Item 7.01 Regulation FD Disclosure.
During our earnings conference
call on April 25, 2019, we highlighted the following outlook for the second quarter 2019.
(Dollar amounts are approximations)
For the second quarter of the
year, we estimate our revenue to be approximately $1.360 billion. We expect price growth for solid waste to be in the range of
4.5% and 5.0%, with volume growth in the range of flat to up 0.5%. Net income attributable to Waste Connections is estimated to
be approximately $162.4 million. Adjusted EBITDA, as reconciled below, is estimated to be approximately 31.9% of revenue, or about
$434 million.
Q2 2019 OUTLOOK
NON-GAAP RECONCILIATION SCHEDULE
(in thousands of U.S. dollars, except where
noted)
Reconciliation of Adjusted EBITDA:
|
|
Q2 2019 Outlook
|
|
|
Estimate
|
|
|
Observation
|
Net income attributable to Waste Connections
|
|
$
|
162,400
|
|
|
|
Plus: Net income attributable to noncontrolling interests
|
|
|
200
|
|
|
|
Plus: Income tax provision
|
|
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45,900
|
|
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Approximately 22.0% effective rate*
|
Plus: Interest expense, net of interest income
|
|
|
36,000
|
|
|
|
Plus: Depreciation and depletion
|
|
|
153,500
|
|
|
Approximately 11.3% of revenue
|
Plus: Amortization
|
|
|
32,500
|
|
|
Approximately 2.4% of revenue,
or about $0.09 per diluted share net of taxes
|
Plus: Closure and post-closure accretion
|
|
|
3,500
|
|
|
|
Adjusted EBITDA
|
|
$
|
434,000
|
|
|
Approximately 31.9% of revenue
|
________________________
*Our effective tax rate in the
second quarter is estimated to be about 22%, subject to change in the event that the proposed IRS tax regulations associated with
the Tax Act are enacted as drafted during the quarter. We estimate that the effect of the proposed regulations would be to increase
our effective tax rate in Q2 to approximately 26.5%, which would result in an impact of approximately $0.03 per share in the quarter.
These estimates assume no change
in the current economic and operating environment. They also exclude any impact from additional acquisitions or divestitures that
may close during the remainder of the year, and expensing of transaction-related items during the period.
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 our operations. We define 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, plus foreign currency transaction loss, less foreign currency transaction
gain. We further adjust this calculation to exclude the effects of other items management believes impact the ability to assess
the operating performance of our 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.
The information furnished in
Item 7.01 is not deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, is not
subject to the liabilities of that section, and is not deemed incorporated by reference in any filing under the Securities Act
of 1933, as amended.
Safe Harbor and Forward-Looking Information
This document 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 document 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 document include, but are not limited to, statements
about expected second quarter 2019 outlook for financial results. 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 U.S. Securities and Exchange Commission and the securities commissions
or similar regulatory authorities in Canada. You should not place undue reliance on forward-looking statements, which speak only
as of the date of this document. Waste Connections undertakes no obligation to update the forward-looking statements set forth
in this document, whether as a result of new information, future events, or otherwise, unless required by applicable securities
laws.