WASTE CONNECTIONS, INC. - Revenue of $1.176 billion, exceeding outlook
- Reports 5.1% solid waste price + volume growth
- Net income attributable to Waste Connections of $123.7 million, or $0.47 per share
- Adjusted net income attributable to Waste Connections* of $145.5 million, or $0.55 per share, up 25%
- Adjusted EBITDA* of $373.6 million, or 31.8% of revenue, exceeding outlook
- YTD net cash provided by operating activities of $551.9 million
- YTD adjusted free cash flow* of $393.6 million, or 17.4% of revenue
TORONTO, July 25, 2017 /PRNewswire/ -- Waste Connections, Inc. (TSX/NYSE: WCN) ("Waste Connections" or the "Company") today announced its results for the second quarter of 2017. Revenue in the second quarter totaled $1.176 billion, up from $727.6 million in the year ago period. Revenue from the Progressive Waste acquisition completed on June 1, 2016, was $511.4 million and $174.0 million in the current year and prior year periods, respectively. Operating income, which included $7.4 million in charges primarily related to share-based compensation costs associated with share-based awards assumed in the Progressive Waste acquisition, was $206.9 million. This compares to operating income of $63.5 million in the second quarter of 2016, which included $73.2 million of items primarily related to the Progressive Waste acquisition completed in that period.
Net income attributable to Waste Connections in the second quarter was $123.7 million, or $0.47 per share on a diluted basis of 264.1 million shares. In the year ago period, the Company reported net income attributable to Waste Connections of $27.5 million, or $0.13 per share on a diluted basis of 210.9 million shares. Shares and per share numbers reflect a three-for-two share split completed in June 2017.
Adjusted net income attributable to Waste Connections* in the second quarter was $145.5 million, or $0.55 per share, versus $93.2 million, or $0.44 per share, in the prior year period. Adjusted EBITDA* in the second quarter was $373.6 million, as compared to adjusted EBITDA* of $233.6 million in the prior year period. Adjusted net income attributable to Waste Connections, adjusted net income attributable to Waste Connections per diluted share and adjusted EBITDA, all non-GAAP measures, primarily exclude the impact of acquisition-related items, as reflected in the detailed reconciliation in the attached tables.
"Continued strength in solid waste volumes, recycled commodity prices and E&P waste activity enabled us to once again exceed our outlook for the quarter. Given our strong results in the first half of the year and expected continuing momentum from these trends, we believe we are on track to report approximately $1.45 billion of adjusted EBITDA in 2017, exceeding our initial outlook provided in February," said Ronald J. Mittelstaedt, Chairman and Chief Executive Officer. "More importantly, full year adjusted free cash flow, now estimated at approximately $750 million, or almost 52% of adjusted EBITDA, is also pacing ahead of initial expectations."
Mr. Mittelstaedt added, "We are pleased to report that our divestiture program is nearing completion, with the expected benefits greater than initially anticipated. Moreover, we are encouraged by our progress on potential acquisitions, for which we could fully utilize existing cash and projected excess cash flow over the next few quarters. In addition to funding potentially above average acquisition activity, our strong financial profile also positions us for another double-digit percentage increase in our quarterly dividend in October."
* A non-GAAP measure; see accompanying Non-GAAP Reconciliation Schedule.
For the six months ended June 30, 2017, revenue was $2.267 billion, as compared to revenue of $1.242 billion in the year ago period. Operating income, which included $159.0 million of expenses primarily related to both goodwill impairment against the Company's E&P segment resulting from the early adoption of FASB's recent accounting pronouncement simplifying the test for goodwill impairment and items related to the expected divestiture of certain assets acquired in the Progressive Waste acquisition, was $233.3 million, compared to $154.5 million for the same period in 2016, which included $82.0 million of costs primarily related to the Progressive Waste acquisition completed in that period.
Net income attributable to Waste Connections for the six months ended June 30, 2017, was $138.5 million, or $0.52 per share on a diluted basis of 264.0 million shares. In the year ago period, the Company reported net income attributable to Waste Connections of $72.3 million, or $0.37 per share on a diluted basis of 198.0 million shares.
Adjusted net income attributable to Waste Connections* for the six months ended June 30, 2017, was $275.5 million, or $1.04 per share, compared to $148.4 million, or $0.75 per share, in the year ago period. Adjusted EBITDA* for the six months ended June 30, 2017, was $706.4 million, as compared to $403.3 million in the prior year period.
UPDATED 2017 OUTLOOK
Waste Connections also updated its outlook for 2017, which assumes no change in the current economic environment. The Company's outlook excludes any impact from additional divestitures and 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 2017 are subject to quarterly fluctuations. See reconciliation in the attached tables.
-- Revenue is estimated to be approximately $4.570 billion, as compared to
our original revenue outlook of approximately $4.450 billion.
-- Net income is estimated to be approximately $390 million and adjusted
EBITDA* is estimated to be approximately $1.450 billion, or about 31.7%
of revenue, as compared to our original adjusted EBITDA* outlook of
$1.410 billion.
-- Net cash provided by operating activities is estimated to be
approximately $1.186 billion and adjusted free cash flow* is estimated
to be approximately $750 million, or about 16.4% of revenue, as compared
to our original adjusted free cash flow* outlook of approximately $725
million.
* A non-GAAP measure; see accompanying Non-GAAP Reconciliation Schedule.
CONFERENCE CALL
Waste Connections will be hosting a conference call related to second quarter earnings on July 26(th) at 8:30 A.M. Eastern Time. The call will be broadcast live over the Internet through a link on the Company's website at www.wasteconnections.com. A playback of the call will be available on the Company's website.
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 39 states in the U.S., and five 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 U.S. 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 within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995 (PSLRA) and "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," "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 2017 financial results, adjusted free cash flow, outlook and related assumptions, potential operating trends, expected benefits of the divestiture program, potential acquisition activity, and a potential dividend increase. 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 filings that have been made by the Company with the U.S. 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 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 AND SIX MONTHS ENDED JUNE 30, 2016 AND 2017
(Unaudited)
(in thousands of U.S. dollars, except share and per share amounts)
Three months ended Six months ended
June 30, June 30,
-------- --------
2016 2017 2016 2017
---- ---- ---- ----
Revenues $727,639 $1,175,569 $1,242,319 $2,266,835
Operating expenses:
Cost of operations 416,262 685,900 703,453 1,329,281
Selling, general and
administrative 152,737 126,350 220,419 255,400
Depreciation 84,348 132,827 145,245 258,067
Amortization of intangibles 14,081 24,762 21,775 50,272
Impairments and other
operating items (3,284) (1,180) (3,048) 140,501
Operating income 63,495 206,910 154,475 233,314
Interest expense (20,485) (31,160) (37,670) (60,291)
Other income (expense), net (714) 1,860 (492) 3,326
Foreign currency
transaction gain (loss) 689 (1,048) 689 (1,638)
Income before income tax
provision 42,985 176,562 117,002 174,711
Income tax provision (15,265) (52,675) (44,265) (35,804)
------- ------- ------- -------
Net income 27,720 123,887 72,737 138,907
Less: net income attributable to noncontrolling interests
(231) (231) (406) (377)
---- ---- ---- ----
Net income attributable to
Waste Connections $27,489 $123,656 $72,331 $138,530
======= ======== ======= ========
Earnings per common share attributable to Waste
Connections' common shareholders:
Basic $0.13 $0.47 $0.37 $0.53
===== ===== ===== =====
Diluted $0.13 $0.47 $0.37 $0.52
===== ===== ===== =====
Shares used in the per share calculations:
Basic 210,305,335 263,387,338 197,244,873 263,225,541
=========== =========== =========== ===========
Diluted 210,880,732 264,109,594 198,036,792 264,007,307
=========== =========== =========== ===========
Cash dividends per common
share $0.097 $0.12 $0.193 $0.24
====== ===== ====== =====
WASTE CONNECTIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands of U.S. dollars, except share and per share amounts)
December 31, June 30,
2016 2017
---- ----
ASSETS
Current assets:
Cash and equivalents $154,382 $399,741
Accounts receivable, net of
allowance for doubtful accounts of
$13,160 and $14,947 at December
31, 2016 and June 30, 2017,
respectively 485,138 547,671
Current assets held for sale 6,339 8,731
Prepaid expenses and other current
assets 97,533 93,053
------ ------
Total current assets 743,392 1,049,196
Property and equipment, net 4,738,055 4,729,335
Goodwill 4,390,261 4,589,573
Intangible assets, net 1,067,158 1,083,787
Restricted assets 63,406 60,393
Long-term assets held for sale 33,989 79,448
Other assets, net 67,664 63,631
------ ------
$11,103,925 $11,655,363
=========== ===========
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable $251,253 $239,150
Book overdraft 10,955 30,585
Accrued liabilities 269,402 270,621
Deferred revenue 134,081 140,070
Current portion of contingent
consideration 21,453 27,097
Current liabilities held for sale 3,383 6,365
Current portion of long-term debt
and notes payable 1,650 11,511
----- ------
Total current liabilities 692,177 725,399
Long-term debt and notes payable 3,616,760 3,963,909
Long-term portion of contingent
consideration 30,373 31,218
Long-term liabilities held for sale - 463
Other long-term liabilities 331,074 304,179
Deferred income taxes 778,664 822,209
------- -------
Total liabilities 5,449,048 5,847,377
Equity:
Common shares: 263,140,777 shares
issued and 262,803,380 shares
outstanding at December 31, 2016;
263,637,093 shares issued and
263,425,440 shares outstanding at
June 30, 2017 4,174,808 4,184,489
Additional paid-in capital 102,220 102,479
Accumulated other comprehensive
income (loss) (43,001) 26,108
Treasury shares: 337,397 and
211,653 shares at December 31,
2016 and June 30, 2017,
respectively - -
Retained earnings 1,413,488 1,487,171
--------- ---------
Total Waste Connections' equity 5,647,515 5,800,247
Noncontrolling interest in
subsidiaries 7,362 7,739
----- -----
Total equity 5,654,877 5,807,986
--------- ---------
$11,103,925 $11,655,363
=========== ===========
WASTE CONNECTIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 2016 AND 2017
(Unaudited)
(in thousands of U.S. dollars)
Six months ended June 30,
2016 2017
---- ----
Cash flows from operating
activities:
Net income $72,737 $138,907
Adjustments to reconcile net income
to net cash provided by operating
activities:
Loss on disposal of assets and
impairments 509 128,608
Depreciation 145,245 258,067
Amortization of intangibles 21,775 50,272
Foreign currency transaction (gain)
loss (689) 1,638
Deferred income taxes, net of
acquisitions 25,363 (10,378)
Amortization of debt issuance costs 2,842 2,101
Share-based compensation 26,405 23,364
Interest income on restricted
assets (246) (283)
Interest accretion 3,629 6,887
Excess tax benefit associated with
equity-based compensation (5,015) -
Adjustments to contingent
consideration (2,495) 11,013
Payment of contingent consideration
recorded in earnings (132) -
Net change in operating assets and
liabilities, net of acquisitions (30,282) (58,290)
------- -------
Net cash provided by operating
activities 259,646 551,906
------- -------
Cash flows from investing
activities:
Payments for acquisitions, net of
cash acquired (12,541) (347,936)
Cash acquired in the Progressive
Waste acquisition 65,745 -
Capital expenditures for property
and equipment (112,087) (202,617)
Proceeds from disposal of assets 1,560 20,617
Change in restricted assets, net of
interest income 113 3,689
Other (696) (1,732)
---- ------
Net cash used in investing
activities (57,906) (527,979)
------- --------
Cash flows from financing
activities:
Proceeds from long-term debt 3,352,676 864,952
Principal payments on notes payable
and long-term debt (3,461,005) (585,762)
Payment of contingent consideration
recorded at acquisition date (4,109) (5,565)
Change in book overdraft 1,998 19,479
Proceeds from option and warrant
exercises - 1,946
Excess tax benefit associated with
equity-based compensation 5,015 -
Payments for cash dividends (35,585) (63,463)
Tax withholdings related to net
share settlements of restricted
share units (11,349) (13,621)
Distributions to noncontrolling
interests (3) -
Debt issuance costs (12,941) (3,519)
Proceeds from sale of common shares
held in trust 8,436 7,735
Other - (1,094)
Net cash provided by (used in)
financing activities (156,867) 221,088
-------- -------
Effect of exchange rate changes on
cash and equivalents (223) 649
---- ---
Net increase in cash and
equivalents 44,650 245,664
Cash and equivalents at beginning
of period 10,974 154,382
Less: change in cash held for sale - (305)
--- ----
Cash and equivalents at end of
period $55,624 $399,741
======= ========
ADDITIONAL STATISTICS
(in thousands of U.S. dollars, except where noted)
Solid Waste Internal Growth: The following table reflects a breakdown of the components of our solid waste internal growth for the three months ended June 30, 2017:
U.S. Canada Total
---- ------ -----
Core Price 3.0% 4.2% 3.1%
Surcharges 0.0% 0.2% 0.0%
Volume 2.4% (2.4%) 2.0%
Recycling 1.0% 3.0% 1.1%
Foreign Exchange Impact - (3.0%) (0.2%)
-----
Total 6.4% 2.0% 6.0%
--- --- ---
Revenue Breakdown: The following table reflects a breakdown of our revenue for the three month periods ended June 30, 2016 and 2017:
Three Months Ended June 30, 2016
--------------------------------
Inter-company Elimination
Revenue Reported %
Revenue
-------
(1,778)
Solid Waste
Collection $502,948 $ $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%
------ ---- ------ ---
727,639
Total $831,006 $(103,367) $ 100.0%
======== ========= =====
Three Months Ended June 30, 2017
Revenue Inter-company Elimination Reported
Revenue %
------- ---
Solid Waste
Collection $797,131 $(2,392) $794,739 67.6%
Solid Waste
Disposal
and
Transfer 416,176 (158,937) 257,239 21.9%
Solid Waste
Recycling 43,693 (2,351) 41,342 3.5%
E&P Waste
Treatment,
Recovery
and
Disposal 50,043 (2,870) 47,173 4.0%
Intermodal
and Other 35,432 (356) 35,076 3.0%
------ ---- ------ ---
Total $1,342,475 $(166,906) $1,175,569 100.0%
========== ========= ========== =====
Contribution from Acquisitions: The following table reflects revenues from acquisitions, net of divestitures, for the three month periods ended June 30, 2016 and 2017:
Three months ended
June 30,
--------
2016 2017
---- ----
Solid waste, net $199,399 $386,211
E&P waste - -
--- ---
Acquisitions, net $199,399 $386,211
======== ========
ADDITIONAL STATISTICS (continued)
(in thousands of U.S. dollars, except where noted)
Other Cash Flow Items: The following table reflects cash interest and cash taxes for the three and six month periods ended June 30, 2016 and 2017:
Three months ended Six months ended
June 30, June 30,
-------- --------
2016 2017 2016 2017
---- ---- ---- ----
Cash
Interest
Paid $19,736 $32,301 $35,993 $54,603
Cash
Taxes
Paid 16,013 22,469 16,914 36,486
Debt to Book Capitalization as of June 30, 2017: 41%
Internalization for the three months ended June 30, 2017: 55%
Days Sales Outstanding for the three months ended June 30, 2017: 43 (32 net of deferred revenue)
Share Information for the three months ended June 30, 2017:
Basic shares outstanding 263,387,338
Dilutive effect of equity-
based awards 722,256
-------
Diluted shares outstanding 264,109,594
NON-GAAP RECONCILIATION SCHEDULE
(in thousands of U.S. dollars, except where noted)
Reconciliation of Adjusted EBITDA:
----------------------------------
Adjusted EBITDA, a non-GAAP financial measure, is provided supplementally because it is widely used by investors as a performance and valuation measure in the solid waste industry. Management uses adjusted EBITDA as one of the
principal measures to evaluate and monitor the ongoing financial performance of Waste Connections' operations. Waste Connections defines adjusted EBITDA as net income attributable to Waste Connections, plus net income
attributable to noncontrolling interests, plus or minus income tax provision (benefit), plus interest expense, plus depreciation and amortization expense, plus closure and post-closure accretion expense, plus or minus any loss
or gain on impairments and other operating items, plus other expense, less other income, plus foreign currency transaction loss, less foreign currency transaction gain. Waste Connections further adjusts this calculation to
exclude the effects of other items management believes impact the ability to assess the operating performance of its business. This measure is not a substitute for, and should be used in conjunction with, GAAP financial
measures. Other companies may calculate adjusted EBITDA differently.
Three months ended Six months ended
June 30, June 30,
-------- --------
2016 2017 2016 2017
---- ---- ---- ----
Net Income attributable
to Waste Connections $27,489 $123,656 $72,331 $138,530
Plus: Net income attributable to
noncontrolling interests 231 231 406 377
Plus: Income tax provision 15,265 52,675 44,265 35,804
Plus: Interest expense 20,485 31,160 37,670 60,291
Plus: Depreciation and amortization 98,429 157,589 167,020 308,339
Plus: Closure and post-closure
accretion 1,758 2,917 2,874 5,835
Plus/less: Impairments and other
operating items (3,284) (1,180) (3,048) 140,501
Plus/less: Other expense (income),
net 714 (1,860) 492 (3,326)
Plus/less: Foreign currency
transaction loss/(gain) (689) 1,048 (689) 1,638
Adjustments:
Plus: Transaction-related expenses
(a) 37,702 715 46,516 2,459
Plus: Pre-existing Progressive
Waste share-based grants (b) 5,357 4,103 5,357 10,578
Plus: Integration-related and other
expenses (c) 30,122 2,594 30,122 5,422
Adjusted EBITDA $233,579 $373,648 $403,316 $706,448
======== ======== ======== ========
As % of revenues 32.1% 31.8% 32.5% 31.2%
_______________________________________________
(a) Reflects the addback of acquisition-related transaction costs, which for 2016 primarily related to the
Progressive Waste acquisition.
(b) Reflects share-based compensation costs, including changes in fair value, associated with share-based
awards granted by Progressive Waste outstanding at the time of the Progressive Waste acquisition.
(c) Reflects the addback of rebranding costs and other integration-related items, including professional
fees and severance costs, associated with the Progressive Waste acquisition.
NON-GAAP RECONCILIATION SCHEDULE (continued)
(in thousands of U.S. dollars, except where noted)
Reconciliation of Adjusted Free Cash Flow:
------------------------------------------
Adjusted free cash flow, a non-GAAP financial measure, is provided supplementally because it is widely used by investors as a valuation and liquidity measure in the solid waste industry. Management uses adjusted free cash
flow as one of the principal measures to evaluate and monitor the ongoing financial performance of Waste Connections' operations. Waste Connections defines adjusted free cash flow as net cash provided by operating
activities, plus or minus change in book overdraft, plus proceeds from disposal of assets, 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 Six months ended
June 30, June 30,
-------- --------
2016 2017 2016 2017
---- ---- ---- ----
Net cash provided by operating
activities $94,930 $264,429 $259,646 $551,906
Plus/(Less): Change in book
overdraft 2,149 (568) 1,998 19,479
Plus: Proceeds from disposal
of assets 879 1,801 1,560 20,617
Plus: Excess tax benefit
associated with equity-based
compensation 581 - 5,015 -
Less: Capital expenditures for
property and equipment (55,512) (111,412) (112,087) (202,617)
Less: Distributions to
noncontrolling interests - - (3) -
Adjustments:
Payment of contingent
consideration recorded in
earnings (a) 99 - 132 -
Cash received for divestitures
(b) - - - (17,400)
Transaction-related expenses
(c) 71,067 715 72,042 2,459
Integration-related and other
expenses (d) 24,529 2,282 24,529 5,110
Pre-existing Progressive
Waste share-based grants (e) - 1,570 - 11,915
Synergy bonus (f) - - - 11,798
Tax effect (g) (18,038) (2,689) (18,410) (9,648)
------- ------ ------- ------
Adjusted free cash flow $120,684 $156,128 $234,422 $393,619
======== ======== ======== ========
As % of revenues 16.6% 13.3% 18.9% 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 Progressive
Waste operations.
(c) Reflects the addback of acquisition-related transaction costs, which for 2016 primarily related
to the Progressive Waste acquisition.
(d) Reflects the addback of rebranding costs and other integration-related items associated with the
Progressive Waste acquisition, including professional fees and severance costs.
(e) Reflects the cash settlement of pre-existing Progressive Waste share-based awards during the
period.
(f) Reflects the addback of cash bonuses paid pursuant to the Company's Synergy Bonus Program adopted
on July 19, 2016 in conjunction with the Progressive Waste acquisition.
(g) The aggregate tax effect of footnotes (a) through (f) is calculated based on the applied tax
rates for the respective periods.
NON-GAAP RECONCILIATION SCHEDULE (continued)
(in thousands of U.S. dollars, except per share amounts)
Reconciliation of Net Income attributable to Waste Connections to Adjusted Net Income attributable to Waste Connections and Adjusted Net Income per Diluted Share attributable to Waste
Connections:
---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Adjusted net income attributable to Waste Connections and adjusted net income per diluted share attributable to Waste Connections, both non-GAAP financial measures, are provided supplementally
because they are widely used by investors as a valuation measure in the solid waste industry. Management uses adjusted net income attributable to Waste Connections and adjusted net income per
diluted share attributable to Waste Connections as one of the principal measures to evaluate and monitor the ongoing financial performance of Waste Connections' operations. Waste Connections
provides adjusted net income attributable to Waste Connections to exclude the effects of items management believes impact the comparability of operating results between periods. Adjusted net
income attributable to Waste Connections has limitations due to the fact that it excludes items that have an impact on the Company's financial condition and results of operations. Adjusted net
income attributable to Waste Connections and adjusted net income per diluted share attributable to Waste Connections are not a substitute for, and should be used in conjunction with, GAAP
financial measures. Other companies may calculate these non-GAAP financial measures differently.
Three months ended Six months ended
June 30, June 30,
-------- --------
2016 2017 2016 2017
---- ---- ---- ----
Reported net income
attributable to Waste
Connections $27,489 $123,656 $72,331 $138,530
Adjustments:
Amortization of intangibles (a) 14,081 24,762 21,775 50,272
Impairments and other operating items
(b) (3,284) (1,180) (3,048) 140,501
Transaction-related expenses (c) 37,702 715 46,516 2,459
Pre-existing Progressive Waste share-
based grants (d) 5,357 4,103 5,357 10,578
Integration-related and other expenses
(e) 30,122 2,594 30,122 5,422
Tax effect (f) (18,257) (9,188) (24,629) (72,253)
------- -------
Adjusted net income
attributable to Waste
Connections $93,210 $145,462 $148,424 $275,509
======= ======== ======== ========
Diluted earnings per common share
attributable to Waste Connections'
common shareholders:
Reported net income $0.13 $0.47 $0.37 $0.52
===== ===== ===== =====
Adjusted net income $0.44 $0.55 $0.75 $1.04
===== ===== ===== =====
_____________________________________________________
(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, which for 2016 primarily related to the Progressive
Waste acquisition.
(d) Reflects share-based compensation costs, including changes in fair value, associated with share-based awards granted
by Progressive Waste outstanding at the time of the Progressive Waste acquisition.
(e) Reflects the addback of rebranding costs and other integration-related items, including professional fees and severance
costs, associated with the Progressive Waste acquisition.
(f) The aggregate tax effect of the adjustments in footnotes (a) through (e) is calculated based on the applied tax rates
for the respective periods.
UPDATED 2017 OUTLOOK
NON-GAAP RECONCILIATION SCHEDULE
(in thousands of U.S. dollars, except where noted)
Reconciliation of Adjusted EBITDA:
----------------------------------
Updated
2017 Outlook
------------
Net Income attributable to Waste
Connections $390,000
Plus: Net income attributable to noncontrolling
interests 1,000
Plus: Income tax provision 141,000
Plus: Interest expense 125,000
Plus: Depreciation and amortization 624,000
Plus: Closure and post-closure accretion 12,000
Plus: Impairments and other operating items (a) 140,501
Less: Other income, net (a) (3,326)
Plus: Foreign currency transaction loss (a) 1,638
Adjustments: (a)
Plus: Transaction-related expenses 2,459
Plus: Pre-existing Progressive Waste share-based
grants 10,578
Plus: Integration-related and other expenses 5,422
Adjusted EBITDA $1,450,272
==========
As % of revenues 31.7%
__________________________________________________
(a) Reflects amounts reported for the six month period ending on June 30, 2017, as shown on page 9.
Reconciliation of Adjusted Free Cash Flow:
------------------------------------------
Updated
2017 Outlook
------------
Net cash provided by operating
activities 1,185,500
$
Plus: Proceeds from disposal of
assets (a) 20,617
Less: Capital expenditures for
property and equipment (460,000)
Adjustments: (a)
Cash received for divestitures (17,400)
Integration-related and other
expenses 5,110
Transaction-related expenses 2,459
Pre-existing Progressive Waste
share-based grants 11,915
Synergy Bonus 11,798
Tax effect (9,648)
------
Adjusted free cash flow 750,351
$
===
As % of revenues 16.4%
_________________________________________________
(a) Reflects amounts reported for the six month period ending on June 30, 2017, as shown on page
10.
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SOURCE Waste Connections, Inc.
