Date: August 7, 2007
Source: BFI Canada Income Fund
BFI Canada Income Fund (TSX:BFC.UN) today reported strong financial results for the three and six months ended
Management Commentary
"We are very pleased with the strong results of our second quarter which were driven by our organic growth initiatives as well as our acquisition strategy," said Keith Carrigan, Vice Chairman and Chief Executive Officer. "We continue to find opportunities to build value within our operations. Our second quarter and year to date organic revenue, which excludes acquisitions, fuel and environmental surcharges, and foreign currency translation, grew by 15.6% and 12.8% in
Mr. Carrigan continued, "Our results demonstrate that the most effective way to continue creating value for our investors is through a disciplined program of internal investment coupled with investment in acquisitions. However, we believe that our ability to raise debt and equity in the capital markets may be limited given the tax and investment climate for income trusts. Therefore, at this time, my fellow Trustees and I have decided not to increase our distributions to unitholders, keeping the Fund's annual distributions unchanged at
"We have identified several acquisition opportunities that may be available to us and it is important that we be in a position to pursue them in the near term and execute our growth strategies going forward. We must ensure that the Fund's structure does not hinder or impede our progress. The Fund's Trustees are actively working with management to review the corporate structure with a committed goal of enhancing total return for our investors."
Financial Highlights for the Three and Six Months Ended
- Total consolidated revenues increased 17.1% and 15.2% to
- Total consolidated revenue growth, excluding the impact of foreign currency translation, was 18.5% and 15.4%.
- Total EBITDA growth, excluding the impact of foreign currency translation, was 18.9% and 17.2%.
- Free cash flow available for distribution(B) increased to
- The Fund's payout ratio was 78.4% and 83.5%.
- The Fund's payout ratio excluding the effects of the foreign currency hedge was 81.2% and 85.7%.
Other Highlights for the Three and Six Months Ended
- The Trustees have elected to maintain current annualized distributions at a rate of
- Effective
- Effective
- Effective
- For the three months ended
Summarized Financial Highlights
Three months Six months
ended ended
June 30 , June 30,
2007 2007
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Revenues June 30, 2006 $ 192,655 $ 371,519
Organic growth and acquisitions (includes
fuel and environmental surcharges) 35,589 57,143
Foreign currency exchange impact (2,729) (847)
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Revenues June 30, 2007 $ 225,515 $ 427,815
%Revenue growth before foreign currency
exchange impact 18.5% 15.4%
Total revenue growth % 17.1% 15.2%
EBITDA(A) June 30, 2006 $ 60,676 $ 111,227
Organic growth and acquisitions 11,478 19,110
Foreign currency exchange impact (720) (231)
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EBITDA(A) June 30, 2007 $ 71,434 $ 130,106
%EBITDA(A) growth before foreign currency
exchange impact 18.9% 17.2%
Total EBITDA(A) growth % 17.7% 17.0%
Free cash flow available for
distribution(B) June 30, 2006 $ 33,293 $ 63,885
Organic growth and acquisitions 6,854 9,147
Foreign currency exchange impact (337) (103)
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Free cash flow available for
distribution(B) June 30, 2007 $ 39,810 $ 72,929
%Free cash flow available for
distribution(B) growth before foreign
currency exchange impact 20.6% 14.3%
Total free cash flow available for
distribution(B) growth % 19.6% 14.2%
Free cash flow available for
distribution(B) without hedge $ 38,439 $ 70,999
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Aggregate distributions declared $ 31,227 $ 60,872
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Payout ratio with foreign currency hedge 78.4% 83.5%
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Payout ratio without foreign currency hedge 81.2% 85.7%
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Foreign Currency Hedge
A significant portion of the Fund's operating results, maintenance capital
and landfill expenditures ("maintenance expenditures"), interest on long-term
debt, and cash income taxes reported in Canadian dollars, originate in the
U.S. Operating expenses, maintenance expenditures, interest on long-term
debt, and cash income taxes originating in the U.S. are settled in U.S.
dollars generated from U.S. operations which results in a natural cash flow
hedge. A portion of the resultant free cash flow available for distribution(B)
is hedged by three single rate hedge agreements through February 2008 to
purchase 4,500 Canadian dollars monthly at an average foreign currency exchange
rate of approximately $1.222.
Financial Highlights
(in thousands, except per weighted average trust unit and PPS)
Three months ended Six months ended
June 30 June 30
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2007 2006 2007 2006
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(unaudited) (unaudited) (unaudited) (unaudited)
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Revenues $ 225,515 $ 192,655 $ 427,815 $ 371,519
Operating expenses 127,888 108,761 244,518 212,442
Selling, general and
administration
expenses ("SG&A") 26,193 23,218 53,191 47,850
Income before the
following 71,434 60,676 130,106 111,227
Amortization 41,372 36,971 79,290 72,244
Interest on long-term debt 8,471 8,203 18,365 16,229
Financing costs - - 864 79
Net gain on sale of
capital assets (1,026) (301) (1,234) (355)
Net gain on financial
instruments (6,158) (4,110) (4,718) (3,799)
Net foreign exchange loss 13,483 7,599 15,104 6,860
Other expenses - 52 5 159
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Income before income taxes
and non-controlling interest 15,292 12,262 22,430 19,810
Income tax expense 6,164 3,237 521 4,774
Non-controlling interest 1,523 1,835 3,718 2,918
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Net income $ 7,605 $ 7,190 $ 18,191 $ 12,118
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Net income per weighted
average trust unit,
basic & diluted $ 0.13 $ 0.13 $ 0.33 $ 0.23
Weighted average number
of trust units outstanding 57,350 53,616 55,557 53,393
Weighted average number
of PPSs outstanding 11,160 11,775 11,328 11,998
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Weighted average number of
trust units and PPSs
outstanding 68,510 65,391 66,885 65,391
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Aggregate number of trust
units and PPSs outstanding 68,706 65,391 68,706 65,391
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Maintenance expenditures $ 18,013 $ 17,118 $ 30,339 $ 26,817
Growth capital and landfill
expenditures
("growth expenditures") 23,332 22,708 33,516 38,149
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Total maintenance and
growth expenditures $ 41,345 $ 39,826 $ 63,855 $ 64,966
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Free cash flow available
for distribution(B) $ 39,810 $ 33,293 $ 72,929 $ 63,885
Free cash flow available
for distribution(B) per
weighted average
trust unit and PPS $ 0.58 $ 0.51 $ 1.09 $ 0.98
Aggregate distributions
declared on weighted
average trust units $ 26,016 $ 22,775 $ 50,569 $ 45,550
Distributions attributable
to non-controlling interest 5,211 5,002 10,303 10,004
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Aggregate distributions
declared $ 31,227 $ 27,777 $ 60,872 $ 55,554
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Aggregate distributions
declared per weighted
average trust unit
and PPS $ 0.46 $ 0.42 $ 0.91 $ 0.85
Management's Discussion
(all amounts are in thousands, except per trust unit, PPS, and foreign currency exchange rate amounts)
Foreign Currency Exchange Rates
The Fund reports its financial results in Canadian dollars, and consequently changes in the foreign currency exchange rate between
2007
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Current Average Cumulative average
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March 31 $ 1.153 $ 1.172 $ 1.172
June 30 $ 1.063 $ 1.098 $ 1.135
2006
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Current Average Cumulative average
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March 31 $ 1.167 $ 1.155 $ 1.155
June 30 $ 1.115 $ 1.122 $ 1.138
The impact of changes in the foreign currency exchange rate on the Fund's
consolidated financial results is included in the Fund's MD&A for the three
and six months ended
Operating Highlights
Three months ended June 30
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2007 2006 $ Change
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Revenues $ 225,515 $ 192,655 $ 32,860
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Canada $ 86,019 $ 72,329 $ 13,690
U.S. south $ 80,398 $ 66,021 $ 14,377
U.S. northeast $ 59,098 $ 54,305 $ 4,793
Operating expenses $ 127,888 $ 108,761 $ 19,127
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Canada $ 45,054 $ 36,398 $ 8,656
U.S. south $ 52,226 $ 44,362 $ 7,864
U.S. northeast $ 30,608 $ 28,001 $ 2,607
SG&A $ 26,193 $ 23,218 $ 2,975
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Canada $ 9,308 $ 8,970 $ 338
U.S. south $ 10,394 $ 8,538 $ 1,856
U.S. northeast $ 6,491 $ 5,710 $ 781
EBITDA(A) $ 71,434 $ 60,676 $ 10,758
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Canada $ 31,657 $ 26,961 $ 4,696
U.S. south $ 17,778 $ 13,121 $ 4,657
U.S. northeast $ 21,999 $ 20,594 $ 1,405
Operating Highlights
Six months ended June 30
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2007 2006 $ Change
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Revenues $ 427,815 $ 371,519 $ 56,296
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Canada $ 159,374 $ 136,806 $ 22,568
U.S. south $ 154,933 $ 129,841 $ 25,092
U.S. northeast $ 113,508 $ 104,872 $ 8,636
Operating expenses $ 244,518 $ 212,442 $ 32,076
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Canada $ 82,721 $ 69,280 $ 13,441
U.S. south $ 100,781 $ 87,701 $ 13,080
U.S. northeast $ 61,016 $ 55,461 $ 5,555
SG&A $ 53,191 $ 47,850 $ 5,341
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Canada $ 19,790 $ 18,371 $ 1,419
U.S. south $ 20,473 $ 17,603 $ 2,870
U.S. northeast $ 12,928 $ 11,876 $ 1,052
EBITDA(A) $ 130,106 $ 111,227 $ 18,879
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Canada $ 56,863 $ 49,155 $ 7,708
U.S. south $ 33,679 $ 24,537 $ 9,142
U.S. northeast $ 39,564 $ 37,535 $ 2,029
The discussions to follow are in addition to the impact of foreign currency exchange fluctuations as detailed in the Fund's MD&A for the three and six months ended
Revenues - Three and six months ended
The increase in consolidated revenues is due in part to solid organic Canadian and U.S. segment growth, where organic growth excludes the impact of fuel and environmental surcharges, acquisitions, and foreign currency translation, coupled with growth through acquisition. The period over period impact of foreign currency translation was partially offset by higher commodity prices.
Operating expenses - Three and six months ended
Higher total disposal and labour costs are attributable to higher collected waste volumes and higher costs to service new and existing customers, contracts, and acquisitions. The balance of the changes is due principally to higher vehicle operating costs and repairs and maintenance expense for the same reasons outlined above.
Selling, general and administration expenses - Three and six months ended
Free Cash Flow Available for Distribution(B)
Free cash flow available for distribution(B) totalled
Free cash flow available for distribution(B) per weighted average trust unit and PPS for the three and six months ended
Free Cash Flow Available for Distribution(B) - Cash Flow Approach
For more information, contact:
BFI Canada Income Fund
Chaya Cooperberg
Director, Investor Relations and Corporate Communications
(416) 401-7729
Email: chaya.cooperberg@bficanada.com
www.bficanada.com
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