- Strong execution, accelerating solid waste pricing growth
and continued strength in both resource recovery values and
acquisition activity again drive outsized results and increased
full year outlook
- Revenue of $1.597 billion, up
14.9% year over year, exceeding outlook
- Reports organic growth of 11.3%, including 7.3% solid waste
price + volume growth, exceeding outlook
- Net income(a) of $114.4
million, and adjusted EBITDA(b) of $505.6 million, or 31.7% of revenue, up
sequentially from Q2 and up 60 basis points year over year
- Net income and adjusted net income(b) of $0.44 and $0.89 per
share, respectively
- Year to date net cash provided by operating activities of
$1.270 billion and adjusted free cash
flow(b) of $825.8 million, or 18.2%
of revenue
- Year to date closed acquisitions of approximately
$240 million in annualized
revenues
- Increases regularly quarterly dividend by 12.2%
- Provides full year 2021 revenue outlook of approximately
$6.110 billion, net income of
approximately $633 million, adjusted
EBITDA(b) of approximately $1.910
billion, net cash from operating activities of approximately
$1.689 billion and adjusted free cash
flow of approximately $1.025
billion
TORONTO, Oct. 27, 2021 /PRNewswire/ -- Waste
Connections, Inc. (TSX/NYSE: WCN) ("Waste Connections" or the
"Company") today announced its results for the third quarter of
2021.
"We delivered another top to bottom beat in the period on
continued strength in solid waste pricing, higher recycled
commodity values, and improving E&P waste activity, along with
acquisitions closed during the period. More importantly,
quality of revenue drove 60 basis points year-over-year adjusted
EBITDA(b) margin expansion in the quarter, overcoming an
estimated 40 basis points impact from margin dilutive acquisitions
and hurricanes, putting us firmly on track to exceed the updated
full year 2021 outlook we provided in August," said Worthing F. Jackman, President and Chief
Executive Officer.
"Strong execution, proactive acceleration of solid waste pricing
to address inflationary pressures, and outsized contribution from
acquisitions completed in 2021, already position us for
double-digit growth, underlying solid waste margin expansion and
strong free cash flow conversion in 2022. Additional
acquisitions expected to be completed later this year, and any
continuation of trends in E&P waste activity or
commodity-driven revenues, would provide incremental benefit."
Mr. Jackman continued, "As anticipated, the strength of our
operating performance, free cash flow generation and balance sheet
positioned us for another double-digit increase in our quarterly
cash dividend, our eleventh straight year, demonstrating once again
our ability to fund our differentiated growth strategy and outsized
acquisition activity, along with an increasing return of capital to
shareholders."
Q3 2021 Results
Revenue in the third quarter totaled $1.597 billion, up from $1.390 billion in the year ago period.
Operating income was $285.1 million,
which included $5.6 million in
acquisition-related costs, $3.1
million of impairments and other operating items, and
$0.9 million in fair value accounting
changes to equity awards. This compares to operating income
of $230.7 million in the third
quarter of 2020, which included $7.9
million of costs primarily resulting from impairments and
other operating items and acquisition-related costs. Net
income in the third quarter was $114.4
million, or $0.44 per share on
a diluted basis of 261.1 million shares, including a net of tax
loss on debt extinguishment associated with the prepayment of
senior notes of $84.2 million or
$0.32 per share. In the year
ago period, the Company reported net income of $158.0 million, or $0.60 per share on a diluted basis of 263.5
million shares.
Adjusted net income(b) in the third quarter was
$233.1 million, or $0.89 per diluted share, versus $188.6 million, or $0.72 per diluted share, in the prior year
period. Adjusted EBITDA(b) in the third quarter
was $505.6 million and 31.7% of
revenue, as compared to $432.6
million and 31.1% of revenue 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.
Nine Months Year to Date Results
For the nine months ended September 30,
2021, revenue was $4.527
billion, up from $4.048
billion in the year ago period. Operating income,
which included $9.8 million in
impairments and other operating items, $7.6
million in fair value accounting changes to equity awards
and $6.2 million in
acquisition-related costs, was $790.3
million, as compared to operating income of $215.3 million for the same period in 2020, which
included $453.1 million primarily
related to impairments and other operating items.
Net income for the nine months ended September 30, 2021 was $451.7 million, or $1.72 per share on a diluted basis of 261.9
million shares. In the year ago period, the Company reported
net income of $74.0 million, or
$0.28 per share on a diluted basis of
263.7 million shares.
Adjusted net income(b) for the nine months ended
September 30, 2021 was $629.5 million, or $2.39 per diluted share, compared to $517.2 million, or $1.96 per diluted share, in the year ago
period. Adjusted EBITDA(b) for the nine months
ended September 30, 2021 was
$1.424 billion and 31.4% of revenue,
up from $1.235 billion and 30.5% of
revenue in the prior year period.
Updated 2021 Outlook
Waste Connections also updated its outlook for 2021, which
assumes no change in the current economic environment or underlying
economic trends, including as a result of or related to impacts
from the COVID-19 pandemic. 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 at approximately $6.110 billion, as compared to our revised
revenue outlook of $5.975 billion
provided in August.
- Net income is estimated at approximately $633 million, and adjusted EBITDA(b)
is estimated at approximately $1.910
billion, or about 31.3% of revenue, as compared to our
revised adjusted EBITDA(b) outlook of $1.875 billion provided in August.
- Capital expenditures are estimated at approximately
$700 million, as compared to our
revised capital expenditures outlook of approximately $675 million provided in August.
- Net cash provided by operating activities is estimated at
$1.689 billion, as compared to our
revised outlook of $1.666 billion
provided in August; adjusted free cash flow(b) is
estimated at approximately $1.025
billion, or about 16.8% of revenue, as compared to our
adjusted free cash flow outlook of $1.0
billion provided in August.
Q3 2021 Earnings Conference Call
Waste Connections will be hosting a conference call related to
third quarter earnings on October
28th at 8:30 A.M. Eastern
Time. A live audio webcast of the conference call can
be accessed by visiting investors.wasteconnections.com and
selecting "News & Events" from the website menu. Alternatively,
listeners may access the call by dialing 800-915-4731 (within
North America) or 212-231-2911
(international) approximately 10 minutes prior to the scheduled
start time; a passcode is not required. A replay of the
conference call will be available until November 4, 2021, by calling 800-633-8284 (within
North America) or 402-977-9140
(international) and entering Passcode #21998075.
Waste Connections will be filing a Form 8-K on EDGAR and on
SEDAR (as an "Other" document) prior to markets opening on
October 28th, providing
the Company's fourth quarter 2021 outlook for revenue, 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
eight million residential, commercial and industrial customers in
mostly exclusive and secondary markets across 44 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 wasteconnections.com.
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. The Company's updated 2021
Sustainability Report provides progress updates on its targets and
investments towards their achievement. For more information,
visit the Waste Connections website at
wasteconnections.com/sustainability.
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 and 2022 financial
results, outlook and related assumptions, 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 NINE MONTHS
ENDED SEPTEMBER 30, 2020 AND 2021
|
|
(Unaudited)
|
|
(in thousands of U.S.
dollars, except share and per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
September 30,
|
|
Nine months ended
September 30,
|
|
|
|
2020
|
|
2021
|
|
2020
|
|
2021
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
1,389,552
|
|
$
|
1,597,168
|
|
$
|
4,047,739
|
|
$
|
4,527,042
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
operations
|
|
|
828,822
|
|
|
946,098
|
|
|
2,429,957
|
|
|
2,673,209
|
|
|
Selling, general and
administrative
|
|
|
136,003
|
|
|
155,520
|
|
|
404,213
|
|
|
454,885
|
|
|
Depreciation
|
|
|
157,590
|
|
|
171,965
|
|
|
459,641
|
|
|
498,588
|
|
|
Amortization of
intangibles
|
|
|
32,653
|
|
|
35,337
|
|
|
96,062
|
|
|
100,237
|
|
|
Impairments and other
operating items
|
|
|
3,805
|
|
|
3,104
|
|
|
442,582
|
|
|
9,819
|
|
|
Operating
income
|
|
|
230,679
|
|
|
285,144
|
|
|
215,284
|
|
|
790,304
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
(40,636)
|
|
|
(40,418)
|
|
|
(119,562)
|
|
|
(124,171)
|
|
|
Interest
income
|
|
|
903
|
|
|
495
|
|
|
4,396
|
|
|
2,342
|
|
|
Other income
(expense), net
|
|
|
702
|
|
|
3,140
|
|
|
(3,046)
|
|
|
5,452
|
|
|
Loss on early
extinguishment of debt
|
|
|
-
|
|
|
(115,288)
|
|
|
-
|
|
|
(115,288)
|
|
|
Income before income
tax provision
|
|
|
191,648
|
|
|
133,073
|
|
|
97,072
|
|
|
558,639
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
provision
|
|
|
(33,657)
|
|
|
(18,419)
|
|
|
(23,654)
|
|
|
(106,578)
|
|
|
Net income
|
|
|
157,991
|
|
|
114,654
|
|
|
73,418
|
|
|
452,061
|
|
|
Plus (less): Net loss
(income) attributable to noncontrolling interests
|
|
|
58
|
|
|
(273)
|
|
|
594
|
|
|
(325)
|
|
|
Net income
attributable to Waste Connections
|
|
$
|
158,049
|
|
$
|
114,381
|
|
$
|
74,012
|
|
$
|
451,736
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per common
share attributable to Waste Connections' common
shareholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.60
|
|
$
|
0.44
|
|
$
|
0.28
|
|
$
|
1.73
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
$
|
0.60
|
|
$
|
0.44
|
|
$
|
0.28
|
|
$
|
1.72
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in the
per share calculations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
262,998,317
|
|
|
260,550,774
|
|
|
263,253,087
|
|
|
261,372,827
|
|
|
Diluted
|
|
|
263,507,486
|
|
|
261,145,220
|
|
|
263,718,001
|
|
|
261,879,754
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends per
common share
|
|
$
|
0.185
|
|
$
|
0.205
|
|
$
|
0.555
|
|
$
|
0.615
|
|
|
WASTE CONNECTIONS,
INC.
|
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
(Unaudited)
|
|
(in thousands of U.S.
dollars, except share and per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
2020
|
|
September 30,
2021
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
|
Cash and
equivalents
|
|
$
|
617,294
|
|
$
|
339,479
|
|
|
Accounts receivable,
net of allowance for credit losses of $19,380 and $20,306 at
December 31, 2020 and September 30, 2021,
respectively
|
|
|
630,264
|
|
|
692,051
|
|
|
Prepaid expenses and
other current assets
|
|
|
160,714
|
|
|
128,758
|
|
|
Total current
assets
|
|
|
1,408,272
|
|
|
1,160,288
|
|
|
Restricted
cash
|
|
|
97,095
|
|
|
118,893
|
|
|
Restricted
investments
|
|
|
57,516
|
|
|
58,430
|
|
|
Property and
equipment, net
|
|
|
5,284,506
|
|
|
5,414,789
|
|
|
Operating lease
right-of-use assets
|
|
|
170,923
|
|
|
162,640
|
|
|
Goodwill
|
|
|
5,726,650
|
|
|
6,006,533
|
|
|
Intangible assets,
net
|
|
|
1,155,079
|
|
|
1,264,728
|
|
|
Other assets,
net
|
|
|
92,323
|
|
|
88,531
|
|
|
Total
assets
|
|
$
|
13,992,364
|
|
$
|
14,274,832
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
290,820
|
|
$
|
341,211
|
|
|
Book
overdraft
|
|
|
17,079
|
|
|
16,527
|
|
|
Deferred
revenue
|
|
|
233,596
|
|
|
254,135
|
|
|
Accrued
liabilities
|
|
|
404,923
|
|
|
448,541
|
|
|
Current portion of
operating lease liabilities
|
|
|
30,671
|
|
|
37,236
|
|
|
Current portion of
contingent consideration
|
|
|
43,297
|
|
|
42,359
|
|
|
Current portion of
long-term debt and notes payable
|
|
|
8,268
|
|
|
5,289
|
|
|
Total current
liabilities
|
|
|
1,028,654
|
|
|
1,145,298
|
|
|
|
|
|
|
|
|
|
|
Long-term portion of
debt and notes payable
|
|
|
4,708,678
|
|
|
4,869,213
|
|
|
Long-term portion of
operating lease liabilities
|
|
|
147,223
|
|
|
132,589
|
|
|
Long-term portion of
contingent consideration
|
|
|
28,439
|
|
|
24,592
|
|
|
Deferred income
taxes
|
|
|
760,044
|
|
|
777,968
|
|
|
Other long-term
liabilities
|
|
|
455,888
|
|
|
442,016
|
|
|
Total
liabilities
|
|
|
7,128,926
|
|
|
7,391,676
|
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
|
Equity:
|
|
|
|
|
|
|
|
|
Common shares:
262,899,174 shares issued and 262,824,990 shares outstanding at
December 31, 2020; 260,526,784 shares issued and 260,453,918
shares outstanding at September 30, 2021
|
|
|
4,030,368
|
|
|
3,726,134
|
|
|
Additional paid-in
capital
|
|
|
170,555
|
|
|
184,995
|
|
|
Accumulated other
comprehensive income (loss)
|
|
|
(651)
|
|
|
17,553
|
|
|
Treasury shares:
74,184 and 72,866 shares at December 31, 2020 and September
30, 2021, respectively
|
|
|
-
|
|
|
-
|
|
|
Retained
earnings
|
|
|
2,659,001
|
|
|
2,949,984
|
|
|
Total Waste
Connections' equity
|
|
|
6,859,273
|
|
|
6,878,666
|
|
|
Noncontrolling
interest in subsidiaries
|
|
|
4,165
|
|
|
4,490
|
|
|
Total
equity
|
|
|
6,863,438
|
|
|
6,883,156
|
|
|
|
$
|
13,992,364
|
|
$
|
14,274,832
|
|
|
WASTE CONNECTIONS,
INC.
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
NINE MONTHS ENDED
SEPTEMBER 30, 2020 AND 2021
|
|
(Unaudited)
|
|
(in thousands of U.S.
dollars)
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended September 30,
|
|
|
|
2020
|
|
2021
|
|
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
73,418
|
|
$
|
452,061
|
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
Loss on disposal of
assets and impairments
|
|
|
423,832
|
|
|
9,302
|
|
|
Depreciation
|
|
|
459,641
|
|
|
498,588
|
|
|
Amortization of
intangibles
|
|
|
96,062
|
|
|
100,237
|
|
|
Loss on early
extinguishment of debt
|
|
|
-
|
|
|
115,288
|
|
|
Deferred income taxes,
net of acquisitions
|
|
|
(77,613)
|
|
|
(24,282)
|
|
|
Amortization of debt
issuance costs
|
|
|
6,146
|
|
|
3,887
|
|
|
Share-based
compensation
|
|
|
38,316
|
|
|
42,694
|
|
|
Interest
accretion
|
|
|
12,843
|
|
|
12,068
|
|
|
Payment of contingent
consideration recorded in earnings
|
|
|
-
|
|
|
(520)
|
|
|
Adjustments to
contingent consideration
|
|
|
16,852
|
|
|
89
|
|
|
Other
|
|
|
936
|
|
|
(1,286)
|
|
|
Net change in
operating assets and liabilities, net of acquisitions
|
|
|
135,140
|
|
|
61,835
|
|
|
Net cash provided by
operating activities
|
|
|
1,185,573
|
|
|
1,269,961
|
|
|
|
|
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
|
Payments for
acquisitions, net of cash acquired
|
|
|
(173,810)
|
|
|
(561,276)
|
|
|
Capital expenditures
for property and equipment
|
|
|
(420,694)
|
|
|
(479,480)
|
|
|
Capital expenditures
for undeveloped landfill property
|
|
|
(66,809)
|
|
|
-
|
|
|
Proceeds from disposal
of assets
|
|
|
11,564
|
|
|
10,109
|
|
|
Other
|
|
|
(317)
|
|
|
(4,193)
|
|
|
Net cash used in
investing activities
|
|
|
(650,066)
|
|
|
(1,034,840)
|
|
|
|
|
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
|
Proceeds from
long-term debt
|
|
|
1,790,625
|
|
|
1,943,192
|
|
|
Principal payments on
notes payable and long-term debt
|
|
|
(1,505,641)
|
|
|
(1,814,034)
|
|
|
Premiums paid on early
extinguishment of debt
|
|
|
-
|
|
|
(110,617)
|
|
|
Payment of contingent
consideration recorded at acquisition date
|
|
|
(2,812)
|
|
|
(7,998)
|
|
|
Change in book
overdraft
|
|
|
(862)
|
|
|
(563)
|
|
|
Payments for
repurchase of common shares
|
|
|
(105,654)
|
|
|
(305,640)
|
|
|
Payments for cash
dividends
|
|
|
(145,921)
|
|
|
(160,754)
|
|
|
Tax withholdings
related to net share settlements of equity-based
compensation
|
|
|
(23,390)
|
|
|
(18,576)
|
|
|
Debt issuance
costs
|
|
|
(11,117)
|
|
|
(17,997)
|
|
|
Proceeds from issuance
of shares under employee share purchase plan
|
|
|
-
|
|
|
1,275
|
|
|
Proceeds from sale of
common shares held in trust
|
|
|
679
|
|
|
131
|
|
|
Net cash used in
financing activities
|
|
|
(4,093)
|
|
|
(491,581)
|
|
|
Effect of exchange
rate changes on cash, cash equivalents and restricted
cash
|
|
|
980
|
|
|
443
|
|
|
Net increase
(decrease) in cash, cash equivalents and restricted cash
|
|
|
532,394
|
|
|
(256,017)
|
|
|
Cash, cash
equivalents and restricted cash at beginning of period
|
|
|
423,221
|
|
|
714,389
|
|
|
Cash, cash
equivalents and restricted cash at end of period
|
|
$
|
955,615
|
|
$
|
458,372
|
|
|
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
and
nine month periods ended September 30, 2021:
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
September 30, 2021
|
|
Nine months ended
September 30, 2021
|
|
Core
Price
|
|
4.7
|
%
|
|
4.6
|
%
|
|
Surcharges
|
|
0.4
|
%
|
|
0.1
|
%
|
|
Volume
|
|
2.2
|
%
|
|
1.8
|
%
|
|
Recycling
|
|
2.1
|
%
|
|
1.5
|
%
|
|
Foreign
Exchange Impact
|
|
0.7
|
%
|
|
1.0
|
%
|
|
Total
|
|
10.1
|
%
|
|
9.0
|
%
|
|
Revenue
Breakdown: The following table reflects a breakdown of our
revenue for the three month periods ended September 30, 2020 and
2021:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
%
|
|
|
|
Three months ended September 30,
2021
|
|
|
|
Revenue
|
|
Inter-company
Elimination
|
|
Reported
Revenue
|
|
%
|
|
Solid Waste
Collection
|
|
$
|
1,137,206
|
|
$
|
(3,091)
|
|
$
|
1,134,115
|
|
71.0
|
%
|
|
Solid Waste Disposal
and Transfer
|
|
|
553,974
|
|
|
(217,899)
|
|
|
336,075
|
|
21.0
|
%
|
|
Solid Waste
Recycling
|
|
|
55,772
|
|
|
(1,354)
|
|
|
54,418
|
|
3.4
|
%
|
|
E&P Waste
Treatment, Recovery and Disposal
|
|
|
38,519
|
|
|
(3,560)
|
|
|
34,959
|
|
2.2
|
%
|
|
Intermodal and
Other
|
|
|
38,377
|
|
|
(776)
|
|
|
37,601
|
|
2.4
|
%
|
|
Total
|
|
$
|
1,823,848
|
|
$
|
(226,680)
|
|
$
|
1,597,168
|
|
100.0
|
%
|
|
Contribution from
Acquisitions: The following table reflects revenues from
acquisitions, net of divestitures, for the three and nine month
periods
ended September 30, 2020 and 2021:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
September 30,
|
|
Nine months
ended
September
30,
|
|
|
2020
|
|
2021
|
|
2020
|
|
2021
|
|
Acquisitions,
net
|
|
$
|
44,214
|
|
$
|
51,368
|
|
$
|
144,509
|
|
$
|
136,035
|
|
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, 2020
and 2021:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
September 30,
|
|
Nine months
ended
September
30,
|
|
|
2020
|
|
2021
|
|
2020
|
|
2021
|
|
Cash Interest
Paid
|
|
$
|
23,572
|
|
$
|
38,685
|
|
$
|
86,400
|
|
$
|
120,647
|
|
Cash Taxes
Paid
|
|
|
47,965
|
|
|
29,411
|
|
|
61,015
|
|
|
90,104
|
|
Debt to Book
Capitalization as of September 30, 2021: 41%
|
|
|
Internalization for the three months ended
September 30, 2021: 56%
|
|
|
Days Sales
Outstanding for the three months ended September 30,
2021: 40 (25 net of deferred revenue)
|
|
|
Share Information
for the three months ended September 30, 2021:
|
|
|
|
|
|
Basic
shares outstanding
|
|
260,550,774
|
|
Dilutive
effect of equity-based awards
|
|
594,446
|
|
Diluted
shares outstanding
|
|
261,145,220
|
|
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
September
30,
|
|
Nine months
ended
September
30,
|
|
|
2020
|
|
2021
|
|
2020
|
|
2021
|
|
Net income
attributable to Waste Connections
|
|
$
|
158,049
|
|
$
|
114,381
|
|
$
|
74,012
|
|
$
|
451,736
|
|
Plus/(less): Net
income (loss) attributable to noncontrolling interests
|
|
|
(58)
|
|
|
273
|
|
|
(594)
|
|
|
325
|
|
Plus: Income tax
provision
|
|
|
33,657
|
|
|
18,419
|
|
|
23,654
|
|
|
106,578
|
|
Plus: Interest
expense
|
|
|
40,636
|
|
|
40,418
|
|
|
119,562
|
|
|
124,171
|
|
Less: Interest
income
|
|
|
(903)
|
|
|
(495)
|
|
|
(4,396)
|
|
|
(2,342)
|
|
Plus: Depreciation
and amortization
|
|
|
190,243
|
|
|
207,302
|
|
|
555,703
|
|
|
598,825
|
|
Plus: Closure and
post-closure accretion
|
|
|
3,723
|
|
|
3,544
|
|
|
11,340
|
|
|
10,919
|
|
Plus: Impairments and
other operating items
|
|
|
3,805
|
|
|
3,104
|
|
|
442,582
|
|
|
9,819
|
|
Plus/(Less): Other
expense (income), net
|
|
|
(702)
|
|
|
(3,140)
|
|
|
3,046
|
|
|
(5,452)
|
|
Plus: Loss on early
extinguishment of debt
|
|
|
-
|
|
|
115,288
|
|
|
-
|
|
|
115,288
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plus:
Transaction-related expenses(a)
|
|
|
2,335
|
|
|
5,637
|
|
|
4,497
|
|
|
6,220
|
|
Plus: Fair value
changes to equity awards(b)
|
|
|
1,798
|
|
|
914
|
|
|
6,021
|
|
|
7,638
|
|
Adjusted
EBITDA
|
|
$
|
432,583
|
|
$
|
505,645
|
|
$
|
1,235,427
|
|
$
|
1,423,725
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As % of
revenues
|
|
|
31.1%
|
|
|
31.7%
|
|
|
30.5%
|
|
|
31.4%
|
|
|
____________________________
|
|
(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,
|
|
|
2020
|
|
2021
|
|
2020
|
|
2021
|
|
Net cash provided by
operating activities
|
|
$
|
432,388
|
|
$
|
421,482
|
|
$
|
1,185,573
|
|
$
|
1,269,961
|
|
Less: Change in book
overdraft
|
|
|
(256)
|
|
|
(373)
|
|
|
(862)
|
|
|
(563)
|
|
Plus: Proceeds from
disposal of assets
|
|
|
922
|
|
|
2,204
|
|
|
11,564
|
|
|
10,109
|
|
Less: Capital
expenditures for property and equipment
|
|
|
(151,983)
|
|
|
(208,089)
|
|
|
(420,694)
|
|
|
(479,480)
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payment
of contingent consideration recorded in
earnings(a)
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
520
|
|
Cash received for
divestitures(b)
|
|
|
-
|
|
|
-
|
|
|
(4,974)
|
|
|
-
|
|
Transaction-related
expenses(c)
|
|
|
2,335
|
|
|
25,090
|
|
|
4,497
|
|
|
25,673
|
|
Pre-existing
Progressive Waste share-based grants(d)
|
|
|
1,015
|
|
|
173
|
|
|
7,455
|
|
|
317
|
|
Tax
effect(e)
|
|
|
(599)
|
|
|
(485)
|
|
|
(4,168)
|
|
|
(699)
|
|
Adjusted free cash
flow
|
|
$
|
283,822
|
|
$
|
240,002
|
|
$
|
778,391
|
|
$
|
825,838
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As % of
revenues
|
|
|
20.4%
|
|
|
15.0%
|
|
|
19.2%
|
|
|
18.2%
|
|
|
___________________________
|
|
(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 and settlement of an
acquired compensation liability.
|
|
(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
September 30,
|
|
Nine months
ended
September 30,
|
|
|
2020
|
|
2021
|
|
2020
|
|
2021
|
|
Reported net income
attributable to Waste Connections
|
|
$
|
158,049
|
|
$
|
114,381
|
|
$
|
74,012
|
|
$
|
451,736
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of
intangibles(a)
|
|
|
32,653
|
|
|
35,337
|
|
|
96,062
|
|
|
100,237
|
|
Impairments and other
operating items(b)
|
|
|
3,805
|
|
|
3,104
|
|
|
442,582
|
|
|
9,819
|
|
Transaction-related
expenses(c)
|
|
|
2,335
|
|
|
5,637
|
|
|
4,497
|
|
|
6,220
|
|
Fair value changes to
equity awards(d)
|
|
|
1,798
|
|
|
914
|
|
|
6,021
|
|
|
7,638
|
|
Loss on early
extinguishment of debt(e)
|
|
|
-
|
|
|
115,288
|
|
|
-
|
|
|
115,288
|
|
Tax
effect(f)
|
|
|
(10,000)
|
|
|
(41,531)
|
|
|
(137,523)
|
|
|
(61,466)
|
|
Tax
items(g)
|
|
|
-
|
|
|
-
|
|
|
31,508
|
|
|
-
|
|
Adjusted net income
attributable to Waste Connections
|
|
$
|
188,640
|
|
$
|
233,130
|
|
$
|
517,159
|
|
$
|
629,472
|
|
Diluted earnings per
common share attributable to Waste Connections' common
shareholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported net
income
|
|
$
|
0.60
|
|
$
|
0.44
|
|
$
|
0.28
|
|
$
|
1.72
|
|
Adjusted net
income
|
|
$
|
0.72
|
|
$
|
0.89
|
|
$
|
1.96
|
|
$
|
2.39
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
____________________________
|
|
(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)
|
Reflects the
make-whole premium and related fees associated with the early
termination of $1.5 billion in senior notes.
|
|
(f)
|
The aggregate tax
effect of the adjustments in footnotes (a) through (e) is
calculated based on the applied tax rates for the respective
periods.
|
|
(g)
|
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 section
267A and an increase in deferred tax liabilities resulting from the
E&P impairment.
|
|
UPDATED 2021
OUTLOOK
|
|
NON-GAAP
RECONCILIATION SCHEDULE
|
|
(in thousands of U.S.
dollars, except where noted)
|
|
|
Reconciliation of
Adjusted EBITDA:
|
|
|
|
|
|
|
|
|
|
|
2021
Outlook
|
|
|
August
Estimates
|
|
|
Current
Estimates
|
|
|
Observation
|
|
Net income
attributable to Waste Connections
|
$
|
690,000
|
|
$
|
633,000
|
|
|
|
|
|
Plus: Income tax provision (a)
|
|
184,294
|
|
|
156,487
|
|
|
Approximate 20.5%
effective rate
|
|
|
Plus: Interest expense, net
|
|
162,000
|
|
|
162,000
|
|
|
|
|
|
Plus: Depreciation and Depletion
|
|
680,000
|
|
|
671,000
|
|
|
Approximately 11.0%
of revenue
|
|
|
Plus: Amortization
|
|
132,000
|
|
|
139,000
|
|
|
|
|
|
Plus: Closure and post-closure accretion
|
|
15,000
|
|
|
15,000
|
|
|
|
|
|
Plus: Loss on early extinguishment of debt (b)
|
|
-
|
|
|
115,288
|
|
|
|
|
|
Plus: Impairments and other operating items (b)
|
|
6,712
|
|
|
9,819
|
|
|
|
|
|
Plus: Other income, net (b)
|
|
(2,312)
|
|
|
(5,452)
|
|
|
|
|
|
Adjustments: (b)
|
|
|
|
|
|
|
|
|
|
|
Plus:
Transaction-related expenses
|
|
583
|
|
|
6,220
|
|
|
|
|
|
Plus: Fair
value changes to equity awards
|
|
6,723
|
|
|
7,638
|
|
|
|
|
|
Adjusted
EBITDA
|
$
|
1,875,000
|
|
$
|
1,910,000
|
|
|
Approximately 31.3%
of revenue
|
|
|
____________________________
|
|
(a)
|
Approximately 20.5%
full year effective tax rate, including amounts reported for the
nine month period ended September 30, 2021; figure excludes tax
impact from early debt extinguishment costs.
|
|
(b)
|
Reflects amounts
reported for the nine month period ended September 30, 2021, as
shown on page 9.
|
|
Reconciliation of
Adjusted Free Cash Flow:
|
|
|
2021
Outlook
|
|
|
|
|
August
Estimates
|
|
|
Current
Estimates
|
|
Net cash provided by
operating activities
|
|
$
|
1,666,061
|
|
$
|
1,689,080
|
|
|
Plus: Proceeds from
disposal of assets (a)
|
|
|
7,906
|
|
|
10,109
|
|
|
Less: Capital
expenditures for property and
equipment
|
|
|
(675,000)
|
|
|
(700,000)
|
|
|
Adjustments:
(a)
|
|
|
|
|
|
|
|
|
Payment of contingent consideration recorded in earnings
|
|
|
520
|
|
|
520
|
|
|
Transaction-related expenses
|
|
|
583
|
|
|
25,673
|
|
|
Pre-existing Progressive Waste share-based grants
|
|
|
144
|
|
|
317
|
|
|
Tax effect
|
|
|
(214)
|
|
|
(699)
|
|
|
Adjusted free cash
flow
|
|
$
|
1,000,000
|
|
$
|
1,025,000
|
|
|
|
|
|
|
|
|
|
|
As % of
revenues
|
|
|
16.7%
|
|
|
16.8%
|
|
|
|
|
|
|
|
|
|
|
____________________________
|
|
(a)
|
Reflects amounts
reported for the nine month period ended September 30, 2021, as
shown on page 10.
|
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SOURCE Waste Connections, Inc.