- Increasing solid waste pricing growth, E&P waste
activity and acquisition contribution once again drive better than
expected quarterly results
- Revenue of $1.880 billion, up
17.7%
- Net income(a) of $236.9
million, and adjusted EBITDA(b) of $588.1 million, up 16.3%
- Adjusted EBITDA(b) margin of 31.3% of revenue,
above outlook and up 20 basis points year over year, excluding
acquisitions
- Net income of $0.92 per share,
and adjusted net income(b) of $1.10 per share
- Year to date net cash provided by operating activities of
$1.500 billion and adjusted free cash
flow(b) of $929.0 million,
or 17.4% of revenue
- Year to date signed or closed acquisitions with
approximately $570 million of total
annualized revenue
- Increases regular quarterly dividend by 10.9%
TORONTO, Nov. 2, 2022
/CNW/ -- Waste Connections, Inc. (TSX/NYSE: WCN) ("Waste
Connections" or the "Company") today announced its results for the
third quarter of 2022 and updated its outlook for 2022.
"Strong execution once again provided for better than expected
results, driven in the third quarter by continued acceleration of
solid waste pricing to 10.1% and higher E&P waste activity,
along with acquisitions closed during the period. Most
notably, we overcame 50 basis points in incremental headwinds,
primarily from the precipitous decline in recycled commodity values
in September, to beat our outlook and expand adjusted EBITDA margin
both sequentially and on a year-over-year basis, excluding the
dilutive impact from acquisitions completed since the year ago
period," said Worthing F. Jackman,
President and Chief Executive Officer.
Mr. Jackman added, "As anticipated, acquisition activity
continues to run well above historical levels, with $535 million in annualized revenue closed in 2022
plus an additional $35 million under
definitive agreement expected to close by year end or early in
2023. These transactions include multi-market solid waste
franchises in California and
Oregon; integrated market
expansions in Arizona and
Texas; new market entries in
Pennsylvania, British Columbia and Quebec; and multiple tuck-ins and market
expansions within our recently established footprint in
Massachusetts."
"The strength of our balance sheet, operating performance and
free cash flow generation positioned us for another double-digit
increase in our quarterly cash dividend, once again demonstrating
our capacity for outsized acquisition activity while continuing to
fund our differentiated growth strategy and increasing return of
capital to shareholders."
Mr. Jackman concluded, "Our outperformance through the third
quarter and acquisitions closed year to date enhance our visibility
for expected double-digit revenue growth in 2023, led by pricing
expected to remain at elevated levels, plus rollover contribution
from acquisitions already signed or closed year to date. In
addition, we expect underlying margin expansion to overcome
headwinds from recent decreases in recycled commodity values."
Q3 2022 Results
Revenue in the third quarter totaled $1.880 billion, up from $1.597 billion in the year ago period.
Operating income was $326.8 million,
which included $25.1 million
primarily in impairments and other operating items and transaction
expenses. This compares to operating income of $285.1 million in the third quarter of 2021,
which included $9.7 million primarily
related to transaction expenses and impairments and other operating
items. Net income in the third quarter was $236.9 million, or $0.92 per share on a diluted basis of 257.9
million shares, including a $15.3
million net of tax benefit, or $0.06 per share, primarily as a result of the
impact from changes in foreign currency exchange rates on certain
debt in the period. In the year ago period, the Company
reported net income of $114.4
million, or $0.44 per share on
a diluted basis of 261.1 million shares, including a net of tax
loss on debt extinguishment associated with the prepayment of
senior notes of $84.2 million or
$0.32 per share.
Adjusted net income(b) in the third quarter was
$284.9 million, or $1.10 per diluted share, versus $233.1 million, or $0.89 per diluted share, in the prior year
period. Adjusted EBITDA(b) in the third quarter
was $588.1 million, as compared to
$505.6 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.
Nine Months Year to Date Results
For the nine months ended September 30,
2022, revenue was $5.343
billion, up from $4.527
billion in the year ago period. Operating income,
which included $38.5 million
primarily attributable to impairments and other operating items and
transaction-related expenses, was $930.2
million, as compared to operating income of $790.3 million in 2021, which included
$23.7 million in impairments, fair
value changes in equity awards and transaction expenses.
Net income for the nine months ended September 30, 2022 was $641.3 million, or $2.49 per share on a diluted basis of 258.1
million shares, including a $18.9
million net of tax benefit, or $0.07 per share, primarily as a result of the
impact from changes in foreign currency exchange rates on certain
debt. In the year ago period, the Company reported net income
of $451.7 million, or $1.72 per share on a diluted basis of 261.9
million shares, including a net of tax loss on debt extinguishment
associated with the prepayment of senior notes of $84.2 million or $0.32 per share.
Adjusted net income(b) for the nine months ended
September 30, 2022 was $755.5 million, or $2.93 per diluted share, compared to $629.5 million, or $2.39 per diluted share, in the year ago period.
Adjusted EBITDA(b) for the nine months ended
September 30, 2022 was $1.657 billion, as compared to $1.424 billion in the prior year
period.
Updated 2022 Outlook
Waste Connections also updated its outlook for 2022, which
assumes no change in the current economic environment or underlying
economic trends. The Company's outlook excludes any impact
from additional acquisitions that may close during the year, and
expensing of transaction-related items. The outlook provided
below is forward looking, and actual results may differ materially
depending on risks and uncertainties detailed at the end of this
release and in our periodic filings with the U.S. Securities and
Exchange Commission and the securities commissions or similar
regulatory authorities in Canada.
Certain components of the outlook for 2022 are subject to
quarterly fluctuations. See reconciliations in the attached
tables.
- Revenue is estimated to be approximately $7.190 billion, as compared to our previously
revised revenue outlook of approximately $7.125 billion.
- Net income is estimated to be approximately $836.7 million, and adjusted EBITDA(b)
is estimated to be approximately $2.210
billion, or about 30.7% of revenue, as compared to our
previously revised adjusted EBITDA(b) outlook of
$2.190 billion or 30.7% of
revenue.
- Capital expenditures are estimated to be approximately
$850 million, in line with our
original outlook.
- Net cash provided by operating activities is estimated to be
approximately $1.963 billion, and
adjusted free cash flow(b) is estimated at approximately
$1.160 billion, or about 16.1% of
revenue, as compared to our previously revised adjusted free cash
flow(b) outlook of $1.160
billion or 16.3% of revenue.
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 and enhancing employee
engagement. The Company's 2022 Sustainability Report provides
progress updates on its targets and investments towards their
achievement, and introduces new emissions reduction targets.
For more information, visit
wasteconnections.com/sustainability.
(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.
|
Q3 2022 Earnings Conference Call
Waste Connections will be hosting a conference call related to
third quarter earnings on November
3rd 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,
conference call participants can preregister by clicking
here. Registered participants will receive dial-in
instructions and a personalized code for entry to the conference
call. A replay of the conference call will be available until
November 10, 2022, by calling
877-344-7529 (within North
America) or 412-317-0088 (international) and entering
Passcode #5667024.
Waste Connections will be filing a Form 8-K on EDGAR and on
SEDAR (as an "Other" document) prior to markets opening on
November 3rd, providing
the Company's fourth quarter 2022 outlook for revenue, price plus
volume growth for solid waste, and adjusted
EBITDA(b).
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 and 2023 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 AND NINE MONTHS
ENDED SEPTEMBER 30, 2021 AND 2022
|
(Unaudited)
|
(in thousands of U.S.
dollars, except share and per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
September 30,
|
|
Nine months ended
September 30,
|
|
|
|
2021
|
|
2022
|
|
2021
|
|
2022
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
1,597,168
|
|
$
|
1,879,868
|
|
$
|
4,527,042
|
|
$
|
5,342,558
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
operations
|
|
|
946,098
|
|
|
1,120,629
|
|
|
2,673,209
|
|
|
3,198,039
|
|
Selling, general and
administrative
|
|
|
155,520
|
|
|
186,887
|
|
|
454,885
|
|
|
518,705
|
|
Depreciation
|
|
|
171,965
|
|
|
193,287
|
|
|
498,588
|
|
|
562,174
|
|
Amortization of
intangibles
|
|
|
35,337
|
|
|
38,859
|
|
|
100,237
|
|
|
113,956
|
|
Impairments and other
operating items
|
|
|
3,104
|
|
|
13,438
|
|
|
9,819
|
|
|
19,467
|
|
Operating
income
|
|
|
285,144
|
|
|
326,768
|
|
|
790,304
|
|
|
930,217
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
(40,418)
|
|
|
(51,161)
|
|
|
(124,171)
|
|
|
(137,565)
|
|
Interest
income
|
|
|
495
|
|
|
1,784
|
|
|
2,342
|
|
|
2,574
|
|
Other income,
net
|
|
|
3,140
|
|
|
8,487
|
|
|
5,452
|
|
|
2,373
|
|
Loss on early
extinguishment of debt
|
|
|
(115,288)
|
|
|
-
|
|
|
(115,288)
|
|
|
-
|
|
Income before income
tax provision
|
|
|
133,073
|
|
|
285,878
|
|
|
558,639
|
|
|
797,599
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
provision
|
|
|
(18,419)
|
|
|
(48,753)
|
|
|
(106,578)
|
|
|
(155,899)
|
|
Net income
|
|
|
114,654
|
|
|
237,125
|
|
|
452,061
|
|
|
641,700
|
|
Less: Net income
attributable to noncontrolling interests
|
|
|
(273)
|
|
|
(213)
|
|
|
(325)
|
|
|
(390)
|
|
Net income attributable
to Waste Connections
|
|
$
|
114,381
|
|
$
|
236,912
|
|
$
|
451,736
|
|
$
|
641,310
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per common
share attributable to Waste
Connections' common shareholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.44
|
|
$
|
0.92
|
|
$
|
1.73
|
|
$
|
2.49
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
$
|
0.44
|
|
$
|
0.92
|
|
$
|
1.72
|
|
$
|
2.49
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in the per
share calculations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
260,550,774
|
|
|
257,197,010
|
|
|
261,372,827
|
|
|
257,438,756
|
|
Diluted
|
|
|
261,145,220
|
|
|
257,891,635
|
|
|
261,879,754
|
|
|
258,060,751
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends per
common share
|
|
$
|
0.205
|
|
$
|
0.230
|
|
$
|
0.615
|
|
$
|
0.690
|
|
|
WASTE CONNECTIONS,
INC.
|
CONDENSED CONSOLIDATED
BALANCE SHEETS
|
(Unaudited)
|
(in thousands of U.S.
dollars, except share and per share amounts)
|
|
|
|
|
|
|
|
|
|
|
December 31,
2021
|
|
September 30,
2022
|
|
ASSETS
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
Cash and
equivalents
|
|
$
|
147,441
|
|
$
|
200,179
|
|
Accounts receivable,
net of allowance for credit losses of $18,480 and $20,512 at
December 31, 2021 and September 30, 2022,
respectively
|
|
|
709,614
|
|
|
810,932
|
|
Prepaid expenses and
other current assets
|
|
|
175,722
|
|
|
219,203
|
|
Total current
assets
|
|
|
1,032,777
|
|
|
1,230,314
|
|
Restricted
cash
|
|
|
72,174
|
|
|
108,194
|
|
Restricted
investments
|
|
|
59,014
|
|
|
55,922
|
|
Property and equipment,
net
|
|
|
5,721,949
|
|
|
6,353,367
|
|
Operating lease
right-of-use assets
|
|
|
160,567
|
|
|
190,860
|
|
Goodwill
|
|
|
6,187,643
|
|
|
6,574,860
|
|
Intangible assets,
net
|
|
|
1,350,597
|
|
|
1,489,242
|
|
Other assets,
net
|
|
|
115,203
|
|
|
127,909
|
|
Total
assets
|
|
$
|
14,699,924
|
|
$
|
16,130,668
|
|
LIABILITIES AND
EQUITY
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
392,868
|
|
$
|
507,899
|
|
Book
overdraft
|
|
|
16,721
|
|
|
10,734
|
|
Deferred
revenue
|
|
|
273,720
|
|
|
306,019
|
|
Accrued
liabilities
|
|
|
442,596
|
|
|
457,904
|
|
Current portion of
operating lease liabilities
|
|
|
38,017
|
|
|
34,526
|
|
Current portion of
contingent consideration
|
|
|
62,804
|
|
|
54,867
|
|
Current portion of
long-term debt and notes payable
|
|
|
6,020
|
|
|
6,718
|
|
Total current
liabilities
|
|
|
1,232,746
|
|
|
1,378,667
|
|
|
|
|
|
|
|
|
|
Long-term portion of
debt and notes payable
|
|
|
5,040,500
|
|
|
6,211,971
|
|
Long-term portion of
operating lease liabilities
|
|
|
129,628
|
|
|
163,848
|
|
Long-term portion of
contingent consideration
|
|
|
31,504
|
|
|
30,896
|
|
Deferred income
taxes
|
|
|
850,921
|
|
|
986,252
|
|
Other long-term
liabilities
|
|
|
421,080
|
|
|
415,664
|
|
Total
liabilities
|
|
|
7,706,379
|
|
|
9,187,298
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
Equity:
|
|
|
|
|
|
|
|
Common shares:
260,283,158 shares issued and 260,212,496 shares outstanding at
December 31, 2021; 257,183,663 shares issued
and 257,118,204 shares outstanding at
September 30, 2022
|
|
|
3,693,027
|
|
|
3,271,958
|
|
Additional paid-in
capital
|
|
|
199,482
|
|
|
229,445
|
|
Accumulated other
comprehensive income
|
|
|
39,584
|
|
|
(83,476)
|
|
Treasury shares: 70,662
and 65,459 shares at December 31, 2021 and September 30,
2022,
respectively
|
|
|
-
|
|
|
-
|
|
Retained
earnings
|
|
|
3,056,845
|
|
|
3,520,446
|
|
Total Waste
Connections' equity
|
|
|
6,988,938
|
|
|
6,938,373
|
|
Noncontrolling interest
in subsidiaries
|
|
|
4,607
|
|
|
4,997
|
|
Total
equity
|
|
|
6,993,545
|
|
|
6,943,370
|
|
|
|
$
|
14,699,924
|
|
$
|
16,130,668
|
|
|
WASTE CONNECTIONS,
INC.
|
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
NINE MONTHS ENDED
SEPTEMBER 30, 2021 AND 2022
|
(Unaudited)
|
(in thousands of U.S.
dollars)
|
|
|
|
|
|
|
|
|
|
|
Nine
months ended September 30,
|
|
|
|
2021
|
|
2022
|
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
|
Net income
|
|
$
|
452,061
|
|
$
|
641,700
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
Loss on disposal of
assets and impairments
|
|
|
9,302
|
|
|
11,503
|
|
Depreciation
|
|
|
498,588
|
|
|
562,174
|
|
Amortization of
intangibles
|
|
|
100,237
|
|
|
113,956
|
|
Loss on early
extinguishment of debt
|
|
|
115,288
|
|
|
-
|
|
Deferred income taxes,
net of acquisitions
|
|
|
(24,282)
|
|
|
91,098
|
|
Current period
provision for expected credit losses
|
|
|
9,239
|
|
|
11,097
|
|
Amortization of debt
issuance costs
|
|
|
3,887
|
|
|
3,879
|
|
Share-based
compensation
|
|
|
42,694
|
|
|
48,395
|
|
Interest
accretion
|
|
|
12,068
|
|
|
13,218
|
|
Payment of contingent
consideration recorded in earnings
|
|
|
(520)
|
|
|
(2,982)
|
|
Adjustments to
contingent consideration
|
|
|
89
|
|
|
(1,030)
|
|
Other
|
|
|
(1,286)
|
|
|
(8,412)
|
|
Net change in
operating assets and liabilities, net of acquisitions
|
|
|
52,596
|
|
|
15,541
|
|
Net cash provided by
operating activities
|
|
|
1,269,961
|
|
|
1,500,137
|
|
|
|
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
Payments for
acquisitions, net of cash acquired
|
|
|
(561,276)
|
|
|
(1,272,910)
|
|
Capital expenditures
for property and equipment
|
|
|
(479,480)
|
|
|
(618,313)
|
|
Proceeds from disposal
of assets
|
|
|
10,109
|
|
|
23,341
|
|
Other
|
|
|
(4,193)
|
|
|
9,296
|
|
Net cash used in
investing activities
|
|
|
(1,034,840)
|
|
|
(1,858,586)
|
|
|
|
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
Proceeds from
long-term debt
|
|
|
1,943,192
|
|
|
3,148,624
|
|
Principal payments on
notes payable and long-term debt
|
|
|
(1,814,034)
|
|
|
(2,052,412)
|
|
Premiums paid on early
extinguishment of debt
|
|
|
(110,617)
|
|
|
-
|
|
Payment of contingent
consideration recorded at acquisition date
|
|
|
(7,998)
|
|
|
(12,114)
|
|
Change in book
overdraft
|
|
|
(563)
|
|
|
(5,983)
|
|
Payments for
repurchase of common shares
|
|
|
(305,640)
|
|
|
(424,999)
|
|
Payments for cash
dividends
|
|
|
(160,754)
|
|
|
(177,710)
|
|
Tax withholdings
related to net share settlements of equity-based
compensation
|
|
|
(18,576)
|
|
|
(17,466)
|
|
Debt issuance
costs
|
|
|
(17,997)
|
|
|
(11,454)
|
|
Proceeds from issuance
of shares under employee share purchase plan
|
|
|
1,275
|
|
|
3,271
|
|
Proceeds from sale of
common shares held in trust
|
|
|
131
|
|
|
660
|
|
Net cash provided by
(used in) financing activities
|
|
|
(491,581)
|
|
|
450,417
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate
changes on cash, cash equivalents and restricted cash
|
|
|
443
|
|
|
(3,210)
|
|
|
|
|
|
|
|
|
|
Net increase (decrease)
in cash, cash equivalents and restricted cash
|
|
|
(256,017)
|
|
|
88,758
|
|
Cash, cash equivalents
and restricted cash at beginning of period
|
|
|
714,389
|
|
|
219,615
|
|
Cash, cash equivalents
and restricted cash at end of period
|
|
$
|
458,372
|
|
$
|
308,373
|
|
ADDITIONAL STATISTICS
(in thousands of
U.S. dollars, except where noted)
Solid Waste Internal Growth: The following table
reflects a breakdown of the components of our solid waste internal
growth for the three and nine month periods ended September 30, 2022:
|
|
Three months
ended
September 30,
2022
|
|
Nine months
ended
September 30,
2022
|
Core Price
|
|
|
8.3 %
|
|
|
7.3 %
|
Surcharges
|
|
|
1.8 %
|
|
|
1.4 %
|
Volume
|
|
|
(1.5 %)
|
|
|
(0.6 %)
|
Recycling
|
|
|
(1.3 %)
|
|
|
0.0 %
|
Foreign Exchange
Impact
|
|
|
(0.5 %)
|
|
|
(0.3 %)
|
Total
|
|
|
6.8 %
|
|
|
7.8 %
|
Revenue Breakdown: The following table reflects a
breakdown of our revenue for the three month periods ended
September 30, 2021 and 2022:
|
|
Three months
ended September 30, 2021
|
|
|
|
Revenue
|
|
Inter-company
Elimination
|
|
Reported
Revenue
|
|
%
|
Solid Waste
Collection
|
|
$
|
1,137,206
|
|
$
|
(3,091)
|
|
$
|
1,134,115
|
|
71.0
|
%
|
Solid Waste Disposal
and Transfer
|
|
|
553,974
|
|
|
(217,899)
|
|
|
336,075
|
|
21.0
|
%
|
Solid Waste
Recycling
|
|
|
55,772
|
|
|
(1,354)
|
|
|
54,418
|
|
3.4
|
%
|
E&P Waste
Treatment, Recovery and Disposal
|
|
|
38,519
|
|
|
(3,560)
|
|
|
34,959
|
|
2.2
|
%
|
Intermodal and
Other
|
|
|
38,377
|
|
|
(776)
|
|
|
37,601
|
|
2.4
|
%
|
Total
|
|
$
|
1,823,848
|
|
$
|
(226,680)
|
|
$
|
1,597,168
|
|
100.0
|
%
|
|
|
Three months
ended September 30, 2022
|
|
|
|
Revenue
|
|
Inter-company
Elimination
|
|
Reported
Revenue
|
|
%
|
Solid Waste
Collection
|
|
$
|
1,368,491
|
|
$
|
(4,296)
|
|
$
|
1,364,195
|
|
72.6
|
%
|
Solid Waste Disposal
and Transfer
|
|
|
616,900
|
|
|
(245,687)
|
|
|
371,213
|
|
19.8
|
%
|
Solid Waste
Recycling
|
|
|
48,246
|
|
|
(2,332)
|
|
|
45,914
|
|
2.4
|
%
|
E&P Waste
Treatment, Recovery and Disposal
|
|
|
56,995
|
|
|
(3,978)
|
|
|
53,017
|
|
2.8
|
%
|
Intermodal and
Other
|
|
|
47,604
|
|
|
(2,075)
|
|
|
45,529
|
|
2.4
|
%
|
Total
|
|
$
|
2,138,236
|
|
$
|
(258,368)
|
|
$
|
1,879,868
|
|
100.0
|
%
|
Contribution from Acquisitions: The following table
reflects revenues from acquisitions, net of divestitures, for the
three and nine month periods ended September
30, 2021 and 2022:
|
|
Three months
ended
September 30,
|
|
Nine months
ended
September 30,
|
|
|
2021
|
|
2022
|
|
2021
|
|
2022
|
Acquisitions,
net
|
|
$
|
51,368
|
|
$
|
150,644
|
|
$
|
136,035
|
|
$
|
402,007
|
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 and nine month periods ended
September 30, 2021 and 2022:
|
|
Three months
ended
September 30,
|
|
Nine months
ended
September 30,
|
|
|
2021
|
|
2022
|
|
2021
|
|
2022
|
Cash Interest
Paid
|
|
$
|
38,685
|
|
$
|
42,528
|
|
$
|
120,647
|
|
$
|
118,541
|
Cash Taxes
Paid
|
|
|
29,411
|
|
|
15,787
|
|
|
90,104
|
|
|
53,599
|
Debt to Book Capitalization as of September 30, 2022: 47%
Internalization for the three months ended
September 30, 2022: 54%
Days Sales Outstanding for the three months ended
September 30, 2022: 40 (25
net of deferred revenue)
Share Information for the three months ended September 30, 2022:
Basic shares
outstanding
|
|
257,197,010
|
Dilutive effect of
equity-based awards
|
|
694,625
|
Diluted shares
outstanding
|
|
257,891,635
|
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
September 30,
|
|
Nine months
ended
September 30,
|
|
|
2021
|
|
2022
|
|
2021
|
|
2022
|
Net income attributable
to Waste Connections
|
|
$
|
114,381
|
|
$
|
236,912
|
|
$
|
451,736
|
|
$
|
641,310
|
Plus: Net income
attributable to noncontrolling interests
|
|
|
273
|
|
|
213
|
|
|
325
|
|
|
390
|
Plus: Income tax
provision
|
|
|
18,419
|
|
|
48,753
|
|
|
106,578
|
|
|
155,899
|
Plus: Interest
expense
|
|
|
40,418
|
|
|
51,161
|
|
|
124,171
|
|
|
137,565
|
Less: Interest
income
|
|
|
(495)
|
|
|
(1,784)
|
|
|
(2,342)
|
|
|
(2,574)
|
Plus: Depreciation and
amortization
|
|
|
207,302
|
|
|
232,146
|
|
|
598,825
|
|
|
676,130
|
Plus: Closure and
post-closure accretion
|
|
|
3,544
|
|
|
4,061
|
|
|
10,919
|
|
|
12,148
|
Plus: Impairments and
other operating items
|
|
|
3,104
|
|
|
13,438
|
|
|
9,819
|
|
|
19,467
|
Less: Other income,
net
|
|
|
(3,140)
|
|
|
(8,487)
|
|
|
(5,452)
|
|
|
(2,373)
|
Plus: Loss on
early extinguishment of debt
|
|
|
115,288
|
|
|
-
|
|
|
115,288
|
|
|
-
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
Plus:
Transaction-related expenses(a)
|
|
|
5,637
|
|
|
10,461
|
|
|
6,220
|
|
|
18,694
|
Plus: Fair value
changes to equity awards(b)
|
|
|
914
|
|
|
1,196
|
|
|
7,638
|
|
|
349
|
Adjusted
EBITDA
|
|
$
|
505,645
|
|
$
|
588,070
|
|
$
|
1,423,725
|
|
$
|
1,657,005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As % of
revenues
|
|
|
31.7 %
|
|
|
31.3 %
|
|
|
31.4 %
|
|
|
31.0 %
|
(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
September 30,
|
|
Nine months
ended
September 30,
|
|
|
2021
|
|
2022
|
|
2021
|
|
2022
|
Net cash provided by
operating activities
|
|
$
|
421,482
|
|
$
|
526,459
|
|
$
|
1,269,961
|
|
$
|
1,500,137
|
Less: Change in book
overdraft
|
|
|
(373)
|
|
|
(5,929)
|
|
|
(563)
|
|
|
(5,983)
|
Plus: Proceeds from
disposal of assets
|
|
|
2,204
|
|
|
6,447
|
|
|
10,109
|
|
|
23,341
|
Less: Capital
expenditures for property and equipment
|
|
|
(208,089)
|
|
|
(246,885)
|
|
|
(479,480)
|
|
|
(618,313)
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
Payment of
contingent consideration recorded in
earnings(a)
|
|
|
-
|
|
|
2,982
|
|
|
520
|
|
|
2,982
|
Cash received for
divestitures(b)
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(5,671)
|
Transaction-related
expenses(c)
|
|
|
25,090
|
|
|
10,461
|
|
|
25,673
|
|
|
37,558
|
Pre-existing
Progressive Waste share-based grants(d)
|
|
|
173
|
|
|
274
|
|
|
317
|
|
|
286
|
Tax
effect(e)
|
|
|
(485)
|
|
|
(3,212)
|
|
|
(699)
|
|
|
(5,377)
|
Adjusted free cash
flow
|
|
$
|
240,002
|
|
$
|
290,597
|
|
$
|
825,838
|
|
$
|
928,960
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As % of
revenues
|
|
|
15.0 %
|
|
|
15.5 %
|
|
|
18.2 %
|
|
|
17.4 %
|
(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
September 30,
|
|
Nine months
ended
September 30,
|
|
|
|
2021
|
|
2022
|
|
2021
|
|
2022
|
|
Reported net income
attributable to Waste Connections
|
|
$
|
114,381
|
|
$
|
236,912
|
|
$
|
451,736
|
|
$
|
641,310
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of
intangibles(a)
|
|
|
35,337
|
|
|
38,859
|
|
|
100,237
|
|
|
113,956
|
|
Impairments and other
operating items(b)
|
|
|
3,104
|
|
|
13,438
|
|
|
9,819
|
|
|
19,467
|
|
Transaction-related
expenses(c)
|
|
|
5,637
|
|
|
10,461
|
|
|
6,220
|
|
|
18,694
|
|
Fair value changes to
equity awards(d)
|
|
|
914
|
|
|
1,196
|
|
|
7,638
|
|
|
349
|
|
Loss on early
extinguishment of debt(e)
|
|
|
115,288
|
|
|
-
|
|
|
115,288
|
|
|
-
|
|
Tax
effect(f)
|
|
|
(41,531)
|
|
|
(15,944)
|
|
|
(61,466)
|
|
|
(38,260)
|
|
Adjusted net income
attributable to Waste Connections
|
|
$
|
233,130
|
|
$
|
284,922
|
|
$
|
629,472
|
|
$
|
755,516
|
|
Diluted earnings per
common share attributable to Waste Connections' common
shareholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported net
income
|
|
$
|
0.44
|
|
$
|
0.92
|
|
$
|
1.72
|
|
$
|
2.49
|
|
Adjusted net
income
|
|
$
|
0.89
|
|
$
|
1.10
|
|
$
|
2.39
|
|
$
|
2.93
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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)
|
Reflects the make-whole
premium and related fees associated with the early termination of
$1.5 billion in senior notes.
|
(f)
|
The aggregate tax
effect of the adjustments in footnotes (a) through (e) is
calculated based on the applied tax rates for the respective
periods.
|
UPDATED 2022 OUTLOOK
NON-GAAP
RECONCILIATION SCHEDULE
(in thousands of U.S. dollars,
except where noted)
Reconciliation of
Adjusted EBITDA:
|
|
|
|
|
|
|
|
|
|
|
|
|
Updated 2022
Outlook
|
|
|
August
Estimates
|
|
Current
Estimates
|
|
Observation
|
Net income attributable
to Waste Connections
|
$
|
837,500
|
|
$
|
836,700
|
|
|
|
|
Plus: Income tax provision (a)
|
|
232,973
|
|
|
209,763
|
|
|
Approximate 20%
effective rate
|
|
Plus: Interest expense, net
|
|
180,000
|
|
|
197,000
|
|
|
|
|
Plus: Depreciation and Depletion
|
|
752,000
|
|
|
758,000
|
|
|
Approximately 10.5% of
revenue
|
|
Plus: Amortization
|
|
152,000
|
|
|
156,000
|
|
|
|
|
Plus: Closure and post-closure accretion
|
|
16,000
|
|
|
16,400
|
|
|
|
|
Plus: Impairments and other operating items (b)
|
|
6,028
|
|
|
19,467
|
|
|
|
|
Plus: Other income, net (b)
|
|
6,114
|
|
|
(2,373)
|
|
|
|
|
Adjustments: (b)
|
|
|
|
|
|
|
|
|
|
Plus:
Transaction-related expenses
|
|
8,232
|
|
|
18,694
|
|
|
|
|
Plus: Fair
value changes to equity awards
|
|
(847)
|
|
|
349
|
|
|
|
|
Adjusted
EBITDA
|
$
|
2,190,000
|
|
$
|
2,210,000
|
|
|
Approximately 30.7% of
revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Approximately 20.0%
full year effective tax rate, including amounts reported for the
nine-month period ended September 30, 2022.
|
(b)
|
Reflects amounts
reported for the nine-month period ended September 30, 2022, as
shown on page 9.
|
Reconciliation of Adjusted Free Cash Flow:
|
|
Updated 2022
Outlook
|
|
|
August
Estimates
|
|
Current
Estimates
|
Net cash provided by
operating activities
|
|
$
|
1,973,888
|
|
$
|
1,962,864
|
Less: Change in book
overdraft (a)
|
|
|
(54)
|
|
|
(5,983)
|
Plus: Proceeds from
disposal of assets (a)
|
|
|
16,894
|
|
|
23,341
|
Less: Capital
expenditures for property and
equipment
|
|
|
(850,000)
|
|
|
(850,000)
|
Adjustments:
(a)
|
|
|
|
|
|
|
Payment of contingent
consideration recorded in earnings
|
|
|
-
|
|
|
2,982
|
Cash received for
divestitures
|
|
|
(5,671)
|
|
|
(5,671)
|
Transaction-related expenses
|
|
|
27,096
|
|
|
37,558
|
Pre-existing Progressive Waste share-based grants
|
|
|
12
|
|
|
286
|
Tax
effect
|
|
|
(2,165)
|
|
|
(5,377)
|
Adjusted free cash
flow
|
|
$
|
1,160,000
|
|
$
|
1,160,000
|
|
|
|
|
|
|
|
As % of
revenues
|
|
|
16.3 %
|
|
|
16.1 %
|
________________________________
|
(a)
|
Reflects amounts
reported for the nine-month period ended September 30, 2022, as
shown on page 10.
|
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SOURCE Waste Connections, Inc.