GFL Environmental (GFL) Q4 2023 earnings summary

Executive summary

• FY2023 revenue was $7,515.5M, up 11.2% reported and 15.7% excluding divestitures; Adjusted EBITDA was $2,003.7M, up 16.4% reported and 21.1% excluding divestitures.

• Record Solid Waste core pricing of 9.8% and margin expansion supported growth; FY2024 priorities include further margin expansion, RNG projects, acquisitions and deleveraging.

Financial highlights

• Q4 revenue was $1,882.8M, up 3.4% reported and 9.9% excluding divestitures; Adjusted EBITDA was $492.2M, up 11.9% reported and 19.1% excluding divestitures.

• Q4 continuing-operations net loss was $62.1M versus $219.1M in Q4 2022; adjusted net income was $17.0M, or $0.05 per diluted share.

• FY continuing-operations net income was $32.2M versus a $183.2M loss in 2022; adjusted net income was $358.7M and adjusted EPS was $0.97 versus $0.49.

• FY cash from operating activities was $980.4M, Adjusted Cash Flows from Operating Activities were $1,464.4M, and Adjusted Free Cash Flow was $701.2M.

• Q4 Adjusted Free Cash Flow was $471.6M versus $221.1M; the increase excluded $141.5M of incremental divestiture-related cash taxes and $145.0M of incremental growth capex.

Outlook and guidance

• FY2024 guidance: revenue ~$8,000M, Adjusted EBITDA ~$2,215M, Adjusted EBITDA margin ~27.7% with 100 bps expansion, and Adjusted Free Cash Flow ~$800M.

• FY2024 Solid Waste core pricing guidance is 6.0%–6.5%; surcharges (0.4%), volume (1.25%)–(1.0%), commodity price impact 0.2%, and Environmental Services organic growth 5.0%–5.5%.

• Guidance includes 4.0% revenue contribution from M&A; Solid Waste volume guidance reflects shedding low-margin business.

• FY2024 net capex is expected at $850M–$900M, excluding $250M–$300M of incremental growth capital for RNG, recycling facilities and infrastructure.

• Year-end 2024 net leverage is expected in the mid-3s excluding anticipated growth capital and M&A, and 3.65x–3.85x including $900M of those investments.