Date: October 30, 2009
Source: IESI-BFC Ltd.
IESI-BFC Ltd. (the "Company") (TSX: BIN) (NYSE: BIN) reported financial results for the three and nine months ended
(All amounts are in
Management Commentary
Revenue totalled
Net income in the quarter was
In the quarter, organic gross revenue grew 1.6% in
"We delivered strong performance in the third quarter relative to current economic conditions," said
Mr. Carrigan added, "We are very pleased with these improvements in our business, which illustrate the effectiveness of our differentiated operating model. With our free cash flow(B) levels and strong balance sheet, we are well-positioned to further apply our strategies for organic growth, and growth through acquisition."
For the nine months ended
For the nine months ended
Financial and Other Highlights
For the Three Months Ended
Revenues declined
EBITDA(A) increased
Free cash flow increased
Net income per diluted share,
Core price increased 3.0% in
Volumes increased 0.3% in
For the Nine Months Ended
Revenues declined
EBITDA(A) increased
Free cash flow increased
Net income per diluted share,
Core price increased 3.3% in
Volumes decreased (0.9%) in
Raised gross common share proceeds of
Raised gross common share proceeds of
Applied the net proceeds from both offerings, approximately
At
Change in Reporting Currency and Generally Accepted Accounting Principles
In connection with our listing on the
Electing to report our financial position and results of operations in U.S. dollars reduces foreign exchange fluctuations in our reported amounts as a significant portion of our assets, liabilities and operations are resident or conducted in the U.S., in U.S. dollars.
We also elected to report our financial results in accordance with accounting principles generally accepted in the U.S. ("U.S. GAAP") to improve the comparability of our financial information with our peers, who are predominantly U.S. publicly listed companies.
FX Rates
Our consolidated financial position and operating results have been translated to U.S. dollars applying the following FX rates:
2009 2008
----------------------------------------------------------------------------
Consolidated Consoli- Consolidated
Consolidated Statement of dated Statement of
Balance Operations and Balance Operations and
Sheet Comprehensive Income Sheet Comprehensive Income
----------------------------------------------------------------------------
Cumulative Cumulative
Current Average Average Current Average Average
----------------------------------------------------------------------------
December 31 $0.8166 $0.9371
March 31 $0.7935 $0.8030 $0.8030 $0.9729 $0.9959 $0.9959
June 30 $0.8602 $0.8568 $0.8290 $0.9817 $0.9901 $0.9930
September 30 $0.9327 $0.9113 $0.8547 $0.9435 $0.9599 $0.9817
Financial Highlights
(in thousands of U.S. dollars, except per weighted average share or trust
unit amounts, unless otherwise stated)
Three months ended Nine months ended
September 30 September 30
----------------------------------------------------------------------------
2009 2008 2009 2008
----------------------------------------------------------------------------
(unaudited) (unaudited) (unaudited) (unaudited)
----------------------------------------------------------------------------
Operating results
Revenues $268,411 $282,235 $746,004 $803,197
Operating expenses 156,195 169,209 435,969 484,501
Selling, general and
administrative ("SG&A") 33,272 32,301 95,949 92,709
Amortization 41,946 46,928 120,702 135,297
----------------------------------------------------------------------------
Operating income 36,998 33,797 93,384 90,690
Interest on long-term debt 7,851 13,367 26,246 40,111
Net gain on sale of capital
and landfill assets (13) (265) (128) (351)
Net foreign exchange loss
(gain) 61 3 238 (617)
Net loss (gain) on financial
instruments 305 98 (866) 3,623
Conversion costs 93 2,216 208 2,216
Other expenses 44 31 109 88
----------------------------------------------------------------------------
Income before income taxes 28,657 18,347 67,577 45,620
Income tax expense 9,548 2,073 23,724 580
----------------------------------------------------------------------------
Net income $ 19,109 $ 16,274 $ 43,853 $ 45,040
----------------------------------------------------------------------------
Net income per weighted
average share or trust unit,
basic $ 0.20 $ 0.24 $ 0.54 $ 0.66
Net income per weighted
average share or trust unit,
diluted $ 0.20 $ 0.24 $0.53 $ 0.66
Weighted average number of
shares or trust units
outstanding (thousands),
basic 82,294 57,569 71,102 57,569
Weighted average number of
shares or trust units
outstanding (thousands),
diluted 93,431 68,706 82,239 68,706
Replacement and growth
expenditures (see page 10)
Replacement expenditures $ 19,322 $ 26,834 $ 49,094 $ 56,206
Growth expenditures 8,839 15,743 38,781 45,873
----------------------------------------------------------------------------
Total replacement and growth
expenditures $ 28,161 $ 42,577 $ 87,875 $102,079
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Operating and free cash
flow(B)
Cash generated from operating
activities $ 76,597 $ 69,876 $192,649 $169,170
Free cash flow(B) $ 38,504 $ 20,755 $ 90,604 $ 77,423
Free cash flow(B) per weighted
average share or trust unit
outstanding, diluted $ 0.41 $ 0.30 $ 1.10 $ 1.13
Dividends and distributions
Dividends and distributions
declared (shares or trust
units) $ 18,546 $ 25,094 $ 49,560 $ 77,058
Dividends declared
(participating preferred
shares ("PPSs")) 2,523 4,853 7,140 14,909
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Total dividends and
distributions declared $ 21,069 $ 29,947 $ 56,700 $ 91,967
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Total dividends or distributions
declared per weighted
average share or trust unit,
diluted $ 0.23 $ 0.44 $ 0.69 $ 1.34
FX Impact on Consolidated Results
The following tables have been prepared to assist readers in assessing the impact of FX on select consolidated results for the three and nine months ended
Three months ended
---------------------------------------------------------------------------
September September September September September
30, 2008 30, 2009 30, 2009 30, 2009 30, 2009
---------------------------------------------------------------------------
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
---------------------------------------------------------------------------
(organic, (holding
acquisition FX
and other constant
non- with the
(as operating comparative (as
reported) changes) period) (FX impact) reported)
----------------------------------------------------------------------------
Consolidated
Statement
of Operations
Revenues $282,235 $ (7,554) $274,681 $ (6,270) $268,411
Operating
expenses 169,209 (9,944) 159,265 (3,070) 156,195
SG&A 32,301 1,716 34,017 (745) 33,272
Amortization 46,928 (4,144) 42,784 (838) 41,946
----------------------------------------------------------------------------
Operating
income 33,797 4,818 38,615 (1,617) 36,998
Interest on
long-term debt 13,367 (5,460) 7,907 (56) 7,851
Net gain on
sale of
capital and
landfill
assets (265) 246 (19) 6 (13)
Net foreign
exchange loss 3 60 63 (2) 61
Net loss on
financial
instruments 98 217 315 (10) 305
Conversion costs 2,216 (2,115) 101 (8) 93
Other expenses 31 13 44 - 44
----------------------------------------------------------------------------
Income before
income taxes 18,347 11,857 30,204 (1,547) 28,657
----------------------------------------------------------------------------
Net income tax
expense 2,073 7,817 9,890 (342) 9,548
----------------------------------------------------------------------------
Net income $ 16,274 $ 4,040 $ 20,314 $ (1,205) $ 19,109
----------------------------------------------------------------------------
----------------------------------------------------------------------------
EBITDA(A) $ 80,725 $ 674 $ 81,399 $ (2,455) $ 78,944
Free cash flow(B) $ 20,755 $ 19,409 $ 40,164 $ (1,660) $ 38,504
Nine months ended
---------------------------------------------------------------------------
September September September September September
30, 2008 30, 2009 30, 2009 30, 2009 30, 2009
---------------------------------------------------------------------------
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
---------------------------------------------------------------------------
(organic, (holding FX
acquisition constant
and other with the
(as non-operating comparative (as
reported) changes) period) (FX impact) reported)
---------------------------------------------------------------------------
Consolidated
Statement of
Operations
Revenues $803,197 $(19,634) $783,563 $(37,559) $746,004
Operating
expenses 484,501 (29,266) 455,235 (19,266) 435,969
SG&A 92,709 8,288 100,997 (5,048) 95,949
Amortization 135,297 (8,960) 126,337 (5,635) 120,702
---------------------------------------------------------------------------
Operating
income 90,690 10,304 100,994 (7,610) 93,384
Interest on
long-term debt 40,111 (12,828) 27,283 (1,037) 26,246
Net gain on
sale of capital
and landfill
assets (351) 198 (153) 25 (128)
Net foreign
exchange (gain)
loss (617) 850 233 5 238
Net loss (gain)
on financial
instruments 3,623 (4,466) (843) (23) (866)
Conversion
costs 2,216 (1,977) 239 (31) 208
Other expenses 88 21 109 - 109
---------------------------------------------------------------------------
Income before
income taxes 45,620 28,506 74,126 (6,549) 67,577
---------------------------------------------------------------------------
Net income tax
expense 580 25,196 25,776 (2,052) 23,724
---------------------------------------------------------------------------
Net income $ 45,040 $ 3,310 $ 48,350 $ (4,497) $ 43,853
---------------------------------------------------------------------------
---------------------------------------------------------------------------
EBITDA(A) $225,987 $ 1,344 $227,331 $(13,245) $214,086
Free cash
flow(B) $ 77,423 $ 20,534 $ 97,957 $ (7,353) $ 90,604
Conversion
Pursuant to the plan of arrangement, the conversion of the
Management's Discussion
(all amounts are in thousands of U.S. dollars, except per share or trust unit, PPS, and FX rate amounts, unless otherwise stated)
Segment Highlights
Three months ended September 30
----------------------------------------------------------------------------
2008 2009 Change 2009 Change
----------------------------------------------------------------------------
(2009 (2009 as
holding reported
(holding FX constant less 2008
(as FX less 2008 (as as
reported) constant) as reported) reported) reported)
----------------------------------------------------------------------------
Revenues $282,235 $274,681 $(7,554) $268,411 $(13,824)
----------------------------------------------------------------------------
Canada $100,965 $100,914 $ (51) $ 94,644 $ (6,321)
U.S. south $ 87,809 $ 89,359 $ 1,550 $ 89,359 $ 1,550
U.S. northeast $ 93,461 $ 84,408 $(9,053) $ 84,408 $ (9,053)
Operating expenses $169,209 $159,265 $(9,944) $156,195 $(13,014)
----------------------------------------------------------------------------
Canada $ 53,938 $ 50,879 $(3,059) $ 47,809 $ (6,129)
U.S. south $ 56,137 $ 56,379 $242 $ 56,379 $ 242
U.S. northeast $ 59,134 $ 52,007 $(7,127) $ 52,007 $ (7,127)
SG&A $ 32,301 $ 34,017 $ 1,716 $ 33,272 $ 971
----------------------------------------------------------------------------
Canada $ 11,726 $ 12,967 $ 1,241 $ 12,222 $ 496
U.S. south $ 10,617 $ 11,669 $ 1,052 $ 11,669 $ 1,052
U.S. northeast $ 9,958 $ 9,381 $ (577) $ 9,381 $ (577)
EBITDA(A) $ 80,725 $ 81,399 $ 674 $ 78,944 $ (1,781)
----------------------------------------------------------------------------
Canada $ 35,301 $ 37,068 $ 1,767 $ 34,613 $ (688)
U.S. south $ 21,055 $ 21,311 $ 256 $ 21,311 $ 256
U.S. northeast $ 24,369 $ 23,020 $(1,349) $ 23,020 $ (1,349)
Nine months ended September 30
----------------------------------------------------------------------------
2008 2009 Change 2009 Change
----------------------------------------------------------------------------
(2009 holding (2009 as
FX constant reported less
(as (holding FX less 2008 as (as 2008 as
reported) constant) reported) reported) reported)
----------------------------------------------------------------------------
Revenues $ 803,197 $ 783,563 $ (19,634) $ 746,004 $ (57,193)
----------------------------------------------------------------------------
Canada $ 286,190 $ 290,374 $ 4,184 $ 252,815 $ (33,375)
U.S. south $ 254,691 $ 253,305 $ (1,386) $ 253,305 $ (1,386)
U.S.
northeast $ 262,316 $ 239,884 $ (22,432) $ 239,884 $ (22,432)
Operating
expenses $ 484,501 $ 455,235 $ (29,266) $ 435,969 $ (48,532)
----------------------------------------------------------------------------
Canada $ 154,518 $ 148,950 $ (5,568) $ 129,684 $ (24,834)
U.S. south $ 163,127 $ 156,216 $ (6,911) $ 156,216 $ (6,911)
U.S.
northeast $ 166,856 $ 150,069 $ (16,787) $ 150,069 $ (16,787)
SG&A $ 92,709 $ 100,997 $ 8,288 $ 95,949 $ 3,240
----------------------------------------------------------------------------
Canada $ 33,651 $ 39,025 $ 5,374 $ 33,977 $ 326
U.S. south $ 31,528 $ 33,967 $ 2,439 $ 33,967 $ 2,439
U.S.
northeast $ 27,530 $ 28,005 $ 475 $ 28,005 $ 475
EBITDA(A) $ 225,987 $ 227,331 $ 1,344 $ 214,086 $ (11,901)
----------------------------------------------------------------------------
Canada $ 98,021 $102,399 $ 4,378 $ 89,154 $ (8,867)
U.S. south $ 60,036 $ 63,122 $ 3,086 $ 63,122 $ 3,086
U.S.
northeast $ 67,930 $ 61,810 $ (6,120) $ 61,810 $ (6,120)
Revenues
Gross revenue by service type
Three months ended September 30, 2009
---------------------------------------------------------------------------
Canada - stated Canada - U.S. -
in Canadian percentage of percentage of
dollars gross revenues U.S. gross revenues
---------------------------------------------------------------------------
Commercial $ 40,472 33.3% $ 46,789 23.1%
Industrial 20,063 16.5% 26,708 13.2%
Residential 16,469 13.5% 43,711 21.6%
Transfer and
disposal 34,850 28.7% 74,670 36.9%
Recycling and
other 9,702 8.0% 10,424 5.2%
---------------------------------------------------------------------------
Gross revenues 121,556 100.0% 202,302 100.0%
Intercompany (16,560) (28,535)
---------------------------------------------------------------------------
Revenues $ 104,996 $ 173,767
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---------------------------------------------------------------------------
Nine months ended September 30, 2009
---------------------------------------------------------------------------
Canada - stated Canada - U.S. -
in Canadian percentage of percentage of
dollars gross revenues U.S. gross revenues
---------------------------------------------------------------------------
Commercial $ 119,093 35.0% $ 138,814 24.2%
Industrial 56,839 16.7% 78,370 13.7%
Residential 46,287 13.6% 120,544 21.0%
Transfer and
disposal 92,501 27.2% 210,366 36.7%
Recycling and
other 25,461 7.5% 25,055 4.4%
---------------------------------------------------------------------------
Gross revenues 340,181 100.0% 573,149 100.0%
Intercompany (44,399) (79,960)
---------------------------------------------------------------------------
Revenues $ 295,782 $ 493,189
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Gross revenue growth components - expressed in percentages and excluding FX
Three months Nine months
ended September ended September
30, 2009 30, 2009
----------------------------------------------------------------------------
Canada U.S. Canada U.S.
----------------------------------------------------------------------------
Price
Core price 3.0 2.0 3.3 2.5
Fuel surcharges (1.9) (3.8) (1.2) (2.7)
Recycling and other 0.2 (1.6) (0.3) (2.2)
----------------------------------------------------------------------------
Total price 1.3 (3.4) 1.8 (2.4)
Volume 0.3 (0.5) (0.9) (3.1)
----------------------------------------------------------------------------
Total organic gross
revenue growth (decline) 1.6 (3.9) 0.9 (5.5)
Acquisitions 0.7 1.5 1.8 1.9
----------------------------------------------------------------------------
Total gross revenue
growth (decline) 2.3 (2.4) 2.7 (3.6)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Three months ended
Excluding the impact of FX, the increase in Canadian segment gross revenues is attributable to core price, acquisition and volume growth. With the exception of recycled materials pricing, we realized price growth in all of our services. Volume growth was modest, but we achieved growth in our commercial, transfer, landfill and recycling services. As in the prior quarter, comparative industrial collection volumes remained soft and partially offset this volume growth. Lower diesel fuel costs are the primary reason for lower fuel surcharges.
U.S. south segment gross revenues increased. Core price, acquisition and volume growth all contributed to the comparative increase. We enjoyed volume growth from our commercial and residential services, as a result of increased sales efforts and contract wins. This volume growth was partially offset by lower comparative industrial volumes, which is attributable to the softer economic environment in this segment. Lower comparative fuel surcharges is the primary offset to gross revenue growth as a result of lower comparative diesel fuel costs. A comparative decline in recycled materials pricing represents the balance of the comparative change.
Gross revenues in our U.S. northeast segment declined. Volume and fuel surcharge declines were partially offset by modest price growth. While gross revenues continue to be affected by lower volumes, we have not experienced any further deterioration as a result of the economic slowdown. Pricing in our collection service lines remained strong, but was partially offset by pricing at our landfills and transfer stations. Volume growth in our landfills has more than offset landfill pricing declines. The balance of the change is the result of lower recycled materials pricing. Recycled materials pricing started to decline in the third and fourth quarters of 2008, and while pricing has strengthened since the fourth quarter of 2008, it has not reached the same levels as the comparative period.
Nine months ended
Excluding the impact of FX, the increase in Canadian segment gross revenues is attributable to core price and acquisition growth. Fuel surcharge declines and declines due to lower volumes were the primary offsets to core price and acquisition growth. Lower diesel fuel costs is the primary reason for lower fuel surcharges, while lower industrial collection volumes was the most significant contributor to the decline in gross revenues attributable to volumes. A decline in year-to-date recycled materials pricing accounts for the balance of the change.
On a year-to-date basis, U.S. south segment gross revenues increased marginally. The comparative increase is the result of strong core price, acquisition and volume growth. The reasons for this growth are consistent with those outlined above for the three months ended. Lower comparative fuel surcharges are the primary offset, coupled with lower gross revenue contributions from recycled materials pricing.
Gross revenues in our U.S. northeast segment declined. Consistent with the three months ended, volume and fuel surcharge declines account for the year-to-date comparative decline in gross revenues. Pricing for our collection services continues to be strong but has been offset by recycled materials pricing and to a lesser extent landfill pricing. The balance of the year-to-date change is attributable to contributions from acquisitions.
Operating expenses
Three months ended
Excluding the impact of FX, the decline in Canadian segment operating expenses is due to lower vehicle operating costs. Lower comparative diesel fuel costs contributed to the comparative decline. Higher labour costs attributable to acquisitions partially offset vehicle operating cost declines.
Operating costs in our U.S. south segment increased marginally period over period. Comparatively, we incurred higher labour costs to collect higher comparative waste volumes and incurred higher insurance costs. Higher insurance costs represent a non-cash actuarial adjustment to our U.S. accident claims reserves. Cost savings resulting from lower vehicle operating costs, attributable to lower diesel fuel costs, almost entirely offset these increases.
In the U.S. northeast, operating costs declined. The decline is attributable to lower disposal, transportation and vehicle operating costs. Lower disposal costs are the result of the economic slowdown in this region, while lower transportation and vehicle operating costs are due to the comparative decline in diesel fuel costs. Higher accident claims reserves partially offset these declines.
Nine months ended
Excluding the impact of FX, the year-to-date decline in Canadian segment operating expenses is due to lower disposal and vehicle operating costs, partially offset by higher labour costs due in part to acquisitions. The reasons for these changes are consistent with the explanations outlined above for the three months ended.
Year-to-date, our U.S. south segment has benefited from lower diesel fuel costs. The balance of the change is attributable to higher labour and insurance claims costs. Acquisitions and marginally higher collected volumes is the primary reason for the rise in comparative labour costs.
The reasons for the U.S. northeast segment decline are consistent with those outlined above for the three months ended.
SG&A expenses
Three months ended
Our Canadian segment SG&A expense increase is due entirely to fair value changes in share based compensation, which is an expense in the current period compared to a prior period recovery.
Higher salary expense, due to higher sales staffing levels in our U.S. south segment, is the primary reason for the increase. Lower professional fees and salaries in our U.S. northeast segment are the primary reasons for the period over period decline.
Nine months ended
Excluding the impact of FX, Canadian segment SG&A expense increased. The increase is attributable to fair value changes to share based compensation as well as higher salaries. Higher sales staffing levels is the primary contributor to the rise in comparative salaries.
Higher salaries and professional fees are the primary cause of the year-to-date increase in SG&A expense for our U.S. south and northeast segments.
Non-controlling interest
With the adoption of guidance on non-controlling interests in consolidated financial statements, which became effective
Free cash flow (B)
Purpose and objective
The purpose of presenting this non-GAAP measure is to align our disclosure with other U.S. publicly listed companies in our industry. Investors and analysts use this calculation as a measure of our valuation and liquidity. We use this non-GAAP measure to assess our performance relative to other U.S. publicly listed companies, to assess our primary sources and uses of cash flow, and to assess our ability to sustain our dividend policy.
Free cash flow (B) - cash flow approach
Three months ended September Nine months ended September
30 30
----------------------------------------------------------------------------
2009 2008 Change 2009 2008 Change
----------------------------------------------------------------------------
Cash generated
from operating
activities
(per the
statement of
cash flows) $ 76,597 $ 69,876 $ 6,721 $ 192,649 $ 169,170 $ 23,479
----------------------------------------------------------------------------
Operating
Changes in
non-cash
working
capital items (10,546) (4,079) (6,467) (15,476) 14,690 (30,166)
Capital and
landfill asset
purchases (28,161) (42,577) 14,416 (87,875) (102,079) 14,204
Purchase of
restricted shares - (3,912) 3,912 (172) (3,912) 3,740
Stock option
expense
(recovery) 416 (781) 1,197 1,000 (1,198) 2,198
Conversion costs 93 2,216 (2,123) 208 2,216 (2,008)
Other expenses 44 31 13 109 88 21
Financing
Financing and
landfill
development costs
(net of non-cash
portion) - (22) 22 (77) (935) 858
Net realized
foreign exchange
loss (gain) 61 3 58 238 (617) 855
----------------------------------------------------------------------------
Free cash
flow(B) $ 38,504 $ 20,755 $ 17,749 $ 90,604 $ 77,423 $ 13,181
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Free cash flow (B) - EBITDA(A) approach
Three months ended September Nine months ended September
30 30
----------------------------------------------------------------------------
2009 2008 Change 2009 2008 Change
----------------------------------------------------------------------------
EBITDA(A) $ 78,944 $ 80,725 $ (1,781) $ 214,086 $ 225,987 $(11,901)
----------------------------------------------------------------------------
Restricted share
expense 390 954 (564) 1,081 954 127
Stock option
expense
(recovery) 416 (781) 1,197 1,000 (1,198) 2,198
Purchase of
restricted shares - (3,912) 3,912 (172) (3,912) 3,740
Capital and
landfill asset
purchases (28,161) (42,577) 14,416 (87,875) (102,079) 14,204
Landfill closure
and post-closure
expenditures (2,609) (485) (2,124) (4,964) (1,108) (3,856)
Landfill closure
and post-closure
cost accretion
expense 805 771 34 2,322 2,326 (4)
Interest on
long-term debt (7,851) (13,367) 5,516 (26,246) (40,111) 13,865
Non-cash interest
expense 676 846 (170) 2,221 2,819 (598)
Current income
tax expense (4,106) (1,419) (2,687) (10,849) (6,255) (4,594)
----------------------------------------------------------------------------
Free cash flow(B) $ 38,504 $ 20,755 $ 17,749 $ 90,604 $ 77,423 $ 13,181
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Three months ended
Free cash flow(B) increased period over period. Excluding the impact of FX, we generated modest increases in Canadian and U.S. south segment EBITDA(A). Our U.S. northeast segment delivered a slight reduction in comparative EBITDA(A) contributions due to lower volumes and lower commodity and other pricing stemming from economic weakness. Lower capital and landfill asset purchases in our U.S. segment are the primary contributors to the increase in free cash flow(B). This comparative decline in purchases is principally attributable to the timing of landfill cell construction. The Canadian segment also contributed to the comparative decline due primarily to the timing of growth expenditures as a result of a decline in new contract wins. Lower interest rates and overall debt levels contributed to the decline in interest expense, while higher cash taxes in
Nine months ended
For the nine months ended, free cash flow(B) increased comparatively. As outlined above for the three months ended, modest contributions from increasing EBITDA(A), excluding the impact of FX, coupled with lower capital and landfill purchases and borrowing costs are the primary reasons for the increase in free cash flow(B). The reasons for these changes are consistent with those outlined above for the three months ended.
Capital and landfill purchases
Capital and landfill purchases characterized as replacement and growth expenditures are as follows:
Three months ended September 30 Nine months ended September 30
----------------------------------------------------------------------------
2009 2008 Change 2009 2008 Change
----------------------------------------------------------------------------
Replacement $19,322 $26,834 $(7,512) $49,094 $56,206 $(7,112)
Growth 8,839 15,743 (6,904) 38,781 45,873 (7,092)
----------------------------------------------------------------------------
Total $28,161 $42,577 $(14,416) $87,875 $102,079 $(14,204)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Capital and landfill purchases - replacement
Capital and landfill purchases characterized as "replacement expenditures" represent cash outlays to sustain current cash flows and are funded from free cash flow(B). Replacement expenditures may include the replacement of existing capital assets, including vehicles, equipment, containers, compactors, furniture, fixtures and computer equipment. Replacement expenditures also include all construction spending for our operating landfills.
Three months ended
Excluding the impact of FX, replacement expenditures decreased. The decline is attributable to the timing of landfill expenditures in our U.S. segment.
Nine months ended
Excluding the impact of FX, replacement expenditures decreased. As outlined above for the three months ended, landfill expenditures in our U.S. segment represent the majority of the comparative decline. The balance of the change is attributable to the timing of landfill construction in our Canadian segment.
Capital and landfill purchases - growth
Capital and landfill purchases characterized as "growth expenditures" represent cash outlays to generate new or future cash flows and are generally funded from free cash flow(B). Growth expenditures may include vehicles, equipment, containers, compactors, furniture, fixtures, computer equipment and facilities (new or expansion) to support new contract wins and organic business growth.
Three months ended
Net of FX, growth expenditures decreased. The decline is most pervasive in
Nine months ended
Net of FX, growth expenditures decreased. In
Readers are reminded that revenue, EBITDA(A), and cash flow contributions derived from vehicles, equipment and container growth expenditures will materialize over future periods.
Dividends and Distributions
(all amounts are in thousands of U.S. dollars, except per share or trust unit and PPS amounts)
2009
Our expected regular dividend record and payment dates, and payment amounts, are as follows:
Expected regular dividend
(payable quarterly)
Dividend amounts per share
and PPS - stated in Canadian
Record date Payment date dollars
----------------------------------------------------------------------------
March 31, 2009 April 15, 2009 $ 0.125
June 30, 2009 July 15, 2009 0.125
September 30, 2009 October 15, 2009 0.125
December 31, 2009 January 15, 2010 0.125
----------------------------------------------------------------------------
Total $ 0.500
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Our expected special dividend record and payments dates, and payment amounts, payable only in 2009, are as follows:
Expected special dividend
schedule (payable
quarterly)
Dividend amounts per share
and PPS - stated in Canadian
Record date Payment date dollars
----------------------------------------------------------------------------
March 31, 2009 April 15, 2009 $ 0.125
June 30, 2009 July 15, 2009 0.125
September 30, 2009 October 15, 2009 0.125
December 17, 2009 December 31, 2009 0.125
----------------------------------------------------------------------------
Total $ 0.500
----------------------------------------------------------------------------
----------------------------------------------------------------------------
2008
In 2008, we declared distributions and dividends to trust unit and participating preferred shareholders for the three and nine month periods ended
Long-term debt
Summary details of our long-term debt facilities at
Letters of
credit (not
reported as
long-term
debt on the
Consolidated
Available Facility Balance Available
lending drawn Sheet) capacity
------------------------------------------------------
Canadian
long-term
debt
facilities
- stated
in
Canadian
dollars
Senior
secured
debenture,
series B $ 58,000 $ 58,000 $ - $ -
Revolving
credit
facility $305,000 $167,000 $ 25,013 $112,987
U.S.
long-term
debt
facilities
- stated
in U.S.
dollars
Term loan $195,000 $195,000 $ - $ -
Revolving
credit
facility $588,500 $138,000 $120,097 $330,403
Variable
rate
demand
solid
waste
disposal
bonds
("IRBs") $104,000 $104,000 $ - $ -
Canadian long-term debt facilities
We drew on our revolving credit facility capacity to repay our
Long-term debt to EBITDA(A)
At
Funded debt to EBITDA(A)
At
September 30, 2009 December 31, 2008
----------------------------------------------------------------
Canada U.S. Canada U.S.
----------------------------------------------------------------
Funded debt to
EBITDA(A) 1.78 2.59 2.10 3.93
Funded debt to
EBITDA(A) maximum 2.75 4.00 2.75 4.25
Definitions of EBITDA and free cash flow
(A) All references to "EBITDA" in this press release are to revenues less operating and SG&A expenses on the consolidated statement of operations and comprehensive income. EBITDA excludes some or all of the following: "amortization, interest on long-term debt, financing costs, net gain or loss on sale of capital and landfill assets, net foreign exchange gain or loss, net gain or loss on financial instruments, conversion costs, other expenses, and income taxes". EBITDA is a term used by us that does not have a standardized meaning prescribed by U.S. GAAP and is therefore unlikely to be comparable to similar measures used by other issuers. EBITDA is a measure of our operating profitability, and by definition, excludes certain items as detailed above. These items are viewed by us as either non-cash (in the case of amortization, net gain or loss on financial instruments, net foreign exchange gain or loss, and deferred income taxes) or non-operating (in the case of interest on long-term debt, net gain or loss on sale of capital and landfill assets, conversion costs, other expenses, and current income taxes). EBITDA is a useful financial and operating metric for us, our Board of Directors, and our lenders, as it represents a starting point in the determination of free cash flow(B). The underlying reasons for the exclusion of each item are as follows:
Amortization - as a non-cash item amortization has no impact on the determination of free cash flow(B).
Interest on long-term debt - interest on long-term debt is a function of our debt/equity mix and interest rates; as such, it reflects our treasury/financing activities and represents a different class of expense than those included in EBITDA.
Net gain or loss on sale of capital and landfill assets - proceeds from the sale of capital and landfill assets are either reinvested in additional or replacement capital or landfill assets or used to repay revolving credit facility borrowings.
Net foreign exchange gain or loss - as non-cash items, foreign exchange gains or losses have no impact on the determination of free cash flow(B).
Net gain or loss on financial instruments - as non-cash items, gains or losses on financial instruments have no impact on the determination of free cash flow(B).
Conversion costs - conversion costs represent professional fees incurred on the Fund's conversion from an income trust to a corporation and its eventual wind-up. Conversion costs represent a different class of expense than those included in EBITDA.
Other expenses - other expenses typically represent amounts paid to certain management of acquired companies who are retained by us post acquisition. These expenses are not considered an expense indicative of continuing operations. Accordingly, other expenses represent a different class of expense than those included in EBITDA.
Income taxes - income taxes are a function of tax laws and rates and are affected by matters which are separate from our daily operations.
EBITDA should not be construed as a measure of income or of cash flows. The reconciling items between EBITDA and net income are detailed in the consolidated statement of operations and comprehensive income or loss beginning with operating income before amortization and ending with net income.
(B) We have adopted a measure called "free cash flow" to supplement net income or (loss) as a measure of operating performance. Free cash flow is a term which does not have a standardized meaning prescribed by U.S. GAAP, is prepared before dividends and or distributions declared, and is therefore unlikely to be comparable to similar measures used by other issuers. The objective of presenting this non-GAAP measure is to align our disclosure with disclosures presented by other U.S. publicly listed companies in the waste industry, to assess our primary sources and uses of cash flow, and to assess our ability to sustain our dividend. All references to "free cash flow" in this press release have the meaning set out in this note.
Forward-looking statements
This press release contains forward-looking statements, within the meaning of the United States Private Securities Litigation Reform Act of 1995 and applicable Canadian securities legislation, concerning the business, operations and financial performance and condition of the Company. Forward-looking statements are statements that are not historical facts and that are subject to a variety of risks and uncertainties which could cause actual events or results to differ materially from those reflected in the forward-looking statements. A number of factors could cause actual outcomes and results to differ materially from those estimated, forecast or projected. These factors include those set forth in the Company's Annual Information Form for the year ended
About
To find out more about
Management will hold a conference call on
A rebroadcast of the call will be available until midnight on
Consolidated Balance Sheets
--------------------------------------------------------------------
September 30, December 31,
2009 2008
--------------------------------------------------------------------
ASSETS
CURRENT
Cash and cash equivalents $ 9,025 $ 11,938
Accounts receivable 119,265 107,767
Other receivables 547 228
Prepaid expenses 19,323 19,597
Restricted cash - 82
--------------------------------------------------------------------
148,160 139,612
OTHER RECEIVABLES 1,302 394
FUNDED LANDFILL POST-CLOSURE COSTS 7,902 6,115
INTANGIBLES 105,514 119,898
GOODWILL 627,706 617,832
LANDFILL DEVELOPMENT ASSETS 6,803 8,589
DEFERRED FINANCING COSTS 8,307 9,936
CAPITAL ASSETS 429,203 408,681
LANDFILL ASSETS 659,296 621,862
--------------------------------------------------------------------
$ 1,994,193 $ 1,932,919
--------------------------------------------------------------------
--------------------------------------------------------------------
LIABILITIES
CURRENT
Accounts payable $ 55,006 $ 54,134
Accrued charges 65,739 55,509
Dividends payable 21,786 2,337
Income taxes payable 10,045 1,387
Deferred revenues 13,044 10,800
Current portion of long-term debt - 38,380
Landfill closure and post-closure
costs 7,668 7,210
--------------------------------------------------------------------
173,288 169,757
LONG-TERM DEBT 646,849 835,210
LANDFILL CLOSURE AND POST-CLOSURE
COSTS 65,694 50,857
OTHER LIABILITIES 12,516 15,045
DEFERRED INCOME TAXES 73,872 64,348
--------------------------------------------------------------------
972,219 1,135,217
--------------------------------------------------------------------
EQUITY
NON-CONTROLLING INTEREST 231,638 230,452
SHAREHOLDERS' EQUITY 790,336 567,250
--------------------------------------------------------------------
1,021,974 797,702
--------------------------------------------------------------------
$ 1,994,193 $ 1,932,919
--------------------------------------------------------------------
--------------------------------------------------------------------
Consolidated Statements of Operations and Comprehensive Income
For the periods ended
Three months ended Nine months ended
---------------------------------------------------------------------
2009 2008 2009 2008
---------------------------------------------------------------------
REVENUES $268,411 $282,235 $746,004 $803,197
EXPENSES
OPERATING 156,195 169,209 435,969 484,501
SELLING, GENERAL AND
ADMINISTRATION 33,272 32,301 95,949 92,709
AMORTIZATION 41,946 46,928 120,702 135,297
---------------------------------------------------------------------
OPERATING INCOME 36,998 33,797 93,384 90,690
INTEREST ON LONG-TERM
DEBT 7,851 13,367 26,246 40,111
NET GAIN ON SALE OF
CAPITAL AND LANDFILL
ASSETS (13) (265) (128) (351)
NET FOREIGN EXCHANGE
LOSS (GAIN) 61 3 238 (617)
NET LOSS (GAIN) ON
FINANCIAL INSTRUMENTS 305 98 (866) 3,623
CONVERSION COSTS 93 2,216 208 2,216
OTHER EXPENSES 44 31 109 88
---------------------------------------------------------------------
INCOME BEFORE INCOME
TAXES 28,657 18,347 67,577 45,620
INCOME TAX EXPENSE
(RECOVERY)
Current 4,106 1,419 10,849 6,255
Deferred 5,442 654 12,875 (5,675)
---------------------------------------------------------------------
9,548 2,073 23,724 580
---------------------------------------------------------------------
NET INCOME 19,109 16,274 43,853 45,040
---------------------------------------------------------------------
OTHER COMPREHENSIVE
INCOME (LOSS)
Foreign currency
translation
adjustment 13,813 1,905 21,985 42,749
Commodity swaps
designated as cash
flow hedges, net of
tax (70) - 283 -
---------------------------------------------------------------------
COMPREHENSIVE INCOME $32,852 $18,179 $66,121 $87,789
---------------------------------------------------------------------
NET INCOME -
CONTROLLING INTEREST $16,793 $13,636 $38,311 $37,739
NET INCOME -
NON-CONTROLLING
INTEREST $ 2,316 $ 2,638 $ 5,522 $ 7,301
COMPREHENSIVE INCOME -
CONTROLLING INTEREST $28,837 $18,179 $57,795 $87,789
COMPREHENSIVE INCOME -
NON-CONTROLLING
INTEREST $ 4,015 $ - $ 8,326 $ -
Net income per
weighted average share
or trust unit, basic $ 0.20 $ 0.24 $ 0.54 $ 0.66
Net income per
weighted average share
or trust unit, diluted $ 0.20 $ 0.24 $ 0.53 $ 0.66
Weighted average
number of shares or
trust units
outstanding
(thousands), basic 82,294 57,569 71,102 57,569
Weighted average
number of shares or
trust units
outstanding
(thousands), diluted 93,431 68,706 82,239 68,706
Consolidated Statements of Cash Flows
For the periods ended
Three months ended Nine months ended
----------------------------------------------------------------------------
2009 2008 2009 2008
----------------------------------------------------------------------------
NET INFLOW (OUTFLOW) OF CASH RELATED TO THE FOLLOWING ACTIVITIES
OPERATING
Net income $19,109 $16,274 $43,853 $45,040
Items not affecting cash
Restricted share expense 390 954 1,081 954
Write-off of landfill
development assets - 22 77 935
Accretion of landfill
closure and post-closure
costs 805 771 2,322 2,326
Amortization of
intangibles 7,164 8,123 21,673 24,236
Amortization of capital
assets 18,890 19,805 55,894 58,102
Amortization of landfill
assets 15,892 19,000 43,135 52,959
Interest on long-term
debt (deferred financing
costs) 676 846 2,221 2,819
Net gain on sale of
capital and landfill
assets (13) (265) (128) (351)
Net loss (gain) on
financial instruments 305 98 (866) 3,623
Deferred income taxes 5,442 654 12,875 (5,675)
Landfill closure and
post-closure
expenditures (2,609) (485) (4,964) (1,108)
Changes in non-cash
working capital items 10,546 4,079 15,476 (14,690)
----------------------------------------------------------------------------
Cash generated from
operating activities 76,597 69,876 192,649 169,170
----------------------------------------------------------------------------
INVESTING
Acquisitions (1,521) (2,023) (22,161) (56,511)
Restricted cash
withdrawals - 742 82 1,532
Investment in other
receivables (120) - (1,398) -
Proceeds from other
receivables 129 72 354 371
Funded landfill
post-closure costs (278) (551) (659) (1,137)
Purchase of capital
assets (20,530) (24,070) (58,370) (61,398)
Purchase of landfill
assets (7,631) (18,507) (29,505) (40,681)
Proceeds from the sale
of capital and landfill
assets 217 807 3,820 1,348
Investment in landfill
development assets (316) (3,470) (755) (5,202)
----------------------------------------------------------------------------
Cash utilized in
investing activities (30,050) (47,000) (108,592) (161,678)
----------------------------------------------------------------------------
FINANCING
Recovery (payment) of
deferred financing costs 98 (2,210) (400) (3,134)
Proceeds from long-term
debt 26,041 55,511 142,815 199,702
Repayment of long-term
debt (50,564) (41,766) (396,948) (105,690)
Common shares issued,
net of issue costs (420) - 209,264 (3)
Purchase of restricted
shares - (3,912) (172) (3,912)
Dividends and
distributions paid to
share or unitholders and
dividends paid to
participating preferred
shareholders (20,542) (29,947) (39,182) (91,967)
----------------------------------------------------------------------------
Cash utilized in
financing activities (45,387) (22,324) (84,623) (5,004)
Effect of foreign
currency translation on
cash and cash
equivalents (3,265) (783) (2,347) (1,465)
----------------------------------------------------------------------------
NET CASH (OUTFLOW)
INFLOW (2,105) (231) (2,913) 1,023
----------------------------------------------------------------------------
CASH AND CASH
EQUIVALENTS, BEGINNING OF
PERIOD OR YEAR 11,130 13,155 11,938 11,901
----------------------------------------------------------------------------
CASH AND CASH
EQUIVALENTS, END OF
PERIOD $ 9,025 $ 12,924 $ 9,025 $ 12,924
----------------------------------------------------------------------------
----------------------------------------------------------------------------
SUPPLEMENTAL CASH FLOW
INFORMATION:
Cash and cash
equivalents are
comprised of:
Cash $ 8,056 $ 12,920 $ 8,056 $ 12,920
Cash equivalents 969 4 969 4
----------------------------------------------------------------------------
$ 9,025 $ 12,924 $ 9,025 $ 12,924
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Cash paid during the
period for:
Income taxes $ 8 $ 264 $ 2,570 $ 9,688
Interest $ 8,096 $ 9,189 $ 27,709 $ 31,683
Consolidated Statements of Equity and Mezzanine Equity
For the three months ended
----------------------------------------------------------------------------
Common Restricted Treasury Contributed
shares shares shares surplus
----------------------------------------------------------------------------
Balance at June
30, 2009 $ 1,082,492 $ (3,928) $ - $ 1,324
Net income
Dividends
Common shares
issued net of
issue
costs and
related tax
effect (302)
Restricted
share expense 390
Foreign
currency
translation
adjustment
Commodity swaps
designated as
cash flow
hedges, net of
tax
----------------------------------------------------------------------------
Balance at
September 30,
2009 $ 1,082,190 $ (3,928) $ - $ 1,714
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Accumulated
other
comprehen- Non-
sive (loss) controlling
Deficit income interest Equity
----------------------------------------------------------------------------
Balance at June
30, 2009 $ (216,447) $ (83,484) $ 230,146 $ 1,010,103
Net income 16,793 2,316 19,109
Dividends (18,546) (2,523) (21,069)
Common shares
issued net of
issue
costs and
related tax
effect (302)
Restricted
share expense 390
Foreign
currency
translation
adjustment 12,104 1,709 13,813
Commodity swaps
designated as
cash flow
hedges, net
of tax (60) (10) (70)
----------------------------------------------------------------------------
Balance at
September 30,
2009 $ (218,200) $ (71,440) $ 231,638 $ 1,021,974
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Accumulated
other
comprehen-
Mezzanine sive (loss)
equity Deficit income Equity
----------------------------------------------------------------------------
Balance at June
30, 2008 $ 1,435,515 $ (485,943) $ (91,168) $ (577,111)
Net income 16,274 16,274
Dividends (29,947) (29,947)
Fair value
adjustments to
trust units,
PPSs and
treasury units (349,340) 349,340 349,340
Foreign
currency
translation
adjustment (13,663) 1,905 1,905
----------------------------------------------------------------------------
Balance at
September 30,
2008 $ 1,072,512 $ (150,276) $ (89,263) $ (239,539)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
IESI-BFC Ltd.
Consolidated Statements of Equity and Mezzanine Equity
For the nine months ended September 30, 2009 and 2008 (unaudited - stated in
accordance with accounting principles generally accepted in the United
States of America and in thousands of U.S. dollars)
----------------------------------------------------------------------------
Common Restricted Treasury Contributed
shares shares shares surplus
----------------------------------------------------------------------------
Balance at
December 31,
2008 $ 868,248 $ (3,756) $ - $ 633
Net income
Dividends
Common shares
issued net of
issue costs
and related
tax effect 213,942
Restricted
shares
purchased (172)
Restricted
share expense 1,081
Common shares
acquired by
U.S.
long-term
incentive plan
("LTIP") (1,779)
Deferred
compensation
obligation 1,779
Foreign
currency
translation
adjustment
Commodity swaps
designated as
cash flow
hedges, net of
tax
----------------------------------------------------------------------------
Balance at
September 30,
2009 $ 1,082,190 $ (3,928) $ - $ 1,714
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Accumulated
other
comprehen- Non-
sive (loss) controlling
Deficit income interest Equity
----------------------------------------------------------------------------
Balance at
December 31,
2008 $ (206,971) $ (90,904) $ 230,452 $ 797,702
Net income 38,331 5,522 43,853
Dividends (49,560) (7,140) (56,700)
Common shares
issued net of
issue costs
and related
tax effect 213,942
Restricted
shares
purchased (172)
Restricted
share expense 1,081
Common shares
acquired by
U.S. long-term
incentive plan
("LTIP") (1,779)
Deferred
compensation
obligation 1,779
Foreign
currency
translation
adjustment 19,217 2,768 21,985
Commodity swaps
designated as
cash flow
hedges, net of
tax 247 36 283
----------------------------------------------------------------------------
Balance at
September 30,
2009 $ (218,200) $ (71,440) $ 231,638 $ 1,021,974
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Accumulated
other
comprehen-
Mezzanine sive (loss)
equity Deficit income Equity
----------------------------------------------------------------------------
Balance at
December 31,
2007 $ 1,580,137 $ (547,998) $ (132,012) $ (680,010)
Net income 45,040 45,040
Dividends (91,967) (91,967)
Trust units
issued net
of issue
costs and
related
tax effect (3) (3)
Trust units
acquired by
U.S. LTIP (1,996) (1,996)
Fair value
adjustments
to trust units,
PPSs and
treasury units (446,648) 446,648 446,648
Foreign
currency
translation
adjustment (60,977) 42,749 42,749
----------------------------------------------------------------------------
Balance at
September 30,
2008 $ 1,072,512 $ (150,276) $ (89,263) $ (239,539)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
For more information, contact:
Director, Investor Relations and Corporate Communications
(416) 401-7729
chaya.cooperberg@bficanada.com.
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