• Continued momentum from higher solid waste pricing and volumes, along with tailwinds from higher recovered commodity values, drive outsized results and increased full year outlook
  • Revenue of $1.534 billion, up 17.5% year over year
  • Reports 11.4% solid waste price + volume growth, exceeding outlook
  • Net income(a) of $177.0 million, and adjusted EBITDA(b) of $484.9 million, or 31.6% of revenue, exceeding outlook and up 140 basis points year over year
  • Net income and adjusted net income(b) of $0.68 and $0.81 per share, respectively
  • Year to date net cash provided by operating activities of $848.5 million and adjusted free cash flow(b) of $585.8 million, or 20.0% of revenue and up 18.5% year over year
  • Provides full year 2021 outlook for revenue of approximately $5.975 billion, net income of approximately $690 million, adjusted EBITDA(b) of approximately $1.875 billion, net cash provided by operating activities of approximately $1.666 billion, and adjusted free cash flow(b) of approximately $1 billion

 

TORONTO, Aug. 4, 2021 /PRNewswire/ -- Waste Connections, Inc. (TSX/NYSE: WCN) ("Waste Connections" or the "Company") today announced its results for the second quarter of 2021.    

Waste Connections logo. (PRNewsFoto/Waste Connections, Inc.) (PRNewsFoto/WASTE CONNECTIONS_ INC_)

"Broad-based strength drove an across the board beat in the second quarter, positioning us to raise our outlook for the full year.  Revenue and adjusted EBITDA(b) in Q2 increased 17.5% and 23.0%, respectively, over the prior year primarily as a result of continued improvement in solid waste pricing and volume growth, and strength in recovered commodity values.  These trends drove year to date adjusted EBITDA(b) margin expansion of 110 basis points and adjusted free cash flow(b) of over $585 million, up 18.5% year over year," said Worthing F. Jackman, President and Chief Executive Officer.  "Given the strength of our results in the first half of the year and expected continuing momentum and margin expansion from these trends, we believe we are on track to report approximately $5.975 billion of revenue and $1.875 billion of adjusted EBITDA(b) in 2021, exceeding our initial outlook provided in February.  More importantly, full year adjusted free cash flow(b) is also pacing ahead of initial expectations and is now estimated at approximately $1 billion, or 53% of adjusted EBITDA(b)."

Mr. Jackman continued, "2021 also has the potential to be another outsized year of acquisition activity.  Year to date, we have signed or closed 14 acquisitions with total annualized revenue of approximately $115 million, including $75 million of franchise operations in California, Nevada and Oregon expected to close later this year.  We continue to see record amounts of seller interest driving elevated acquisition dialogue and, as communicated throughout the year, expect closings related to most of this activity to be more weighted to the second half of the year.  Our recently expanded credit facility and continuing balance sheet strength provide the flexibility to fund outsized acquisition activity along with an increasing return of capital to shareholders."

Q2 2021 Results

Revenue in the second quarter totaled $1.534 billion, up from $1.306 billion in the year ago period.  Operating income was $266.8 million, which included $6.4 million in fair value accounting changes to equity awards and $6.1 million of impairments and other operating items.  This compares to operating loss of $232.4 million in the second quarter of 2020, which included $437.3 million in impairments primarily related to a decrease in property, plant and equipment at certain E&P waste landfills.  Net income in the second quarter was $177.0 million, or $0.68 per share on a diluted basis of 261.4 million shares.  In the year ago period, the Company reported net loss of $227.1 million, or $0.86 per share on a diluted basis of 263.0 million shares. 

Adjusted net income(b) in the second quarter was $210.9 million, or $0.81 per diluted share, versus $158.0 million, or $0.60 per diluted share, in the prior year period.  Adjusted EBITDA(b) in the second quarter was $484.9 million and 31.6% of revenue, as compared to $394.3 million and 30.2% 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.

Six Months Year to Date Results

For the six months ended June 30, 2021, revenue was $2.930 billion, up from $2.658 billion in the year ago period.  Operating income, which included $7.3 million primarily related to fair value accounting changes to equity awards and $6.7 million in impairments and other operating items, was $505.2 million, as compared to operating loss of $15.4 million for the same period in 2020, which included $445.2 million primarily related to impairments and other operating items. 

Net income for the six months ended June 30, 2021 was $337.4 million, or $1.29 per share on a diluted basis of 262.3 million shares.  In the year ago period, the Company reported net loss of $84.0 million, or $0.32 per share on a diluted basis of 263.4 million shares. 

Adjusted net income(b) for the six months ended June 30, 2021 was $396.3 million, or $1.51 per diluted share, compared to $328.5 million, or $1.25 per diluted share, in the year ago period. Adjusted EBITDA(b) for the six months ended June 30, 2021 was $918.1 million and 31.3% of revenue, up from $802.8 million and 30.2% 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 or the Delta variant of the coronavirus.  The Company's outlook excludes any impact from additional acquisitions that may close during the year, and expensing of transaction-related items.  The outlook provided below is forward looking, and actual results may differ materially depending on risks and uncertainties detailed at the end of this release and in our periodic filings with the U.S. Securities and Exchange Commission and the securities commissions or similar regulatory authorities in Canada. Certain components of the outlook for 2021 are subject to quarterly fluctuations.  See reconciliations in the attached tables.

  • Revenue is estimated to be approximately $5.975 billion, as compared to our original revenue outlook of approximately $5.800 billion
  • Net income is estimated to be approximately $690 million, and adjusted EBITDA(b) is estimated to be approximately $1.875 billion, or about 31.4% of revenue, as compared to our original adjusted EBITDA(b) outlook of $1.800 billion or 31.0% of revenue.
  • Capital expenditures are estimated to be approximately $675 million, as compared to our original capital expenditures outlook of approximately $625 million.
  • Net cash provided by operating activities is estimated to be approximately $1.666 billion, as compared to our original outlook of $1.575 billion, and adjusted free cash flow(b) is estimated to be approximately $1 billion, or about 16.7% of revenue, as compared to our original adjusted free cash flow(b) outlook of approximately $950 million or 16.4% of revenue. 

Q2 2021 Earnings Conference Call

Waste Connections will be hosting a conference call related to first quarter earnings on August 5th 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 800-908-8370 (within North America) or 312-281-1211 (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 August 12, 2021, by calling 800-633-8284 (within North America) or 402-977-9140 (international) and entering Passcode #21995717.    

Waste Connections will be filing a Form 8-K on EDGAR and on SEDAR (as an "Other" document) prior to markets opening on August 5th, providing the Company's third 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 seven million residential, commercial and industrial customers in mostly exclusive and secondary markets across 43 states in the U.S. and six provinces in Canada.  Waste Connections also provides non-hazardous oilfield waste treatment, recovery and disposal services in several basins across the U.S., as well as intermodal services for the movement of cargo and solid waste containers in the Pacific Northwest.  For more information, visit Waste Connections at 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.  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 financial results, outlook and related assumptions, potential growth and margin expansion, potential acquisition activity and return of capital to shareholders. Important factors that could cause actual results to differ, possibly materially, from those indicated by the forward-looking statements include, but are not limited to, risk factors detailed from time to time in the Company's filings with the SEC and the securities commissions or similar regulatory authorities in Canada.  You should not place undue reliance on forward-looking statements, which speak only as of the date of this press release.  Waste Connections undertakes no obligation to update the forward-looking statements set forth in this press release, whether as a result of new information, future events, or otherwise, unless required by applicable securities laws.

– financial tables attached –

CONTACT:










Mary Anne Whitney / (832) 442-2253  




Joe Box / (832) 442-2153

maryannew@wasteconnections.com 




joe.box@wasteconnections.com 

 

WASTE CONNECTIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF NET INCOME (LOSS)

THREE AND SIX MONTHS ENDED JUNE 30, 2020 AND 2021

(Unaudited)

(in thousands of U.S. dollars, except share and per share amounts)






Three months ended
June 30,


Six months ended
June 30,




2020


2021


2020


2021












Revenues


$

1,305,782


$

1,533,931


$

2,658,187


$

2,929,874


Operating expenses:














Cost of operations



785,710



901,191



1,601,134



1,727,111


Selling, general and administrative



132,158



157,943



268,210



299,365


Depreciation



151,230



169,221



302,051



326,624


Amortization of intangibles



31,771



32,707



63,409



64,899


Impairments and other operating items



437,270



6,081



438,777



6,715


Operating income (loss)



(232,357)



266,788



(15,394)



505,160
















Interest expense



(40,936)



(41,328)



(78,926)



(83,753)


Interest income



1,317



744



3,493



1,848


Other income (expense), net



5,772



(1,235)



(3,749)



2,312


Income (loss) before income tax provision



(266,204)



224,969



(94,576)



425,567
















Income tax (provision) benefit



38,737



(47,868)



10,003



(88,159)


Net income (loss)



(227,467)



177,101



(84,573)



337,408


Plus (less): Net loss (income) attributable to noncontrolling interests



395



(54)



536



(52)


Net income (loss) attributable to Waste Connections


$

(227,072)


$

177,047


$

(84,037)


$

337,356
















Earnings (loss) per common share attributable to Waste Connections' common shareholders:














Basic


$

(0.86)


$

0.68


$

(0.32)


$

1.29
















Diluted


$

(0.86)


$

0.68


$

(0.32)


$

1.29
















Shares used in the per share calculations:














Basic



262,994,275



260,951,405



263,390,685



261,791,088


Diluted



262,994,275



261,418,573



263,390,685



262,269,600






























Cash dividends per common share


$

0.185


$

0.205


$

0.37


$

0.41


 

WASTE CONNECTIONS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in thousands of U.S. dollars, except share and per share amounts)











December 31,
2020


June 30,
2021


ASSETS








Current assets:








Cash and equivalents


$

617,294


$

727,395


Accounts receivable, net of allowance for credit losses of $19,380 and $19,527 at December 31, 2020 and June 30, 2021, respectively



630,264



649,561


Prepaid expenses and other current assets



160,714



129,487


Total current assets



1,408,272



1,506,443


Restricted cash



97,095



110,367


Restricted investments



57,516



59,825


Property and equipment, net



5,284,506



5,249,904


Operating lease right-of-use assets



170,923



169,523


Goodwill



5,726,650



5,818,749


Intangible assets, net



1,155,079



1,102,516


Other assets, net



92,323



88,880


Total assets


$

13,992,364


$

14,106,207


 

LIABILITIES AND EQUITY








Current liabilities:








Accounts payable


$

290,820


$

326,085


Book overdraft



17,079



16,902


Deferred revenue



233,596



250,254


Accrued liabilities



404,923



411,333


Current portion of operating lease liabilities



30,671



37,352


Current portion of contingent consideration



43,297



43,359


Current portion of long-term debt and notes payable



8,268



6,997


Total current liabilities



1,028,654



1,092,282










Long-term portion of debt and notes payable



4,708,678



4,762,857


Long-term portion of operating lease liabilities



147,223



139,329


Long-term portion of contingent consideration



28,439



24,670


Deferred income taxes



760,044



772,867


Other long-term liabilities



455,888



445,602


Total liabilities



7,128,926



7,237,607


Commitments and contingencies








Equity:








Common shares: 262,899,174 shares issued and 262,824,990 shares outstanding at December 31, 2020;  260,506,316 shares issued and 260,433,450 shares outstanding at June 30, 2021



4,030,368



3,724,859


Additional paid-in capital



170,555



172,232


Accumulated other comprehensive income (loss)



(651)



78,265


Treasury shares: 74,184 and 72,866 shares at December 31, 2020 and June 30, 2021, respectively



-



-


Retained earnings



2,659,001



2,889,027


Total Waste Connections' equity



6,859,273



6,864,383


Noncontrolling interest in subsidiaries



4,165



4,217


Total equity



6,863,438



6,868,600




$

13,992,364


$

14,106,207


 

WASTE CONNECTIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

SIX MONTHS ENDED JUNE 30, 2020 AND 2021

(Unaudited)

(in thousands of U.S. dollars)












Six months ended June 30,




2020


2021


Cash flows from operating activities:








Net income (loss)


$

(84,573)


$

337,408


Adjustments to reconcile net income (loss) to net cash provided by operating activities:








Loss on disposal of assets and impairments



420,169



6,229


Depreciation



302,051



326,624


Amortization of intangibles



63,409



64,899


Deferred income taxes, net of acquisitions



(66,821)



3,520


Amortization of debt issuance costs



4,783



2,689


Share-based compensation



24,643



28,724


Interest accretion



8,512



8,199


Payment of contingent consideration recorded in earnings



-



(520)


Adjustments to contingent consideration



16,794



89


Other



1,596



(1,118)


Net change in operating assets and liabilities, net of acquisitions



62,622



71,735


Net cash provided by operating activities



753,185



848,478










Cash flows from investing activities:








Payments for acquisitions, net of cash acquired



(86,325)



(67,493)


Capital expenditures for property and equipment



(268,711)



(271,392)


Capital expenditure for undeveloped landfill property



(16,450)



-


Proceeds from disposal of assets



10,642



7,906


Other



888



(1,815)


Net cash used in investing activities



(359,956)



(332,794)










Cash flows from financing activities:








Proceeds from long-term debt



1,790,625



311,000


Principal payments on notes payable and long-term debt



(1,484,118)



(267,050)


Payment of contingent consideration recorded at acquisition date



(2,251)



(5,595)


Change in book overdraft



(606)



(190)


Payments for repurchase of common shares



(105,654)



(305,640)


Payments for cash dividends



(96,912)



(107,330)


Tax withholdings related to net share settlements of equity-based compensation



(23,291)



(18,510)


Debt issuance costs



(10,957)



-


Proceeds from sale of common shares held in trust



679



131


Net cash provided by (used in) financing activities



67,515



(393,184)


Effect of exchange rate changes on cash, cash equivalents and restricted cash



(541)



873


Net increase in cash, cash equivalents and restricted cash



460,203



123,373


Cash, cash equivalents and restricted cash at beginning of period



423,221



714,389


Cash, cash equivalents and restricted cash at end of period


$

883,424


$

837,762


 

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 six month periods ended June 30, 2021:



Three months ended
June 30, 2021


Six months ended
June 30, 2021

Core Price


4.7

%


4.6

%

Surcharges


0.2

%


0.0

%

Volume


6.5

%


1.6

%

Recycling


1.5

%


1.2

%

Foreign Exchange Impact


1.5

%


1.1

%

Total


14.4

%


8.5

%

Revenue Breakdown: The following table reflects a breakdown of our revenue for the three month periods ended June 30, 2020 and 2021:



 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

%




 Three months ended June 30, 2021



Revenue


Inter-company
Elimination


Reported
Revenue


%

Solid Waste Collection


$

1,098,319


$

(3,232)


$

1,095,087


71.4

%

Solid Waste Disposal and Transfer



544,257



(215,481)



328,776


21.4

%

Solid Waste Recycling



41,539



(1,113)



40,426


2.7

%

E&P Waste Treatment, Recovery and Disposal



34,607



(3,454)



31,153


2.0

%

Intermodal and Other



38,590



(101)



38,489


2.5

%

Total


$

1,757,312


$

(223,381)


$

1,533,931


100.0

%

Contribution from Acquisitions: The following table reflects revenues from acquisitions, net of divestitures, for the three and six month periods ended June 30, 2020 and 2021:



Three months ended
June 30,


Six months ended
June 30,



2020


2021


2020


2021

Acquisitions, net


$

40,727


$

44,125


$

100,296


$

84,666

 

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, 2020 and 2021:
















Three months ended
June 30,


Six months ended
June 30,



2020


2021


2020


2021

Cash Interest Paid


$

45,782


$

56,516


$

62,828


$

81,962

Cash Taxes Paid



8,440



32,072



13,050



60,693

Debt to Book Capitalization as of June 30, 2021:  41%

Internalization for the three months ended June 30, 2021:  56%

Days Sales Outstanding for the three months ended June 30, 2021:  39 (24 net of deferred revenue)

Share Information for the three months ended June 30, 2021:




Basic shares outstanding


260,951,405

Dilutive effect of equity-based awards 


467,168

Diluted shares outstanding


261,418,573

 

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,



2020


2021


2020


2021

Net income (loss) attributable to Waste Connections


$

(227,072)


$

177,047


$

(84,037)


$

337,356

Plus/(less): Net income (loss) attributable to noncontrolling interests



(395)



54



(536)



52

Plus/(less): Income tax provision (benefit)



(38,737)



47,868



(10,003)



88,159

Plus: Interest expense



40,936



41,328



78,926



83,753

Less: Interest income



(1,317)



(744)



(3,493)



(1,848)

Plus: Depreciation and amortization



183,001



201,928



365,460



391,523

Plus: Closure and post-closure accretion



3,709



3,666



7,617



7,375

Plus: Impairments and other operating items



437,270



6,081



438,777



6,715

Plus/(Less): Other expense (income), net



(5,772)



1,235



3,749



(2,312)

Adjustments:













Plus: Transaction-related expenses(a)



1,016



57



2,162



583

Plus: Fair value changes to equity awards(b)



1,683



6,385



4,223



6,723

Adjusted EBITDA


$

394,322


$

484,905


$

802,845


$

918,079














As % of revenues



30.2%



31.6%



30.2%



31.3%

____________________________

(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,



2020


2021


2020


2021

Net cash provided by operating activities


$

383,599


$

448,081


$

753,185


$

848,478

Plus/(Less): Change in book overdraft



3,243



16,659



(606)



(190)

Plus: Proceeds from disposal of assets



7,143



5,826



10,642



7,906

Less: Capital expenditures for property and equipment



(130,930)



(174,599)



(268,711)



(271,392)

Adjustments:













   Payment of contingent consideration recorded in earnings(a)



-



-



-



520

Cash received for divestitures(b)



(4,974)



-



(4,974)



-

Transaction-related expenses(c)



1,016



57



2,162



583

Pre-existing Progressive Waste share-based grants(d)



-



47



6,440



144

Tax effect(e)



(251)



(26)



(3,569)



(214)

Adjusted free cash flow


$

258,846


$

296,045


$

494,569


$

585,835














As % of revenues



19.8%



19.3%



18.6%



20.0%

___________________________

(a)

Reflects the addback of acquisition-related payments for contingent consideration that were recorded as expenses in earnings and as a component of cash flows from operating activities as the amounts paid exceeded the fair value of the contingent consideration recorded at the acquisition date.

(b)

Reflects the elimination of cash received in conjunction with the divestiture of certain operations.

(c)

Reflects the addback of acquisition-related transaction costs.

(d)

Reflects the cash settlement of pre-existing Progressive Waste share-based awards during the period.

(e)

The aggregate tax effect of footnotes (a) through (d) is calculated based on the applied tax rates for the respective periods.

 

NON-GAAP RECONCILIATION SCHEDULE (continued) 
(in thousands of U.S. dollars, except per share amounts)

Reconciliation of Adjusted Net Income attributable to Waste Connections and Adjusted Net Income per Diluted Share attributable to Waste Connections:

Adjusted net income attributable to Waste Connections and adjusted net income per diluted share attributable to Waste Connections, both non-GAAP financial measures, are provided supplementally because they are widely used by investors as a valuation measure in the solid waste industry.  Management uses adjusted net income attributable to Waste Connections and adjusted net income per diluted share attributable to Waste Connections as one of the principal measures to evaluate and monitor the ongoing financial performance of Waste Connections' operations.  Waste Connections provides adjusted net income attributable to Waste Connections to exclude the effects of items management believes impact the comparability of operating results between periods.  Adjusted net income attributable to Waste Connections has limitations due to the fact that it excludes items that have an impact on the Company's financial condition and results of operations.  Adjusted net income attributable to Waste Connections and adjusted net income per diluted share attributable to Waste Connections are not a substitute for, and should be used in conjunction with, GAAP financial measures.  Other companies may calculate these non-GAAP financial measures differently. 



Three months ended
June 30,


Six months ended
June 30,



2020


2021


2020


2021

Reported net income (loss) attributable to Waste Connections


$

(227,072)


$

177,047


$

(84,037)


$

337,356

Adjustments:













Amortization of intangibles(a)



31,771



32,707



63,409



64,899

Impairments and other operating items(b)



437,270



6,081



438,777



6,715

Transaction-related expenses(c) 



1,016



57



2,162



583

Fair value changes to equity awards(d)



1,683



6,385



4,223



6,723

Tax effect(e)



(118,220)



(11,393)



(127,523)



(19,935)

Tax items(f)



31,508



-



31,508



-

Adjusted net income attributable to Waste Connections


$

157,956


$

210,884


$

328,519


$

396,341

Diluted earnings (loss) per common share attributable to Waste Connections' common shareholders:













Reported net income (loss)


$

(0.86)


$

0.68


$

(0.32)


$

1.29

Adjusted net income


$

0.60


$

0.81


$

1.25


$

1.51














Shares used in the per share calculations:













Reported diluted shares



262,994,275



261,418,573



263,390,685



262,269,600

Adjusted diluted shares(g)



263,317,054



261,418,573



263,833,471



262,269,600

____________________________

(a)

Reflects the elimination of the non-cash amortization of acquisition-related intangible assets.

(b)

Reflects the addback of impairments and other operating items.

(c)

Reflects the addback of acquisition-related transaction costs.

(d)

Reflects fair value accounting changes associated with certain equity awards.

(e)

The aggregate tax effect of the adjustments in footnotes (a) through (d) is calculated based on the applied tax rates for the respective periods.

(f)

Reflects the impact of a portion of the Company's 2019 inter-entity payments no longer being deductible for tax purposes due to the finalization of tax regulations on April 7, 2020 under Internal Revenue Code 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.

 

UPDATED 2021 OUTLOOK

NON-GAAP RECONCILIATION SCHEDULE

(in thousands of U.S. dollars, except where noted)


Reconciliation of Adjusted EBITDA:








Updated 2021 Outlook



Estimates


Observation

Net income attributable to Waste Connections

$

690,000



    Plus: Income tax provision (a)


184,294


Approximate 21.0% effective rate

    Plus: Interest expense, net


162,000



    Plus: Depreciation and Depletion


680,000


Approximately 11.4% of revenue

    Plus: Amortization


132,000



    Plus: Closure and post-closure accretion


15,000



    Plus: Impairments and other operating items (b)


6,712



    Plus: Other income, net (b)


(2,312)



    Adjustments: (b)





        Plus: Transaction-related expenses


583



        Plus: Fair value changes to equity awards


6,723



Adjusted EBITDA

$

1,875,000


Approximately 31.4% of revenue

____________________________

(a)

Approximately 21% full year effective tax rate, including amounts reported for the six month period ended June 30, 2021.

(b)

Reflects amounts reported for the six month period ended June 30, 2021, as shown on page 9.



Reconciliation of Adjusted Free Cash Flow:





Updated

2021 Outlook

Net cash provided by operating activities


$

1,666,061

Plus: Proceeds from disposal of assets (a)



7,906

Less: Capital expenditures for property and equipment         



(675,000)

Adjustments: (a)




    Payment of contingent consideration recorded in earnings



520

    Transaction-related expenses



583

    Pre-existing Progressive Waste share-based grants



144

    Tax effect



(214)

Adjusted free cash flow


$

1,000,000




As % of revenues



16.7%

____________________________

(a)

Reflects amounts reported for the six month period ended June 30, 2021, as shown on page 10.

 

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SOURCE Waste Connections, Inc.

Copyright 2021 PR Newswire

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