WASTE CONNECTIONS, INC. - Revenue of $1.206 billion, exceeding outlook
- Reports 3.8% solid waste price + volume growth, exceeding outlook
- Net income attributable to Waste Connections of $123.2 million, or $0.47 per share
- Adjusted net income attributable to Waste Connections* of $158.1 million, or $0.60 per share, up 25%
- Adjusted EBITDA* of $393.4 million, or 32.6% of revenue, up 100 basis points
- YTD net cash provided by operating activities of $888.4 million
- YTD adjusted free cash flow* of $614.0 million, or 17.7% of revenue
- Increases regular quarterly cash dividend by 16.7%
TORONTO, Oct. 25, 2017 /PRNewswire/ -- Waste Connections, Inc. (TSX/NYSE: WCN) ("Waste Connections" or the "Company") today announced its results for the third quarter of 2017. Revenue in the third quarter totaled $1.206 billion, up from $1.085 billion in the year ago period. Operating income was $218.8 million, which included $7.2 million in charges primarily related to costs for transactions completed in the period and certain costs associated with the Progressive Waste acquisition, including share-based compensation costs associated with share-based awards assumed in that acquisition. This compares to operating income of $158.7 million in the third quarter of 2016, which included $20.3 million of items primarily related to the Progressive Waste acquisition completed on June 1, 2016.
Net income attributable to Waste Connections in the third quarter was $123.2 million, or $0.47 per share on a diluted basis of 264.3 million shares. In the year ago period, the Company reported net income attributable to Waste Connections of $88.6 million, or $0.34 per share on a diluted basis of 263.7 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 third quarter was $158.1 million, or $0.60 per diluted share, versus $126.5 million, or $0.48 per diluted share, in the prior year period. Adjusted EBITDA* in the third quarter was $393.4 million, as compared to adjusted EBITDA* of $342.3 million in the prior year period. Adjusted net income attributable to Waste Connections, adjusted net income attributable to Waste Connections per diluted share, adjusted EBITDA, and adjusted free cash flow, all non-GAAP measures, primarily exclude the impact of acquisition-related items, as shown in the detailed reconciliation in the attached schedules.
"Continued strength across all lines of business enabled us to once again exceed our outlook for the third quarter. Adjusted EBITDA* as a percent of revenue in the quarter expanded 100 basis points year-over-year, as expected, in spite of the impact from two hurricanes, which is especially noteworthy in light of the dilutive margin acquisitions completed since the year-ago period. More importantly, adjusted free cash flow remains notably strong at $614.0 million year-to-date, or 17.7% of revenue and 55.8% of adjusted EBITDA*," said Ronald J. Mittelstaedt, Chairman and Chief Executive Officer. "We remain on track to meet or exceed the increased expectations for the full year we communicated in July despite the precipitous decline in recycled fiber values that began in September."
Mr. Mittelstaedt added, "As anticipated last quarter, our strong operating performance, free cash flow growth and balance sheet strength provided for another double-digit percentage increase in the quarterly cash dividend. We remain well positioned to fund expected above average acquisition activity in the near term while continuing to increase our return of capital to shareholders."
* A non-GAAP measure; see accompanying Non-GAAP Reconciliation Schedule.
For the nine months ended September 30, 2017, revenue was $3.473 billion, as compared to revenue of $2.327 billion in the year ago period. Operating income, which included $167.0 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 share-based compensation costs associated with share-based awards assumed in the Progressive Waste acquisition, was $452.1 million, compared to $313.1 million for the same period in 2016, which included $102.3 million of items related to the Progressive Waste acquisition.
Net income attributable to Waste Connections for the nine months ended September 30, 2017, was $261.7 million, or $0.99 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 $160.9 million, or $0.73 per share on a diluted basis of 220.1 million shares.
Adjusted net income attributable to Waste Connections* for the nine months ended September 30, 2017, was $433.6 million, or $1.64 per diluted share, compared to $274.9 million, or $1.25 per diluted share, in the year ago period. Adjusted EBITDA* for the nine months ended September 30, 2017, was $1.100 billion, as compared to $745.6 million in the prior year period.
* A non-GAAP measure; see accompanying Non-GAAP Reconciliation Schedule
CONFERENCE CALL
Waste Connections will be hosting a conference call related to third quarter earnings on October 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 38 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, potential acquisition activity and the amount of capital returned to shareholders. Important factors that could cause actual results to differ, possibly materially, from those indicated by the forward-looking statements include, but are not limited to, risk factors detailed from time to time in 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 NINE MONTHS ENDED SEPTEMBER 30, 2016 AND 2017
(Unaudited)
(in thousands of U.S. dollars, except share and per share amounts)
Three months ended Nine months ended
September 30, September 30,
------------- -------------
2016 2017 2016 2017
---- ---- ---- ----
Revenues $1,084,922 $1,206,478 $2,327,241 $3,473,313
Operating expenses:
Cost of operations 636,310 695,122 1,339,764 2,024,402
Selling, general and administrative 129,576 128,200 349,995 383,600
Depreciation 125,744 136,941 270,988 395,008
Amortization of intangibles 26,944 26,613 48,719 76,886
Impairments and other operating items 7,682 832 4,634 141,333
Operating income 158,666 218,770 313,141 452,084
Interest expense (27,621) (32,471) (65,291) (92,763)
Interest income 171 1,656 447 3,131
Other income (expense), net 500 1,709 (268) 3,561
Foreign currency transaction gain
(loss) (350) (1,864) 339 (3,502)
Income before income tax provision 131,366 187,800 248,368 362,511
Income tax provision (42,485) (64,390) (86,750) (100,220)
------- ------- ------- --------
Net income 88,881 123,410 161,618 262,291
Less: net income attributable to noncontrolling
interests
(264) (183) (670) (559)
---- ---- ---- ----
Net income attributable to Waste
Connections $88,617 $123,227 $160,948 $261,732
======= ======== ======== ========
Earnings per common share attributable to Waste
Connections' common shareholders:
Basic $0.34 $0.47 $0.73 $0.99
===== ===== ===== =====
Diluted $0.34 $0.47 $0.73 $0.99
===== ===== ===== =====
Shares used in the per share calculations:
Basic 263,005,450 263,443,064 219,321,828 263,298,839
=========== =========== =========== ===========
Diluted 263,650,138 264,299,472 220,064,670 264,109,383
=========== =========== =========== ===========
Cash dividends per common share $0.097 $0.120 $0.290 $0.360
====== ====== ====== ======
WASTE CONNECTIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands of U.S. dollars, except share and per share amounts)
December 31, September 30,
2016 2017
---- ----
ASSETS
Current assets:
Cash and equivalents $154,382 $495,254
Accounts receivable, net of
allowance for doubtful accounts of
$13,160 and $16,245 at December
31, 2016 and September 30, 2017,
respectively 485,138 588,534
Current assets held for sale 6,339 2,021
Prepaid expenses and other current
assets 97,533 107,134
------ -------
Total current assets 743,392 1,192,943
Property and equipment, net 4,738,055 4,783,928
Goodwill 4,390,261 4,688,348
Intangible assets, net 1,067,158 1,108,961
Restricted assets 63,406 59,192
Long-term assets held for sale 33,989 12,619
Other assets, net 67,664 64,284
------ ------
$11,103,925 $11,910,275
=========== ===========
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable $251,253 $276,970
Book overdraft 10,955 24,923
Accrued liabilities 269,402 347,439
Deferred revenue 134,081 142,787
Current portion of contingent
consideration 21,453 13,819
Current liabilities held for sale 3,383 2,255
Current portion of long-term debt
and notes payable 1,650 11,596
----- ------
Total current liabilities 692,177 819,789
Long-term debt and notes payable 3,616,760 3,925,761
Long-term portion of contingent
consideration 30,373 31,136
Other long-term liabilities 331,074 310,646
Deferred income taxes 778,664 829,087
------- -------
Total liabilities 5,449,048 5,916,419
Equity:
Common shares: 263,140,777 shares
issued and 262,803,271 shares
outstanding at December 31, 2016;
263,640,287 shares issued and
263,443,234 shares outstanding at
September 30, 2017 4,174,808 4,185,458
Additional paid-in capital 102,220 109,627
Accumulated other comprehensive
income (loss) (43,001) 114,779
Treasury shares: 337,397 and
197,053 shares at December 31,
2016 and September 30, 2017,
respectively - -
Retained earnings 1,413,488 1,578,635
--------- ---------
Total Waste Connections' equity 5,647,515 5,988,499
Noncontrolling interest in
subsidiaries 7,362 5,357
----- -----
Total equity 5,654,877 5,993,856
--------- ---------
$11,103,925 $11,910,275
=========== ===========
WASTE CONNECTIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 2016 AND 2017
(Unaudited)
(in thousands of U.S. dollars)
Nine months ended September 30,
-------------------------------
2016 2017
---- ----
Cash flows from
operating
activities:
Net income $161,618 $262,291
Adjustments to
reconcile net
income to net
cash provided by
operating
activities:
Loss on disposal
of assets and
impairments 3,572 122,098
Depreciation 270,988 395,008
Amortization of
intangibles 48,719 76,886
Foreign currency
transaction
(gain) loss (339) 3,502
Deferred income
taxes, net of
acquisitions 35,968 (10,971)
Amortization of
debt issuance
costs 3,877 3,221
Share-based
compensation 35,476 32,407
Interest income
on restricted
assets (366) (387)
Interest
accretion 7,038 10,406
Excess tax
benefit
associated with
equity-based
compensation (5,151) -
Adjustments to
contingent
consideration (2,563) 17,754
Payment of
contingent
consideration
recorded in
earnings (413) -
Net change in
operating assets
and liabilities,
net of
acquisitions (19,593) (23,840)
------- -------
Net cash provided
by operating
activities 538,831 888,375
------- -------
Cash flows from
investing
activities:
Payments for
acquisitions,
net of cash
acquired (13,703) (394,002)
Cash acquired in
the Progressive
Waste
acquisition 65,768 -
Capital
expenditures for
property and
equipment (204,934) (317,385)
Proceeds from
disposal of
assets 3,026 25,826
Change in
restricted
assets, net of
interest income (188) 5,464
Other (3,016) (3,465)
------ ------
Net cash used in
investing
activities (153,047) (683,562)
-------- --------
Cash flows from
financing
activities:
Proceeds from
long-term debt 3,407,359 896,947
Principal
payments on
notes payable
and long-term
debt (3,612,763) (666,724)
Payment of
contingent
consideration
recorded at
acquisition date (12,105) (5,840)
Change in book
overdraft 6,050 13,814
Proceeds from
option and
warrant
exercises - 1,946
Excess tax
benefit
associated with
equity-based
compensation 5,151 -
Payments for cash
dividends (61,001) (95,201)
Tax withholdings
related to net
share
settlements of
restricted share
units (11,461) (13,754)
Debt issuance
costs (13,508) (3,638)
Proceeds from
sale of common
shares held in
trust 15,341 8,704
Other (3) (1,095)
Net cash provided
by (used in)
financing
activities (276,940) 135,159
-------- -------
Effect of
exchange rate
changes on cash
and equivalents (483) 927
---- ---
Net increase in
cash and
equivalents 108,361 340,899
Cash and
equivalents at
beginning of
period 10,974 154,382
Less: change in
cash held for
sale - (27)
--- ---
Cash and
equivalents at
end of period $119,335 $495,254
======== ========
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 September 30, 2017:
U.S. Canada Total
---- ------ -----
Core Price 3.2% 3.8% 3.3%
Surcharges 0.0% 0.1% 0.0%
Volume 1.1% (2.7%) 0.5%
Recycling 0.5% 2.0% 0.8%
Foreign Exchange Impact - 4.2% 0.7%
---
Total 4.8% 7.4% 5.3%
--- --- ---
Revenue Breakdown: The following table reflects a breakdown of our revenue for the three month periods ended September 30, 2016 and 2017:
Three Months Ended September 30, 2016
-------------------------------------
Revenue Inter-company
Elimination Reported %
Revenue
-------
Solid Waste
Collection $760,281 $(2,472) $757,809 69.9%
Solid Waste
Disposal and
Transfer 377,998 (144,459) 233,539 21.5%
Solid Waste
Recycling 32,138 (2,523) 29,615 2.7%
E&P Waste
Treatment,
Recovery and
Disposal 33,673 (3,608) 30,065 2.8%
Intermodal
and Other 34,155 (261) 33,894 3.1%
------ ---- ------ ---
Total $1,238,245 $(153,323) $1,084,922 100.0%
========== ========= ========== =====
Three Months Ended September 30, 2017
-------------------------------------
Revenue Inter-company
Elimination Reported %
Revenue
-------
Solid Waste
Collection $815,344 $(2,484) $812,860 67.4%
Solid Waste
Disposal and
Transfer 416,764 (157,280) 259,484 21.5%
Solid Waste
Recycling 43,864 (2,295) 41,569 3.5%
E&P Waste
Treatment,
Recovery and
Disposal 57,797 (3,082) 54,715 4.5%
Intermodal
and Other 38,221 (371) 37,850 3.1%
------ ---- ------ ---
Total $1,371,990 $(165,512) $1,206,478 100.0%
========== ========= ========== =====
Contribution from Acquisitions: The following table reflects revenues from acquisitions, net of divestitures, for the three month periods ended September 30, 2016 and 2017:
Three months ended
September 30,
-------------
2016 2017
---- ----
Solid waste, net $538,398 $40,253
E&P waste - -
--- ---
Acquisitions, net $538,398 $40,253
======== =======
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, 2016 and 2017:
Three months ended Nine months ended
September 30, September 30,
------------- -------------
2016 2017 2016 2017
---- ---- ---- ----
Cash
Interest
Paid $20,246 $21,897 $56,238 $76,500
Cash
Taxes
Paid 19,590 44,945 36,504 81,431
Debt to Book Capitalization as of September 30, 2017: 40%
Internalization for the three months ended September 30, 2017: 55%
Days Sales Outstanding for the three months ended September 30, 2017: 45 (34 net of deferred revenue)
Share Information for the three months ended September 30, 2017:
Basic shares outstanding 263,443,064
Dilutive effect of equity-
based awards 856,408
-------
Diluted shares outstanding 264,299,472
NON-GAAP RECONCILIATION SCHEDULE
(in thousands of U.S. dollars, except where noted)
Reconciliation of Adjusted EBITDA:
Adjusted EBITDA, a non-GAAP financial measure, is provided supplementally because it is widely used by investors as a performance and valuation measure in the solid waste industry. Management uses adjusted EBITDA as one of the principal measures to evaluate and monitor the ongoing financial performance of Waste Connections' operations. Waste Connections defines adjusted EBITDA as net income attributable to Waste Connections, plus net income attributable to noncontrolling interests, plus or minus income tax provision (benefit), plus interest expense, less interest income, plus depreciation and amortization expense, plus closure and post-closure accretion expense, plus or minus any loss or gain on impairments and other operating items, plus other expense, less other income, plus foreign currency transaction loss, less foreign currency transaction gain. Waste Connections further adjusts this calculation to exclude the effects of other items management believes impact the ability to assess the operating performance of its business. This measure is not a substitute for, and should be used in conjunction with, GAAP financial measures. Other companies may calculate adjusted EBITDA differently.
Three months ended Nine months ended
September 30, September 30,
------------- -------------
2016 2017 2016 2017
---- ---- ---- ----
Net income attributable
to Waste Connections $88,617 $123,227 $160,948 $261,732
Plus: Net income
attributable to
noncontrolling
interests 264 183 670 559
Plus: Income tax
provision 42,485 64,390 86,750 100,220
Plus: Interest expense 27,621 32,471 65,291 92,763
Less: Interest income (171) (1,656) (447) (3,131)
Plus: Depreciation and
amortization 152,688 163,554 319,707 471,894
Plus: Closure and post-
closure accretion 3,034 2,971 5,908 8,805
Plus: Impairments and
other operating items 7,682 832 4,634 141,333
Plus/less: Other
expense (income), net (500) (1,709) 268 (3,561)
Plus/less: Foreign
currency transaction
loss/(gain) 350 1,864 (339) 3,502
Adjustments:
Plus: Transaction-
related expenses (a) 310 1,958 46,827 4,418
Plus: Pre-existing
Progressive Waste
share-based grants
(b) 4,466 2,369 9,823 12,947
Plus: Integration-
related and other
expenses (c) 10,178 2,922 40,300 8,344
Plus: Synergy bonus (d) 5,300 - 5,300 -
Adjusted EBITDA $342,324 $393,376 $745,640 $1,099,825
======== ======== ======== ==========
As % of revenues 31.6% 32.6% 32.0% 31.7%
_______________________________________________
(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.
(d) Reflects the addback of bonuses accrued pursuant to the Company's Synergy Bonus Program adopted on July 19, 2016
in connection 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 Nine months ended
September 30, September 30,
------------- -------------
2016 2017 2016 2017
---- ---- ---- ----
Net cash provided by
operating
activities $279,184 $336,469 $538,831 $888,375
Plus/(Less): Change
in book overdraft 4,053 (5,665) 6,050 13,814
Plus: Proceeds from
disposal of assets 1,466 5,209 3,026 25,826
Plus: Excess tax
benefit associated
with equity-based
compensation 136 - 5,151 -
Less: Capital
expenditures for
property and
equipment (92,847) (114,768) (204,934) (317,385)
Less: Distributions
to noncontrolling
interests - - (3) -
Adjustments:
Payment of
contingent
consideration
recorded in
earnings (a) 281 - 413 -
Cash received for
divestitures (b) - (3,700) - (21,100)
Transaction-related
expenses (c) 6,480 1,958 41,748 4,418
Integration-related
and other expenses
(d) 17,219 2,859 78,521 7,968
Pre-existing
Progressive Waste
share-based grants
(e) - (175) - 11,740
Synergy bonus (f) - - - 11,798
Tax effect (g) (10,128) (1,778) (28,537) (11,426)
------- ------ ------- -------
Adjusted free cash
flow $205,844 $220,409 $440,266 $614,028
======== ======== ======== ========
As % of revenues 19.0% 18.3% 18.9% 17.7%
____________________________________________
(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 Nine months ended
September 30, September 30,
------------- -------------
2016 2017 2016 2017
---- ---- ---- ----
Reported net income
attributable to Waste
Connections $88,617 $123,227 $160,948 $261,732
Adjustments:
Amortization of intangibles
(a) 26,944 26,613 48,719 76,886
Impairments and other
operating items (b) 7,682 832 4,634 141,333
Transaction-related expenses
(c) 310 1,958 46,827 4,418
Pre-existing Progressive
Waste share-based grants (d) 4,466 2,369 9,823 12,947
Integration-related and other
expenses (e) 10,178 2,922 40,300 8,344
Synergy bonus (f) 5,300 - 5,300 -
Tax effect (g) (19,001) (3,575) (43,630) (75,828)
Impact of deferred tax
adjustment (h) 1,964 3,787 1,964 3,787
----- -----
Adjusted net income
attributable to Waste
Connections $126,460 $158,133 $274,885 $433,619
======== ======== ======== ========
Diluted earnings per common
share attributable to Waste
Connections' common
shareholders:
Reported net income $0.34 $0.47 $0.73 $0.99
===== ===== ===== =====
Adjusted net income $0.48 $0.60 $1.25 $1.64
===== ===== ===== =====
_____________________________________________________
(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) Reflects the addback of bonuses accrued pursuant to the Company's Synergy Bonus Program adopted on July 19, 2016 in connection
with the Progressive Waste acquisition.
(g) The aggregate tax effect of the adjustments in footnotes (a) through (f) is calculated based on the applied tax rates for the
respective periods.
(h) Reflects in 2016 a change in the geographical apportionment of our deferred tax liabilities resulting from the Progressive Waste
acquisition. In 2017, reflects the elimination of an increase to the income tax provision associated with an increase in the
Company's deferred tax liabilities resulting from the enactment of the Illinois State Budget Public Act 100-0022 on July 6,
2017.
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SOURCE Waste Connections, Inc.
