0001558370-22-015993.txt : 20221102 0001558370-22-015993.hdr.sgml : 20221102 20221102162008 ACCESSION NUMBER: 0001558370-22-015993 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 14 CONFORMED PERIOD OF REPORT: 20221102 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Regulation FD Disclosure ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20221102 DATE AS OF CHANGE: 20221102 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Waste Connections, Inc. CENTRAL INDEX KEY: 0001318220 STANDARD INDUSTRIAL CLASSIFICATION: REFUSE SYSTEMS [4953] IRS NUMBER: 000000000 STATE OF INCORPORATION: A6 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-34370 FILM NUMBER: 221354394 BUSINESS ADDRESS: STREET 1: 6220 HWY 7 STREET 2: SUITE 600 CITY: WOODBRIDGE STATE: A6 ZIP: L4H 4G3 BUSINESS PHONE: (905) 532-7510 MAIL ADDRESS: STREET 1: 6220 HWY 7 STREET 2: SUITE 600 CITY: WOODBRIDGE STATE: A6 ZIP: L4H 4G3 FORMER COMPANY: FORMER CONFORMED NAME: Progressive Waste Solutions Ltd. DATE OF NAME CHANGE: 20110503 FORMER COMPANY: FORMER CONFORMED NAME: IESI-BFC Ltd DATE OF NAME CHANGE: 20090522 FORMER COMPANY: FORMER CONFORMED NAME: BFI Canada Ltd DATE OF NAME CHANGE: 20081015 8-K 1 wcn-20221102x8k.htm 8-K
0001318220false00013182202022-11-022022-11-02

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

Current Report

Pursuant To Section 13 or 15 (d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): November 2, 2022

Waste Connections, Inc.

(Exact name of registrant as specified in its charter)

Ontario, Canada

    

1-34370

    

98-1202763

(State or other jurisdiction
of Incorporation)

(Commission
File Number)

(I.R.S. Employer
Identification No.)

6220 Hwy 7, Suite 600

Woodbridge

Ontario L4H 4G3

Canada

(Address of principal executive offices)

Registrant’s telephone number, including area code: (905) 532-7510

Not Applicable

(Former name or address, if changed since last report.)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Shares, no par value

WCN

New York Stock Exchange (“NYSE”)
Toronto Stock Exchange (“TSX”)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Item 2.02  Results of Operations and Financial Condition.

See Item 7.01 below.

Item 7.01 Regulation FD Disclosure.

On November 2, 2022, Waste Connections, Inc., a corporation organized under the laws of Ontario, Canada (“Waste Connections” or the “Company”), issued a press release announcing its third quarter 2022 results and updated outlook for 2022.  A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

The information furnished in Items 2.02 and 7.01 is not deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, is not subject to the liabilities of that section, and is not deemed incorporated by reference in any filing under the Securities Act of 1933, as amended.

Safe Harbor and Forward-Looking Information

This document 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 document 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 document include, but are not limited to, statements about expected 2022 and 2023 financial results, outlook and related assumptions, and potential acquisition activity. 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 document.  Waste Connections undertakes no obligation to update the forward-looking statements set forth in this document, whether as a result of new information, future events, or otherwise, unless required by applicable securities laws.

Item 9.01 Financial Statements and Exhibits.

(d)Exhibits.

Exhibit No.

Description

99.1

Press Release, dated November 2, 2022, issued by Waste Connections, Inc.

104

The cover page of Waste Connections, Inc. on Current Report on Form 8-K formatted in Inline XBRL.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

WASTE CONNECTIONS, INC.

Date: November 2, 2022

BY:

/s/ Mary Anne Whitney

Mary Anne Whitney

Executive Vice President and Chief Financial Officer

EX-99.1 2 wcn-20221102xex99d1.htm EX-99.1 _

Graphic

WASTE CONNECTIONS REPORTS THIRD QUARTER 2022 RESULTS AND UPDATES FULL YEAR OUTLOOK

-Increasing solid waste pricing growth, E&P waste activity and acquisition contribution once again drive better than expected quarterly results
-Revenue of $1.880 billion, up 17.7%
-Net income(a) of $236.9 million, and adjusted EBITDA(b) of $588.1 million, up 16.3%
-Adjusted EBITDA(b) margin of 31.3% of revenue, above outlook and up 20 basis points year over year, excluding acquisitions
-Net income of $0.92 per share, and adjusted net income(b) of $1.10 per share
-Year to date net cash provided by operating activities of $1.500 billion and adjusted free cash flow(b) of $929.0 million, or 17.4% of revenue
-Year to date signed or closed acquisitions with approximately $570 million of total annualized revenue
-Increases regular quarterly dividend by 10.9%

TORONTO, ONTARIO, November 2, 2022 - Waste Connections, Inc. (TSX/NYSE: WCN) (“Waste Connections” or the “Company”) today announced its results for the third quarter of 2022 and updated its outlook for 2022. 

Strong execution once again provided for better than expected results, driven in the third quarter by continued acceleration of solid waste pricing to 10.1% and higher E&P waste activity, along with acquisitions closed during the period.  Most notably, we overcame 50 basis points in incremental headwinds, primarily from the precipitous decline in recycled commodity values in September, to beat our outlook and expand adjusted EBITDA margin both sequentially and on a year-over-year basis, excluding the dilutive impact from acquisitions completed since the year ago period,” said Worthing F. Jackman, President and Chief Executive Officer.  

Mr. Jackman added, “As anticipated, acquisition activity continues to run well above historical levels, with $535 million in annualized revenue closed in 2022 plus an additional $35 million under definitive agreement expected to close by year end or early in 2023.  These transactions include multi-market solid waste franchises in California and Oregon; integrated market expansions in Arizona and Texas; new market entries in Pennsylvania, British Columbia and Quebec; and multiple tuck-ins and market expansions within our recently established footprint in Massachusetts.”

“The strength of our balance sheet, operating performance and free cash flow generation positioned us for another double-digit increase in our quarterly cash dividend, once again demonstrating our capacity for outsized acquisition activity while continuing to fund our differentiated growth strategy and increasing return of capital to shareholders.”

Mr. Jackman concluded, “Our outperformance through the third quarter and acquisitions closed year to date enhance our visibility for expected double-digit revenue growth in 2023, led by pricing expected to remain at elevated levels, plus rollover contribution from acquisitions already signed or closed year to date.  In addition, we expect underlying margin expansion to overcome headwinds from recent decreases in recycled commodity values.”

Q3 2022 Results

Revenue in the third quarter totaled $1.880 billion, up from $1.597 billion in the year ago period.  Operating income was $326.8 million, which included $25.1 million primarily in impairments and other operating items and transaction expenses.  This compares to operating income of $285.1 million in the third quarter of 2021, which included $9.7 million primarily related to transaction expenses and impairments and other operating items.  Net income in the third quarter was $236.9 million, or $0.92 per share on a diluted basis of 257.9 million shares, including a $15.3 million net of tax benefit, or $0.06 per share, primarily as a result of the

1


impact from changes in foreign currency exchange rates on certain debt in the period.  In the year ago period, the Company reported net income of $114.4 million, or $0.44 per share on a diluted basis of 261.1 million shares, including a net of tax loss on debt extinguishment associated with the prepayment of senior notes of $84.2 million or $0.32 per share.  

Adjusted net income(b) in the third quarter was $284.9 million, or $1.10 per diluted share, versus $233.1 million, or $0.89 per diluted share, in the prior year period.  Adjusted EBITDA(b) in the third quarter was $588.1 million, as compared to $505.6 million in the prior year period.  Adjusted net income, adjusted net income per diluted share and adjusted EBITDA, all non-GAAP measures, primarily exclude impairments and acquisition-related items, as reflected in the detailed reconciliations in the attached tables.

Nine Months Year to Date Results

For the nine months ended September 30, 2022, revenue was $5.343 billion, up from $4.527 billion in the year ago period.  Operating income, which included $38.5 million primarily attributable to impairments and other operating items and transaction-related expenses, was $930.2 million, as compared to operating income of $790.3 million in 2021, which included $23.7 million in impairments, fair value changes in equity awards and transaction expenses.

Net income for the nine months ended September 30, 2022 was $641.3 million, or $2.49 per share on a diluted basis of 258.1 million shares, including a $18.9 million net of tax benefit, or $0.07 per share, primarily as a result of the impact from changes in foreign currency exchange rates on certain debt.  In the year ago period, the Company reported net income of $451.7 million, or $1.72 per share on a diluted basis of 261.9 million shares, including a net of tax loss on debt extinguishment associated with the prepayment of senior notes of $84.2 million or $0.32 per share.  

Adjusted net income(b) for the nine months ended September 30, 2022 was $755.5 million, or $2.93 per diluted share, compared to $629.5 million, or $2.39 per diluted share, in the year ago period. Adjusted EBITDA(b) for the nine months ended September 30, 2022 was $1.657 billion, as compared to $1.424 billion in the prior year period.

 

Updated 2022 Outlook

Waste Connections also updated its outlook for 2022, which assumes no change in the current economic environment or underlying economic trends.  The Company’s outlook excludes any impact from additional acquisitions 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 2022 are subject to quarterly fluctuations.  See reconciliations in the attached tables.

-Revenue is estimated to be approximately $7.190 billion, as compared to our previously revised revenue outlook of approximately $7.125 billion.  
-Net income is estimated to be approximately $836.7 million, and adjusted EBITDA(b) is estimated to be approximately $2.210 billion, or about 30.7% of revenue, as compared to our previously revised adjusted EBITDA(b) outlook of $2.190 billion or 30.7% of revenue.
-Capital expenditures are estimated to be approximately $850 million, in line with our original outlook.
-Net cash provided by operating activities is estimated to be approximately $1.963 billion, and adjusted free cash flow(b) is estimated at approximately $1.160 billion, or about 16.1% of revenue, as compared to our previously revised adjusted free cash flow(b) outlook of $1.160 billion or 16.3% of revenue.  

Environmental, Social and Governance

Waste Connections views its Environmental, Social and Governance (“ESG”) efforts as integral to its business, with initiatives consistent with its objective of long-term value creation.  In 2020, the Company introduced long-term, aspirational ESG targets and committed over $500 million for investments to meet or exceed such sustainability targets. These investments primarily focus on reducing emissions, increasing resource recovery of both recyclable commodities and clean energy fuels, reducing reliance on off-site disposal for landfill leachate, further improving safety and enhancing employee engagement.  The Company’s 2022 Sustainability Report provides progress updates on its targets and investments towards their achievement, and introduces new emissions reduction targets.  For more information, visit wasteconnections.com/sustainability.

----------------------------------------------------------------------------------------------------------------------------------------------------

(a) All references to "Net income" refer to the financial statement line item "Net income attributable to Waste Connections".

(b) A non-GAAP measure; see accompanying Non-GAAP Reconciliation Schedule.

2


Q3 2022 Earnings Conference Call

Waste Connections will be hosting a conference call related to third quarter earnings on November 3rd at 8:30 A.M. Eastern Time.  A live audio webcast of the conference call can be accessed by visiting investors.wasteconnections.com and selecting “News & Events” from the website menu. Alternatively, conference call participants can preregister by clicking here.  Registered participants will receive dial-in instructions and a personalized code for entry to the conference call.  A replay of the conference call will be available until November 10, 2022, by calling 877-344-7529 (within North America) or 412-317-0088 (international) and entering Passcode #5667024.

Waste Connections will be filing a Form 8-K on EDGAR and on SEDAR (as an "Other" document) prior to markets opening on November 3rd, providing the Company's fourth quarter 2022 outlook for revenue, price plus volume growth for solid waste, and adjusted EBITDA(b).

About Waste Connections

Waste Connections is an integrated solid waste services company that provides non-hazardous waste collection, transfer and disposal services, along with resource recovery primarily through recycling and renewable fuels generation.  The Company serves more than eight million residential, commercial and industrial customers in mostly exclusive and secondary markets across 43 states in the U.S. and six provinces in Canada.  Waste Connections also provides non-hazardous oilfield waste treatment, recovery and disposal services in several basins across the U.S., as well as intermodal services for the movement of cargo and solid waste containers in the Pacific Northwest.  For more information, visit Waste Connections at wasteconnections.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 2022 and 2023 financial results, outlook and related assumptions, and potential acquisition activity. 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 Joe Box / (832) 442-2153

maryannew@wasteconnections.com joe.box@wasteconnections.com

3


Waste Connections, Inc.

CONDENSED Consolidated Statements of NET INCOME

THRee AND NINE months ended SEPTEMBER 30, 2021 and 2022

(Unaudited)

(in thousands of U.S. dollars, except share and per share amounts)

Three months ended
September 30,

Nine months ended
September 30,

    

2021

    

2022

    

2021

    

2022

Revenues

$

1,597,168

$

1,879,868

$

4,527,042

$

5,342,558

 

Operating expenses:

Cost of operations

946,098

1,120,629

2,673,209

3,198,039

Selling, general and administrative

155,520

186,887

454,885

518,705

Depreciation

171,965

193,287

498,588

562,174

Amortization of intangibles

35,337

38,859

100,237

113,956

Impairments and other operating items

3,104

13,438

9,819

19,467

Operating income

285,144

326,768

790,304

930,217

Interest expense

(40,418)

(51,161)

(124,171)

(137,565)

Interest income

495

1,784

2,342

2,574

Other income, net

3,140

8,487

5,452

2,373

Loss on early extinguishment of debt

(115,288)

-

(115,288)

-

Income before income tax provision

133,073

285,878

558,639

797,599

Income tax provision

(18,419)

(48,753)

(106,578)

(155,899)

Net income

114,654

237,125

452,061

641,700

Less: Net income attributable to noncontrolling interests

(273)

(213)

(325)

(390)

Net income attributable to Waste Connections

$

114,381

$

236,912

$

451,736

$

641,310

Earnings per common share attributable to Waste Connections’ common shareholders:

Basic

$

0.44

$

0.92

$

1.73

$

2.49

Diluted

$

0.44

$

0.92

$

1.72

$

2.49

Shares used in the per share calculations:

Basic

260,550,774

257,197,010

261,372,827

257,438,756

Diluted

261,145,220

257,891,635

261,879,754

258,060,751

Cash dividends per common share

$

0.205

$

0.230

$

0.615

$

0.690

4


Waste Connections, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(in thousands of U.S. dollars, except share and per share amounts)

    

December 31,
2021

    

September 30,
2022

 

ASSETS

Current assets:

Cash and equivalents

$

147,441

$

200,179

Accounts receivable, net of allowance for credit losses of $18,480 and $20,512 at December 31, 2021 and September 30, 2022, respectively

709,614

810,932

Prepaid expenses and other current assets

175,722

219,203

Total current assets

1,032,777

1,230,314

Restricted cash

72,174

108,194

Restricted investments

59,014

55,922

Property and equipment, net

5,721,949

6,353,367

Operating lease right-of-use assets

160,567

190,860

Goodwill

6,187,643

6,574,860

Intangible assets, net

1,350,597

1,489,242

Other assets, net

115,203

127,909

Total assets

$

14,699,924

$

16,130,668

LIABILITIES AND EQUITY

Current liabilities:

Accounts payable

$

392,868

$

507,899

Book overdraft

16,721

10,734

Deferred revenue

273,720

306,019

Accrued liabilities

442,596

457,904

Current portion of operating lease liabilities

38,017

34,526

Current portion of contingent consideration

62,804

54,867

Current portion of long-term debt and notes payable

6,020

6,718

Total current liabilities

1,232,746

1,378,667

Long-term portion of debt and notes payable

5,040,500

6,211,971

Long-term portion of operating lease liabilities

129,628

163,848

Long-term portion of contingent consideration

31,504

30,896

Deferred income taxes

850,921

986,252

Other long-term liabilities

421,080

415,664

Total liabilities

7,706,379

9,187,298

Commitments and contingencies

Equity:

Common shares: 260,283,158 shares issued and 260,212,496 shares outstanding at December 31, 2021; 257,183,663 shares issued and 257,118,204 shares outstanding at September 30, 2022

3,693,027

3,271,958

Additional paid-in capital

199,482

229,445

Accumulated other comprehensive income

39,584

(83,476)

Treasury shares: 70,662 and 65,459 shares at December 31, 2021 and September 30, 2022, respectively

-

-

Retained earnings

3,056,845

3,520,446

Total Waste Connections’ equity

6,988,938

6,938,373

Noncontrolling interest in subsidiaries

4,607

4,997

Total equity

6,993,545

6,943,370

$

14,699,924

$

16,130,668

5


Waste Connections, Inc.

Condensed Consolidated Statements of Cash Flows

Nine months ended september 30, 2021 and 2022

(Unaudited)

(in thousands of U.S. dollars)

Nine months ended September 30,

    

2021

    

2022

 

Cash flows from operating activities:

Net income

$

452,061

$

641,700

Adjustments to reconcile net income to net cash provided by operating activities:

Loss on disposal of assets and impairments

9,302

11,503

Depreciation

498,588

562,174

Amortization of intangibles

100,237

113,956

Loss on early extinguishment of debt

115,288

-

Deferred income taxes, net of acquisitions

(24,282)

91,098

Current period provision for expected credit losses

9,239

11,097

Amortization of debt issuance costs

3,887

3,879

Share-based compensation

42,694

48,395

Interest accretion

12,068

13,218

Payment of contingent consideration recorded in earnings

(520)

(2,982)

Adjustments to contingent consideration

89

(1,030)

Other

(1,286)

(8,412)

Net change in operating assets and liabilities, net of acquisitions

52,596

15,541

Net cash provided by operating activities

1,269,961

1,500,137

Cash flows from investing activities:

Payments for acquisitions, net of cash acquired

(561,276)

(1,272,910)

Capital expenditures for property and equipment

(479,480)

(618,313)

Proceeds from disposal of assets

10,109

23,341

Other

(4,193)

9,296

Net cash used in investing activities

(1,034,840)

(1,858,586)

Cash flows from financing activities:

Proceeds from long-term debt

1,943,192

3,148,624

Principal payments on notes payable and long-term debt

(1,814,034)

(2,052,412)

Premiums paid on early extinguishment of debt

(110,617)

-

Payment of contingent consideration recorded at acquisition date

(7,998)

(12,114)

Change in book overdraft

(563)

(5,983)

Payments for repurchase of common shares

(305,640)

(424,999)

Payments for cash dividends

(160,754)

(177,710)

Tax withholdings related to net share settlements of equity-based compensation

(18,576)

(17,466)

Debt issuance costs

(17,997)

(11,454)

Proceeds from issuance of shares under employee share purchase plan

1,275

3,271

Proceeds from sale of common shares held in trust

131

660

Net cash provided by (used in) financing activities

(491,581)

450,417

Effect of exchange rate changes on cash, cash equivalents and restricted cash

443

(3,210)

Net increase (decrease) in cash, cash equivalents and restricted cash

(256,017)

88,758

Cash, cash equivalents and restricted cash at beginning of period

714,389

219,615

Cash, cash equivalents and restricted cash at end of period

$

458,372

$

308,373

6


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 and nine month periods ended September 30, 2022:

    

Three months ended

September 30, 2022

Nine months ended

September 30, 2022

Core Price

8.3%

7.3%

Surcharges

1.8%

1.4%

Volume

(1.5%)

(0.6%)

Recycling

(1.3%)

0.0%

Foreign Exchange Impact

(0.5%)

(0.3%)

Total

6.8%

7.8%

Revenue Breakdown: The following table reflects a breakdown of our revenue for the three month periods ended September 30, 2021 and 2022:

Three months ended September 30, 2021

    

Revenue

    

Inter-company
Elimination

    

Reported
Revenue

    

%

Solid Waste Collection

$

1,137,206

$

(3,091)

$

1,134,115

71.0

%

Solid Waste Disposal and Transfer

553,974

(217,899)

336,075

21.0

%

Solid Waste Recycling

55,772

(1,354)

54,418

3.4

%

E&P Waste Treatment, Recovery and Disposal

38,519

(3,560)

34,959

2.2

%

Intermodal and Other

38,377

(776)

37,601

2.4

%

Total

$

1,823,848

$

(226,680)

$

1,597,168

100.0

%

Three months ended September 30, 2022

    

Revenue

    

Inter-company
Elimination

    

Reported
Revenue

    

%

Solid Waste Collection

$

1,368,491

$

(4,296)

$

1,364,195

72.6

%

Solid Waste Disposal and Transfer

616,900

(245,687)

371,213

19.8

%

Solid Waste Recycling

48,246

(2,332)

45,914

2.4

%

E&P Waste Treatment, Recovery and Disposal

56,995

(3,978)

53,017

2.8

%

Intermodal and Other

47,604

(2,075)

45,529

2.4

%

Total

$

2,138,236

$

(258,368)

$

1,879,868

100.0

%

Contribution from Acquisitions: The following table reflects revenues from acquisitions, net of divestitures, for the three and nine month periods ended September 30, 2021 and 2022:

Three months ended
September 30,

Nine months ended
September 30,

    

2021

    

2022

    

2021

    

2022

Acquisitions, net

$

51,368

$

150,644

$

136,035

$

402,007

7


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 nine month periods ended September 30, 2021 and 2022:

Three months ended
September 30,

Nine months ended
September 30,

    

2021

    

2022

    

2021

    

2022

Cash Interest Paid

$

38,685

$

42,528

$

120,647

$

118,541

Cash Taxes Paid

29,411

15,787

90,104

53,599

Debt to Book Capitalization as of September 30, 2022: 47%

Internalization for the three months ended September 30, 2022: 54%

Days Sales Outstanding for the three months ended September 30, 2022: 40 (25 net of deferred revenue)

Share Information for the three months ended September 30, 2022:

Basic shares outstanding

257,197,010

Dilutive effect of equity-based awards

694,625

Diluted shares outstanding

257,891,635

8


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 or minus net income (loss) attributable to noncontrolling interests, plus income tax provision, 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.  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
September 30,

Nine months ended
September 30,

    

2021

    

2022

    

2021

    

2022

Net income attributable to Waste Connections

$

114,381

$

236,912

$

451,736

$

641,310

Plus: Net income attributable to noncontrolling interests

273

213

325

390

Plus: Income tax provision

18,419

48,753

106,578

155,899

Plus: Interest expense

40,418

51,161

124,171

137,565

Less: Interest income

(495)

(1,784)

(2,342)

(2,574)

Plus: Depreciation and amortization

207,302

232,146

598,825

676,130

Plus: Closure and post-closure accretion

3,544

4,061

10,919

12,148

Plus: Impairments and other operating items

3,104

13,438

9,819

19,467

Less: Other income, net

(3,140)

(8,487)

(5,452)

(2,373)

Plus: Loss on early extinguishment of debt

115,288

-

115,288

-

Adjustments:

Plus: Transaction-related expenses(a)

5,637

10,461

6,220

18,694

Plus: Fair value changes to equity awards(b)

914

1,196

7,638

349

Adjusted EBITDA

$

505,645

$

588,070

$

1,423,725

$

1,657,005

As % of revenues

31.7%

31.3%

31.4%

31.0%

____________________________

(a)Reflects the addback of acquisition-related transaction costs.
(b)Reflects fair value accounting changes associated with certain equity awards.

9


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
September 30,

Nine months ended
September 30,

    

2021

    

2022

    

2021

    

2022

Net cash provided by operating activities

$

421,482

$

526,459

$

1,269,961

$

1,500,137

Less: Change in book overdraft

(373)

(5,929)

(563)

(5,983)

Plus: Proceeds from disposal of assets

2,204

6,447

10,109

23,341

Less: Capital expenditures for property and equipment

(208,089)

(246,885)

(479,480)

(618,313)

Adjustments:

Payment of contingent consideration recorded in earnings(a)

-

2,982

520

2,982

Cash received for divestitures(b)

-

-

-

(5,671)

Transaction-related expenses(c)

25,090

10,461

25,673

37,558

Pre-existing Progressive Waste share-based grants(d)

173

274

317

286

Tax effect(e)

(485)

(3,212)

(699)

(5,377)

Adjusted free cash flow

$

240,002

$

290,597

$

825,838

$

928,960

As % of revenues

15.0%

15.5%

18.2%

17.4%

___________________________

(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 certain operations.
(c)Reflects the addback of acquisition-related transaction costs and the settlement of an acquired tax liability.
(d)Reflects the cash settlement of pre-existing Progressive Waste share-based awards during the period.
(e)The aggregate tax effect of footnotes (a) through (d) is calculated based on the applied tax rates for the respective periods.

10


NON-GAAP RECONCILIATION SCHEDULE (continued)

(in thousands of U.S. dollars, except per share amounts)

Reconciliation of 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
September 30,

Nine months ended
September 30,

    

2021

    

2022

2021

2022

Reported net income attributable to Waste Connections

$

114,381

$

236,912

$

451,736

$

641,310

Adjustments:

Amortization of intangibles(a)

35,337

38,859

100,237

113,956

Impairments and other operating items(b)

3,104

13,438

9,819

19,467

Transaction-related expenses(c) 

5,637

10,461

6,220

18,694

Fair value changes to equity awards(d)

914

1,196

7,638

349

Loss on early extinguishment of debt(e)

115,288

-

115,288

-

Tax effect(f)

(41,531)

(15,944)

(61,466)

(38,260)

Adjusted net income attributable to Waste Connections

$

233,130

$

284,922

$

629,472

$

755,516

Diluted earnings per common share attributable to Waste Connections’ common shareholders:

Reported net income

$

0.44

$

0.92

$

1.72

$

2.49

Adjusted net income

$

0.89

$

1.10

$

2.39

$

2.93

____________________________

(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 fair value accounting changes associated with certain equity awards.
(e)Reflects the make-whole premium and related fees associated with the early termination of $1.5 billion in senior notes.  
(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.

11


UPDATED 2022 OUTLOOK

NON-GAAP RECONCILIATION SCHEDULE

(in thousands of U.S. dollars, except where noted)

Reconciliation of Adjusted EBITDA:

Updated 2022 Outlook

August Estimates

Current  Estimates

  

Observation

Net income attributable to Waste Connections

$

837,500

$

836,700

Plus: Income tax provision (a)

232,973

209,763

Approximate 20% effective rate

Plus: Interest expense, net

180,000

197,000

Plus: Depreciation and Depletion

752,000

758,000

Approximately 10.5% of revenue

Plus: Amortization

152,000

156,000

Plus: Closure and post-closure accretion

16,000

16,400

Plus: Impairments and other operating items (b)

6,028

19,467

Plus: Other income, net (b)

6,114

(2,373)

Adjustments: (b)

Plus: Transaction-related expenses

8,232

18,694

Plus: Fair value changes to equity awards

(847)

349

Adjusted EBITDA

$

2,190,000

$

2,210,000

Approximately 30.7% of revenue

       

____________________________

(a)Approximately 20.0% full year effective tax rate, including amounts reported for the nine-month period ended September 30, 2022.
(b)Reflects amounts reported for the nine-month period ended September 30, 2022, as shown on page 9.

Reconciliation of Adjusted Free Cash Flow:

Updated 2022 Outlook

    

August Estimates

    

Current Estimates

Net cash provided by operating activities

$

1,973,888

$

1,962,864

Less: Change in book overdraft (a)

(54)

(5,983)

Plus: Proceeds from disposal of assets (a)

16,894

23,341

Less: Capital expenditures for property and equipment          

(850,000)

(850,000)

Adjustments: (a)

Payment of contingent consideration recorded in earnings

-

2,982

Cash received for divestitures

(5,671)

(5,671)

Transaction-related expenses

27,096

37,558

Pre-existing Progressive Waste share-based grants

12

286

Tax effect

(2,165)

(5,377)

Adjusted free cash flow

$

1,160,000

$

1,160,000

As % of revenues

16.3%

16.1%

____________________________

(a)Reflects amounts reported for the nine-month period ended September 30, 2022, as shown on page 10.

12


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Document and Entity Information
Nov. 02, 2022
Document and Entity Information [Abstract]  
Document Type 8-K
Document Period End Date Nov. 02, 2022
Entity File Number 1-34370
Entity Registrant Name Waste Connections, Inc.
Entity Incorporation, State or Country Code A6
Entity Tax Identification Number 98-1202763
Entity Address, Address Line One 6220 Hwy 7
Entity Address, Address Line Two Suite 600
Entity Address, City or Town Woodbridge
Entity Address, State or Province ON
Entity Address, Postal Zip Code L4H 4G3
Entity Address, Country CA
City Area Code 905
Local Phone Number 532-7510
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Title of 12(b) Security Common Shares, no par value
Trading Symbol WCN
Security Exchange Name NYSE
Entity Emerging Growth Company false
Entity Central Index Key 0001318220
Amendment Flag false
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