Fourth Quarter Highlights
- Improving solid waste volumes and increasing values for
recycled commodities and renewable fuels drive results above
expectations
- Revenue of $1.398 billion, net
income(a) of $130.7
million, and adjusted EBITDA(b) of $426.6 million, or 30.5% of revenue
- Net income and adjusted net income(b) of
$0.50 and $0.68 per share, respectively
- Completes additional acquisitions to bring total acquired
annualized revenue for the full year to approximately $180 million
Looking at 2021
- Expects 5.0% solid waste price plus volume growth, 50bps
margin expansion, and double-digit percentage growth in adjusted
free cash flow(b)
- Expects revenue to be approximately $5.80 billion, excluding additional
acquisitions
- Expects net income to be approximately $669 million
- Expects adjusted EBITDA(b) to be
approximately $1.80 billion, or about
31.0% of revenue
- Expects net cash provided by operating activities to be
approximately $1.575 billion
- Expects adjusted free cash flow(b) to be at
least $950 million, or 16.4% of
revenue
- Expects double-digit percentage increase in cash dividends
and share repurchases
TORONTO, Feb. 17, 2021 /CNW/ -- Waste Connections, Inc.
(TSX/NYSE: WCN) ("Waste Connections" or the "Company") today
announced its results for the fourth quarter of 2020 and outlook
for 2021.
"Q4 capped off a remarkable year for Waste Connections,
culminating in a solid beat in the period and providing a higher
entry point into 2021. A more than 250 basis points higher
than expected improvement in solid waste volumes and increased
values for recycled commodities and renewable fuels drove adjusted
EBITDA(b) margins 50 basis points above expectations for
the quarter. Moreover, we converted more than 50% of adjusted
EBITDA(b) to adjusted free cash flow(b) in
the year, while positioning ourselves for double-digit percentage
growth in adjusted free cash flow(b) in 2021," said
Worthing F. Jackman, President and
Chief Executive Officer. "Culture and values have guided our
response throughout the pandemic, driving improvement in many areas
in addition to financial, including safety, employee engagement,
retention, and customer connectivity. We spent over $35 million in 2020 primarily directed to
discretionary supplemental pay for frontline employees, and, among
other initiatives, increased our minimum wage target to
$15/hour, expanded benefits and
provided scheduling flexibility to accommodate employee needs."
Mr. Jackman added, "2020 was also noteworthy for the pace of
acquisition activity, which accelerated in the fourth quarter to
drive another outsized year of activity and an incremental 2%
rollover revenue growth from such acquisitions in 2021.
Acquisition dialogue remains elevated and given the strength
of our balance sheet, we remain well positioned to fund additional
acquisitions, while also increasing return of capital to
shareholders through opportunistic share repurchases and dividend
growth. With expected solid waste pricing plus volume growth of 5%
and increasing recycling and renewable fuels values, 2021 is
already positioned for continued growth and margin expansion, with
upside from any further reopening activity, recovery in the
economy, or acquisitions completed during the year."
Mr. Jackman continued, "The strength of our results in 2020 and
expectations for 2021 reflect our purposeful culture and
differentiated strategy; moreover, they are a testament to the
tireless efforts of our dedicated essential workers. We are
extremely grateful for our employees' efforts to drive not only
outsized financial performance during this challenging period but
operational excellence as well, as they honor commitments to our
customers, communities and each other."
Financial Impact from COVID-19
Throughout the COVID-19 pandemic, revenue from solid waste
commercial collection, transfer and disposal has largely reflected
the extent to which the slowdown in activity associated with
shelter-in-place or other closure restrictions or requirements in
effect since Q1 of 2020 have persisted. Q2 was the first full
quarter to reflect the impacts from the COVID-19 pandemic, and
activity levels in impacted lines of business have shown
improvement in subsequent quarters. Recoveries in more
impacted markets, particularly those where reopenings continue to
be delayed or where additional restrictions have been imposed, have
generally been less pronounced.
Improving trends since Q2 include as follows: solid waste
collection, transfer and disposal revenue improved from down 5.3%
in Q2 to up 0.7% year over year on a same store basis in Q4, with
reported solid waste volumes improving from down 9.6% in Q2 to down
3.1% in Q4. On a same store basis, year-over-year landfill
tons, which were down approximately 10% in Q2, improved to down
about 5% in Q4, and roll-off pulls improved from down approximately
11% in Q2 to down about 4% in Q4. Additionally, service
resumptions or increases in frequency in solid waste commercial
collection in competitive markets we track that had previously
suspended or reduced service due to the COVID-19 pandemic improved
from recovery levels of 42% of such impacted revenue through Q2 to
56% at year end 2020.
Since the onset of the COVID-19 pandemic, protecting the health,
welfare and safety of our employees has been our top
priority. Recognizing the potential for financial hardship
and other challenges, we looked to provide a safety net for our
employees on issues of income and family health. To that end
in 2020, we incurred over $35 million
in incremental COVID-19-related costs, primarily supplemental pay
for frontline employees, including pre-holiday "Thank you" bonuses
paid out in the fourth quarter.
The impact of the COVID-19 pandemic on our business, results of
operations, financial condition and cash flows in future periods
will depend largely on future developments, including the duration
and spread of the pandemic in the U.S. and Canada, its severity, the actions to contain
the novel coronavirus or treat its impact, and how quickly and to
what extent normal economic and operating conditions can
resume.
Q4 2020 Results
Revenue in the fourth quarter totaled $1.398 billion, up from $1.362 billion in the year ago period.
Operating income was $197.1 million,
which included $24.1 million of
impairments and other operating items primarily related to an
adjustment to the carrying values of certain acquired long-lived
assets and $5.3 million of
acquisition-related costs. This compares to operating income
of $194.2 million in the fourth
quarter of 2019, which included $32.7
million of costs primarily resulting from impairments and
other operating items. Net income in the fourth quarter was
$130.7 million, or $0.50 per share on a diluted basis of 263.6
million shares. In the year ago period, the Company reported
net income of $133.3 million, or
$0.50 per share on a diluted basis of
264.6 million shares.
Adjusted net income(b) in the fourth quarter was
$178.6 million, or $0.68 per diluted share, versus $181.4 million, or $0.69 per diluted share, in the prior year
period. Adjusted EBITDA(b) in the fourth
quarter was $426.6 million, as
compared to $419.0 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.
Full Year 2020 Results
For the year ended December 31,
2020, revenue was $5.446
billion, as compared to $5.389
billion in the year ago period. Operating income,
which included $482.1 million in
costs primarily related to the decrease in property and equipment
at certain E&P landfills as a result of the Company's
impairment testing, was $412.4
million, as compared to $837.8
million in the prior year, which included $77.4 million of costs primarily resulting from
impairments and other operating items.
Net income in 2020 was $204.7
million, or $0.78 per share on
a diluted basis of 263.7 million shares. In the year ago
period, the Company reported net income of $566.8 million, or $2.14 per share on a diluted basis of 264.5
million shares.
Adjusted net income(b) in 2020 was $695.8 million, or $2.64 per diluted share, compared to $719.6 million, or $2.72 per diluted share, in the year ago
period. Adjusted EBITDA(b) in 2020 was $1.662 billion, as compared to $1.674 billion in the prior year
period.
2021 Outlook
Waste Connections also announced its outlook for 2021, which
assumes no change in the current economic environment. 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 2021 are subject to quarterly
fluctuations. See reconciliations in the attached tables.
- Revenue is estimated to be approximately $5.80 billion;
- Net income is estimated to be approximately $669 million;
- Adjusted EBITDA(b) is estimated to be
approximately $1.80 billion, or about
31.0% of revenue;
- Net cash provided by operating activities is estimated to be
approximately $1.575 billion;
- Capital expenditures are estimated to be approximately
$625 million; and
- Adjusted free cash flow(b) is estimated to be
at least $950 million, or 16.4% 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 through reduced incidents and
enhancing employee engagement through improved voluntary turnover
and Servant Leadership scores. For more information, visit
the Waste Connections website at
www.wasteconnections.com/sustainability.
Q4 2020 Earnings and 2021 Outlook Conference Call
Waste Connections will be hosting a conference call related to
fourth quarter earnings and 2021 outlook on February 18th at 8:30 A.M. Eastern Time. To access the call,
listeners should dial 800-763-6049 (within North America) or 212-231-2936 (international)
approximately 10 minutes prior to the scheduled start time and ask
the operator for the Waste Connections conference call (a passcode
is not required). A replay of the conference call will be
available until February 25, 2021 by
calling 800-633-8284 (within North
America) or 402-977-9140 (international) and entering
Passcode #21989487. 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.
Waste Connections will be filing a Form 8-K on EDGAR and on
SEDAR (as an "Other" document) prior to markets opening on
February 18th, providing
the Company's first quarter 2021 outlook for revenue, core price
plus volume growth for solid waste, and adjusted
EBITDA(b).
(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
|
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
seven 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 www.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 2021 financial results,
outlook and related assumptions, potential growth and margin
expansion, potential acquisition activity and return of capital 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 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
|
WASTE CONNECTIONS,
INC.
CONDENSED CONSOLIDATED STATEMENTS OF NET INCOME
THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2019 AND 2020
(Unaudited)
(in thousands of U.S. dollars, except share and per share
amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
December 31,
|
|
Twelve months ended
December 31,
|
|
|
|
2019
|
|
2020
|
|
2019
|
|
2020
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
1,361,960
|
|
$
|
1,398,251
|
|
$
|
5,388,679
|
|
$
|
5,445,990
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
operations
|
|
|
814,151
|
|
|
846,851
|
|
|
3,198,757
|
|
|
3,276,808
|
|
Selling, general and
administrative
|
|
|
136,146
|
|
|
133,419
|
|
|
546,278
|
|
|
537,632
|
|
Depreciation
|
|
|
156,779
|
|
|
161,462
|
|
|
618,396
|
|
|
621,102
|
|
Amortization of
intangibles
|
|
|
31,701
|
|
|
35,239
|
|
|
125,522
|
|
|
131,302
|
|
Impairments and other
operating items
|
|
|
28,999
|
|
|
24,136
|
|
|
61,948
|
|
|
466,718
|
|
Operating
income
|
|
|
194,184
|
|
|
197,144
|
|
|
837,778
|
|
|
412,428
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
(36,056)
|
|
|
(42,813)
|
|
|
(147,368)
|
|
|
(162,375)
|
|
Interest
income
|
|
|
2,592
|
|
|
857
|
|
|
9,777
|
|
|
5,253
|
|
Other income
(expense), net
|
|
|
1,142
|
|
|
1,654
|
|
|
5,704
|
|
|
(1,392)
|
|
Income before income
tax provision
|
|
|
161,862
|
|
|
156,842
|
|
|
705,891
|
|
|
253,914
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
provision
|
|
|
(28,671)
|
|
|
(26,268)
|
|
|
(139,210)
|
|
|
(49,922)
|
|
Net income
|
|
|
133,191
|
|
|
130,574
|
|
|
566,681
|
|
|
203,992
|
|
Plus: Net loss
attributable to noncontrolling interests
|
|
|
71
|
|
|
90
|
|
|
160
|
|
|
685
|
|
Net income
attributable to Waste Connections
|
|
$
|
133,262
|
|
$
|
130,664
|
|
$
|
566,841
|
|
$
|
204,677
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per common
share attributable to Waste
Connections' common shareholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.51
|
|
$
|
0.50
|
|
$
|
2.15
|
|
$
|
0.78
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
$
|
0.50
|
|
$
|
0.50
|
|
$
|
2.14
|
|
$
|
0.78
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in the
per share calculations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
263,865,203
|
|
|
263,001,985
|
|
|
263,792,693
|
|
|
263,189,699
|
|
Diluted
|
|
|
264,636,883
|
|
|
263,598,602
|
|
|
264,526,561
|
|
|
263,687,539
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends per
common share
|
|
$
|
0.185
|
|
$
|
0.205
|
|
$
|
0.665
|
|
$
|
0.760
|
|
WASTE CONNECTIONS,
INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands of U.S. dollars, except share and per share
amounts)
|
|
|
|
|
|
|
|
|
|
|
December 31,
2019
|
|
December 31,
2020
|
|
ASSETS
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
Cash and
equivalents
|
|
$
|
326,738
|
|
$
|
617,294
|
|
Accounts receivable,
net of allowance for credit losses of $16,432 and $19,380 at
December 31, 2019 and 2020, respectively
|
|
|
662,808
|
|
|
630,264
|
|
Prepaid expenses and
other current assets
|
|
|
141,052
|
|
|
160,714
|
|
Total current
assets
|
|
|
1,130,598
|
|
|
1,408,272
|
|
Restricted
cash
|
|
|
96,483
|
|
|
97,095
|
|
Restricted
investments
|
|
|
51,179
|
|
|
57,516
|
|
Property and
equipment, net
|
|
|
5,516,347
|
|
|
5,284,506
|
|
Operating lease
right-of-use assets
|
|
|
183,220
|
|
|
170,923
|
|
Goodwill
|
|
|
5,510,851
|
|
|
5,726,650
|
|
Intangible assets,
net
|
|
|
1,163,063
|
|
|
1,155,079
|
|
Other assets,
net
|
|
|
85,954
|
|
|
92,323
|
|
Total
assets
|
|
$
|
13,737,695
|
|
$
|
13,992,364
|
|
LIABILITIES AND
EQUITY
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
436,970
|
|
$
|
290,820
|
|
Book
overdraft
|
|
|
15,954
|
|
|
17,079
|
|
Accrued
liabilities
|
|
|
280,808
|
|
|
404,923
|
|
Current portion of
operating lease liabilities
|
|
|
29,929
|
|
|
30,671
|
|
Current portion of
contingent consideration
|
|
|
26,659
|
|
|
43,297
|
|
Deferred
revenue
|
|
|
216,443
|
|
|
233,596
|
|
Current portion of
long-term debt and notes payable
|
|
|
465
|
|
|
8,268
|
|
Total current
liabilities
|
|
|
1,007,228
|
|
|
1,028,654
|
|
|
|
|
|
|
|
|
|
Long-term portion of
debt and notes payable
|
|
|
4,353,782
|
|
|
4,708,678
|
|
Long-term portion of
operating lease liabilities
|
|
|
160,033
|
|
|
147,223
|
|
Long-term portion of
contingent consideration
|
|
|
42,825
|
|
|
28,439
|
|
Deferred income
taxes
|
|
|
818,622
|
|
|
760,044
|
|
Other long-term
liabilities
|
|
|
416,851
|
|
|
455,888
|
|
Total
liabilities
|
|
|
6,799,341
|
|
|
7,128,926
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
Equity:
|
|
|
|
|
|
|
|
Common shares:
263,699,675 shares issued and 263,618,161 shares outstanding
at December 31, 2019; 262,899,174 shares issued and
262,824,990 shares outstanding at
December 31, 2020
|
|
|
4,135,343
|
|
|
4,030,368
|
|
Additional paid-in
capital
|
|
|
154,917
|
|
|
170,555
|
|
Accumulated other
comprehensive loss
|
|
|
(10,963)
|
|
|
(651)
|
|
Treasury shares:
81,514 and 74,184 shares at December 31, 2019 and 2020,
respectively
|
|
|
-
|
|
|
-
|
|
Retained
earnings
|
|
|
2,654,207
|
|
|
2,659,001
|
|
Total Waste
Connections' equity
|
|
|
6,933,504
|
|
|
6,859,273
|
|
Noncontrolling
interest in subsidiaries
|
|
|
4,850
|
|
|
4,165
|
|
Total
equity
|
|
|
6,938,354
|
|
|
6,863,438
|
|
|
|
$
|
13,737,695
|
|
$
|
13,992,364
|
|
WASTE CONNECTIONS,
INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
TWELVE MONTHS ENDED DECEMBER 31, 2019 AND 2020
(Unaudited)
(in thousands of U.S. dollars)
|
|
|
|
|
|
|
|
|
|
|
Twelve months ended December 31,
|
|
|
|
2019
|
|
2020
|
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
|
Net income
|
|
$
|
566,681
|
|
$
|
203,992
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
Loss on disposal of
assets and impairments
|
|
|
60,592
|
|
|
445,647
|
|
Depreciation
|
|
|
618,396
|
|
|
621,102
|
|
Amortization of
intangibles
|
|
|
125,522
|
|
|
131,302
|
|
Deferred income taxes,
net of acquisitions
|
|
|
54,637
|
|
|
(50,487)
|
|
Amortization of debt
issuance costs
|
|
|
5,001
|
|
|
7,509
|
|
Share-based
compensation
|
|
|
42,671
|
|
|
45,751
|
|
Interest
accretion
|
|
|
16,426
|
|
|
17,205
|
|
Payment of contingent
consideration recorded in earnings
|
|
|
-
|
|
|
(10,371)
|
|
Adjustments to
contingent consideration
|
|
|
1,498
|
|
|
18,418
|
|
Other
|
|
|
(2,240)
|
|
|
2,426
|
|
Net change in
operating assets and liabilities, net of acquisitions
|
|
|
51,363
|
|
|
(23,973)
|
|
Net cash provided by
operating activities
|
|
|
1,540,547
|
|
|
1,408,521
|
|
|
|
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
Payments for
acquisitions, net of cash acquired
|
|
|
(736,610)
|
|
|
(388,789)
|
|
Capital expenditures
for property and equipment
|
|
|
(634,406)
|
|
|
(597,053)
|
|
Capital expenditure
for undeveloped landfill property
|
|
|
(31,683)
|
|
|
(67,508)
|
|
Investment in
noncontrolling interest
|
|
|
(25,000)
|
|
|
-
|
|
Proceeds from disposal
of assets
|
|
|
3,566
|
|
|
19,084
|
|
Other
|
|
|
(1,873)
|
|
|
(11,777)
|
|
Net cash used in
investing activities
|
|
|
(1,426,006)
|
|
|
(1,046,043)
|
|
|
|
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
Proceeds from
long-term debt
|
|
|
1,575,795
|
|
|
1,815,625
|
|
Principal payments on
notes payable and long-term debt
|
|
|
(1,470,711)
|
|
|
(1,542,958)
|
|
Payment of contingent
consideration recorded at acquisition date
|
|
|
(3,200)
|
|
|
(12,566)
|
|
Change in book
overdraft
|
|
|
(2,564)
|
|
|
1,096
|
|
Payments for
repurchase of common shares
|
|
|
-
|
|
|
(105,654)
|
|
Payments for cash
dividends
|
|
|
(175,067)
|
|
|
(199,883)
|
|
Tax withholdings
related to net share settlements of equity-based
compensation
|
|
|
(17,660)
|
|
|
(23,446)
|
|
Debt issuance
costs
|
|
|
(5,953)
|
|
|
(11,117)
|
|
Proceeds from sale of
common shares held in trust
|
|
|
4,036
|
|
|
679
|
|
Distributions to
noncontrolling interests
|
|
|
(570)
|
|
|
-
|
|
Net cash used in
financing activities
|
|
|
(95,894)
|
|
|
(78,224)
|
|
Effect of exchange
rate changes on cash, cash equivalents and restricted
cash
|
|
|
608
|
|
|
6,914
|
|
Net increase in cash,
cash equivalents and restricted cash
|
|
|
19,255
|
|
|
291,168
|
|
Cash, cash
equivalents and restricted cash at beginning of year
|
|
|
403,966
|
|
|
423,221
|
|
Cash, cash
equivalents and restricted cash at end of year
|
|
$
|
423,221
|
|
$
|
714,389
|
|
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 December 31, 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
|
Canada
|
|
|
Total
|
|
Core Price
|
|
4.1%
|
|
|
5.3%
|
|
|
4.3%
|
|
Surcharges
|
|
(0.4%)
|
|
|
(1.0%)
|
|
|
(0.5%)
|
|
Volume
|
|
(2.9%)
|
|
|
(4.5%)
|
|
|
(3.1%)
|
|
Recycling
|
|
0.5%
|
|
|
1.0%
|
|
|
0.5%
|
|
Foreign Exchange
Impact
|
|
-
|
|
|
1.3%
|
|
|
0.2%
|
|
Total
|
|
1.3%
|
|
|
2.1%
|
|
|
1.4%
|
|
Revenue
Breakdown: The following table reflects a breakdown of our
revenue for the three month periods ended December 31,
2019 and 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended December 31,
2019
|
|
|
Revenue
|
|
Inter-
company
Elimination
|
|
Reported
Revenue
|
|
%
|
Solid Waste
Collection
|
|
$
|
974,886
|
|
$
|
(2,499)
|
|
$
|
972,387
|
|
71.4%
|
Solid Waste Disposal
and Transfer
|
|
|
476,840
|
|
|
(193,474)
|
|
|
283,366
|
|
20.8%
|
Solid Waste
Recycling
|
|
|
13,569
|
|
|
(365)
|
|
|
13,204
|
|
1.0%
|
E&P Waste
Treatment, Recovery and Disposal
|
|
|
66,144
|
|
|
(3,661)
|
|
|
62,483
|
|
4.6%
|
Intermodal and
Other
|
|
|
30,646
|
|
|
(126)
|
|
|
30,520
|
|
2.2%
|
Total
|
|
$
|
1,562,085
|
|
$
|
(200,125)
|
|
$
|
1,361,960
|
|
100.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended December 31, 2020
|
|
|
Revenue
|
|
Inter-
company
Elimination
|
|
Reported
Revenue
|
|
%
|
Solid Waste
Collection
|
|
$
|
1,024,099
|
|
$
|
(3,341)
|
|
$
|
1,020,758
|
|
73.0%
|
Solid Waste Disposal
and Transfer
|
|
|
493,093
|
|
|
(200,272)
|
|
|
292,821
|
|
20.9%
|
Solid Waste
Recycling
|
|
|
26,688
|
|
|
(909)
|
|
|
25,779
|
|
1.9%
|
E&P Waste
Treatment, Recovery and Disposal
|
|
|
27,690
|
|
|
(2,163)
|
|
|
25,527
|
|
1.8%
|
Intermodal and
Other
|
|
|
33,427
|
|
|
(61)
|
|
|
33,366
|
|
2.4%
|
Total
|
|
$
|
1,604,997
|
|
$
|
(206,746)
|
|
$
|
1,398,251
|
|
100.0%
|
Contribution from
Acquisitions: The following table reflects revenues from
acquisitions, net of divestitures, for the three and
twelve month periods ended December 31, 2019 and 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
December 31,
|
|
Twelve months
ended
December 31,
|
|
|
2019
|
|
2020
|
|
2019
|
|
2020
|
Acquisitions,
net
|
|
$
|
68,465
|
|
$
|
52,721
|
|
$
|
291,938
|
|
$
|
197,231
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 twelve month periods ended
December 31, 2019 and 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
December 31,
|
|
Twelve months
ended
December 31,
|
|
|
2019
|
|
2020
|
|
2019
|
|
2020
|
Cash Interest
Paid
|
|
$
|
54,078
|
|
$
|
55,910
|
|
$
|
139,694
|
|
$
|
142,310
|
Cash Taxes
Paid
|
|
|
39,089
|
|
|
43,603
|
|
|
81,049
|
|
|
104,618
|
|
Debt to Book
Capitalization as of December 31, 2020: 41%
|
|
Internalization for the three months ended
December 31, 2020: 55%
|
|
Days Sales
Outstanding for the three months ended December 31,
2020: 41 (26 net of deferred revenue)
|
|
Share Information
for the three months ended December 31, 2020:
|
|
|
|
Basic shares
outstanding
|
|
263,001,985
|
Dilutive effect of
equity-based awards
|
|
596,617
|
Diluted shares
outstanding
|
|
263,598,602
|
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
December 31,
|
|
Twelve months
ended
December 31,
|
|
|
2019
|
|
2020
|
|
2019
|
|
2020
|
Net income
attributable to Waste Connections
|
|
$
|
133,262
|
|
$
|
130,664
|
|
$
|
566,841
|
|
$
|
204,677
|
Less: Net loss
attributable to noncontrolling interests
|
|
|
(71)
|
|
|
(91)
|
|
|
(160)
|
|
|
(685)
|
Plus: Income tax
provision
|
|
|
28,671
|
|
|
26,269
|
|
|
139,210
|
|
|
49,922
|
Plus: Interest
expense
|
|
|
36,056
|
|
|
42,813
|
|
|
147,368
|
|
|
162,375
|
Less: Interest
income
|
|
|
(2,592)
|
|
|
(857)
|
|
|
(9,777)
|
|
|
(5,253)
|
Plus: Depreciation
and amortization
|
|
|
188,480
|
|
|
196,701
|
|
|
743,918
|
|
|
752,404
|
Plus: Closure and
post-closure accretion
|
|
|
3,649
|
|
|
3,755
|
|
|
14,471
|
|
|
15,095
|
Plus: Impairments and
other operating items
|
|
|
28,999
|
|
|
24,136
|
|
|
61,948
|
|
|
466,718
|
Plus/(Less): Other
expense (income), net
|
|
|
(1,142)
|
|
|
(1,654)
|
|
|
(5,704)
|
|
|
1,392
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
Plus:
Transaction-related expenses(a)
|
|
|
4,278
|
|
|
5,306
|
|
|
12,335
|
|
|
9,803
|
Plus (Less): Fair
value changes to equity awards(b)
|
|
|
(589)
|
|
|
(485)
|
|
|
3,104
|
|
|
5,536
|
Adjusted
EBITDA
|
|
$
|
419,001
|
|
$
|
426,557
|
|
$
|
1,673,554
|
|
$
|
1,661,984
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As % of
revenues
|
|
|
30.8%
|
|
|
30.5%
|
|
|
31.1%
|
|
|
30.5%
|
____________________________
|
(a)
|
Reflects the addback
of acquisition-related transaction costs.
|
(b)
|
Reflects fair value
accounting changes associated with certain equity
awards.
|
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.
|
|
|
|
|
|
|
|
|
Twelve months
ended
December 31,
|
|
|
2019
|
|
2020
|
Net cash provided by
operating activities
|
|
$
|
1,540,547
|
|
$
|
1,408,521
|
Plus/(Less): Change
in book overdraft
|
|
|
(2,564)
|
|
|
1,096
|
Plus: Proceeds from
disposal of assets
|
|
|
3,566
|
|
|
19,084
|
Less: Capital
expenditures for property and equipment
|
|
|
(634,406)
|
|
|
(597,053)
|
Less: Distributions
to noncontrolling interests
|
|
|
(570)
|
|
|
-
|
Adjustments:
|
|
|
|
|
|
|
Payment of contingent
consideration recorded in earnings(a)
|
|
|
-
|
|
|
10,371
|
Cash received for
divestitures(b)
|
|
|
(2,376)
|
|
|
(10,673)
|
Transaction-related
expenses(c)
|
|
|
12,335
|
|
|
9,803
|
Pre-existing
Progressive Waste share-based grants(d)
|
|
|
4,810
|
|
|
5,770
|
Tax
effect(e)
|
|
|
(4,565)
|
|
|
(5,021)
|
Adjusted free cash
flow
|
|
$
|
916,777
|
|
$
|
841,898
|
|
|
|
|
|
|
|
As % of
revenues
|
|
|
17.0%
|
|
|
15.5%
|
____________________________
|
(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.
|
(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.
|
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
December 31,
|
|
Twelve months
ended
December 31,
|
|
|
2019
|
|
2020
|
|
2019
|
|
2020
|
Reported net income
attributable to Waste Connections
|
|
$
|
133,262
|
|
$
|
130,664
|
|
$
|
566,841
|
|
$
|
204,677
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of
intangibles(a)
|
|
|
31,701
|
|
|
35,239
|
|
|
125,522
|
|
|
131,302
|
Impairments and other
operating items(b)
|
|
|
28,999
|
|
|
24,136
|
|
|
61,948
|
|
|
466,718
|
Transaction-related
expenses(c)
|
|
|
4,278
|
|
|
5,306
|
|
|
12,335
|
|
|
9,803
|
Fair value changes to
equity awards(d)
|
|
|
(589)
|
|
|
(485)
|
|
|
3,104
|
|
|
5,536
|
Tax
effect(e)
|
|
|
(16,234)
|
|
|
(16,235)
|
|
|
(50,189)
|
|
|
(153,758)
|
Tax
items(f)
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
31,508
|
Adjusted net income
attributable to Waste Connections
|
|
$
|
181,417
|
|
$
|
178,625
|
|
$
|
719,561
|
|
$
|
695,786
|
Diluted earnings per
common share attributable to Waste
Connections' common shareholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported net
income
|
|
$
|
0.50
|
|
$
|
0.50
|
|
$
|
2.14
|
|
$
|
0.78
|
Adjusted net
income
|
|
$
|
0.69
|
|
$
|
0.68
|
|
$
|
2.72
|
|
$
|
2.64
|
____________________________
|
(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.
|
(d)
|
Reflects fair value
accounting changes associated with certain equity
awards.
|
(e)
|
The aggregate tax
effect of the adjustments in footnotes (a) through
(d) is calculated based on the applied tax rates for the
respective periods.
|
(f)
|
Reflects the impact
of a portion of the Company's 2019 inter-entity payments no longer
being deductible for tax purposes due to the finalization of
tax regulations on April 7, 2020 under Internal Revenue Code 267A
and an increase in deferred tax liabilities resulting from the
E&P impairment.
|
2021
OUTLOOK NON-GAAP RECONCILIATION SCHEDULE (in
thousands of U.S. dollars, except where noted)
|
|
Reconciliation of
Adjusted EBITDA:
|
|
|
|
|
|
|
|
|
|
2021
Outlook
|
|
|
|
Estimates
|
|
Observation
|
Net income
attributable to Waste Connections
|
|
$
|
669,000
|
|
|
Plus: Income tax provision
|
|
|
167,400
|
|
Approximate 20.0%
effective rate
|
Plus: Interest expense, net
|
|
|
162,000
|
|
|
Plus: Depreciation and Depletion
|
|
|
660,000
|
|
Approximately 11.3%
of revenue
|
Plus: Amortization
|
|
|
126,600
|
|
|
Plus: Closure and post-closure accretion
|
|
|
15,000
|
|
|
Adjusted
EBITDA
|
|
$
|
1,800,000
|
|
Approximately 31.0%
of revenue
|
Reconciliation of
Adjusted Free Cash Flow:
|
|
|
|
|
2021
Outlook
|
|
Estimates
|
Net cash provided by
operating activities
|
$
|
1,575,000
|
Less: Capital expenditures
|
|
(625,000)
|
Adjusted free cash
flow
|
$
|
950,000
|
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SOURCE Waste Connections, Inc.