- Revenue of $1.306
billion, exceeding preliminary expectations
- Incurs $417.4 million
non-cash impairment charge for certain E&P waste assets
- Net loss attributable to Waste Connections of
$227.1 million, or $0.86 per share
- Adjusted net income attributable to Waste
Connections* of $158.0 million, or
$0.60 per share
- Adjusted EBITDA* of $394.3
million, or 30.2% of revenue, exceeding preliminary
expectations
- YTD net cash provided by operating activities of
$753.2 million
- YTD adjusted free cash flow* of $494.6 million, or 18.6% of revenue
- Signs or closes acquisitions YTD with approximately
$100 million total annualized
revenues
- Provides full year 2020 outlook above May's
preliminary expectations
TORONTO, Aug. 6, 2020 /CNW/ -- Waste Connections,
Inc. (TSX/NYSE: WCN) ("Waste Connections" or the "Company") today
announced its results for the second quarter of 2020.
"Strong operational execution and continued recovery in solid
waste volumes drove better than expected results in the second
quarter. Adjusted EBITDA* margin for solid waste collection,
transfer and disposal expanded year over year in spite of
significant COVID-19-related costs incurred during the
quarter. In fact, the reported year-over-year margin decline
in the period was entirely attributable to reduced E&P waste
activity, as underlying solid waste margin expansion more than
offset over $20 million in
incremental COVID-related costs, primarily related to frontline
supplemental wages, and the margin dilutive impact of acquisitions
in the quarter. These results reflect the resilience of our
underlying solid waste business as well as the dedication and
commitment of our employees, who have maintained a focus on the
health, safety and welfare of their colleagues, service continuity,
expense management and community support, all while enduring the
many challenges and hardships resulting from the pandemic," said
Worthing F. Jackman, President and
Chief Executive Officer.
Mr. Jackman added, "At the onset, we believed our preparedness
and execution during this pandemic would leave us better positioned
when we emerged from it. Although only in the early stages of
a recovery, we already are pleased to provide our outlook for the
full year above the preliminary expectations we had communicated in
May. We remain encouraged by the pace of acquisition dialogue
and are on track for another solid year of acquisition
activity. Our strong operating performance, free cash flow
generation and balance sheet strength keep us well-positioned
during this uncertain period for additional acquisitions and
incremental opportunistic capital investments, while maintaining
our flexibility to increase the return of capital to
shareholders."
Financial Impact from COVID-19
During the second quarter of 2020, our business was impacted by
COVID-19 due to a reduction in revenue primarily in solid waste
commercial collection and solid waste transfer and disposal
resulting from a slowdown in activity associated with
shelter-in-place or other closure restrictions or requirements
imposed in response to the COVID-19 pandemic. Commercial
collection activity slowed down in certain markets due to service
reductions or suspensions by customers whose business activity was
curtailed by such measures, with third party transfer and disposal
volumes and roll-off activity typically following similar patterns,
and some of the declines in E&P waste activity may also be
related to COVID-19. The impacts to solid waste activity that
we experienced during the second quarter varied by geography, the
size and customer mix in each market, and the timing and extent of
shutdown requirements and reopening policies across markets.
In some markets, the impacts abated during the second quarter, as
reopenings resulted in increased service requirements by commercial
customers and higher landfill volumes and roll-off activity; in
other cases, where reopenings were delayed, the improvements were
less pronounced.
* A non-GAAP measure; see accompanying Non-GAAP
Reconciliation Schedule
Through the second quarter, about 53% of solid waste commercial
customers and 42% of associated revenue in competitive markets we
track that had suspended or reduced service had reached out for a
resumption in service or increase in frequency, up from 12% and 9%,
respectively, in early May. Volumes in all of our solid waste
regions exceeded our preliminary expectations, resulting in solid
waste revenue down 5.3% year over year on a same store basis in the
second quarter, about 70 basis points better than the preliminary
expectations we provided in May. Moreover, excluding the most
impacted markets in the Northeast and Canada, where closures were widespread and
volumes were most impacted, solid waste revenues in the quarter
were down 1.3% year over year on a same store basis.
In July, revenue on a reported basis declined approximately 1.9%
year-over-year, or approximately 4.7% excluding acquisitions
completed since the year ago period, and adjusted EBITDA* margin
declined an estimated 70 basis points year over year.
Reduction in E&P waste activity accounted for the entire year
over year decline in revenue and exceeded the estimated
adjusted EBITDA* margin decline for the month. Solid waste
collection, transfer and disposal revenue was down approximately
2.4% year over year on a same store basis in July, or up 0.5%
excluding Canada and the Northeast
U.S. To date, about 60% of solid waste commercial customers
and 50% of associated revenue in competitive markets we track that
had suspended or reduced service have reached out for a resumption
in service or increase in frequency.
The ultimate impact of the COVID-19 outbreak on our business,
results of operations, financial condition and cash flows will
depend largely on future developments, including the duration and
spread of the outbreak 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.
2020 Outlook
Waste Connections also provided its outlook for 2020, which
assumes no significant change in underlying economic trends.
The Company's outlook excludes any impact from additional
acquisitions that may close during the year, and expensing of
transaction-related items. The outlook provided below is
forward looking, and actual results may differ materially depending
on risks and uncertainties detailed at the end of this release and
in our periodic filings with the U.S. Securities and Exchange
Commission and the securities commissions or similar regulatory
authorities in Canada. Certain
components of the outlook for 2020 are subject to quarterly
fluctuations. See reconciliations in the attached
schedules.
- Revenue is estimated to be approximately $5.325 billion.
- Net income attributable to Waste Connections is estimated to be
approximately $184 million, and
adjusted EBITDA* is estimated to be approximately $1.610 billion, or about 30.2% of revenue.
- Capital expenditures are estimated to be approximately
$550 million.
- Net cash provided by operating activities is estimated to range
between $1.344 billion and
$1.374 billion, and adjusted free
cash flow* is estimated to range between $805 million and $835
million, or between approximately 50.0% and 52.0% of
adjusted EBITDA*.
Q2 2020 Results
Revenue in the second quarter totaled $1.306 billion, as compared to $1.370 billion in the year ago period.
Operating loss was $232.4 million,
which included: $437.3 million in
impairments and other operating items, due primarily to
$417.4 million related to a decrease
in property, plant and equipment at certain E&P landfills in
the Bakken, Eagle Ford and Powder River basins as a result of the
Company's impairment testing and $16.8
million in adjustments to contingent liabilities associated
with acquisitions closed in prior years. This operating loss
compares to operating income of $222.1
million in the second quarter of 2019, which included
$11.3 million primarily related to
transaction-related expenses.
Net loss attributable to Waste Connections in the second quarter
was $227.1 million, or $0.86 per share on a diluted basis of 263.0
million shares. In the year ago period, the Company reported
net income attributable to Waste Connections of $148.8 million, or $0.56 per share on a diluted basis of 264.5
million shares.
* A non-GAAP measure; see accompanying Non-GAAP
Reconciliation Schedule
Adjusted net income attributable to Waste Connections* in the
second quarter was $158.0 million, or
$0.60 per diluted share on an
adjusted diluted basis of 263.3 million shares, versus $181.3 million, or $0.69 per diluted share, in the prior year
period. Adjusted EBITDA* in the second quarter was
$394.3 million, as compared to
adjusted EBITDA* of $425.3 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
impairments and other operating items and acquisition-related
items. For detailed reconciliations, please refer to the
attached schedules.
Six Months Year to Date Results
For the six months ended June 30,
2020, revenue was $2.658
billion, as compared to revenue of $2.614 billion in the year ago period.
Operating loss, which included $445.2
million primarily related to impairments and other operating
items, was $15.4 million, compared to
operating income of $407.0 million
for the same period in 2019, which included $31.3 million primarily related to impairments
and other operating items.
Net loss attributable to Waste Connections for the six months
ended June 30, 2020, was $84.0 million, or $0.32 per share on a diluted basis of 263.4
million shares. In the year ago period, the Company reported
net income attributable to Waste Connections of $274.5 million, or $1.04 per share on a diluted basis of 264.4
million shares.
Adjusted net income attributable to Waste Connections* for the
six months ended June 30, 2020, was
$328.5 million, or $1.25 per diluted share on an adjusted diluted
share basis of 263.8 million shares, compared to $345.2 million, or $1.31 per diluted share, in the year ago period.
Adjusted EBITDA* for the six months ended June 30, 2020, was $802.8
million, as compared to $811.0
million in the prior year period.
Q2 2020 Earnings Conference Call
Waste Connections will be hosting a conference call related to
second quarter earnings on August
7th at 8:30 A.M. Eastern
Time. To access the call, listeners should dial
800-747-0367 (within North
America) or 212-231-2915 (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 August 14, 2020 by calling
800-633-8284 (within North
America) or 402-977-9140 (international) and entering
Passcode # 21964629. 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
August 7th, providing the
Company's third quarter 2020 outlook for revenue, core price plus
volume growth for solid waste and adjusted EBITDA*.
* 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, 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 seven million residential, commercial, industrial, and
exploration and production customers in 42 states in the U.S., and
six provinces in Canada. The Company also provides intermodal
services for the rail haul 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 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"), 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 can be
identified by use of forward-looking terminology, such as
"believes," "expects," "intends," "may," "might," "will," "could,"
"should," or "anticipates," or the negative thereof or comparable
terminology, or by the discussions of strategy. 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 the expected impacts of the novel
coronavirus pandemic and the COVID-19 outbreak, 2020 financial
results, outlook and related assumptions, capital expenditures, the
return of capital to shareholders and potential acquisition
activity. Important factors that could cause actual results to
differ, possibly materially, from those indicated by the
forward-looking statements include, but are not limited to, risk
factors detailed from time to time in the Company's filings with
the SEC and the securities commissions or similar regulatory
authorities in Canada. You should not place undue reliance on
forward-looking statements, which speak only as of the date of this
press release. Waste Connections undertakes no obligation to
update the forward-looking statements set forth in this press
release, whether as a result of new information, future events, or
otherwise, unless required by applicable securities laws.
– financial tables attached –
CONTACT:
|
|
Mary Anne Whitney /
(832) 442-2253
|
Joe Box / (281)
873-3205
|
maryannew@wasteconnections.com
|
joe.box@wasteconnections.com
|
WASTE CONNECTIONS,
INC.
CONDENSED CONSOLIDATED STATEMENTS OF NET INCOME (LOSS)
THREE AND SIX MONTHS ENDED JUNE 30, 2019 AND 2020
(Unaudited)
(in thousands of U.S. dollars, except share and per share
amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
June 30,
|
|
Six months ended
June 30,
|
|
|
|
2019
|
|
2020
|
|
2019
|
|
2020
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
1,369,639
|
|
$
|
1,305,782
|
|
$
|
2,614,275
|
|
$
|
2,658,187
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
operations
|
|
|
815,819
|
|
|
785,710
|
|
|
1,549,508
|
|
|
1,601,134
|
|
Selling, general and
administrative
|
|
|
139,664
|
|
|
132,158
|
|
|
272,249
|
|
|
268,210
|
|
Depreciation
|
|
|
156,776
|
|
|
151,230
|
|
|
303,623
|
|
|
302,051
|
|
Amortization of
intangibles
|
|
|
31,344
|
|
|
31,771
|
|
|
61,886
|
|
|
63,409
|
|
Impairments and other
operating items
|
|
|
3,902
|
|
|
437,270
|
|
|
20,014
|
|
|
438,777
|
|
Operating income
(loss)
|
|
|
222,134
|
|
|
(232,357)
|
|
|
406,995
|
|
|
(15,394)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
(37,245)
|
|
|
(40,936)
|
|
|
(74,533)
|
|
|
(78,926)
|
|
Interest
income
|
|
|
1,818
|
|
|
1,317
|
|
|
5,129
|
|
|
3,493
|
|
Other income
(expense), net
|
|
|
1,920
|
|
|
5,772
|
|
|
4,581
|
|
|
(3,749)
|
|
Income (loss) before
income tax provision
|
|
|
188,627
|
|
|
(266,204)
|
|
|
342,172
|
|
|
(94,576)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
(provision) benefit
|
|
|
(39,788)
|
|
|
38,737
|
|
|
(67,756)
|
|
|
10,003
|
|
Net income
(loss)
|
|
|
148,839
|
|
|
(227,467)
|
|
|
274,416
|
|
|
(84,573)
|
|
Plus: Net loss
attributable to noncontrolling interests
|
|
|
9
|
|
|
395
|
|
|
54
|
|
|
536
|
|
Net income (loss)
attributable to Waste Connections
|
|
$
|
148,848
|
|
$
|
(227,072)
|
|
$
|
274,470
|
|
$
|
(84,037)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per
common share attributable to Waste Connections' common
shareholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.56
|
|
$
|
(0.86)
|
|
$
|
1.04
|
|
$
|
(0.32)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
$
|
0.56
|
|
$
|
(0.86)
|
|
$
|
1.04
|
|
$
|
(0.32)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in the
per share calculations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
263,846,970
|
|
|
262,994,275
|
|
|
263,725,867
|
|
|
263,390,685
|
|
Diluted
|
|
|
264,494,943
|
|
|
262,994,275
|
|
|
264,416,610
|
|
|
263,390,685
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends per
common share
|
|
$
|
0.160
|
|
$
|
0.185
|
|
$
|
0.320
|
|
$
|
0.370
|
|
WASTE CONNECTIONS,
INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands of U.S. dollars, except share and per share
amounts)
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
2019
|
|
June 30,
2020
|
|
ASSETS
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
Cash and
equivalents
|
|
$
|
326,738
|
|
$
|
790,551
|
|
Accounts receivable,
net of allowance for credit losses of $16,432 and $19,965 at
December 31, 2019 and June 30, 2020,
respectively
|
|
|
662,808
|
|
|
608,801
|
|
Prepaid expenses and
other current assets
|
|
|
141,052
|
|
|
105,574
|
|
Total current
assets
|
|
|
1,130,598
|
|
|
1,504,926
|
|
Restricted
cash
|
|
|
96,483
|
|
|
92,873
|
|
Restricted
investments
|
|
|
51,179
|
|
|
46,391
|
|
Property and
equipment, net
|
|
|
5,516,347
|
|
|
5,045,872
|
|
Operating lease
right-of-use assets
|
|
|
183,220
|
|
|
173,905
|
|
Goodwill
|
|
|
5,510,851
|
|
|
5,488,305
|
|
Intangible assets,
net
|
|
|
1,163,063
|
|
|
1,152,303
|
|
Other assets,
net
|
|
|
85,954
|
|
|
89,430
|
|
Total
assets
|
|
$
|
13,737,695
|
|
$
|
13,594,005
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
436,970
|
|
$
|
367,355
|
|
Book
overdraft
|
|
|
15,954
|
|
|
15,348
|
|
Accrued
liabilities
|
|
|
280,808
|
|
|
341,333
|
|
Current portion of
operating lease liabilities
|
|
|
29,929
|
|
|
30,933
|
|
Current portion of
contingent consideration
|
|
|
26,659
|
|
|
62,213
|
|
Deferred
revenue
|
|
|
216,443
|
|
|
214,478
|
|
Current portion of
long-term debt and notes payable
|
|
|
465
|
|
|
7,658
|
|
Total current
liabilities
|
|
|
1,007,228
|
|
|
1,039,318
|
|
|
|
|
|
|
|
|
|
Long-term portion of
debt and notes payable
|
|
|
4,353,782
|
|
|
4,694,736
|
|
Long-term portion of
operating lease liabilities
|
|
|
160,033
|
|
|
149,763
|
|
Long-term portion of
contingent consideration
|
|
|
42,825
|
|
|
25,801
|
|
Deferred income
taxes
|
|
|
818,622
|
|
|
728,730
|
|
Other long-term
liabilities
|
|
|
416,851
|
|
|
459,276
|
|
Total
liabilities
|
|
|
6,799,341
|
|
|
7,097,624
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
Equity:
|
|
|
|
|
|
|
|
Common shares:
263,699,675 shares issued and 263,618,161 shares outstanding at
December 31, 2019; 262,885,349 shares issued and 262,811,165
shares outstanding at June 30, 2020
|
|
|
4,135,343
|
|
|
4,030,368
|
|
Additional paid-in
capital
|
|
|
154,917
|
|
|
151,149
|
|
Accumulated other
comprehensive loss
|
|
|
(10,963)
|
|
|
(162,707)
|
|
Treasury shares:
81,514 and 74,184 shares at December 31, 2019 and
June 30, 2020, respectively
|
|
|
-
|
|
|
-
|
|
Retained
earnings
|
|
|
2,654,207
|
|
|
2,473,258
|
|
Total Waste
Connections' equity
|
|
|
6,933,504
|
|
|
6,492,068
|
|
Noncontrolling
interest in subsidiaries
|
|
|
4,850
|
|
|
4,313
|
|
Total
equity
|
|
|
6,938,354
|
|
|
6,496,381
|
|
|
|
$
|
13,737,695
|
|
$
|
13,594,005
|
|
WASTE CONNECTIONS,
INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 2019 AND 2020
(Unaudited)
(in thousands of U.S. dollars)
|
|
|
|
|
|
|
|
|
|
|
Six months ended June 30,
|
|
|
|
2019
|
|
2020
|
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
$
|
274,416
|
|
$
|
(84,573)
|
|
Adjustments to
reconcile net income (loss) to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
Loss on disposal of
assets and impairments
|
|
|
18,924
|
|
|
420,169
|
|
Depreciation
|
|
|
303,623
|
|
|
302,051
|
|
Amortization of
intangibles
|
|
|
61,886
|
|
|
63,409
|
|
Amortization of
leases
|
|
|
13,183
|
|
|
9,863
|
|
Deferred income taxes,
net of acquisitions
|
|
|
18,911
|
|
|
(66,821)
|
|
Amortization of debt
issuance costs
|
|
|
2,414
|
|
|
4,783
|
|
Share-based
compensation
|
|
|
26,763
|
|
|
24,643
|
|
Interest
accretion
|
|
|
8,143
|
|
|
8,512
|
|
Adjustments to
contingent consideration
|
|
|
1,466
|
|
|
16,794
|
|
Other
|
|
|
(1,514)
|
|
|
1,596
|
|
Net change in
operating assets and liabilities, net of acquisitions
|
|
|
24,833
|
|
|
52,759
|
|
Net cash provided by
operating activities
|
|
|
753,048
|
|
|
753,185
|
|
|
|
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
Payments for
acquisitions, net of cash acquired
|
|
|
(381,422)
|
|
|
(86,325)
|
|
Capital expenditures
for property and equipment
|
|
|
(253,790)
|
|
|
(268,711)
|
|
Capital expenditures
for undeveloped landfill property
|
|
|
-
|
|
|
(16,450)
|
|
Proceeds from disposal
of assets
|
|
|
1,198
|
|
|
10,642
|
|
Change in restricted
investments, net of interest income
|
|
|
(6,206)
|
|
|
4,532
|
|
Other
|
|
|
(70)
|
|
|
(3,644)
|
|
Net cash used in
investing activities
|
|
|
(640,290)
|
|
|
(359,956)
|
|
|
|
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
Proceeds from
long-term debt
|
|
|
1,016,154
|
|
|
1,790,625
|
|
Principal payments on
notes payable and long-term debt
|
|
|
(1,134,589)
|
|
|
(1,484,118)
|
|
Payment of contingent
consideration recorded at acquisition date
|
|
|
(550)
|
|
|
(2,251)
|
|
Change in book
overdraft
|
|
|
(534)
|
|
|
(606)
|
|
Payments for
repurchase of common shares
|
|
|
-
|
|
|
(105,654)
|
|
Payments for cash
dividends
|
|
|
(84,215)
|
|
|
(96,912)
|
|
Tax withholdings
related to net share settlements of equity-based
compensation
|
|
|
(17,264)
|
|
|
(23,291)
|
|
Debt issuance
costs
|
|
|
(5,838)
|
|
|
(10,957)
|
|
Proceeds from sale of
common shares held in trust
|
|
|
3,695
|
|
|
679
|
|
Other
|
|
|
(117)
|
|
|
-
|
|
Net cash provided by
(used in) financing activities
|
|
|
(223,258)
|
|
|
67,515
|
|
Effect of exchange
rate changes on cash, cash equivalents and restricted
cash
|
|
|
270
|
|
|
(541)
|
|
Net increase
(decrease) in cash, cash equivalents and restricted cash
|
|
|
(110,230)
|
|
|
460,203
|
|
Cash, cash
equivalents and restricted cash at beginning of period
|
|
|
403,966
|
|
|
423,221
|
|
Cash, cash
equivalents and restricted cash at end of period
|
|
$
|
293,736
|
|
$
|
883,424
|
|
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,
2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
|
|
Canada
|
|
|
Total
|
|
Core Price
|
|
|
|
4.4
|
|
%
|
|
5.0
|
%
|
|
4.5
|
%
|
Surcharges
|
|
|
|
(0.1
|
|
%
|
|
(0.9)
|
%
|
|
(0.2)
|
%
|
Volume
|
|
|
|
(8.5
|
|
%
|
|
(16.4)
|
%
|
|
(9.6)
|
%
|
Recycling
|
|
|
|
(0.1
|
|
%
|
|
0.6
|
%
|
|
(0.0)
|
%
|
Foreign Exchange
Impact
|
|
|
|
-
|
|
|
|
(3.3)
|
%
|
|
(0.5)
|
%
|
Total
|
|
|
|
(4.3
|
|
%
|
|
(15.0)
|
%
|
|
(5.8)
|
%
|
Revenue Breakdown: The following table reflects a
breakdown of our revenue for the three month periods ended
June 30, 2019 and 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended June 30,
2019
|
|
|
Revenue
|
|
Inter-company
Elimination
|
|
Reported
Revenue
|
|
%
|
Solid Waste
Collection
|
|
$
|
958,124
|
|
$
|
(2,733)
|
|
$
|
955,391
|
|
69.8%
|
Solid Waste Disposal
and Transfer
|
|
|
501,401
|
|
|
(198,008)
|
|
|
303,393
|
|
22.1%
|
Solid Waste
Recycling
|
|
|
16,730
|
|
|
(405)
|
|
|
16,325
|
|
1.2%
|
E&P Waste
Treatment, Recovery and Disposal
|
|
|
68,039
|
|
|
(4,021)
|
|
|
64,018
|
|
4.7%
|
Intermodal and
Other
|
|
|
31,134
|
|
|
(622)
|
|
|
30,512
|
|
2.2%
|
Total
|
|
$
|
1,575,428
|
|
$
|
(205,789)
|
|
$
|
1,369,639
|
|
100.0%
|
|
|
|
|
Three months
ended June 30, 2020
|
|
|
Revenue
|
|
Inter-company
Elimination
|
|
Reported
Revenue
|
|
%
|
Solid Waste
Collection
|
|
$
|
948,072
|
|
$
|
(3,432)
|
|
$
|
944,640
|
|
72.4%
|
Solid Waste Disposal
and Transfer
|
|
|
469,704
|
|
|
(191,301)
|
|
|
278,403
|
|
21.3%
|
Solid Waste
Recycling
|
|
|
20,217
|
|
|
(660)
|
|
|
19,557
|
|
1.5%
|
E&P Waste
Treatment, Recovery and Disposal
|
|
|
40,152
|
|
|
(4,644)
|
|
|
35,508
|
|
2.7%
|
Intermodal and
Other
|
|
|
27,811
|
|
|
(137)
|
|
|
27,674
|
|
2.1%
|
Total
|
|
$
|
1,505,956
|
|
$
|
(200,174)
|
|
$
|
1,305,782
|
|
100.0%
|
Contribution from Acquisitions: The following table
reflects revenues from acquisitions, net of divestitures, for the
three month periods ended June 30,
2019 and 2020:
|
|
|
|
|
|
|
|
|
|
Three months
ended
June 30,
|
|
|
2019
|
|
2020
|
Acquisitions,
net
|
|
$
|
77,396
|
|
$
|
40,727
|
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, 2019 and 2020:
|
|
Three months
ended
June 30,
|
|
Six months
ended
June 30,
|
|
|
2019
|
|
2020
|
|
2019
|
|
2020
|
Cash Interest
Paid
|
|
$
|
46,084
|
|
$
|
45,782
|
|
$
|
68,258
|
|
$
|
62,828
|
Cash Taxes
Paid
|
|
|
14,121
|
|
|
8,440
|
|
|
20,532
|
|
|
13,050
|
Debt to Book Capitalization as of June
30, 2020: 42%
Internalization for the three months ended
June 30, 2020: 56%
Days Sales Outstanding for the three months ended
June 30, 2020: 42 (27 net
of deferred revenue)
Share Information for the three months ended June 30, 2020:
|
|
|
Basic shares
outstanding
|
|
262,994,275
|
Dilutive effect of
equity-based awards (a)
|
|
-
|
Diluted shares
outstanding
|
|
262,994,275
|
|
__________________________________________________
|
(a)
|
For the three months
ended June 30, 2020, equity-based awards to purchase 322,779 of
common shares were excluded from the computation of diluted loss
per share as they were anti-dilutive.
|
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 (loss)
attributable to Waste Connections, plus or minus net income (loss)
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. 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
June 30,
|
|
Six months
ended
June 30,
|
|
|
2019
|
|
2020
|
|
2019
|
|
2020
|
Net income (loss)
attributable to Waste Connections
|
|
$
|
148,848
|
|
$
|
(227,072)
|
|
$
|
274,470
|
|
$
|
(84,037)
|
Less: Net loss
attributable to noncontrolling interests
|
|
|
(9)
|
|
|
(395)
|
|
|
(54)
|
|
|
(536)
|
Plus/(Less): Income
tax provision (benefit)
|
|
|
39,788
|
|
|
(38,737)
|
|
|
67,756
|
|
|
(10,003)
|
Plus: Interest
expense
|
|
|
37,245
|
|
|
40,936
|
|
|
74,533
|
|
|
78,926
|
Less: Interest
income
|
|
|
(1,818)
|
|
|
(1,317)
|
|
|
(5,129)
|
|
|
(3,493)
|
Plus: Depreciation
and amortization
|
|
|
188,120
|
|
|
183,001
|
|
|
365,509
|
|
|
365,460
|
Plus: Closure and
post-closure accretion
|
|
|
3,682
|
|
|
3,709
|
|
|
7,172
|
|
|
7,617
|
Plus: Impairments and
other operating items
|
|
|
3,902
|
|
|
437,270
|
|
|
20,014
|
|
|
438,777
|
Plus/(Less): Other
expense (income), net
|
|
|
(1,920)
|
|
|
(5,772)
|
|
|
(4,581)
|
|
|
3,749
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
Plus:
Transaction-related expenses (a)
|
|
|
6,184
|
|
|
1,016
|
|
|
7,021
|
|
|
2,162
|
Plus: Fair value
changes to certain equity awards (b)
|
|
|
1,262
|
|
|
1,683
|
|
|
4,283
|
|
|
4,223
|
Adjusted
EBITDA
|
|
$
|
425,284
|
|
$
|
394,322
|
|
$
|
810,994
|
|
$
|
802,845
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As % of
revenues
|
|
|
31.1%
|
|
|
30.2%
|
|
|
31.0%
|
|
|
30.2%
|
|
__________________________________________________
|
(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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
June 30,
|
|
Six months
ended
June 30,
|
|
|
2019
|
|
2020
|
|
2019
|
|
2020
|
Net cash provided by
operating activities
|
|
$
|
389,276
|
|
$
|
383,599
|
|
$
|
753,048
|
|
$
|
753,185
|
Plus/(Less): Change
in book overdraft
|
|
|
2,250
|
|
|
3,243
|
|
|
(534)
|
|
|
(606)
|
Plus: Proceeds from
disposal of assets
|
|
|
559
|
|
|
7,143
|
|
|
1,198
|
|
|
10,642
|
Less: Capital
expenditures for property and equipment
|
|
|
(139,552)
|
|
|
(130,930)
|
|
|
(253,790)
|
|
|
(268,711)
|
Less: Distributions
to noncontrolling interests
|
|
|
(117)
|
|
|
-
|
|
|
(117)
|
|
|
-
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash received for
divestitures (a)
|
|
|
-
|
|
|
(4,974)
|
|
|
(2,376)
|
|
|
(4,974)
|
Transaction-related
expenses (b)
|
|
|
6,184
|
|
|
1,016
|
|
|
7,021
|
|
|
2,162
|
Pre-existing
Progressive Waste share-based grants (c)
|
|
|
189
|
|
|
-
|
|
|
2,371
|
|
|
6,440
|
Tax effect
(d)
|
|
|
(1,213)
|
|
|
(251)
|
|
|
(2,910)
|
|
|
(3,569)
|
Adjusted free cash
flow
|
|
$
|
257,576
|
|
$
|
258,846
|
|
$
|
503,911
|
|
$
|
494,569
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As % of
revenues
|
|
|
18.8%
|
|
|
19.8%
|
|
|
19.3%
|
|
|
18.6%
|
|
__________________________________________________
|
(a)
|
Reflects the
elimination of cash received in conjunction with the divestiture of
certain Progressive Waste operations.
|
(b)
|
Reflects the addback
of acquisition-related transaction costs.
|
(c)
|
Reflects the cash
settlement of pre-existing Progressive Waste share-based awards
during the period.
|
(d)
|
The aggregate tax
effect of footnotes (a) through (c) 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
June 30,
|
|
Six months
ended
June 30,
|
|
|
2019
|
|
2020
|
|
2019
|
|
2020
|
Reported net income
(loss) attributable to Waste Connections
|
|
$
|
148,848
|
|
$
|
(227,072)
|
|
$
|
274,470
|
|
$
|
(84,037)
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of
intangibles (a)
|
|
|
31,344
|
|
|
31,771
|
|
|
61,886
|
|
|
63,409
|
Impairments and other
operating items (b)
|
|
|
3,902
|
|
|
437,270
|
|
|
20,014
|
|
|
438,777
|
Transaction-related
expenses (c)
|
|
|
6,184
|
|
|
1,016
|
|
|
7,021
|
|
|
2,162
|
Fair value changes to
equity awards (d)
|
|
|
1,262
|
|
|
1,683
|
|
|
4,283
|
|
|
4,223
|
Tax effect
(e)
|
|
|
(10,272)
|
|
|
(118,220)
|
|
|
(22,469)
|
|
|
(127,523)
|
Tax items
(f)
|
|
|
-
|
|
|
31,508
|
|
|
-
|
|
|
31,508
|
Adjusted net income
attributable to Waste Connections
|
|
$
|
181,268
|
|
$
|
157,956
|
|
$
|
345,205
|
|
$
|
328,519
|
Diluted earnings
(loss) per common share attributable to Waste Connections' common
shareholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported net income
(loss)
|
|
$
|
0.56
|
|
$
|
(0.86)
|
|
$
|
1.04
|
|
$
|
(0.32)
|
Adjusted net
income
|
|
$
|
0.69
|
|
$
|
0.60
|
|
$
|
1.31
|
|
$
|
1.25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in the
per share calculations:
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported diluted
shares
|
|
|
264,494,943
|
|
|
262,994,275
|
|
|
264,416,610
|
|
|
263,390,685
|
Adjusted diluted
shares (g)
|
|
|
264,494,943
|
|
|
263,317,054
|
|
|
264,416,610
|
|
|
263,833,471
|
|
__________________________________________________
|
(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 related-party payments no longer
being deductible for tax purposes due to the finalization of tax
regulations on April 7, 2020 under Internal Revenue Code section
267A and an increase in deferred tax liabilities resulting from the
E&P impairment.
|
(g)
|
Reflects reported
diluted shares adjusted for shares that were excluded from the
reported diluted shares calculation due to our reporting a net loss
during the three and six months ended June 30, 2020.
|
2020 OUTLOOK
NON-GAAP RECONCILIATION
SCHEDULES
(in thousands of U.S. dollars, except where
noted)
Reconciliation of Adjusted EBITDA:
|
|
|
|
|
|
|
|
|
|
2020
Outlook
|
|
Net income
attributable to Waste Connections
|
|
$
|
184,089
|
|
Plus: Income tax
provision (a)
|
|
|
64,000
|
|
Plus: Interest
expense, net
|
|
|
155,000
|
|
Plus: Depreciation
and depletion
|
|
|
615,000
|
|
Plus:
Amortization
|
|
|
128,000
|
|
Plus: Closure and
post-closure accretion
|
|
|
15,000
|
|
Plus: Impairments and
other operating items (b)
|
|
|
438,777
|
|
Plus: Other income,
net
|
|
|
3,749
|
|
Adjustments:
|
|
|
|
|
Plus:
Transaction-related expenses (b)
|
|
|
2,162
|
|
Plus: Fair value
changes to equity awards (b)
|
|
|
4,223
|
|
Adjusted
EBITDA
|
|
$
|
1,610,000
|
|
|
|
|
|
|
As % of
revenues
|
|
|
30.2%
|
|
|
|
|
|
|
__________________________________________________
|
(a)
|
Reflects amounts
reported for the six-month period ended June 30, 2020 and 21.5%
effective rate for 2H '20.
|
(b)
|
Reflects amounts
reported for the six-month period ended June 30, 2020, as shown on
page 10.
|
Reconciliation of Adjusted Free Cash Flow:
|
|
|
2020
Outlook
|
Net cash provided by
operating activities
|
|
$
|
1,344,299
|
$
|
1,374,299
|
Plus: Proceeds from
disposal of assets (a)
|
|
|
10,642
|
|
10,642
|
Less: Capital
expenditures for property and
equipment
|
|
|
(550,000)
|
|
(550,000)
|
Adjustments:
(a)
|
|
|
|
|
|
Cash received from divestitures
|
|
|
(4,974)
|
|
(4,974)
|
Transaction-related expenses
|
|
|
2,162
|
|
2,162
|
Pre-existing Progressive Waste share-based grants
|
|
|
6,440
|
|
6,440
|
Tax effect
|
|
|
(3,569)
|
|
(3,569)
|
Adjusted free cash
flow
|
|
$
|
805,000
|
$
|
835,000
|
|
|
|
|
|
|
As % of Adjusted
EBITDA
|
|
|
50.0%
|
|
51.9%
|
|
|
|
|
|
|
__________________________________________________
|
(a)
|
Reflects amounts reported for
the six-month period ended June 30, 2020, as shown on page
11.
|
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SOURCE Waste Connections, Inc.