- Accelerating solid waste pricing growth and E&P waste
activity drive better than expected Q2 results
- Revenue of $1.816 billion, up
18.4%
- Net income(a) of $224.1 million, and adjusted
EBITDA(b) of $566.8
million, up 16.9%
- Adjusted EBITDA(b) margin of 31.2%
of revenue, in line with outlook and flat year over year, excluding
acquisitions
- Net income of $0.87 per share,
and adjusted net income(b) of $1.00 per share, up 23.5%
- Year to date net cash provided by operating activities of
$973.7 million and adjusted free cash
flow(b) of $638.4
million, or 18.4% of revenue
- Year to date signed or closed acquisitions with
approximately $470 million of total
annualized revenue
- Increases full year 2022 outlook to revenue of approximately
$7.125 billion, net income of
approximately $837.5 million,
adjusted EBITDA(b) of approximately $2.190 billion, net cash provided by operating
activities of approximately $1.974
billion and adjusted free cash flow(b) of
approximately $1.160 billion
TORONTO, Aug. 2, 2022
/CNW/ -- Waste Connections, Inc. (TSX/NYSE: WCN) ("Waste
Connections" or the "Company") today announced its results for the
second quarter of 2022 and updated its outlook for 2022.
"Accelerating solid waste pricing and E&P waste activity
drove a top-to-bottom beat in the period. Solid waste pricing
growth of 8.8% enabled us to overcome increased inflationary
pressures during the period and deliver adjusted
EBITDA(b) margin in line with our outlook for Q2 and
flat on a year over year basis excluding the margin dilutive impact
from acquisitions completed since the year ago period," said
Worthing F. Jackman, President and
Chief Executive Officer.
"Our outperformance in the first half of 2022, expected further
sequential increases in solid waste pricing growth, continuing
strength in E&P waste activity, and acquisitions closed year to
date, position us to update our outlook for the full year to
revenue of approximately $7.125
billion, adjusted EBITDA(b) of approximately
$2.190 billion and adjusted free cash
flow(b) of approximately $1.160
billion, exceeding our initial outlook as provided in
February and another reflection of our culture of accountability in
a challenging operating environment."
Mr. Jackman added, "As anticipated, acquisition activity is
pacing well above average. We have closed approximately
$245 million in annualized revenues,
with another approximately $225
million in total annualized revenue under definitive
agreements expected to close during the third quarter, subject to
customary closing conditions, and our pipeline remains quite
robust. As such, we believe we are well-positioned for double
digit revenue growth in 2023 along with margin expansion from
continuing solid waste pricing strength and rollover contribution
from acquisitions already signed or closed year to date; additional
acquisitions expected to close later this year and early next year
would provide further growth."
Q2 2022 Results
Revenue in the second quarter totaled $1.816 billion, up from $1.534 billion in the year ago period.
Operating income was $329.6 million,
which included $6.8 million primarily
in impairments and other operating items. This compares to
operating income of $266.8 million in
the second quarter of 2021, which included $12.5 million primarily related to fair value
accounting changes to equity awards. Net income in the second
quarter was $224.1 million, or
$0.87 per share on a diluted basis of
257.7 million shares. In the year ago period, the Company
reported net income of $177.0
million, or $0.68 per share on
a diluted basis of 261.4 million shares.
Adjusted net income(b) in the second quarter was
$257.1 million, or $1.00 per diluted share, versus $210.9 million, or $0.81 per diluted share, in the prior year
period. Adjusted EBITDA(b) in the second quarter
was $566.8 million, as compared to
$484.9 million in the prior year
period. Adjusted net income, adjusted net income per diluted
share and adjusted EBITDA, all non-GAAP measures, primarily
exclude impairments and acquisition-related items, as
reflected in the detailed reconciliations in the attached
tables.
Six Months Year to Date Results
For the six months ended June 30,
2022, revenue was $3.463
billion, up from $2.930
billion in the year ago period. Operating income,
which included $13.4 million
primarily attributable to transaction-related expenses, was
$603.4 million, as compared to
operating income of $505.2 million in
2021, which included $14.0 million
primarily related to fair value changes in equity awards.
Net income for the six months ended June
30, 2022 was $404.4 million,
or $1.57 per share on a diluted basis
of 258.1 million shares. In the year ago period, the Company
reported net income of $337.4
million, or $1.29 per share on
a diluted basis of 262.3 million shares.
Adjusted net income(b) for the six months ended
June 30, 2022 was $470.6 million, or $1.82 per diluted share, compared to $396.3 million, or $1.51 per diluted share, in the year ago
period. Adjusted EBITDA(b) for the six months ended
June 30, 2022 was $1.069 billion, as compared to $918.1 million in the prior year
period.
Updated 2022 Outlook
Waste Connections also updated its outlook for 2022, which
assumes no change in the current economic environment or underlying
economic trends. The Company's outlook excludes any impact
from additional acquisitions that may close during the year, and
expensing of transaction-related items. The outlook provided
below is forward looking, and actual results may differ materially
depending on risks and uncertainties detailed at the end of this
release and in our periodic filings with the U.S. Securities and
Exchange Commission and the securities commissions or similar
regulatory authorities in Canada.
Certain components of the outlook for 2022 are subject to quarterly
fluctuations. See reconciliations in the attached tables.
- Revenue is estimated to be approximately $7.125 billion, as compared to our original
revenue outlook of approximately $6.875
billion.
- Net income is estimated to be approximately $837.5 million, and adjusted EBITDA(b)
is estimated to be approximately $2.190
billion, or about 30.7% of revenue, as compared to our
original adjusted EBITDA(b) outlook of $2.145 billion or 31.2% 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 $1.974 billion, and
adjusted free cash flow(b) of approximately $1.160 billion, or about 16.3% of revenue, as
compared to our original adjusted free cash flow(b)
outlook of $1.150 billion or 16.7% of
revenue.
Environmental, Social and Governance
Waste Connections views its Environmental, Social and Governance
("ESG") efforts as integral to its business, with initiatives
consistent with its objective of long-term value creation. In
2020, the Company introduced long-term, aspirational ESG targets
and committed over $500 million for
investments to meet or exceed such sustainability targets. These
investments primarily focus on reducing emissions, increasing
resource recovery of both recyclable commodities and clean energy
fuels, reducing reliance on off-site disposal for landfill
leachate, further improving safety through reduced incidents and
enhancing employee engagement through improved voluntary turnover
and Servant Leadership scores. The Company's 2021
Sustainability Report provides progress updates on its targets and
investments towards their achievement. For more information,
visit the Waste Connections website at
wasteconnections.com/sustainability.
|
|
(a) All references to
"Net income" refer to the financial statement line item "Net income
attributable to Waste Connections"
|
(b) A non-GAAP measure;
see accompanying Non-GAAP Reconciliation Schedule
|
|
Q2 2022 Earnings Conference Call
Waste Connections will be hosting a conference call related to
second quarter earnings on August 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, listeners may access
the call by dialing 800-747-0365 (within North America) or 212-231-2939 (international)
approximately 10 minutes prior to the scheduled start time; a
passcode is not required. A replay of the conference call
will be available until August 10,
2022, by calling 800-633-8284 (within North America) or 402-977-9140 (international)
and entering Passcode #22019767.
Waste Connections will be filing a Form 8-K on EDGAR and on
SEDAR (as an "Other" document) prior to markets opening on
August 3rd, providing the Company's
third quarter 2022 outlook for revenue, price plus volume growth
for solid waste, and adjusted EBITDA(b).
About Waste Connections
Waste Connections is an integrated solid waste services company
that provides non-hazardous waste collection, transfer and disposal
services, along with resource recovery primarily through recycling
and renewable fuels generation. The Company serves more than
eight million residential, commercial and industrial customers in
mostly exclusive and secondary markets across 43 states in the U.S.
and six provinces in Canada. Waste Connections also provides
non-hazardous oilfield waste treatment, recovery and disposal
services in several basins across the U.S., as well as intermodal
services for the movement of cargo and solid waste containers in
the Pacific Northwest. For more information, visit Waste
Connections at wasteconnections.com.
Safe Harbor and Forward-Looking Information
This press release contains forward-looking statements within
the meaning of the safe harbor provisions of the U.S. Private
Securities Litigation Reform Act of 1995 ("PSLRA"), including
"forward-looking information" within the meaning of applicable
Canadian securities laws. These forward-looking statements are
neither historical facts nor assurances of future performance and
reflect Waste Connections' current beliefs and expectations
regarding future events and operating performance. These
forward-looking statements are often identified by the words "may,"
"might," "believes," "thinks," "expects," "estimate," "continue,"
"intends" or other words of similar meaning. All of the
forward-looking statements included in this press release are made
pursuant to the safe harbor provisions of the PSLRA and applicable
securities laws in Canada.
Forward-looking statements involve risks and uncertainties.
Forward-looking statements in this press release include, but are
not limited to, statements about expected 2022 and 2023 financial
results, outlook and related assumptions, and potential acquisition
activity. Important factors that could cause actual results to
differ, possibly materially, from those indicated by the
forward-looking statements include, but are not limited to, risk
factors detailed from time to time in the Company's filings with
the SEC and the securities commissions or similar regulatory
authorities in Canada. You should not place undue reliance on
forward-looking statements, which speak only as of the date of this
press release. Waste Connections undertakes no obligation to
update the forward-looking statements set forth in this press
release, whether as a result of new information, future events, or
otherwise, unless required by applicable securities laws.
– financial tables attached –
CONTACT:
|
|
Mary Anne Whitney /
(832) 442-2253
|
Joe Box / (832)
442-2153
|
maryannew@wasteconnections.com
|
joe.box@wasteconnections.com
|
WASTE CONNECTIONS,
INC.
|
CONDENSED CONSOLIDATED
STATEMENTS OF NET INCOME
|
THREE AND SIX MONTHS
ENDED JUNE 30, 2021 AND 2022
|
(Unaudited)
|
(in thousands of U.S.
dollars, except share and per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
June 30,
|
|
Six months ended
June 30,
|
|
|
|
2021
|
|
2022
|
|
2021
|
|
2022
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
1,533,931
|
|
$
|
1,816,435
|
|
$
|
2,929,874
|
|
$
|
3,462,690
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
operations
|
|
|
901,191
|
|
|
1,087,892
|
|
|
1,727,111
|
|
|
2,077,410
|
|
Selling, general and
administrative
|
|
|
157,943
|
|
|
168,404
|
|
|
299,365
|
|
|
331,818
|
|
Depreciation
|
|
|
169,221
|
|
|
188,937
|
|
|
326,624
|
|
|
368,887
|
|
Amortization of
intangibles
|
|
|
32,707
|
|
|
37,462
|
|
|
64,899
|
|
|
75,098
|
|
Impairments and other
operating items
|
|
|
6,081
|
|
|
4,150
|
|
|
6,715
|
|
|
6,028
|
|
Operating
income
|
|
|
266,788
|
|
|
329,590
|
|
|
505,160
|
|
|
603,449
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
(41,328)
|
|
|
(45,079)
|
|
|
(83,753)
|
|
|
(86,404)
|
|
Interest
income
|
|
|
744
|
|
|
652
|
|
|
1,848
|
|
|
790
|
|
Other income (expense),
net
|
|
|
(1,235)
|
|
|
(2,649)
|
|
|
2,312
|
|
|
(6,114)
|
|
Income before income
tax provision
|
|
|
224,969
|
|
|
282,514
|
|
|
425,567
|
|
|
511,721
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
provision
|
|
|
(47,868)
|
|
|
(58,307)
|
|
|
(88,159)
|
|
|
(107,146)
|
|
Net income
|
|
|
177,101
|
|
|
224,207
|
|
|
337,408
|
|
|
404,575
|
|
Less: Net income
attributable to noncontrolling interests
|
|
|
(54)
|
|
|
(133)
|
|
|
(52)
|
|
|
(177)
|
|
Net income attributable
to Waste Connections
|
|
$
|
177,047
|
|
$
|
224,074
|
|
$
|
337,356
|
|
$
|
404,398
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per common
share attributable to Waste Connections' common
shareholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.68
|
|
$
|
0.87
|
|
$
|
1.29
|
|
$
|
1.57
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
$
|
0.68
|
|
$
|
0.87
|
|
$
|
1.29
|
|
$
|
1.57
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in the per
share calculations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
260,951,405
|
|
|
257,179,434
|
|
|
261,791,088
|
|
|
257,555,033
|
|
Diluted
|
|
|
261,418,573
|
|
|
257,736,745
|
|
|
262,269,600
|
|
|
258,140,714
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends per
common share
|
|
$
|
0.205
|
|
$
|
0.23
|
|
$
|
0.41
|
|
$
|
0.46
|
|
WASTE CONNECTIONS,
INC.
CONDENSED CONSOLIDATED
BALANCE SHEETS
(Unaudited)
(in thousands of U.S.
dollars, except share and per share amounts)
|
|
|
|
|
|
|
|
|
|
|
December 31,
2021
|
|
June 30,
2022
|
|
ASSETS
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
Cash and
equivalents
|
|
$
|
147,441
|
|
$
|
217,808
|
|
Accounts receivable,
net of allowance for credit losses of $18,480 and $20,253 at
December 31, 2021 and June 30, 2022, respectively
|
|
|
709,614
|
|
|
797,877
|
|
Prepaid expenses and
other current assets
|
|
|
175,722
|
|
|
242,050
|
|
Total current
assets
|
|
|
1,032,777
|
|
|
1,257,735
|
|
Restricted
cash
|
|
|
72,174
|
|
|
106,736
|
|
Restricted
investments
|
|
|
59,014
|
|
|
56,234
|
|
Property and equipment,
net
|
|
|
5,721,949
|
|
|
5,858,175
|
|
Operating lease
right-of-use assets
|
|
|
160,567
|
|
|
167,099
|
|
Goodwill
|
|
|
6,187,643
|
|
|
6,457,910
|
|
Intangible assets,
net
|
|
|
1,350,597
|
|
|
1,400,249
|
|
Other assets,
net
|
|
|
115,203
|
|
|
112,103
|
|
Total
assets
|
|
$
|
14,699,924
|
|
$
|
15,416,241
|
|
LIABILITIES AND
EQUITY
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
392,868
|
|
$
|
496,622
|
|
Book
overdraft
|
|
|
16,721
|
|
|
16,668
|
|
Deferred
revenue
|
|
|
273,720
|
|
|
305,724
|
|
Accrued
liabilities
|
|
|
442,596
|
|
|
417,725
|
|
Current portion of
operating lease liabilities
|
|
|
38,017
|
|
|
35,101
|
|
Current portion of
contingent consideration
|
|
|
62,804
|
|
|
59,371
|
|
Current portion of
long-term debt and notes payable
|
|
|
6,020
|
|
|
6,342
|
|
Total current
liabilities
|
|
|
1,232,746
|
|
|
1,337,553
|
|
|
|
|
|
|
|
|
|
Long-term portion of
debt and notes payable
|
|
|
5,040,500
|
|
|
5,633,524
|
|
Long-term portion of
operating lease liabilities
|
|
|
129,628
|
|
|
139,191
|
|
Long-term portion of
contingent consideration
|
|
|
31,504
|
|
|
31,264
|
|
Deferred income
taxes
|
|
|
850,921
|
|
|
994,766
|
|
Other long-term
liabilities
|
|
|
421,080
|
|
|
410,281
|
|
Total
liabilities
|
|
|
7,706,379
|
|
|
8,546,579
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
Equity:
|
|
|
|
|
|
|
|
Common shares:
260,283,158 shares issued and 260,212,496 shares outstanding at
December 31, 2021; 257,166,050 shares issued and
257,100,591 shares outstanding at
June 30, 2022
|
|
|
3,693,027
|
|
|
3,270,242
|
|
Additional paid-in
capital
|
|
|
199,482
|
|
|
210,767
|
|
Accumulated other
comprehensive income
|
|
|
39,584
|
|
|
41,438
|
|
Treasury shares: 70,662
and 65,459 shares at December 31, 2021 and June 30, 2022,
respectively
|
|
|
-
|
|
|
-
|
|
Retained
earnings
|
|
|
3,056,845
|
|
|
3,342,431
|
|
Total Waste
Connections' equity
|
|
|
6,988,938
|
|
|
6,864,878
|
|
Noncontrolling interest
in subsidiaries
|
|
|
4,607
|
|
|
4,784
|
|
Total
equity
|
|
|
6,993,545
|
|
|
6,869,662
|
|
|
|
$
|
14,699,924
|
|
$
|
15,416,241
|
|
WASTE CONNECTIONS,
INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE
30, 2021 AND 2022
(Unaudited)
(in thousands of U.S.
dollars)
|
|
|
|
|
|
|
|
|
|
|
Six months ended June 30,
|
|
|
|
2021
|
|
2022
|
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
|
Net income
|
|
$
|
337,408
|
|
$
|
404,575
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
Loss on disposal of
assets and impairments
|
|
|
6,229
|
|
|
6,048
|
|
Depreciation
|
|
|
326,624
|
|
|
368,887
|
|
Amortization of
intangibles
|
|
|
64,899
|
|
|
75,098
|
|
Deferred income taxes,
net of acquisitions
|
|
|
3,520
|
|
|
84,991
|
|
Current period
provision for expected credit losses
|
|
|
4,903
|
|
|
6,907
|
|
Amortization of debt
issuance costs
|
|
|
2,689
|
|
|
2,484
|
|
Share-based
compensation
|
|
|
28,724
|
|
|
27,716
|
|
Interest
accretion
|
|
|
8,199
|
|
|
8,798
|
|
Payment of contingent
consideration recorded in earnings
|
|
|
(520)
|
|
|
-
|
|
Adjustments to
contingent consideration
|
|
|
89
|
|
|
(1,030)
|
|
Other
|
|
|
(1,118)
|
|
|
(2,173)
|
|
Net change in
operating assets and liabilities, net of acquisitions
|
|
|
66,832
|
|
|
(8,623)
|
|
Net cash provided by
operating activities
|
|
|
848,478
|
|
|
973,678
|
|
|
|
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
Payments for
acquisitions, net of cash acquired
|
|
|
(67,493)
|
|
|
(546,982)
|
|
Capital expenditures
for property and equipment
|
|
|
(271,392)
|
|
|
(371,428)
|
|
Proceeds from disposal
of assets
|
|
|
7,906
|
|
|
16,894
|
|
Other
|
|
|
(1,815)
|
|
|
9,566
|
|
Net cash used in
investing activities
|
|
|
(332,794)
|
|
|
(891,950)
|
|
|
|
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
Proceeds from
long-term debt
|
|
|
311,000
|
|
|
1,517,732
|
|
Principal payments on
notes payable and long-term debt
|
|
|
(267,050)
|
|
|
(920,107)
|
|
Payment of contingent
consideration recorded at acquisition date
|
|
|
(5,595)
|
|
|
(8,898)
|
|
Change in book
overdraft
|
|
|
(190)
|
|
|
(54)
|
|
Payments for
repurchase of common shares
|
|
|
(305,640)
|
|
|
(424,999)
|
|
Payments for cash
dividends
|
|
|
(107,330)
|
|
|
(118,812)
|
|
Tax withholdings
related to net share settlements of equity-based
compensation
|
|
|
(18,510)
|
|
|
(17,266)
|
|
Debt issuance
costs
|
|
|
-
|
|
|
(4,668)
|
|
Proceeds from issuance
of shares under employee share purchase plan
|
|
|
-
|
|
|
1,554
|
|
Proceeds from sale of
common shares held in trust
|
|
|
131
|
|
|
660
|
|
Net cash provided by
(used in) financing activities
|
|
|
(393,184)
|
|
|
25,142
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate
changes on cash, cash equivalents and restricted cash
|
|
|
873
|
|
|
(1,941)
|
|
|
|
|
|
|
|
|
|
Net increase in cash,
cash equivalents and restricted cash
|
|
|
123,373
|
|
|
104,929
|
|
Cash, cash equivalents
and restricted cash at beginning of period
|
|
|
714,389
|
|
|
219,615
|
|
Cash, cash equivalents
and restricted cash at end of period
|
|
$
|
837,762
|
|
$
|
324,544
|
|
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 six month periods ended June 30, 2022:
|
|
|
|
|
|
|
|
Three months
ended
June 30,
2022
|
|
Six months
ended
June 30,
2022
|
Core Price
|
|
|
7.2 %
|
|
|
6.8 %
|
Surcharges
|
|
|
1.6 %
|
|
|
1.2 %
|
Volume
|
|
|
(0.7 %)
|
|
|
(0.1 %)
|
Recycling
|
|
|
0.4 %
|
|
|
0.7 %
|
Foreign Exchange
Impact
|
|
|
(0.5 %)
|
|
|
(0.3 %)
|
Total
|
|
|
8.0 %
|
|
|
8.3 %
|
Revenue
Breakdown: The following table reflects a breakdown of our
revenue for the three month periods ended June 30, 2021
and 2022:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended June 30, 2021
|
|
|
|
Revenue
|
|
Inter-company
Elimination
|
|
Reported
Revenue
|
|
%
|
Solid Waste
Collection
|
|
$
|
1,098,319
|
|
$
|
(3,232)
|
|
$
|
1,095,087
|
|
71.4
|
%
|
Solid Waste Disposal
and Transfer
|
|
|
544,257
|
|
|
(215,481)
|
|
|
328,776
|
|
21.4
|
%
|
Solid Waste
Recycling
|
|
|
41,539
|
|
|
(1,113)
|
|
|
40,426
|
|
2.7
|
%
|
E&P Waste
Treatment, Recovery and Disposal
|
|
|
34,607
|
|
|
(3,454)
|
|
|
31,153
|
|
2.0
|
%
|
Intermodal and
Other
|
|
|
38,590
|
|
|
(101)
|
|
|
38,489
|
|
2.5
|
%
|
Total
|
|
$
|
1,757,312
|
|
$
|
(223,381)
|
|
$
|
1,533,931
|
|
100.0
|
%
|
|
|
Three months
ended June 30, 2022
|
|
|
|
Revenue
|
|
Inter-company
Elimination
|
|
Reported
Revenue
|
|
%
|
Solid Waste
Collection
|
|
$
|
1,297,402
|
|
$
|
(3,391)
|
|
$
|
1,294,011
|
|
71.2
|
%
|
Solid Waste Disposal
and Transfer
|
|
|
601,194
|
|
|
(238,162)
|
|
|
363,032
|
|
20.0
|
%
|
Solid Waste
Recycling
|
|
|
67,504
|
|
|
(2,823)
|
|
|
64,681
|
|
3.6
|
%
|
E&P Waste
Treatment, Recovery and Disposal
|
|
|
54,155
|
|
|
(3,712)
|
|
|
50,443
|
|
2.8
|
%
|
Intermodal and
Other
|
|
|
46,310
|
|
|
(2,042)
|
|
|
44,268
|
|
2.4
|
%
|
Total
|
|
$
|
2,066,565
|
|
$
|
(250,130)
|
|
$
|
1,816,435
|
|
100.0
|
%
|
Contribution from
Acquisitions: The following table reflects revenues from
acquisitions, net of divestitures, for the three and six
month periods ended June 30, 2021 and 2022:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
June 30,
|
|
Six months
ended
June 30,
|
|
|
2021
|
|
2022
|
|
2021
|
|
2022
|
Acquisitions,
net
|
|
$
|
44,125
|
|
$
|
141,356
|
|
$
|
84,666
|
|
$
|
251,363
|
ADDITIONAL STATISTICS
(continued)
(in thousands of U.S.
dollars, except where noted)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Cash Flow
Items: The following table reflects cash interest and cash
taxes for the three and six month periods ended June
30, 2021 and 2022:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
June 30,
|
|
Six months
ended
June 30,
|
|
|
2021
|
|
2022
|
|
2021
|
|
2022
|
Cash Interest
Paid
|
|
$
|
56,516
|
|
$
|
43,853
|
|
$
|
81,962
|
|
$
|
76,013
|
Cash Taxes
Paid
|
|
|
32,072
|
|
|
20,423
|
|
|
60,693
|
|
|
37,812
|
Debt to Book
Capitalization as of June 30, 2022: 45%
Internalization
for the three months ended June 30, 2022:
55%
Days Sales
Outstanding for the three months ended June 30,
2022: 40 (25 net of deferred revenue)
Share Information
for the three months ended June 30, 2022:
|
|
|
|
Basic shares
outstanding
|
|
257,179,434
|
Dilutive effect of
equity-based awards
|
|
557,311
|
Diluted shares
outstanding
|
|
257,736,745
|
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
June 30,
|
|
Six months
ended
June 30,
|
|
|
2021
|
|
2022
|
|
2021
|
|
2022
|
Net income attributable
to Waste Connections
|
|
$
|
177,047
|
|
$
|
224,074
|
|
$
|
337,356
|
|
$
|
404,398
|
Plus: Net income
attributable to noncontrolling interests
|
|
|
54
|
|
|
133
|
|
|
52
|
|
|
177
|
Plus: Income tax
provision
|
|
|
47,868
|
|
|
58,307
|
|
|
88,159
|
|
|
107,146
|
Plus: Interest
expense
|
|
|
41,328
|
|
|
45,079
|
|
|
83,753
|
|
|
86,404
|
Less: Interest
income
|
|
|
(744)
|
|
|
(652)
|
|
|
(1,848)
|
|
|
(790)
|
Plus: Depreciation and
amortization
|
|
|
201,928
|
|
|
226,399
|
|
|
391,523
|
|
|
443,985
|
Plus: Closure and
post-closure accretion
|
|
|
3,666
|
|
|
3,992
|
|
|
7,375
|
|
|
8,087
|
Plus: Impairments and
other operating items
|
|
|
6,081
|
|
|
4,150
|
|
|
6,715
|
|
|
6,028
|
Plus/(Less): Other
expense (income), net
|
|
|
1,235
|
|
|
2,649
|
|
|
(2,312)
|
|
|
6,114
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
Plus:
Transaction-related expenses(a)
|
|
|
57
|
|
|
3,692
|
|
|
583
|
|
|
8,232
|
Plus: Fair value
changes to equity awards(b)
|
|
|
6,385
|
|
|
(1,009)
|
|
|
6,723
|
|
|
(847)
|
Adjusted
EBITDA
|
|
$
|
484,905
|
|
$
|
566,814
|
|
$
|
918,079
|
|
$
|
1,068,934
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As % of
revenues
|
|
|
31.6 %
|
|
|
31.2 %
|
|
|
31.3 %
|
|
|
30.9 %
|
____________________________
|
(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
June 30,
|
|
Six months
ended
June 30,
|
|
|
2021
|
|
2022
|
|
2021
|
|
2022
|
Net cash provided by
operating activities
|
|
$
|
448,081
|
|
$
|
532,781
|
|
$
|
848,478
|
|
$
|
973,678
|
Plus/(Less): Change in
book overdraft
|
|
|
16,659
|
|
|
(141)
|
|
|
(190)
|
|
|
(54)
|
Plus: Proceeds from
disposal of assets
|
|
|
5,826
|
|
|
1,881
|
|
|
7,906
|
|
|
16,894
|
Less: Capital
expenditures for property and equipment
|
|
|
(174,599)
|
|
|
(219,110)
|
|
|
(271,392)
|
|
|
(371,428)
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
Payment of
contingent consideration recorded in
earnings(a)
|
|
|
-
|
|
|
-
|
|
|
520
|
|
|
-
|
Cash received for
divestitures(b)
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(5,671)
|
Transaction-related
expenses(c)
|
|
|
57
|
|
|
3,692
|
|
|
583
|
|
|
27,096
|
Pre-existing
Progressive Waste share-based grants(d)
|
|
|
47
|
|
|
(64)
|
|
|
144
|
|
|
12
|
Tax
effect(e)
|
|
|
(26)
|
|
|
(1,056)
|
|
|
(214)
|
|
|
(2,165)
|
Adjusted free cash
flow
|
|
$
|
296,045
|
|
$
|
317,983
|
|
$
|
585,835
|
|
$
|
638,362
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As % of
revenues
|
|
|
19.3 %
|
|
|
17.5 %
|
|
|
20.0 %
|
|
|
18.4 %
|
___________________________
|
(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
June 30,
|
|
Six months
ended
June 30,
|
|
|
2021
|
|
2022
|
|
2021
|
|
2022
|
Reported net income
attributable to Waste Connections
|
|
$
|
177,047
|
|
$
|
224,074
|
|
$
|
337,356
|
|
$
|
404,398
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of
intangibles(a)
|
|
|
32,707
|
|
|
37,462
|
|
|
64,899
|
|
|
75,098
|
Impairments and other
operating items(b)
|
|
|
6,081
|
|
|
4,150
|
|
|
6,715
|
|
|
6,028
|
Transaction-related
expenses(c)
|
|
|
57
|
|
|
3,692
|
|
|
583
|
|
|
8,232
|
Fair value changes to
equity awards(d)
|
|
|
6,385
|
|
|
(1,009)
|
|
|
6,723
|
|
|
(847)
|
Tax
effect(e)
|
|
|
(11,393)
|
|
|
(11,224)
|
|
|
(19,935)
|
|
|
(22,316)
|
Adjusted net income
attributable to Waste Connections
|
|
$
|
210,884
|
|
$
|
257,145
|
|
$
|
396,341
|
|
$
|
470,593
|
Diluted earnings per
common share attributable to Waste Connections' common
shareholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported net
income
|
|
$
|
0.68
|
|
$
|
0.87
|
|
$
|
1.29
|
|
$
|
1.57
|
Adjusted net
income
|
|
$
|
0.81
|
|
$
|
1.00
|
|
$
|
1.51
|
|
$
|
1.82
|
____________________________
|
(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) The aggregate tax
effect of the adjustments in footnotes (a) through (d) 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
|
|
|
Estimates
|
|
Observation
|
Net income attributable
to Waste Connections
|
$
|
837,500
|
|
|
Plus: Income tax provision (a)
|
|
232,973
|
|
Approximate 21.8%
effective rate
|
Plus: Interest expense, net
|
|
180,000
|
|
|
Plus: Depreciation and Depletion
|
|
752,000
|
|
Approximately 10.6% of
revenue
|
Plus: Amortization
|
|
152,000
|
|
|
Plus: Closure and post-closure accretion
|
|
16,000
|
|
|
Plus: Impairments and other operating items (b)
|
|
6,028
|
|
|
Plus: Other income, net (b)
|
|
6,114
|
|
|
Adjustments: (b)
|
|
|
|
|
Plus:
Transaction-related expenses
|
|
8,232
|
|
|
Plus: Fair
value changes to equity awards
|
|
(847)
|
|
|
Adjusted
EBITDA
|
$
|
2,190,000
|
|
Approximately 30.7% of
revenue
|
___________________________
|
(a) Approximately 21.8%
full year effective tax rate, including amounts reported for the
six month period ended June 30, 2022.
|
(b) Reflects amounts reported
for the six month period ended June 30, 2022, as shown on page
9.
|
Reconciliation of
Adjusted Free Cash Flow:
|
|
|
|
|
|
|
|
Updated
2022 Outlook
|
Net cash provided by
operating activities
|
|
$
|
1,973,888
|
Less: Change in
book overdraft (a)
|
|
|
(54)
|
Plus: Proceeds from
disposal of assets (a)
|
|
|
16,894
|
Less: Capital
expenditures for property and
equipment
|
|
|
(850,000)
|
Adjustments:
(a)
|
|
|
|
Cash
received for divestitures
|
|
|
(5,671)
|
Transaction-related expenses
|
|
|
27,096
|
Pre-existing Progressive Waste share-based grants
|
|
|
12
|
Tax
effect
|
|
|
(2,165)
|
Adjusted free cash
flow
|
|
$
|
1,160,000
|
|
|
|
|
As % of
revenues
|
|
|
16.3 %
|
|
|
|
|
___________________________
|
(a) Reflects amounts
reported for the six month period ended June 30, 2022, as shown on
page 10.
|
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SOURCE Waste Connections, Inc.