• Solid waste pricing growth of 7.1% drives underlying margin expansion and better than expected Q1 results
  • Revenue of $1.646 billion, up 17.9%
  • Net income(a) of $180.3 million, and adjusted EBITDA(b) of $502.1 million, or 30.5% of revenue and up 15.9%
  • Net income of $0.69 per share, and adjusted net income(b) of $0.82 per share, up 17.1%
  • Net cash provided by operating activities of $440.9 million and adjusted free cash flow(b) of $320.4 million, or 19.5% of revenue and up 10.6% year over year
  • Completes acquisitions with approximately $175 million of total annualized revenue

TORONTO, May 3, 2022 /CNW/ -- Waste Connections, Inc. (TSX/NYSE: WCN) ("Waste Connections" or the "Company") today announced its results for the first quarter of 2022. 

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

"We are extremely pleased by our strong start to the year, with record solid waste pricing growth driving underlying margin expansion in spite of inflationary pressures.   Our 50 basis points year-over-year decline in adjusted EBITDA(b) margin in the quarter included 90 basis points combined margin impact, as expected, from $10 million of COVID-related frontline support in January and acquisitions completed since the prior year period.  Looking ahead, further sequential improvement in solid waste pricing growth, increasing E&P waste activity and strong operational execution should continue to differentiate our performance," said Worthing F. Jackman, President and Chief Executive Officer. "Moreover, adjusted free cash flow(b) generation of over $320 million, or 19.5% of revenue in the period, positions us to meet or exceed our full year adjusted free cash flow(b) outlook of $1.150 billion."

Mr. Jackman added, "The elevated cadence of solid waste acquisition activity has continued, with approximately $175 million in annualized revenues closed year to date, confirming our expectations for another outsized year of such activity, for which we remain well-positioned."

Q1 2022 Results

Revenue in the first quarter totaled $1.646 billion, up from $1.396 billion in the year ago period.  Operating income was $273.9 million, which included $4.7 million in acquisition-related costs and $1.9 million in impairments and other operating items.  This compares to operating income of $238.4 million in the first quarter of 2021, which included $1.5 million in primarily acquisition-related costs.  Net income in the first quarter was $180.3 million, or $0.69 per share on a diluted basis of 259.6 million shares.  In the year ago period, the Company reported net income of $160.3 million, or $0.61 per share on a diluted basis of 263.2 million shares. 

Adjusted net income(b) in the first quarter was $213.4 million, or $0.82 per diluted share, versus $185.5 million, or $0.70 per diluted share, in the prior year period.  Adjusted EBITDA(b) in the first quarter was $502.1 million, as compared to $433.2 million in the prior year period.  Adjusted net income, adjusted net income per diluted share and adjusted EBITDA, all non-GAAP measures, primarily exclude impairments and acquisition-related items, as reflected in the detailed reconciliations in the attached tables.

Environmental, Social and Governance

Waste Connections views its Environmental, Social and Governance ("ESG") efforts as integral to its business, with initiatives consistent with its objective of long-term value creation.  In 2020, the Company introduced long-term, aspirational ESG targets and committed over $500 million for investments to meet or exceed such sustainability targets. These investments primarily focus on reducing emissions, increasing resource recovery of both recyclable commodities and clean energy fuels, reducing reliance on off-site disposal for landfill leachate, further improving safety through reduced incidents and enhancing employee engagement through improved voluntary turnover and Servant Leadership scores.  The Company's 2021 Sustainability Report provides progress updates on its targets and investments towards their achievement.  For more information, visit the Waste Connections website at wasteconnections.com/sustainability.

Q1 2022 Earnings Conference Call

Waste Connections will be hosting a conference call related to first quarter earnings on May 4th at 8:30 A.M. Eastern Time.  A live audio webcast of the conference call can be accessed by visiting investors.wasteconnections.com and selecting "News & Events" from the website menu. Alternatively, listeners may access the call by dialing 800-926-4425 (within North America) or 212-231-2911 (international) approximately 10 minutes prior to the scheduled start time; a passcode is not required.  A replay of the conference call will be available until May 11, 2022, by calling 800-633-8284 (within North America) or 402-977-9140 (international) and entering Passcode #22017071.  

Waste Connections will be filing a Form 8-K on EDGAR and on SEDAR (as an "Other" document) prior to markets opening on May 4th, providing the Company's second quarter 2022 outlook for revenue, price plus volume growth for solid waste, and adjusted EBITDA(b).





 (a) All references to "Net income" refer to the financial statement line item "Net income attributable to Waste Connections"

 (b) A non-GAAP measure; see accompanying Non-GAAP Reconciliation Schedule

About Waste Connections

Waste Connections is an integrated solid waste services company that provides non-hazardous waste collection, transfer and disposal services, along with resource recovery primarily through recycling and renewable fuels generation.  The Company serves more than eight million residential, commercial and industrial customers in mostly exclusive and secondary markets across 43 states in the U.S. and six provinces in Canada.  Waste Connections also provides non-hazardous oilfield waste treatment, recovery and disposal services in several basins across the U.S., as well as intermodal services for the movement of cargo and solid waste containers in the Pacific Northwest.  For more information, visit Waste Connections at wasteconnections.com. 

Safe Harbor and Forward-Looking Information

This press release contains forward-looking statements within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995 ("PSLRA"), including "forward-looking information" within the meaning of applicable Canadian securities laws. These forward-looking statements are neither historical facts nor assurances of future performance and reflect Waste Connections' current beliefs and expectations regarding future events and operating performance. These forward-looking statements are often identified by the words "may," "might," "believes," "thinks," "expects," "estimate," "continue," "intends" or other words of similar meaning. All of the forward-looking statements included in this press release are made pursuant to the safe harbor provisions of the PSLRA and applicable securities laws in Canada. Forward-looking statements involve risks and uncertainties. Forward-looking statements in this press release include, but are not limited to, statements about expected 2022 financial results, outlook and related assumptions, and potential acquisition activity. Important factors that could cause actual results to differ, possibly materially, from those indicated by the forward-looking statements include, but are not limited to, risk factors detailed from time to time in the Company's filings with the SEC and the securities commissions or similar regulatory authorities in Canada.  You should not place undue reliance on forward-looking statements, which speak only as of the date of this press release.  Waste Connections undertakes no obligation to update the forward-looking statements set forth in this press release, whether as a result of new information, future events, or otherwise, unless required by applicable securities laws.

– financial tables attached –

CONTACT:


Mary Anne Whitney / (832) 442-2253

Joe Box / (832) 442-2153

maryannew@wasteconnections.com   

joe.box@wasteconnections.com    

                                               

 

WASTE CONNECTIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF NET INCOME

THREE MONTHS ENDED MARCH 31, 2021 AND 2022

(Unaudited)

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




Three months ended
March 31,



2021


2022






Revenues


$

1,395,942


$

1,646,255

Operating expenses:







     Cost of operations



825,920



989,518

     Selling, general and administrative



141,422



163,414

     Depreciation



157,402



179,950

     Amortization of intangibles



32,192



37,635

     Impairments and other operating items



634



1,878

Operating income



238,372



273,860








Interest expense



(42,425)



(41,324)

Interest income



1,103



137

Other income (expense), net



3,548



(3,466)

Income before income tax provision



200,598



229,207








Income tax provision



(40,291)



(48,839)

Net income



160,307



180,368

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



2



(44)

Net income attributable to Waste Connections


$

160,309


$

180,324








Earnings per common share attributable to Waste Connections' common shareholders:







     Basic


$

0.61


$

0.70








     Diluted


$

0.61


$

0.69








Shares used in the per share calculations:







     Basic



262,697,487



258,946,933

     Diluted



263,156,655



259,560,983















Cash dividends per common share


$

0.205


$

0.23

 

WASTE CONNECTIONS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

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




December 31,
2021


March 31,
2022


ASSETS








Current assets:








     Cash and equivalents


$

147,441


$

391,417


     Accounts receivable, net of allowance for credit losses of $18,480 and $19,361 at
     December 31, 2021 and March 31, 2022, respectively



709,614



727,737


     Prepaid expenses and other current assets



175,722



293,625


          Total current assets



1,032,777



1,412,779


Restricted cash



72,174



71,867


Restricted investments



59,014



59,449


Property and equipment, net



5,721,949



5,770,931


Operating lease right-of-use assets



160,567



162,332


Goodwill



6,187,643



6,427,763


Intangible assets, net



1,350,597



1,388,687


Other assets, net



115,203



120,554


     Total assets


$

14,699,924


$

15,414,362


 

LIABILITIES AND EQUITY








Current liabilities:








     Accounts payable


$

392,868


$

423,175


     Book overdraft



16,721



16,809


     Deferred revenue



273,720



293,729


     Accrued liabilities



442,596



396,292


     Current portion of operating lease liabilities



38,017



35,079


     Current portion of contingent consideration



62,804



64,480


     Current portion of long-term debt and notes payable



6,020



28,070


          Total current liabilities



1,232,746



1,257,634










Long-term portion of debt and notes payable



5,040,500



5,817,641


Long-term portion of operating lease liabilities



129,628



134,392


Long-term portion of contingent consideration



31,504



31,558


Deferred income taxes



850,921



1,002,800


Other long-term liabilities



421,080



411,278


          Total liabilities



7,706,379



8,655,303


Commitments and contingencies








Equity:








Common shares: 260,283,158 shares issued and 260,212,496 shares outstanding at
     December 31, 2021; 257,164,867 shares issued and 257,096,408 shares outstanding at
     March 31, 2022



3,693,027



3,269,887


Additional paid-in capital



199,482



196,385


Accumulated other comprehensive income



39,584



110,358


Treasury shares: 70,662 and 68,459 shares at December 31, 2021 and March 31, 2022,
     respectively



-



-


Retained earnings



3,056,845



3,177,778


          Total Waste Connections' equity



6,988,938



6,754,408


Noncontrolling interest in subsidiaries



4,607



4,651


          Total equity



6,993,545



6,759,059




$

14,699,924


$

15,414,362


 

WASTE CONNECTIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

THREE MONTHS ENDED MARCH 31, 2021 AND 2022

(Unaudited)

(in thousands of U.S. dollars)






Three months ended March 31,




2021


2022


Cash flows from operating activities:








Net income


$

160,307


$

180,368


Adjustments to reconcile net income to net cash provided by operating activities:








     Loss on disposal of assets and impairments



401



2,090


     Depreciation



157,402



179,950


     Amortization of intangibles



32,192



37,635


     Deferred income taxes, net of acquisitions



8,379



38,378


     Current period provision for expected credit losses



1,915



3,022


     Amortization of debt issuance costs



1,359



1,195


     Share-based compensation



10,307



14,635


     Interest accretion



4,204



4,448


     Payment of contingent consideration recorded in earnings



(520)



-


     Adjustments to contingent consideration



89



(52)


     Other



(796)



382


     Net change in operating assets and liabilities, net of acquisitions



25,157



(21,154)


Net cash provided by operating activities



400,396



440,897










Cash flows from investing activities:








     Payments for acquisitions, net of cash acquired



(8,545)



(355,212)


     Capital expenditures for property and equipment



(96,793)



(152,318)


     Proceeds from disposal of assets



2,080



15,012


     Other



2,705



2,637


Net cash used in investing activities



(100,553)



(489,881)










Cash flows from financing activities:








     Proceeds from long-term debt



-



1,305,288


     Principal payments on notes payable and long-term debt



(5,559)



(505,597)


     Payment of contingent consideration recorded at acquisition date



(4,807)



(3,571)


     Change in book overdraft



(16,849)



87


     Payments for repurchase of common shares



(65,999)



(424,999)


     Payments for cash dividends



(53,909)



(59,391)


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



(18,490)



(17,236)


     Debt issuance costs



-



(4,382)


     Proceeds from issuance of shares under employee share purchase plan



-



1,554


     Proceeds from sale of common shares held in trust



131



305


Net cash provided by (used in) financing activities



(165,482)



292,058


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



403



595


Net increase in cash, cash equivalents and restricted cash



134,764



243,669


Cash, cash equivalents and restricted cash at beginning of period



714,389



219,615


Cash, cash equivalents and restricted cash at end of period


$

849,153


$

463,284


















 

ADDITIONAL STATISTICS

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




Solid Waste Internal Growth:  The following table reflects a breakdown of the components of our solid waste internal growth for the three months ended March 31, 2022:






Three months
ended March
31, 2022




Core Price


6.3

%






Surcharges


0.8

%






Volume


0.5

%






Recycling


1.1

%






Foreign Exchange Impact


-







Total


8.7

%






 

Revenue Breakdown: The following table reflects a breakdown of our revenue for the three month periods ended March 31, 2021 and 2022:




 Three months ended March 31, 2021



Revenue


Inter-company
Elimination


Reported
Revenue


%

Solid Waste Collection


$

1,036,472


$

(3,045)


$

1,033,427


74.0%

Solid Waste Disposal and Transfer



461,259



(190,446)



270,813


19.4%

Solid Waste Recycling



32,448



(993)



31,455


2.3%

E&P Waste Treatment, Recovery and Disposal



28,012



(3,343)



24,669


1.8%

Intermodal and Other



35,634



(56)



35,578


2.5%

Total


$

1,593,825


$

(197,883)


$

1,395,942


100.0%















Three months ended March 31, 2022



Revenue


Inter-company
Elimination


Reported
Revenue


%

Solid Waste Collection


$

1,199,452


$

(2,883)


$

1,196,569


72.7%

Solid Waste Disposal and Transfer



517,722



(213,019)



304,703


18.5%

Solid Waste Recycling



63,094



(2,573)



60,521


3.7%

E&P Waste Treatment, Recovery and Disposal



43,555



(2,732)



40,823


2.5%

Intermodal and Other



45,693



(2,054)



43,639


2.6%

Total


$

1,869,516


$

(223,261)


$

1,646,255


100.0%

 

Contribution from Acquisitions: The following table reflects revenues from acquisitions, net of divestitures, for the three month periods ended March 31, 2021 and 2022:




Three months ended
March 31,



2021


2022

Acquisitions, net  


$

40,542


$

110,007

 

ADDITIONAL STATISTICS (continued)

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


Other Cash Flow Items: The following table reflects cash interest and cash taxes for the three month periods ended March 31, 2021 and 2022:




Three months ended
March 31,



2021


2022

Cash Interest Paid


$

25,446


$

32,159

Cash Taxes Paid



28,621



17,389

 

Debt to Book Capitalization as of March 31, 2022:  46%

 

Internalization for the three months ended March 31, 2022:  56%

 

Days Sales Outstanding for the three months ended March 31, 2022:  40 (24 net of deferred revenue)

 

Share Information for the three months ended March 31, 2022:


Basic shares outstanding


258,946,933

Dilutive effect of equity-based awards 


614,050

Diluted shares outstanding


259,560,983

 

NON-GAAP RECONCILIATION SCHEDULE

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


Reconciliation of Adjusted EBITDA:


Adjusted EBITDA, a non-GAAP financial measure, is provided supplementally because it is widely used by investors as a performance and valuation measure in the solid waste industry.  Management uses adjusted EBITDA as one of the principal measures to evaluate and monitor the ongoing financial performance of Waste Connections' operations.  Waste Connections defines adjusted EBITDA as net income attributable to Waste Connections, plus or minus net income (loss) attributable to noncontrolling interests, plus income tax provision, plus interest expense, less interest income, plus depreciation and amortization expense, plus closure and post-closure accretion expense, plus or minus any loss or gain on impairments and other operating items, plus other expense, less other income.  Waste Connections further adjusts this calculation to exclude the effects of other items management believes impact the ability to assess the operating performance of its business.  This measure is not a substitute for, and should be used in conjunction with, GAAP financial measures.  Other companies may calculate adjusted EBITDA differently. 




Three months ended
March 31,



2021


2022

Net income attributable to Waste Connections


$

160,309


$

180,324

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



(2)



44

Plus: Income tax provision



40,291



48,839

Plus: Interest expense



42,425



41,324

Less: Interest income



(1,103)



(137)

Plus: Depreciation and amortization



189,594



217,585

Plus: Closure and post-closure accretion



3,709



4,096

Plus: Impairments and other operating items



634



1,878

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



(3,548)



3,466

Adjustments:







     Plus: Transaction-related expenses(a)



526



4,540

     Plus: Fair value changes to equity awards(b)



339



161

Adjusted EBITDA


$

433,174


$

502,120








As % of revenues



31.0%



30.5%

 




(a)    Reflects the addback of acquisition-related transaction costs.
(b)    Reflects fair value accounting changes associated with certain equity awards.

   

NON-GAAP RECONCILIATION SCHEDULE (continued)

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


Reconciliation of Adjusted Free Cash Flow:

 

Adjusted free cash flow, a non-GAAP financial measure, is provided supplementally because it is widely used by investors as a valuation and liquidity measure in the solid waste industry.  Management uses adjusted free cash flow as one of the principal measures to evaluate and monitor the ongoing financial performance of Waste Connections' operations.  Waste Connections defines adjusted free cash flow as net cash provided by operating activities, plus or minus change in book overdraft, plus proceeds from disposal of assets, less capital expenditures for property and equipment and distributions to noncontrolling interests.  Waste Connections further adjusts this calculation to exclude the effects of items management believes impact the ability to assess the operating performance of its business.  This measure is not a substitute for, and should be used in conjunction with, GAAP liquidity or financial measures.  Other companies may calculate adjusted free cash flow differently. 




Three months ended
March 31,




2021


2022


Net cash provided by operating activities


$

400,396


$

440,897


Plus/Less: Change in book overdraft



(16,849)



87


Plus: Proceeds from disposal of assets



2,080



15,012


Less: Capital expenditures for property and equipment



(96,793)



(152,318)


Adjustments:








     Payment of contingent consideration recorded in earnings(a)



520



-


     Cash received for divestitures(b)



-



(5,671)


     Transaction-related expenses(c)



526



23,404


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



97



76


     Tax effect(e)



(188)



(1,110)


     Adjusted free cash flow


$

289,789


$

320,377










          As % of revenues



20.8%



19.5%























 







(a)

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

(b)

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

(c)

Reflects the addback of acquisition-related transaction costs and the settlement of an acquired tax liability.

(d)

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

(e)

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

 

NON-GAAP RECONCILIATION SCHEDULE (continued)

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


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

 

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




Three months ended
March 31,



2021


2022

Reported net income attributable to Waste Connections


$

160,309


$

180,324

Adjustments:







     Amortization of intangibles(a)



32,192



37,635

     Impairments and other operating items(b)



634



1,878

     Transaction-related expenses(c) 



526



4,540

     Fair value changes to equity awards(d)



339



161

     Tax effect(e)



(8,543)



(11,092)

     Adjusted net income attributable to Waste Connections


$

185,457


$

213,446

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







     Reported net income


$

0.61


$

0.69

     Adjusted net income


$

0.70


$

0.82

 








(a)

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

(b)

Reflects the addback of impairments and other operating items.

(c)

Reflects the addback of acquisition-related transaction costs.

(d)

Reflects fair value accounting changes associated with certain equity awards.

(e)

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

 

 

Cision View original content to download multimedia:https://www.prnewswire.com/news-releases/waste-connections-reports-first-quarter-2022-results-301538901.html

SOURCE Waste Connections, Inc.

Copyright 2022 Canada NewsWire

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