GFL Q4 results ‘exceed expectations’

GFL Environmental Inc., Vaughan, Ontario, has announced its fourth quarter earnings for 2024, reporting revenue of $1.98 billion, an increase of 8.2 percent, excluding the impact of divestitures, compared with 2023.

“Our more than 20,000 employees delivered another year of results that exceeded our expectations,” GFL Founder and CEO Patrick Dovigi. “Our results are a testament to our profitability focused strategic initiatives that we are implementing across the portfolio.”

The company reported a solid waste revenue of $1.57 billion, including 6 percent from core pricing and 2.3 percent from positive volume. Environmental services revenue was $414.7 million, compared to $424.3 million in the prior year period, which included approximately $12.9 million of revenue associated with an unseasonably high level of large event driven business, $5.5 million from lower used motor oil selling prices and $6.5 million from lower soil volumes. Excluding these impacts, revenue increased by 3.1 percent, GFL says.

The company announced the definitive agreement for the sale of its environmental services business at an $8 billion valuation. Dovigi says GFL is on target to close the transaction by March 1. The company intends to repay $3.75 billion of long-term debt shortly after the sale.

“The transaction will allow us to materially delever our balance sheet and accelerate our path to an investment-grade credit rating,” he says. “In addition, we will have the optionality to deploy incremental capital across organic growth initiatives, solid waste M&A [mergers and acquisitions] and higher return of capital to shareholders through share repurchases and higher dividends, while maintaining targeted net leverage in the low threes.”

Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) increased by 17.4 percent to $577.8 million in the fourth quarter of 2024, compared to $492.2 million in the fourth quarter of 2023. The adjusted EBITDA margin was 29.1 percent in Q4, compared to 26.1 percent in 2023, and the solid waste adjusted EBITDA margin was 33.4 percent, compared to 30.7 percent last year. The environmental services adjusted EBITDA margin was 28.9 percent in the fourth quarter of 2024, compared to 25 percent in the fourth quarter of 2023.

The company experienced a net loss of $199.5 million in Q4, compared to $62.1 million in the same period in 2023.

Adjusted free cash flow was $360.1 million, compared to $471.6 million last year. The company attributes the $111.5 million decrease to an increase of cash capex net of incremental growth investments and an investment in working capital, partially offset by an increase in EBITDA.

2024 results

GFL’s 2024 revenue came in at $7.86 billion, an increase of 8.8 percent excluding the impact of divestitures compared to 2023. Its solid waste revenue was $6.13 billion, including 6.5 percent from core pricing, partially offset by volume decreases of 0.8 percent.

GFL’s 2024 environmental services revenue was $1.72 billion, compared to $1.69 billion in the prior year period which included approximately $94.7 million of revenue associated with an unseasonably high level of large event driven business, the company says. Excluding the impact of this outsized activity in the prior year period, revenue increased by 7.5 percent.

Adjusted EBITDA increased by 15 percent, excluding the impact of divestitures, to $2.25 billion, with a margin of 28.6 percent. The solid waste adjusted EBITDA margin was 32.9 percent in 2024, compared to 30.7 percent in 2023, and the environmental services adjusted EBITDA margin was 28.5 percent in 2024, compared to 27.1 percent in 2023.

GFL experienced a net loss of $737.7 million in 2024, compared to a net income of $32.2 million in 2023.

Adjusted free cash flow was $820.3 million in 2024, compared to $701.2 million in 2023. The company attributes the increase of $119.1 million to an increase in EBITDA and a reduction in cash interest paid, partially offset by an increase in cash capex net of incremental growth investments and an investment in working capital.

GFL increased its greenhouse gas (GHG) emissions reduction target to a 30 percent absolute reduction in scope 1 and 2 emissions by 2030 from a 2021 base year. The company says it derived its increased target level by aligning with science-aligned pathways for 3 distinct sources of emissions in its operations. 

"We have built a best-in-class North American platform that we will continue to optimize," Dovigi says. "Based on our strong results in 2024 and outlook for 2025, we believe we are uniquely positioned for continued industry leading organic growth over the near to medium term. The reignition of our M&A program as well as opportunistic share buy backs are also expected to be significant drivers of equity value creation.”

In GFL’s earnings call, Dovigi noted that while GFL closed 11 transactions in 2024, all but one were considered small.