Exhibit 99.1
WASTE CONNECTIONS REPORTS FIRST QUARTER
2016 RESULTS
| - | Revenue of $514.7 million, in-line with outlook |
| - | Reports 5.9% solid waste price + volume growth |
| - | Adjusted EBITDA* of $169.7 million, or 33.0% of revenue, slightly above outlook |
| - | GAAP EPS and adjusted EPS* of $0.36 and $0.45, respectively |
| - | Net cash provided by operating activities of $164.7 million |
| - | Adjusted free cash flow* of $113.6 million, or 22.1% of revenue |
| - | Proposed combination with Progressive Waste Solutions on track for Q2 close |
THE WOODLANDS, TX, April 27, 2016
- Waste Connections, Inc. (NYSE: WCN) today announced its results for the first quarter of 2016. Revenue totaled $514.7 million,
up from $506.1 million in the year ago period. Operating income was $91.0 million compared to $101.9 million in the first quarter
of 2015. Adjusted EBITDA* in the first quarter of 2016 was $169.7 million, or 33.0% of revenue, compared to $168.3 million in
the prior year period. Adjusted EBITDA, a non-GAAP measure, excludes the impact of items such as acquisition-related costs, as
shown in the detailed reconciliation in the attached table.
Net income attributable to Waste Connections
in the quarter was $44.8 million, or $0.36 per share on a diluted basis of 123.5 million shares. In the year ago period, the Company
reported net income attributable to Waste Connections of $51.8 million, or $0.42 per share on a diluted basis of 124.4 million
shares.
Adjusted net income attributable to Waste
Connections* in the quarter was $55.2 million, or $0.45 per share, versus $56.9 million, or $0.46 per share, in the prior year
period. Adjusted net income and adjusted net income per diluted share, both non-GAAP measures, primarily exclude the impact of
acquisition-related items such as amortization of intangibles and transaction costs, all net of tax, as shown in the detailed
reconciliation in the attached table.
“Accelerating organic growth and
continuing margin expansion within solid waste enabled us to once again meet or exceed our outlook for the quarter and generate
over 22% adjusted free cash flow as a percentage of revenue. Double-digit growth in solid waste landfill tonnage and strong increases
in both commercial and roll off collection activity across our regions drove core price plus volume growth in the period to above
6%, our fourth consecutive quarter for this metric to exceed 5.0%. We are particularly pleased with these results, as this strength
in solid waste was sufficient to offset lower than expected E&P waste activity resulting from a continued decline in drilling
activity throughout the period,” said Ronald J. Mittelstaedt, Chief Executive Officer and Chairman.
Mr. Mittelstaedt added, “Moving
on to the Progressive Waste combination, we are extremely pleased with the progress both companies have made towards closing the
transaction and encouraged by the integration efforts to date. We remain on track for a second quarter closing, with the meeting
date for stockholder approval set for both companies to occur on May 26th, and we look forward to realizing the benefits
of this compelling combination.”
CONFERENCE CALL
Waste Connections will be hosting a conference
call related to first quarter earnings on April 28th at 8:30 A.M. Eastern Time. The call will be broadcast live over
the Internet at www.streetevents.com or through a link on our website at www.wasteconnections.com.
A playback of the call will be available at both of these websites.
* A non-GAAP measure;
see accompanying Non-GAAP Reconciliation Schedule.
About Waste Connections
Waste
Connections, Inc. is an integrated solid waste services company that provides waste collection, transfer, disposal and recycling
services in mostly exclusive and secondary markets. 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 two million residential, commercial, industrial, and exploration and production customers from a network of operations
in 32 states. Waste Connections also provides intermodal services for the movement of cargo and solid waste containers in the
Pacific Northwest. Waste Connections, Inc. was founded in September 1997 and is headquartered in The Woodlands, Texas.
For more information, visit the Waste
Connections web site at www.wasteconnections.com. Copies of financial literature, including this release, are available
on the Waste Connections website or through contacting us directly at (832) 442-2200.
Information Regarding Forward-Looking
Statements
Certain statements contained in this
release are forward-looking in nature, including statements related to the following: trends in our business; the expected contribution
from recently announced acquisitions and the timing to complete acquisitions; and Waste Connections’ ability to finance additional
acquisitions. These statements can be identified by the use of forward-looking terminology such as “believes,” “expects,”
“may,” “will,” “should,” or “anticipates,” or the negative thereof or comparable
terminology, or by discussions of strategy. Factors that could cause actual results to differ from those projected include,
but are not limited to, the following: (1) negative trends or volatility in crude oil prices may adversely affect
the level of exploration, development and production activity of E&P companies and the demand for our E&P waste services;
(2) our results are vulnerable to economic conditions; (3) our financial and operating performance may be affected by the
inability to renew landfill operating permits, obtain new landfills and expand existing ones; (4) a portion of our growth and future
financial performance depends on our ability to integrate acquired businesses, and the success of our acquisitions; (5) each
business that we acquire or have acquired may have liabilities or risks that we fail or are unable to discover, or that become
more adverse to our business than we anticipated at the time of acquisition; (6) competition for acquisition candidates, consolidation
within the waste industry and economic and market conditions may limit our ability to grow through acquisitions; (7) our industry
is highly competitive and includes larger and better capitalized companies, companies with lower prices, return expectations or
other advantages, and governmental service providers, which could adversely affect our ability to compete and our operating results;
(8) our indebtedness could adversely affect our financial condition and limit our financial flexibility; (9) price increases
may not be adequate to offset the impact of increased costs, or may cause us to lose volume; (10) fluctuations in prices for
recycled commodities that we sell and rebates we offer to customers may cause our revenues and operating results to decline; (11)
the seasonal nature of our business and “event-driven” waste projects cause our results to fluctuate; (12) we
may lose contracts through competitive bidding, early termination or governmental action; (13) alternatives to landfill disposal
may cause our revenues and operating results to decline; (14) increases in labor costs could impact our financial results; (15)
increases in the price of diesel or compressed natural gas fuel may adversely affect our collection business and reduce our operating
margins; (16) labor union activity could divert management attention and adversely affect our operating results; (17) we could
face significant withdrawal liability if we withdraw from participation in one or more multiemployer pension plans in which we
participate and the accrued pension benefits are not fully funded; (18) pending or future litigation or governmental proceedings
could result in material adverse consequences, including judgments or settlements; (19) we may be subject in the normal course
of business to judicial, administrative or other third-party proceedings that could interrupt or limit our operations, require
expensive remediation, result in adverse judgments, settlements or fines and create negative publicity; (20) our financial results
could be adversely affected by impairments of goodwill, indefinite-lived intangibles or property and equipment; (21) increases
in insurance costs and the amount that we self-insure for various risks could reduce our operating margins and reported earnings;
(22) we rely on computer systems to run our business and disruptions or privacy breaches in these systems could impact our
ability to service our customers and adversely affect our financial results, damage our reputation, and expose us to litigation
risk; (23) extensive and evolving environmental, health and safety laws and regulations may restrict our operations and growth
and increase our costs; (24) our E&P waste business could be adversely affected by changes in laws regulating E&P waste;
(25) our E&P waste business depends on the willingness of E&P companies to outsource their waste services activities;
(26) changes in laws or government regulations regarding hydraulic fracturing could increase our customers’ costs of
doing business and reduce oil and gas production by our customers, which could adversely impact our business; (27) future
changes in laws regulating the flow of solid waste in interstate commerce could adversely affect our operating results; (28) extensive
regulations that govern the design, operation, expansion and closure of landfills may restrict our landfill operations or increase
our costs of operating landfills; (29) our financial results are based upon estimates and assumptions that may differ from actual
results; (30) our accruals for our landfill site closure and post-closure costs may be inadequate; (31) we depend significantly
on the services of the members of our senior and regional management team, and the departure of any of those persons could cause
our operating results to suffer; (32) our decentralized decision-making structure could allow local managers to make decisions
that may adversely affect our operating results; (33) liabilities for environmental damage may adversely affect our financial condition,
business and earnings; and (34) if we are not able to develop and protect intellectual property, or if a competitor develops or
obtains exclusive rights to a breakthrough technology, our financial results may suffer. These risks and uncertainties, as well
as others, are discussed in greater detail in our filings with the Securities and Exchange Commission, including our most recent
Annual Report on Form 10-K. There may be additional risks of which we are not presently aware or that we currently believe are
immaterial which could have an adverse impact on our business. We make no commitment to revise or update any forward-looking statements
in order to reflect events or circumstances that may change.
No Offer or Solicitation
This communication does not constitute
an offer to sell or the solicitation of an offer to buy any securities, or a solicitation of any vote or approval, nor shall there
be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration
or qualification under the securities laws of any such jurisdiction.
Additional Information and Where to Find It
This communication may be deemed to
be solicitation material in respect of the proposed transaction between Waste Connections and Progressive Waste Solutions Ltd.,
a corporation organized under the laws of Ontario (“Progressive”). In connection with the proposed transaction, Progressive,
as the parent company that will result from the combination, has filed with the SEC a registration statement on Form F-4 that includes
the proxy statement/prospectus of Waste Connections and Progressive. The registration statement on Form F-4 was declared effective
by the SEC on April 25, 2016. Waste Connections mailed its proxy statement to its stockholders on or around April 27, 2016. WE
URGE STOCKHOLDERS TO READ THE PROXY STATEMENT AND OTHER RELEVANT DOCUMENTS THAT HAVE BEEN OR WILL BE FILED WITH THE SEC WHEN THEY
BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. Stockholders may obtain copies
of the proxy statement/prospectus and other documents filed with the SEC (when available) free of charge at the SEC’s website,
http://www.sec.gov. Copies of documents filed with the SEC by Waste Connections will be made available free of charge on Waste
Connections’ investor relations website at http://wasteconnections.investorroom.com. Copies of documents filed with the SEC
by Progressive will be made available free of charge on Progressive’s investor relations website at http://investor.progressivewaste.com.
Participants in the Solicitation of Votes
Waste Connections and its directors,
executive officers and certain other members of management and employees may be deemed to be participants in the solicitation of
proxies for its security holder approvals to be obtained for the proposed transaction. Information regarding Waste Connections’
directors and executive officers is available in its proxy statement filed with the SEC by Waste Connections on April 2, 2015 in
connection with its 2015 annual meeting of stockholders. Other information regarding the participants in the proxy solicitation
and a description of their direct and indirect interests, by security holdings or otherwise, is contained in the proxy statement/prospectus,
Progressive’s registration statement and information circular and other relevant materials that have been or will be filed
with the SEC and the Canadian securities regulators when they become available.
Safe Harbor and Forward-Looking
Information
In addition to the forward-looking statements
described above, this document includes forward-looking statements regarding our proposed merger with Progressive (which includes
“forward-looking information” within the meaning of applicable Canadian securities laws). These forward-looking statements
are not based on historical facts but instead reflect Progressive's or Waste Connections’ respective management’s expectations,
estimates or projections concerning future results or events. These forward-looking statements are often identified by the words
“may,” “might,” “believes,” “thinks,” “anticipates,” “plans,”
“expects,” “intends” or similar expressions and include statements regarding (1) expectations regarding
whether the transaction, including the merger, the issuance of the merger consideration and the proposed share consolidation of
Progressive, will be consummated, including whether conditions to the consummation of the transaction will be satisfied, or the
timing for completing the transaction, (2) expectations for the effects of the transaction or the ability of the combined company
to successfully achieve business objectives, including integrating the companies or the effects of unexpected costs, liabilities
or delays, (3) the potential benefits and synergies of the transaction, including expected cost savings and tax benefits and (4)
expectations for other economic, business, and/or competitive factors. Although Waste Connections and Progressive believe that
the expectations reflected in such forward-looking statements are reasonable, such statements involve risks and uncertainties,
and undue reliance should not be placed on such statements, as unknown or unpredictable factors could have material adverse effects
on future results, performance or achievements of the combined company. Among the key factors that could cause actual results to
differ materially from those projected in the forward-looking statements include the following: the ability to consummate the proposed
transaction; the ability to obtain requisite regulatory and shareholder approvals and the satisfaction of other conditions to the
consummation of the proposed transactions on the proposed terms and schedule; the ability of Waste Connections and Progressive
to successfully integrate their respective operations and employees and realize synergies and cost savings at the times, and to
the extent, anticipated; the potential impact of the announcement or consummation of the proposed transactions on relationships,
including with employees, suppliers, customers and competitors; changes in general economic, business and political conditions,
including changes in the financial markets; changes in applicable laws and regulations and interpretations of laws and regulations;
significant competition that Waste Connections and Progressive face; compliance with extensive government regulation; and the diversion
of management time on the proposed transactions. These forward-looking statements may be affected by risks and uncertainties in
the business of Waste Connections and Progressive and market conditions. This information is qualified in its entirety by cautionary
statements and risk factor disclosure contained in filings made by Waste Connections and Progressive with the U.S. Securities and
Exchange Commission, including Waste Connections’ quarterly reports on Form 10-Q and its annual report on Form 10-K for the
year ended December 31, 2015, and Progressive’s quarterly reports on Form 6-K and its year-end report for the year ended
December 31, 2015, as well as in Progressive’s filings with the Canadian securities regulators. Waste Connections and Progressive
wish to caution readers that certain important factors may have affected and could in the future affect their actual results and
could cause their actual results for subsequent periods to differ materially from those expressed in any forward-looking statement
made by or on behalf of Waste Connections or Progressive. Neither Waste Connections nor Progressive undertakes any obligation to
update forward-looking statements to reflect events or circumstances after the date hereof, except as may be specifically required
by applicable securities laws.
– financial tables attached –
CONTACT:
| Worthing Jackman / (832) 442-2266 |
Mary Anne Whitney / (832) 442-2253 |
| worthingj@wasteconnections.com |
maryannew@wasteconnections.com |
Waste
Connections, Inc.
CONDENSED
Consolidated Statements of NET INCOME
THRee
months ended MARCH 31, 2015 and 2016
(Unaudited)
(in thousands, except share and per share
amounts)
| | |
Three months ended March 31, | |
| | |
2015 | | |
2016 | |
| | |
| | |
| |
| Revenues | |
$ | 506,100 | | |
$ | 514,680 | |
| Operating expenses: | |
| | | |
| | |
| Cost of operations | |
| 281,123 | | |
| 287,192 | |
| Selling, general and administrative | |
| 58,144 | | |
| 67,682 | |
| Depreciation | |
| 57,307 | | |
| 60,897 | |
| Amortization of intangibles | |
| 6,999 | | |
| 7,694 | |
| Other operating items | |
| 662 | | |
| 236 | |
| Operating income | |
| 101,865 | | |
| 90,979 | |
| | |
| | | |
| | |
| Interest expense | |
| (15,697 | ) | |
| (17,184 | ) |
| Other income (expense), net | |
| (220 | ) | |
| 222 | |
| Income before income tax provision | |
| 85,948 | | |
| 74,017 | |
| | |
| | | |
| | |
| Income tax provision | |
| (33,867 | ) | |
| (29,000 | ) |
| Net income | |
| 52,081 | | |
| 45,017 | |
| Less: net income attributable to noncontrolling interests | |
| (257 | ) | |
| (175 | ) |
| Net income attributable to Waste Connections | |
$ | 51,824 | | |
$ | 44,842 | |
| | |
| | | |
| | |
| Earnings per common share attributable to Waste Connections’ common stockholders: | |
| | | |
| | |
| Basic | |
$ | 0.42 | | |
$ | 0.37 | |
| | |
| | | |
| | |
| Diluted | |
$ | 0.42 | | |
$ | 0.36 | |
| | |
| | | |
| | |
| Shares used in the per share calculations: | |
| | | |
| | |
| Basic | |
| 124,008,687 | | |
| 122,778,290 | |
| Diluted | |
| 124,367,668 | | |
| 123,450,584 | |
| | |
| | | |
| | |
| Cash dividends per common share | |
$ | 0.13 | | |
$ | 0.145 | |
Waste
Connections, Inc.
Condensed
Consolidated Balance Sheets
(Unaudited)
(in thousands, except share and per share
amounts)
| | |
December 31,
2015 | | |
March 31,
2016 | |
| ASSETS | |
| | |
| |
| Current assets: | |
| | | |
| | |
| Cash and equivalents | |
$ | 10,974 | | |
$ | 9,263 | |
| Accounts receivable, net of allowance for doubtful accounts of $7,738 and $7,243 at December 31, 2015 and March 31, 2016, respectively | |
| 255,192 | | |
| 236,746 | |
| Deferred income taxes | |
| 49,727 | | |
| 35,811 | |
| Prepaid expenses and other current assets | |
| 46,534 | | |
| 39,333 | |
| Total current assets | |
| 362,427 | | |
| 321,153 | |
| | |
| | | |
| | |
| Property and equipment, net | |
| 2,738,288 | | |
| 2,718,194 | |
| Goodwill | |
| 1,422,825 | | |
| 1,424,591 | |
| Intangible assets, net | |
| 511,294 | | |
| 505,075 | |
| Restricted assets | |
| 46,232 | | |
| 46,101 | |
| Other assets, net | |
| 40,732 | | |
| 40,257 | |
| | |
$ | 5,121,798 | | |
$ | 5,055,371 | |
| LIABILITIES AND EQUITY | |
| | | |
| | |
| Current liabilities: | |
| | | |
| | |
| Accounts payable | |
$ | 115,206 | | |
$ | 111,259 | |
| Book overdraft | |
| 12,357 | | |
| 12,206 | |
| Accrued liabilities | |
| 136,018 | | |
| 131,580 | |
| Deferred revenue | |
| 90,349 | | |
| 90,487 | |
| Current portion of contingent consideration | |
| 22,217 | | |
| 20,407 | |
| Current portion of long-term debt and notes payable | |
| 2,127 | | |
| 1,590 | |
| Total current liabilities | |
| 378,274 | | |
| 367,529 | |
| | |
| | | |
| | |
| Long-term debt and notes payable | |
| 2,147,127 | | |
| 2,066,051 | |
| Long-term portion of contingent consideration | |
| 27,177 | | |
| 27,231 | |
| Other long-term liabilities | |
| 124,943 | | |
| 123,885 | |
| Deferred income taxes | |
| 452,493 | | |
| 454,344 | |
| Total liabilities | |
| 3,130,014 | | |
| 3,039,040 | |
| | |
| | | |
| | |
| Commitments and contingencies | |
| | | |
| | |
| | |
| | | |
| | |
| Equity: | |
| | | |
| | |
| Preferred stock: $0.01 par value; 7,500,000 shares authorized; none issued and outstanding | |
| - | | |
| - | |
| Common stock: $0.01 par value; 250,000,000 shares authorized; 122,375,955 and 122,717,727 shares issued and outstanding at December 31, 2015 and March 31, 2016, respectively | |
| 1,224 | | |
| 1,227 | |
| Additional paid-in capital | |
| 736,652 | | |
| 736,750 | |
| Accumulated other comprehensive loss | |
| (12,171 | ) | |
| (14,947 | ) |
| Retained earnings | |
| 1,259,495 | | |
| 1,286,546 | |
| Total Waste Connections’ equity | |
| 1,985,200 | | |
| 2,009,576 | |
| Noncontrolling interest in subsidiaries | |
| 6,584 | | |
| 6,755 | |
| Total equity | |
| 1,991,784 | | |
| 2,016,331 | |
| | |
$ | 5,121,798 | | |
$ | 5,055,371 | |
Waste
Connections, Inc.
Condensed
Consolidated Statements of Cash Flows
THREE
months ended MARCH 31, 2015 and 2016
(Unaudited)
(Dollars in thousands)
| | |
Three months ended March 31, | |
| | |
2015 | | |
2016 | |
| Cash flows from operating activities: | |
| | | |
| | |
| Net income | |
$ | 52,081 | | |
$ | 45,017 | |
Adjustments to reconcile net income to net cash provided by
operating activities: | |
| | | |
| | |
| Loss (gain) on disposal of assets | |
| (241 | ) | |
| 231 | |
| Depreciation | |
| 57,307 | | |
| 60,897 | |
| Amortization of intangibles | |
| 6,999 | | |
| 7,694 | |
| Deferred income taxes, net of acquisitions | |
| 17,753 | | |
| 17,473 | |
| Amortization of debt issuance costs | |
| 1,169 | | |
| 670 | |
| Equity-based compensation | |
| 4,821 | | |
| 5,299 | |
| Interest income on restricted assets | |
| (117 | ) | |
| (129 | ) |
| Interest accretion | |
| 1,914 | | |
| 1,465 | |
| Excess tax benefit associated with equity-based compensation | |
| (1,479 | ) | |
| (4,434 | ) |
| Adjustments to contingent consideration | |
| 808 | | |
| (75 | ) |
| Payment of contingent consideration recorded in earnings | |
| - | | |
| (33 | ) |
| Net change in operating assets and liabilities, net of acquisitions | |
| 21,556 | | |
| 30,641 | |
| Net cash provided by operating activities | |
| 162,571 | | |
| 164,716 | |
| | |
| | | |
| | |
| Cash flows from investing activities: | |
| | | |
| | |
| Payments for acquisitions, net of cash acquired | |
| (90,849 | ) | |
| (3,555 | ) |
| Capital expenditures for property and equipment | |
| (41,706 | ) | |
| (56,575 | ) |
| Proceeds from disposal of assets | |
| 598 | | |
| 681 | |
| Change in restricted assets, net of interest income | |
| (1,202 | ) | |
| 260 | |
| Other | |
| 985 | | |
| 147 | |
| Net cash used in investing activities | |
| (132,174 | ) | |
| (59,042 | ) |
| | |
| | | |
| | |
| Cash flows from financing activities: | |
| | | |
| | |
| Proceeds from long-term debt | |
| 263,000 | | |
| 115,000 | |
| Principal payments on notes payable and long-term debt | |
| (249,624 | ) | |
| (197,024 | ) |
| Payment of contingent consideration recorded at acquisition date | |
| - | | |
| (2,217 | ) |
| Change in book overdraft | |
| 25 | | |
| (151 | ) |
| Excess tax benefit associated with equity-based compensation | |
| 1,479 | | |
| 4,434 | |
| Payments for repurchase of common stock | |
| (18,366 | ) | |
| - | |
| Payments for cash dividends | |
| (16,156 | ) | |
| (17,791 | ) |
| Tax withholdings related to net share settlements of restricted stock units | |
| (6,299 | ) | |
| (9,632 | ) |
| Distributions to noncontrolling interests | |
| (43 | ) | |
| (4 | ) |
| Debt issuance costs | |
| (3,032 | ) | |
| - | |
| Net cash used in financing activities | |
| (29,016 | ) | |
| (107,385 | ) |
| | |
| | | |
| | |
| Net increase (decrease) in cash and equivalents | |
| 1,381 | | |
| (1,711 | ) |
| Cash and equivalents at beginning of period | |
| 14,353 | | |
| 10,974 | |
| Cash and equivalents at end of period | |
$ | 15,734 | | |
$ | 9,263 | |
ADDITIONAL STATISTICS
(Dollars
in thousands)
Solid Waste Internal Growth: The following table reflects
a breakdown of the components of our solid waste internal growth for the three months ended March 31, 2016:
| | |
Three months ended
March 31, 2016 |
Solid Waste Internal Growth:
Core Price | |
3.1% |
| Surcharges | |
(0.4%) |
| Volume | |
3.2% |
| Recycling | |
(0.2%) |
| Total Solid Waste Internal Growth | |
5.7% |
Revenue Breakdown: The following table reflects a breakdown
of our revenue for the three month periods ended March 31, 2015 and 2016:
| | |
Three Months Ended March 31, 2015 | |
| | |
Revenue | | |
Inter-company Elimination | | |
Reported
Revenue | | |
% | |
| Solid Waste Collection | |
$ | 327,005 | | |
$ | (919 | ) | |
$ | 326,086 | | |
| 64.4 | % |
| Solid Waste Disposal and Transfer | |
| 142,430 | | |
| (56,326 | ) | |
| 86,104 | | |
| 17.0 | % |
| Solid Waste Recycling | |
| 11,069 | | |
| (221 | ) | |
| 10,848 | | |
| 2.1 | % |
| E&P Waste Treatment, Recovery and Disposal | |
| 72,556 | | |
| (3,998 | ) | |
| 68,558 | | |
| 13.6 | % |
| Intermodal and Other | |
| 14,504 | | |
| - | | |
| 14,504 | | |
| 2.9 | % |
| Total | |
$ | 567,564 | | |
$ | (61,464 | ) | |
$ | 506,100 | | |
| 100.0 | % |
| | |
Three Months Ended March 31, 2016 | |
| | |
Revenue | | |
Inter-company Elimination | | |
Reported
Revenue | | |
% | |
| Solid Waste Collection | |
$ | 356,598 | | |
$ | (1,321 | ) | |
$ | 355,277 | | |
| 69.0 | % |
| Solid Waste Disposal and Transfer | |
| 170,083 | | |
| (66,034 | ) | |
| 104,049 | | |
| 20.2 | % |
| Solid Waste Recycling | |
| 10,619 | | |
| (639 | ) | |
| 9,980 | | |
| 2.0 | % |
| E&P Waste Treatment, Recovery and Disposal | |
| 32,851 | | |
| (2,366 | ) | |
| 30,485 | | |
| 5.9 | % |
| Intermodal and Other | |
| 14,889 | | |
| - | | |
| 14,889 | | |
| 2.9 | % |
| Total | |
$ | 585,040 | | |
$ | (70,360 | ) | |
$ | 514,680 | | |
| 100.0 | % |
Contribution from Acquisitions: The following table reflects
revenues from acquisitions, net of divestitures, for the three month periods ended March 31, 2015 and 2016
| | |
Three months ended
March 31, | |
| | |
2015 | | |
2016 | |
| Solid waste, net | |
$ | 4,193 | | |
$ | 21,496 | |
| E&P waste, net | |
| 9,659 | | |
| - | |
| Acquisitions, net | |
$ | 13,852 | | |
$ | 21,496 | |
ADDITIONAL STATISTICS (continued)
Other Cash Flow Items: The following table reflects cash
interest and cash taxes for the three month periods ended March 31, 2015
and 2016:
| | |
Three months ended
March 31, | |
| | |
2015 | | |
2016 | |
| Cash Interest Paid | |
$ | 7,044 | | |
$ | 16,257 | |
| Cash Taxes Paid | |
| 463 | | |
| 901 | |
Debt to Book Capitalization as of March 31, 2016: 51%
Internalization for the three months ended March 31, 2016:
58%
Days Sales Outstanding for the three months ended March 31,
2016: 42 (26 net of deferred revenue)
Share Information for the three months ended March 31, 2016:
| Basic shares outstanding | |
| 122,778,290 | |
| Dilutive effect of options and warrants | |
| 27,383 | |
| Dilutive effect of restricted stock units | |
| 644,911 | |
| Diluted shares outstanding | |
| 123,450,584 | |
NON-GAAP RECONCILIATION SCHEDULE
(in thousands)
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, plus income
tax provision, plus interest expense, plus depreciation and amortization expense, plus closure and post-closure accretion expense,
plus or minus any loss or gain on other operating items, plus other expense, less other income. 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
March 31, | |
| | |
2015 | | |
2016 | |
| Net income | |
$ | 52,081 | | |
$ | 45,017 | |
| Plus: Income tax provision | |
| 33,867 | | |
| 29,000 | |
| Plus: Interest expense | |
| 15,697 | | |
| 17,184 | |
| Plus: Depreciation and amortization | |
| 64,306 | | |
| 68,591 | |
| Plus: Closure and post-closure accretion | |
| 955 | | |
| 1,116 | |
| Plus: Other operating items (a) | |
| 662 | | |
| 236 | |
| Plus/Less: Other expense (income), net | |
| 220 | | |
| (222 | ) |
| Adjustments: | |
| | | |
| | |
| Plus: Acquisition-related costs (b) | |
| 512 | | |
| 8,815 | |
| Adjusted EBITDA | |
$ | 168,300 | | |
$ | 169,737 | |
| | |
| | | |
| | |
| As % of revenues | |
| 33.3 | % | |
| 33.0 | % |
____________________________________________
| (a) | Reflects the addback of other operating items. |
| (b) | Reflects the addback of acquisition-related transaction costs. |
NON-GAAP RECONCILIATION SCHEDULE
(continued)
(in thousands)
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 the Company’s operations. Waste Connections defines adjusted free cash flow as net cash provided
by operating activities, plus proceeds from disposal of assets, plus or minus change in book overdraft, plus excess tax benefit
associated with equity-based compensation, 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
March 31, | |
| | |
2015 | | |
2016 | |
| Net cash provided by operating activities | |
$ | 162,571 | | |
$ | 164,716 | |
| Plus/Less: Change in book overdraft | |
| 25 | | |
| (151 | ) |
| Plus: Proceeds from disposal of assets | |
| 598 | | |
| 681 | |
| Plus: Excess tax benefit associated with equity-based compensation | |
| 1,479 | | |
| 4,434 | |
| Less: Capital expenditures for property and equipment | |
| (41,706 | ) | |
| (56,575 | ) |
| Less: Distributions to noncontrolling interests | |
| (43 | ) | |
| (4 | ) |
Adjustments:
Payment of contingent consideration recorded in earnings (a) | |
| - | | |
| 33 | |
| Acquisition-related costs, net of taxes (b) | |
| - | | |
| 424 | |
| Adjusted free cash flow | |
$ | 122,924 | | |
$ | 113,558 | |
| | |
| | | |
| | |
| As % of revenues | |
| 24.3 | % | |
| 22.1 | % |
| (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 addback of third party expenses and reimbursable
advances to employees associated with the Progressive merger, net of taxes at the applied tax rate for the period. |
NON-GAAP RECONCILIATION SCHEDULE (continued)
(in
thousands, except per share amounts)
Reconciliation of Net Income to Adjusted Net Income
and Adjusted Net Income per Diluted Share:
Adjusted net income and adjusted
net income per diluted share, 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 and adjusted net income per diluted share
as one of the principal measures to evaluate and monitor the ongoing financial performance of Waste Connections’ operations.
Waste Connections provides adjusted net income to exclude the effects of items management believes impact the comparability of
operating results between periods. Adjusted net income has limitations due to the fact that it excludes items that have an impact
on Waste Connections’ financial condition and results of operations. Adjusted net income and adjusted net income per diluted
share are not a substitute for, and should be used in conjunction with, GAAP financial measures. Other companies may calculate
adjusted net income and adjusted net income per diluted share differently.
| | |
Three months ended
March 31, | |
| | |
2015 | | |
2016 | |
| Reported net income attributable to Waste Connections | |
$ | 51,824 | | |
$ | 44,842 | |
| Adjustments: | |
| | | |
| | |
| Amortization of intangibles (a) | |
| 6,999 | | |
| 7,694 | |
| Acquisition-related costs (b) | |
| 512 | | |
| 8,815 | |
| Other operating items (c) | |
| 662 | | |
| 236 | |
| Tax effect (d) | |
| (3,134 | ) | |
| (6,371 | ) |
| Adjusted net income attributable to Waste Connections | |
$ | 56,863 | | |
$ | 55,216 | |
| | |
| | | |
| | |
Diluted earnings per common share attributable to Waste Connections’
common stockholders: | |
| | | |
| | |
| Reported net income | |
$ | 0.42 | | |
$ | 0.36 | |
| Adjusted net income | |
$ | 0.46 | | |
$ | 0.45 | |
| | |
| | | |
| | |
____________________________________________
| (a) | Reflects the elimination of the non-cash amortization of acquisition-related
intangible assets. |
| (b) | Reflects the elimination of acquisition-related transaction costs. |
| (c) | Reflects the addback of other operating items. |
| (d) | The aggregate tax effect of the adjustments in footnotes (a) through (c)
is calculated based on the applied tax rates for the respective periods. |
