Mr. Patrick Dovigi reports

GFL ENVIRONMENTAL REPORTS THIRD QUARTER 2023 RESULTS

GFL Environmental Inc. has released its results for the third quarter of 2023.

"Once again in the third quarter, our employees delivered results that exceeded our expectations," said Patrick Dovigi, founder and chief executive officer of GFL Environmental. "Total revenue for the quarter, excluding non-core asset divestitures, increased 10.3 per cent over the prior-year period, driven primarily by solid waste core pricing increase of 8.8 per cent and our continued focus on the quality of our revenue. We also saw significant margin improvement during this quarter across both our lines of business, with solid waste adjusted [earnings before interest, taxes, depreciation and amortization] margin up 250 [basis points] year over year, inclusive of headwinds from [mergers and acquisitions], commodity pricing, and fuel, and environmental services adjusted EBITDA margin up 440 bps. These results are a testament to the strength of our business and our ability to execute on the many self-help levers in our portfolio."

Mr. Dovigi added: "We continue to manage our asset base to create long-term sustainable shareholder value. In the second quarter, we completed divestitures of certain non-core assets and are reinvesting a portion of those proceeds into higher-margin, accretive organic growth initiatives, such as [renewable natural gas] projects and new contract wins, driven by extended producer responsibility recycling regulations in Canada. Our base business has now scaled to the point where we expect organic growth to outpace growth from M&A as we focus primarily on tuck-in acquisitions to densify our existing footprint.

"Even in this current high interest rate environment, this quarter, we reduced our cost of borrowing by 60 bps under our senior secured term loan, reflecting the continued support of our high-quality, long-standing institutional debt investors. We remain committed to deleveraging our balance sheet. With the progressive improvements we are making in our business, we expect to continue to realize material credit quality enhancements in the near to medium term, leading to our achieving an investment-grade rating before the majority of our fixed-rate debt matures in 2028 and beyond, positioning us for improved free cash flow conversion."

Mr. Dovigi concluded: "Our strong results year to date position us well for outsized operating leverage next year. Our preliminary 2024 outlook sets us up to achieve high-single-digit top-line growth, inclusive of approximately $210-million of M&A rollover revenue from acquisitions already completed and before considering the impact of divestitures from earlier this year. By continuing to apply our proven strategy that drove margin expansion this year, we expect another year of outsized adjusted EBITDA margin expansion, which should also drive low-teens adjusted EBITDA growth, or at least 10 per cent, when considering the impact of divestitures. We look forward to providing our formal guidance for 2024 when we report our year-end results."

Third quarter results:

• Revenue of $1,890.0-million in the third quarter of 2023, increase of 10.3 per cent, excluding the impact of divestitures (3.2 per cent including the impact of divestitures), compared with the third quarter of 2022:
  • Solid waste revenue of $1,502.5-million, including organic growth of 4.2 per cent, driven predominantly by core pricing increases;
  • Environmental services revenue of $387.5-million, including organic growth of 6.9 per cent, excluding the impact of $30.0-million of revenue contributed from an outsized amount of subcontracting work in the third quarter of 2022 ((1.9) per cent including this impact); the increase is predominantly due to higher industrial collection and processing activity at its facilities and an increased level of emergency response activity, offset by a reduction in contaminated soil volumes;
• Adjusted EBITDA increased by 12.0 per cent to $530.3-million in the third quarter of 2023, compared with the third quarter of 2022; adjusted EBITDA margin was 28.1 per cent in the third quarter of 2023, compared with 25.8 per cent in the third quarter of 2022; solid waste adjusted EBITDA margin was 31.4 per cent in the third quarter of 2023, compared with 28.9 per cent in the third quarter of 2022;
• Net income from continuing operations was $18.3-million in the third quarter of 2023, compared with net loss from continuing operations of $183.7-million in the third quarter of 2022;
• Adjusted free cash flow was $276.0-million in the third quarter of 2023, compared with $97.0-million in the third quarter of 2022; the increase of $179.0-million was inclusive of $248.6-million of incremental cash taxes related to divestitures and $21.6-million of incremental cash interest paid, offset by a decrease of $84.9-million of incremental net capital expenditures.

Year-to-date results:

• Revenue of $5,632.7-million for the nine months ended Sept. 30, 2023, increase of 17.8 per cent, excluding the impact of divestitures (14.0 per cent including the impact of divestitures), compared with the nine months ended Sept. 30, 2022:
  • Solid waste revenue of $4,541.0-million, including organic growth of 6.8 per cent, driven predominantly by core pricing increases;
  • Environmental services revenue of $1,091.7-million, including organic growth of 12.9 per cent, excluding the impact of $30.0-million of revenue contributed from an outsized amount of subcontracting work in the nine months ended Sept. 30, 2022 (9.2 per cent including this impact); the increase is predominantly due to higher industrial collection and processing activity at its facilities and an increased level of emergency response activity;
• Adjusted EBITDA increased by 18.0 per cent to $1,511.5-million for the nine months ended Sept. 30, 2023, compared with nine months ended Sept. 30, 2022; adjusted EBITDA margin was 26.8 per cent for the nine months ended Sept. 30, 2023, compared with 25.9 per cent for the nine months ended Sept. 30, 2022; solid waste adjusted EBITDA margin was 30.8 per cent for the nine months ended Sept. 30, 2023, compared with 29.3 per cent for the nine months ended Sept. 30, 2022;
• Net income from continuing operations was $94.3-million for the nine months ended Sept. 30, 2023, compared with net income from continuing operations of $35.9-million for the nine months ended Sept. 30, 2022;
• Adjusted free cash flow was $235.8-million for the nine months ended Sept. 30, 2023, compared with $317.8-million for the nine months ended Sept. 30, 2022; the decrease of $82.0-million was inclusive of $248.6-million of incremental cash taxes related to divestitures, $195.9-million of incremental net capex and $114.6-million of incremental cash interest paid.

Q3 2023 earnings call

GFL Environmental will host a conference call related to its third quarter earnings on Nov. 2, 2023, at 8:30 a.m. Eastern Time. A live audio webcast of the conference call will be available by logging onto its investors page at the company's website. Listeners may join the call toll-free by dialling 1-833-950-0062 in Canada or 1-833-470-1428 in the United States (access code: 591692) approximately 15 minutes prior to the scheduled start time.

The company encourages participants who will be dialling in to preregister for the conference call. Callers who preregister will be given a conference access code and PIN to gain immediate access to the call and bypass the live operator on the day of the call. Participants may preregister at any time, including up to and after the call start time. For those unable to listen live, an audio replay of the call will be available until Nov. 16, 2023, by dialling 1-226-828-7578 in Canada or 1-866-813-9403 in the United States (access code: 103479). A copy of the presentation for the call will be available on the company's website.

About GFL Environmental Inc.

GFL Environmental, headquartered in Vaughan, Ont., is the fourth-largest diversified environmental service company in North America, providing a comprehensive line of solid waste management, liquid waste management and soil remediation services through its platform of facilities throughout Canada and in more than half of the U.S. states. Across its organization, GFL Environmental has a work force of more than 20,000 employees.

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