Waste Connections Reports Second Quarter 2017 Results And Raises Full Year Outlook

-    Revenue of $1.176 billion, exceeding outlook

-    Reports 5.1% solid waste price + volume growth

-    Net income attributable to Waste Connections of $123.7 million, or $0.47 per share

-    Adjusted net income attributable to Waste Connections* of $145.5 million, or $0.55 per share, up 25%

-    Adjusted EBITDA* of $373.6 million, or 31.8% of revenue, exceeding outlook

-    YTD net cash provided by operating activities of $551.9 million

-    YTD adjusted free cash flow* of $393.6 million, or 17.4% of revenue

TORONTO, July 25, 2017 /CNW/ -- Waste Connections, Inc. (TSX/NYSE: WCN) ("Waste Connections" or the "Company") today announced its results for the second quarter of 2017.  Revenue in the second quarter totaled $1.176 billion, up from $727.6 million in the year ago period.  Revenue from the Progressive Waste acquisition completed on June 1, 2016, was $511.4 million and $174.0 million in the current year and prior year periods, respectively.  Operating income, which included $7.4 million in charges primarily related to share-based compensation costs associated with share-based awards assumed in the Progressive Waste acquisition, was $206.9 million.  This compares to operating income of $63.5 million in the second quarter of 2016, which included $73.2 million of items primarily related to the Progressive Waste acquisition completed in that period.

Net income attributable to Waste Connections in the second quarter was $123.7 million, or $0.47 per share on a diluted basis of 264.1 million shares.  In the year ago period, the Company reported net income attributable to Waste Connections of $27.5 million, or $0.13 per share on a diluted basis of 210.9 million shares.  Shares and per share numbers reflect a three-for-two share split completed in June 2017.

Adjusted net income attributable to Waste Connections* in the second quarter was $145.5 million, or $0.55 per share, versus $93.2 million, or $0.44 per share, in the prior year period.  Adjusted EBITDA* in the second quarter was $373.6 million, as compared to adjusted EBITDA* of $233.6 million in the prior year period.  Adjusted net income attributable to Waste Connections, adjusted net income attributable to Waste Connections per diluted share and adjusted EBITDA, all non-GAAP measures, primarily exclude the impact of acquisition-related items, as reflected in the detailed reconciliation in the attached tables.

"Continued strength in solid waste volumes, recycled commodity prices and E&P waste activity enabled us to once again exceed our outlook for the quarter.  Given our strong results in the first half of the year and expected continuing momentum from these trends, we believe we are on track to report approximately $1.45 billion of adjusted EBITDA in 2017, exceeding our initial outlook provided in February," said Ronald J. Mittelstaedt, Chairman and Chief Executive Officer.  "More importantly, full year adjusted free cash flow, now estimated at approximately $750 million, or almost 52% of adjusted EBITDA, is also pacing ahead of initial expectations."

Mr. Mittelstaedt added, "We are pleased to report that our divestiture program is nearing completion, with the expected benefits greater than initially anticipated.  Moreover, we are encouraged by our progress on potential acquisitions, for which we could fully utilize existing cash and projected excess cash flow over the next few quarters.  In addition to funding potentially above average acquisition activity, our strong financial profile also positions us for another double-digit percentage increase in our quarterly dividend in October."

* A non-GAAP measure; see accompanying Non-GAAP Reconciliation Schedule.

For the six months ended June 30, 2017, revenue was $2.267 billion, as compared to revenue of $1.242 billion in the year ago period.  Operating income, which included $159.0 million of expenses primarily related to both goodwill impairment against the Company's E&P segment resulting from the early adoption of FASB's recent accounting pronouncement simplifying the test for goodwill impairment and items related to the expected divestiture of certain assets acquired in the Progressive Waste acquisition, was $233.3 million, compared to $154.5 million for the same period in 2016, which included $82.0 million of costs primarily related to the Progressive Waste acquisition completed in that period.

Net income attributable to Waste Connections for the six months ended June 30, 2017, was $138.5 million, or $0.52 per share on a diluted basis of 264.0 million shares.  In the year ago period, the Company reported net income attributable to Waste Connections of $72.3 million, or $0.37 per share on a diluted basis of 198.0 million shares. 

Adjusted net income attributable to Waste Connections* for the six months ended June 30, 2017, was $275.5 million, or $1.04 per share, compared to $148.4 million, or $0.75 per share, in the year ago period. Adjusted EBITDA* for the six months ended June 30, 2017, was $706.4 million, as compared to $403.3 million in the prior year period. 

UPDATED 2017 OUTLOOK

Waste Connections also updated its outlook for 2017, which assumes no change in the current economic environment.  The Company's outlook excludes any impact from additional divestitures and 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 2017 are subject to quarterly fluctuations.  See reconciliation in the attached tables.

  • Revenue is estimated to be approximately $4.570 billion, as compared to our original revenue outlook of approximately $4.450 billion.
  • Net income is estimated to be approximately $390 million and adjusted EBITDA* is estimated to be approximately $1.450 billion, or about 31.7% of revenue, as compared to our original adjusted EBITDA* outlook of $1.410 billion.
  • Net cash provided by operating activities is estimated to be approximately $1.186 billion and adjusted free cash flow* is estimated to be approximately $750 million, or about 16.4% of revenue, as compared to our original adjusted free cash flow* outlook of approximately $725 million.

* A non-GAAP measure; see accompanying Non-GAAP Reconciliation Schedule. 

CONFERENCE CALL

Waste Connections will be hosting a conference call related to second quarter earnings on July 26th at 8:30 A.M. Eastern Time.  The call will be broadcast live over the Internet through a link on the Company's website at www.wasteconnections.com.  A playback of the call will be available on the Company's website.

About Waste Connections

Waste Connections is an integrated solid waste services company that provides waste collection, transfer, disposal and recycling services in mostly exclusive and secondary markets in the United States and Canada.  Through its R360 Environmental Solutions subsidiary, Waste Connections is also a leading provider of non-hazardous oilfield waste treatment, recovery and disposal services in several of the most active natural resource producing areas in the United States, including the Permian, Bakken and Eagle Ford Basins.  Waste Connections serves more than six million residential, commercial, industrial, and exploration and production customers in 39 states in the U.S., and five provinces in Canada.  The Company also provides intermodal services for the movement of cargo and solid waste containers in the Pacific Northwest. 

For more information, visit the Waste Connections web site at www.wasteconnections.com.  Copies of financial literature, including this release, are available on the Waste Connections website or through contacting us directly at (905) 532-7510.  Investors can also obtain these materials and other documents filed with the U.S. Securities and Exchange Commission (SEC) and the Canadian securities regulators free of charge at the SEC's website, www.sec.gov, and at the System for Electronic Document Analysis and Retrieval (SEDAR) maintained by the Canadian Securities Administrators at www.sedar.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) and "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," "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 2017 financial results, adjusted free cash flow, outlook and related assumptions, potential operating trends, expected benefits of the divestiture program, potential acquisition activity, and a potential dividend increase. 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 filings that have been made by the Company with the U.S. Securities and Exchange Commission 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:




Worthing Jackman / (832) 442-2266

Mary Anne Whitney / (832) 442-2253

worthingj@wasteconnections.com 

maryannew@wasteconnections.com

 

WASTE CONNECTIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF NET INCOME

THREE AND SIX MONTHS ENDED JUNE 30, 2016 AND 2017

(Unaudited)

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



Three months ended

June 30,


Six months ended

June 30,


2016


2017


2016


2017









Revenues

$    727,639


$ 1,175,569


$ 1,242,319


$ 2,266,835

Operating expenses:








Cost of operations

416,262


685,900


703,453


1,329,281

Selling, general and administrative

152,737


126,350


220,419


255,400

Depreciation

84,348


132,827


145,245


258,067

Amortization of intangibles

14,081


24,762


21,775


50,272

Impairments and other operating items

(3,284)


(1,180)


(3,048)


140,501

Operating income

63,495


206,910


154,475


233,314









Interest expense

(20,485)


(31,160)


(37,670)


(60,291)

Other income (expense), net

(714)


1,860


(492)


3,326

Foreign currency transaction gain (loss)

689


(1,048)


689


(1,638)

Income before income tax provision

42,985


176,562


117,002


174,711









Income tax provision

(15,265)


(52,675)


(44,265)


(35,804)

Net income

27,720


123,887


72,737


138,907

Less: net income attributable to noncontrolling   interests

 

(231)


 

(231)


 

(406)


 

(377)

Net income attributable to Waste Connections

$      27,489


$     123,656


$     72,331


$     138,530









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








Basic

$          0.13


$          0.47


$          0.37


$          0.53









Diluted

$          0.13


$          0.47


$           0.37


$           0.52









Shares used in the per share calculations:








Basic

210,305,335


263,387,338


197,244,873


263,225,541

Diluted

210,880,732


264,109,594


198,036,792


264,007,307









Cash dividends per common share

$       0.097


$       0.12


$          0.193


$          0.24

 


WASTE CONNECTIONS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

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




December 31,
2016


June 30,
2017

ASSETS





Current assets:





Cash and equivalents


$

154,382


$

399,741

Accounts receivable, net of allowance for doubtful accounts of $13,160 and $14,947 at December 31, 2016 and June 30, 2017, respectively



485,138



547,671

Current assets held for sale



6,339



8,731

Prepaid expenses and other current assets



97,533



93,053

Total current assets



743,392



1,049,196








Property and equipment, net



4,738,055



4,729,335

Goodwill



4,390,261



4,589,573

Intangible assets, net



1,067,158



1,083,787

Restricted assets



63,406



60,393

Long-term assets held for sale



33,989



79,448

Other assets, net



67,664



63,631



$

11,103,925


$

11,655,363

LIABILITIES AND EQUITY







Current liabilities:







Accounts payable


$

251,253


$

239,150

Book overdraft



10,955



30,585

Accrued liabilities



269,402



270,621

Deferred revenue



134,081



140,070

Current portion of contingent consideration



21,453



27,097

Current liabilities held for sale



3,383



6,365

Current portion of long-term debt and notes payable



1,650



11,511

      Total current liabilities



692,177



725,399








Long-term debt and notes payable



3,616,760



3,963,909

Long-term portion of contingent consideration



30,373



31,218

Long-term liabilities held for sale



-



463

Other long-term liabilities



331,074



304,179

Deferred income taxes



778,664



822,209

      Total liabilities



5,449,048



5,847,377








Equity:







Common shares: 263,140,777 shares issued and 262,803,380 shares outstanding at December 31, 2016; 263,637,093 shares issued and 263,425,440 shares outstanding at June 30, 2017



4,174,808



4,184,489

Additional paid-in capital



102,220



102,479

Accumulated other comprehensive income (loss)



(43,001)



26,108

Treasury shares: 337,397 and 211,653 shares at December 31, 2016 and June 30, 2017, respectively



-



-

Retained earnings



1,413,488



1,487,171

      Total Waste Connections' equity



5,647,515



5,800,247

Noncontrolling interest in subsidiaries



7,362



7,739

      Total equity



5,654,877



5,807,986




$

11,103,925


$

11,655,363











 

WASTE CONNECTIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

SIX MONTHS ENDED JUNE 30, 2016 AND 2017

(Unaudited)

(in thousands of U.S. dollars)



Six months ended June 30,



2016



2017

Cash flows from operating activities:







Net income


$

72,737


$

138,907

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







Loss on disposal of assets and impairments



509



128,608

Depreciation



145,245



258,067

Amortization of intangibles



21,775



50,272

Foreign currency transaction (gain) loss



(689)



1,638

Deferred income taxes, net of acquisitions



25,363



(10,378)

Amortization of debt issuance costs



2,842



2,101

Share-based compensation



26,405



23,364

Interest income on restricted assets



(246)



(283)

Interest accretion



3,629



6,887

Excess tax benefit associated with equity-based compensation



(5,015)



-

Adjustments to contingent consideration



(2,495)



11,013

Payment of contingent consideration recorded in earnings



(132)



-

Net change in operating assets and liabilities, net of acquisitions



(30,282)



(58,290)

Net cash provided by operating activities



259,646



551,906








Cash flows from investing activities:







Payments for acquisitions, net of cash acquired



(12,541)



(347,936)

Cash acquired in the Progressive Waste acquisition



65,745



-

Capital expenditures for property and equipment



(112,087)



(202,617)

Proceeds from disposal of assets



1,560



20,617

Change in restricted assets, net of interest income



113



3,689

Other



(696)



(1,732)

Net cash used in investing activities



(57,906)



(527,979)








Cash flows from financing activities:







Proceeds from long-term debt



3,352,676



864,952

Principal payments on notes payable and long-term debt



(3,461,005)



(585,762)

Payment of contingent consideration recorded at acquisition date



(4,109)



(5,565)

Change in book overdraft



1,998



19,479

Proceeds from option and warrant exercises



-



1,946

Excess tax benefit associated with equity-based compensation



5,015



-

Payments for cash dividends



(35,585)



(63,463)

Tax withholdings related to net share settlements of restricted share units



(11,349)



(13,621)

Distributions to noncontrolling interests



(3)



-

Debt issuance costs



(12,941)



(3,519)

Proceeds from sale of common shares held in trust



8,436



7,735

Other



-



(1,094)

Net cash provided by (used in) financing activities



(156,867)



221,088

Effect of exchange rate changes on cash and equivalents



(223)



649

Net increase in cash and equivalents



44,650



245,664

Cash and equivalents at beginning of period



10,974



154,382

Less: change in cash held for sale



-



(305)

Cash and equivalents at end of period


$

55,624


$

399,741










 

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 June 30, 2017:                               



U.S.


Canada


Total

Core Price

3.0%


4.2%


3.1%

Surcharges

0.0%


0.2%


0.0%

Volume

2.4%


(2.4%)


2.0%

Recycling

1.0%


3.0%


1.1%

Foreign Exchange Impact

-


(3.0%)


(0.2%)

Total

6.4%


2.0%


6.0%








Revenue Breakdown: The following table reflects a breakdown of our revenue for the three month periods ended June 30, 2016 and 2017:


Three Months Ended June 30, 2016



Revenue



Inter-company Elimination



Reported

Revenue


%

Solid Waste Collection

$

502,948


$

(1,778)


$

501,170


68.9%

Solid Waste Disposal and Transfer


256,847



(96,815)



160,032


22.0%

Solid Waste Recycling


18,119



(1,393)



16,726


2.3%

E&P Waste Treatment, Recovery and Disposal


30,734



(3,253)



27,481


3.8%

Intermodal and Other


22,358



(128)



22,230


3.0%

Total

$

831,006


$

(103,367)


$

727,639


100.0%













Three Months Ended June 30, 2017



Revenue



Inter-company Elimination



Reported

Revenue


 

%

Solid Waste Collection

$

797,131


$

(2,392)


$

794,739


67.6%

Solid Waste Disposal and Transfer


416,176



(158,937)



257,239


21.9%

Solid Waste Recycling


43,693



(2,351)



41,342


3.5%

E&P Waste Treatment, Recovery and Disposal


50,043



(2,870)



47,173


4.0%

Intermodal and Other


35,432



(356)



35,076


3.0%

Total

$

1,342,475


$

(166,906)


$

1,175,569


100.0%












Contribution from Acquisitions: The following table reflects revenues from acquisitions, net of divestitures, for the three month periods ended June 30, 2016 and 2017:


Three months ended
June 30,


2016


2017

Solid waste, net

$

199,399


$

386,211

E&P waste


-



-


Acquisitions, net

$

199,399


$

386,211

 

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 six month periods ended June 30, 2016 and 2017:


Three months ended
June 30,



Six months ended
June 30,


2016


2017



2016


2017

Cash Interest Paid

$

19,736


$

32,301



$

35,993


$

54,603

Cash Taxes Paid


16,013



22,469




16,914



36,486

Debt to Book Capitalization as of June 30, 2017:  41%

Internalization for the three months ended June 30, 2017:  55%

Days Sales Outstanding for the three months ended June 30, 2017:  43 (32 net of deferred revenue)

Share Information for the three months ended June 30, 2017:

Basic shares outstanding

263,387,338

Dilutive effect of equity-based awards 

722,256

Diluted shares outstanding

264,109,594

 


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 net income attributable to noncontrolling interests, plus or minus income tax provision (benefit), plus interest expense, 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, plus foreign currency transaction loss, less foreign currency transaction gain.  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
June 30,


Six months ended
June 30,


2016


2017


2016


2017

Net Income attributable to Waste Connections

$

27,489


$

123,656


$

72,331


$

138,530

Plus: Net income attributable to noncontrolling interests


231



231



406



377

Plus: Income tax provision


15,265



52,675



44,265



35,804

Plus: Interest expense


20,485



31,160



37,670



60,291

Plus: Depreciation and amortization


98,429



157,589



167,020



308,339

Plus: Closure and post-closure accretion


1,758



2,917



2,874



5,835

Plus/less: Impairments and other operating items


(3,284)



(1,180)



(3,048)



140,501

Plus/less: Other expense (income), net


714



(1,860)



492



(3,326)

Plus/less: Foreign currency transaction loss/(gain)


(689)



1,048



(689)



1,638

Adjustments:












Plus: Transaction-related expenses (a)


37,702



715



46,516



2,459

Plus: Pre-existing Progressive Waste share-based grants (b)


5,357



4,103



5,357



10,578

Plus: Integration-related and other expenses (c)


30,122



2,594



30,122



5,422

Adjusted EBITDA

$

233,579


$

373,648


$

403,316


$

706,448













As % of revenues


32.1%



31.8%



32.5%



31.2%



























_______________________________________________

(a) Reflects the addback of acquisition-related transaction costs, which for 2016 primarily related to the Progressive Waste acquisition.

(b) Reflects share-based compensation costs, including changes in fair value, associated with share-based awards granted by Progressive Waste outstanding at the time of the Progressive Waste acquisition.

(c) Reflects the addback of rebranding costs and other integration-related items, including professional fees and severance costs, associated with the Progressive Waste acquisition.

 


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, plus excess tax benefit associated with equity-based compensation, 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
June 30,


Six months ended
June 30,



2016


2017


2016


2017

Net cash provided by operating activities


$

94,930


$

264,429


$

259,646


$

551,906

Plus/(Less): Change in book overdraft



2,149



(568)



1,998



19,479

Plus: Proceeds from disposal of assets



879



1,801



1,560



20,617

Plus: Excess tax benefit associated with equity-based compensation



581



-



5,015



-

Less: Capital expenditures for property and equipment



(55,512)



(111,412)



(112,087)



(202,617)

Less: Distributions to noncontrolling interests



-



-



(3)



-

Adjustments:













  Payment of contingent consideration recorded in earnings (a)



99



-



132



-

  Cash received for divestitures (b)



-



-



-



(17,400)

  Transaction-related expenses (c)



71,067



715



72,042



2,459

  Integration-related and other expenses (d)



24,529



2,282



24,529



5,110

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



-



1,570



-



11,915

  Synergy bonus (f)



-



-



-



11,798

  Tax effect (g)



(18,038)



(2,689)



(18,410)



(9,648)

Adjusted free cash flow


$

120,684


$

156,128


$

234,422


$

393,619














As % of revenues



16.6%



13.3%



18.9%



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 Progressive Waste operations.

(c) Reflects the addback of acquisition-related transaction costs, which for 2016 primarily related to the Progressive Waste acquisition.

(d) Reflects the addback of rebranding costs and other integration-related items associated with the Progressive Waste acquisition, including professional fees and severance costs.

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

(f) Reflects the addback of cash bonuses paid pursuant to the Company's Synergy Bonus Program adopted on July 19, 2016 in conjunction with the Progressive Waste acquisition.

(g) The aggregate tax effect of footnotes (a) through (f) 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 Net Income attributable to Waste Connections to 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
June 30,


Six months ended
June 30,


2016


2017


2016


2017

Reported net income attributable to Waste Connections

$

27,489


$

123,656


$

72,331


$

138,530

Adjustments:












Amortization of intangibles (a)


14,081



24,762



21,775



50,272

Impairments and other operating items (b)


(3,284)



(1,180)



(3,048)



140,501

Transaction-related expenses (c)


37,702



715



46,516



2,459

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


5,357



4,103



5,357



10,578

Integration-related and other expenses (e)


30,122



2,594



30,122



5,422

Tax effect (f)


(18,257)



(9,188)



(24,629)



(72,253)

Adjusted net income attributable to Waste Connections     

$

93,210


$

145,462


$

148,424


$

275,509

 

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












     Reported net income

$

0.13


$

0.47


$

0.37


$

0.52

Adjusted net income

$

0.44


$

0.55


$

0.75


$

1.04













_____________________________________________________

(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, which for 2016 primarily related to the Progressive Waste acquisition.

(d) Reflects share-based compensation costs, including changes in fair value, associated with share-based awards granted by Progressive Waste outstanding at the time of the Progressive Waste acquisition.

(e) Reflects the addback of rebranding costs and other integration-related items, including professional fees and severance costs, associated with the Progressive Waste acquisition.

(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 2017 OUTLOOK

NON-GAAP RECONCILIATION SCHEDULE

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


Reconciliation of Adjusted EBITDA:



Updated


2017 Outlook

Net Income attributable to Waste Connections

$

390,000

Plus: Net income attributable to noncontrolling interests


1,000

Plus: Income tax provision


141,000

Plus: Interest expense


125,000

Plus: Depreciation and amortization


624,000

Plus: Closure and post-closure accretion


12,000

Plus: Impairments and other operating items (a)


140,501

Less: Other income, net (a)


(3,326)

Plus: Foreign currency transaction loss (a)


1,638

Adjustments: (a)



Plus: Transaction-related expenses


2,459

Plus: Pre-existing Progressive Waste share-based grants


10,578

Plus: Integration-related and other expenses


5,422

Adjusted EBITDA

$

1,450,272




As % of revenues


31.7%




__________________________________________________

(a) Reflects amounts reported for the six month period ending on June 30, 2017, as shown on page 9.

 

Reconciliation of Adjusted Free Cash Flow:



Updated


2017 Outlook

Net cash provided by operating activities

 

$

1,185,500

Plus: Proceeds from disposal of assets (a)


20,617

Less: Capital expenditures for property and equipment


(460,000)

Adjustments: (a)



    Cash received for divestitures


(17,400)

    Integration-related and other expenses


5,110

    Transaction-related expenses


2,459

    Pre-existing Progressive Waste share-based grants


11,915

    Synergy Bonus


11,798

    Tax effect


(9,648)

Adjusted free cash flow

 

$

750,351




As % of revenues


16.4%




_________________________________________________

(a) Reflects amounts reported for the six month period ending on June 30, 2017, as shown on page 10.

 

View original content with multimedia:http://www.prnewswire.com/news-releases/waste-connections-reports-second-quarter-2017-results-and-raises-full-year-outlook-300493864.html

SOURCE Waste Connections, Inc.


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