- Organic revenue growth of 14.6% results in revenue of
$1,799.1 million, increase of
28.4%
- Solid Waste price of 12.6%, highest in company
history
- Adjusted EBITDA1 of $440.5
million, increase of 24.3%; Net loss from continuing
operations of $217.8 million;
Adjusted Net Income from continuing operations1 of
$28.7 million
- Adjusted Cash Flows from Operating Activities1 of
$209.6 million; cash flows from
operating activities of $192.5
million; Adjusted Free Cash Flow1 of
$(54.8) million
- Adjusted earnings per share from continuing
operations1 of $0.08; Loss
per share from continuing operations of $(0.66)
- Completed acquisitions generating approximately $45 million2 in annualized
revenue
VAUGHAN,
ON, April 27, 2023 /CNW/ - GFL Environmental
Inc. (NYSE: GFL) (TSX: GFL) ("GFL", "we" or "our") today announced
its results for the first quarter of 2023.
"I am extremely proud of the hard work and commitment of our
over 20,000 employees, as we had yet another exceptional start to
the year," said Patrick Dovigi,
Founder and Chief Executive Officer of GFL. "Our strong execution
once again resulted in our achievement of double digit, industry
leading revenue growth in the quarter, including our highest to
date Solid Waste core pricing increase of 12.6%, continued volume
growth and outperformance from acquisitions. We also grew Adjusted
EBITDA1 by 24.3% and demonstrated the effectiveness of
our pricing and efficiency initiatives to counteract continuing
inflationary cost pressures, resulting in organic Adjusted EBITDA
margin1 expansion of 190 basis points, excluding the
impact of fuel and commodity prices. We remain highly confident
that these initiatives will drive significant margin expansion over
the balance of 2023."
"We continue to focus on the rationalization of our portfolio of
assets in order to maximize return on invested capital. Since we
reported our year end results, we entered into definitive
agreements to sell the previously identified three non-core
distinct U.S. Solid Waste regions that we acquired as part of
several recent larger acquisitions. These divestitures will result
in gross proceeds of approximately $1.6
billion relative to approximately $1.5 billion at announcement, the net proceeds of
which will reduce Net Leverage1 to below 4.0x by the end
of the year, positioning us for sustainable industry leading free
cash flow per share growth over the mid-term. The transactions are
expected to close in the coming months and be completed before the
end of the third quarter."
Mr. Dovigi added, "This year we have continued to make
significant advancements on our ESG commitments. Today, we welcome
Sandra Levy to our Board of
Directors, as our ninth independent director. Sandra is the current
Chief People & Culture Officer at the Canadian Olympic
Committee and serves on the board of trustees and chair of the
governance committee of SIR Royalty Income Fund. Sandra's broad
experience as a lawyer, HR professional and an Olympian allows her
to bring unique perspectives to GFL."
Mr. Dovigi concluded, "Our success in the first quarter sets us
up for a strong 2023. Our financial performance exceeded our
internal expectations across every key metric and we are on track
to finalize the divestitures faster and for considerably more
proceeds than we originally anticipated. We could not ask for a
better start to the year and we continue to see upside
opportunities ahead of us. With the strength of our first quarter
results, we are well on track to meet or exceed the high end of our
full year guidance range and expect to provide a guidance update
for our base business when we report our second quarter
results."
First Quarter Results
- Revenue increased by 28.4% to $1,799.1
million in the first quarter of 2023, compared to the first
quarter of 2022.
-
- Solid Waste revenue of $1,482.2
million, including organic growth of 12.5% driven
predominantly by core pricing and surcharge increases and higher
volumes across our collection and post collection operations.
- Environmental Services revenue of $316.9
million, including organic growth of 25.4% driven by the
strength of industrial collection and processing activity at our
facilities and by core pricing and surcharge increases.
- Adjusted EBITDA1 increased by 24.3% to $440.5 million in the first quarter of 2023,
compared to the first quarter of 2022. Adjusted EBITDA
margin1 was 24.5% in the first quarter of 2023, compared
to 25.3% in the first quarter of 2022. Solid Waste Adjusted EBITDA
margin1 was 29.5% in the first quarter of 2023, compared
to 29.9% in the first quarter of 2022.
- Net loss from continuing operations was $217.8 million in the first quarter of 2023,
compared to net income from continuing operations of $137.0 million in the first quarter of 2022.
- Adjusted Free Cash Flow1 was $(54.8) million in the first quarter of 2023,
compared to $118.6 million in the
first quarter of 2022. The decrease of $173.4 million was inclusive of $155.6 million of incremental net capex and
$64.8 million incremental cash
interest paid, both of which were primarily the result of timing
differences.
______________________
|
(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).
|
Q1 2023 Earnings Call
GFL will host a conference call related to our
first quarter earnings on April 28, 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 1-833-950-0062 in Canada or 1-844-200-6205 in the United States (access code: 990410)
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://www.netroadshow.com/events/login?show=5fa54226&confId=48351.
Callers who pre-register will be given a conference access code and
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 May 12, 2023 by
dialing 1-226-828-7578 in Canada
or 1-866-813-9403 in the United
States (access code: 427271). 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, 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 and (h) acquisition, rebranding and other
integration costs (included in cost of sales related to acquisition
activity). 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 months ended
March 31, 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 ("Acquisition EBITDA
Adjustments") and (b) contract and acquisition annualization for
contracts entered into and acquisitions completed by such acquired
business prior to our acquisition. 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 4 and integration of the business into our operations.
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) purchase of
property and equipment and intangible assets and (d) investment in
joint ventures and associates. For the three months ended
March 31, 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 and (l) the tax impact of the forgoing. For
the three months ended March 31, 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 Loss
(In millions of dollars except per share amounts)
|
|
Three
months ended
March
31,
|
|
2023
|
|
2022
|
Revenue
|
|
$
1,799.1
|
|
$
1,401.4
|
Expenses
|
|
|
|
|
Cost of
sales
|
|
1,554.6
|
|
1,265.6
|
Selling, general and
administrative expenses
|
|
214.5
|
|
162.7
|
Interest and other
finance costs
|
|
164.7
|
|
99.7
|
Loss (gain) on sale of
property and equipment
|
|
0.1
|
|
(1.8)
|
Loss (gain) on foreign
exchange
|
|
5.3
|
|
(58.6)
|
Mark-to-market loss
(gain) on Purchase Contracts
|
|
104.3
|
|
(174.9)
|
Gain on
divestiture
|
|
(5.5)
|
|
(6.5)
|
|
|
2,038.0
|
|
1,286.2
|
Share of net loss of
investments accounted for using the equity method
|
|
(21.0)
|
|
—
|
(Loss) earnings before
income taxes
|
|
(259.9)
|
|
115.2
|
Current income tax
expense
|
|
7.2
|
|
6.9
|
Deferred tax
recovery
|
|
(49.3)
|
|
(28.7)
|
Income tax
recovery
|
|
(42.1)
|
|
(21.8)
|
Net (loss) income from
continuing operations
|
|
(217.8)
|
|
137.0
|
Net loss from
discontinued operations
|
|
—
|
|
(109.6)
|
Net (loss)
income
|
|
(217.8)
|
|
27.4
|
Less: Net income
attributable to non-controlling interests
|
|
1.6
|
|
—
|
Net (loss) income
attributable to GFL Environmental Inc.
|
|
(219.4)
|
|
27.4
|
|
|
|
|
|
Items that may be
subsequently reclassified to net loss
|
|
|
|
|
Currency translation
adjustment
|
|
(5.5)
|
|
(91.4)
|
Fair value movements
on cash flow hedges, net of tax
|
|
7.4
|
|
(22.4)
|
Other comprehensive
income (loss) from continuing operations
|
|
1.9
|
|
(113.8)
|
Comprehensive (loss)
income from continuing operations
|
|
(215.9)
|
|
23.2
|
Comprehensive loss from
discontinued operations
|
|
—
|
|
(109.6)
|
Total comprehensive
loss
|
|
(215.9)
|
|
(86.4)
|
Less: Total
comprehensive income attributable to non-controlling
interests
|
|
1.5
|
|
—
|
Total comprehensive
loss attributable to GFL Environmental Inc.
|
|
$
(217.4)
|
|
$
(86.4)
|
|
|
|
|
|
Basic and diluted
(loss) earnings per share
|
|
|
|
|
Continuing
operations
|
|
$
(0.66)
|
|
$
0.32
|
Discontinued
operations
|
|
—
|
|
(0.30)
|
Total
operations
|
|
$
(0.66)
|
|
$
0.02
|
|
|
|
|
|
Weighted and diluted
weighted average number of shares
outstanding(2)
|
|
369,176,174
|
|
364,035,921
|
Diluted weighted
average number of shares outstanding(2)
|
|
369,176,174
|
|
366,549,527
|
|
|
(1)
|
Basic and diluted
loss per share is calculated on net loss adjusted for amounts
attributable to preferred shareholders. Refer to Note 10 in our
Interim Financial Statements.
|
(2)
|
Basic and diluted
loss per share includes the minimum conversion of TEUs into
subordinate voting shares, which represented 25,659,880 subordinate
voting shares as at March 31, 2022.
|
GFL Environmental Inc.
Unaudited Interim Condensed Consolidated Statements of Financial
Position
(In millions of dollars)
|
|
March 31,
2023
|
|
December 31,
2022
|
Assets
|
|
|
|
|
Cash
|
|
$
73.0
|
|
$
82.1
|
Trade and other
receivables, net
|
|
1,021.6
|
|
1,118.1
|
Prepaid expenses and
other assets
|
|
202.4
|
|
182.9
|
Assets held for
sale
|
|
1,021.6
|
|
—
|
Current
assets
|
|
2,318.6
|
|
1,383.1
|
|
|
|
|
|
Property and
equipment, net
|
|
6,401.1
|
|
6,540.3
|
Intangible assets,
net
|
|
3,125.8
|
|
3,245.0
|
Investments accounted
for using the equity method
|
|
310.2
|
|
326.6
|
Other long-term
assets
|
|
71.2
|
|
90.2
|
Goodwill
|
|
7,603.3
|
|
8,182.4
|
Non-current
assets
|
|
17,511.6
|
|
18,384.5
|
Total
assets
|
|
19,830.2
|
|
19,767.6
|
|
|
|
|
|
Liabilities
|
|
|
|
|
Accounts payable and
accrued liabilities
|
|
1,380.0
|
|
1,557.7
|
Income taxes
payable
|
|
4.9
|
|
—
|
Long-term
debt
|
|
17.4
|
|
17.9
|
Lease
obligations
|
|
53.4
|
|
51.5
|
Due to related
party
|
|
5.8
|
|
9.3
|
Tangible equity
units
|
|
—
|
|
1,024.9
|
Landfill closure and
post-closure obligations
|
|
33.5
|
|
30.8
|
Liabilities held for
sale
|
|
54.5
|
|
—
|
Current
liabilities
|
|
1,549.5
|
|
2,692.1
|
|
|
|
|
|
Long-term
debt
|
|
9,554.7
|
|
9,248.9
|
Lease
obligations
|
|
324.9
|
|
327.3
|
Other long-term
liabilities
|
|
43.1
|
|
47.5
|
Due to related
party
|
|
5.8
|
|
8.7
|
Deferred income tax
liabilities
|
|
541.7
|
|
582.6
|
Landfill closure and
post-closure obligations
|
|
854.9
|
|
816.4
|
Non-current
liabilities
|
|
11,325.1
|
|
11,031.4
|
Total
liabilities
|
|
12,874.6
|
|
13,723.5
|
|
|
|
|
|
Shareholders'
equity
|
|
|
|
|
Share
capital
|
|
9,754.1
|
|
8,640.3
|
Contributed
surplus
|
|
120.7
|
|
109.6
|
Deficit
|
|
(3,068.0)
|
|
(2,843.0)
|
Accumulated other
comprehensive income
|
|
132.3
|
|
130.3
|
Total GFL
Environmental Inc.'s shareholders' equity
|
|
6,939.1
|
|
6,037.2
|
Non-controlling
interests
|
|
16.5
|
|
6.9
|
Total shareholders'
equity
|
|
6,955.6
|
|
6,044.1
|
Total liabilities
and shareholders' equity
|
|
$
19,830.2
|
|
$
19,767.6
|
GFL Environmental Inc.
Unaudited Interim Condensed Consolidated Statements of Cash
Flows
(In millions of dollars)
|
|
Three
months ended
March
31,
|
|
|
2023
|
|
2022
|
Operating
activities
|
|
|
|
|
Net (loss)
income
|
|
$
(217.8)
|
|
$
27.4
|
Adjustments for
non-cash items
|
|
|
|
|
Depreciation of
property and equipment
|
|
239.8
|
|
231.7
|
Amortization of
intangible assets
|
|
138.8
|
|
125.7
|
Share of net loss of
investments accounted for using the equity method
|
|
21.0
|
|
—
|
Gain on
divestiture
|
|
(5.5)
|
|
(6.5)
|
Impairment related to
discontinued operations
|
|
—
|
|
109.8
|
Interest and other
finance costs
|
|
164.7
|
|
103.2
|
Share-based
payments
|
|
15.0
|
|
13.5
|
Loss on unrealized
foreign exchange on long-term debt and TEUs
|
|
6.1
|
|
(58.7)
|
Loss (gain) on sale of
property and equipment
|
|
0.1
|
|
(1.8)
|
Mark-to-market loss
(gain) on Purchase Contracts
|
|
104.3
|
|
(174.9)
|
Current income tax
expense
|
|
7.2
|
|
7.0
|
Deferred tax
recovery
|
|
(49.3)
|
|
(30.6)
|
Interest paid in cash
on Amortizing Notes component of TEUs
|
|
(0.2)
|
|
(0.7)
|
Interest paid in cash,
excluding interest paid on Amortizing Notes
|
|
(161.0)
|
|
(96.2)
|
Income taxes paid in
cash, net
|
|
(2.0)
|
|
(0.4)
|
Changes in non-cash
working capital items
|
|
(65.8)
|
|
(69.6)
|
Landfill closure and
post-closure expenditures
|
|
(2.9)
|
|
(2.9)
|
|
|
192.5
|
|
176.0
|
Investing
activities
|
|
|
|
|
Proceeds on disposal
of assets
|
|
13.2
|
|
91.9
|
Purchase of property
and equipment and intangible assets
|
|
(272.9)
|
|
(203.2)
|
Investment in joint
ventures and associates
|
|
(4.7)
|
|
(12.2)
|
Business acquisitions,
net of cash acquired
|
|
(217.3)
|
|
(67.1)
|
|
|
(481.7)
|
|
(190.6)
|
Financing
activities
|
|
|
|
|
Repayment of lease
obligations
|
|
(17.8)
|
|
(16.6)
|
Issuance of long-term
debt
|
|
877.8
|
|
238.5
|
Repayment of long-term
debt
|
|
(554.3)
|
|
(166.9)
|
Proceeds from
termination of hedged arrangements
|
|
17.3
|
|
—
|
Payment of contingent
purchase consideration and holdbacks
|
|
(2.5)
|
|
(10.2)
|
Repayment of
Amortizing Notes
|
|
(15.7)
|
|
(14.0)
|
Dividends issued and
paid
|
|
(5.6)
|
|
(4.7)
|
Payment of financing
costs
|
|
(14.1)
|
|
(0.1)
|
Repayment of loan to
related party
|
|
(6.4)
|
|
(6.4)
|
Contribution from
non-controlling interest
|
|
8.1
|
|
—
|
|
|
286.8
|
|
19.6
|
|
|
|
|
|
(Decrease) increase in
cash
|
|
(2.4)
|
|
5.0
|
Changes due to foreign
exchange revaluation of cash
|
|
(6.7)
|
|
(6.1)
|
Cash, beginning of
period
|
|
82.1
|
|
190.4
|
Cash, end of
period
|
|
$
73.0
|
|
$
189.3
|
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 months ended March 31, 2023.
Revenue Growth
The following table summarizes the revenue growth in our
segments for the period indicated:
|
|
Three
months ended March 31, 2023
|
|
|
Contribution from
Acquisitions
|
|
Organic
Growth
|
|
Foreign
Exchange
|
|
Total Revenue
Growth
|
Solid Waste
|
|
|
|
|
|
|
|
|
Canada
|
|
5.0 %
|
|
11.0 %
|
|
— %
|
|
15.9 %
|
USA
|
|
10.6
|
|
13.2
|
|
7.6
|
|
31.4
|
Solid Waste
|
|
8.9
|
|
12.5
|
|
5.3
|
|
26.7
|
Environmental
Services
|
|
9.7
|
|
25.4
|
|
1.8
|
|
36.8
|
Total
|
|
9.0 %
|
|
14.6 %
|
|
4.7 %
|
|
28.4 %
|
Detail of Solid Waste Organic Growth
The following table summarizes the components of our Solid Waste
organic growth for the period indicated:
|
|
|
|
Three
months ended
March 31,
2023
|
Price
|
|
|
|
12.6 %
|
Surcharges
|
|
|
|
0.5
|
Volume
|
|
|
|
0.7
|
Commodity
price
|
|
|
|
(1.4)
|
Total Solid Waste
organic growth
|
|
|
|
12.5 %
|
Operating Segment Results
The following table summarizes our operating segment results for
the periods indicated:
|
|
Three
months ended
March 31,
2023
|
|
Three
months ended
March 31,
2022
|
($
millions)
|
|
Revenue
|
|
Adjusted
EBITDA(1)
|
|
Adjusted
EBITDA
Margin(2)
|
|
Revenue
|
|
Adjusted
EBITDA(1)
|
|
Adjusted
EBITDA
Margin(2)
|
Solid Waste
|
|
|
|
|
|
|
|
|
|
|
|
|
Canada
|
|
$
412.5
|
|
$
101.5
|
|
24.6 %
|
|
$
355.7
|
|
$
93.7
|
|
26.3 %
|
USA
|
|
1,069.7
|
|
335.5
|
|
31.4
|
|
814.0
|
|
256.0
|
|
31.4
|
Solid Waste
|
|
1,482.2
|
|
437.0
|
|
29.5
|
|
1,169.7
|
|
349.7
|
|
29.9
|
Environmental
Services
|
|
316.9
|
|
60.7
|
|
19.2
|
|
231.7
|
|
46.4
|
|
20.0
|
Corporate
|
|
—
|
|
(57.2)
|
|
—
|
|
—
|
|
(41.7)
|
|
—
|
Total
|
|
$ 1,799.1
|
|
$
440.5
|
|
24.5 %
|
|
$ 1,401.4
|
|
$
354.4
|
|
25.3 %
|
|
(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)
|
|
March 31,
2023
|
|
December 31,
2022
|
Total long-term debt,
net of derivative asset(1)
|
|
$
9,533.6
|
|
$
9,208.5
|
Deferred finance costs
and other adjustments
|
|
(36.0)
|
|
(43.5)
|
Total long-term debt
excluding deferred finance costs and other adjustments
|
|
$
9,569.6
|
|
$
9,252.0
|
Less: cash
|
|
(73.0)
|
|
(82.1)
|
|
|
9,496.6
|
|
9,169.9
|
|
|
|
|
|
Trailing twelve months
Adjusted EBITDA(2)
|
|
1,806.9
|
|
1,720.8
|
Acquisition EBITDA
Adjustments(3)
|
|
102.5
|
|
106.0
|
Run-Rate
EBITDA(3)
|
|
$
1,909.4
|
|
$
1,826.8
|
|
|
|
|
|
Net
Leverage(2)
|
|
4.97x
|
|
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 audited consolidated 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:
|
|
March 31,
2023
|
Subordinate voting
shares
|
|
357,340,187
|
Multiple voting
shares
|
|
11,812,964
|
Basic shares
outstanding
|
|
369,153,151
|
Effect of dilutive
instruments
|
|
4,941,223
|
Series A Preferred
Shares (as converted)
|
|
28,331,407
|
Series B Preferred
Shares (as converted)
|
|
7,377,978
|
Diluted shares
outstanding
|
|
409,803,759
|
NON-IFRS RECONCILIATION SCHEDULE
Adjusted EBITDA
The following table provides a reconciliation of our net (loss)
income from continuing operations to EBITDA and Adjusted EBITDA for
the periods indicated:
($
millions)
|
|
Three
months ended
March 31,
2023
|
|
Three
months ended
March 31,
2022
|
Net (loss) income from
continuing operations
|
|
$
(217.8)
|
|
$
137.0
|
Add:
|
|
|
|
|
Interest and other
finance costs
|
|
164.7
|
|
99.7
|
Depreciation of
property and equipment
|
|
239.8
|
|
227.0
|
Amortization of
intangible assets
|
|
138.8
|
|
124.5
|
Income tax
recovery
|
|
(42.1)
|
|
(21.8)
|
EBITDA
|
|
283.4
|
|
566.4
|
Add:
|
|
|
|
|
Loss (gain) on foreign
exchange(1)
|
|
5.3
|
|
(58.6)
|
Loss (gain) on sale of
property and equipment
|
|
0.1
|
|
(1.8)
|
Mark-to-market loss
(gain) on Purchase Contracts(2)
|
|
104.3
|
|
(174.9)
|
Share of net loss of
investments accounted for using the equity method
|
|
21.0
|
|
—
|
Share-based
payments(3)
|
|
15.0
|
|
11.8
|
Gain on
divestiture(4)
|
|
(5.5)
|
|
(6.5)
|
Transaction
costs(5)
|
|
12.0
|
|
11.9
|
Acquisition,
rebranding and other integration costs(6)
|
|
4.9
|
|
6.1
|
Adjusted
EBITDA
|
|
$
440.5
|
|
$
354.4
|
|
|
(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.
|
(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 table provides a reconciliation of our net (loss)
income from continuing operations to Adjusted Net Income from
continuing operations for the periods indicated:
($
millions)
|
|
Three
months ended
March 31,
2023
|
|
Three
months ended
March 31,
2022
|
Net (loss) income from
continuing operations
|
|
$
(217.8)
|
|
$
137.0
|
Add:
|
|
|
|
|
Amortization of
intangible assets(1)
|
|
138.8
|
|
124.5
|
ARO discount rate
depreciation adjustment(2)
|
|
—
|
|
2.4
|
Incremental
depreciation of property and equipment due to
recapitalization
|
|
4.5
|
|
4.5
|
Amortization of
deferred financing costs
|
|
5.3
|
|
2.9
|
Loss (gain) on foreign
exchange(3)
|
|
5.3
|
|
(58.6)
|
Mark-to-market loss
(gain) on Purchase Contracts(4)
|
|
104.3
|
|
(174.9)
|
Share of net loss of
investments accounted for using the equity method
|
|
21.0
|
|
—
|
Gain on
divestiture(5)
|
|
(5.5)
|
|
(6.5)
|
Transaction
costs(6)
|
|
12.0
|
|
11.9
|
Acquisition,
rebranding and other integration costs(7)
|
|
4.9
|
|
6.1
|
TEU amortization
expense
|
|
0.1
|
|
0.3
|
Tax
effect(8)
|
|
(44.2)
|
|
(27.2)
|
Adjusted Net Income
from continuing operations
|
|
$
28.7
|
|
$
22.4
|
Adjusted earnings
per share from continuing operations, basic and
diluted
|
|
$
0.08
|
|
$
0.06
|
|
|
(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.
|
(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 loss (income) from continuing
operations.
|
Adjusted Cash Flows from Operating Activities and Adjusted Free
Cash Flow
The following table provides 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
March 31,
2023
|
|
Three
months ended
March 31,
2022
|
Cash flows from
operating activities
|
|
$
192.5
|
|
$
176.0
|
Less:
|
|
|
|
|
Operating cash flows
from discontinued operations(1)
|
|
—
|
|
35.4
|
Cash flows from
operating activities (excluding discontinued operations)
|
|
192.5
|
|
211.4
|
Add:
|
|
|
|
|
Transaction
costs(2)
|
|
12.0
|
|
11.9
|
Acquisition,
rebranding and other integration costs(3)
|
|
4.9
|
|
6.1
|
M&A related net
working capital investment(4)
|
|
—
|
|
4.8
|
Cash interest paid on
TEUs(5)
|
|
0.2
|
|
0.7
|
Adjusted Cash Flows
from Operating Activities
|
|
209.6
|
|
234.9
|
Add:
|
|
|
|
|
Proceeds from asset
divestitures(6)
|
|
10.2
|
|
85.8
|
Proceeds on disposal
of assets
|
|
3.0
|
|
6.1
|
Purchase of property
and equipment and intangible assets(7)
|
|
(272.9)
|
|
(196.0)
|
Adjusted Free Cash
Flow (excluding investment in joint ventures and
associates)
|
|
(50.1)
|
|
130.8
|
Add:
|
|
|
|
|
Investment in joint
ventures and associates(8)
|
|
(4.7)
|
|
(12.2)
|
Adjusted Free Cash
Flow
|
|
$
(54.8)
|
|
$
118.6
|
|
|
(1)
|
Consists of
operating cash flows from discontinued operations. As at March 31,
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.
|
(7)
|
Excludes purchase of
property and equipment and intangible assets for GFL
Infrastructure, which was presented as discontinued operations, of
$nil for the three months ended March 31, 2023 and $7.2 million for
the three months ended March 31, 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.