GFL shows sizeable growth in Q3 results

GFL Environmental Inc., Ontario, announced its results for the third quarter Nov. 3.

Revenue increased by 43.3 percent year over year to $1.19 billion* in the third quarter of 2021. Solid waste revenue increased by 8.2 percent, including 5.8 percent from core pricing, surcharge and commodity price increases and 2.4 percent from positive volume. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) increased by $108.1 million to $333.94 million in the third quarter of 2021 compared with the third quarter of 2020. Adjusted EBITDA margin was 28 percent in the third quarter of 2021 compared with 27.1 percent in the third quarter of 2020. Net loss increased to $196.93 million in the third quarter of 2021 compared with a net loss of $92.12 million in the third quarter of 2020. Cash flows from operating activities decreased by 12.8 percent to $179.82 million in the third quarter of 2021 compared with the third quarter of 2020.

Revenue for the first three quarters was $3.2 billion, an increase of 34.6 percent compared with the first three quarters of 2020. Adjusted EBITDA increased by $248.89 million to $863.68 million for the first three quarters compared with the first three quarters of 2020. Adjusted EBITDA margin was 27 percent for the first three quarters of 2021, compared with25.9 percent for the first three quarters of 2020. Net loss decreased to $358.35 million for the first three quarters of 2021 compared with a net loss of $408.15 million for the first three quarters of 2020. Cash flows from operating activities increased by 81.3 percent to $493.2 million for the first three quarters of 2021 compared with the prior-year period.

"Our employees continued to deliver exceptional results in the third quarter, allowing us to once again exceed our expectations," Patrick Dovigi, founder and CEO of GFL, says. "This quarter we grew revenue by 43.3 percent, driven by strong organic growth ahead of expectations and continued outperformance from recent acquisitions. We also expanded adjusted EBITDA margin by 90 basis points during the quarter, demonstrating the ability to successfully counteract increased inflationary cost pressures through proactive price increases and ongoing efficiency initiatives. We achieved these results in the face of continued COVID-19 restrictions in many of our Canadian markets, where we generate almost 40 percent of our revenue.

"We remain focused on executing on our strategy to create long-term value for all of our stakeholders with the goal of growing our free cash flow. Year to date, we completed 37 acquisitions, including the acquisitions of Terrapure Environmental Ltd. and Peoria Disposal Company, further reinforcing our reputation as an acquirer of choice. We also completed several financing initiatives to further reduce our cost of capital, including an amendment to our revolving credit facility, resulting in additional annualized cash interest savings and an equity commitment of up to $300 million from affiliates of HPS Investment Partners LLC," he continues. "Finally, we received an additional $74.2 million, $126.4 million year-to-date, from the sale of non-core solid waste assets, the proceeds of which we are actively redeploying into organic and inorganic initiatives in our key growth markets.

"We continue to see upside opportunities ahead of us this year, as a result of our organic initiatives, and the robust M&A pipeline that we manage," Dovigi adds. "Based on our performance to date and our proven ability to deliver on our growth strategies, we are once again increasing our 2021 full-year guidance for revenue, adjusted EBITDA and adjusted free cash flow. Furthermore, excluding acquisitions we expect to complete prior to year-end, we are positioned to have nearly 8.5 percent of rollover revenue contribution from M&A heading into 2022.

"We remain committed to our sustainability initiatives and continue to evaluate opportunities to unlock what we believe is significant value through landfill gas to energy projects at our MSW landfills and acceleration of the conversion of our fleet to CNG. On Oct. 1, 2021, we expanded on these initiatives with the addition of landfill assets as part of our acquisition of Peoria Disposal Company," he says. 

GFL also announced during its earnings that Jessica McDonald will be joining the board of directors in February 2022.

"Earlier this year, we made a commitment to enhance the diversity of our board of directors," Dovigi says. "I am very excited that Jessica has agreed to join our board as our seventh independent director. Jessica has an extensive background in sustainable initiatives, having previously served as deputy minister to the premier of British Columbia, Strategy Policy, Environment and Resource Development and the president and CEO of BC Hydro and Power Authority. She currently serves as a director and member of the Audit Committee of Hydro One Limited and as a director and member of the Environment, Health, Safety and Corporate Responsibility Committee of Coeur Mining Inc. We welcome Jessica to our board and look forward to working with her."

Updated full-year 2021 guidance

GFL also provided its updated guidance for 2021 assuming a CAD/US exchange rate of 1.25 for the remainder of the year:

• Revenue is estimated to be between $4.33 billion and $4.34 billion (as compared with between $4.2 million and $4.24 billion).
• Adjusted EBITDA is estimated to be between $1156.5 million and $1164.53 million (as compared with between $1124.38 million and $1136.42 million).
• Adjusted free cash flow is estimated to be between $421.64 million and $425.66 million (as compared with between $409.59 and $417.63 million).

In addition, net capital expenditures for 2021 are expected to be approximately $433.69 million and nonacquisition-related investment in working capital is estimated to be $28.11 million.

*Dollars have been converted from Canadian to U.S. currency.