Waste Connections Q3 2026 Earnings: $153M of Price Covers a $55M Volume Drop

Waste Connections called it "another top to bottom beat," and the numbers agree: revenue of $2.638 billion (up 7.3%), net income of $359.2 million (up 25.5%), and adjusted EBITDA of $895.8 million at a 34.0% margin — followed by the second increase to the full-year 2026 outlook, a 10% dividend hike, and year-to-date buybacks over $1 billion. But read the revenue bridge and a sharper story emerges: volumes shrank by $54.8 million while price added $153.4 million. This quarter was won at the price sheet, not at the curb.

The Headline Numbers​

Every figure below comes from the Form 10-Q and the earnings release.

* Non-GAAP; see the bridge below.

Three things stand out in the deltas. First, profit grew three times faster than revenue because last year's quarter carried $60.1 million of impairments and other operating items — mostly write-downs of contracts, a non-operating E&P facility permit and an environmental liability — against just $1.9 million this quarter. Strip those lines out of both periods and operating income grew about 8.8%, in line with the business rather than ahead of it. Second, earnings per share outran net income (28.8% versus 25.5%) because buybacks shrank the diluted share count 2.2%, to 251.9 million from 257.6 million. Third, the tax rate helped: the provision was 20.4% of pre-tax income against 23.6% a year ago. The beat is real, but most of the net-income growth came from a cleaner quarter, fewer shares and a lower tax rate — not from operations.

Revenue Deep Dive​

The 10-Q decomposes the $179.7 million of growth line by line, and it is the most informative table in the filing:

Price did 85% of the work. The $153.4 million breaks into $123.7 million of core price increases and $29.7 million of surcharges — the waste industry's contracted escalators and fuel recovery doing what they are designed to do. Volumes, meanwhile, lost $54.8 million on weaker roll-off and commercial collection in the Eastern, Southern and Canada segments. CEO Ronald J. Mittelstaedt's qualifier matters here: "Sequential improvement of 70 basis points in solid waste unit volumes was led by an uptick in landfill volumes." Landfill volumes improved; collection volumes did not. The ledger confirms the landfill half — net landfill revenue grew 8.0% — but nothing in the filing says commercial or roll-off demand has turned.

Acquisitions added $53.9 million, consistent with the $130 million of annualized acquired revenue closed year to date across eleven small deals. E&P waste grew $19.1 million on the same-facility basis — new disposal capacity, a reopened suspended facility, and stronger drilling in Canada and the Southern segment plus higher oil and gas prices. Recyclables added $7.4 million on old corrugated cardboard prices, and landfill-gas revenue rose $8.8 million on renewable-credit values.

The six geographic segments tell the same story with different margins:

Southern is the star — 13.1% growth with 2.4 points of margin expansion to 35.0%, on price, acquisitions and E&P drilling activity. Eastern is the laggard at 2.4% with margin slipping to 26.5%, the lowest in the fleet; it is one of the three segments losing collection volume. Canada keeps the best margin in the company at 44.5% even after giving back 1.2 points. The thesis the mix supports: this is a price-led compounder whose volume softness is concentrated in economically sensitive collection lines, while its landfills and E&P assets — the capacity-constrained parts — are tightening.

By line of business, collection still dominates at $1.820 billion (+5.5%), followed by landfill at $273.9 million (+8.0%), transfer at $218.3 million (+7.6%), E&P at $212.9 million (+18.8%), recycling at $64.7 million (+15.1%) and other at $48.4 million (+15.4%). The fastest growers are the smallest and most commodity-linked lines — worth remembering when cardboard or oil prices turn.

The Margin Story​

Operating margin jumped 2.6 points, but the mechanics are mostly the impairments line: 2.45% of revenue last year, 0.07% this year. Excluding impairments from both quarters, the operating margin expanded only about 0.3 points — which reconciles neatly with management's claim of "underlying margin expansion of 50 basis points" on the adjusted EBITDA line "despite a late quarter surge in diesel pricing." Cost of operations ran at 56.9% of revenue, 0.3 points leaner than a year ago, even as fuel, labor and maintenance all rose; price and lower risk-management costs covered the difference.

Pricing language in the filing is all about yield, not demand: "price increases for our solid waste services" is listed first among the drivers of operating-income growth, with the company reporting $123.7 million of core price against a $54.8 million volume decline. That is pricing power in the textbook sense — charging more per unit while selling fewer units — and it is exactly what a landfill-heavy network with contracted escalators should deliver. The offset to watch is depreciation, up 10.1% to $290.6 million on fleet additions and depletion, and interest expense, up 14.1% to $96.4 million as debt funds acquisitions and buybacks. Neither threatens the story yet, but both grow faster than revenue.

The One Big Question: How Long Can Price Do All the Work?​

Two consecutive quarters of the same pattern make this the defining question. The nine-month bridge shows price adding $419.7 million against volume losses of $176.9 million — the full year is a bigger version of the quarter. Pricing power this strong usually invites one of two endings: volumes stabilize and the price gains drop straight to the bottom line, or the economy softens further, commercial and roll-off demand keeps sliding, and churn starts eating the yield. Management's volume commentary points to the first ending ("improving trends in landfill activity"), but the filing's own numbers — volume losses in three of six segments — have not confirmed it yet.

What is not in doubt is the cash margin the market actually prices. Waste stocks trade on adjusted EBITDA, and the release's own bridge from GAAP net income is worth printing in full:

Note how small the discretionary adjustments are: $3.0 million of deal costs and a $0.6 million equity-award swing. The other $533.4 million of the bridge is tax, interest, depreciation and accretion — the ordinary cost of owning landfills and trucks. A 34.0% adjusted EBITDA margin with almost nothing squirreled away in add-backs is a clean number, and the raised outlook asks for more of it: revenue of about $10.09 billion, net income of about $1.18 billion, adjusted EBITDA of about $3.345 billion, capital expenditures of about $1.25 billion, operating cash flow of $2.64–2.69 billion and adjusted free cash flow of $1.40–1.45 billion. Hitting the EBITDA guide needs Q4 to hold the 34% margin through another quarter of diesel volatility.

Tracking a $10 Billion Company in Plain Text​

Double-entry bookkeeping forces every dollar to reconcile, which makes it the ideal lens for a roll-up: acquisitions enter the balance sheet as goodwill and debt long before they show up in earnings, and the ledger keeps both visible. Our ledger models Waste Connections the same way we model every company — read how we model every company for the conventions. Beancount sign rules apply below: income is negative (credit), expenses positive (debit), and the transaction sums to zero.

; FY2026Q3 Income Statement — three months ended September 30, 2026
; Check: −2638.081 + 1501.143 + 253.934 + 290.625 + 48.783 + 1.851 + 96.376 − 2.988 − 2.768 + 91.901 + 359.224 = 0 ✓
 
2026-09-30 * "Waste Connections, Inc." "FY2026Q3 Income Statement"
  Income:Revenue                        -2638.081 MUSD
  Expenses:CostOfRevenue                 1501.143 MUSD
  Expenses:SellingGeneralAdministrative    253.934 MUSD
  Expenses:DepreciationAndAmortization     290.625 MUSD
  Expenses:DepreciationAndAmortization      48.783 MUSD
  Expenses:OtherNet                          1.851 MUSD
  Expenses:Interest                         96.376 MUSD
  Income:OtherNet                            -2.988 MUSD
  Income:OtherNet                            -2.768 MUSD
  Expenses:IncomeTax                        91.901 MUSD
  Equity:Adjustments                       359.224 MUSD

The one balance-sheet number that tells the narrative is goodwill: $8.414 billion, 39% of total assets, up from $7.950 billion at the end of 2024. Beside it sits $9.435 billion of total debt, up $615 million in nine months. That pairing — goodwill and debt climbing together while the share count falls 2.1% — is the acquisition compounder's signature: buy small haulers with borrowed money, fold them into a denser route network, and return the cash the network throws off. The buybacks even show up where a Canadian corporation puts them: common shares fell from $2.783 billion to $1.845 billion in nine months, almost exactly the $944.4 million of repurchases in the cash-flow statement.

The Multi-Year Arc​

FY2024 is the trough that makes the compounding visible: shutting the Chiquita Canyon Landfill cost $480.8 million in closure-liability charges plus a $116.1 million impairment, crushing operating margin to 12.0% and net income to $617.6 million. FY2025 was the snapback — revenue up 6.1%, operating margin back to 18.1%, net income up 74%. The through-line across all five years is leverage deployed into acquisitions: debt up roughly 40% since the end of 2023, goodwill up 14%, revenue compounding at about 9% a year. That trade works while acquired routes price like Waste Connections routes. Southern's 35.0% segment margin says they do.

The Verdict: Bull vs. Bear​

Bull Case

• Pricing power is proven and contractual: $123.7 million of core price in one quarter against falling units, with escalators still rolling through the book.
• Landfill volumes are inflecting — up 70 basis points sequentially — and landfill revenue grew 8.0%, confirming the CEO's volume commentary where it counts.
• E&P waste is a second growth engine at +18.8%, with reopened capacity and drilling activity in Canada and the Southern segment still ramping.
• Cash returns are elite: a 10% dividend hike (the sixteenth straight double-digit increase), over $1 billion of buybacks retiring 2.5% of shares, and $1.40–1.45 billion of free cash flow guided.
• The outlook has been raised twice, and Q4 needs only a normal quarter — about $2.52 billion of revenue — to hit the $10.09 billion guide.

Bear Case

• Collection volumes are shrinking in half the footprint: −$54.8 million in the quarter, −$176.9 million over nine months, concentrated in economically sensitive commercial and roll-off lines.
• Diesel already tested the margin once; a late-quarter price surge had to be "overcome," and fuel plus labor both grow faster than revenue.
• Debt is $9.435 billion and rising (+$615 million in nine months) while interest expense grows 14.1% — the roll-up works until credit tightens or deal flow dries up.
• The fastest-growing lines are commodity bets: E&P tracks oil and gas, recyclables track cardboard, and landfill gas tracks renewable-credit values.
• Chiquita Canyon is closed but not over: a state endangerment order with a final noncompliance determination, an air-quality enforcement suit filed in May, and consolidated civil litigation all continue into 2027.

Our Take

Buy the pricing power, watch the volumes. Waste Connections just proved it can expand margins while selling fewer units — the hallmark of a real moat, not a cyclical tailwind. At 34% EBITDA margins with a twice-raised guide, the market is pricing that moat fairly, not cheaply. The long thesis needs commercial and roll-off demand to stabilize so price gains compound on flat-to-growing units; if volume losses deepen into 2027, even perfect pricing starts to look like harvesting. Until then, this is the compounding machine working as designed.