Mr. Patrick Dovigi reports

GFL ENVIRONMENTAL REPORTS FOURTH QUARTER AND FULL YEAR 2023 RESULTS; PROVIDES FULL YEAR 2024 GUIDANCE

GFL Environmental Inc. has released its results for the fourth quarter and full-year 2023, as well as guidance for full-year 2024.

"Our employees delivered another exceptional year of results," said Patrick Dovigi, founder and chief executive officer of GFL Environmental. "In 2023, our continued focus on strong execution drove double-digit, industry-leading organic revenue growth, including solid waste core pricing increase of 9.8 per cent for the year, the highest in our history. We also grew adjusted [earnings before interest, taxes, depreciation and amortizations] for the year by 21.1 per cent, excluding the impact of divestitures, and demonstrated significant operating leverage, resulting in solid waste adjusted EBITDA margin expansion of 180 basis points and environmental services adjusted EBITDA margin expansion of 160 basis points, year over year."

Mr. Dovigi continued: "In 2023, we continued to optimize our asset base to create long-term sustainable shareholder value, including the divestiture of three non-core U.S. solid waste businesses for $1.6-billion in proceeds, $275.0-million of which we reinvested into higher-margin, accretive organic growth initiatives such as [renewable natural gas] and new contract wins related to extended producer responsibility recycling legislation in Canada. Our EPR-related investments are expected to generate an aggregate of [$80.0-million] to $100.0-million of incremental adjusted EBITDA starting in Q4 2024 and ramping up to the full run rate by 2026. On RNG, our first contributions from our Arbor Hills facility are expected in [first quarter] 2024, and we remain confident in our ability to achieve $175.0-million of annual adjusted EBITDA from our RNG-related investments by 2026.

"Additionally, we deployed approximately $900-million into 39 highly accretive acquisitions, which we expect will generate revenue of approximately $355-million on an annualized basis. In 2024, consistent with our capital allocation framework announced in November, we expect to deploy between [$600.0-million] and $650.0-million into densifying tuck-in [mergers and acquisitions].

"Inclusive of the impact of our growth capital deployment, we reduced net leverage nearly a full turn since the prior year. We also successfully completed several refinancing initiatives, the effects of which were to reduce our cost of borrowing, increase our proportion of fixed interest rate debt from 72 per cent to 86 per cent and extend our debt maturities to 2031. We remain committed to making disciplined capital allocation decisions while continuing to delever the business, with a focus on moving toward an investment-grade credit rating in the medium term.

"Our results for the year demonstrate that our commitment to our strategy is working. Over the past 15 years, we have assembled a best-in-class asset base across North America, and now it is time to optimize what we have built. The strong pricing momentum exiting 2023 positions us for 9 per cent top-line growth in 2024 before considering the impact of incremental M&A, and over 100 basis points of organic adjusted EBITDA margin expansion for 2024."

Mr. Dovigi concluded: "I could not be prouder of our over 20,000 employees, who continue to demonstrate their exceptional ability to execute our growth strategy. I continue to be excited about the future and the many opportunities that lie ahead of us."

Fourth quarter results:

• Revenue of $1,882.8-million in the fourth quarter of 2023, increase of 9.9 per cent excluding the impact of divestitures (3.4 per cent including the impact of divestitures), compared with the fourth quarter of 2022:
  • Solid waste revenue of $1,511.6-million, including organic growth of 4.0 per cent driven predominantly by core pricing increases;
  • Environmental services revenue of $371.2-million, including organic growth of 1.5 per cent; the increase is predominantly due to higher industrial collection and processing activity at its facilities and higher used motor oil selling prices;
• Adjusted EBITDA increased by 19.1 per cent excluding the impact of divestitures (11.9 per cent including the impact of divestitures) to $492.2-million in the fourth quarter of 2023, compared with the fourth quarter of 2022; adjusted EBITDA margin was 26.1 per cent in the fourth quarter of 2023, compared with 24.1 per cent in the fourth quarter of 2022; solid waste adjusted EBITDA margin was 30.7 per cent in the fourth quarter of 2023, compared with 28.2 per cent in the fourth quarter of 2022; environmental services adjusted EBITDA margin was 24.0 per cent in the fourth quarter of 2023, inclusive of the 165-basis-point impact of a facility fire late in the quarter, compared with 22.2 per cent in the fourth quarter of 2022;
• Net loss from continuing operations was $62.1-million in the fourth quarter of 2023, compared with $219.1-million in the fourth quarter of 2022;
• Adjusted free cash flow was $471.6-million in the fourth quarter of 2023, compared with $221.1-million in the fourth quarter of 2022; the increase of $250.5-million was exclusive of $141.5-million of incremental cash taxes related to divestitures and $145.0-million of incremental growth capital expenditures.

Year-to-date results:

• Revenue of $7,515.5-million for the year ended Dec. 31, 2023, increase of 15.7 per cent excluding the impact of divestitures (11.2 per cent including the impact of divestitures), compared with the year ended Dec. 31, 2022:
  • Solid waste revenue of $6,052.6-million, including organic growth of 6.0 per cent driven predominantly by core pricing increases;
  • Environmental services revenue of $1,462.9-million, including organic growth of 7.2 per cent; 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 21.1 per cent excluding the impact of divestitures (16.4 per cent including the impact of divestitures) to $2,003.7-million for the year ended Dec. 31, 2023, compared with the year ended Dec. 31, 2022; adjusted EBITDA margin was 26.7 per cent for the year ended Dec. 31, 2023, compared with 25.5 per cent for the year ended Dec. 31, 2022; solid waste adjusted EBITDA margin was 30.8 per cent for the year ended Dec. 31, 2023, compared with 29.0 per cent for the year ended Dec. 31, 2022; environmental services adjusted EBITDA margin was 26.2 per cent for the year ended Dec. 31, 2023, inclusive of the 40-basis-point impact of a facility fire late in the quarter, compared with 24.6 per cent for the year ended Dec. 31, 2022;
• Net income from continuing operations was $32.2-million for the year ended Dec. 31, 2023, compared with net loss from continuing operations of $183.2-million for the year ended Dec. 31, 2022;
• Adjusted free cash flow was $701.2-million for the year ended Dec. 31, 2023, compared with $691.3-million for the year ended Dec. 31, 2022; the increase of $9.9-million was exclusive of $390.1-million of incremental cash taxes related to divestitures and $275.0-million of incremental growth capex.

Full-year 2024 guidance

GFL Environmental also provided its guidance for 2024:

• Revenue is estimated to be approximately $8-billion:
  • Full-year solid waste core pricing of 6.0 per cent to 6.5 per cent, surcharges of (0.4 per cent), volume of (1.25 per cent) to (1.0 per cent), as a result of the rollover impact of intentional shedding of low-margin business, and commodity price impact of 0.2 per cent;
  • Environmental services organic growth of 5.0 per cent to 5.5 per cent;
  • Revenue from M&A contribution of 4.0 per cent;
  • Assumes no foreign exchange impact (2024 guidance based on U.S.-dollar/Canadian-dollar exchange rate of 1.35 versus the average 2023 exchange rate of 1.35);
• Adjusted EBITDA is estimated to be approximately $2,215-million:
  • Full-year adjusted EBITDA margin is expected to be approximately 27.7 per cent, increase of 100 basis points;
• Adjusted free cash flow is estimated to be approximately $800-million:
  • Full-year net capex is expected to be between $850.0-million and $900.0-million, excluding approximately $250-million to $300-million of incremental growth capital expected to be deployed in 2024 related to renewable natural gas projects, material recycling facilities and other infrastructure primarily related to opportunities arising under extended producer responsibility legislation;
• Excluding the impact of anticipated incremental growth capital opportunities described above and anticipated M&A, net leverage is estimated to be mid-threes by the end of 2024, resulting from growth in adjusted EBITDA and adjusted free cash flow; including the aggregate impact of $900.0-million in these anticipated growth capital opportunities and M&A, net leverage at year-end is estimated to be between 3.65 times and 3.85 times.

Environmental, social and governance

GFL Environmental views its environmental, social and governance efforts as integral to its business and long-term value creation for all stakeholders. In 2022, it released its 2021 sustainability report and established its sustainability action plan, which lays out a clear path to achieving its long-term goals aimed at benefiting the environment and the customers and communities that it serve. In 2023, it released its 2022 sustainability update report to update stakeholders on its progress in implementing its sustainability action plan. Its goals include increasing its recyclables recovered at its material recovery facilities by 40 per cent, reducing its total Scope 1 and 2 greenhouse gas emissions by 15 per cent, doubling the beneficial use of biogas generated from its landfills, and having renewable natural gas power for at least 85 per cent of its compressed natural gas solid waste collection fleet in the United States, all by 2030, and investing in its communities through its full circle project.

Q4 2023 earnings and 2024 guidance call

GFL Environmental will host a conference call related to its fourth quarter and full-year 2023 financial results and its 2024 guidance on Feb. 21, 2024, 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 GFL Environmental website. Listeners may listen to the call toll-free by dialling 1-833-950-0062 in Canada or 1-833-470-1428 in the United States (access code: 398061) approximately 15 minutes prior to the scheduled start time.

GFL Environmental 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 March 6, 2024, by dialling 1-226-828-7578 in Canada or 1-866-813-9403 in the United States (access code: 917217). A copy of the presentation for the call will be available on its website.

Annual report

GFL Environmental also announced that on or about Feb. 23, 2024, it will be filing its annual report on Form 40-F, including the company's audited consolidated financial statements, for the year ended Dec. 31, 2023, with the U.S. Securities and Exchange Commission on EDGAR and with the Canadian securities regulators on SEDAR+. The annual report will also be available on the investors page of the company's website. Shareholders may receive a hard copy of the complete annual financial statements from the company free of charge upon request by contacting GFL Environmental investor relations at ir@gflenv.com.

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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