Waste Connections (WCN 0.63%), a major operator in waste collection, disposal, and recycling with a strong focus on secondary and rural North American markets, released results for the quarter on July 23, 2025. The company reported $2.41 billion in GAAP revenue, outpacing the $2.39 billion analyst consensus (GAAP), and delivered Non-GAAP EPS of $1.29 versus the expected $1.25. These results were driven by robust solid waste pricing and strong acquisition contributions, but were held back by ongoing pressures on volumes and softer contributions from high-margin commodity activities. Management described the quarter as solid, highlighting execution on key pricing and safety initiatives, and reiterated its full-year 2025 outlook.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (Non-GAAP) | $1.29 | $1.25 | $1.24 | 4.0% |
| Revenue | $2.41 billion | $2.39 billion | $2.25 billion | 7.1% |
| Adjusted EBITDA | $786 million | $732 million | 7.4% | |
| Adjusted EBITDA Margin | 32.7% | 32.6% | 0.1 pp | |
| Adjusted Free Cash Flow | $367 million | $403 million | (9.0%) |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
About Waste Connections: Business Model and Strategic Focus
Waste Connections (WCN 0.63%) is a leading North American provider of waste collection, landfill, recycling, and special waste services. It serves over nine million customers, with an emphasis on exclusive, secondary, and rural markets spread across 46 U.S. states and six Canadian provinces. The company's business model relies on building local scale through vertical integration — owning collection routes, transfer stations, and landfill assets in each market — providing control over costs and stable, long-term revenue.
The company's recent strategy centers on growing through acquisitions, expanding vertically to control the waste stream end-to-end, and targeting markets where competition is relatively low. By focusing on secondary and rural markets, the company believes it reduces exposure to customer churn and improves financial returns. Key factors for success include price discipline, efficient operations, vertical asset integration, and strong attention to employee safety and retention. Operational discipline and an active acquisition pipeline continue to be major drivers for financial results.
Second Quarter Highlights: Pricing, Acquisitions, and Operations
During the quarter, the company delivered financial results ahead of consensus, supported by a 6.6% increase in core solid waste price. Management emphasized that price increases offset input cost inflation, which remained in the 4% to 4.5% range. The spread between these figures helped expand underlying solid waste margins by approximately 70 basis points, keeping overall adjusted EBITDA (non-GAAP) margins at 32.7%. However, the company noted that lower contributions from recycling and other commodity-linked activities weighed on margins compared to initial forecasts.
Total revenue (GAAP) rose by 7.1% from the prior year, reaching $2.41 billion. This was driven by strong pricing and $112.9 million in additional revenue from acquisitions. Volume, on the other hand, declined by 2.6% in the three months ended June 30, 2025, reflecting both the shedding of underperforming contracts from legacy acquisitions and a generally flat macroeconomic environment, as described by management. The most cyclical business lines, such as construction and demolition waste (making up about 10% of total revenue), continued to drag overall volumes, while activity in oilfield-based E&P (exploration and production) waste disposal provided a boost, growing over 40% year-over-year to $169.8 million.
The segment breakdown shows solid waste collection accounted for 70% of revenue, with solid waste disposal and transfer at 18.3% of revenue, and recycling at 2.8%. Recycling revenues grew by 9.2% year-over-year, reflecting new facility contributions, even as base commodity prices for materials like cardboard remained subdued. The remainder came from E&P waste and intermodal/other activities. Notably, the company acquired a state-of-the-art recycling facility in New Jersey in early 2025 to support its expanding New York City operations, reflecting its ongoing investment in infrastructure and acquisition-driven growth.
Beyond financials, the company reported record-setting employee retention and safety performance during the period, with incident counts dropping as much as 40% from recent peaks in recent months. Operational safety improvements are credited to a focus on culture and better field execution, such as coaching drivers and optimizing staff levels, as discussed by management, helping drive up internalization rates — the share of waste sent to company-owned landfills — to 60%. These operational measures help manage costs and improve profitability over time.
The company continues to monitor requirements relating to PFAS chemicals and landfill regulations, but management reports no major impact yet and sees room to pass along compliance costs to customers if they rise. Ongoing costs associated with the Chiquita Canyon landfill, now closed, are projected to be $100–$150 million for calendar year 2025, with the situation contained and stable.
Adjusted free cash flow was $367 million for the quarter ended June 30, 2025, down by 9% from the prior year due to higher capital expenditures and timing of cash collections. The balance sheet remains stable, with $110.2 million in cash as of June 30, 2025, and a debt-to-book capitalization ratio of 50% as of June 30, 2025. The quarterly dividend was increased to $0.315 per share.
Looking Ahead: Financial Guidance and Investor Watch Points
The company maintained its financial guidance for FY2025, targeting revenue of $9.45 billion, adjusted EBITDA (non-GAAP) of $3.12 billion (a 33.0% margin), and adjusted free cash flow of $1.3 billion for FY2025. Management indicated ongoing confidence, citing the potential for additional upside from continued acquisitions, stabilization in commodity-related income, and eventual improvements in solid waste volume trends, as discussed in the company's full-year 2025 outlook. About $200 million in acquisition revenue has closed or is lined up for 2025, with a robust pipeline of additional targets expected to buoy fiscal performance.
Areas for investors to monitor in coming quarters include persistent pressure on volumes, especially in cyclical areas like construction and demolition waste, as well as special waste linked to large infrastructure projects. Management has acknowledged that the process of shedding underperforming contracts will continue to affect reported volumes until the largest contract lapses at the end of Q3 2025. Margin sensitivity to commodity swings — mainly from recycling and renewable energy credits — could add volatility, although operational improvements, internalization gains, and bolt-on acquisitions are expected to support margins through these fluctuations.
The quarterly dividend was raised to $0.315 per share.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
