- Revenue of $1.240 billion, exceeding outlook
- Net income attributable to Waste Connections of $138.7 million, or $0.52 per share
- Adjusted net income attributable to Waste Connections* of $172.3 million, or
$0.65 per share, up 18.2%
- Adjusted EBITDA* of $395.5 million, or 31.9% of revenue
- YTD net cash provided by operating activities of $664.9 million
- YTD adjusted free cash flow* of $472.7 million, or 19.9% of revenue
- Completes previously announced acquisitions, bringing YTD acquired annualized revenue to approximately $175 million
TORONTO, July 24, 2018 /PRNewswire/ -- Waste Connections,
Inc. (TSX/NYSE: WCN) ("Waste Connections" or the "Company") today announced its results for the second quarter of 2018.
Revenue in the second quarter totaled $1.240 billion, up from $1.176
billion in the year ago period. Operating income was $210.7 million, which included
$7.1 million of impairments and other operating items primarily associated with the Company's
termination of certain contracts assumed in the Progressive Waste acquisition, and $5.6 million in
acquisition-related costs; this compares to $206.9 million in the year ago period, which primarily
included $7.4 million in charges related to share-based compensation costs associated with
share-based awards assumed in the Progressive Waste acquisition.
Net income attributable to Waste Connections in the second quarter was $138.7 million, or
$0.52 per share on a diluted basis of 264.3 million shares. In the year ago period, the Company
reported net income attributable to Waste Connections of $123.7 million, or $0.47 per share on a diluted basis of 264.1 million shares.
Adjusted net income attributable to Waste Connections* in the second quarter was $172.3 million,
or $0.65 per share, versus $145.5 million, or $0.55 per share, in the prior year period. Adjusted EBITDA* in the second quarter was $395.5 million and 31.9% of revenue, as compared to adjusted EBITDA* of $373.6
million and 31.8% of revenue in the prior year period. Adjusted net income attributable to Waste Connections,
adjusted net income attributable to Waste Connections per diluted share and adjusted EBITDA, all non-GAAP measures, primarily
exclude acquisition-related items, as reflected in the detailed reconciliations in the attached tables.
"Continued strength in solid waste pricing growth, E&P waste activity and acquisition contribution enabled us to exceed
our outlook for the period, overcoming increased headwinds from recycling and a weather-delayed ramp in special waste activity
across many markets. We are especially pleased with our year-to-date adjusted EBITDA* margin expansion and adjusted free
cash flow* generation in spite of these headwinds, as well as our upwardly revised outlook for the full year," said Ronald J. Mittelstaedt, Chief Executive Officer and Chairman.
Mr. Mittelstaedt added, "Looking ahead to 2019, we believe we should be well-positioned for above average revenue growth and
margin expansion as current favorable trends for solid waste pricing, E&P waste activity and acquisition contribution should
continue, while the current recycling headwinds and reported negative volume growth primarily associated with our purposeful
shedding of lower quality solid waste revenues, should abate. Our strong financial profile and free cash flow generation
provide us the flexibility to not only invest in new growth projects and fund expected continuing above-average acquisition
activity, but to also increase our return of capital to shareholders through double-digit percentage increases in our quarterly
dividend each October and opportunistic share repurchases."
* A non-GAAP measure; see accompanying Non-GAAP Reconciliation Schedule.
For the six months ended June 30, 2018, revenue was $2.380
billion, as compared to revenue of $2.267 billion in the year ago period. Operating
income was $399.4 million, which included $18.3 million of expenses
primarily related to impairments and other items related to the termination of certain contracts and other acquisition-related
costs; this compared to $233.3 million for the same period in 2017, which included $159.0 million of expenses primarily related to both goodwill impairment against the Company's E&P segment
resulting from the early adoption of FASB's recent accounting pronouncement simplifying the test for goodwill impairment and
items related to the expected divestiture of certain assets acquired in the Progressive Waste acquisition.
Net income attributable to Waste Connections for the six months ended June 30, 2018, was
$263.6 million, or $1.00 per share on a diluted basis of 264.5
million shares. In the year ago period, the Company reported net income attributable to Waste Connections of $138.5 million, or $0.52 per share on a diluted basis of 264.0 million
shares.
Adjusted net income attributable to Waste Connections* for the six months ended June 30, 2018,
was $320.9 million, or $1.21 per share, compared to $275.5 million, or $1.04 per share, in the year ago period. Adjusted EBITDA* for
the six months ended June 30, 2018, was $752.4 million and 31.6% of
revenue, as compared to $706.4 million and 31.2% of revenue in the prior year period.
UPDATED 2018 OUTLOOK
Waste Connections also updated its outlook for 2018, which assumes no change in the current economic environment. The
Company's outlook excludes any impact from additional acquisitions and divestitures that may close during the year, and expensing
of transaction-related items. The outlook provided below is forward looking, and actual results may differ materially
depending on risks and uncertainties detailed at the end of this release and in our periodic filings with the U.S. Securities and
Exchange Commission and the securities commissions or similar regulatory authorities in Canada.
Certain components of the outlook for 2018 are subject to quarterly fluctuations. See reconciliation in the attached
tables.
- Revenue is estimated to be approximately $4.880 billion, as compared to our original revenue
outlook of approximately $4.825 billion.
- Net income attributable to Waste Connections is estimated to be approximately $559 million,
and adjusted EBITDA* is estimated to be approximately $1.555 billion, or about 31.9% of revenue,
as compared to our original adjusted EBITDA* outlook of $1.550 billion.
- Net cash provided by operating activities is estimated to be approximately $1.379 billion and
adjusted free cash flow* is estimated to be approximately $860 million, or about 17.6% of
revenue, as compared to our original adjusted free cash flow* outlook of approximately $850
million.
- Capital expenditures are estimated to be approximately $530 million, as compared to our
original capital expenditures outlook of approximately $500 million.
* A non-GAAP measure; see accompanying Non-GAAP Reconciliation Schedule.
CONFERENCE CALL
Waste Connections will be hosting a conference call related to second quarter earnings and third quarter outlook on
July 25 th at 8:30 A.M. Eastern Time. The call will
be broadcast live over the Internet through a link on the Company's website at www.wasteconnections.com . A playback of the call will be available
on the Company's website. Waste Connections will be filing a Form 8-K on EDGAR and on SEDAR (as an "Other" document) prior to
markets opening on July 25 th , providing the Company's third quarter 2018 outlook for
revenue, core price plus volume growth for solid waste and adjusted EBITDA*.
*A non-GAAP measure.
About Waste Connections
Waste Connections is an integrated solid waste services company that provides waste collection, transfer, disposal and recycling
services in mostly exclusive and secondary markets in the United States and Canada.
Through its R360 Environmental Solutions subsidiary, Waste Connections is also a leading provider of non-hazardous oilfield waste
treatment, recovery and disposal services in several of the most active natural resource producing areas in the United States, including the Permian, Bakken and Eagle Ford Basins. Waste Connections serves more
than six million residential, commercial, industrial, and exploration and production customers in 40 states in the U.S., and six
provinces in Canada. The Company also provides intermodal services for the movement of cargo and solid waste containers in
the Pacific Northwest.
For more information, visit the Waste Connections website at www.wasteconnections.com . Copies of financial literature,
including this release, are available on the Waste Connections website or through contacting us directly at (905) 532-7510.
Investors can also obtain these materials and other documents filed with the U.S. Securities and Exchange Commission (the "SEC")
and the Canadian securities regulators free of charge at the SEC's website, www.sec.gov, and at the System for Electronic Document Analysis and Retrieval maintained by the Canadian
Securities Administrators at www.sedar.com.
Safe Harbor and Forward-Looking Information
This press release contains forward-looking statements within the meaning of the safe harbor provisions of the U.S. Private
Securities Litigation Reform Act of 1995 ("PSLRA"), including "forward-looking information" within the meaning of applicable
Canadian securities laws. These forward-looking statements are neither historical facts nor assurances of future performance
and reflect Waste Connections' current beliefs and expectations regarding future events and operating performance .
These forward-looking statements are often identified by the words "may," "might," "believes," "thinks," "expects," "estimate,"
"continue," "intends" or other words of similar meaning. All of the forward-looking statements included in this press release are
made pursuant to the safe harbor provisions of the PSLRA and applicable securities laws in Canada. Forward-looking statements involve risks and uncertainties. Forward-looking statements in this press
release include, but are not limited to, statements about expected 2018 and 2019 financial results, capital expenditures,
adjusted free cash flow, outlook and related assumptions, potential acquisition activity and the amount of capital returned to
shareholders. Important factors that could cause actual results to differ, possibly materially, from those indicated by the
forward-looking statements include, but are not limited to, risk factors detailed from time to time in the Company's filings with
the SEC and the securities commissions or similar regulatory authorities in Canada. You should not place undue reliance on
forward-looking statements, which speak only as of the date of this press release. Waste Connections undertakes no
obligation to update the forward-looking statements set forth in this press release, whether as a result of new information,
future events, or otherwise, unless required by applicable securities laws.
– financial tables attached –
CONTACT:
Mary Anne Whitney / (832) 442-2253
maryannew@wasteconnections.com
WASTE CONNECTIONS, INC.
|
CONDENSED CONSOLIDATED STATEMENTS OF NET INCOME
|
THREE AND SIX MONTHS ENDED JUNE 30, 2017 AND 2018
|
(Unaudited)
|
(in thousands of U.S. dollars, except share and per share
amounts)
|
|
|
|
Three months ended
June 30,
|
|
Six months ended
June 30,
|
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
|
|
|
|
|
|
|
Revenues
|
$ 1,175,569
|
|
$ 1,239,968
|
|
$ 2,266,835
|
|
$ 2,380,099
|
Operating expenses:
|
|
|
|
|
|
|
|
Cost of operations
|
685,900
|
|
725,022
|
|
1,329,281
|
|
1,384,825
|
Selling, general and administrative
|
126,350
|
|
128,261
|
|
255,400
|
|
259,568
|
Depreciation
|
132,827
|
|
142,450
|
|
258,067
|
|
275,634
|
Amortization of intangibles
|
24,762
|
|
26,474
|
|
50,272
|
|
52,573
|
Impairments and other operating items
|
(1,180)
|
|
7,073
|
|
140,501
|
|
8,104
|
Operating income
|
206,910
|
|
210,688
|
|
233,314
|
|
399,395
|
|
|
|
|
|
|
|
|
Interest expense
|
(31,160)
|
|
(32,426)
|
|
(60,291)
|
|
(64,796)
|
Interest income
|
1,026
|
|
1,056
|
|
1,474
|
|
2,210
|
Other income, net
|
834
|
|
2,031
|
|
1,852
|
|
1,644
|
Foreign currency transaction gain (loss)
|
(1,048)
|
|
30
|
|
(1,638)
|
|
(190)
|
Income before income tax provision
|
176,562
|
|
181,379
|
|
174,711
|
|
338,263
|
|
|
|
|
|
|
|
|
Income tax provision
|
(52,675)
|
|
(42,565)
|
|
(35,804)
|
|
(74,417)
|
Net income
|
123,887
|
|
138,814
|
|
138,907
|
|
263,846
|
Less: net income attributable to noncontrolling interests
|
(231)
|
|
(132)
|
|
(377)
|
|
(295)
|
Net income attributable to Waste Connections
|
$ 123,656
|
|
$ 138,682
|
|
$ 138,530
|
|
$ 263,551
|
|
|
|
|
|
|
|
|
Earnings per common share attributable to Waste Connections' common
shareholders:
|
|
|
|
|
|
|
|
Basic
|
$ 0.47
|
|
$ 0.53
|
|
$ 0.53
|
|
$ 1.00
|
|
|
|
|
|
|
|
|
Diluted
|
$ 0.47
|
|
$ 0.52
|
|
$ 0.52
|
|
$ 1.00
|
|
|
|
|
|
|
|
|
Shares used in the per share calculations:
|
|
|
|
|
|
|
|
Basic
|
263,387,338
|
|
263,691,172
|
|
263,225,541
|
|
263,757,179
|
Diluted
|
264,109,594
|
|
264,332,029
|
|
264,007,307
|
|
264,452,785
|
Cash dividends per common share
|
$ 0.12
|
|
$ 0.14
|
|
$ 0.24
|
|
$ 0.28
|
|
WASTE CONNECTIONS, INC.
|
CONDENSED CONSOLIDATED BALANCE SHEETS
|
(Unaudited)
|
(in thousands of U.S. dollars, except share and per share
amounts)
|
|
|
|
December 31,
2017
|
|
June 30,
2018
|
ASSETS
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
Cash and equivalents
|
|
$
|
433,815
|
|
$
|
145,801
|
Accounts receivable, net of allowance for doubtful accounts of $17,154 and
$15,658 at December 31, 2017 and June 30, 2018, respectively
|
|
|
554,458
|
|
|
604,090
|
Current assets held for sale
|
|
|
1,596
|
|
|
1,448
|
Prepaid expenses and other current assets
|
|
|
186,999
|
|
|
167,036
|
Total current assets
|
|
|
1,176,868
|
|
|
918,375
|
Restricted cash
|
|
|
122,652
|
|
|
80,045
|
Restricted investments
|
|
|
44,360
|
|
|
44,049
|
Property and equipment, net
|
|
|
4,820,934
|
|
|
5,024,868
|
Goodwill
|
|
|
4,681,774
|
|
|
4,772,966
|
Intangible assets, net
|
|
|
1,087,436
|
|
|
1,085,775
|
Long-term assets held for sale
|
|
|
12,625
|
|
|
11,647
|
Other assets, net
|
|
|
68,032
|
|
|
86,819
|
|
|
$
|
12,014,681
|
|
$
|
12,024,544
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
330,523
|
|
$
|
343,870
|
Book overdraft
|
|
|
19,223
|
|
|
18,041
|
Accrued liabilities
|
|
|
278,039
|
|
|
257,874
|
Deferred revenue
|
|
|
145,197
|
|
|
162,463
|
Current portion of contingent consideration
|
|
|
15,803
|
|
|
11,688
|
Current liabilities held for sale
|
|
|
2,155
|
|
|
2,044
|
Current portion of long-term debt and notes payable
|
|
|
11,659
|
|
|
1,690
|
Total current liabilities
|
|
|
802,599
|
|
|
797,670
|
|
|
|
|
|
|
|
Long-term debt and notes payable
|
|
|
3,899,572
|
|
|
3,792,847
|
Long-term portion of contingent consideration
|
|
|
31,482
|
|
|
43,300
|
Other long-term liabilities
|
|
|
316,191
|
|
|
325,459
|
Deferred income taxes
|
|
|
690,767
|
|
|
718,627
|
Total liabilities
|
|
|
5,740,611
|
|
|
5,677,903
|
Commitments and contingencies
|
|
|
|
|
|
|
Equity:
|
|
|
|
|
|
|
Common shares: 263,660,803 shares issued and 263,494,670 shares
outstanding at December 31, 2017; 263,498,672 shares issued and 263,362,026 shares outstanding at June 30,
2018
|
|
|
4,187,568
|
|
|
4,147,674
|
Additional paid-in capital
|
|
|
115,743
|
|
|
118,113
|
Accumulated other comprehensive income
|
|
|
108,413
|
|
|
15,106
|
Treasury shares: 166,133 and 136,646 shares at December 31, 2017 and June
30, 2018, respectively
|
|
|
-
|
|
|
-
|
Retained earnings
|
|
|
1,856,946
|
|
|
2,060,156
|
Total Waste Connections' equity
|
|
|
6,268,670
|
|
|
6,341,049
|
Noncontrolling interest in subsidiaries
|
|
|
5,400
|
|
|
5,592
|
Total equity
|
|
|
6,274,070
|
|
|
6,346,641
|
|
|
$
|
12,014,681
|
|
$
|
12,024,544
|
WASTE CONNECTIONS, INC.
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
SIX MONTHS ENDED JUNE 30, 2017 AND 2018
|
(Unaudited)
|
(in thousands of U.S. dollars)
|
|
|
|
|
|
|
|
Six months ended June 30,
|
|
|
|
|
2017
|
|
|
2018
|
Cash flows from operating activities:
|
|
|
|
|
|
|
Net income
|
|
$
|
138,907
|
|
$
|
263,846
|
Adjustments to reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
|
Loss on disposal of assets and impairments
|
|
|
128,608
|
|
|
10,090
|
Depreciation
|
|
|
258,067
|
|
|
275,634
|
Amortization of intangibles
|
|
|
50,272
|
|
|
52,573
|
Foreign currency transaction loss
|
|
|
1,638
|
|
|
190
|
Deferred income taxes, net of acquisitions
|
|
|
(10,378)
|
|
|
26,399
|
Amortization of debt issuance costs
|
|
|
2,101
|
|
|
2,081
|
Share-based compensation
|
|
|
23,364
|
|
|
20,262
|
Interest income on restricted investments
|
|
|
(283)
|
|
|
(126)
|
Interest accretion
|
|
|
6,887
|
|
|
7,403
|
Adjustments to contingent consideration
|
|
|
11,013
|
|
|
349
|
Payment of contingent consideration recorded in earnings
|
|
|
-
|
|
|
(11)
|
Net change in operating assets and liabilities, net of
acquisitions
|
|
|
(58,290)
|
|
|
6,241
|
Net cash provided by operating activities
|
|
|
551,906
|
|
|
664,931
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
Payments for acquisitions, net of cash acquired
|
|
|
(347,936)
|
|
|
(485,519)
|
Capital expenditures for property and equipment
|
|
|
(202,617)
|
|
|
(201,712)
|
Proceeds from disposal of assets
|
|
|
20,617
|
|
|
2,074
|
Change in restricted investments, net of interest income
|
|
|
(768)
|
|
|
-
|
Other
|
|
|
(1,732)
|
|
|
(77)
|
Net cash used in investing activities
|
|
|
(532,436)
|
|
|
(685,234)
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
Proceeds from long-term debt
|
|
|
864,952
|
|
|
165,736
|
Principal payments on notes payable and long-term debt
|
|
|
(585,762)
|
|
|
(338,137)
|
Payment of contingent consideration recorded at acquisition date
|
|
|
(5,565)
|
|
|
(4,976)
|
Change in book overdraft
|
|
|
19,479
|
|
|
(1,132)
|
Proceeds from option and warrant exercises
|
|
|
1,946
|
|
|
-
|
Payments for repurchase of common shares
|
|
|
-
|
|
|
(42,040)
|
Payments for cash dividends
|
|
|
(63,463)
|
|
|
(73,584)
|
Tax withholdings related to net share settlements of equity-based
compensation
|
|
|
(13,621)
|
|
|
(14,589)
|
Debt issuance costs
|
|
|
(3,519)
|
|
|
(2,757)
|
Proceeds from sale of common shares held in trust
|
|
|
7,735
|
|
|
2,146
|
Other
|
|
|
(1,094)
|
|
|
(103)
|
Net cash provided by (used in) financing activities
|
|
|
221,088
|
|
|
(309,436)
|
Effect of exchange rates changes on cash, cash equivalents and restricted
cash
|
|
|
672
|
|
|
(915)
|
Net increase (decrease) in cash, cash equivalents and restricted
cash
|
|
|
241,230
|
|
|
(330,654)
|
Cash, cash equivalents and restricted cash at beginning of
period
|
|
|
169,112
|
|
|
556,467
|
Plus (less): change in cash held for sale
|
|
|
(305)
|
|
|
33
|
Cash, cash equivalents and restricted cash at end of period
|
|
$
|
410,037
|
|
$
|
225,846
|
|
|
|
|
|
|
|
|
|
ADDITIONAL STATISTICS
(in thousands of U.S. dollars, except where noted)
Solid Waste Internal Growth: The following table reflects a breakdown of the components of our solid waste
internal growth for the three months ended June 30, 2018:
|
|
U.S.
|
|
Canada
|
|
Total
|
Core Price
|
3.8%
|
|
4.4%
|
|
3.9%
|
Surcharges
|
0.3%
|
|
0.7%
|
|
0.3%
|
Volume
|
(0.9%)
|
|
(4.2%)
|
|
(1.5%)
|
Recycling
|
(1.4%)
|
|
(4.0%)
|
|
(1.8%)
|
Foreign Exchange Impact
|
-
|
|
4.0%
|
|
0.7%
|
Total
|
1.8%
|
|
0.9%
|
|
1.6%
|
|
|
|
|
|
|
|
Revenue Breakdown: The following table reflects a breakdown of our revenue for the three month periods ended
June 30, 2017 and 2018:
|
Three Months Ended June 30, 2017
|
|
|
|
Revenue
|
|
|
Inter-company Elimination
|
|
|
Reported
Revenue
|
|
%
|
|
Solid Waste Collection
|
$
|
797,131
|
|
$
|
(2,392)
|
|
$
|
794,739
|
|
67.6%
|
Solid Waste Disposal and Transfer
|
|
416,176
|
|
|
(158,937)
|
|
|
257,239
|
|
21.9%
|
Solid Waste Recycling
|
|
43,693
|
|
|
(2,351)
|
|
|
41,342
|
|
3.5%
|
E&P Waste Treatment, Recovery and Disposal
|
|
50,043
|
|
|
(2,870)
|
|
|
47,173
|
|
4.0%
|
Intermodal and Other
|
|
35,432
|
|
|
(356)
|
|
|
35,076
|
|
3.0%
|
Total
|
$
|
1,342,475
|
|
$
|
(166,906)
|
|
$
|
1,175,569
|
|
100.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2018
|
|
|
|
Revenue
|
|
|
Inter-company Elimination
|
|
|
Reported
Revenue
|
|
%
|
|
Solid Waste Collection
|
$
|
854,719
|
|
$
|
(2,440)
|
|
$
|
852,279
|
|
68.7%
|
Solid Waste Disposal and Transfer
|
|
440,537
|
|
|
(171,583)
|
|
|
268,954
|
|
21.7%
|
Solid Waste Recycling
|
|
22,703
|
|
|
(698)
|
|
|
22,005
|
|
1.8%
|
E&P Waste Treatment, Recovery and Disposal
|
|
62,663
|
|
|
(2,431)
|
|
|
60,232
|
|
4.9%
|
Intermodal and Other
|
|
37,324
|
|
|
(826)
|
|
|
36,498
|
|
2.9%
|
Total
|
$
|
1,417,946
|
|
$
|
(177,978)
|
|
$
|
1,239,968
|
|
100.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contribution from Acquisitions: The following table reflects revenues from solid waste acquisitions, net of
divestitures, for the three month periods ended June 30, 2017 and 2018:
|
Three months ended
June 30,
|
|
|
|
2017
|
|
2018
|
|
|
Acquisitions, net
|
$
|
386,211
|
|
$
|
32,763
|
|
|
|
|
|
|
|
|
|
|
ADDITIONAL STATISTICS (continued)
(in thousands of U.S. dollars, except where noted)
Other Cash Flow Items: The following table reflects cash interest and cash taxes for the three and six month periods
ended June 30, 2017 and 2018:
|
Three months ended
June 30,
|
|
|
Six months ended
June 30,
|
|
2017
|
|
2018
|
|
|
2017
|
|
2018
|
Cash Interest Paid
|
$
|
32,301
|
|
$
|
40,046
|
|
|
$
|
54,603
|
|
$
|
62,486
|
Cash Taxes Paid
|
|
22,469
|
|
|
16,183
|
|
|
|
36,486
|
|
|
22,853
|
Debt to Book Capitalization as of June 30, 2018: 37%
Internalization for the three months ended June 30, 2018: 57%
Days Sales Outstanding for the three months ended June 30, 2018: 44 (32 net
of deferred revenue)
Share Information for the three months ended June 30, 2018:
Basic shares outstanding
|
263,691,172
|
Dilutive effect of equity-based awards
|
640,857
|
Diluted shares outstanding
|
264,332,029
|
NON-GAAP RECONCILIATION SCHEDULE
(in thousands of U.S. dollars, except where noted)
Reconciliation of Adjusted EBITDA:
Adjusted EBITDA, a non-GAAP financial measure, is provided supplementally because it is widely used by investors as a
performance and valuation measure in the solid waste industry. Management uses adjusted EBITDA as one of the principal
measures to evaluate and monitor the ongoing financial performance of Waste Connections' operations. Waste Connections
defines adjusted EBITDA as net income attributable to Waste Connections, plus net income attributable to noncontrolling
interests, plus or minus income tax provision (benefit), plus interest expense, less interest income, plus depreciation and
amortization expense, plus closure and post-closure accretion expense, plus or minus any loss or gain on impairments and other
operating items, plus other expense, less other income, plus foreign currency transaction loss, less foreign currency transaction
gain. Waste Connections further adjusts this calculation to exclude the effects of other items management believes impact
the ability to assess the operating performance of its business. This measure is not a substitute for, and should be used
in conjunction with, GAAP financial measures. Other companies may calculate adjusted EBITDA differently.
|
Three months ended
June 30,
|
|
Six months ended
June 30,
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
Net Income attributable to Waste Connections
|
$
|
123,656
|
|
$
|
138,682
|
|
$
|
138,530
|
|
$
|
263,551
|
Plus: Net income attributable to noncontrolling interests
|
|
231
|
|
|
132
|
|
|
377
|
|
|
295
|
Plus: Income tax provision
|
|
52,675
|
|
|
42,565
|
|
|
35,804
|
|
|
74,417
|
Plus: Interest expense
|
|
31,160
|
|
|
32,426
|
|
|
60,291
|
|
|
64,796
|
Less: Interest income
|
|
(1,026)
|
|
|
(1,056)
|
|
|
(1,474)
|
|
|
(2,210)
|
Plus: Depreciation and amortization
|
|
157,589
|
|
|
168,924
|
|
|
308,339
|
|
|
328,207
|
Plus: Closure and post-closure accretion
|
|
2,917
|
|
|
3,258
|
|
|
5,835
|
|
|
6,496
|
Plus/less: Impairments and other operating items
|
|
(1,180)
|
|
|
7,073
|
|
|
140,501
|
|
|
8,104
|
Less: Other income, net
|
|
(834)
|
|
|
(2,031)
|
|
|
(1,852)
|
|
|
(1,644)
|
Plus/less: Foreign currency transaction loss/(gain)
|
|
1,048
|
|
|
(30)
|
|
|
1,638
|
|
|
190
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
Plus: Transaction-related expenses (a)
|
|
715
|
|
|
2,199
|
|
|
2,459
|
|
|
4,584
|
Plus: Pre-existing Progressive Waste share-based grants (b)
|
|
4,103
|
|
|
2,058
|
|
|
10,578
|
|
|
3,221
|
Plus: Integration-related and other expenses (c)
|
|
2,594
|
|
|
1,306
|
|
|
5,422
|
|
|
2,416
|
Adjusted EBITDA
|
$
|
373,648
|
|
$
|
395,506
|
|
$
|
706,448
|
|
$
|
752,423
|
|
|
|
|
|
|
|
|
|
|
|
|
As % of revenues
|
|
31.8%
|
|
|
31.9%
|
|
|
31.2%
|
|
|
31.6%
|
|
|
|
|
|
(a)
|
Reflects the addback of acquisition-related transaction costs.
|
(b)
|
Reflects share-based compensation costs, including changes in fair value
and related expenses, associated with share-based awards granted by Progressive Waste outstanding at the time of the
Progressive Waste acquisition.
|
(c)
|
Reflects the addback of integration-related items, including rebranding
costs, associated with the Progressive Waste acquisition.
|
NON-GAAP RECONCILIATION SCHEDULE (continued)
(in thousands of U.S. dollars, except where noted)
Reconciliation of Adjusted Free Cash Flow:
Adjusted free cash flow, a non-GAAP financial measure, is provided supplementally because it is widely used by investors as a
valuation and liquidity measure in the solid waste industry. Management uses adjusted free cash flow as one of the
principal measures to evaluate and monitor the ongoing financial performance of Waste Connections' operations. Waste
Connections defines adjusted free cash flow as net cash provided by operating activities, plus or minus change in book overdraft,
plus proceeds from disposal of assets, less capital expenditures for property and equipment and distributions to noncontrolling
interests. Waste Connections further adjusts this calculation to exclude the effects of items management believes impact
the ability to assess the operating performance of its business. This measure is not a substitute for, and should be used
in conjunction with, GAAP liquidity or financial measures. Other companies may calculate adjusted free cash flow
differently.
|
|
Three months ended
June 30,
|
|
Six months ended
June 30,
|
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
Net cash provided by operating activities
|
|
$
|
264,429
|
|
$
|
357,684
|
|
$
|
551,906
|
|
$
|
664,931
|
Plus/(Less): Change in book overdraft
|
|
|
(568)
|
|
|
(837)
|
|
|
19,479
|
|
|
(1,132)
|
Plus: Proceeds from disposal of assets
|
|
|
1,801
|
|
|
1,072
|
|
|
20,617
|
|
|
2,074
|
Less: Capital expenditures for property and equipment
|
|
|
(111,412)
|
|
|
(110,496)
|
|
|
(202,617)
|
|
|
(201,712)
|
Less: Distributions to noncontrolling interests
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(103)
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
Payment of contingent consideration recorded in earnings
(a)
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
11
|
Cash received for divestitures (b)
|
|
|
-
|
|
|
-
|
|
|
(17,400)
|
|
|
-
|
Transaction-related expenses (c)
|
|
|
715
|
|
|
2,199
|
|
|
2,459
|
|
|
4,584
|
Integration-related and other expenses (d)
|
|
|
2,282
|
|
|
2,990
|
|
|
5,110
|
|
|
2,416
|
Pre-existing Progressive Waste share-based grants (e)
|
|
|
1,570
|
|
|
1,306
|
|
|
11,915
|
|
|
4,909
|
Synergy bonus (f)
|
|
|
-
|
|
|
-
|
|
|
11,798
|
|
|
-
|
Tax effect (g)
|
|
|
(2,689)
|
|
|
(1,373)
|
|
|
(9,648)
|
|
|
(3,279)
|
Adjusted free cash flow
|
|
$
|
156,128
|
|
$
|
252,545
|
|
$
|
393,619
|
|
$
|
472,699
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As % of revenues
|
|
|
13.3%
|
|
|
20.4%
|
|
|
17.4%
|
|
|
19.9%
|
|
|
|
|
|
(a)
|
Reflects the addback of acquisition-related payments for contingent
consideration that were recorded as expenses in earnings and as a component of cash flows from operating activities as
the amounts paid exceeded the fair value of the contingent consideration recorded at the acquisition date.
|
(b)
|
Reflects the elimination of cash received in conjunction with the
divestiture of Progressive Waste operations.
|
(c)
|
Reflects the addback of acquisition-related transaction costs.
|
(d)
|
Reflects the addback of integration-related items, including rebranding
costs, associated with the Progressive Waste acquisition.
|
(e)
|
Reflects the cash settlement of pre-existing Progressive Waste share-based
awards and related payments during the period.
|
(f)
|
Reflects the addback of cash bonuses paid pursuant to the Company's Synergy
Bonus Program in conjunction with the Progressive Waste acquisition.
|
(g)
|
The aggregate tax effect of footnotes (a) through (f) is calculated based
on the applied tax rates for the respective periods.
|
NON-GAAP RECONCILIATION SCHEDULE (continued)
(in thousands of U.S. dollars, except per share amounts)
Reconciliation of Net Income attributable to Waste Connections to Adjusted Net Income attributable to Waste
Connections and Adjusted Net Income per Diluted Share attributable to Waste Connections:
Adjusted net income attributable to Waste Connections and adjusted net income per diluted share attributable to Waste
Connections, both non-GAAP financial measures, are provided supplementally because they are widely used by investors as a
valuation measure in the solid waste industry. Management uses adjusted net income attributable to Waste Connections and
adjusted net income per diluted share attributable to Waste Connections as one of the principal measures to evaluate and monitor
the ongoing financial performance of Waste Connections' operations. Waste Connections provides adjusted net income
attributable to Waste Connections to exclude the effects of items management believes impact the comparability of operating
results between periods. Adjusted net income attributable to Waste Connections has limitations due to the fact that it
excludes items that have an impact on the Company's financial condition and results of operations. Adjusted net income
attributable to Waste Connections and adjusted net income per diluted share attributable to Waste Connections are not a
substitute for, and should be used in conjunction with, GAAP financial measures. Other companies may calculate these
non-GAAP financial measures differently.
|
Three months ended
June 30,
|
|
Six months ended
June 30,
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
Reported net income attributable to Waste Connections
|
$
|
123,656
|
|
$
|
138,682
|
|
$
|
138,530
|
|
$
|
263,551
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangibles (a)
|
|
24,762
|
|
|
26,474
|
|
|
50,272
|
|
|
52,573
|
Impairments and other operating items (b)
|
|
(1,180)
|
|
|
7,073
|
|
|
140,501
|
|
|
8,104
|
Transaction-related expenses (c)
|
|
715
|
|
|
2,199
|
|
|
2,459
|
|
|
4,584
|
Pre-existing Progressive Waste share-based grants (d)
|
|
4,103
|
|
|
2,058
|
|
|
10,578
|
|
|
3,221
|
Integration-related and other expenses (e)
|
|
2,594
|
|
|
1,306
|
|
|
5,422
|
|
|
2,416
|
Tax effect (f)
|
|
(9,188)
|
|
|
(7,971)
|
|
|
(72,253)
|
|
|
(16,016)
|
Tax items (g)
|
|
-
|
|
|
2,515
|
|
|
-
|
|
|
2,515
|
Adjusted net income attributable to Waste
Connections
|
$
|
145,462
|
|
$
|
172,336
|
|
$
|
275,509
|
|
$
|
320,948
|
Diluted earnings per common share attributable to Waste Connections' common
shareholders:
|
|
|
|
|
|
|
|
|
|
|
|
Reported net income
|
$
|
0.47
|
|
$
|
0.52
|
|
$
|
0.52
|
|
$
|
1.00
|
Adjusted net income
|
$
|
0.55
|
|
$
|
0.65
|
|
$
|
1.04
|
|
$
|
1.21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Reflects the elimination of the non-cash amortization of
acquisition-related intangible assets.
|
(b)
|
Reflects the addback of impairments and other operating items.
|
(c)
|
Reflects the addback of acquisition-related transaction costs.
|
(d)
|
Reflects share-based compensation costs, including changes in fair value
and related expenses, associated with share-based awards granted by Progressive Waste outstanding at the time of the
Progressive Waste acquisition.
|
(e)
|
Reflects the addback of integration-related items, including rebranding
costs, associated with the Progressive Waste acquisition.
|
(f)
|
The aggregate tax effect of the adjustments in footnotes (a) through (e) is
calculated based on the applied tax rates for the respective periods.
|
(g)
|
Reflects items primarily associated with internal financing restructuring
in conjunction with the Tax Act enacted on December 22, 2017, as well as a reduction in deferred tax liabilities
resulting from state legislation enacted during the quarter and changes in the Company's geographical apportionment due
to acquisition activity.
|
UPDATED 2018 OUTLOOK
NON-GAAP RECONCILIATION SCHEDULE
(in thousands of U.S. dollars, except where noted)
Reconciliation of Adjusted EBITDA:
|
|
|
|
|
|
|
|
|
Updated
2018 Outlook
|
|
|
|
|
|
|
Net Income attributable to Waste Connections
|
$
|
559,129
|
|
|
Plus: Net income attributable to noncontrolling interests
|
|
1,000
|
|
|
Plus: Income tax provision
|
|
160,000
|
|
|
Plus: Interest expense
|
|
134,000
|
|
|
Less: Interest income
|
|
(4,000)
|
|
|
Plus: Depreciation and amortization
|
|
675,000
|
|
|
Plus: Closure and post-closure accretion
|
|
13,000
|
|
|
Plus: Impairments and other operating items (a)
|
|
8,104
|
|
|
Less: Other income, net (a)
|
|
(1,644)
|
|
|
Plus: Foreign currency transaction loss (a)
|
|
190
|
|
|
Adjustments: (a)
|
|
|
|
|
Plus: Transaction-related expenses
|
|
4,584
|
|
|
Plus: Pre-existing Progressive Waste share-based grants
|
|
3,221
|
|
|
Plus: Integration-related and other expenses
|
|
2,416
|
|
|
Adjusted EBITDA
|
$
|
1,555,000
|
|
|
|
|
|
|
|
As % of revenues
|
|
31.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Reflects amounts reported for the six month period ended
|
|
June 30, 2018, as shown on page 9.
|
Reconciliation of Adjusted Free Cash Flow:
|
|
|
Updated
|
|
|
|
|
|
|
2018 Outlook
|
|
|
|
Net cash provided by operating activities
|
|
$
|
1,379,388
|
|
|
|
Plus: Proceeds from disposal of assets (a)
|
|
|
2,074
|
|
|
|
Less: Distributions to noncontrolling interests (a)
|
|
|
(103)
|
|
|
|
Less: Capital expenditures for property and equipment
|
|
|
(530,000)
|
|
|
|
Adjustments: (a)
|
|
|
|
|
|
|
Payment of contingent consideration recorded in
earnings
|
|
|
11
|
|
|
|
Transaction-related expenses
|
|
|
4,584
|
|
|
|
Integration-related and other expenses
|
|
|
2,416
|
|
|
|
Pre-existing Progressive Waste share-based
grants
|
|
|
4,909
|
|
|
|
Tax effect
|
|
|
(3,279)
|
|
|
|
Adjusted free cash flow
|
|
$
|
860,000
|
|
|
|
|
|
|
|
|
|
As % of revenues
|
|
|
17.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Reflects amounts reported for the six month period ended
|
|
June 30, 2018, as shown on page 10.
|
View original content with multimedia:http://www.prnewswire.com/news-releases/waste-connections-reports-second-quarter-2018-results-and-raises-full-year-outlook-300685734.html
SOURCE Waste Connections, Inc.