Waste Connections: 2Q Review & Model Update

Research evidence excerpt

Waste Connections: 2Q Review & Model Update

0.60B (both up ~6% YoY, respectively) with EBITDA margins of 33.3% and

33.8%, respectively. We maintain our Dec 26 PT at $195 based on ~16x FY1 Quarterly Forecasts (FYE Dec)

EV/EBITDA, in line with the current valuation. We rate WCN Overweight. Adj. EPS ($)

2025A 2026E 2027E

Below are key highlights from the earnings conference call. Q1 1.13 1.23A 1.43

Q2 1.29 1.50A 1.54

• Solid waste demand remained pressured by macro uncertainty and higher Q3 1.44 1.41 1.70

fuel-related activity costs, with solid waste volumes down 1.9% in 2Q, roll- Q4 1.29 1.27 1.57

off pulls down 2%, landfill tons essentially flat, MSW flat, special waste down FY 5.15 5.42 6.24

nominally on tough comps, and C&D tons up 1% for the first time in 10 Style Exposure

quarters, led by a 10% increase in the Central region. Management tied the

softer volume backdrop to sluggish construction activity, construction-related

projects that were paused during 2Q as elevated fuel costs impacted timing and

economics, and some incremental churn from higher fuel-related surcharges,

but July activity improved across special waste, C&D, and MSW, suggesting

the project slowdown may prove temporary while reinforcing that solid waste

volumes remain highly dependent on construction restart timing and broader

macro stabilization. Pricing remained firmly on track, with solid waste organic

growth from total price of 6.7% in 2Q driven by 5.6% core pricing plus 1.1%

from fuel and material surcharges, while collection / transfer / disposal core

price was cited at roughly 6% and ranged from ~4% in the mostly exclusive The authors wish to thank Prerana

Western region to ~7% in competitive regions. Management reiterated full- Jhanwar, of the J.P. Morgan Global