Exhibit 99.1
WASTE CONNECTIONS REPORTS SECOND QUARTER 2016 RESULTS
- Revenue of $727.6 million, exceeding outlook
- Reports 5.0% solid waste price + volume growth
- Net income of $27.5 million, or $0.20 per share
- Adjusted net income* of $93.2 million, or $0.66 per share
- Adjusted EBITDA* of $233.6 million, or 32.1% of revenue, exceeding outlook
- YTD net cash provided by operating activities of $259.6 million
- YTD adjusted free cash flow* of $234.4 million, or 18.9% of revenue
- Integration of Progressive Waste on track; contribution ahead of expectations
- Authorizes share repurchase program
TORONTO, ONTARIO, August 3, 2016 - Waste Connections, Inc. (TSX/NYSE: WCN) (“Waste Connections” or the “Company”) today announced its results for the second quarter of 2016. Revenue in the second quarter, which included $174.0 million from the Progressive Waste acquisition, was $727.6 million, as compared to revenue of $531.3 million in the year ago period. Operating income, which included $73.2 million of items primarily related to the Progressive Waste combination completed in the period, was $63.5 million, as compared to $110.0 million in the second quarter of 2015.
Net income attributable to Waste Connections in the quarter was $27.5 million, or $0.20 per share on a diluted basis of 140.6 million shares. In the year ago period, the Company reported net income attributable to Waste Connections of $57.4 million, or $0.46 per share on a diluted basis of 124.4 million shares.
Adjusted net income attributable to Waste Connections* in the quarter was $93.2 million, or $0.66 per share, versus $61.6 million, or $0.50 per share, in the prior year period. Adjusted EBITDA* in the current year period was $233.6 million, as compared to adjusted EBITDA of $177.7 million in the prior year period. Adjusted net income, adjusted net income per diluted share and adjusted EBITDA, all non-GAAP measures, primarily exclude the impact of acquisition-related items, as shown in the detailed reconciliation in the attached table.
“Better than expected solid waste volume growth and contribution from the recent combination with Progressive Waste enabled us to once again exceed our outlook for the period. Solid waste margins, excluding the impact of the acquisitions completed since the prior year period, expanded approximately 110 basis points year-over-year. We believe this performance, together with pricing and operating improvement plans we’ve implemented in Progressive Waste operations, has already positioned our financial run-rate at or above the upper end of our previous outlook for the first year following the combination,” said Ronald J. Mittelstaedt, Chief Executive Officer and Chairman. “We had underestimated the opportunity for improvement within Progressive Waste’s operations and are encouraged by the organizational momentum to exceed original expectations as we look ahead.”
Mr. Mittelstaedt added, “Acquisition dialogue remains robust, while continued strength in free cash flow provides the ability to fund both additional growth and return of capital to shareholders. To that end and as also announced today, our board authorized a share repurchase program for up to 5% of our outstanding shares over the next 12 months.”
For the six months ended June 30, 2016 revenue was $1.24 billion, as compared to revenue of $1.04 billion in the year ago period. Operating income, which included $82.0 million of items related to the Progressive Waste combination completed on June 1, 2016, was $154.5 million compared to $211.9 million for the same period in 2015.
* A non-GAAP measure; see accompanying Non-GAAP Reconciliation Schedule
Net income attributable to Waste Connections for the six months ended June 30, 2016, was $72.3 million, or $0.55 per share on a diluted basis of 132.0 million shares. In the year ago period, the Company reported net income attributable to Waste Connections of $109.2 million, or $0.88 per share on a diluted basis of 124.4 million shares.
Adjusted net income attributable to Waste Connections* for the six months ended June 30, 2016, was $148.4 million, or $1.12 per share, compared to $118.2 million, or $0.95 per share, in the year ago period. Adjusted EBITDA* for the six months ended June 30, 2016, was $403.3 million, as compared to $346.0 million in the prior year period.
* A non-GAAP measure; see accompanying Non-GAAP Reconciliation Schedule
Presentation of Financials
The combination of Waste Connections US, Inc. (f/k/a Waste Connections, Inc., “Old Waste Connections”) and the Company (f/k/a Progressive Waste Solutions Ltd.) was accounted for as a reverse merger using the acquisition method of accounting. The financial statements presented herein are the historical financial statements of Old Waste Connections with the inclusion on June 1, 2016 of the fair value of the assets and liabilities acquired from Progressive Waste and the inclusion of the results of operations from the acquired Progressive Waste operations commencing on June 1, 2016. The term “Progressive Waste” is used herein in the context of references to Progressive Waste Solutions Ltd. prior to the completion of the Progressive Waste acquisition on June 1, 2016.
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 and the District of Columbia 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 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 (905) 532-7510. Investors can also obtain these materials and other documents filed with the Securities and Exchange Commission (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 (SEDAR) maintained by the Canadian Securities Administrators at www.sedar.com.
Safe Harbor and Forward-Looking Information
This press release contains forward-looking statements (which include "forward-looking information" as that term is defined in applicable securities laws in Canada) within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995 (PSLRA). 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 and speak only as of the date hereof. These forward-looking statements are often identified by the words “may,” “might,” “believes,” “thinks,” “expects,” “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 potential operating trends and acquisition activity, future financial performance and repurchases of common shares of the Company. Important factors that could cause actual results to differ, possibly materially, from those indicated by the forward-looking statements include, without limitation, the following: the possibility that any of the anticipated benefits of the combination of the Company and Waste Connections US, Inc. (f/k/a Waste Connections, Inc.) will not be realized; the ability of the combined company to successfully achieve business objectives, including integrating the two companies or the effects of unexpected costs, liabilities or delays; the potential benefits and synergies of the transaction; and expectations for other economic, business and/or competitive factors. In addition, you should carefully consider the risks and uncertainties and other factors that may affect future results of the combined company that are disclosed in filings that have been made by the Company (including, under its former name, Progressive Waste Solutions Ltd.) and by Waste Connections US, Inc. (including, under its former name, Waste Connections, Inc.) with the Securities and Exchange Commission 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 otherwise required by applicable securities laws.
| - 2 - |
– financial tables attached –
CONTACT:
| Worthing Jackman / (832) 442-2266 | Mary Anne Whitney / (832) 442-2253 | |
| worthingj@wasteconnections.com | maryannew@wasteconnections.com |
| - 3 - |
Waste Connections, Inc.
CONDENSED Consolidated Statements of NET INCOME
THRee AND SIX months ended JuNE 30, 2015 and 2016
(Unaudited)
(in thousands, except share and per share amounts)
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
| 2015 | 2016 | 2015 | 2016 | |||||||||||||
| Revenues | $ | 531,312 | $ | 727,639 | $ | 1,037,412 | $ | 1,242,319 | ||||||||
| Operating expenses: | ||||||||||||||||
| Cost of operations | 297,437 | 416,262 | 578,560 | 703,453 | ||||||||||||
| Selling, general and administrative | 57,264 | 152,737 | 115,409 | 220,419 | ||||||||||||
| Depreciation | 59,639 | 84,348 | 116,945 | 145,245 | ||||||||||||
| Amortization of intangibles | 7,264 | 14,081 | 14,263 | 21,775 | ||||||||||||
| Other operating items | (316 | ) | (3,284 | ) | 346 | (3,048 | ) | |||||||||
| Operating income | 110,024 | 63,495 | 211,889 | 154,475 | ||||||||||||
| Interest expense | (15,322 | ) | (20,485 | ) | (31,018 | ) | (37,670 | ) | ||||||||
| Other income (expense), net | 92 | (714 | ) | (128 | ) | (492 | ) | |||||||||
| Foreign currency transaction gain | - | 689 | - | 689 | ||||||||||||
| Income before income tax provision | 94,794 | 42,985 | 180,743 | 117,002 | ||||||||||||
| Income tax provision | (37,153 | ) | (15,265 | ) | (71,020 | ) | (44,265 | ) | ||||||||
| Net income | 57,641 | 27,720 | 109,723 | 72,737 | ||||||||||||
| Less: net income attributable to noncontrolling interests | (281 | ) | (231 | ) | (539 | ) | (406 | ) | ||||||||
| Net income attributable to Waste Connections | $ | 57,360 | $ | 27,489 | $ | 109,184 | $ | 72,331 | ||||||||
| Earnings per common share attributable to Waste Connections’ common shareholders: | ||||||||||||||||
| Basic | $ | 0.46 | $ | 0.20 | $ | 0.88 | $ | 0.55 | ||||||||
| Diluted | $ | 0.46 | $ | 0.20 | $ | 0.88 | $ | 0.55 | ||||||||
| Shares used in the per share calculations: | ||||||||||||||||
| Basic | 124,079,184 | 140,203,557 | 124,044,130 | 131,496,582 | ||||||||||||
| Diluted | 124,352,062 | 140,587,155 | 124,360,059 | 132,024,528 | ||||||||||||
| Cash dividends per common share | $ | 0.13 | $ | 0.145 | $ | 0.26 | $ | 0.29 | ||||||||
| - 4 - |
Waste Connections, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(in thousands, except share and per share amounts)
| December 31, 2015 | June 30, 2016 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and equivalents | $ | 10,974 | $ | 55,624 | ||||
| Accounts receivable, net of allowance for doubtful accounts of $7,738 and $14,083 at December 31, 2015 and June 30, 2016, respectively | 255,192 | 502,833 | ||||||
| Deferred income taxes | 49,727 | 86,146 | ||||||
| Prepaid expenses and other current assets | 46,534 | 89,465 | ||||||
| Total current assets | 362,427 | 734,068 | ||||||
| Property and equipment, net | 2,738,288 | 4,788,084 | ||||||
| Goodwill | 1,422,825 | 4,299,463 | ||||||
| Intangible assets, net | 511,294 | 1,160,484 | ||||||
| Restricted assets | 46,232 | 62,985 | ||||||
| Other assets, net | 40,732 | 48,468 | ||||||
| $ | 5,121,798 | $ | 11,093,552 | |||||
| LIABILITIES AND EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 115,206 | $ | 243,215 | ||||
| Book overdraft | 12,357 | 14,341 | ||||||
| Accrued liabilities | 136,018 | 269,334 | ||||||
| Deferred revenue | 90,349 | 134,257 | ||||||
| Current portion of contingent consideration | 22,217 | 21,920 | ||||||
| Current portion of long-term debt and notes payable | 2,127 | 1,575 | ||||||
| Total current liabilities | 378,274 | 684,642 | ||||||
| Long-term debt and notes payable | 2,147,127 | 3,761,307 | ||||||
| Long-term portion of contingent consideration | 27,177 | 34,604 | ||||||
| Other long-term liabilities | 124,943 | 317,332 | ||||||
| Deferred income taxes | 452,493 | 737,946 | ||||||
| Total liabilities | 3,130,014 | 5,535,831 | ||||||
| Commitments and contingencies | ||||||||
| Equity: | ||||||||
| Common shares: 122,375,955 and 175,037,601 shares issued and outstanding at December 31, 2015 and June 30, 2016, respectively | 1,224 | 4,163,374 | ||||||
| Additional paid-in capital | 736,652 | 92,792 | ||||||
| Accumulated other comprehensive loss | (12,171 | ) | (1,673 | ) | ||||
| Treasury shares: 0 shares and 375,007 shares at December 31, 2015 and June 30, 2016, respectively | - | - | ||||||
| Retained earnings | 1,259,495 | 1,296,241 | ||||||
| Total Waste Connections’ equity | 1,985,200 | 5,550,734 | ||||||
| Noncontrolling interest in subsidiaries | 6,584 | 6,987 | ||||||
| Total equity | 1,991,784 | 5,557,721 | ||||||
| $ | 5,121,798 | $ | 11,093,552 | |||||
| - 5 - |
Waste Connections, Inc.
Condensed Consolidated Statements of Cash Flows
SIX months ended JUNE 30, 2015 and 2016
(Unaudited)
(Dollars in thousands)
| Six months ended | ||||||||
| June 30, | ||||||||
| 2015 | 2016 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income | $ | 109,723 | $ | 72,737 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Loss (gain) on disposal of assets | (582 | ) | 509 | |||||
| Depreciation | 116,945 | 145,245 | ||||||
| Amortization of intangibles | 14,263 | 21,775 | ||||||
| Foreign currency transaction gain | - | (689 | ) | |||||
| Deferred income taxes, net of acquisitions | 14,725 | 25,363 | ||||||
| Amortization of debt issuance costs | 1,777 | 2,842 | ||||||
| Share-based compensation | 9,580 | 26,405 | ||||||
| Interest income on restricted assets | (215 | ) | (246 | ) | ||||
| Interest accretion | 3,704 | 3,629 | ||||||
| Excess tax benefit associated with equity-based compensation | (1,850 | ) | (5,015 | ) | ||||
| Adjustments to contingent consideration | 833 | (2,495 | ) | |||||
| Payment of contingent consideration recorded in earnings | - | (132 | ) | |||||
| Net change in operating assets and liabilities, net of acquisitions | 50,314 | (30,282 | ) | |||||
| Net cash provided by operating activities | 319,217 | 259,646 | ||||||
| Cash flows from investing activities: | ||||||||
| Payments for acquisitions, net of cash acquired | (91,724 | ) | (12,541 | ) | ||||
| Cash acquired in the Progressive Waste acquisition | - | 65,745 | ||||||
| Capital expenditures for property and equipment | (102,170 | ) | (112,087 | ) | ||||
| Proceeds from disposal of assets | 1,290 | 1,560 | ||||||
| Change in restricted assets, net of interest income | 296 | 113 | ||||||
| Other | 568 | (696 | ) | |||||
| Net cash used in investing activities | (191,740 | ) | (57,906 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from long-term debt | 336,000 | 3,352,676 | ||||||
| Principal payments on notes payable and long-term debt | (381,226 | ) | (3,461,005 | ) | ||||
| Payment of contingent consideration recorded at acquisition date | (190 | ) | (4,109 | ) | ||||
| Change in book overdraft | (21 | ) | 1,998 | |||||
| Proceeds from option and warrant exercises | 417 | - | ||||||
| Excess tax benefit associated with equity-based compensation | 1,850 | 5,015 | ||||||
| Payments for repurchase of common shares | (41,311 | ) | - | |||||
| Payments for cash dividends | (32,203 | ) | (35,585 | ) | ||||
| Tax withholdings related to net share settlements of restricted share units | (6,359 | ) | (11,349 | ) | ||||
| Distributions to noncontrolling interests | (43 | ) | (3 | ) | ||||
| Debt issuance costs | (3,120 | ) | (12,941 | ) | ||||
| Proceeds from sale of common shares held in trust | - | 8,436 | ||||||
| Net cash used in financing activities | (126,206 | ) | (156,867 | ) | ||||
| Effect of exchange rate changes on cash and equivalents | - | (223 | ) | |||||
| Net increase in cash and equivalents | 1,271 | 44,650 | ||||||
| Cash and equivalents at beginning of period | 14,353 | 10,974 | ||||||
| Cash and equivalents at end of period | $ | 15,624 | $ | 55,624 | ||||
| - 6 - |
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 June 30, 2016:
| Three months ended June 30, 2016 | ||
| Solid Waste Internal Growth: | ||
| Core Price | 2.9% | |
| Surcharges | (0.3%) | |
| Volume | 2.4% | |
| Recycling | (0.1%) | |
| Total Solid Waste Internal Growth | 4.9% |
Revenue Breakdown: The following table reflects a breakdown of our revenue for the three month periods ending June 30, 2015 and 2016:
| Three Months Ended June 30, 2015 | ||||||||||||||||
| Revenue | Inter- company Elimination | Reported Revenue | % | |||||||||||||
| Solid Waste Collection | $ | 342,583 | $ | (981 | ) | $ | 341,602 | 64.3 | % | |||||||
| Solid Waste Disposal and Transfer | 171,932 | (64,838 | ) | 107,094 | 20.1 | % | ||||||||||
| Solid Waste Recycling | 12,332 | (278 | ) | 12,054 | 2.3 | % | ||||||||||
| E&P Waste Treatment, Recovery and Disposal | 55,851 | (3,362 | ) | 52,489 | 9.9 | % | ||||||||||
| Intermodal and Other | 18,073 | - | 18,073 | 3.4 | % | |||||||||||
| Total | $ | 600,771 | $ | (69,459 | ) | $ | 531,312 | 100.0 | % | |||||||
| Three Months Ended June 30, 2016 | ||||||||||||||||
| Revenue | Inter- company Elimination | Reported Revenue | % | |||||||||||||
| Solid Waste Collection | $ | 502,948 | $ | (1,778 | ) | $ | 501,170 | 68.9 | % | |||||||
| Solid Waste Disposal and Transfer | 256,847 | (96,815 | ) | 160,032 | 22.0 | % | ||||||||||
| Solid Waste Recycling | 18,119 | (1,393 | ) | 16,726 | 2.3 | % | ||||||||||
| E&P Waste Treatment, Recovery and Disposal | 30,734 | (3,253 | ) | 27,481 | 3.8 | % | ||||||||||
| Intermodal and Other | 22,358 | (128 | ) | 22,230 | 3.0 | % | ||||||||||
| Total | $ | 831,006 | $ | (103,367 | ) | $ | 727,639 | 100.0 | % | |||||||
Contribution from Acquisitions: The following table reflects revenues from acquisitions, net of divestitures, for the three month periods ending June 30, 2015 and 2016:
| Three months ended June 30, | ||||||||
| 2015 | 2016 | |||||||
| Solid waste, net | $ | 6,199 | $ | 199,399 | ||||
| E&P waste | 5,161 | - | ||||||
| Acquisitions, net | $ | 11,360 | $ | 199,399 | ||||
| - 7 - |
ADDITIONAL STATISTICS (continued)
Other Cash Flow Items: The following table reflects cash interest and cash taxes for the three and six month periods ending June 30, 2015 and 2016:
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||
| 2015 | 2016 | 2015 | 2016 | |||||||||||||
| Cash Interest Paid | $ | 21,083 | $ | 19,736 | $ | 28,127 | $ | 35,993 | ||||||||
| Cash Taxes Paid | 32,072 | 16,013 | 32,535 | 16,914 | ||||||||||||
Debt to Book Capitalization as of June 30, 2016: 40%
Internalization for the three months ended June 30, 2016: 54%
Days Sales Outstanding for the three months ended June 30, 2016 pro forma for the Progressive Waste acquisition: 43 (31 net of deferred revenue)
Share Information for the three months ended June 30, 2016:
| Basic shares outstanding | 140,203,557 |
| Dilutive effect of warrants | 38,298 |
| Dilutive effect of restricted share units | 345,300 |
| Diluted shares outstanding | 140,587,155 |
| - 8 - |
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 the Company’s 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, plus foreign currency transaction loss, less foreign currency transaction gain. The Company further adjusts this calculation to exclude the effects of other items management believes impact the ability to assess the operating performance of our 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, | |||||||||||||||
| 2015 | 2016 | 2015 | 2016 | |||||||||||||
| Net Income | $ | 57,641 | $ | 27,720 | $ | 109,723 | $ | 72,737 | ||||||||
| Plus: Income tax provision | 37,153 | 15,265 | 71,020 | 44,265 | ||||||||||||
| Plus: Interest expense | 15,322 | 20,485 | 31,018 | 37,670 | ||||||||||||
| Plus: Depreciation and amortization | 66,903 | 98,429 | 131,208 | 167,020 | ||||||||||||
| Plus: Closure and post-closure accretion | 987 | 1,758 | 1,942 | 2,874 | ||||||||||||
| Plus/less: Other operating items | (316 | ) | (3,284 | ) | 346 | (3,048 | ) | |||||||||
| Plus/less: Other expense (income), net | (92 | ) | 714 | 128 | 492 | |||||||||||
| Less: Foreign currency transaction gain | - | (689 | ) | - | (689 | ) | ||||||||||
| Adjustments: | ||||||||||||||||
| Plus: Transaction-related expenses (a) | 82 | 37,702 | 594 | 46,516 | ||||||||||||
| Plus: Pre-existing Progressive Waste equity grants (b) | - | 5,357 | - | 5,357 | ||||||||||||
| Plus: Severance-related and other expenses (c) | - | 30,122 | - | 30,122 | ||||||||||||
| Adjusted EBITDA | $ | 177,680 | $ | 233,579 | $ | 345,979 | $ | 403,316 | ||||||||
| As % of revenues | 33.4 | % | 32.1 | % | 33.4 | % | 32.5 | % | ||||||||
____________________________________________
| (a) | Reflects the addback of acquisition-related transaction costs, including excise tax payments, primarily related to the Progressive Waste acquisition. |
|
(b)
(c) |
Reflects equity compensation costs, including changes in fair value, associated with equity awards granted by Progressive Waste outstanding at the time of the Progressive Waste acquisition. Reflects the addback of severance-related expenses and other items, including accelerated vesting of certain equity awards of both Old Waste Connections and Progressive Waste, in connection with the Progressive Waste acquisition. |
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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 June 30, | Six months ended June 30, | |||||||||||||||
| 2015 | 2016 | 2015 | 2016 | |||||||||||||
| Net cash provided by operating activities | $ | 156,647 | $ | 94,930 | $ | 319,217 | $ | 259,646 | ||||||||
| Plus/Less: Change in book overdraft | (47 | ) | 2,149 | (21 | ) | 1,998 | ||||||||||
| Plus: Proceeds from disposal of assets | 692 | 879 | 1,290 | 1,560 | ||||||||||||
| Plus: Excess tax benefit associated with equity-based compensation | 371 | 581 | 1,850 | 5,015 | ||||||||||||
| Less: Capital expenditures for property and equipment | (60,464 | ) | (55,512 | ) | (102,170 | ) | (112,087 | ) | ||||||||
| Less: Distributions to noncontrolling interests | - | - | (43 | ) | (3 | ) | ||||||||||
| Adjustments: | ||||||||||||||||
| Payment of contingent consideration recorded in earnings (a) | - | 99 | - | 132 | ||||||||||||
| Transaction-related expenses (b) | - | 71,067 | - | 72,042 | ||||||||||||
| Severance-related and other expenses (c) | - | 24,529 | - | 24,529 | ||||||||||||
| Tax effect (d) | (18,038 | ) | (18,410 | ) | ||||||||||||
| Adjusted free cash flow | $ | 97,199 | $ | 120,684 | $ | 220,123 | $ | 234,422 | ||||||||
| As % of revenues | 18.3 | % | 16.6 | % | 21.2 | % | 18.9 | % | ||||||||
___________________________________________
| (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 addback of acquisition-related transaction costs, including excise tax payments, primarily related to the Progressive Waste acquisition. |
| (c) | Reflects the addback of severance-related payments. |
| (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. |
| - 10 - |
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 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 the Company’s 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 adjusted net income attributable to Waste Connections and adjusted net income per diluted share attributable to Waste Connections differently.
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||
| 2015 | 2016 | 2015 | 2016 | |||||||||||||
| Reported net income attributable to Waste Connections | $ | 57,360 | $ | 27,489 | $ | 109,184 | $ | 72,331 | ||||||||
| Adjustments: | ||||||||||||||||
| Amortization of intangibles (a) | 7,264 | 14,081 | 14,263 | 21,775 | ||||||||||||
| Other operating items (b) | (316 | ) | (3,284 | ) | 346 | (3,048 | ) | |||||||||
| Transaction-related expenses (c) | - | 37,702 | - | 46,516 | ||||||||||||
| Pre-existing Progressive Waste equity grants (d) | - | 5,357 | - | 5,357 | ||||||||||||
| Severance-related and other expenses (e) | - | 30,122 | - | 30,122 | ||||||||||||
| Tax effect (f) | (2,665 | ) | (18,257 | ) | (5,602 | ) | (24,629 | ) | ||||||||
| Adjusted net income attributable to Waste Connections | $ | 61,643 | $ | 93,210 | $ | 118,191 | $ | 148,424 | ||||||||
| Diluted earnings per common share attributable to Waste Connections’ common shareholders: | ||||||||||||||||
| Reported net income | $ | 0.46 | $ | 0.20 | $ | 0.88 | $ | 0.55 | ||||||||
| Adjusted net income | $ | 0.50 | $ | 0.66 | $ | 0.95 | $ | 1.12 | ||||||||
______________________________________________
| (a) | Reflects the elimination of the non-cash amortization of acquisition-related intangible assets. |
|
(b) (c) |
Reflects the addback of other operating items. Reflects the addback of acquisition-related transaction costs, including excise tax payments, primarily related to the Progressive Waste acquisition. |
|
(d)
(e) |
Reflects equity compensation costs, including changes in fair value, associated with equity awards granted by Progressive Waste outstanding at the time of the Progressive Waste acquisition. Reflects the addback of severance-related expenses and other items, including accelerated vesting of certain equity |
|
(f)
|
awards of both Old Waste Connections and Progressive Waste, in connection with the Progressive Waste acquisition. The aggregate tax effect of the adjustments in footnotes (a) through (e) is calculated based on the applied tax rates for the respective periods. |
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