WASTE CONNECTIONS REPORTS THIRD QUARTER 2022 RESULTS AND UPDATES FULL YEAR OUTLOOK
Waste Connections reported robust Q3 2022 results with revenue of $1.880 billion, a 17.7% increase year-over-year. Net income reached $236.9 million, translating to $0.92 per share. The company achieved an adjusted EBITDA of $588.1 million, a 16.3% rise, resulting in a 31.3% EBITDA margin. Year-to-date, operating cash flow hit $1.500 billion with $929 million in adjusted free cash flow. Additionally, a 10.9% dividend increase was announced. The outlook for 2022 remains positive with expectations for continued revenue growth and margin expansion.
- Revenue increased by 17.7% to $1.880 billion in Q3 2022.
- Adjusted EBITDA rose to $588.1 million, up 16.3% from the previous year.
- Net income of $236.9 million achieved, equating to $0.92 per diluted share.
- Year-to-date adjusted free cash flow reached $929 million, or 17.4% of revenue.
- 10.9% increase in quarterly dividend demonstrates strong financial health.
- Operating income included $25.1 million in impairments and transaction expenses.
- Increasing solid waste pricing growth, E&P waste activity and acquisition contribution once again drive better than expected quarterly results
- Revenue of
$1.88 0 billion, up17.7% - Net income(a) of
$236.9 million , and adjusted EBITDA(b) of$588.1 million , up16.3% - 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
$1.50 0 billion and adjusted free cash flow(b) of$929.0 million , or17.4% 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 /PRNewswire/ -- 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
Mr. Jackman added, "As anticipated, acquisition activity continues to run well above historical levels, with
"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
Adjusted net income(b) in the third quarter was
Nine Months Year to Date Results
For the nine months ended September 30, 2022, revenue was
Net income for the nine months ended September 30, 2022 was
Adjusted net income(b) for the nine months ended September 30, 2022 was
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
$7.19 0 billion, as compared to our previously revised revenue outlook of approximately$7.12 5 billion. - Net income is estimated to be approximately
$836.7 million , and adjusted EBITDA(b) is estimated to be approximately$2.21 0 billion, or about30.7% of revenue, as compared to our previously revised adjusted EBITDA(b) outlook of$2.19 0 billion or30.7% 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
$1.96 3 billion, and adjusted free cash flow(b) is estimated at approximately$1.16 0 billion, or about16.1% of revenue, as compared to our previously revised adjusted free cash flow(b) outlook of$1.16 0 billion or16.3% 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
(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 |
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 | Nine months ended | ||||||||||||
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 | |||||||||||||
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, | September 30, | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and equivalents | $ | 147,441 | $ | 200,179 | |||
Accounts receivable, net of allowance for credit losses of | 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 | 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, | - | - | |||||
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 | Reported | % | |||||||||
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 | Reported | % | |||||||||
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 | Nine months ended | |||||||||||||
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 | Nine months ended | |||||||||||
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:
Internalization for the three months ended September 30, 2022:
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 | Nine months ended | |||||||||||
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 | Nine months ended | |||||||||||
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 | Nine months ended | ||||||||||||
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 |
(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 |
Current | Observation | |||||||||||
Net income attributable to Waste Connections | $ | 837,500 | $ | 836,700 | |||||||||
Plus: Income tax provision (a) | 232,973 | 209,763 | Approximate | ||||||||||
Plus: Interest expense, net | 180,000 | 197,000 | |||||||||||
Plus: Depreciation and Depletion | 752,000 | 758,000 | Approximately | ||||||||||
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 | ||||||||
(a) | Approximately |
(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 | Current | |||||
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.
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