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8-K - FORM 8-K - Waste Connections US, Inc. | d490105d8k.htm |
Exhibit 99.1
WASTE CONNECTIONS REPORTS FOURTH QUARTER RESULTS AND PROVIDES 2013 OUTLOOK
| Q4 revenue of $448.8 million, up 18.2% |
| Q4 GAAP EPS of $0.29 and adjusted EPS* of $0.37 |
| Full year revenue of $1.66 billion, up 10.4% |
| Full year net cash provided by operating activities of $416.3 million |
| Full year adjusted free cash flow* of $275.8 million, or 16.6% of revenue |
| Expects double digit revenue, adjusted EPS and free cash flow growth in 2013 |
THE WOODLANDS, TX, February 20, 2013 - Waste Connections, Inc. (NYSE: WCN) today announced its results for the fourth quarter of 2012. Revenue totaled $448.8 million, an 18.2% increase over revenue of $379.8 million in the year ago period. Operating income was $80.2 million compared to $74.4 million in the fourth quarter of 2011. Adjusted operating income before depreciation and amortization* in the fourth quarter of 2012 was $142.3 million, or 31.7% of revenue, compared to $119.8 million, or 31.5% of revenue, in the prior year period. Adjusted operating income before depreciation and amortization, a non-GAAP measure, excludes the impact of items such as acquisition-related costs and expenses incurred in connection with the relocation of our corporate headquarters from California to Texas, as shown in the detailed reconciliation in the attached table.
Net income attributable to Waste Connections in the quarter was $36.0 million, or $0.29 per share on a diluted basis of 123.7 million shares. In the year ago period, the Company reported net income attributable to Waste Connections of $38.0 million, or $0.34 per share on a diluted basis of 112.4 million shares.
Adjusted net income attributable to Waste Connections* in the quarter was $45.9 million, or $0.37 per share, versus $42.1 million, or $0.37 per share, in the prior year period. Adjusted net income and adjusted net income per diluted share, both non-GAAP measures, primarily exclude the impact of acquisition-related items such as amortization of intangibles, transaction costs and adjustment to accrued deferred tax liabilities, as well as expenses incurred in connection with the relocation of our corporate headquarters from California to Texas, all net of tax, as shown in the detailed reconciliation in the attached table.
Better than expected pricing growth, disposal volumes and recycled commodity values enabled us to exceed the upper end of our fourth quarter outlook for solid waste. Revenue and margins within E&P waste, however, were hampered by a combination of the sector-wide slowdown in E&P activity during the quarter and incremental start-up costs at new facilities. More importantly, though, the strong cash flow characteristics of our strategy were evidenced as adjusted free cash flow* for the period exceeded our expectations and was $275.8 million, or 16.6% of revenue for the full year, said Ronald J. Mittelstaedt, Chairman and Chief Executive Officer. We remain cautiously optimistic about the current fundamentals for our business given the high retention rates weve realized from recently implemented core price increases. With more than $300 million of free cash flow expected in the upcoming year, we remain well positioned to fund additional growth opportunities, including acquisitions and potential newly permitted E&P waste facilities.
Mr. Mittelstaedt added, Our outlook for 2013 reflects double digit year-over-year growth in revenue, adjusted EPS and free cash flow. Weve initially incorporated a cautious approach within our outlook for the contribution from E&P waste as we wait to see how the expected ramp in activity plays out during the year, and note that year-over-year growth in GAAP EPS will be impacted by an almost 100 basis point increase in non-cash expenses as a percent of revenue resulting from acquisition-related accounting for the R360 transaction.
* | A non-GAAP measure; see accompanying Non-GAAP Reconciliation Schedule. |
For the year ended December 31, 2012, revenue was $1.66 billion, a 10.4% increase over revenue of $1.51 billion in the year ago period. Operating income was $316.1 million compared to $317.1 million in the prior year. Adjusted operating income before depreciation and amortization* in 2012 was $528.4 million, or 31.8% of revenue, compared to $489.6 million, or 32.5% of revenue, in the prior year.
Net income attributable to Waste Connections in 2012 was $159.1 million, or $1.31 per share on a diluted basis of 121.8 million shares. The Company reported net income attributable to Waste Connections of $165.2 million in 2011, or $1.45 per share on a diluted basis of 113.6 million shares. Adjusted net income attributable to Waste Connections* in 2012 was $188.1 million, or $1.54 per share, compared to $180.1 million, or $1.59 per share, in the prior year.
2013 OUTLOOK
Waste Connections also announced its outlook for 2013, which assumes no change in the current economic environment. The Companys outlook excludes the impact of any additional acquisitions, potential newly permitted E&P waste facilities, and expensing of acquisition-related transaction costs, as well as any remaining costs incurred in connection with the relocation of the Companys corporate headquarters from California to Texas. 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 SEC filings. Certain components of the outlook for 2013 are subject to quarterly fluctuations.
| Revenue is estimated to be between $1.925 billion and $1.95 billion, $250 million to $275 million of which is expected to be E&P waste-related. |
| Depreciation and depletion expense is estimated to be approximately 11.2% of revenue. |
| Amortization of intangibles expense is estimated to be approximately 1.3% of revenue. |
| Closure and post-closure accretion expense is estimated to be approximately 0.15% of revenue. |
| Operating income is estimated to be approximately 22.0% of revenue. |
| Net interest expense is estimated to be approximately $75.5 million. |
| Effective tax rate is expected to be approximately 39.2%. |
| Net income attributable to noncontrolling interests is estimated to reduce net income by approximately $1.0 million. |
| Net cash provided by operating activities is estimated to be approximately 25.5% of revenue. |
| Capital expenditures are estimated to be about $185 million. |
CONFERENCE CALL
Waste Connections will be hosting a conference call related to fourth quarter results and 2013 outlook on February 21st at 8:30 A.M. Eastern Time. To access the call, listeners should dial 800-688-0836 (domestic) or 617-614-4072 (international) approximately 10 minutes prior to the scheduled start time and ask the operator for the Waste Connections conference call, Passcode # 78857716. A replay of the conference call will be available until February 28, 2013, by calling 888-286-8010 (domestic) or 617-801-6888 (international) and entering Passcode # 48153821. The call also will be broadcast live over the Internet at www.streetevents.com or through a link on our web site at www.wasteconnections.com. A playback of the call will be available at both of these web sites.
Waste Connections, Inc. is an integrated solid waste services company that provides waste collection, transfer, disposal and recycling services in mostly exclusive and secondary markets. Through its R360 Environmental Solutions subsidiary, the Company also is 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 two million residential, commercial, industrial, and exploration and production customers from a network of operations in 31 states. The Company also provides intermodal services for the movement of cargo and solid waste containers in the Pacific Northwest. Waste Connections, Inc. was founded in September 1997 and is headquartered in The Woodlands, Texas.
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 (832) 442-2200.
* | A non-GAAP measure; see accompanying Non-GAAP Reconciliation Schedule. |
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Information Regarding Forward-Looking Statements
Certain statements contained in this release are forward-looking in nature, including statements related to: expected operating performance; expected roll-off activity, recycled commodity prices and E&P activity; expected contribution from recently completed acquisitions; expected 2013 financial results, capital expenditures and outlook; expected retention rates from core price increases; the Companys ability to finance acquisitions and newly permitted E&P waste facilities, and the impact of the relocation of the Companys corporate headquarters from Folsom, California to The Woodlands, Texas. These statements can be identified by the use of forward-looking terminology such as believes, expects, may, will, should, or anticipates, or the negative thereof or comparable terminology, or by discussions of strategy. Factors that could cause actual results to differ from those projected include, but are not limited to, the following: (1) our acquisitions may not be successful, which may reduce the anticipated benefit from acquired businesses; (2) a portion of our growth and future financial performance depends on our ability to integrate acquired businesses into our organization and operations; (3) our indebtedness could adversely affect our financial condition and limit our financial flexibility; (4) competition for acquisition candidates, consolidation within the waste industry and economic and market conditions may limit our ability to grow through acquisitions; (5) our industry is highly competitive and includes larger and better capitalized companies, companies with lower prices, return expectations or other advantages, and governmental service providers, which could adversely affect our ability to compete and operating results; (6) we may lose contracts through competitive bidding, early termination or governmental action; (7) price increases may not be adequate to offset the impact of increased costs or may cause us to lose volume; (8) economic downturns adversely affect operating results; (9) our results are vulnerable to economic conditions and seasonal factors affecting the regions in which we operate; (10) the E&P waste disposal business depends on oil and gas prices and the level of drilling and production activity in the basins in which we operate;(11) our E&P waste business is dependent upon the willingness of our customers to outsource their waste management activities; (12) changes in laws or government regulations regarding hydraulic fracturing could increase our customers costs of doing business and reduce oil and gas production by our customers, which could adversely impact our business; (13) our E&P waste business could be adversely affected by changes in laws regulating E&P waste; (14) we may be subject in the normal course of business to judicial, administrative or other third party proceedings that could interrupt or limit our operations, require expensive remediation, result in adverse judgments, settlements or fines and create negative publicity; (15) increases in the price of diesel fuel may adversely affect our collection business and reduce our operating margins; (16) increases in labor and disposal and related transportation costs could impact our financial results; (17) efforts by labor unions could divert management attention and adversely affect operating results; (18) we could face significant withdrawal liability if we withdraw from participation in one or more multiemployer pension plans in which we participate and the accrued pension benefits are not fully funded; (19) increases in insurance costs and the amount that we self-insure for various risks could reduce our operating margins and reported earnings; (20) each business that we acquire or have acquired may have liabilities or risks that we fail or are unable to discover, including environmental liabilities; (21) liabilities for environmental damage may adversely affect our financial condition, business and earnings; (22) our accruals for our landfill site closure and post-closure costs may be inadequate; (23) the financial soundness of our customers could affect our business and operating results; (24) we depend significantly on the services of the members of our senior, regional and district management team, and the departure of any of those persons could cause our operating results to suffer; (25) our decentralized decision-making structure could allow local managers to make decisions that adversely affect our operating results; (26) we may incur charges related to capitalized expenditures of landfill development projects, which would decrease our earnings; (27) because we depend on railroads for our intermodal operations, our operating results and financial condition are likely to be adversely affected by any reduction or deterioration in rail service; (28) our financial results could be adversely affected by impairments of goodwill or indefinite-lived intangibles; (29) our financial results are based upon estimates and assumptions that may differ from actual results; (30) the adoption of new accounting standards or interpretations could adversely affect our financial results; (31) pending or future litigation or governmental proceedings could result in material adverse consequences, including judgments or settlements; and (32) if we are not able to develop and protect intellectual property, or if a competitor develops or obtains exclusive rights to a breakthrough technology, our financial results may suffer. These risks and uncertainties, as well as others, are discussed in greater detail in our filings with the Securities and Exchange Commission, including our most recent Annual Report on Form 10-K. There may be additional risks of which we are not presently aware or that we currently believe are immaterial which could have an adverse impact on our business. We make no commitment to revise or update any forward-looking statements in order to reflect events or circumstances that may change.
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financial tables attached
CONTACT:
Worthing Jackman / (832) 442-2266 | Mary Anne Whitney / (832) 442-2253 | |
worthingj@wasteconnections.com | maryannew@wasteconnections.com |
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WASTE CONNECTIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2011 AND 2012
(Unaudited)
(in thousands, except share and per share amounts)
Three months
ended December 31, |
Twelve months
ended December 31, |
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2011 | 2012 | 2011 | 2012 | |||||||||||||
Revenues |
$ | 379,752 | $ | 448,803 | $ | 1,505,366 | $ | 1,661,618 | ||||||||
Operating expenses: |
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Cost of operations |
220,081 | 258,007 | 857,580 | 956,357 | ||||||||||||
Selling, general and administrative |
40,914 | 53,555 | 161,967 | 197,454 | ||||||||||||
Depreciation |
38,193 | 49,696 | 147,036 | 169,027 | ||||||||||||
Amortization of intangibles |
5,276 | 6,441 | 20,064 | 24,557 | ||||||||||||
Loss on disposal of assets |
914 | 912 | 1,657 | 1,627 | ||||||||||||
Gain from litigation settlement |
| (14 | ) | | (3,551 | ) | ||||||||||
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Operating income |
74,374 | 80,206 | 317,062 | 316,147 | ||||||||||||
Interest expense |
(12,571 | ) | (16,974 | ) | (44,520 | ) | (53,037 | ) | ||||||||
Interest income |
122 | 143 | 530 | 773 | ||||||||||||
Other income, net |
807 | 187 | 57 | 1,220 | ||||||||||||
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Income before income tax provision |
62,732 | 63,562 | 273,129 | 265,103 | ||||||||||||
Income tax provision |
(24,543 | ) | (27,476 | ) | (106,958 | ) | (105,443 | ) | ||||||||
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Net income |
38,189 | 36,086 | 166,171 | 159,660 | ||||||||||||
Less: net income attributable to noncontrolling interests |
(231 | ) | (97 | ) | (932 | ) | (567 | ) | ||||||||
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Net income attributable to Waste Connections |
$ | 37,958 | $ | 35,989 | $ | 165,239 | $ | 159,093 | ||||||||
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Earnings per common share attributable to Waste Connections common stockholders: |
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Basic |
$ | 0.34 | $ | 0.29 | $ | 1.47 | $ | 1.31 | ||||||||
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Diluted |
$ | 0.34 | $ | 0.29 | $ | 1.45 | $ | 1.31 | ||||||||
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Shares used in the per share calculations: |
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Basic |
111,504,918 | 122,963,136 | 112,720,444 | 121,172,381 | ||||||||||||
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Diluted |
112,410,495 | 123,687,624 | 113,583,486 | 121,824,349 | ||||||||||||
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Cash dividends per common share |
$ | 0.09 | $ | 0.10 | $ | 0.315 | $ | 0.37 | ||||||||
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WASTE CONNECTIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands, except share and per share amounts)
December 31, 2011 |
December 31, 2012 |
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ASSETS |
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Current assets: |
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Cash and equivalents |
$ | 12,643 | $ | 23,212 | ||||
Accounts receivable, net of allowance for doubtful accounts of $6,617 and $6,548 at December 31, 2011 and 2012, respectively |
176,277 | 235,762 | ||||||
Deferred income taxes |
20,630 | 45,798 | ||||||
Prepaid expenses and other current assets |
39,708 | 57,714 | ||||||
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Total current assets |
249,258 | 362,486 | ||||||
Property and equipment, net |
1,450,469 | 2,457,606 | ||||||
Goodwill |
1,116,888 | 1,636,557 | ||||||
Intangible assets, net |
449,581 | 541,908 | ||||||
Restricted assets |
30,544 | 34,889 | ||||||
Other assets, net |
31,265 | 42,580 | ||||||
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$ | 3,328,005 | $ | 5,076,026 | |||||
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LIABILITIES AND EQUITY |
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Current liabilities: |
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Accounts payable |
$ | 95,097 | $ | 130,260 | ||||
Book overdraft |
12,169 | 12,567 | ||||||
Accrued liabilities |
97,020 | 121,829 | ||||||
Deferred revenue |
64,694 | 69,930 | ||||||
Current portion of contingent consideration |
8,923 | 49,018 | ||||||
Current portion of long-term debt and notes payable |
5,899 | 33,968 | ||||||
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Total current liabilities |
283,802 | 417,572 | ||||||
Long-term debt and notes payable |
1,172,758 | 2,204,967 | ||||||
Long-term portion of contingent consideration |
22,573 | 30,346 | ||||||
Other long-term liabilities |
52,051 | 75,129 | ||||||
Deferred income taxes |
397,134 | 464,882 | ||||||
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Total liabilities |
1,928,318 | 3,192,896 | ||||||
Commitments and contingencies |
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Equity: |
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Preferred stock: $0.01 par value; 7,500,000 shares authorized; none issued and outstanding |
| | ||||||
Common stock: $0.01 par value; 250,000,000 shares authorized; 110,907,782 and 123,019,494 shares issued and outstanding at December 31, 2011 and 2012, respectively |
1,109 | 1,230 | ||||||
Additional paid-in capital |
408,721 | 779,904 | ||||||
Retained earnings |
988,560 | 1,103,188 | ||||||
Accumulated other comprehensive loss |
(3,480 | ) | (6,165 | ) | ||||
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Total Waste Connections equity |
1,394,910 | 1,878,157 | ||||||
Noncontrolling interest in subsidiaries |
4,777 | 4,973 | ||||||
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Total equity |
1,399,687 | 1,883,130 | ||||||
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$ | 3,328,005 | $ | 5,076,026 | |||||
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WASTE CONNECTIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
TWELVE MONTHS ENDED DECEMBER 31, 2011 AND 2012
(Unaudited)
(Dollars in thousands)
Twelve months ended December 31, |
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2011 | 2012 | |||||||
Cash flows from operating activities: |
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Net income |
$ | 166,171 | $ | 159,660 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: |
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Loss on disposal of assets |
1,657 | 1,627 | ||||||
Depreciation |
147,036 | 169,027 | ||||||
Amortization of intangibles |
20,064 | 24,557 | ||||||
Deferred income taxes, net of acquisitions |
50,989 | 29,689 | ||||||
Amortization of debt issuance costs |
1,420 | 1,993 | ||||||
Equity-based compensation |
11,879 | 17,289 | ||||||
Interest income on restricted assets |
(454 | ) | (603 | ) | ||||
Interest accretion |
2,771 | 4,000 | ||||||
Excess tax benefit associated with equity-based compensation |
(4,763 | ) | (5,033 | ) | ||||
Net change in operating assets and liabilities, net of acquisitions |
(8,600 | ) | 14,121 | |||||
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Net cash provided by operating activities |
388,170 | 416,327 | ||||||
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Cash flows from investing activities: |
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Payments for acquisitions, net of cash acquired |
(257,852 | ) | (1,579,869 | ) | ||||
Capital expenditures for property and equipment |
(141,924 | ) | (153,517 | ) | ||||
Proceeds from disposal of assets |
4,434 | 2,741 | ||||||
Decrease in restricted assets, net of interest income |
351 | 2,983 | ||||||
Other |
(5,014 | ) | (6,185 | ) | ||||
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Net cash used in investing activities |
(400,005 | ) | (1,733,847 | ) | ||||
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Cash flows from financing activities: |
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Proceeds from long-term debt |
592,500 | 1,647,000 | ||||||
Principal payments on notes payable and long-term debt |
(421,872 | ) | (609,014 | ) | ||||
Payment of contingent consideration |
(500 | ) | (12,473 | ) | ||||
Change in book overdraft |
(227 | ) | 398 | |||||
Proceeds from option and warrant exercises |
5,159 | 4,057 | ||||||
Excess tax benefit associated with equity-based compensation |
4,763 | 5,033 | ||||||
Payments for repurchase of common stock |
(116,817 | ) | (18,597 | ) | ||||
Payments for cash dividends |
(35,566 | ) | (44,465 | ) | ||||
Tax withholdings related to net share settlements of restricted stock units |
(5,511 | ) | (6,062 | ) | ||||
Distributions to noncontrolling interests |
(675 | ) | (198 | ) | ||||
Proceeds from common stock offering, net |
| 369,584 | ||||||
Debt issuance costs |
(6,649 | ) | (7,174 | ) | ||||
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Net cash provided by financing activities |
14,605 | 1,328,089 | ||||||
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Net increase in cash and equivalents |
2,770 | 10,569 | ||||||
Cash and equivalents at beginning of period |
9,873 | 12,643 | ||||||
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Cash and equivalents at end of period |
$ | 12,643 | $ | 23,212 | ||||
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NON-GAAP RECONCILIATION SCHEDULE
(in thousands)
Reconciliation of Adjusted Operating Income before Depreciation and Amortization:
Adjusted operating income before depreciation and amortization, 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 operating income before depreciation and amortization as one of the principal measures to evaluate and monitor the ongoing financial performance of the Companys operations. Waste Connections defines adjusted operating income before depreciation and amortization as operating income, plus depreciation and amortization expense, plus closure and post-closure accretion expense, plus or minus any gain or loss on disposal of assets. The Company further adjusts this calculation to exclude the effects of items management believes impact the ability to assess the operating performance of our business. This measure is not a substitute for, and should be used in conjunction with, GAAP financial measures. Other companies may calculate adjusted operating income before depreciation and amortization differently.
Three months ended December 31, 2011 |
Three months ended December 31, 2012 |
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Operating income |
$ | 74,374 | $ | 80,206 | ||||
Plus: Depreciation and amortization |
43,469 | 56,137 | ||||||
Plus: Closure and post-closure accretion |
516 | 711 | ||||||
Plus: Loss on disposal of assets |
914 | 912 | ||||||
Adjustments: |
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Plus: Acquisition-related costs (a) |
467 | 2,805 | ||||||
Plus: Corporate relocation expenses (b) |
83 | 1,540 | ||||||
Less: Gain from litigation settlement (d) |
| (14 | ) | |||||
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Adjusted operating income before depreciation and amortization |
$ | 119,823 | $ | 142,297 | ||||
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As % of revenues |
31.5 | % | 31.7 | % |
Twelve months ended December 31, 2011 |
Twelve months ended December 31, 2012 |
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Operating income |
$ | 317,062 | $ | 316,147 | ||||
Plus: Depreciation and amortization |
167,100 | 193,584 | ||||||
Plus: Closure and post-closure accretion |
1,967 | 2,581 | ||||||
Plus: Loss on disposal of assets |
1,657 | 1,627 | ||||||
Adjustments: |
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Plus: Acquisition-related costs (a) |
1,744 | 6,415 | ||||||
Plus: Corporate relocation expenses (b) |
83 | 8,031 | ||||||
Plus: NEO one-time equity grants (c) |
| 3,585 | ||||||
Less: Gain from litigation settlement (d) |
| (3,551 | ) | |||||
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Adjusted operating income before depreciation and amortization |
$ | 489,613 | $ | 528,419 | ||||
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As % of revenues | 32.5 | % | 31.8 | % |
(a) | Reflects the addback of acquisition-related transaction and severance costs. |
(b) | Reflects the addback of costs associated with the relocation of the Companys corporate headquarters from California to Texas. |
(c) | Reflects the addback of one-time equity compensation expense incurred at the time the Companys NEOs employment contracts were modified. |
(d) | Reflects the elimination of a non-recurring gain from an arbitration award. |
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NON-GAAP RECONCILIATION SCHEDULE (continued)
(in thousands)
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 the Companys operations. Waste Connections defines adjusted free cash flow as net cash provided by operating activities, plus proceeds from disposal of assets, plus or minus change in book overdraft, plus excess tax benefit associated with equity-based compensation, less capital expenditures for property and equipment and distributions to noncontrolling interests. The Company 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 December 31, 2011 |
Three months ended December 31, 2012 |
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Net cash provided by operating activities |
$ | 90,446 | $ | 89,588 | ||||
Plus: Change in book overdraft |
710 | 3,781 | ||||||
Plus: Proceeds from disposal of assets |
1,197 | 633 | ||||||
Plus: Excess tax benefit associated with equity-based compensation |
262 | 1,618 | ||||||
Less: Capital expenditures for property and equipment |
(57,872 | ) | (42,522 | ) | ||||
Less: Distributions to noncontrolling interests |
| (104 | ) | |||||
Adjustment: |
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Corporate office relocation, net of taxes (a) |
251 | (974 | ) | |||||
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Adjusted free cash flow |
$ | 34,994 | $ | 52,020 | ||||
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As % of revenues |
9.2 | % | 11.6 | % |
Twelve months ended December 31, 2011 |
Twelve months ended December 31, 2012 |
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Net cash provided by operating activities |
$ | 388,170 | $ | 416,327 | ||||
Plus/less: Change in book overdraft |
(227 | ) | 398 | |||||
Plus: Proceeds from disposal of assets |
4,434 | 2,741 | ||||||
Plus: Excess tax benefit associated with equity-based compensation |
4,763 | 5,033 | ||||||
Less: Capital expenditures for property and equipment |
(141,924 | ) | (153,517 | ) | ||||
Less: Distributions to noncontrolling interests |
(675 | ) | (198 | ) | ||||
Adjustment: |
||||||||
Corporate office relocation, net of taxes (a) |
251 | 4,975 | ||||||
|
|
|
|
|||||
Adjusted free cash flow |
$ | 254,792 | $ | 275,759 | ||||
|
|
|
|
|||||
As % of revenues |
16.9 | % | 16.6 | % |
(a) | Reflects the addback of third party expenses and reimbursable advances to employees associated with the relocation of our corporate headquarters from California to Texas. |
- 9 -
NON-GAAP RECONCILIATION SCHEDULE (continued)
(in thousands, except per share amounts)
Reconciliation of Net Income to Adjusted Net Income and Adjusted Net Income per Diluted Share:
Adjusted net income and adjusted net income per diluted share, 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 and adjusted net income per diluted share as one of the principal measures to evaluate and monitor ongoing financial performance of the Companys operations. Waste Connections provides adjusted net income to exclude the effects of items management believes impact the comparability of operating results between periods. Adjusted net income has limitations due to the fact that it may exclude items that have an impact on the Companys financial condition and results of operations. Adjusted net income and adjusted net income per diluted share are not a substitute for, and should be used in conjunction with, GAAP financial measures. Other companies may calculate adjusted net income and adjusted net income per diluted share differently.
Three months ended December 31, |
Twelve months ended December 31, |
|||||||||||||||
2011 | 2012 | 2011 | 2012 | |||||||||||||
Reported net income attributable to Waste Connections |
$ | 37,958 | $ | 35,989 | $ | 165,239 | $ | 159,093 | ||||||||
Adjustments: |
||||||||||||||||
Amortization of intangibles, net of taxes (a) |
3,271 | 3,977 | 12,440 | 15,209 | ||||||||||||
Acquisition-related costs, net of taxes (b) |
290 | 1,814 | 1,327 | 4,052 | ||||||||||||
Loss on disposal of assets, net of taxes (c) |
567 | 563 | 1,027 | 1,006 | ||||||||||||
Corporate relocation expenses, net of taxes (d) |
51 | 951 | 51 | 4,975 | ||||||||||||
NEO one-time equity grants, net of taxes (e) |
| | | 3,315 | ||||||||||||
Litigation settlement, net of taxes (f) |
| (9 | ) | | (2,202 | ) | ||||||||||
Impact of deferred tax adjustment (g) |
| 2,602 | | 2,602 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Adjusted net income attributable to Waste Connections |
$ | 42,137 | $ | 45,887 | $ | 180,084 | $ | 188,050 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Diluted earnings per common share attributable to Waste Connections common stockholders: |
||||||||||||||||
Reported net income |
$ | 0.34 | $ | 0.29 | $ | 1.45 | $ | 1.31 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Adjusted net income |
$ | 0.37 | $ | 0.37 | $ | 1.59 | $ | 1.54 | ||||||||
|
|
|
|
|
|
|
|
(a) | Reflects the elimination of the non-cash amortization of acquisition-related intangible assets. |
(b) | Reflects the elimination of acquisition-related transaction and severance costs. |
(c) | Reflects the elimination of a loss on disposal of assets. |
(d) | Reflects the addback of costs associated with the relocation of the Companys corporate headquarters from California to Texas. |
(e) | Reflects the addback of one-time equity compensation expense incurred at the time our NEOs employment contracts were modified. |
(f) | Reflects the elimination of a non-recurring gain from an arbitration award. |
(g) | Reflects the elimination of an increase to the income tax provision associated with an increase in the Companys deferred tax liabilities primarily resulting from the R360 acquisition completed in the quarter. |
- 10 -
ADDITIONAL STATISTICS
THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2012
(Dollars in thousands)
Revenue Growth: The following table reflects changes in our revenue for the three months ended December 31, 2012:
Three months ended December 31, 2012 |
||||
Solid Waste Internal Growth: |
||||
Core Price |
2.9 | % | ||
Surcharges |
0.3 | % | ||
Volume |
(2.4 | %) | ||
Recycling |
(0.9 | %) | ||
|
|
|||
Total Solid Waste Internal Growth |
(0.1 | %) | ||
Intermodal and Other |
0.1 | % | ||
Acquisitions, net |
18.2 | % | ||
|
|
|||
Total |
18.2 | % | ||
|
|
Revenue Breakdown: The following table reflects a breakdown of our revenue for the three and twelve months ended December 31:
Three months ended December 31, 2011 |
Three months ended December 31, 2012 |
|||||||||||||||
Solid Waste Collection |
$ | 272,282 | 62.5 | % | $ | 295,412 | 58.2 | % | ||||||||
Solid Waste Disposal and Transfer |
125,348 | 28.8 | % | 134,285 | 26.5 | % | ||||||||||
E&P Waste Treatment, Disposal & Recovery |
3,020 | 0.7 | % | 45,893 | 9.0 | % | ||||||||||
Solid Waste Recycling |
23,296 | 5.3 | % | 19,703 | 3.9 | % | ||||||||||
Intermodal and Other |
11,987 | 2.7 | % | 12,089 | 2.4 | % | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total before inter-company elimination |
435,933 | 100.0 | % | 507,382 | 100.0 | % | ||||||||||
Inter-company elimination |
(56,181 | ) | (58,579 | ) | ||||||||||||
|
|
|
|
|||||||||||||
Reported Revenue |
$ | 379,752 | $ | 448,803 | ||||||||||||
|
|
|
|
Twelve months ended December 31, 2011 |
Twelve months ended December 31, 2012 |
|||||||||||||||
Solid Waste Collection |
$ | 1,069,065 | 62.0 | % | $ | 1,176,333 | 62.1 | % | ||||||||
Solid Waste Disposal and Transfer |
497,584 | 28.9 | % | 524,861 | 27.7 | % | ||||||||||
E&P Waste Treatment, Disposal & Recovery |
12,746 | 0.7 | % | 61,350 | 3.2 | % | ||||||||||
Solid Waste Recycling |
96,417 | 5.6 | % | 81,512 | 4.3 | % | ||||||||||
Intermodal and Other |
48,166 | 2.8 | % | 50,321 | 2.7 | % | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total before inter-company elimination |
1,723,978 | 100.0 | % | 1,894,377 | 100.0 | % | ||||||||||
Inter-company elimination |
(218,612 | ) | (232,759 | ) | ||||||||||||
|
|
|
|
|||||||||||||
Reported Revenue |
$ | 1,505,366 | $ | 1,661,618 | ||||||||||||
|
|
|
|
- 11 -
ADDITIONAL STATISTICS (continued)
THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2012
(Dollars in thousands)
Days Sales Outstanding for the three months ended December 31, 2012: 48 (34 net of deferred revenue)
Internalization for the three months ended December 31, 2012: 55%
Other Cash Flow Items:
Three months ended December 31, 2012 |
Twelve months ended December 31, 2012 |
|||||||
Cash Interest Paid |
$ | 23,095 | $ | 49,826 | ||||
Cash Taxes Paid |
$ | 27,805 | $ | 69,954 |
Debt to Book Capitalization as of December 31, 2012: 54%
Share Information for the three months ended December 31, 2012:
Basic shares outstanding |
122,963,136 | |||
Dilutive effect of options and warrants |
276,356 | |||
Dilutive effect of restricted stock units |
448,132 | |||
|
|
|||
Diluted shares outstanding |
123,687,624 |
- 12 -