TORONTO, Oct. 28, 2020 /PRNewswire/ -- Waste Connections,
Inc. (TSX/NYSE: WCN) ("Waste Connections" or the "Company") today
announced its results for the third quarter of 2020.
"Sequential improvement in solid waste volumes and increased
recovered commodity values drove better than expected results in
the third quarter and provide incremental momentum going forward.
Our strong operating results, financial performance and
frontline support continue to differentiate Waste Connections
during this year's unprecedented health, economic and social
challenges," said Worthing F.
Jackman, President and Chief Executive Officer.
Mr. Jackman added, "Higher margin flow-through from improving
revenue during the quarter provided better than expected adjusted
EBITDA* margin and adjusted free cash flow* generation. Adjusted
EBITDA* as a percentage of revenue in the period was approximately
40 basis points above our outlook in spite of 30 basis points
higher than expected discretionary frontline and incentive
compensation costs impacting the quarter, which resulted from our
more than $35 million commitment in
incremental costs primarily directed to discretionary supplemental
pay for frontline employees. Solid waste margins expanded by
almost 200 basis points compared to the year ago period, with
collection, transfer and disposal accounting for over 80% of that
increase. Moreover, year-to-date adjusted free cash flow* of
$778 million, or 19.2% of revenue,
increased year over year, putting us firmly on track to exceed the
adjusted free cash flow* outlook for the full year that we
communicated in August and positioning us for double digit growth
in adjusted free cash flow* in 2021."
Mr. Jackman concluded, "As anticipated last quarter, our strong
operating performance, free cash flow generation and balance sheet
strength positioned us for a double-digit percentage increase in
our quarterly cash dividend, for the tenth consecutive year.
We are also on track for another year of above average acquisition
activity, while maintaining optionality for opportunistic share
repurchases. As we look ahead, we expect to emerge from this
challenging period better positioned financially, with tremendous
flexibility with respect to capital allocation, and operationally,
with higher operating leverage in solid waste and both
safety-related incidents and voluntary turnover levels already
achieving multi-year lows."
* A non-GAAP
measure; see accompanying Non-GAAP Reconciliation
Schedule
|
Financial Impact from COVID-19
During the third quarter of 2020, our business continued to be
impacted by COVID-19, albeit to a lesser extent than in the prior
period in many markets. Revenue in solid waste commercial
collection and solid waste transfer and disposal continued to
reflect the extent to which the slowdown in activity associated
with shelter-in-place or other closure restrictions or requirements
in effect since the first quarter of 2020 has persisted.
The impacts to solid waste activity from COVID-19 that we
experienced during the third quarter reflected the pace of
reopening activity and varied by geography, the size and customer
mix in each market. In some markets, impacts began to abate
in the second quarter, when a portion of the lost volumes returned;
in other cases, impacts abated more during the third quarter, when
reopenings resulted in increased service requirements by commercial
customers and higher landfill volumes and roll-off activity.
In markets where reopenings continue to be delayed or where
additional restrictions have been imposed, the improvements were
less pronounced. Through the third quarter, about 68% of
solid waste commercial customers and 57% of associated revenue in
competitive markets we track that had suspended or reduced service
due to COVID-19, had since reached out for either a resumption of
service or an increase in frequency, up from 53% and 42%
respectively through the second quarter. As a result, solid
waste collection, transfer and disposal revenue was down 2.0% year
over year on a same store basis in the third quarter, an
improvement of 330 basis points from Q2, which was down 5.3% year
over year.
The impact of the COVID-19 outbreak 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 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.
Q3 2020 Results
Revenue in the third quarter totaled $1.390 billion, as compared to $1.412 billion in the year ago period.
Operating income was $230.7 million,
which included $7.9 million of costs
primarily resulting from impairments and other operating items and
acquisition-related costs. This compares to operating income of
$236.6 million in the third quarter
of 2019, which included $13.4 million
of costs primarily resulting from impairments and other operating
items.
Net income attributable to Waste Connections in the third
quarter was $158.0 million, or
$0.60 per share on a diluted basis of
263.5 million shares. In the year ago period, the Company
reported net income attributable to Waste Connections of
$159.1 million, or $0.60 per share on a diluted basis of 264.6
million shares.
Adjusted net income attributable to Waste Connections* in the
third quarter was $188.6 million, or
$0.72 per diluted share, versus
$192.9 million, or $0.73 per diluted share, in the prior year
period. Adjusted EBITDA* in the third quarter was
$432.6 million, as compared to
adjusted EBITDA* of $443.6 million in
the prior year period.
Adjusted net income attributable to Waste Connections, adjusted
net income attributable to Waste Connections per diluted share and
adjusted EBITDA, all non-GAAP measures, primarily exclude
impairments and other operating items and acquisition-related
items. For detailed reconciliations, please refer to the
attached tables.
Nine Months Year to Date Results
For the nine months ended September
30, 2020, revenue was $4.048
billion, up from $4.027
billion in the year ago period. Operating income,
which included $453.1 million of
costs primarily related to the decrease in property, plant and
equipment at certain E&P landfills as a result of the Company's
impairment testing, was $215.3
million, compared to $643.6
million for the same period in 2019, which included
$44.7 million of costs primarily
resulting from impairments and other operating items.
Net income attributable to Waste Connections for the nine months
ended September 30, 2020, was
$74.0 million, or $0.28 per share on a diluted basis of 263.7
million shares. In the year ago period, the Company reported
net income attributable to Waste Connections of $433.6 million, or $1.64 per share on a diluted basis of 264.5
million shares.
Adjusted net income attributable to Waste Connections* for the
nine months ended September 30, 2020,
was $517.2 million, or $1.96 per diluted share, compared to $538.1 million, or $2.03 per diluted share, in the year ago
period. Adjusted EBITDA* for the nine months ended September 30, 2020, was $1.235 billion, as compared to $1.255 billion in the prior year
period.
Q3 2020 Earnings Conference Call
Waste Connections will be hosting a conference call related to
third quarter earnings on October
29th at 8:30 A.M. Eastern
Time. To access the call, listeners should dial
800-920-3365 (within North
America) or 212-231-2902 (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 November 5, 2020 by calling
800-633-8284 (within North
America) or 402-977-9140 (international) and entering
Passcode # 21969551. 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
October 29th, providing
the Company's fourth 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 and disposal
services, along with recycling and resource recovery, in mostly
exclusive and secondary markets across 42 states in the U.S. and
six provinces in Canada. The
Company serves more than seven million residential, commercial and
industrial customers. 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 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 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
2020 and 2021 financial results, outlook and related assumptions,
adjusted free cash flow, capital expenditures, 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:
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Mary Anne Whitney /
(832) 442-2253
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Joe Box / (281)
873-3205
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maryannew@wasteconnections.com
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joe.box@wasteconnections.com
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WASTE CONNECTIONS,
INC.
CONDENSED
CONSOLIDATED STATEMENTS OF NET INCOME
THREE AND NINE MONTHS
ENDED SEPTEMBER 30, 2019 AND 2020
(Unaudited)
(in thousands of U.S.
dollars, except share and per share amounts)
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|
|
|
|
|
|
|
|
|
|
|
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|
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Three months ended
September 30,
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Nine months ended
September 30,
|
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|
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2019
|
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2020
|
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2019
|
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2020
|
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|
|
|
|
|
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|
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Revenues
|
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$
|
1,412,444
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$
|
1,389,552
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$
|
4,026,719
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$
|
4,047,739
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Operating
expenses:
|
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|
|
|
|
|
|
|
|
|
|
|
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Cost of
operations
|
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835,098
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|
828,822
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|
|
2,384,607
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|
2,429,957
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|
Selling, general and
administrative
|
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137,883
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136,003
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|
410,132
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404,213
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Depreciation
|
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157,994
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157,590
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|
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461,616
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|
|
459,641
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Amortization of
intangibles
|
|
|
31,934
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|
|
32,653
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|
|
93,821
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|
|
96,062
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|
Impairments and other
operating items
|
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|
12,935
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|
|
3,805
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|
|
32,949
|
|
|
442,582
|
|
Operating
income
|
|
|
236,600
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|
|
230,679
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|
|
643,594
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|
|
215,284
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
(36,780)
|
|
|
(40,636)
|
|
|
(111,313)
|
|
|
(119,562)
|
|
Interest
income
|
|
|
2,056
|
|
|
903
|
|
|
7,186
|
|
|
4,396
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Other income
(expense), net
|
|
|
(19)
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|
|
702
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|
|
4,562
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|
|
(3,046)
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Income before income
tax provision
|
|
|
201,857
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|
|
191,648
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|
|
544,029
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|
|
97,072
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Income tax
provision
|
|
|
(42,783)
|
|
|
(33,657)
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|
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(110,539)
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|
(23,654)
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Net income
|
|
|
159,074
|
|
|
157,991
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|
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433,490
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|
|
73,418
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Plus: Net loss
attributable to noncontrolling interests
|
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|
35
|
|
|
58
|
|
|
89
|
|
|
594
|
|
Net income
attributable to Waste Connections
|
|
$
|
159,109
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|
$
|
158,049
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|
$
|
433,579
|
|
$
|
74,012
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per common
share attributable to Waste Connections'
common shareholders:
|
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Basic
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$
|
0.60
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|
$
|
0.60
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|
$
|
1.64
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$
|
0.28
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|
|
|
|
|
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|
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Diluted
|
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$
|
0.60
|
|
$
|
0.60
|
|
$
|
1.64
|
|
$
|
0.28
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|
|
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|
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|
|
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|
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Shares used in the
per share calculations:
|
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|
|
|
|
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|
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Basic
|
|
|
263,853,681
|
|
|
262,998,317
|
|
|
263,768,258
|
|
|
263,253,087
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|
Diluted
|
|
|
264,587,456
|
|
|
263,507,486
|
|
|
264,473,345
|
|
|
263,718,001
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Cash dividends per
common share
|
|
$
|
0.160
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|
$
|
0.185
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|
$
|
0.480
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$
|
0.555
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WASTE CONNECTIONS,
INC.
CONDENSED
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands of U.S.
dollars, except share and per share amounts)
|
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|
|
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December 31,
2019
|
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September 30,
2020
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ASSETS
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Current
assets:
|
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Cash and
equivalents
|
|
$
|
326,738
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|
$
|
859,096
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Accounts receivable,
net of allowance for credit losses of $16,432 and $20,657 at
December 31,
2019 and September 30, 2020, respectively
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662,808
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616,630
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Prepaid expenses and
other current assets
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|
141,052
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|
115,690
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Total current
assets
|
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|
1,130,598
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|
1,591,416
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Restricted
cash
|
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|
96,483
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|
96,519
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Restricted
investments
|
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51,179
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|
47,161
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Property and
equipment, net
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|
5,516,347
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|
5,193,378
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Operating lease
right-of-use assets
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|
|
183,220
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168,974
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Goodwill
|
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5,510,851
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|
5,534,567
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Intangible assets,
net
|
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|
1,163,063
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|
|
1,127,279
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|
Other assets,
net
|
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|
85,954
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|
|
90,153
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Total
assets
|
|
$
|
13,737,695
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|
$
|
13,849,447
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LIABILITIES AND
EQUITY
|
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|
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Current
liabilities:
|
|
|
|
|
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|
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Accounts
payable
|
|
$
|
436,970
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|
$
|
403,946
|
|
Book
overdraft
|
|
|
15,954
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|
|
15,092
|
|
Accrued
liabilities
|
|
|
280,808
|
|
|
400,293
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|
Current portion of
operating lease liabilities
|
|
|
29,929
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|
|
30,196
|
|
Current portion of
contingent consideration
|
|
|
26,659
|
|
|
62,492
|
|
Deferred
revenue
|
|
|
216,443
|
|
|
216,675
|
|
Current portion of
long-term debt and notes payable
|
|
|
465
|
|
|
6,772
|
|
Total current
liabilities
|
|
|
1,007,228
|
|
|
1,135,466
|
|
|
|
|
|
|
|
|
|
Long-term portion of
debt and notes payable
|
|
|
4,353,782
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|
|
4,680,219
|
|
Long-term portion of
operating lease liabilities
|
|
|
160,033
|
|
|
145,642
|
|
Long-term portion of
contingent consideration
|
|
|
42,825
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|
|
26,030
|
|
Deferred income
taxes
|
|
|
818,622
|
|
|
725,343
|
|
Other long-term
liabilities
|
|
|
416,851
|
|
|
470,558
|
|
Total
liabilities
|
|
|
6,799,341
|
|
|
7,183,258
|
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Commitments and
contingencies
|
|
|
|
|
|
|
|
Equity:
|
|
|
|
|
|
|
|
Common shares:
263,699,675 shares issued and 263,618,161 shares outstanding at
December 31,
2019; 262,897,009 shares issued and 262,822,825 shares outstanding
at September 30, 2020
|
|
|
4,135,343
|
|
|
4,030,368
|
|
Additional paid-in
capital
|
|
|
154,917
|
|
|
162,606
|
|
Accumulated other
comprehensive loss
|
|
|
(10,963)
|
|
|
(113,338)
|
|
Treasury shares:
81,514 and 74,184 shares at December 31, 2019 and
September 30, 2020,
respectively
|
|
|
-
|
|
|
-
|
|
Retained
earnings
|
|
|
2,654,207
|
|
|
2,582,298
|
|
Total Waste
Connections' equity
|
|
|
6,933,504
|
|
|
6,661,934
|
|
Noncontrolling
interest in subsidiaries
|
|
|
4,850
|
|
|
4,255
|
|
Total
equity
|
|
|
6,938,354
|
|
|
6,666,189
|
|
|
|
$
|
13,737,695
|
|
$
|
13,849,447
|
|
WASTE CONNECTIONS,
INC.
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED
SEPTEMBER 30, 2019 AND 2020
(Unaudited)
(in thousands of U.S.
dollars)
|
|
|
|
|
|
|
|
|
|
|
Nine months ended September 30,
|
|
|
|
2019
|
|
2020
|
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
|
Net income
|
|
$
|
433,490
|
|
$
|
73,418
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
Loss on disposal of
assets and impairments
|
|
|
31,852
|
|
|
423,832
|
|
Depreciation
|
|
|
461,616
|
|
|
459,641
|
|
Amortization of
intangibles
|
|
|
93,821
|
|
|
96,062
|
|
Amortization of
leases
|
|
|
17,661
|
|
|
14,281
|
|
Deferred income taxes,
net of acquisitions
|
|
|
41,481
|
|
|
(77,613)
|
|
Amortization of debt
issuance costs
|
|
|
3,708
|
|
|
6,146
|
|
Share-based
compensation
|
|
|
35,510
|
|
|
38,316
|
|
Interest
accretion
|
|
|
12,283
|
|
|
12,843
|
|
Adjustments to
contingent consideration
|
|
|
1,466
|
|
|
16,852
|
|
Other
|
|
|
(1,316)
|
|
|
936
|
|
Net change in
operating assets and liabilities, net of acquisitions
|
|
|
53,858
|
|
|
120,859
|
|
Net cash provided by
operating activities
|
|
|
1,185,430
|
|
|
1,185,573
|
|
|
|
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
Payments for
acquisitions, net of cash acquired
|
|
|
(420,392)
|
|
|
(173,810)
|
|
Capital expenditures
for property and equipment
|
|
|
(433,526)
|
|
|
(420,694)
|
|
Capital expenditure
for undeveloped landfill property
|
|
|
(31,683)
|
|
|
(66,809)
|
|
Proceeds from disposal
of assets
|
|
|
2,626
|
|
|
11,564
|
|
Other
|
|
|
(2,697)
|
|
|
(317)
|
|
Net cash used in
investing activities
|
|
|
(885,672)
|
|
|
(650,066)
|
|
|
|
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
Proceeds from
long-term debt
|
|
|
1,021,795
|
|
|
1,790,625
|
|
Principal payments on
notes payable and long-term debt
|
|
|
(1,184,165)
|
|
|
(1,505,641)
|
|
Payment of contingent
consideration recorded at acquisition date
|
|
|
(1,621)
|
|
|
(2,812)
|
|
Change in book
overdraft
|
|
|
1,911
|
|
|
(862)
|
|
Payments for
repurchase of common shares
|
|
|
-
|
|
|
(105,654)
|
|
Payments for cash
dividends
|
|
|
(126,348)
|
|
|
(145,921)
|
|
Tax withholdings
related to net share settlements of equity-based
compensation
|
|
|
(17,592)
|
|
|
(23,390)
|
|
Debt issuance
costs
|
|
|
(5,938)
|
|
|
(11,117)
|
|
Proceeds from sale of
common shares held in trust
|
|
|
4,036
|
|
|
679
|
|
Distributions to
noncontrolling interests
|
|
|
(117)
|
|
|
-
|
|
Net cash used in
financing activities
|
|
|
(308,039)
|
|
|
(4,093)
|
|
Effect of exchange
rate changes on cash, cash equivalents and restricted
cash
|
|
|
143
|
|
|
980
|
|
Net increase
(decrease) in cash, cash equivalents and restricted cash
|
|
|
(8,138)
|
|
|
532,394
|
|
Cash, cash
equivalents and restricted cash at beginning of period
|
|
|
403,966
|
|
|
423,221
|
|
Cash, cash
equivalents and restricted cash at end of period
|
|
$
|
395,828
|
|
$
|
955,615
|
|
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, 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
|
|
Canada
|
|
|
Total
|
|
Core Price
|
|
3.9
|
|
%
|
|
5.2
|
%
|
|
4.1
|
%
|
Surcharges
|
|
(0.3)
|
|
%
|
|
(0.6)
|
%
|
|
(0.4)
|
%
|
Volume
|
|
(5.2)
|
|
%
|
|
(8.9)
|
%
|
|
(5.7)
|
%
|
Recycling
|
|
0.2
|
|
%
|
|
0.3
|
%
|
|
0.2
|
%
|
Foreign Exchange
Impact
|
|
-
|
|
|
|
(0.8)
|
%
|
|
(0.1)
|
%
|
Total
|
|
(1.4)
|
|
%
|
|
(4.8)
|
%
|
|
(1.9)
|
%
|
Revenue Breakdown: The following table reflects a
breakdown of our revenue for the three month periods ended
September 30, 2019 and 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended September 30, 2019
|
|
|
Revenue
|
|
Inter-company
Elimination
|
|
Reported
Revenue
|
|
%
|
Solid Waste
Collection
|
|
$
|
990,790
|
|
$
|
(2,532)
|
|
$
|
988,258
|
|
70.0%
|
Solid Waste Disposal
and Transfer
|
|
|
520,218
|
|
|
(202,554)
|
|
|
317,664
|
|
22.5%
|
Solid Waste
Recycling
|
|
|
14,142
|
|
|
(394)
|
|
|
13,748
|
|
1.0%
|
E&P Waste
Treatment, Recovery and Disposal
|
|
|
70,874
|
|
|
(4,466)
|
|
|
66,408
|
|
4.7%
|
Intermodal and
Other
|
|
|
26,520
|
|
|
(154)
|
|
|
26,366
|
|
1.8%
|
Total
|
|
$
|
1,622,544
|
|
$
|
(210,100)
|
|
$
|
1,412,444
|
|
100.0%
|
|
|
|
Three months
ended September 30, 2020
|
|
|
Revenue
|
|
Inter-company
Elimination
|
|
Reported
Revenue
|
|
%
|
Solid Waste
Collection
|
|
$
|
1,010,497
|
|
$
|
(3,940)
|
|
$
|
1,006,557
|
|
72.4%
|
Solid Waste Disposal
and Transfer
|
|
|
514,705
|
|
|
(203,136)
|
|
|
311,569
|
|
22.4%
|
Solid Waste
Recycling
|
|
|
21,377
|
|
|
(656)
|
|
|
20,721
|
|
1.5%
|
E&P Waste
Treatment, Recovery and Disposal
|
|
|
26,218
|
|
|
(2,575)
|
|
|
23,643
|
|
1.7%
|
Intermodal and
Other
|
|
|
27,141
|
|
|
(79)
|
|
|
27,062
|
|
2.0%
|
Total
|
|
$
|
1,599,938
|
|
$
|
(210,386)
|
|
$
|
1,389,552
|
|
100.0%
|
Contribution from Acquisitions: The following table
reflects revenues from acquisitions, net of divestitures, for the
three month periods ended September 30,
2019 and 2020:
|
|
|
|
|
|
|
|
|
Three months
ended
September 30,
|
|
|
2019
|
|
2020
|
Acquisitions,
net
|
|
$
|
77,092
|
|
$
|
44,214
|
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, 2019 and 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
September 30,
|
|
Nine months
ended
September 30,
|
|
|
2019
|
|
2020
|
|
2019
|
|
2020
|
Cash Interest
Paid
|
|
$
|
17,358
|
|
$
|
23,572
|
|
$
|
85,616
|
|
$
|
86,400
|
Cash Taxes
Paid
|
|
|
21,428
|
|
|
47,965
|
|
|
41,960
|
|
|
61,015
|
Debt to Book Capitalization as of September 30, 2020: 41%
Internalization for the three months ended
September 30, 2020: 55%
Days Sales Outstanding for the three months ended
September 30, 2020: 41 (26
net of deferred revenue)
Share Information for the three months ended September 30, 2020:
|
|
|
Basic shares
outstanding
|
|
262,998,317
|
Dilutive effect of
equity-based awards
|
|
509,169
|
Diluted shares
outstanding
|
|
263,507,486
|
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, minus net loss attributable to noncontrolling
interests, plus income tax provision, plus interest expense, less
interest income, plus depreciation and amortization expense, plus
closure and post-closure accretion expense, plus or minus any loss
or gain on impairments and other operating items, plus other
expense, less other income. Waste Connections further adjusts
this calculation to exclude the effects of other items management
believes impact the ability to assess the operating performance of
its business. This measure is not a substitute for, and
should be used in conjunction with, GAAP financial measures.
Other companies may calculate adjusted EBITDA
differently.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
September 30,
|
|
Nine months
ended
September 30,
|
|
|
2019
|
|
2020
|
|
2019
|
|
2020
|
Net income
attributable to Waste Connections
|
|
$
|
159,109
|
|
$
|
158,049
|
|
$
|
433,579
|
|
$
|
74,012
|
Less: Net loss
attributable to noncontrolling interests
|
|
|
(35)
|
|
|
(58)
|
|
|
(89)
|
|
|
(594)
|
Plus: Income tax
provision
|
|
|
42,783
|
|
|
33,657
|
|
|
110,539
|
|
|
23,654
|
Plus: Interest
expense
|
|
|
36,780
|
|
|
40,636
|
|
|
111,313
|
|
|
119,562
|
Less: Interest
income
|
|
|
(2,056)
|
|
|
(903)
|
|
|
(7,186)
|
|
|
(4,396)
|
Plus: Depreciation
and amortization
|
|
|
189,928
|
|
|
190,243
|
|
|
555,437
|
|
|
555,703
|
Plus: Closure and
post-closure accretion
|
|
|
3,649
|
|
|
3,723
|
|
|
10,821
|
|
|
11,340
|
Plus: Impairments and
other operating items
|
|
|
12,935
|
|
|
3,805
|
|
|
32,949
|
|
|
442,582
|
Plus/(Less): Other
expense (income), net
|
|
|
19
|
|
|
(702)
|
|
|
(4,562)
|
|
|
3,046
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
Plus:
Transaction-related expenses (a)
|
|
|
1,036
|
|
|
2,335
|
|
|
8,057
|
|
|
4,497
|
Plus/(Less): Fair
value changes to equity awards (b)
|
|
|
(589)
|
|
|
1,798
|
|
|
3,693
|
|
|
6,021
|
Adjusted
EBITDA
|
|
$
|
443,559
|
|
$
|
432,583
|
|
$
|
1,254,551
|
|
$
|
1,235,427
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As % of
revenues
|
|
|
31.4%
|
|
|
31.1%
|
|
|
31.2%
|
|
|
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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
September 30,
|
|
Nine months
ended
September 30,
|
|
|
2019
|
|
2020
|
|
2019
|
|
2020
|
Net cash provided by
operating activities
|
|
$
|
432,383
|
|
$
|
432,388
|
|
$
|
1,185,430
|
|
$
|
1,185,573
|
Plus/(Less): Change
in book overdraft
|
|
|
2,445
|
|
|
(256)
|
|
|
1,911
|
|
|
(862)
|
Plus: Proceeds from
disposal of assets
|
|
|
1,428
|
|
|
922
|
|
|
2,626
|
|
|
11,564
|
Less: Capital
expenditures for property and equipment
|
|
|
(179,736)
|
|
|
(151,983)
|
|
|
(433,526)
|
|
|
(420,694)
|
Less: Distributions
to noncontrolling interests
|
|
|
-
|
|
|
-
|
|
|
(117)
|
|
|
-
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash received for
divestitures (a)
|
|
|
-
|
|
|
-
|
|
|
(2,376)
|
|
|
(4,974)
|
Transaction-related
expenses (b)
|
|
|
1,036
|
|
|
2,335
|
|
|
8,057
|
|
|
4,497
|
Pre-existing
Progressive Waste share-based grants (c)
|
|
|
1,935
|
|
|
1,015
|
|
|
4,306
|
|
|
7,455
|
Tax effect
(d)
|
|
|
(464)
|
|
|
(599)
|
|
|
(3,375)
|
|
|
(4,168)
|
Adjusted free cash
flow
|
|
$
|
259,027
|
|
$
|
283,822
|
|
$
|
762,936
|
|
$
|
778,391
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As % of
revenues
|
|
|
18.3%
|
|
|
20.4%
|
|
|
18.9%
|
|
|
19.2%
|
|
|
|
|
|
|
(a)
|
Reflects the
elimination of cash received in conjunction with the divestiture of
certain 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
September 30,
|
|
Nine months
ended
September 30,
|
|
|
2019
|
|
2020
|
|
2019
|
|
2020
|
Reported net income
attributable to Waste Connections
|
|
$
|
159,109
|
|
$
|
158,049
|
|
$
|
433,579
|
|
$
|
74,012
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of
intangibles (a)
|
|
|
31,934
|
|
|
32,653
|
|
|
93,821
|
|
|
96,062
|
Impairments and other
operating items (b)
|
|
|
12,935
|
|
|
3,805
|
|
|
32,949
|
|
|
442,582
|
Transaction-related
expenses (c)
|
|
|
1,036
|
|
|
2,335
|
|
|
8,057
|
|
|
4,497
|
Fair value changes to
equity awards (d)
|
|
|
(589)
|
|
|
1,798
|
|
|
3,693
|
|
|
6,021
|
Tax effect
(e)
|
|
|
(11,486)
|
|
|
(10,000)
|
|
|
(33,955)
|
|
|
(137,523)
|
Tax items
(f)
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
31,508
|
Adjusted net income
attributable to Waste Connections
|
|
$
|
192,939
|
|
$
|
188,640
|
|
$
|
538,144
|
|
$
|
517,159
|
Diluted earnings per
common share attributable to Waste
Connections' common shareholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported net
income
|
|
$
|
0.60
|
|
$
|
0.60
|
|
$
|
1.64
|
|
$
|
0.28
|
Adjusted net
income
|
|
$
|
0.73
|
|
$
|
0.72
|
|
$
|
2.03
|
|
$
|
1.96
|
|
|
|
|
|
|
(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 267A and
an increase in deferred tax liabilities resulting from the E&P
impairment.
|
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SOURCE Waste Connections, Inc.