By Adriano Marchese
Waste Connections shares were lower Thursday morning after the company said it experienced $15 million in unforeseen headwinds in the third quarter, and that it may face more in the fourth quarter.
At 9:54 a.m. ET, shares trading in Toronto were 4% lower at 181.93 Canadian dollars ($131.86).
The Canadian waste services company said late Wednesday that it logged $15 million in unforeseen headwinds in the quarter.
Chief Executive Ronald Mittelstaedt said that the company overcame high levels of risk-related expenses and other lagging effects of higher employee turnover in prior periods, as well as site-specific incremental operating expenses at one of the company's landfills in California.
"The expected fourth-quarter and ongoing expanding impacts from that evolving landfill situation are currently being evaluated, along with a recent shorter-term development at a landfill in Texas, and as such weren't anticipated in the full year outlook we provided in August," Mittelstaedt said.
He added that the Canadian waste services company expects more clarity on the situation going forward but estimates the range of outcomes next quarter will include costs of $20 million to revenue, adjusted earnings before interest, taxes, depreciation and amortization and adjusted free cash flow.
RBC's Walter Spracklin said in a report that management said impacts from the Seabreeze landfill in Texas are due to slope failure and could cost in the range of $5 million to $10 million, but are limited to the fourth quarter.
Meanwhile, at Chiquita Canyon in California, the company is engaged in odor mitigation and incremental leachate treatment with an estimated cost of $10 million.
"Though the impacts are relatively muted, they have the potential to lower results below full year guidance," Spracklin said.
In its third quarter, Waste Connection reported higher revenue of $2.06 billion, up from $1.88 billion a year earlier, in line with analyst expectations according to a poll on FactSet.
Net income fell slightly to $229 million from $236.9 million, or 89 cents a share down from 92 cents.
On an adjusted basis, earnings rose to $1.17 a share, up from $1.10 a share and ahead of expectations of a rise to $1.13 a share.
Write to Adriano Marchese at firstname.lastname@example.org
(END) Dow Jones Newswires