GFL Environmental Reports First Quarter 2023 Results
- Organic revenue growth of
14.6% results in revenue of$1,799.1 million 28.4% - Solid Waste price of
12.6% , highest in company history - Adjusted EBITDA1 of
$440.5 million 24.3% ; Net loss from continuing operations of$217.8 million $28.7 million - Adjusted Cash Flows from Operating Activities1 of
$209.6 million $192.5 million $(54.8) million - Adjusted earnings per share from continuing operations1 of
$0.08 $(0.66) - Completed acquisitions generating approximately
$45 million
"I am extremely proud of the hard work and commitment of our over 20,000 employees, as we had yet another exceptional start to the year," said
"We continue to focus on the rationalization of our portfolio of assets in order to maximize return on invested capital. Since we reported our year end results, we entered into definitive agreements to sell the previously identified three non-core distinct
First Quarter Results
- Revenue increased by
28.4% to$1,799.1 million - Solid Waste revenue of
$1,482.2 million 12.5% driven predominantly by core pricing and surcharge increases and higher volumes across our collection and post collection operations. - Environmental Services revenue of
$316.9 million 25.4% driven by the strength of industrial collection and processing activity at our facilities and by core pricing and surcharge increases. - Adjusted EBITDA1 increased by
24.3% to$440.5 million 24.5% in the first quarter of 2023, compared to25.3% in the first quarter of 2022. Solid Waste Adjusted EBITDA margin1 was29.5% in the first quarter of 2023, compared to29.9% in the first quarter of 2022. - Net loss from continuing operations was
$217.8 million $137.0 million - Adjusted Free Cash Flow1 was
$(54.8) million $118.6 million $173.4 million $155.6 million $64.8 million
______________________ | |
(1) | A non-IFRS measure; see accompanying Non-IFRS Reconciliation Schedule; see "Non-IFRS Measures" for an explanation of the composition of non-IFRS measures. |
(2) | Includes the expected contribution of acquisitions completed in 2023 (other than contribution from 2023 acquisitions previously reflected in the Company's 2023 full year guidance provided on |
Q1 2023 Earnings Call
GFL will host a conference call related to our first quarter earnings on
We encourage participants who will be dialing in to pre-register for the conference call using the following link: https://www.netroadshow.com/events/login?show=5fa54226&confId=48351. Callers who pre-register will be given a conference access code and PIN to gain immediate access to the call and bypass the live operator on the day of the call. Participants may pre-register at any time, including up to and after the call start time. For those unable to listen live, an audio replay of the call will be available until
About GFL
GFL, headquartered in
For more information, visit the GFL web site at gflenv.com. To subscribe for investor email alerts please visit investors.gflenv.com or click here.
Forward-Looking Information
This release includes certain "forward-looking statements" and "forward-looking information" (collectively, "forward-looking information") within the meaning of applicable
Forward-looking information is based on our opinions, estimates and assumptions that we considered appropriate and reasonable as of the date such information is stated, is subject to known and unknown risks, uncertainties, assumptions and other important factors that may cause the actual results, level of activity, performance or achievements to be materially different from those expressed or implied by such forward-looking information, including but not limited to certain assumptions set out herein; our ability to obtain and maintain existing financing on acceptable terms; our ability to source and execute on acquisitions on terms acceptable to us; our ability to find purchasers for non-core assets on terms acceptable to us; currency exchange and interest rates; commodity price fluctuations; our ability to implement price increases and surcharges; changes in waste volumes; labour, supply chain and transportation constraints; inflationary cost pressures; our ability to maintain a favourable working capital position; the impact of competition; the changes and trends in our industry or the global economy; changes in laws, rules, regulations, and global standards; and the duration and severity of the COVID-19 pandemic, including variants, and its impact on the economy, the North American financial markets, our operations, our M&A pipeline and our financial results. Other important factors that could materially affect our forward-looking information can be found in the "Risk Factors" section of GFL's annual information form for the year ended
Non-IFRS Measures
This release makes reference to certain non-IFRS measures. These measures are not recognized measures under IFRS and do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Accordingly, these measures should not be considered in isolation or as a substitute for analysis of our financial information reported under IFRS. Rather, these non-IFRS measures are used to provide investors with supplemental measures of our operating performance and thus highlight trends in our core business that may not otherwise be apparent when relying solely on IFRS measures. We also believe that securities analysts, investors and other interested parties frequently use non-IFRS measures in the evaluation of issuers. Our management also uses non-IFRS measures in order to facilitate operating performance comparisons from period to period, to prepare annual operating budgets and forecasts and to determine components of management compensation.
EBITDA represents, for the applicable period, net income (loss) from continuing operations plus (a) interest and other finance costs, plus (b) depreciation and amortization of property and equipment, landfill assets and intangible assets, less (c) the provision (recovery) for income taxes, in each case to the extent deducted or added to/from net income (loss) from continuing operations. We present EBITDA to assist readers in understanding the mathematical development of Adjusted EBITDA. Management does not use EBITDA as a financial performance metric.
Adjusted EBITDA is a supplemental measure used by management and other users of our financial statements including our lenders and investors, to assess the financial performance of our business without regard to financing methods or capital structure. Adjusted EBITDA is also a key metric that management uses prior to execution of any strategic investing or financing opportunity. For example, management uses Adjusted EBITDA as a measure in determining the value of acquisitions, expansion opportunities and dispositions. In addition, Adjusted EBITDA is utilized by financial institutions to measure borrowing capacity. Adjusted EBITDA is calculated by adding and deducting, as applicable from EBITDA, certain expenses, costs, charges or benefits incurred in such period which in management's view are either not indicative of underlying business performance or impact the ability to assess the operating performance of our business, including: (a) (gain) loss on foreign exchange, (b) (gain) loss on sale of property and equipment, (c) mark-to-market (gain) loss on Purchase Contracts, (d) share of net income (loss) of investments accounted for using the equity method, (e) share-based payments, (f) gain (loss) on divestiture, (g) transaction costs and (h) acquisition, rebranding and other integration costs (included in cost of sales related to acquisition activity). We use Adjusted EBITDA to facilitate a comparison of our operating performance on a consistent basis reflecting factors and trends affecting our business. For the three months ended
Adjusted EBITDA margin represents Adjusted EBITDA divided by revenue. Management and other users of our financial statements including our lenders and investors use Adjusted EBITDA margin to facilitate a comparison of the operating performance of each of our operating segments on a consistent basis reflecting factors and trends affecting our business.
Acquisition EBITDA represents, for the applicable period, management's estimates of the annual Adjusted EBITDA of an acquired business, based on its most recently available historical financial information at the time of acquisition, as adjusted to give effect to (a) the elimination of expenses related to the prior owners and certain other costs and expenses that are not indicative of the underlying business performance, if any, as if such business had been acquired on the first day of such period ("Acquisition EBITDA Adjustments") and (b) contract and acquisition annualization for contracts entered into and acquisitions completed by such acquired business prior to our acquisition. Further adjustments are made to such annual Adjusted EBITDA to reflect estimated operating cost savings and synergies, if any, anticipated to be realized upon acquisition 4 and integration of the business into our operations. We use Acquisition EBITDA for the acquired businesses to adjust our Adjusted EBITDA to include a proportional amount of the Acquisition EBITDA of the acquired businesses based upon the respective number of months of operation for such period prior to the date of our acquisition of each such business.
Adjusted Cash Flows from Operating Activities represents cash flows from operating activities adjusted for (a) operating cash flows from discontinued operations, (b) transaction costs, (c) acquisition, rebranding and other integration costs, (d) M&A related net working capital investment and (e) cash interest paid on TEUs. Adjusted Cash Flows from Operating Activities is a supplemental measure used by investors as a valuation and liquidity measure in our industry. Adjusted Cash Flows from Operating Activities is a supplemental measure used by management to evaluate and monitor liquidity and the ongoing financial performance of GFL.
Adjusted Free Cash Flow represents Adjusted Cash Flows from Operating Activities adjusted for (a) proceeds from asset divestitures, (b) proceeds on disposal of assets, (c) purchase of property and equipment and intangible assets and (d) investment in joint ventures and associates. For the three months ended
Adjusted Net Income (Loss) from continuing operations represents net income (loss) for continuing operations adjusted for (a) amortization of intangible assets, (b) ARO discount rate depreciation adjustment, (c) incremental depreciation of property and equipment due to recapitalization, (d) amortization of deferred financing costs, (e) (gain) loss on foreign exchange, (f) mark-to-market (gain) loss on Purchase Contracts, (g) share of net income (loss) of investments accounted for using the equity method, (h) gain (loss) on divestiture, (i) transaction costs, (j) acquisition, rebranding and other integration costs, (k) TEU amortization expense and (l) the tax impact of the forgoing. For the three months ended
Net Leverage is a supplemental measure used by management to evaluate borrowing capacity and capital allocation strategies. Net Leverage is equal to our total long-term debt, as adjusted for fair value, deferred financings and other adjustments and reduced by our cash, divided by Run-Rate EBITDA.
Run-Rate EBITDA represents Adjusted EBITDA for the applicable period as adjusted to give effect to management's estimates of (a) Acquisition EBITDA Adjustments (as defined above) and (b) the impact of annualization of certain new municipal and disposal contracts and cost savings initiatives, entered into, commenced or implemented, as applicable, in such period, as if such contracts or costs savings initiatives had been entered into, commenced or implemented, as applicable, on the first day of such period. Run-Rate EBITDA has not been adjusted to take into account the impact of the cancellation of contracts and cost increases associated with these contracts. These adjustments reflect monthly allocations of Acquisition EBITDA for the acquired businesses based on straight line proration. As a result, these estimates do not take into account the seasonality of a particular acquired business. While we do not believe the seasonality of any one acquired business is material when aggregated with other acquired businesses, the estimates may result in a higher or lower adjustment to our Run-Rate EBITDA than would have resulted had we adjusted for the actual results of each of the acquired businesses for the period prior to our acquisition. We primarily use Run-Rate EBITDA to show how GFL would have performed if each of the interim acquisitions had been consummated at the start of the period as well as to show the impact of the annualization of certain new municipal and disposal contracts and cost savings initiatives. We also believe that Run-Rate EBITDA is useful to investors and creditors to monitor and evaluate our borrowing capacity and compliance with certain of our debt covenants. Run-Rate EBITDA as presented herein is calculated in accordance with the terms of our revolving credit agreement.
All references to "$" in this press release are to Canadian dollars, unless otherwise noted.
For further information:
+1 905-326-0101,
pdovigi@gflenv.com
Unaudited Interim Condensed Consolidated Statements of Operations and Comprehensive Loss
(In millions of dollars except per share amounts)
Three months ended | ||||
2023 | 2022 | |||
Revenue | $ 1,799.1 | $ 1,401.4 | ||
Expenses | ||||
Cost of sales | 1,554.6 | 1,265.6 | ||
Selling, general and administrative expenses | 214.5 | 162.7 | ||
Interest and other finance costs | 164.7 | 99.7 | ||
Loss (gain) on sale of property and equipment | 0.1 | (1.8) | ||
Loss (gain) on foreign exchange | 5.3 | (58.6) | ||
Mark-to-market loss (gain) on Purchase Contracts | 104.3 | (174.9) | ||
Gain on divestiture | (5.5) | (6.5) | ||
2,038.0 | 1,286.2 | |||
Share of net loss of investments accounted for using the equity method | (21.0) | — | ||
(Loss) earnings before income taxes | (259.9) | 115.2 | ||
Current income tax expense | 7.2 | 6.9 | ||
Deferred tax recovery | (49.3) | (28.7) | ||
Income tax recovery | (42.1) | (21.8) | ||
Net (loss) income from continuing operations | (217.8) | 137.0 | ||
Net loss from discontinued operations | — | (109.6) | ||
Net (loss) income | (217.8) | 27.4 | ||
Less: Net income attributable to non-controlling interests | 1.6 | — | ||
Net (loss) income attributable to | (219.4) | 27.4 | ||
Items that may be subsequently reclassified to net loss | ||||
Currency translation adjustment | (5.5) | (91.4) | ||
Fair value movements on cash flow hedges, net of tax | 7.4 | (22.4) | ||
Other comprehensive income (loss) from continuing operations | 1.9 | (113.8) | ||
Comprehensive (loss) income from continuing operations | (215.9) | 23.2 | ||
Comprehensive loss from discontinued operations | — | (109.6) | ||
Total comprehensive loss | (215.9) | (86.4) | ||
Less: Total comprehensive income attributable to non-controlling interests | 1.5 | — | ||
Total comprehensive loss attributable to | $ (217.4) | $ (86.4) | ||
Basic and diluted (loss) earnings per share | ||||
Continuing operations | $ (0.66) | $ 0.32 | ||
Discontinued operations | — | (0.30) | ||
Total operations | $ (0.66) | $ 0.02 | ||
Weighted and diluted weighted average number of shares outstanding(2) | 369,176,174 | 364,035,921 | ||
Diluted weighted average number of shares outstanding(2) | 369,176,174 | 366,549,527 | ||
(1) | Basic and diluted loss per share is calculated on net loss adjusted for amounts attributable to preferred shareholders. Refer to Note 10 in our Interim Financial Statements. |
(2) | Basic and diluted loss per share includes the minimum conversion of TEUs into subordinate voting shares, which represented 25,659,880 subordinate voting shares as at |
Unaudited Interim Condensed Consolidated Statements of Financial Position
(In millions of dollars)
Assets | ||||
Cash | $ 73.0 | $ 82.1 | ||
Trade and other receivables, net | 1,021.6 | 1,118.1 | ||
Prepaid expenses and other assets | 202.4 | 182.9 | ||
Assets held for sale | 1,021.6 | — | ||
Current assets | 2,318.6 | 1,383.1 | ||
Property and equipment, net | 6,401.1 | 6,540.3 | ||
Intangible assets, net | 3,125.8 | 3,245.0 | ||
Investments accounted for using the equity method | 310.2 | 326.6 | ||
Other long-term assets | 71.2 | 90.2 | ||
7,603.3 | 8,182.4 | |||
Non-current assets | 17,511.6 | 18,384.5 | ||
Total assets | 19,830.2 | 19,767.6 | ||
Liabilities | ||||
Accounts payable and accrued liabilities | 1,380.0 | 1,557.7 | ||
Income taxes payable | 4.9 | — | ||
Long-term debt | 17.4 | 17.9 | ||
Lease obligations | 53.4 | 51.5 | ||
Due to related party | 5.8 | 9.3 | ||
Tangible equity units | — | 1,024.9 | ||
Landfill closure and post-closure obligations | 33.5 | 30.8 | ||
Liabilities held for sale | 54.5 | — | ||
Current liabilities | 1,549.5 | 2,692.1 | ||
Long-term debt | 9,554.7 | 9,248.9 | ||
Lease obligations | 324.9 | 327.3 | ||
Other long-term liabilities | 43.1 | 47.5 | ||
Due to related party | 5.8 | 8.7 | ||
Deferred income tax liabilities | 541.7 | 582.6 | ||
Landfill closure and post-closure obligations | 854.9 | 816.4 | ||
Non-current liabilities | 11,325.1 | 11,031.4 | ||
Total liabilities | 12,874.6 | 13,723.5 | ||
Shareholders' equity | ||||
Share capital | 9,754.1 | 8,640.3 | ||
Contributed surplus | 120.7 | 109.6 | ||
Deficit | (3,068.0) | (2,843.0) | ||
Accumulated other comprehensive income | 132.3 | 130.3 | ||
6,939.1 | 6,037.2 | |||
Non-controlling interests | 16.5 | 6.9 | ||
Total shareholders' equity | 6,955.6 | 6,044.1 | ||
Total liabilities and shareholders' equity | $ 19,830.2 | $ 19,767.6 |
GFL
Unaudited Interim Condensed Consolidated Statements of Cash Flows
(In millions of dollars)
Three months ended | ||||
2023 | 2022 | |||
Operating activities | ||||
Net (loss) income | $ (217.8) | $ 27.4 | ||
Adjustments for non-cash items | ||||
Depreciation of property and equipment | 239.8 | 231.7 | ||
Amortization of intangible assets | 138.8 | 125.7 | ||
Share of net loss of investments accounted for using the equity method | 21.0 | — | ||
Gain on divestiture | (5.5) | (6.5) | ||
Impairment related to discontinued operations | — | 109.8 | ||
Interest and other finance costs | 164.7 | 103.2 | ||
Share-based payments | 15.0 | 13.5 | ||
Loss on unrealized foreign exchange on long-term debt and TEUs | 6.1 | (58.7) | ||
Loss (gain) on sale of property and equipment | 0.1 | (1.8) | ||
Mark-to-market loss (gain) on Purchase Contracts | 104.3 | (174.9) | ||
Current income tax expense | 7.2 | 7.0 | ||
Deferred tax recovery | (49.3) | (30.6) | ||
Interest paid in cash on Amortizing Notes component of TEUs | (0.2) | (0.7) | ||
Interest paid in cash, excluding interest paid on Amortizing Notes | (161.0) | (96.2) | ||
Income taxes paid in cash, net | (2.0) | (0.4) | ||
Changes in non-cash working capital items | (65.8) | (69.6) | ||
Landfill closure and post-closure expenditures | (2.9) | (2.9) | ||
192.5 | 176.0 | |||
Investing activities | ||||
Proceeds on disposal of assets | 13.2 | 91.9 | ||
Purchase of property and equipment and intangible assets | (272.9) | (203.2) | ||
Investment in joint ventures and associates | (4.7) | (12.2) | ||
Business acquisitions, net of cash acquired | (217.3) | (67.1) | ||
(481.7) | (190.6) | |||
Financing activities | ||||
Repayment of lease obligations | (17.8) | (16.6) | ||
Issuance of long-term debt | 877.8 | 238.5 | ||
Repayment of long-term debt | (554.3) | (166.9) | ||
Proceeds from termination of hedged arrangements | 17.3 | — | ||
Payment of contingent purchase consideration and holdbacks | (2.5) | (10.2) | ||
Repayment of Amortizing Notes | (15.7) | (14.0) | ||
Dividends issued and paid | (5.6) | (4.7) | ||
Payment of financing costs | (14.1) | (0.1) | ||
Repayment of loan to related party | (6.4) | (6.4) | ||
Contribution from non-controlling interest | 8.1 | — | ||
286.8 | 19.6 | |||
(Decrease) increase in cash | (2.4) | 5.0 | ||
Changes due to foreign exchange revaluation of cash | (6.7) | (6.1) | ||
Cash, beginning of period | 82.1 | 190.4 | ||
Cash, end of period | $ 73.0 | $ 189.3 | ||
SUPPLEMENTAL DATA
You should read the following information in conjunction with our audited consolidated financial statements and notes thereto as of and for the year ended
Revenue Growth
The following table summarizes the revenue growth in our segments for the period indicated:
Three months ended | ||||||||
Contribution from Acquisitions | Organic Growth | Foreign Exchange | Total Revenue Growth | |||||
Solid Waste | ||||||||
5.0 % | 11.0 % | — % | 15.9 % | |||||
10.6 | 13.2 | 7.6 | 31.4 | |||||
Solid Waste | 8.9 | 12.5 | 5.3 | 26.7 | ||||
Environmental Services | 9.7 | 25.4 | 1.8 | 36.8 | ||||
Total | 9.0 % | 14.6 % | 4.7 % | 28.4 % | ||||
Detail of Solid Waste Organic Growth
The following table summarizes the components of our Solid Waste organic growth for the period indicated:
Three months ended | ||||
Price | 12.6 % | |||
Surcharges | 0.5 | |||
Volume | 0.7 | |||
Commodity price | (1.4) | |||
Total Solid Waste organic growth | 12.5 % |
Operating Segment Results
The following table summarizes our operating segment results for the periods indicated:
Three months ended | Three months ended | |||||||||||
($ millions) | Revenue | Adjusted EBITDA(1) | Adjusted | Revenue | Adjusted EBITDA(1) | Adjusted | ||||||
Solid Waste | ||||||||||||
$ 412.5 | $ 101.5 | 24.6 % | $ 355.7 | $ 93.7 | 26.3 % | |||||||
1,069.7 | 335.5 | 31.4 | 814.0 | 256.0 | 31.4 | |||||||
Solid Waste | 1,482.2 | 437.0 | 29.5 | 1,169.7 | 349.7 | 29.9 | ||||||
Environmental Services | 316.9 | 60.7 | 19.2 | 231.7 | 46.4 | 20.0 | ||||||
Corporate | — | (57.2) | — | — | (41.7) | — | ||||||
Total | $ 1,799.1 | $ 440.5 | 24.5 % | $ 1,401.4 | $ 354.4 | 25.3 % | ||||||
(1) A non-IFRS measure; see accompanying Non-IFRS Reconciliation Schedule; see "Non-IFRS Measures" for an explanation of the composition of non-IFRS measures. |
(2) See "Non-IFRS Measures" for an explanation of the composition of non-IFRS measures. |
Net Leverage
The following table presents the calculation of Net Leverage as at the dates indicated:
($ millions) | ||||
Total long-term debt, net of derivative asset(1) | $ 9,533.6 | $ 9,208.5 | ||
Deferred finance costs and other adjustments | (36.0) | (43.5) | ||
Total long-term debt excluding deferred finance costs and other adjustments | $ 9,569.6 | $ 9,252.0 | ||
Less: cash | (73.0) | (82.1) | ||
9,496.6 | 9,169.9 | |||
Trailing twelve months Adjusted EBITDA(2) | 1,806.9 | 1,720.8 | ||
Acquisition EBITDA Adjustments(3) | 102.5 | 106.0 | ||
Run-Rate EBITDA(3) | $ 1,909.4 | $ 1,826.8 | ||
Net Leverage(2) | 4.97x | 5.02x |
(1) | Total long-term debt includes derivative asset reclassified for financial statement presentation purposes to other long-term assets, refer to Note 7 in our audited consolidated financial statements. |
(2) | A non-IFRS measure; see accompanying Non-IFRS Reconciliation Schedule; see "Non-IFRS Measures" for an explanation of the composition of non-IFRS measures. |
(3) | See "Non-IFRS Measures" for an explanation of the composition of non-IFRS measures and ratios. |
Shares Outstanding
The following table presents the total shares outstanding as at the date indicated:
Subordinate voting shares | 357,340,187 | |
Multiple voting shares | 11,812,964 | |
Basic shares outstanding | 369,153,151 | |
Effect of dilutive instruments | 4,941,223 | |
Series A Preferred Shares (as converted) | 28,331,407 | |
Series B Preferred Shares (as converted) | 7,377,978 | |
Diluted shares outstanding | 409,803,759 |
NON-IFRS RECONCILIATION SCHEDULE
Adjusted EBITDA
The following table provides a reconciliation of our net (loss) income from continuing operations to EBITDA and Adjusted EBITDA for the periods indicated:
($ millions) | Three months ended | Three months ended | ||
Net (loss) income from continuing operations | $ (217.8) | $ 137.0 | ||
Add: | ||||
Interest and other finance costs | 164.7 | 99.7 | ||
Depreciation of property and equipment | 239.8 | 227.0 | ||
Amortization of intangible assets | 138.8 | 124.5 | ||
Income tax recovery | (42.1) | (21.8) | ||
EBITDA | 283.4 | 566.4 | ||
Add: | ||||
Loss (gain) on foreign exchange(1) | 5.3 | (58.6) | ||
Loss (gain) on sale of property and equipment | 0.1 | (1.8) | ||
Mark-to-market loss (gain) on Purchase Contracts(2) | 104.3 | (174.9) | ||
Share of net loss of investments accounted for using the equity method | 21.0 | — | ||
Share-based payments(3) | 15.0 | 11.8 | ||
Gain on divestiture(4) | (5.5) | (6.5) | ||
Transaction costs(5) | 12.0 | 11.9 | ||
Acquisition, rebranding and other integration costs(6) | 4.9 | 6.1 | ||
Adjusted EBITDA | $ 440.5 | $ 354.4 |
(1) | Consists of (i) non-cash gains and losses on foreign exchange and interest rate swaps entered into in connection with our debt instruments and (ii) gains and losses attributable to foreign exchange rate fluctuations. |
(2) | This is a non-cash item that consists of the fair value "mark-to-market" adjustment on the Purchase Contracts. |
(3) | This is a non-cash item and consists of the amortization of the estimated fair value of share-based options granted to certain members of management under share-based option plans. |
(4) | Consists of gain resulting from the divestiture of certain assets. |
(5) | Consists of acquisition, integration and other costs such as legal, consulting and other fees and expenses incurred in respect of acquisitions and financing activities completed during the applicable period. We expect to incur similar costs in connection with other acquisitions in the future and, under IFRS, such costs relating to acquisitions are expensed as incurred and not capitalized. This is part of SG&A. |
(6) | Consists of costs related to the rebranding of equipment acquired through business acquisitions. We expect to incur similar costs in connection with other acquisitions in the future. This is part of cost of sales. |
Adjusted Net Income from Continuing Operations
The following table provides a reconciliation of our net (loss) income from continuing operations to Adjusted Net Income from continuing operations for the periods indicated:
($ millions) | Three months ended | Three months ended | ||
Net (loss) income from continuing operations | $ (217.8) | $ 137.0 | ||
Add: | ||||
Amortization of intangible assets(1) | 138.8 | 124.5 | ||
ARO discount rate depreciation adjustment(2) | — | 2.4 | ||
Incremental depreciation of property and equipment due to recapitalization | 4.5 | 4.5 | ||
Amortization of deferred financing costs | 5.3 | 2.9 | ||
Loss (gain) on foreign exchange(3) | 5.3 | (58.6) | ||
Mark-to-market loss (gain) on Purchase Contracts(4) | 104.3 | (174.9) | ||
Share of net loss of investments accounted for using the equity method | 21.0 | — | ||
Gain on divestiture(5) | (5.5) | (6.5) | ||
Transaction costs(6) | 12.0 | 11.9 | ||
Acquisition, rebranding and other integration costs(7) | 4.9 | 6.1 | ||
TEU amortization expense | 0.1 | 0.3 | ||
Tax effect(8) | (44.2) | (27.2) | ||
Adjusted Net Income from continuing operations | $ 28.7 | $ 22.4 | ||
Adjusted earnings per share from continuing operations, basic and diluted | $ 0.08 | $ 0.06 |
(1) | This is a non-cash item and consists of the amortization of intangible assets such as customer lists, municipal contracts, non-compete agreements, trade name and other licenses. |
(2) | This is a non-cash item and consists of depreciation expense related to the difference between the ARO calculated using the credit adjusted risk-free discount rate required for measurement of the ARO through purchase accounting compared to the risk-free discount rate required for quarterly valuations. |
(3) | Consists of (i) non-cash gains and losses on foreign exchange and interest rate swaps entered into in connection with our debt instruments and (ii) gains and losses attributable to foreign exchange rate fluctuations. |
(4) | This is a non-cash item that consists of the fair value "mark-to-market" adjustment on the Purchase Contracts. |
(5) | Consists of gain resulting from the divestiture of certain assets. |
(6) | Consists of acquisition, integration and other costs such as legal, consulting and other fees and expenses incurred in respect of acquisitions and financing activities completed during the applicable period. We expect to incur similar costs in connection with other acquisitions in the future and, under IFRS, such costs relating to acquisitions are expensed as incurred and not capitalized. This is part of SG&A. |
(7) | Consists of costs related to the rebranding of equipment acquired through business acquisitions. We expect to incur similar costs in connection with other acquisitions in the future. This is part of cost of sales. |
(8) | Consists of the tax effect of the adjustments to net loss (income) from continuing operations. |
Adjusted Cash Flows from Operating Activities and Adjusted Free Cash Flow
The following table provides a reconciliation of our cash flows from operating activities to Adjusted Cash Flows from Operating Activities and Adjusted Free Cash Flow for the periods indicated:
($ millions) | Three months ended | Three months ended | ||
Cash flows from operating activities | $ 192.5 | $ 176.0 | ||
Less: | ||||
Operating cash flows from discontinued operations(1) | — | 35.4 | ||
Cash flows from operating activities (excluding discontinued operations) | 192.5 | 211.4 | ||
Add: | ||||
Transaction costs(2) | 12.0 | 11.9 | ||
Acquisition, rebranding and other integration costs(3) | 4.9 | 6.1 | ||
M&A related net working capital investment(4) | — | 4.8 | ||
Cash interest paid on TEUs(5) | 0.2 | 0.7 | ||
Adjusted Cash Flows from Operating Activities | 209.6 | 234.9 | ||
Add: | ||||
Proceeds from asset divestitures(6) | 10.2 | 85.8 | ||
Proceeds on disposal of assets | 3.0 | 6.1 | ||
Purchase of property and equipment and intangible assets(7) | (272.9) | (196.0) | ||
Adjusted Free Cash Flow (excluding investment in joint ventures and associates) | (50.1) | 130.8 | ||
Add: | ||||
Investment in joint ventures and associates(8) | (4.7) | (12.2) | ||
Adjusted Free Cash Flow | $ (54.8) | $ 118.6 |
(1) | Consists of operating cash flows from discontinued operations. As at |
(2) | Consists of acquisition, integration and other costs such as legal, consulting and other fees and expenses incurred in respect of acquisitions and financing activities completed during the applicable period. We expect to incur similar cots in connection with other acquisitions in the future, and, under IFRS, such costs relating to acquisitions are expensed as incurred and not capitalized. This is part of SG&A. |
(3) | Consists of costs related to the rebranding of equipment acquired through business acquisitions. We expect to incur similar costs in connection with other acquisitions in the future. This is part of cost of sales. |
(4) | Consists of net non-cash working capital in the period in relation to acquisitions. |
(5) | Consists of interest paid in cash on the Amortizing Notes. |
(6) | Consists of proceeds from divestitures. |
(7) | Excludes purchase of property and equipment and intangible assets for GFL Infrastructure, which was presented as discontinued operations, of $nil for the three months ended |
(8) | Consists of initial capital investment for the development and construction of renewable natural gas facilities operated as joint ventures. |
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