Waste Connections Inc

Q2 performance stronger than expected; margins expanded despite headwinds - Revenue $2.562B, +6.4% YoY; adjusted EBITDA $840.1M (+6.8% YoY). - Adjusted EBITDA margin 32.8%, expanding +70 bps underlying, but partially offset by ~40 bps drag from fuel and ~20 bps drag from lower commodity values. - Organic solid waste pricing strong: total price +6.7% = core price +5.6% plus fuel/material surcharges +1.1% (~$25M). - Volumes down ~1.9% YoY; yield 4.6% steady (AI pricing optimization helped).

Macro + fuel created pressure, but company sees normalization improving - Main challenge: fuel spiked rapidly ($60 to $120+ in weeks), causing margin pressure and contributing to volume churn and slower construction-driven activity. - Management said churn impacts from fuel were broadly consistent with history, but the *speed* of increase likely added ~10–15 bps volume churn in the quarter. - Growth slowdown appeared temporary: they’re seeing improvement in July with MSW and C&D up nominally across several weeks, and signs equipment rental demand is accelerating (waste generation may lag).

Updated full-year 2026 outlook increased (but cash flow range unchanged) - Revenue outlook: $10.02B–$10.05B (up ~$100M–$120M vs. February guidance). - Adjusted EBITDA outlook: $3.33B–$3.34B, with full-year margin 33.2%–33.3%. - Adjusted free cash flow outlook unchanged: $1.4B–$1.45B (includes expected Chiquita Canyon closure outflows $100M–$150M and CapEx $1.25B). - 2H margin cadence: average ~33.7%, with Q3 potentially exceeding 34% depending on fuel/commodities.