Waste Connections, Inc 10-Q for FY2021 Q1

Waste Connections, Inc. (WCN)

10-Q 2021-04-29 For: 2021-03-31

Added on April 07, 2026

About this 10-Q

Waste Connections, Inc filed this 10-Q on April 29, 2021, covering the quarter ended March 31, 2021 (FY2021 Q1).

Headline figures

Quarter ended March 31, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $1.4B; up 3.2% from $1.35B a year earlier
Net income: $160.31M; up 12.1% from net income of $143.04M a year earlier
Diluted EPS: $0.61; up 13.0% from $0.54 a year earlier

Search and read filings like this one from Claude or ChatGPT with the SEC filings MCP server →

☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended March 31, 2021
	Or
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from to


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Shares, no par value	WCN	New York Stock Exchange (“NYSE”) Toronto Stock Exchange (“TSX”)


þ Large Accelerated Filer	◻ Accelerated Filer	◻ Non-accelerated Filer	☐ Smaller Reporting Company	☐ Emerging Growth Company


		Page
PART I – FINANCIAL INFORMATION (unaudited)
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Net Income	2
	Condensed Consolidated Statements of Comprehensive Income (Loss)	3
	Condensed Consolidated Statements of Equity	4
	Condensed Consolidated Statements of Cash Flows	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	29
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	50
Item 4.	Controls and Procedures	52
PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	53
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	53
Item 6.	Exhibits	54
Signatures		55


	March 31,		December 31,
	2021		2020
ASSETS
Current assets:
Cash and equivalents	$	743,464	$	617,294
Accounts receivable, net of allowance for credit losses of $18,970 and $19,380 at March 31, 2021 and December 31, 2020, respectively		608,758		630,264
Prepaid expenses and other current assets		151,769		160,714
Total current assets		1,503,991		1,408,272

Restricted cash		105,689		97,095
Restricted investments		56,620		57,516
Property and equipment, net		5,232,682		5,284,506
Operating lease right-of-use assets		174,635		170,923
Goodwill		5,754,101		5,726,650
Intangible assets, net		1,125,894		1,155,079
Other assets, net		89,317		92,323
Total assets	$	14,042,929	$	13,992,364
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	280,025	$	290,820
Book overdraft		234		17,079
Deferred revenue		243,712		233,596
Accrued liabilities		399,470		404,923
Current portion of operating lease liabilities		35,699		30,671
Current portion of contingent consideration		42,360		43,297
Current portion of long-term debt and notes payable		105,386		8,268
Total current liabilities		1,106,886		1,028,654

Long-term portion of debt and notes payable		4,613,602		4,708,678
Long-term portion of operating lease liabilities		146,018		147,223
Long-term portion of contingent consideration		24,618		28,439
Deferred income taxes		776,498		760,044
Other long-term liabilities		433,434		455,888
Total liabilities		7,101,056		7,128,926

Commitments and contingencies (Note 17)

Equity:
Common shares: 262,564,371 shares issued and 262,491,505 shares outstanding at March 31, 2021; 262,899,174 shares issued and 262,824,990 shares outstanding at December 31, 2020		3,964,500		4,030,368
Additional paid-in capital		161,638		170,555
Accumulated other comprehensive income (loss)		46,171		(651)
Treasury shares: 72,866 and 74,184 shares at March 31, 2021 and December 31, 2020, respectively		—		—
Retained earnings		2,765,401		2,659,001
Total Waste Connections’ equity		6,937,710		6,859,273
Noncontrolling interest in subsidiaries		4,163		4,165
Total equity		6,941,873		6,863,438
	$	14,042,929	$	13,992,364


	Three Months Ended March 31,
	2021		2020
Revenues	$	1,395,942	$	1,352,404
Operating expenses:
Cost of operations		825,920		815,424
Selling, general and administrative		141,422		136,052
Depreciation		157,402		150,821
Amortization of intangibles		32,192		31,638
Impairments and other operating items		634		1,506
Operating income		238,372		216,963

Interest expense		(42,425)		(37,990)
Interest income		1,103		2,175
Other income (expense), net		3,548		(9,521)
Income before income tax provision		200,598		171,627

Income tax provision		(40,291)		(28,734)
Net income		160,307		142,893
Plus: Net loss attributable to noncontrolling interests		2		142
Net income attributable to Waste Connections	$	160,309	$	143,035

Earnings per common share attributable to Waste Connections’ common shareholders:
Basic	$	0.61	$	0.54
Diluted	$	0.61	$	0.54

Shares used in the per share calculations:
Basic		262,697,487		263,790,364
Diluted		263,156,655		264,353,158

Cash dividends per common share	$	0.205	$	0.185


	WASTE CONNECTIONS' EQUITY
						ACCUMULATED
				ADDITIONAL		OTHER
	COMMON SHARES			PAID-IN		COMPREHENSIVE		TREASURY SHARES			RETAINED		NONCONTROLLING
	SHARES	AMOUNT		CAPITAL		LOSS		SHARES	AMOUNT		EARNINGS		INTERESTS		TOTAL
Balances at December 31, 2020	262,824,990	$	4,030,368	$	170,555	$	(651)	74,184	$	—	$	2,659,001	$	4,165	$	6,863,438
Sale of common shares held in trust	1,318		131		—		—	(1,318)		—		—		—		131
Vesting of restricted share units	340,529		—		—		—	—		—		—		—		—
Vesting of performance-based restricted share units	154,251		—		—		—	—		—		—		—		—
Restricted share units released from deferred compensation plan	19,150		—		—		—	—		—		—		—		—
Tax withholdings related to net share settlements of equity-based compensation	(186,039)		—		(18,490)		—	—		—		—		—		(18,490)
Equity-based compensation	—		—		9,573		—	—		—		—		—		9,573
Exercise of warrants	3,490		—		—		—	—		—		—		—		—
Repurchase of common shares	(666,184)		(65,999)		—		—	—		—		—		—		(65,999)
Cash dividends on common shares	—		—		—		—	—		—		(53,909)		—		(53,909)
Amounts reclassified into earnings, net of taxes	—		—		—		3,525	—		—		—		—		3,525
Changes in fair value of cash flow hedges, net of taxes	—		—		—		15,243	—		—		—		—		15,243
Foreign currency translation adjustment	—		—		—		28,054	—		—		—		—		28,054
Net income (loss)	—		—		—		—	—		—		160,309		(2)		160,307
Balances at March 31, 2021	262,491,505	$	3,964,500	$	161,638	$	46,171	72,866	$	—	$	2,765,401	$	4,163	$	6,941,873


Final capping, closure and post-closure liability at December 31, 2020	$	301,896
Liability adjustments		(7,134)
Accretion expense associated with landfill obligations		3,655
Closure payments		(3,237)
Foreign currency translation adjustment		562
Final capping, closure and post-closure liability at March 31, 2021	$	295,742


	Gross				Accumulated		Net
	Carrying		Accumulated		Impairment		Carrying
	Amount		Amortization		Loss		Amount
Finite-lived intangible assets:
Long-term franchise agreements and contracts	$	601,120	$	(245,880)	$	—	$	355,240
Customer lists		638,674		(400,314)		—		238,360
Permits and other		379,785		(83,178)		—		296,607
		1,619,579		(729,372)		—		890,207
Indefinite-lived intangible assets:
Solid waste collection and transportation permits		172,056		—		—		172,056
Material recycling facility permits		42,283		—		—		42,283
E&P facility permits		59,855		—		(38,507)		21,348
		274,194		—		(38,507)		235,687
Intangible assets, exclusive of goodwill	$	1,893,773	$	(729,372)	$	(38,507)	$	1,125,894


For the year ending December 31, 2021	$	126,891
For the year ending December 31, 2022	$	108,169
For the year ending December 31, 2023	$	92,115
For the year ending December 31, 2024	$	79,163
For the year ending December 31, 2025	$	66,880


Three Months Ended			Intercompany		Reported		Segment
March 31, 2021	Revenue		Revenue^(b)		Revenue		EBITDA^(c)
Southern	$	382,687	$	(44,526)	$	338,161	$	93,424
Eastern		398,830		(62,369)		336,461		89,121
Western		332,820		(35,816)		297,004		93,825
Central		267,702		(32,316)		235,386		79,040
Canada		211,786		(22,856)		188,930		73,940
Corporate^(a)		—		—		—		(750)
	$	1,593,825	$	(197,883)	$	1,395,942	$	428,600


	Southern		Eastern		Western		Central		Canada		Total
Balance as of December 31, 2020	$	1,532,215	$	1,374,577	$	442,862	$	824,204	$	1,552,792	$	5,726,650
Goodwill acquired		—		—		2,289		—		—		2,289
Goodwill acquisition adjustments		(4)		1,408		—		4,385		(2)		5,787
Impact of changes in foreign currency		—		—		—		—		19,375		19,375
Balance as of March 31, 2021	$	1,532,211	$	1,375,985	$	445,151	$	828,589	$	1,572,165	$	5,754,101


			Fixed		Variable
	Notional		Interest		Interest Rate
Date Entered	Amount		Rate Paid*		Received	Effective Date	Expiration Date
August 2017	$	100,000	1.900	%	1-month LIBOR	July 2019	July 2022
August 2017	$	200,000	2.200	%	1-month LIBOR	October 2020	October 2025
August 2017	$	150,000	1.950	%	1-month LIBOR	February 2020	February 2023
June 2018	$	200,000	2.925	%	1-month LIBOR	October 2020	October 2025
June 2018	$	200,000	2.925	%	1-month LIBOR	October 2020	October 2025
December 2018	$	200,000	2.850	%	1-month LIBOR	July 2022	July 2027


Derivatives Designated as Cash	Asset Derivatives			Liability Derivatives
Flow Hedges	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Interest rate swaps	Prepaid expenses and other current assets	$	—	Accrued liabilities^(a)	$	(19,778)
				Other long-term liabilities		(49,376)
Total derivatives designated as cash flow hedges		$	—		$	(69,154)


	Carrying Value at				*Fair Value at**
	March 31,		December 31,		March 31,		December 31,
	2021		2020		2021		2020
4.64% Senior Notes due 2021	$	100,000	$	100,000	$	100,010	$	100,850
2.39% Senior Notes due 2021	$	150,000	$	150,000	$	150,363	$	150,695
3.09% Senior Notes due 2022	$	125,000	$	125,000	$	128,420	$	128,482
2.75% Senior Notes due 2023	$	200,000	$	200,000	$	206,447	$	206,204
3.24% Senior Notes due 2024	$	150,000	$	150,000	$	157,859	$	158,140
3.41% Senior Notes due 2025	$	375,000	$	375,000	$	398,579	$	403,025
3.03% Senior Notes due 2026	$	400,000	$	400,000	$	416,544	$	424,874
3.49% Senior Notes due 2027	$	250,000	$	250,000	$	264,697	$	271,198
4.25% Senior Notes due 2028	$	500,000	$	500,000	$	563,500	$	597,050
3.50% Senior Notes due 2029	$	500,000	$	500,000	$	536,050	$	570,450
2.60% Senior Notes due 2030	$	600,000	$	600,000	$	603,240	$	644,520
3.05% Senior Notes due 2050	$	500,000	$	500,000	$	471,600	$	540,050


		Three Months Ended March 31,
	2021		2020
Commercial	$	426,395	$	416,507
Residential		400,819		365,731
Industrial and construction roll off		209,258		206,771
Total collection		1,036,472		989,009
Landfill		271,936		266,218
Transfer		189,323		180,765
Recycling		32,448		18,108
E&P		28,012		65,377
Intermodal and other		35,634		30,018
Intercompany		(197,883)		(197,091)
Total	$	1,395,942	$	1,352,404


	Three Months Ended March 31,
	2021		2020
Beginning balance	$	19,380	$	16,432
Current period provision for expected credit losses		1,915		2,027
Write-offs charged against the allowance		(3,501)		(5,063)
Recoveries collected		1,153		1,932
Impact of changes in foreign currency		23		(156)
Ending balance	$	18,970	$	15,172


	March 31,			December 31,
	2021			2020
Revolver under Credit Agreement
Available	$	1,240,137		$	1,238,937
Letters of credit outstanding	$	118,387		$	119,636
Total amount drawn, as follows:	$	203,976		$	203,927
Amount drawn - U.S. LIBOR rate loan	$	200,000		$	200,000
Interest rate applicable - U.S. LIBOR rate loan		1.31	%		1.35	%
Amount drawn – Canadian bankers’ acceptance	$	3,976		$	3,927
Interest rate applicable – Canadian bankers’ acceptance		1.61	%		1.66	%
Commitment – rate applicable		0.15	%		0.15	%
Term loan under Credit Agreement
Amount drawn – U.S. based LIBOR loan	$	650,000		$	650,000
Interest rate applicable – U.S. based LIBOR loan		1.31	%		1.35	%


Three Months Ended			Intercompany		Reported		Segment
March 31, 2020	Revenue		Revenue^(b)		Revenue		EBITDA^(c)
Southern	$	416,382	$	(47,126)	$	369,256	$	106,319
Eastern		397,000		(64,798)		332,202		84,662
Western		305,436		(33,455)		271,981		81,029
Central		237,570		(29,028)		208,542		73,151
Canada		193,107		(22,684)		170,423		59,398
Corporate^(a)		—		—		—		(3,631)
	$	1,549,495	$	(197,091)	$	1,352,404	$	400,928


	Fair Value Measurement at March 31, 2021 Using
			Quoted Prices in		Significant
			Active Markets		Other		Significant
			for Identical		Observable		Unobservable
			Assets		Inputs		Inputs
	Total		(Level 1)		(Level 2)		(Level 3)
Interest rate swap derivative instruments – net liability position	$	(69,154)	$	—	$	(69,154)	$	—
Restricted cash and investments	$	162,847	$	—	$	162,847	$	—
Contingent consideration	$	(66,978)	$	—	$	—	$	(66,978)


	Fair Value Measurement at December 31, 2020 Using
			Quoted Prices in		Significant
			Active Markets		Other		Significant
			for Identical		Observable		Unobservable
			Assets		Inputs		Inputs
	Total		(Level 1)		(Level 2)		(Level 3)
Interest rate swap derivative instruments – net liability position	$	(94,689)	$	—	$	(94,689)	$	—
Restricted cash and investments	$	155,176	$	—	$	155,176	$	—
Contingent consideration	$	(71,736)	$	—	$	—	$	(71,736)


	Three Months Ended March 31, 2021
	Gross		Tax Effect		Net of Tax
Interest rate swap amounts reclassified into interest expense	$	4,796	$	(1,271)	$	3,525
Changes in fair value of interest rate swaps		20,739		(5,496)		15,243
Foreign currency translation adjustment		28,054		—		28,054
	$	53,589	$	(6,767)	$	46,822


	Three Months Ended March 31, 2020
	Gross		Tax Effect		Net of Tax
Interest rate swap amounts reclassified into interest expense	$	(440)	$	117	$	(323)
Changes in fair value of interest rate swaps		(58,026)		15,377		(42,649)
Foreign currency translation adjustment		(184,717)		—		(184,717)
	$	(243,183)	$	15,494	$	(227,689)


			Foreign		Accumulated
			Currency		Other
	Interest		Translation		Comprehensive
	Rate Swaps		Adjustment		Income (Loss)
Balance at December 31, 2020	$	(69,596)	$	68,945	$	(651)
Amounts reclassified into earnings		3,525		—		3,525
Changes in fair value		15,243		—		15,243
Foreign currency translation adjustment		—		28,054		28,054
Balance at March 31, 2021	$	(50,828)	$	96,999	$	46,171


		Unvested Shares
Outstanding at December 31, 2020		772,625
Granted		447,301
Forfeited		(13,569)
Vested and issued		(340,529)
Outstanding at March 31, 2021		865,828


		Unvested Shares
Outstanding at December 31, 2020		434,558
Granted		116,784
Forfeited		(5,048)
Vested and issued		(154,251)
Outstanding at March 31, 2021		392,043


		Vested Shares
Outstanding at December 31, 2020		21,586
Granted		2,856
Outstanding at March 31, 2021		24,442


Outstanding at December 31, 2020		66,554
Cash settled		(1,318)
Outstanding at March 31, 2021		65,236


Outstanding at December 31, 2020		51,200
Cash settled		(3,131)
Outstanding at March 31, 2021		48,069


	Payments Due by Period
	(amounts in thousands of U.S. dollars)
			Less Than		1 to 3				Over 5
Recorded Obligations	Total		1 Year		Years		3 to 5 Years		Years
Long-term debt	$	4,744,690	$	105,386	$	1,340,226	$	536,585	$	2,762,493
Cash interest payments	$	1,217,092	$	160,761	$	268,554	$	203,981	$	583,796
Contingent consideration	$	86,498	$	42,360	$	5,724	$	3,224	$	35,190
Operating leases	$	213,877	$	28,245	$	67,921	$	43,115	$	74,596
Final capping, closure and post-closure	$	1,500,547	$	16,726	$	40,739	$	9,541	$	1,433,541


	Amount of Commitment Expiration Per Period
	(amounts in thousands of U.S. dollars)
			Less Than		1 to 3		3 to 5		Over 5
Unrecorded Obligations⁽¹⁾	Total		1 Year		Years		Years		Years
Unconditional purchase obligations	$	116,619	$	82,673	$	33,946	$	—	$	—


				Total Number of	Maximum Number
				Shares Purchased	of Shares that
	Total Number	Average		as Part of Publicly	May Yet Be
	of Shares	Price Paid		Announced	Purchased Under
Period	Purchased	Per Share ⁽¹⁾		Program	the Program
1/1/21 - 1/31/21	200,000	$	99.43	200,000	12,944,773
2/1/21 - 2/28/21	466,184	$	98.92	466,184	12,478,589
3/1/21 - 3/31/21	—	$	-	—	12,478,589
	666,184	$	99.07	666,184

Exhibit Number		Description of Exhibits
3.1		Articles of Amendment (incorporated by reference to Exhibit 3.1 of the Registrant’s Form 8-K filed on May 26, 2017)
3.2		Articles of Amalgamation (incorporated by reference to Exhibit 3.2 of the Registrant’s Form 8-K filed on June 7, 2016)
3.3		Articles of Amendment (incorporated by reference to Exhibit 3.1 of the Registrant’s Form 8-K filed on June 7, 2016)
3.4		By-law No. 1 of the Registrant (incorporated by reference to Exhibit 3.3 of the Registrant’s Form 8-K filed on June 7, 2016)
31.1		Certification of Principal Executive Officer pursuant to Exchange Act Rules 13a-14(a)/15d-14(a)
31.2		Certification of Principal Financial Officer pursuant to Exchange Act Rules 13a-14(a)/15d-14(a)
32.1		Certification of Principal Executive Officer pursuant to 18 U.S.C. §1350
32.2		Certification of Principal Financial Officer pursuant to 18 U.S.C. §1350
101.INS		The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH		XBRL Taxonomy Extension Schema Document
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB		XBRL Taxonomy Extension Labels Linkbase Document
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document
104		Cover Page Interactive Data File – The cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.


	WASTE CONNECTIONS, INC.

Date: April 29, 2021	BY:	/s/ Worthing F. Jackman
		Worthing F. Jackman
		President and Chief Executive Officer

Date: April 29, 2021	BY:	/s/ Mary Anne Whitney
		Mary Anne Whitney
		Executive Vice President and Chief Financial Officer