- Net Leverage1 of 4.18x, lowest level in company's
history; accelerated deleveraging following completion of
divestitures for gross proceeds of over $1.6
billion
- Revenue of $1,943.6 million,
increase of 13.8%
- Solid Waste price of 10.4%, up 310 basis points
year-over-year
- Adjusted EBITDA1 of $540.7
million, increase of 19.3%; Net income from continuing
operations of $293.8 million;
Adjusted Net Income from continuing operations1 of
$196.2 million
- Adjusted EBITDA margin1 of 27.8%; Solid Waste
Adjusted EBITDA margin1 of 31.6%; Environmental Services
Adjusted EBITDA margin1 of 29.2 %
- Adjusted Cash Flows from Operating Activities1 of
$295.6 million; cash flows from
operating activities of $260.7
million; Adjusted Free Cash Flow1 of $8.5 million
- Adjusted earnings per share from continuing
operations1 of $0.53;
Earnings per share from continuing operations of $0.74
- Year-to-date completed acquisitions generating approximately
$48 million2 in annualized
revenue
VAUGHAN,
ON, July 26, 2023 /PRNewswire/ - GFL
Environmental Inc. (NYSE: GFL) (TSX: GFL) ("GFL", "we" or "our")
today announced its results for the second quarter
of 2023.
"Our exceptional start to the year continued into the second
quarter, thanks to the hard work and commitment of our over 20,000
employees," said Patrick Dovigi,
Founder and Chief Executive Officer of GFL. "Our strong execution
once again resulted in our achievement of double-digit revenue
growth in the quarter. We also grew Adjusted EBITDA1 by
19.3% and demonstrated the effectiveness of our pricing and
efficiency initiatives resulting in industry leading Adjusted
EBITDA margin1 expansion of 130 basis points. This top
line growth and margin expansion, both of which exceeded our
expectations, demonstrate the strength in our best-in-class asset
base and the ability of our exceptional team to execute on our
proven value creation strategies."
Mr. Dovigi added, "During the second quarter, we successfully
completed our portfolio rationalization initiative that we
committed to earlier this year. We realized $1.65 billion of gross proceeds from these
non-core divestitures, $150 million
more than our original expectation, and completed the process one
quarter ahead of plan. A portion of the net proceeds from the
divestitures was used to accelerate our balance sheet deleveraging
commitment and we ended the second quarter with Net
Leverage1 of 4.18x, the lowest level in our history. The
resulting enhanced strength of our balance sheet, coupled with our
margin expansion and accelerated free cash flow, sets us on a path
to ending the year with Net Leverage1 of less than 4.0x,
mid 3.0x by the end of 2024 and a pathway to investment grade in
the medium term."
Mr. Dovigi continued, "We remain focused on executing on our
strategy to create long-term shareholder value. We have completed
16 acquisitions year-to-date, the majority of which were smaller
tuck-in acquisitions, which have continued to densify our existing
footprint. With the success of the divestiture transactions, we
intend to allocate a portion of the proceeds to a number of
incremental sustainability related capital projects, primarily
related to opportunities arising from extended producer
responsibility legislation and RNG, in keeping with our highest and
best capital use strategy. We are excited about the positive
contribution that these investments will have across many facets of
our strategy."
Mr. Dovigi concluded, "Our strong performance for the first half
of the year, coupled with our expectation for the balance of the
year, the resilience of our business model and the effectiveness of
our growth strategies, are leading us to increase our already
industry leading full year guidance for this year. We are
increasing our guidance for revenue, Adjusted EBITDA1
and Adjusted Free Cash Flow1. We continue to see upside
opportunities from our robust M&A pipeline and any incremental
contribution from further M&A completed in the second half of
the year would be upside to our updated guidance."
Second Quarter Results
- Revenue increased by 13.8% to $1,943.6
million in the second quarter of 2023, compared to the
second quarter of 2022.
-
- Solid Waste revenue of $1,556.3
million, including organic growth of 4.8% driven
predominantly by core pricing increases.
- Environmental Services revenue of $387.3
million, including organic growth of 10.2% driven by the
strength of industrial collection and processing activity at our
facilities and by core pricing and surcharge increases.
- Adjusted EBITDA1 increased by 19.3% to $540.7 million in the second quarter of 2023,
compared to the second quarter of 2022. Adjusted EBITDA
margin1 was 27.8% in the second quarter of 2023,
compared to 26.5% in the second quarter of 2022. Solid Waste
Adjusted EBITDA margin1 was 31.6% in the second quarter
of 2023, compared to 29.4% in the second quarter of 2022.
- Net income from continuing operations was $293.8 million in the second quarter of 2023,
compared to net income from continuing operations of $82.6 million in the second quarter of 2022.
- Adjusted Free Cash Flow1 was $8.5 million in the second quarter of 2023,
compared to $102.2 million in the
second quarter of 2022. The decrease of $93.7 million was inclusive of $138.8 million of incremental net capex and
$28.2 million of incremental cash
interest paid.
Year to Date Results
- Revenue increased by 20.4% to $3,742.7
million for the six months ended June
30, 2023, compared to the six months ended June 30, 2022.
-
- Solid Waste revenue of $3,038.5
million, including organic growth of 8.3% driven
predominantly by core pricing increases.
- Environmental Services revenue of $704.2
million, including organic growth of 16.5% driven by the
strength of industrial collection and processing activity at our
facilities and by core pricing and surcharge increases.
- Adjusted EBITDA1 increased by 21.5% to $981.2 million for the six months ended
June 30, 2023, compared to the six
months ended June 30, 2022. Adjusted
EBITDA margin1 was 26.2% for the six months ended
June 30, 2023, compared to 26.0% for
the six months ended June 30, 2022.
Solid Waste Adjusted EBITDA margin1 was 30.6% for the
six months ended June 30, 2023,
compared to 29.6% for the six months ended June 30, 2022.
- Net income from continuing operations was $76.0 million for the six months ended
June 30, 2023, compared to net income
from continuing operations of $219.6
million for the six months ended June
30, 2022.
- Adjusted Free Cash Flow1 was $(46.3) million for the six months ended
June 30, 2023, compared to
$220.8 million for the six months
ended June 30, 2022. The decrease of
$267.1 million was inclusive of
$286.9 million of incremental net
capex and $93.0 million of
incremental cash interest paid.
Updated Full Year 2023 Guidance3
GFL also provided its updated guidance for 2023 assuming a
CAD/US exchange rate of 1.32 for the remainder of the year
(compared to 1.34 provided in our original guidance on February 21, 2023).
|
|
Original Full
Year 2023
Guidance
(Midpoint)
|
|
Pro Forma
U.S. Solid
Waste
Divestitures
|
|
Pro Forma
Adjusted
Original
Guidance
|
|
Updated Full
Year 2023
Guidance
|
Revenue
|
|
$ 7,600.0
|
|
$
(255.0)
|
|
$ 7,345.0
|
|
$ 7,400.0
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA(3)
|
|
2,025.0
|
|
(75.0)
|
|
1,950.0
|
|
2,000.0
|
Adjusted EBITDA
margin(3)
|
|
26.6 %
|
|
29.4 %
|
|
26.5 %
|
|
27.0 %
|
|
|
|
|
|
|
|
|
|
Adjusted Free Cash
Flow(3)
|
|
700.0
|
|
(25.0)
|
|
675.0
|
|
705.0
|
|
|
|
|
|
|
|
|
|
Net
Leverage(3)
|
|
Low
4s
|
|
|
|
|
|
<4.0x
|
- Revenue is estimated to be approximately $7,400 million.
-
- Full year Solid Waste core pricing of 9.5%, surcharges of
(1.0%), volume of (1.9%) and commodity price impact of (0.6%);
- Environmental Services organic growth of 7.0%; and,
- Changes in foreign exchange resulting in 1.6% revenue growth
and revenue from M&A contribution of 1.7%.
- Adjusted EBITDA3 is estimated to be approximately
$2,000 million.
-
- Full year Adjusted EBITDA margin3 is expected to be
approximately 27.0%.
- Adjusted Free Cash Flow3 is estimated to be
approximately $705 million.
-
- Full year cash interest is expected to be approximately
$490 million, inclusive of
$20 million of cash interest
incremental to original guidance as a result of higher interest
rates and borrowings and the in-year savings from the repayment of
variable debt using net proceeds from the sale of three non-core
U.S. Solid Waste businesses.
- Full year net capex is expected to be approximately
$805 million, excluding approximately
$200 million to $300 million of incremental purchase of property
and equipment which will be offset by an equal allocation of a
portion of the net proceeds from the sale of three non-core U.S.
Solid Waste businesses.
- Year-end Net Leverage3 is estimated to be less than
4.0x, resulting from growth in Adjusted EBITDA3 and
Adjusted Free Cash Flow3.
The 2023 updated guidance includes the expected contribution of
acquisitions already completed in 2023, net of divestitures
completed to date, but excludes any impact from acquisitions not
yet completed. Implicit in forward-looking information in respect
of our expectations for 2023 are certain current assumptions,
including, among others, no changes to the current economic
environment, including fuel and commodities. The 2023 updated
guidance assumes GFL will continue to execute on its strategy
of organically growing our business, leverage our scalable network
to attract and retain customers across multiple service lines,
realize operational efficiencies, and extract procurement and cost
synergies. See "Forward-Looking Information".
______________________
|
(1)
|
A non-IFRS measure;
see accompanying Non-IFRS Reconciliation Schedule; see "Non-IFRS
Measures" for an explanation of the composition of non-IFRS
measures.
|
(2)
|
Includes the
expected contribution of acquisitions completed in 2023 (other than
contribution from 2023 acquisitions previously reflected in the
Company's 2023 full year guidance provided on February 21,
2023).
|
(3)
|
Information
contained in the section titled "Updated Full Year 2023 Guidance"
includes non-IFRS measures and ratios, including Adjusted EBITDA,
Adjusted EBITDA margin, Adjusted Free Cash Flow and Net Leverage.
Due to the uncertainty of the likelihood, amount and timing of
effects of events or circumstances to be excluded from these
measures, GFL does not have information available to provide a
quantitative reconciliation of such projections to comparable IFRS
measures. See "Non-IFRS Measures" below. See Second Quarter Results
for the equivalent historical non-IFRS measure.
|
Q2 2023 Earnings Call
GFL will host a conference call related to our second quarter
earnings on July 27, 2023 at
8:30 am Eastern Time. A live audio
webcast of the conference call can be accessed by logging onto our
Investors page at investors.gflenv.com or by clicking here.
Listeners may access the call toll-free by dialing 1-888-575-5163
approximately 15 minutes prior to the scheduled start time.
We encourage participants who will be dialing in to pre-register
for the conference call using the following link:
https://emportal.ink/446g9bB. Callers who pre-register will be
given a PIN to gain immediate access to the call and bypass the
live operator on the day of the call. Participants may pre-register
at any time, including up to and after the call start time. For
those unable to listen live, an audio replay of the call will be
available until August 10, 2023 by
dialing 1-877-674-7070 (access code: 021187). A copy of the
presentation for the call will be available on our website at
investors.gflenv.com or by clicking here.
About GFL
GFL, headquartered in Vaughan,
Ontario, is the fourth largest diversified environmental
services company in North America,
providing a comprehensive line of solid waste management, liquid
waste management and soil remediation services through its platform
of facilities throughout Canada
and in more than half of the U.S. states. Across its
organization, GFL has a workforce of more than 20,000
employees.
For more information, visit the GFL web site at gflenv.com. To
subscribe for investor email alerts please visit
investors.gflenv.com or click here.
Forward-Looking Information
This release includes certain "forward-looking statements" and
"forward-looking information" (collectively, "forward-looking
information") within the meaning of applicable U.S. and Canadian
securities laws, respectively. Forward-looking information includes
all statements that do not relate solely to historical or current
facts and may relate to our future outlook, financial guidance and
anticipated events or results and may include statements regarding
our financial performance, financial condition or results, business
strategy, growth strategies, budgets, operations and services.
Particularly, statements regarding our expectations of future
results, performance, achievements, prospects or opportunities or
the markets in which we operate is forward-looking information. In
some cases, forward-looking information can be identified by the
use of forward-looking terminology such as "plans", "targets",
"expects" or "does not expect", "is expected", "an opportunity
exists", "budget", "scheduled", "estimates", "outlook",
"forecasts", "projection", "prospects", "strategy", "intends",
"anticipates", "does not anticipate", "believes", or "potential" or
variations of such words and phrases or statements that certain
actions, events or results "may", "could", "would", "might",
"will", "will be taken", "occur" or "be achieved", although not all
forward-looking information includes those words or phrases. In
addition, any statements that refer to expectations, intentions,
projections, guidance, potential or other characterizations of
future events or circumstances contain forward-looking information.
Statements containing forward-looking information are not
historical facts nor assurances of future performance but instead
represent management's expectations, estimates and projections
regarding future events or circumstances.
Forward-looking information is based on our opinions, estimates
and assumptions that we considered appropriate and reasonable as of
the date such information is stated, is subject to known and
unknown risks, uncertainties, assumptions and other important
factors that may cause the actual results, level of activity,
performance or achievements to be materially different from those
expressed or implied by such forward-looking information, including
but not limited to certain assumptions set out herein; our ability
to obtain and maintain existing financing on acceptable terms; our
ability to source and execute on acquisitions on terms acceptable
to us; our ability to find purchasers for non-core assets on terms
acceptable to us; currency exchange and interest rates; commodity
price fluctuations; our ability to implement price increases and
surcharges; changes in waste volumes; labour, supply chain and
transportation constraints; inflationary cost pressures; our
ability to maintain a favourable working capital position; the
impact of competition; the changes and trends in our industry or
the global economy; changes in laws, rules, regulations, and global
standards; and the duration and severity of the COVID-19 pandemic,
including variants, and its impact on the economy, the North
American financial markets, our operations, our M&A pipeline
and our financial results. Other important factors that could
materially affect our forward-looking information can be found in
the "Risk Factors" section of GFL's annual information form for the
year ended December 31, 2022 and
GFL's other periodic filings with the U.S. Securities and Exchange
Commission and the securities commissions or similar regulatory
authorities in Canada.
Shareholders, potential investors and other readers are urged to
consider these risks carefully in evaluating our forward-looking
information and are cautioned not to place undue reliance on such
information. There can be no assurance that the underlying
opinions, estimates and assumptions will prove to be correct.
Although we have attempted to identify important risk factors that
could cause actual results to differ materially from those
contained in forward-looking information, there may be other
factors not currently known to us or that we currently believe are
not material that could also cause actual results or future events
to differ materially from those expressed in such forward-looking
information. There can be no assurance that such information will
prove to be accurate, as actual results and future events could
differ materially from those anticipated in such information. The
forward-looking information contained in this release represents
our expectations as of the date of this release (or as the date it
is otherwise stated to be made), and is subject to change after
such date. However, we disclaim any intention or obligation or
undertaking to update or revise any forward-looking information
whether as a result of new information, future events or otherwise,
except as required under applicable U.S. or Canadian securities
laws. The purpose of disclosing our financial outlook set out in
this release is to provide investors with more information
concerning the financial impact of our business initiatives and
growth strategies.
Non-IFRS Measures
This release makes reference to certain non-IFRS measures. These
measures are not recognized measures under IFRS and do not have a
standardized meaning prescribed by IFRS and are therefore unlikely
to be comparable to similar measures presented by other companies.
Accordingly, these measures should not be considered in isolation
or as a substitute for analysis of our financial information
reported under IFRS. Rather, these non-IFRS measures are used to
provide investors with supplemental measures of our operating
performance and thus highlight trends in our core business that may
not otherwise be apparent when relying solely on IFRS measures. We
also believe that securities analysts, investors and other
interested parties frequently use non-IFRS measures in the
evaluation of issuers. Our management also uses non-IFRS measures
in order to facilitate operating performance comparisons from
period to period, to prepare annual operating budgets and forecasts
and to determine components of management compensation.
EBITDA represents, for the applicable period, net income (loss)
from continuing operations plus (a) interest and other finance
costs, plus (b) depreciation and amortization of property and
equipment, landfill assets and intangible assets, plus (less) (c)
the provision (recovery) for income taxes, in each case to the
extent deducted or added to/from net income (loss) from continuing
operations. We present EBITDA to assist readers in understanding
the mathematical development of Adjusted EBITDA. Management does
not use EBITDA as a financial performance metric.
Adjusted EBITDA is a supplemental measure used by management and
other users of our financial statements including our lenders and
investors, to assess the financial performance of our business
without regard to financing methods or capital structure. Adjusted
EBITDA is also a key metric that management uses prior to execution
of any strategic investing or financing opportunity. For example,
management uses Adjusted EBITDA as a measure in determining the
value of acquisitions, expansion opportunities and dispositions. In
addition, Adjusted EBITDA is utilized by financial institutions to
measure borrowing capacity. Adjusted EBITDA is calculated by adding
and deducting, as applicable from EBITDA, certain expenses, costs,
charges or benefits incurred in such period which in management's
view are either not indicative of underlying business performance
or impact the ability to assess the operating performance of our
business, including: (a) (gain) loss on foreign exchange, (b)
(gain) loss on sale of property and equipment, (c) mark-to-market
(gain) loss on Purchase Contracts, (d) share of net (income) loss
of investments accounted for using the equity method, (e)
share-based payments, (f) gain (loss) on divestiture, (g)
transaction costs, (h) acquisition, rebranding and other
integration costs (included in cost of sales related to acquisition
activity) and (i) other. We use Adjusted EBITDA to facilitate a
comparison of our operating performance on a consistent basis
reflecting factors and trends affecting our business. For the three
and six months ended June 30, 2023,
we added back our share of net loss of investments accounted for
using the equity method. As we continue to grow our business, we
may be faced with new events or circumstances that are not
indicative of our underlying business performance or that impact
the ability to assess our operating performance.
Adjusted EBITDA margin represents Adjusted EBITDA divided by
revenue. Management and other users of our financial statements
including our lenders and investors use Adjusted EBITDA margin to
facilitate a comparison of the operating performance of each of our
operating segments on a consistent basis reflecting factors and
trends affecting our business.
Acquisition EBITDA represents, for the applicable period,
management's estimates of the annual Adjusted EBITDA of an acquired
business, based on its most recently available historical financial
information at the time of acquisition, as adjusted to give effect
to (a) the elimination of expenses related to the prior owners and
certain other costs and expenses that are not indicative of the
underlying business performance, if any, as if such business had
been acquired on the first day of such period and (b) contract and
acquisition annualization for contracts entered into and
acquisitions completed by such acquired business prior to our
acquisition (collectively, "Acquisition EBITDA Adjustments").
Further adjustments are made to such annual Adjusted EBITDA to
reflect estimated operating cost savings and synergies, if any,
anticipated to be realized upon acquisition and integration of the
business into our operations. Acquisition EBITDA is calculated net
of divestitures. We use Acquisition EBITDA for the acquired
businesses to adjust our Adjusted EBITDA to include a proportional
amount of the Acquisition EBITDA of the acquired businesses based
upon the respective number of months of operation for such period
prior to the date of our acquisition of each such business.
Adjusted Cash Flows from Operating Activities represents cash
flows from operating activities adjusted for (a) operating cash
flows from discontinued operations, (b) transaction costs, (c)
acquisition, rebranding and other integration costs, (d) M&A
related net working capital investment and (e) cash interest paid
on TEUs. Adjusted Cash Flows from Operating Activities is a
supplemental measure used by investors as a valuation and liquidity
measure in our industry. Adjusted Cash Flows from Operating
Activities is a supplemental measure used by management to evaluate
and monitor liquidity and the ongoing financial performance of
GFL.
Adjusted Free Cash Flow represents Adjusted Cash Flows from
Operating Activities adjusted for (a) proceeds from asset
divestitures, (b) proceeds on disposal of assets, (c) insurance
proceeds related to property and equipment, (d) purchase of
property and equipment and intangible assets and (e) investment in
joint ventures. For the three and six months ended June 30, 2022, purchase of property and equipment
and intangible assets excludes those by GFL's Infrastructure
services division ("GFL Infrastructure"). Adjusted Free Cash Flow
is a supplemental measure used by investors as a valuation and
liquidity measure in our industry. Adjusted Free Cash Flow is a
supplemental measure used by management to evaluate and monitor
liquidity and the ongoing financial performance of GFL.
Adjusted Net Income (Loss) from continuing operations represents
net income (loss) for continuing operations adjusted for (a)
amortization of intangible assets, (b) ARO discount rate
depreciation adjustment, (c) incremental depreciation of property
and equipment due to recapitalization, (d) amortization of deferred
financing costs, (e) (gain) loss on foreign exchange, (f)
mark-to-market (gain) loss on Purchase Contracts, (g) share of net
(income) loss of investments accounted for using the equity method,
(h) gain (loss) on divestiture, (i) transaction costs, (j)
acquisition, rebranding and other integration costs, (k) TEU
amortization expense, (l) other and (m) the tax impact of the
forgoing. For the three and six months ended June 30, 2023, we
added back our share of net loss of investments accounted for using
the equity method. Adjusted earnings (loss) per share from
continuing operations is defined as Adjusted Net Income (Loss) from
continuing operations divided by the weighted average shares in the
period. We believe that Adjusted earnings (loss) per share from
continuing operations provides a meaningful comparison of current
results to prior periods' results by excluding items that GFL does
not believe reflect its fundamental business performance.
Net Leverage is a supplemental measure used by management to
evaluate borrowing capacity and capital allocation strategies. Net
Leverage is equal to our total long-term debt, as adjusted for fair
value, deferred financings and other adjustments and reduced by our
cash, divided by Run-Rate EBITDA.
Run-Rate EBITDA represents Adjusted EBITDA for the applicable
period as adjusted to give effect to management's estimates of (a)
Acquisition EBITDA Adjustments (as defined above) and (b) the
impact of annualization of certain new municipal and disposal
contracts and cost savings initiatives, entered into, commenced or
implemented, as applicable, in such period, as if such contracts or
costs savings initiatives had been entered into, commenced or
implemented, as applicable, on the first day of such period.
Run-Rate EBITDA has not been adjusted to take into account the
impact of the cancellation of contracts and cost increases
associated with these contracts. These adjustments reflect monthly
allocations of Acquisition EBITDA for the acquired businesses based
on straight line proration. As a result, these estimates do not
take into account the seasonality of a particular acquired
business. While we do not believe the seasonality of any one
acquired business is material when aggregated with other acquired
businesses, the estimates may result in a higher or lower
adjustment to our Run-Rate EBITDA than would have resulted had we
adjusted for the actual results of each of the acquired businesses
for the period prior to our acquisition. We primarily use Run-Rate
EBITDA to show how GFL would have performed if each of the interim
acquisitions had been consummated at the start of the period as
well as to show the impact of the annualization of certain new
municipal and disposal contracts and cost savings initiatives. We
also believe that Run-Rate EBITDA is useful to investors and
creditors to monitor and evaluate our borrowing capacity and
compliance with certain of our debt covenants. Run-Rate EBITDA as
presented herein is calculated in accordance with the terms of our
revolving credit agreement.
All references to "$" in this press release are to Canadian
dollars, unless otherwise noted.
For further information:
Patrick Dovigi, Founder and Chief
Executive Officer
+1 905-326-0101
pdovigi@gflenv.com
GFL Environmental Inc.
Unaudited Interim Condensed Consolidated Statements of
Operations and Comprehensive Income (Loss)
(In millions of dollars except per share amounts)
|
|
Three months
ended
June
30,
|
|
Six
months ended
June
30,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Revenue
|
|
$
1,943.6
|
|
$
1,707.5
|
|
$
3,742.7
|
|
$
3,108.9
|
Expenses
|
|
|
|
|
|
|
|
|
Cost of
sales
|
|
1,590.6
|
|
1,482.0
|
|
3,145.2
|
|
2,747.6
|
Selling, general and
administrative expenses
|
|
234.2
|
|
178.4
|
|
448.7
|
|
341.1
|
Interest and other
finance costs
|
|
164.8
|
|
104.8
|
|
329.5
|
|
204.5
|
Gain on sale of
property and equipment
|
|
(6.5)
|
|
(2.6)
|
|
(6.4)
|
|
(4.4)
|
(Gain) loss on foreign
exchange
|
|
(56.8)
|
|
112.6
|
|
(51.5)
|
|
54.0
|
Mark-to-market loss
(gain) on Purchase Contracts
|
|
—
|
|
(206.2)
|
|
104.3
|
|
(381.1)
|
Gain on
divestiture
|
|
(575.0)
|
|
—
|
|
(580.5)
|
|
(6.5)
|
Other
|
|
(2.3)
|
|
9.1
|
|
(2.3)
|
|
9.1
|
|
|
1,349.0
|
|
1,678.1
|
|
3,387.0
|
|
2,964.3
|
Share of net (loss)
income of investments accounted for using the equity
method
|
|
(61.9)
|
|
5.3
|
|
(82.9)
|
|
5.3
|
Earnings before income
taxes
|
|
532.7
|
|
34.7
|
|
272.8
|
|
149.9
|
Current income tax
expense
|
|
342.2
|
|
4.0
|
|
349.4
|
|
10.9
|
Deferred tax
recovery
|
|
(103.3)
|
|
(51.9)
|
|
(152.6)
|
|
(80.6)
|
Income tax expense
(recovery)
|
|
238.9
|
|
(47.9)
|
|
196.8
|
|
(69.7)
|
Net income from
continuing operations
|
|
293.8
|
|
82.6
|
|
76.0
|
|
219.6
|
Net loss from
discontinued operations
|
|
—
|
|
(18.3)
|
|
—
|
|
(127.9)
|
Net
income
|
|
293.8
|
|
64.3
|
|
76.0
|
|
91.7
|
Less: Net (loss)
income attributable to non-controlling interests
|
|
(1.1)
|
|
—
|
|
0.5
|
|
—
|
Net income
attributable to GFL Environmental Inc.
|
|
294.9
|
|
64.3
|
|
75.5
|
|
91.7
|
|
|
|
|
|
|
|
|
|
Items that may be
subsequently reclassified to net income
|
|
|
|
|
|
|
|
|
Currency translation
adjustment
|
|
(156.3)
|
|
197.7
|
|
(161.8)
|
|
106.3
|
Fair value movements
on cash flow hedges, net of tax
|
|
7.5
|
|
21.6
|
|
14.9
|
|
(0.8)
|
Share of other
comprehensive loss of investments accounted for using the equity
method
|
|
(0.4)
|
|
—
|
|
(0.4)
|
|
—
|
Reclassification to
net income of foreign currency differences on
divestitures
|
|
22.5
|
|
—
|
|
22.5
|
|
—
|
Other comprehensive
(loss) income from continuing operations
|
|
(126.7)
|
|
219.3
|
|
(124.8)
|
|
105.5
|
Comprehensive income
(loss) from continuing operations
|
|
167.1
|
|
301.9
|
|
(48.8)
|
|
325.1
|
Comprehensive loss from
discontinued operations
|
|
—
|
|
(18.3)
|
|
—
|
|
(127.9)
|
Total comprehensive
income (loss)
|
|
167.1
|
|
283.6
|
|
(48.8)
|
|
197.2
|
Less: Total
comprehensive (loss) income attributable to non-controlling
interests
|
|
(1.3)
|
|
—
|
|
0.2
|
|
—
|
Total comprehensive
income (loss) attributable to GFL Environmental Inc.
|
|
$
168.4
|
|
$
283.6
|
|
$
(49.0)
|
|
$
197.2
|
|
|
|
|
|
|
|
|
|
Basic earnings per
share(1)
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
$
0.74
|
|
$
0.17
|
|
$
0.08
|
|
$
0.49
|
Discontinued
operations
|
|
—
|
|
(0.05)
|
|
—
|
|
(0.35)
|
Total
operations
|
|
$
0.74
|
|
$
0.12
|
|
$
0.08
|
|
$
0.14
|
Diluted earnings per
share(1)
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
$
0.72
|
|
$
0.17
|
|
$
0.08
|
|
$
0.49
|
Discontinued
operations
|
|
—
|
|
(0.05)
|
|
—
|
|
(0.35)
|
Total
operations
|
|
$
0.72
|
|
$
0.12
|
|
$
0.08
|
|
$
0.14
|
Weighted average
number of shares outstanding(2)
|
|
369,225,007
|
|
366,843,674
|
|
369,200,725
|
|
365,447,590
|
Diluted weighted
average number of shares outstanding(2)
|
|
401,218,417
|
|
368,706,685
|
|
372,779,310
|
|
367,672,505
|
(1) Basic and diluted
earnings per share is calculated on net income attributable to GFL
Environmental Inc. adjusted for amounts attributable to preferred
shareholders. Refer to Note 10 in our Interim Financial
Statements.
|
(2) Basic and diluted
earnings per share includes the minimum conversion of TEUs into
subordinate voting shares, which represented nil subordinate voting
shares as at June 30, 2023 (25,661,050 subordinate voting shares as
at June 30, 2022).
|
GFL Environmental Inc.
Unaudited Interim Condensed Consolidated Statements of Financial
Position
(In millions of dollars)
|
|
June 30,
2023
|
|
December 31,
2022
|
Assets
|
|
|
|
|
Cash
|
|
$
82.2
|
|
$
82.1
|
Trade and other
receivables, net
|
|
1,113.2
|
|
1,118.1
|
Prepaid expenses and
other assets
|
|
250.9
|
|
182.9
|
Current
assets
|
|
1,446.3
|
|
1,383.1
|
|
|
|
|
|
Property and
equipment, net
|
|
6,401.7
|
|
6,540.3
|
Intangible assets,
net
|
|
2,948.1
|
|
3,245.0
|
Investments accounted
for using the equity method
|
|
271.9
|
|
326.6
|
Other long-term
assets
|
|
59.5
|
|
90.2
|
Goodwill
|
|
7,430.3
|
|
8,182.4
|
Non-current
assets
|
|
17,111.5
|
|
18,384.5
|
Total
assets
|
|
18,557.8
|
|
19,767.6
|
|
|
|
|
|
Liabilities
|
|
|
|
|
Accounts payable and
accrued liabilities
|
|
1,442.4
|
|
1,557.7
|
Income taxes
payable
|
|
337.3
|
|
—
|
Long-term
debt
|
|
—
|
|
17.9
|
Lease
obligations
|
|
51.2
|
|
51.5
|
Due to related
party
|
|
5.8
|
|
9.3
|
Tangible equity
units
|
|
—
|
|
1,024.9
|
Landfill closure and
post-closure obligations
|
|
33.7
|
|
30.8
|
Current
liabilities
|
|
1,870.4
|
|
2,692.1
|
|
|
|
|
|
Long-term
debt
|
|
7,888.0
|
|
9,248.9
|
Lease
obligations
|
|
341.5
|
|
327.3
|
Other long-term
liabilities
|
|
40.1
|
|
47.5
|
Due to related
party
|
|
5.8
|
|
8.7
|
Deferred income tax
liabilities
|
|
435.4
|
|
582.6
|
Landfill closure and
post-closure obligations
|
|
845.2
|
|
816.4
|
Non-current
liabilities
|
|
9,556.0
|
|
11,031.4
|
Total
liabilities
|
|
11,426.4
|
|
13,723.5
|
|
|
|
|
|
Shareholders'
equity
|
|
|
|
|
Share
capital
|
|
9,754.7
|
|
8,640.3
|
Contributed
surplus
|
|
135.3
|
|
109.6
|
Deficit
|
|
(2,779.6)
|
|
(2,843.0)
|
Accumulated other
comprehensive income
|
|
5.8
|
|
130.3
|
Total GFL
Environmental Inc.'s shareholders' equity
|
|
7,116.2
|
|
6,037.2
|
Non-controlling
interests
|
|
15.2
|
|
6.9
|
Total shareholders'
equity
|
|
7,131.4
|
|
6,044.1
|
Total liabilities
and shareholders' equity
|
|
$
18,557.8
|
|
$
19,767.6
|
GFL Environmental Inc.
Unaudited Interim Condensed Consolidated Statements of Cash
Flows
(In millions of dollars)
|
|
Three months
ended
June
30,
|
|
Six
months ended
June
30,
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Operating
activities
|
|
|
|
|
|
|
|
|
Net income
|
|
$
293.8
|
|
$
64.3
|
|
$
76.0
|
|
$
91.7
|
Adjustments for
non-cash items
|
|
|
|
|
|
|
|
|
Depreciation of
property and equipment
|
|
237.8
|
|
241.1
|
|
477.6
|
|
472.8
|
Amortization of
intangible assets
|
|
134.0
|
|
133.4
|
|
272.8
|
|
259.1
|
Share of net loss
(income) of investments accounted for using the equity
|
|
61.9
|
|
(5.3)
|
|
82.9
|
|
(5.3)
|
Gain on
divestiture
|
|
(575.0)
|
|
—
|
|
(580.5)
|
|
(6.5)
|
Other
|
|
(2.3)
|
|
9.1
|
|
(2.3)
|
|
9.1
|
Impairment related to
discontinued operations
|
|
—
|
|
18.3
|
|
—
|
|
128.1
|
Interest and other
finance costs
|
|
164.8
|
|
104.8
|
|
329.5
|
|
208.0
|
Share-based
payments
|
|
15.2
|
|
13.1
|
|
30.2
|
|
26.6
|
(Gain) loss on
unrealized foreign exchange on long-term debt and TEUs
|
|
(56.8)
|
|
112.0
|
|
(50.7)
|
|
53.3
|
Gain on sale of
property and equipment
|
|
(6.5)
|
|
(2.6)
|
|
(6.4)
|
|
(4.4)
|
Mark-to-market (gain)
loss on Purchase Contracts
|
|
—
|
|
(206.2)
|
|
104.3
|
|
(381.1)
|
Current income tax
expense
|
|
342.2
|
|
4.0
|
|
349.4
|
|
11.0
|
Deferred tax
recovery
|
|
(103.3)
|
|
(51.9)
|
|
(152.6)
|
|
(82.5)
|
Interest paid in cash
on Amortizing Notes component of TEUs
|
|
—
|
|
(0.6)
|
|
(0.2)
|
|
(1.3)
|
Interest paid in cash,
excluding interest paid on Amortizing Notes
|
|
(115.7)
|
|
(87.5)
|
|
(276.7)
|
|
(183.7)
|
Income taxes paid in
cash, net
|
|
(8.9)
|
|
(19.1)
|
|
(10.9)
|
|
(19.5)
|
Changes in non-cash
working capital items
|
|
(116.7)
|
|
(90.8)
|
|
(182.5)
|
|
(160.4)
|
Landfill closure and
post-closure expenditures
|
|
(3.8)
|
|
(4.9)
|
|
(6.7)
|
|
(7.8)
|
|
|
260.7
|
|
231.2
|
|
453.2
|
|
407.2
|
Investing
activities
|
|
|
|
|
|
|
|
|
Proceeds on disposal
of assets
|
|
1,650.3
|
|
224.3
|
|
1,663.5
|
|
316.2
|
Purchase of property
and equipment and intangible assets
|
|
(280.6)
|
|
(129.0)
|
|
(553.5)
|
|
(332.2)
|
Investment in joint
ventures and associates
|
|
(32.8)
|
|
(19.6)
|
|
(37.5)
|
|
(31.8)
|
Insurance proceeds
related to property and equipment
|
|
2.8
|
|
—
|
|
2.8
|
|
—
|
Business acquisitions,
net of cash acquired
|
|
(21.4)
|
|
(880.3)
|
|
(238.7)
|
|
(947.4)
|
|
|
1,318.3
|
|
(804.6)
|
|
836.6
|
|
(995.2)
|
Financing
activities
|
|
|
|
|
|
|
|
|
Repayment of lease
obligations
|
|
(20.8)
|
|
(18.4)
|
|
(38.6)
|
|
(35.0)
|
Issuance of long-term
debt
|
|
1,085.3
|
|
1,052.6
|
|
1,963.1
|
|
1,291.1
|
Repayment of long-term
debt
|
|
(2,630.6)
|
|
(381.0)
|
|
(3,184.9)
|
|
(547.9)
|
Proceeds from
termination of hedged arrangements
|
|
—
|
|
—
|
|
17.3
|
|
—
|
Payment of contingent
purchase consideration and holdbacks
|
|
(1.5)
|
|
—
|
|
(4.0)
|
|
(10.2)
|
Repayment of
Amortizing Notes
|
|
—
|
|
(14.2)
|
|
(15.7)
|
|
(28.2)
|
Dividends issued and
paid
|
|
(6.5)
|
|
(5.0)
|
|
(12.1)
|
|
(9.7)
|
Payment of financing
costs
|
|
(0.9)
|
|
(1.8)
|
|
(15.0)
|
|
(1.9)
|
Repayment of loan to
related party
|
|
—
|
|
—
|
|
(6.4)
|
|
(6.4)
|
Contribution from
non-controlling interest
|
|
—
|
|
—
|
|
8.1
|
|
—
|
|
|
(1,575.0)
|
|
632.2
|
|
(1,288.2)
|
|
651.8
|
|
|
|
|
|
|
|
|
|
(Decrease) increase in
cash
|
|
4.0
|
|
58.8
|
|
1.6
|
|
63.8
|
Changes due to foreign
exchange revaluation of cash
|
|
5.2
|
|
(17.5)
|
|
(1.5)
|
|
(23.6)
|
Cash, beginning of
period
|
|
73.0
|
|
189.3
|
|
82.1
|
|
190.4
|
Cash, end of
period
|
|
$
82.2
|
|
$
230.6
|
|
$
82.2
|
|
$
230.6
|
SUPPLEMENTAL DATA
You should read the following information in conjunction with
our audited consolidated financial statements and notes thereto as
of and for the year ended December 31,
2022, as well as our unaudited Interim Financial Statements
and notes thereto for the three and six months ended June 30, 2023.
Revenue Growth
The following tables summarize the revenue growth in our
segments for the periods indicated:
|
|
Three months ended
June 30, 2023
|
|
|
Contribution
from
Acquisitions
|
|
Organic
Growth
|
|
Foreign
Exchange
|
|
Total
Revenue
Growth
|
Solid Waste
|
|
|
|
|
|
|
|
|
Canada
|
|
3.7 %
|
|
3.4 %
|
|
— %
|
|
7.2 %
|
USA
|
|
4.1
|
|
5.4
|
|
5.5
|
|
15.0
|
Solid Waste
|
|
4.0
|
|
4.8
|
|
3.7
|
|
12.5
|
Environmental
Services
|
|
8.2
|
|
10.2
|
|
1.0
|
|
19.4
|
Total
|
|
4.8 %
|
|
5.8 %
|
|
3.2 %
|
|
13.8 %
|
|
|
|
|
|
|
|
|
Six
months ended June 30, 2023
|
|
|
Contribution
from
Acquisitions
|
|
Organic
Growth
|
|
Foreign
Exchange
|
|
Total
Revenue
Growth
|
Solid Waste
|
|
|
|
|
|
|
|
|
Canada
|
|
4.3 %
|
|
6.8 %
|
|
— %
|
|
11.1 %
|
USA
|
|
7.1
|
|
9.0
|
|
6.5
|
|
22.6
|
Solid Waste
|
|
6.2
|
|
8.3
|
|
4.5
|
|
19.0
|
Environmental
Services
|
|
8.8
|
|
16.5
|
|
1.3
|
|
26.7
|
Total
|
|
6.7 %
|
|
9.8 %
|
|
3.9 %
|
|
20.4 %
|
Detail of Solid Waste Organic Growth
The following table summarizes the components of our Solid Waste
organic growth for the periods indicated:
|
|
Three months
ended
June 30,
2023
|
|
Six
months ended
June 30,
2023
|
Price
|
|
10.4 %
|
|
11.4 %
|
Surcharges
|
|
(1.0)
|
|
(0.3)
|
Volume
|
|
(3.5)
|
|
(1.6)
|
Commodity
price
|
|
(1.1)
|
|
(1.2)
|
Total Solid Waste
organic growth
|
|
4.8 %
|
|
8.3 %
|
Operating Segment Results
The following tables summarize our operating segment results for
the periods indicated:
|
|
Three months
ended
June 30,
2023
|
|
Three months
ended
June 30,
2022
|
($
millions)
|
|
Revenue
|
|
Adjusted
EBITDA(1)
|
|
Adjusted
EBITDA
Margin(2)
|
|
Revenue
|
|
Adjusted
EBITDA(1)
|
|
Adjusted
EBITDA
Margin(2)
|
Solid Waste
|
|
|
|
|
|
|
|
|
|
|
|
|
Canada
|
|
$
465.8
|
|
$
135.8
|
|
29.2 %
|
|
$
434.7
|
|
$
117.8
|
|
27.1 %
|
USA
|
|
1,090.5
|
|
356.1
|
|
32.7
|
|
948.5
|
|
288.9
|
|
30.5
|
Solid Waste
|
|
1,556.3
|
|
491.9
|
|
31.6
|
|
1,383.2
|
|
406.7
|
|
29.4
|
Environmental
Services
|
|
387.3
|
|
113.0
|
|
29.2
|
|
324.3
|
|
91.5
|
|
28.2
|
Corporate
|
|
—
|
|
(64.2)
|
|
—
|
|
—
|
|
(44.9)
|
|
—
|
Total
|
|
$ 1,943.6
|
|
$
540.7
|
|
27.8 %
|
|
$ 1,707.5
|
|
$
453.3
|
|
26.5 %
|
|
|
|
|
|
|
|
Six
months ended
June 30,
2023
|
|
Six
months ended
June 30,
2022
|
($
millions)
|
|
Revenue
|
|
Adjusted
EBITDA(1)
|
|
Adjusted
EBITDA
Margin(2)
|
|
Revenue
|
|
Adjusted
EBITDA(1)
|
|
Adjusted
EBITDA
Margin(2)
|
Solid Waste
|
|
|
|
|
|
|
|
|
|
|
|
|
Canada
|
|
$
878.3
|
|
$
237.3
|
|
27.0 %
|
|
$
790.4
|
|
$
211.5
|
|
26.8 %
|
USA
|
|
2,160.2
|
|
691.6
|
|
32.0
|
|
1,762.5
|
|
544.9
|
|
30.9
|
Solid Waste
|
|
3,038.5
|
|
928.9
|
|
30.6
|
|
2,552.9
|
|
756.4
|
|
29.6
|
Environmental
Services
|
|
704.2
|
|
173.7
|
|
24.7
|
|
556.0
|
|
137.9
|
|
24.8
|
Corporate
|
|
—
|
|
(121.4)
|
|
—
|
|
—
|
|
(86.6)
|
|
—
|
Total
|
|
$ 3,742.7
|
|
$
981.2
|
|
26.2 %
|
|
$ 3,108.9
|
|
$
807.7
|
|
26.0 %
|
(1) A
non-IFRS measure; see accompanying Non-IFRS Reconciliation
Schedule; see "Non-IFRS Measures" for an explanation of the
composition of non-IFRS measures.
|
(2) See
"Non-IFRS Measures" for an explanation of the composition of
non-IFRS measures.
|
Net Leverage
The following table presents the calculation of Net Leverage as
at the dates indicated:
($
millions)
|
|
June 30,
2023
|
|
December 31,
2022
|
Total long-term debt,
net of derivative asset(1)
|
|
$
7,871.8
|
|
$
9,208.5
|
Deferred finance costs
and other adjustments
|
|
17.4
|
|
(43.5)
|
Total long-term debt
excluding deferred finance costs and other adjustments
|
|
$
7,854.4
|
|
$
9,252.0
|
Less: cash
|
|
(82.2)
|
|
(82.1)
|
|
|
7,772.2
|
|
9,169.9
|
|
|
|
|
|
Trailing twelve months
Adjusted EBITDA(2)
|
|
1,894.3
|
|
1,720.8
|
Acquisition EBITDA
Adjustments(3)
|
|
(37.0)
|
|
106.0
|
Run-Rate
EBITDA(3)
|
|
$
1,857.3
|
|
$
1,826.8
|
|
|
|
|
|
Net
Leverage(2)
|
|
4.18x
|
|
5.02x
|
(1) Total
long-term debt includes derivative asset reclassified for financial
statement presentation purposes to other long-term assets, refer to
Note 7 in our Interim Financial Statements.
|
(2) A
non-IFRS measure; see accompanying Non-IFRS Reconciliation
Schedule; see "Non-IFRS Measures" for an explanation of the
composition of non-IFRS measures.
|
(3) See
"Non-IFRS Measures" for an explanation of the composition of
non-IFRS measures and ratios.
|
Shares Outstanding
The following table presents the total shares outstanding as at
the date indicated:
|
|
June 30,
2023
|
Subordinate voting
shares
|
|
357,354,378
|
Multiple voting
shares
|
|
11,812,964
|
Basic shares
outstanding
|
|
369,167,342
|
Effect of dilutive
instruments
|
|
8,385,234
|
Series A Preferred
Shares (as converted)
|
|
28,829,718
|
Series B Preferred
Shares (as converted)
|
|
7,489,300
|
Diluted shares
outstanding
|
|
413,871,594
|
NON-IFRS RECONCILIATION SCHEDULE
Adjusted EBITDA
The following tables provide a reconciliation of our net income
from continuing operations to EBITDA and Adjusted EBITDA for the
periods indicated:
($
millions)
|
|
Three months
ended
June 30,
2023
|
|
Three months
ended
June 30,
2022
|
Net income from
continuing operations
|
|
$
293.8
|
|
$
82.6
|
Add:
|
|
|
|
|
Interest and other
finance costs
|
|
164.8
|
|
104.8
|
Depreciation of
property and equipment
|
|
237.8
|
|
241.1
|
Amortization of
intangible assets
|
|
134.0
|
|
133.4
|
Income tax expense
(recovery)
|
|
238.9
|
|
(47.9)
|
EBITDA
|
|
1,069.3
|
|
514.0
|
Add:
|
|
|
|
|
(Gain) loss
on foreign
exchange(1)
|
|
(56.8)
|
|
112.6
|
Gain on sale of
property and equipment
|
|
(6.5)
|
|
(2.6)
|
Mark-to-market gain on
Purchase Contracts(2)
|
|
—
|
|
(206.2)
|
Share of net loss
(income) of investments accounted for using the equity
method
|
|
61.9
|
|
(5.3)
|
Share-based
payments(3)
|
|
15.2
|
|
13.0
|
Gain on
divestiture(4)
|
|
(575.0)
|
|
—
|
Transaction
costs(5)
|
|
29.6
|
|
11.4
|
Acquisition,
rebranding and other integration costs(6)
|
|
5.3
|
|
7.3
|
Other
|
|
(2.3)
|
|
9.1
|
Adjusted
EBITDA
|
|
$
540.7
|
|
$
453.3
|
|
|
|
|
|
|
|
|
|
|
($
millions)
|
|
Six
months ended
June 30,
2023
|
|
Six
months ended
June 30,
2022
|
Net income from
continuing operations
|
|
$
76.0
|
|
$
219.6
|
Add:
|
|
|
|
|
Interest and other
finance costs
|
|
329.5
|
|
204.5
|
Depreciation of
property and equipment
|
|
477.6
|
|
468.1
|
Amortization of
intangible assets
|
|
272.8
|
|
257.9
|
Income tax expense
(recovery)
|
|
196.8
|
|
(69.7)
|
EBITDA
|
|
1,352.7
|
|
1,080.4
|
Add:
|
|
|
|
|
(Gain) loss on foreign
exchange(1)
|
|
(51.5)
|
|
54.0
|
Gain on sale of
property and equipment
|
|
(6.4)
|
|
(4.4)
|
Mark-to-market loss
(gain) on Purchase Contracts(2)
|
|
104.3
|
|
(381.1)
|
Share of net loss
(income) of investments accounted for using the equity
method
|
|
82.9
|
|
(5.3)
|
Share-based
payments(3)
|
|
30.2
|
|
24.8
|
Gain on
divestiture(4)
|
|
(580.5)
|
|
(6.5)
|
Transaction
costs(5)
|
|
41.6
|
|
23.3
|
Acquisition,
rebranding and other integration costs(6)
|
|
10.2
|
|
13.4
|
Other
|
|
(2.3)
|
|
9.1
|
Adjusted
EBITDA
|
|
$
981.2
|
|
$
807.7
|
(1)
|
Consists of (i)
non-cash gains and losses on foreign exchange and interest rate
swaps entered into in connection with our debt instruments and (ii)
gains and losses attributable to foreign exchange rate
fluctuations.
|
(2)
|
This is a non-cash
item that consists of the fair value "mark-to-market" adjustment on
the Purchase Contracts.
|
(3)
|
This is a non-cash
item and consists of the amortization of the estimated fair value
of share-based options granted to certain members of management
under share-based option plans.
|
(4)
|
Consists of gain
resulting from the divestiture of certain assets and three non-core
U.S. Solid Waste businesses.
|
(5)
|
Consists of
acquisition, integration and other costs such as legal, consulting
and other fees and expenses incurred in respect of acquisitions and
financing activities completed during the applicable period. We
expect to incur similar costs in connection with other acquisitions
in the future and, under IFRS, such costs relating to acquisitions
are expensed as incurred and not capitalized. This is part of
SG&A.
|
(6)
|
Consists of costs
related to the rebranding of equipment acquired through business
acquisitions. We expect to incur similar costs in connection with
other acquisitions in the future. This is part of cost of
sales.
|
Adjusted Net Income from Continuing Operations
The following tables provide a reconciliation of our net income
from continuing operations to Adjusted Net Income from continuing
operations for the periods indicated:
($
millions)
|
|
Three months
ended
June 30,
2023
|
|
Three months
ended
June 30,
2022
|
Net income from
continuing operations
|
|
$
293.8
|
|
$
82.6
|
Add:
|
|
|
|
|
Amortization of
intangible assets(1)
|
|
134.0
|
|
133.4
|
ARO discount rate
depreciation adjustment(2)
|
|
—
|
|
2.4
|
Incremental
depreciation of property and equipment due to
recapitalization
|
|
3.0
|
|
4.5
|
Amortization of
deferred financing costs
|
|
3.9
|
|
3.0
|
(Gain) loss on foreign
exchange(3)
|
|
(56.8)
|
|
112.6
|
Mark-to-market gain on
Purchase Contracts(4)
|
|
—
|
|
(206.2)
|
Share of net loss
(income) of investments accounted for using the equity
method
|
|
61.9
|
|
(5.3)
|
Gain on
divestiture(5)
|
|
(575.0)
|
|
—
|
Transaction
costs(6)
|
|
29.6
|
|
11.4
|
Acquisition,
rebranding and other integration costs(7)
|
|
5.3
|
|
7.3
|
TEU amortization
expense
|
|
—
|
|
0.3
|
Other
|
|
(2.3)
|
|
9.1
|
Tax
effect(8)
|
|
298.8
|
|
(65.5)
|
Adjusted Net Income
from continuing operations
|
|
$
196.2
|
|
$
89.6
|
Adjusted earnings
from continuing operations per share, basic
|
|
$
0.53
|
|
$
0.24
|
Adjusted earnings
from continuing operations per share, diluted
|
|
$
0.49
|
|
$
0.24
|
|
|
|
|
|
|
|
|
|
|
($
millions)
|
|
Six
months ended
June 30,
2023
|
|
Six
months ended
June 30,
2022
|
Net income from
continuing operations
|
|
$
76.0
|
|
$
219.6
|
Add:
|
|
|
|
|
Amortization of
intangible assets(1)
|
|
272.8
|
|
257.9
|
ARO discount rate
depreciation adjustment(2)
|
|
—
|
|
4.8
|
Incremental
depreciation of property and equipment due to
recapitalization
|
|
7.5
|
|
9.0
|
Amortization of
deferred financing costs
|
|
9.2
|
|
5.9
|
(Gain) loss on foreign
exchange(3)
|
|
(51.5)
|
|
54.0
|
Mark-to-market loss
(gain) on Purchase Contracts(4)
|
|
104.3
|
|
(381.1)
|
Share of net loss
(income) of investments accounted for using the equity
method
|
|
82.9
|
|
(5.3)
|
Gain on
divestiture(5)
|
|
(580.5)
|
|
(6.5)
|
Transaction
costs(6)
|
|
41.6
|
|
23.3
|
Acquisition,
rebranding and other integration costs(7)
|
|
10.2
|
|
13.4
|
TEU amortization
expense
|
|
0.1
|
|
0.6
|
Other
|
|
(2.3)
|
|
9.1
|
Tax
effect(8)
|
|
254.6
|
|
(92.7)
|
Adjusted Net Income
from continuing operations
|
|
$
224.9
|
|
$
112.0
|
Adjusted earnings
per share from continuing operations, basic
|
|
$
0.61
|
|
$
0.31
|
Adjusted earnings
per share from continuing operations, diluted
|
|
$
0.60
|
|
$
0.31
|
(1)
|
This is a non-cash
item and consists of the amortization of intangible assets such as
customer lists, municipal contracts, non-compete agreements, trade
name and other licenses.
|
(2)
|
This is a non-cash
item and consists of depreciation expense related to the difference
between the ARO calculated using the credit adjusted risk-free
discount rate required for measurement of the ARO through purchase
accounting compared to the risk-free discount rate required for
quarterly valuations.
|
(3)
|
Consists of (i)
non-cash gains and losses on foreign exchange and interest rate
swaps entered into in connection with our debt instruments and (ii)
gains and losses attributable to foreign exchange rate
fluctuations.
|
(4)
|
This is a non-cash
item that consists of the fair value "mark-to-market" adjustment on
the Purchase Contracts.
|
(5)
|
Consists of gain
resulting from the divestiture of certain assets and three non-core
U.S. Solid Waste businesses.
|
(6)
|
Consists of
acquisition, integration and other costs such as legal, consulting
and other fees and expenses incurred in respect of acquisitions and
financing activities completed during the applicable period. We
expect to incur similar costs in connection with other acquisitions
in the future and, under IFRS, such costs relating to acquisitions
are expensed as incurred and not capitalized. This is part of
SG&A.
|
(7)
|
Consists of costs
related to the rebranding of equipment acquired through business
acquisitions. We expect to incur similar costs in connection with
other acquisitions in the future. This is part of cost of
sales.
|
(8)
|
Consists of the tax
effect of the adjustments to net income from continuing
operations.
|
Adjusted Cash Flows from Operating Activities and Adjusted
Free Cash Flow
The following tables provide a reconciliation of our cash flows
from operating activities to Adjusted Cash Flows from Operating
Activities and Adjusted Free Cash Flow for the periods
indicated:
($
millions)
|
|
Three months
ended
June 30,
2023
|
|
Three months
ended
June 30,
2022
|
Cash flows from
operating activities
|
|
260.7
|
|
231.2
|
Add:
|
|
|
|
|
Transaction
costs(2)
|
|
29.6
|
|
11.4
|
Acquisition,
rebranding and other integration costs(3)
|
|
5.3
|
|
7.3
|
Cash interest paid on
TEUs(5)
|
|
—
|
|
0.6
|
Adjusted Cash Flows
from Operating Activities
|
|
295.6
|
|
250.5
|
Add:
|
|
|
|
|
Proceeds on disposal
of assets
|
|
4.4
|
|
0.3
|
Insurance proceeds
related to property and equipment
|
|
2.8
|
|
—
|
Purchase of property
and equipment and intangible assets(7)
|
|
(280.6)
|
|
(129.0)
|
Adjusted Free Cash
Flow (excluding investment in joint ventures)
|
|
22.2
|
|
121.8
|
Add:
|
|
|
|
|
Investment in joint
ventures(8)
|
|
(13.7)
|
|
(19.6)
|
Adjusted Free Cash
Flow
|
|
$
8.5
|
|
$
102.2
|
|
|
|
|
|
|
|
|
|
|
($
millions)
|
|
Six
months ended
June 30,
2023
|
|
Six
months ended
June 30,
2022
|
Cash flows from
operating activities
|
|
$
453.2
|
|
$
407.2
|
Less:
|
|
|
|
|
Operating cash flows
from discontinued operations(1)
|
|
—
|
|
35.4
|
Cash flows from
operating activities (excluding discontinued operations)
|
|
453.2
|
|
442.6
|
Add:
|
|
|
|
|
Transaction
costs(2)
|
|
41.6
|
|
23.3
|
Acquisition,
rebranding and other integration costs(3)
|
|
10.2
|
|
13.4
|
M&A related net
working capital investment(4)
|
|
—
|
|
4.8
|
Cash interest paid on
TEUs(5)
|
|
0.2
|
|
1.3
|
Adjusted Cash Flows
from Operating Activities
|
|
505.2
|
|
485.4
|
Add:
|
|
|
|
|
Proceeds from asset
divestitures(6)
|
|
10.2
|
|
85.8
|
Proceeds on disposal
of assets
|
|
7.4
|
|
6.4
|
Insurance proceeds
related to property and equipment
|
|
2.8
|
|
—
|
Purchase of property
and equipment and intangible assets(7)
|
|
(553.5)
|
|
(325.0)
|
Adjusted Free Cash
Flow (excluding investment in joint ventures)
|
|
(27.9)
|
|
252.6
|
Add:
|
|
|
|
|
Investment in joint
ventures(8)
|
|
(18.4)
|
|
(31.8)
|
Adjusted Free Cash
Flow
|
|
$
(46.3)
|
|
$
220.8
|
(1)
|
Consists of
operating cash flows from discontinued operations. As at June 30,
2022, GFL Infrastructure was presented as discontinued operations.
Refer to Note 19 in our Interim Financial
Statements.
|
(2)
|
Consists of
acquisition, integration and other costs such as legal, consulting
and other fees and expenses incurred in respect of acquisitions and
financing activities completed during the applicable period. We
expect to incur similar cots in connection with other acquisitions
in the future, and, under IFRS, such costs relating to acquisitions
are expensed as incurred and not capitalized. This is part of
SG&A.
|
(3)
|
Consists of costs
related to the rebranding of equipment acquired through business
acquisitions. We expect to incur similar costs in connection with
other acquisitions in the future. This is part of cost of
sales.
|
(4)
|
Consists of net
non-cash working capital in the period in relation to
acquisitions.
|
(5)
|
Consists of interest
paid in cash on the Amortizing Notes.
|
(6)
|
Consists of proceeds
from divestitures, excluding proceeds received from the divestiture
of three non-core U.S. Solid Waste businesses.
|
(7)
|
Excludes purchase of
property and equipment and intangible assets for GFL
Infrastructure, which was presented as discontinued operations, of
$nil for the three and six months ended June 30, 2023 and $7.2
million for the three and six months ended June 30, 2022. Refer to
Note 19 in our Interim Financial Statements.
|
(8)
|
Consists of initial
capital investment for the development and construction of
renewable natural gas facilities operated as joint
ventures.
|
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SOURCE GFL Environmental Inc.