Date: February 20, 2013
Source: Waste Connections, Inc.
Q4 revenue of
Q4 GAAP EPS of
Full year revenue of
Full year net cash provided by operating
activities of
Full year adjusted free cash flow* of
Expects double digit revenue, adjusted EPS and free cash flow growth in 2013
Net income attributable to
Adjusted net income attributable to
"Better than expected pricing growth, disposal volumes and recycled commodity
values enabled us to exceed the upper end of our fourth quarter outlook for
solid waste. Revenue and margins within E&P waste, however, were hampered
by a combination of the sector-wide slowdown in E&P activity during the
quarter and incremental start-up costs at new facilities. More importantly,
though, the strong cash flow characteristics of our strategy were evidenced
as adjusted free cash flow* for the period exceeded our expectations and was
Mr. Mittelstaedt added, "Our outlook for 2013 reflects double digit year-over-year growth in revenue, adjusted EPS and free cash flow. We've initially incorporated a cautious approach within our outlook for the contribution from E&P waste as we wait to see how the expected ramp in activity plays out during the year, and note that year-over-year growth in GAAP EPS will be impacted by an almost 100 basis point increase in non-cash expenses as a percent of revenue resulting from acquisition-related accounting for the R360 transaction."
* A non-GAAP measure; see accompanying Non-GAAP Reconciliation Schedule.
For the year ended
Net income attributable to
2013 OUTLOOK
Revenue is estimated to be between
Depreciation and depletion expense is estimated to be approximately 11.2% of revenue.
Amortization of intangibles expense is estimated to be approximately 1.3% of revenue.
Closure and post-closure accretion expense is estimated to be approximately 0.15% of revenue.
Operating income is estimated to be approximately 22.0% of revenue.
Net interest expense is estimated to be approximately
Effective tax rate is expected to be approximately 39.2%.
Net income attributable to noncontrolling interests is estimated to reduce
net income by approximately
Net cash provided by operating activities is estimated to be approximately 25.5% of revenue.
Capital expenditures are estimated to be about
CONFERENCE CALL
For more information, visit the * A non-GAAP measure; see accompanying Non-GAAP Reconciliation Schedule. Information Regarding Forward-Looking Statements Certain statements contained in this release
are forward-looking in nature, including statements related to: expected operating
performance; expected roll-off activity, recycled commodity prices and E&P
activity; expected contribution from recently completed acquisitions; expected
2013 financial results, capital expenditures and outlook; expected retention
rates from core price increases; the Company's ability to finance acquisitions
and newly permitted E&P waste facilities, and the impact of the relocation
of the Company's corporate headquarters from - financial tables attached - Reconciliation of Adjusted Operating Income before Depreciation and Amortization: Adjusted operating income before depreciation and amortization, a non-GAAP
financial measure, is provided supplementally because it is widely used by investors
as a performance and valuation measure in the solid waste industry. Management
uses adjusted operating income before depreciation and amortization as one of
the principal measures to evaluate and monitor the ongoing financial performance
of the Company's operations. ____________________________________________ Reconciliation of Adjusted Free Cash Flow: Adjusted free cash flow, a non-GAAP financial measure, is provided supplementally
because it is widely used by investors as a valuation and liquidity measure
in the solid waste industry. Management uses adjusted free cash flow as one
of the principal measures to evaluate and monitor the ongoing financial performance
of the Company's operations. ____________________________________________ Reconciliation of Net Income to Adjusted Net Income and Adjusted Net Income per Diluted Share: Adjusted net income and adjusted net income per diluted share, both non-GAAP
financial measures, are provided supplementally because they are widely used
by investors as a valuation measure in the solid waste industry. Management
uses adjusted net income and adjusted net income per diluted share as one of
the principal measures to evaluate and monitor ongoing financial performance
of the Company's operations. ______________________________________________ Revenue Growth: The following table reflects changes in our revenue for the three months ended Revenue Breakdown: The following table reflects a breakdown of our revenue for the three and twelve months ended Days Sales Outstanding for the three months ended Internalization for the three months ended Other Cash Flow Items: Debt to Book Capitalization as of Share Information for the three months ended
For more information, contact:
WASTE CONNECTIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2011 AND 2012
(Unaudited)
(in thousands, except share and per share amounts)
Three months ended
December 31,
Twelve months ended
December 31,
2011
2012
2011
2012
Revenues
$
379,752
$
448,803
$
1,505,366
$
1,661,618
Operating expenses:
Cost of operations
220,081
258,007
857,580
956,357
Selling, general and administrative
40,914
53,555
161,967
197,454
Depreciation
38,193
49,696
147,036
169,027
Amortization of intangibles
5,276
6,441
20,064
24,557
Loss on disposal of assets
914
912
1,657
1,627
Gain from litigation settlement
-
(14
)
-
(3,551
)
Operating income
74,374
80,206
317,062
316,147
Interest expense
(12,571
)
(16,974
)
(44,520
)
(53,037
)
Interest income
122
143
530
773
Other income, net
807
187
57
1,220
Income before income tax provision
62,732
63,562
273,129
265,103
Income tax provision
(24,543
)
(27,476
)
(106,958
)
(105,443
)
Net income
38,189
36,086
166,171
159,660
Less: net income attributable to noncontrolling interests
(231)
(97)
(932)
(567)
Net income attributable to Waste Connections
$
37,958
$
35,989
$
165,239
$
159,093
Earnings per common share attributable to Waste Connections' common stockholders:
Basic
$
0.34
$
0.29
$
1.47
$
1.31
Diluted
$
0.34
$
0.29
$
1.45
$
1.31
Shares used in the per share calculations:
Basic
111,504,918
122,963,136
112,720,444
121,172,381
Diluted
112,410,495
123,687,624
113,583,486
121,824,349
Cash dividends per common share
$
0.09
$
0.10
$ 0.315
$
0.37
WASTE CONNECTIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands, except share and per share amounts)
December 31,
December 31,
2011
2012
ASSETS
Current assets:
Cash and equivalents
$
12,643
$
23,212
Accounts receivable, net of allowance for doubtful accounts of $6,617 and $6,548 at December 31, 2011 and 2012, respectively
176,277
235,762
Deferred income taxes
20,630
45,798
Prepaid expenses and other current assets
39,708
57,714
Total current assets
249,258
362,486
Property and equipment, net
1,450,469
2,457,606
Goodwill
1,116,888
1,636,557
Intangible assets, net
449,581
541,908
Restricted assets
30,544
34,889
Other assets, net
31,265
42,580
$
3,328,005
$
5,076,026
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable
$
95,097
$
130,260
Book overdraft
12,169
12,567
Accrued liabilities
97,020
121,829
Deferred revenue
64,694
69,930
Current portion of contingent consideration
8,923
49,018
Current portion of long-term debt and notes payable
5,899
33,968
Total current liabilities
283,802
417,572
Long-term debt and notes payable
1,172,758
2,204,967
Long-term portion of contingent consideration
22,573
30,346
Other long-term liabilities
52,051
75,129
Deferred income taxes
397,134
464,882
Total liabilities
1,928,318
3,192,896
Commitments and contingencies
Equity:
Preferred stock: $0.01 par value; 7,500,000 shares authorized; none issued and outstanding
-
-
Common stock: $0.01 par value; 250,000,000 shares authorized; 110,907,782 and 123,019,494 shares issued and outstanding at December 31, 2011 and 2012, respectively
1,109
1,230
Additional paid-in capital
408,721
779,904
Retained earnings
988,560
1,103,188
Accumulated other comprehensive loss
(3,480
)
(6,165
)
Total Waste Connections' equity
1,394,910
1,878,157
Noncontrolling interest in subsidiaries
4,777
4,973
Total equity
1,399,687
1,883,130
$
3,328,005
$
5,076,026
WASTE CONNECTIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
TWELVE MONTHS ENDED DECEMBER 31, 2011 AND 2012
(Unaudited)
(Dollars in thousands)
Twelve months ended
December 31,
2011
2012
Cash flows from operating activities:
Net income
$
166,171
$
159,660
Adjustments to reconcile net income to net cash provided by operating activities:
Loss on disposal of assets
1,657
1,627
Depreciation
147,036
169,027
Amortization of intangibles
20,064
24,557
Deferred income taxes, net of acquisitions
50,989
29,689
Amortization of debt issuance costs
1,420
1,993
Equity-based compensation
11,879
17,289
Interest income on restricted assets
(454
)
(603
)
Interest accretion
2,771
4,000
Excess tax benefit associated with equity-based compensation
(4,763
)
(5,033
)
Net change in operating assets and liabilities, net of acquisitions
(8,600
)
14,121
Net cash provided by operating activities
388,170
416,327
Cash flows from investing activities:
Payments for acquisitions, net of cash acquired
(257,852
)
(1,579,869
)
Capital expenditures for property and equipment
(141,924
)
(153,517
)
Proceeds from disposal of assets
4,434
2,741
Decrease in restricted assets, net of interest income
351
2,983
Other
(5,014
)
(6,185
)
Net cash used in investing activities
(400,005
)
(1,733,847
)
Cash flows from financing activities:
Proceeds from long-term debt
592,500
1,647,000
Principal payments on notes payable and long-term debt
(421,872
)
(609,014
)
Payment of contingent consideration
(500
)
(12,473
)
Change in book overdraft
(227
)
398
Proceeds from option and warrant exercises
5,159
4,057
Excess tax benefit associated with equity-based compensation
4,763
5,033
Payments for repurchase of common stock
(116,817
)
(18,597
)
Payments for cash dividends
(35,566
)
(44,465
)
Tax withholdings related to net share settlements of restricted stock units
(5,511
)
(6,062
)
Distributions to noncontrolling interests
(675
)
(198
)
Proceeds from common stock offering, net
-
369,584
Debt issuance costs
(6,649
)
(7,174
)
Net cash provided by financing activities
14,605
1,328,089
Net increase in cash and equivalents
2,770
10,569
Cash and equivalents at beginning of period
9,873
12,643
Cash and equivalents at end of period
$
12,643
$
23,212
NON-GAAP RECONCILIATION SCHEDULE
(in thousands)
Three months ended
December 31, 2011
Three months ended
December 31, 2012
Operating income
$
74,374
$
80,206
Plus: Depreciation and amortization
43,469
56,137
Plus: Closure and post-closure accretion
516
711
Plus: Loss on disposal of assets
914
912
Adjustments:
Plus: Acquisition-related costs (a)
467
2,805
Plus: Corporate relocation expenses (b)
83
1,540
Less: Gain from litigation settlement (d)
-
(14
)
Adjusted operating income before depreciation and amortization
$
119,823
$
142,297
As % of revenues
31.5%
31.7%
Twelve months ended
December 31, 2011
Twelve months ended
December 31, 2012
Operating income
$
317,062
$
316,147
Plus: Depreciation and amortization
167,100
193,584
Plus: Closure and post-closure accretion
1,967
2,581
Plus: Loss on disposal of assets
1,657
1,627
Adjustments:
Plus: Acquisition-related costs (a)
1,744
6,415
Plus: Corporate relocation expenses (b)
83
8,031
Plus: NEO one-time equity grants (c)
-
3,585
Less: Gain from litigation settlement (d)
-
(3,551
)
Adjusted operating income before depreciation and amortization
$
489,613
$
528,419
As % of revenues
32.5%
31.8%
(a)
(b)
(c)Reflects the addback of acquisition-related transaction and severance costs.
Reflects the addback of costs associated with the relocation of the Company's corporate headquarters from California to Texas.
Reflects the addback of one-time equity compensation expense incurred at the time the Company's NEOs' employment contracts were modified.
(d)
Reflects the elimination of a non-recurring gain from an arbitration award.
NON-GAAP RECONCILIATION SCHEDULE (continued)
(in thousands)
Three months ended
December 31, 2011
Three months ended
December 31, 2012
Net cash provided by operating activities
$
90,446
$
89,588
Plus: Change in book overdraft
710
3,781
Plus: Proceeds from disposal of assets
1,197
633
Plus: Excess tax benefit associated with equity-based compensation
262
1,618
Less: Capital expenditures for property and equipment
(57,872
)
(42,522
)
Less: Distributions to noncontrolling interests
-
(104
)
Adjustment:
Corporate office relocation, net of taxes (a)
251
(974
)
Adjusted free cash flow
$
34,994
$
52,020
As % of revenues
9.2%
11.6%
Twelve months ended
December 31, 2011
Twelve months ended
December 31, 2012
Net cash provided by operating activities
$
388,170
$
416,327
Plus/less: Change in book overdraft
(227
)
398
Plus: Proceeds from disposal of assets
4,434
2,741
Plus: Excess tax benefit associated with equity-based compensation
4,763
5,033
Less: Capital expenditures for property and equipment
(141,924
)
(153,517
)
Less: Distributions to noncontrolling interests
(675
)
(198
)
Adjustment:
Corporate office relocation, net of taxes (a)
251
4,975
Adjusted free cash flow
$
254,792
$
275,759
As % of revenues
16.9%
16.6%
(a)
Reflects the addback of third party expenses and reimbursable advances to employees associated with the relocation of our corporate headquarters from California to Texas.
NON-GAAP RECONCILIATION SCHEDULE (continued)
(in thousands, except per share amounts)
Three months ended
December 31,
Twelve months ended
December 31,
2011
2012
2011
2012
Reported net income attributable to Waste Connections
$
37,958
$
35,989
$
165,239
$
159,093
Adjustments:
Amortization of intangibles, net of taxes (a)
3,271
3,977
12,440
15,209
Acquisition-related costs, net of taxes (b)
290
1,814
1,327
4,052
Loss on disposal of assets, net of taxes (c)
567
563
1,027
1,006
Corporate relocation expenses, net of taxes (d)
51
951
51
4,975
NEO one-time equity grants, net of taxes (e)
-
-
-
3,315
Litigation settlement, net of taxes (f)
-
(9
)
-
(2,202
)
Impact of deferred tax adjustment (g)
-
2,602
-
2,602
Adjusted net income attributable to Waste Connections
$
42,137
$
45,887
$
180,084
$
188,050
Diluted earnings per common share attributable to Waste Connections common stockholders:
Reported net income
$
0.34
$
0.29
$
1.45
$
1.31
Adjusted net income
$
0.37
$
0.37
$
1.59
$
1.54
(a)
(b)Reflects the elimination of the non-cash amortization of acquisition-related intangible assets.
Reflects the elimination of acquisition-related transaction and severance costs.
(c)
Reflects the elimination of a loss on disposal of assets.
(d)
Reflects the addback of costs associated with the relocation of the Company's corporate headquarters from California to Texas.
(e)
Reflects the addback of one-time equity compensation expense incurred at the time our NEOs' employment contracts were modified.
(f)
Reflects the elimination of a non-recurring gain from an arbitration award.
(g)
Reflects the elimination of an increase to the income tax provision associated with an increase in the Company's deferred tax liabilities primarily resulting from the R360 acquisition completed in the quarter.
ADDITIONAL STATISTICS
THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2012
(Dollars in thousands)
Three months ended
December 31, 2012
Solid Waste Internal Growth:
Core Price
2.9%
Surcharges
0.3%
Volume
(2.4%)
Recycling
(0.9%)
Total Solid Waste Internal Growth
(0.1%)
Intermodal and Other
0.1%
Acquisitions, net
18.2%
Total
18.2%
Three months ended
December 31, 2011
Three months ended
December 31, 2012
Solid Waste Collection
$
272,282
62.5
%
$
295,412
58.2
%
Solid Waste Disposal and Transfer
125,348
28.8
%
134,285
26.5
%
E&P Waste Treatment, Disposal & Recovery
3,020
0.7
%
45,893
9.0
%
Solid Waste Recycling
23,296
5.3
%
19,703
3.9
%
Intermodal and Other
11,987
2.7
%
12,089
2.4
%
Total before inter-company elimination
435,933
100.0
%
507,382
100.0
%
Inter-company elimination
(56,181
)
(58,579
)
Reported Revenue
$
379,752
$
448,803
Twelve months ended
December 31, 2011
Twelve months ended
December 31, 2012
Solid Waste Collection
$
1,069,065
62.0
%
$
1,176,333
62.1
%
Solid Waste Disposal and Transfer
497,584
28.9
%
524,861
27.7
%
E&P Waste Treatment, Disposal & Recovery
12,746
0.7
%
61,350
3.2
%
Solid Waste Recycling
96,417
5.6
%
81,512
4.3
%
Intermodal and Other
48,166
2.8
%
50,321
2.7
%
Total before inter-company elimination
1,723,978
100.0
%
1,894,377
100.0
%
Inter-company elimination
(218,612
)
(232,759
)
Reported Revenue
$
1,505,366
$
1,661,618
ADDITIONAL STATISTICS (continued)
THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2012
(Dollars in thousands)
Three months ended
December 31, 2012
Twelve months ended
December 31, 2012
Cash Interest Paid
$23,095
$49,826
Cash Taxes Paid
$27,805
$69,954
Basic shares outstanding
122,963,136
Dilutive effect of options and warrants
276,356
Dilutive effect of restricted stock units
448,132
Diluted shares outstanding
123,687,624
(832) 442-2266
(832) 442-2253
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