VAUGHAN,
ON, June 5, 2023 /CNW/ - GFL Environmental
Inc. (NYSE: GFL) (TSX: GFL) ("GFL" or the "Company")
today announced that it has divested of its Colorado and New
Mexico solid waste operations and its Nashville, Tennessee solid waste operations in
two separate transactions. The third and last of the divestitures,
the sale of its solid waste operations in Pennsylvania, Maryland and Delaware, has received clearance from the U.S.
Department of Justice under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and is scheduled to close
on June 30, 2023. The three
divested non-core distinct U.S. solid waste regions were acquired
as part of several recent larger acquisitions.
"I am very pleased to announce the completion of the sale of
these three U.S. solid waste regions, one fiscal quarter ahead of
plan," said Mr. Patrick Dovigi,
Founder and CEO of GFL. "The transactions will result in gross
proceeds of over C$1.6 billion which
are expected to be on balance sheet as at June 30, 2023. The net proceeds from the
transactions will allow us to exit the second quarter with Net
Leverage1 between 4.3x and 4.4x and reduce Net
Leverage1 to below 3.99x by year end, positioning us
well for future upgrades to our credit ratings as well as
sustainable industry leading free cash flow per share growth over
the medium term."
Mr. Dovigi continued, "These divestitures complete our portfolio
rationalization plan. We believe our network of assets and market
selection position us for high quality, organic profitability
growth and we remain focused on our M&A strategy of densifying
our existing footprint across Canada and the
United States through our robust acquisition pipeline."
As previously disclosed, the divested assets represented
approximately C$450 million of
revenue, C$120 million of Adjusted
EBITDA1 and C$30 million
of capital expenditures on an annualized basis. On a full year pro
forma basis, the transactions will be free cash flow accretive.
The timing of the closing of each of the transactions is as
follows:
- The sale of the Nashville,
Tennessee operations closed on May 1,
2023.
- The sale of the Colorado and
New Mexico operations closed on
June 1, 2023.
- The sale of the Pennsylvania,
Maryland and Delaware operations is scheduled to close on
June 30, 2023.
Based on the timing of the sales of each of the regions, the
in-period impact to the Company's previously provided framework for
the second quarter is estimated as follows:
(C$ millions)
|
|
|
|
|
|
|
Q2
2023
|
Revenue
|
|
|
|
|
|
|
($25)
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA(1)
|
|
|
|
|
|
|
(7)
|
Less:
|
|
|
|
|
|
|
|
Cash Interest
|
|
|
|
|
|
|
(2)
|
Capital
Expenditures
|
|
|
|
|
|
|
(2)
|
Adjusted Free Cash
Flow(1)
|
|
|
|
|
|
|
($3)
|
The amounts in the table above represent changes to the
Company's previously provided framework for the second quarter
solely as a result of the divestitures. The Company anticipates
updating its full year fiscal 2023 guidance to reflect the impact
of the divestitures, outperformance of the Company in the first
quarter, M&A completed to date and the Company's expectations
for the balance of the year when it reports its second quarter
results.
___________________________
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(1)
|
See "Non-IFRS Measures"
for an explanation of the composition of non-IFRS measures. 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.
|
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.
Forward Looking
Statements
This release includes certain "forward-looking statements",
including statements relating to the use of proceeds of the
recently completed divestitures, changes to credit ratings and
expected leverage levels. In some cases, but not necessarily in all
cases, forward-looking statements can be identified by the use of
forward looking terminology such as "plans", "targets", "expects"
or "does not expect", "is expected", "an opportunity exists", "is
positioned", "estimates", "intends", "assumes", "anticipates" or
"does not anticipate" or "believes", or variations of such words
and phrases or statements that certain actions, events or results
"may", "could", "would", "might", "will" or "will be taken",
"occur" or "be achieved". In addition, any statements that refer to
expectations, projections or other characterizations of future
events or circumstances contain forward-looking statements.
Forward-looking statements are not historical facts, nor guarantees
or assurances of future performance but instead represent
management's current beliefs, expectations, estimates and
projections regarding future events and operating performance.
Forward-looking statements are necessarily based on a number of
opinions, assumptions and estimates that, while considered
reasonable by GFL as of the date of this release, are subject to
inherent uncertainties, risks and changes in circumstances that may
differ materially from those contemplated by the forward-looking
statements. Important factors that could cause actual results to
differ, possibly materially, from those indicated by the
forward-looking statements include, but are not limited to, the
factors described in the "Risk Factors" section of GFL's annual
information form for the 2022 fiscal year filed on Form 40-F and
GFL's other periodic filings with the U.S. Securities and Exchange
Commission and the securities commissions or similar regulatory
authorities in Canada. These
factors are not intended to represent a complete list of the
factors that could affect GFL. However, such risk factors should be
considered carefully. There can be no assurance that such estimates
and assumptions will prove to be correct. You should not place
undue reliance on forward-looking statements, which speak only as
of the date of this release. GFL undertakes no obligation to
publicly update any forward-looking statement, except as required
by applicable securities laws.
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.
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.
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 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.
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.
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.
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. 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.
All dollar amounts are in Canadian dollars, unless otherwise
noted.
For more information:
Patrick Dovigi
+1 905 326-0101
pdovigi@gflenv.com
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SOURCE GFL Environmental Inc.