Date: February 14, 2013
Source: Progressive Waste Solutions Ltd.
Core business of solid waste collection, transfer and disposal demonstrated resilience throughout 2012
Completed 19 strategic acquisitions in 2012, including seven in the fourth quarter, which strengthened the Company's network of integrated assets
Consolidated revenues of
Adjusted EBITDA(A) of
Earnings per share of
Management Commentary
(All amounts are in
"The strength of our core collection, transfer and disposal operations, combined
with 19 strategic "tuck-in" acquisitions, softened the impact of a 1.6% decline
in revenues from lower recycled commodity prices in 2012. In 2013, we are well
positioned for growth with a strengthened network of integrated assets and the
market-focused strategies to continue to execute our operating model and drive
value on these assets. Acquisitions we completed in 2012 generate annualized
revenues of approximately
Fourth quarter ended
Reported revenues increased
Operating income was
Adjusted amounts
Adjusted EBITDA(A) was
Year ended
For the year ended
Operating income was
Adjusted amounts
For the year, adjusted EBITDA(A) was
Share repurchases totalled
Acquisitions
We invested
In the fourth quarter, we completed seven acquisitions, three in the U.S.
south, three in the U.S. northeast and one in
We continue to identify collection and transfer assets in and around the markets we serve in order to improve asset density and facilitate higher internalization at our landfills. We also evaluate new markets for growth opportunities
Other highlights for the year ended
In
In
In
We repurchased and cancelled approximately 3.2 million common shares in 2012. At the close of the year, there were 115.2 million common shares outstanding
2013 Outlook
The Company is providing its outlook assuming no change in the current economic environment and excluding the impact of any acquisitions we may complete in 2013. Our outlook has been prepared assuming FX parity.
The purpose of presenting this outlook is to provide investors and analysts with our expected results for the coming year.
Our outlook, which is forward-looking, was approved by management on
Revenue is estimated to be
Adjusted EBITDA(A) is estimated to be
Amortization expense, as a percentage of revenue, is estimated to be approximately 14.4%
The effective tax rate is estimated to be approximately 40% of income before income tax expense and net loss from equity accounted investee, on an adjusted basis
Cash taxes are estimated to be
Adjusted net income(A) per diluted share is estimated to be
Free cash flow(B) is estimated to be
Capital and landfill expenditures are estimated to be
Expected annual cash dividend of
Commodity pricing
Revenues and earnings are impacted by changes in recycled commodity prices,
which principally include old corrugated cardboard ("OCC") and other paper fibers,
including newsprint, sorted office paper and mixed paper. Other commodities
we receive include wood, plastics, aluminum and metals. Our results of operations
may be affected by changing prices or market requirements for recyclable materials.
The resale and purchase price of, and market demand for, recyclable materials
can be volatile due to changes in economic conditions and numerous other factors
beyond our control. These fluctuations may affect our consolidated financial
condition, results of operations and cash flows. Based on current volumes, a
Progressive Waste Solutions Ltd. | |||||||||||||
Consolidated Statements of Operations and Comprehensive Income or Loss ("Statement of Operations and Comprehensive Income or Loss") | |||||||||||||
For the three months (unaudited) and years ended December 31, 2012 (unaudited) and 2011 (stated in accordance with accounting principles generally accepted in the United States of America ("U.S.") and in thousands of U.S. dollars, except share and net income per share amounts) | |||||||||||||
Three months ended | Year ended | ||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||
REVENUES | $ | 495,822 | $ | 457,212 | $ | 1,896,741 | $ | 1,840,096 | |||||
EXPENSES | |||||||||||||
OPERATING | 305,236 | 273,283 | 1,154,764 | 1,094,067 | |||||||||
SELLING, GENERAL AND ADMINISTRATION | 59,814 | 58,178 | 230,740 | 218,600 | |||||||||
RESTRUCTURING | - | 411 | - | 1,609 | |||||||||
GOODWILL IMPAIRMENT | - | 360,557 | - | 360,557 | |||||||||
AMORTIZATION | 71,766 | 58,372 | 274,118 | 257,066 | |||||||||
NET LOSS (GAIN) ON SALE OF CAPITAL ASSETS | 383 | (541 | ) | (592 | ) | (3,412 | ) | ||||||
OPERATING INCOME (LOSS) | 58,623 | (293,048 | ) | 237,711 | (88,391 | ) | |||||||
INTEREST ON LONG-TERM DEBT | 14,494 | 13,723 | 57,428 | 62,086 | |||||||||
NET FOREIGN EXCHANGE (GAIN) LOSS | (3 | ) | 10 | 9 | (73 | ) | |||||||
NET LOSS (GAIN) ON FINANCIAL INSTRUMENTS | 3,541 | (1,101 | ) | 1,725 | (4,984 | ) | |||||||
LOSS ON EXTINGUISHMENT OF DEBT | 16,924 | - | 16,924 | - | |||||||||
OTHER EXPENSES | - | 45 | 105 | 872 | |||||||||
INCOME (LOSS) BEFORE INCOME TAX EXPENSE AND NET LOSS | |||||||||||||
FROM EQUITY ACCOUNTED INVESTEE | 23,667 | (305,725 | ) | 161,520 | (146,292 | ) | |||||||
INCOME TAX EXPENSE | |||||||||||||
Current | 10,969 | 9,009 | 49,281 | 47,433 | |||||||||
Deferred | 934 | (18,584 | ) | 17,841 | 2,315 | ||||||||
11,903 | (9,575 | ) | 67,122 | 49,748 | |||||||||
NET LOSS FROM EQUITY ACCOUNTED INVESTEE | 11 | 38 | 41 | 96 | |||||||||
NET INCOME (LOSS) | 11,753 | (296,188 | ) | 94,357 | (196,136 | ) | |||||||
OTHER COMPREHENSIVE (LOSS) INCOME: | |||||||||||||
Foreign currency translation adjustment | (6,322 | ) | 13,320 | 11,702 | (12,520 | ) | |||||||
Derivatives designated as cash flow hedges, net of income tax ($1,089) and ($863) (2011 - ($294) and $3,117) | 2,025 | 550 | 1,604 | (5,790 | ) | ||||||||
Settlement of derivatives designated as cash flow hedges, net of income tax ($170) and ($177) (2011 - ($165) and ($646)) | 314 | 306 | 329 | 1,201 | |||||||||
2,339 | 856 | 1,933 | (4,589 | ) | |||||||||
TOTAL OTHER COMPREHENSIVE (LOSS) INCOME | (3,983 | ) | 14,176 | 13,635 | (17,109 | ) | |||||||
COMPREHENSIVE INCOME (LOSS) | $ | 7,770 | $ | (282,012 | ) | $ | 107,992 | $ | (213,245 | ) | |||
Net income (loss) per weighted average share, basic | $ | 0.10 | $ | (2.48 | ) | $ | 0.81 | $ | (1.63 | ) | |||
Net income (loss) per weighted average share, diluted | $ | 0.10 | $ | (2.48 | ) | $ | 0.81 | $ | (1.63 | ) | |||
Weighted average number of shares outstanding (thousands), basic | 115,163 | 119,554 | 116,178 | 120,683 | |||||||||
Weighted average number of shares outstanding (thousands), diluted | 115,163 | 119,554 | 116,178 | 120,683 |
Progressive Waste Solutions Ltd. | |||||||
Consolidated Balance Sheets ("Balance Sheet") | |||||||
December 31, 2012 (unaudited) and December 31, 2011 (stated in accordance with accounting principles generally accepted in the U.S. and in thousands of U.S. dollars except issued and outstanding share amounts) | |||||||
December 31, | December 31, | ||||||
2012 | 2011 | ||||||
ASSETS | |||||||
CURRENT | |||||||
Cash and cash equivalents | $ | 29,940 | $ | 14,143 | |||
Accounts receivable | 238,958 | 212,099 | |||||
Other receivables | 440 | 414 | |||||
Prepaid expenses | 38,762 | 31,484 | |||||
Income taxes recoverable | 2,928 | - | |||||
Restricted cash | 476 | 452 | |||||
Other assets | 1,573 | 1,972 | |||||
313,077 | 260,564 | ||||||
OTHER RECEIVABLES | 72 | 376 | |||||
FUNDED LANDFILL POST-CLOSURE COSTS | 9,885 | 9,200 | |||||
INTANGIBLES | 287,847 | 257,731 | |||||
GOODWILL | 929,114 | 774,409 | |||||
LANDFILL DEVELOPMENT ASSETS | 19,715 | 15,869 | |||||
DEFERRED FINANCING COSTS | 20,060 | 19,983 | |||||
CAPITAL ASSETS | 927,518 | 776,058 | |||||
LANDFILL ASSETS | 963,720 | 958,792 | |||||
INVESTMENT IN EQUITY ACCOUNTED INVESTEE | 4,062 | 3,973 | |||||
OTHER ASSETS | 491 | 649 | |||||
$ | 3,475,561 | $ | 3,077,604 | ||||
LIABILITIES | |||||||
CURRENT | |||||||
Accounts payable | $ | 120,341 | $ | 115,292 | |||
Accrued charges | 131,528 | 124,496 | |||||
Dividends payable | 16,206 | 14,540 | |||||
Income taxes payable | 1,986 | 10,693 | |||||
Deferred revenues | 19,002 | 17,645 | |||||
Current portion of long-term debt | 6,907 | 1,500 | |||||
Landfill closure and post-closure costs | 8,871 | 9,468 | |||||
Other liabilities | 2,527 | 3,484 | |||||
307,368 | 297,118 | ||||||
LONG-TERM DEBT | 1,681,370 | 1,311,593 | |||||
LANDFILL CLOSURE AND POST-CLOSURE COSTS | 104,281 | 92,034 | |||||
OTHER LIABILITIES | 6,166 | 7,484 | |||||
DEFERRED INCOME TAXES | 103,795 | 76,234 | |||||
2,202,980 | 1,784,463 | ||||||
SHAREHOLDERS' EQUITY | |||||||
Common shares (authorized - unlimited, issued and outstanding - 114,993,864 (December 31, 2011 - 118,040,683)) | 1,773,530 | 1,824,231 | |||||
Restricted shares (issued and outstanding - 172,500 (December 31, 2011 - 252,150)) | (3,460 | ) | (5,353 | ) | |||
Additional paid in capital | 2,166 | 2,789 | |||||
Accumulated deficit | (451,539 | ) | (466,775 | ) | |||
Accumulated other comprehensive loss | (48,116 | ) | (61,751 | ) | |||
Total shareholders' equity | 1,272,581 | 1,293,141 | |||||
$ | 3,475,561 | $ | 3,077,604 |
Progressive Waste Solutions Ltd. | ||||||||||||||
Consolidated Statements of Cash Flows ("Statement of Cash Flows") | ||||||||||||||
For the three months (unaudited) and years ended December 31, 2012 (unaudited) and 2011 (stated in accordance with accounting principles generally accepted in the U.S. and in thousands of U.S. dollars, except share and net income per share amounts) | ||||||||||||||
Three months ended | Year ended | |||||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||||
NET INFLOW (OUTFLOW) OF CASH RELATED TO THE FOLLOWING ACTIVITIES | ||||||||||||||
OPERATING | ||||||||||||||
Net income (loss) | $ | 11,753 | $ | (296,188 | ) | $ | 94,357 | $ | (196,136 | ) | ||||
Items not affecting cash | ||||||||||||||
Restricted share expense | 819 | 726 | 2,034 | 2,107 | ||||||||||
Write-off of deferred financing costs | 11,726 | - | 11,726 | - | ||||||||||
Accretion of landfill closure and post-closure costs | 1,313 | 1,255 | 5,240 | 5,071 | ||||||||||
Goodwill impairment | - | 360,557 | - | 360,557 | ||||||||||
Amortization of intangibles | 14,379 | 12,582 | 53,585 | 49,559 | ||||||||||
Amortization of capital assets | 37,841 | 33,343 | 141,192 | 131,088 | ||||||||||
Amortization of landfill assets | 19,546 | 12,447 | 79,341 | 76,419 | ||||||||||
Interest on long-term debt (amortization of deferred financing costs) | 596 | 1,680 | 5,665 | 6,035 | ||||||||||
Net loss (gain) on sale of capital assets | 383 | (541 | ) | (592 | ) | (3,412 | ) | |||||||
Net loss (gain) on financial instruments | 3,541 | (1,101 | ) | 1,725 | (4,984 | ) | ||||||||
Deferred income taxes | 934 | (18,584 | ) | 17,841 | 2,315 | |||||||||
Net loss from equity accounted investee | 11 | 38 | 41 | 96 | ||||||||||
Landfill closure and post-closure expenditures | (1,336 | ) | (1,183 | ) | (6,737 | ) | (4,345 | ) | ||||||
Changes in non-cash working capital items | (27,322 | ) | 10,186 | (68,657 | ) | (28,664 | ) | |||||||
Cash generated from operating activities | 74,184 | 115,217 | 336,761 | 395,706 | ||||||||||
INVESTING | ||||||||||||||
Acquisitions | (168,608 | ) | (351 | ) | (282,313 | ) | (139,857 | ) | ||||||
Restricted cash deposits | (1 | ) | (6 | ) | (24 | ) | (18 | ) | ||||||
Investment in other receivables | - | - | (148 | ) | - | |||||||||
Proceeds from other receivables | 110 | 118 | 440 | 474 | ||||||||||
Funded landfill post-closure costs | (117 | ) | (71 | ) | (404 | ) | (381 | ) | ||||||
Purchase of capital assets | (54,410 | ) | (35,315 | ) | (180,322 | ) | (112,348 | ) | ||||||
Purchase of landfill assets | (18,471 | ) | (19,006 | ) | (66,556 | ) | (58,665 | ) | ||||||
Proceeds from the sale of capital assets | 654 | 721 | 2,761 | 5,925 | ||||||||||
Investment in landfill development assets | (461 | ) | (1,717 | ) | (3,968 | ) | (6,428 | ) | ||||||
Cash utilized in investing activities | (241,304 | ) | (55,627 | ) | (530,534 | ) | (311,298 | ) | ||||||
FINANCING | ||||||||||||||
Payment of deferred financing costs | (16,975 | ) | (5 | ) | (17,315 | ) | (4,811 | ) | ||||||
Proceeds from long-term debt | 1,617,304 | 49,184 | 1,924,480 | 380,347 | ||||||||||
Repayment of long-term debt | (1,401,816 | ) | (60,456 | ) | (1,568,323 | ) | (318,086 | ) | ||||||
Proceeds from the exercise of stock options | 39 | 1,530 | 403 | 2,385 | ||||||||||
Repurchase of common shares | - | (40,270 | ) | (65,633 | ) | (79,326 | ) | |||||||
Purchase of, net of proceeds from, restricted shares | - | - | (541 | ) | (4,226 | ) | ||||||||
Dividends paid to shareholders | (16,260 | ) | (14,647 | ) | (63,478 | ) | (61,078 | ) | ||||||
Cash generated from (utilized in) financing activities | 182,292 | (64,664 | ) | 209,593 | (84,795 | ) | ||||||||
Effect of foreign currency translation on cash and cash equivalents | (655 | ) | 2,341 | (23 | ) | 1,124 | ||||||||
NET CASH INFLOW (OUTFLOW) | 14,517 | (2,733 | ) | 15,797 | 737 | |||||||||
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD OR YEAR | 15,423 | 16,876 | 14,143 | 13,406 | ||||||||||
CASH AND CASH EQUIVALENTS, END OF YEAR | $ | 29,940 | $ | 14,143 | $ | 29,940 | $ | 14,143 | ||||||
SUPPLEMENTAL CASH FLOW INFORMATION: | ||||||||||||||
Cash and cash equivalents are comprised of: | ||||||||||||||
Cash | $ | 28,929 | $ | 14,142 | $ | 28,929 | $ | 14,142 | ||||||
Cash equivalents | 1,011 | 1 | 1,011 | 1 | ||||||||||
$ | 29,940 | $ | 14,143 | $ | 29,940 | $ | 14,143 | |||||||
Cash paid during the period or year for: | ||||||||||||||
Income taxes | $ | 11,833 | $ | 8,911 | $ | 53,531 | $ | 49,509 | ||||||
Interest | $ | 17,170 | $ | 12,694 | $ | 57,109 | $ | 59,289 |
FX Impact on Consolidated Results | |||||||||||||||
The following tables have been prepared to assist readers in assessing the FX impact on selected results for the three months and year ended December 31, 2012. | |||||||||||||||
Three months ended | |||||||||||||||
December 31, 2011 | December 31, 2012 | December 31, 2012 | December 31, 2012 | December 31, 2012 | |||||||||||
(as reported) | (organic, acquisition and other non-operating changes) | (holding FX constant with the comparative period) | (FX impact) | (as reported) | |||||||||||
Consolidated Statement of Operations | |||||||||||||||
Revenues | $ | 457,212 | $ | 32,310 | $ | 489,522 | $ | 6,300 | $ | 495,822 | |||||
Operating expenses | 273,283 | 28,452 | 301,735 | 3,501 | 305,236 | ||||||||||
Selling, general and administration | 58,178 | 859 | 59,037 | 777 | 59,814 | ||||||||||
Restructuring expenses | 411 | (411 | ) | - | - | - | |||||||||
Goodwill impairment | 360,557 | (360,557 | ) | - | - | - | |||||||||
Amortization | 58,372 | 12,573 | 70,945 | 821 | 71,766 | ||||||||||
Net (gain) loss on sale of capital assets | (541 | ) | 936 | 395 | (12 | ) | 383 | ||||||||
Operating (loss) income | (293,048 | ) | 350,458 | 57,410 | 1,213 | 58,623 | |||||||||
Interest on long-term debt | 13,723 | 673 | 14,396 | 98 | 14,494 | ||||||||||
Net foreign exchange loss (gain) | 10 | (13 | ) | (3 | ) | - | (3 | ) | |||||||
Net (gain) loss on financial instruments | (1,101 | ) | 4,630 | 3,529 | 12 | 3,541 | |||||||||
Loss on extinguishment of debt | - | 17,012 | 17,012 | (88 | ) | 16,924 | |||||||||
Other expense | 45 | (46 | ) | (1 | ) | 1 | - | ||||||||
(Loss) income before net income tax | |||||||||||||||
(recovery) expense and | |||||||||||||||
net loss from equity accounted investee | (305,725 | ) | 328,202 | 22,477 | 1,190 | 23,667 | |||||||||
Net income tax (recovery) expense | (9,575 | ) | 21,140 | 11,565 | 338 | 11,903 | |||||||||
Net loss from equity accounted investee | 38 | (28 | ) | 10 | 1 | 11 | |||||||||
Net (loss) income | $ | (296,188 | ) | $ | 307,090 | $ | 10,902 | $ | 851 | $ | 11,753 | ||||
Adjusted EBITDA (A) | $ | 133,861 | $ | (2,153 | ) | $ | 131,708 | $ | 2,029 | $ | 133,737 | ||||
Adjusted operating income (A) | $ | 76,030 | $ | (15,663 | ) | $ | 60,367 | $ | 1,221 | $ | 61,588 | ||||
Adjusted net income (A) | $ | 37,995 | $ | (10,642 | ) | $ | 27,353 | $ | 799 | $ | 28,152 | ||||
Free cash flow (B) | $ | 59,281 | $ | (23,565 | ) | $ | 35,716 | $ | 904 | $ | 36,620 |
Year ended | |||||||||||||||
December 31, 2011 | December 31, 2012 | December 31, 2012 | December 31, 2012 | December 31, 2012 | |||||||||||
(as reported) | (organic, acquisition and other non-operating changes) | (holding FX constant with the comparative year) | (FX impact) | (as reported) | |||||||||||
Consolidated Statement of Operations | |||||||||||||||
Revenues | $ | 1,840,096 | $ | 64,582 | $ | 1,904,678 | $ | (7,937 | ) | $ | 1,896,741 | ||||
Operating expenses | 1,094,067 | 65,120 | 1,159,187 | (4,423 | ) | 1,154,764 | |||||||||
Selling, general and administration | 218,600 | 13,105 | 231,705 | (965 | ) | 230,740 | |||||||||
Restructuring expenses | 1,609 | (1,609 | ) | - | - | - | |||||||||
Goodwill impairment | 360,557 | (360,557 | ) | - | - | - | |||||||||
Amortization | 257,066 | 18,127 | 275,193 | (1,075 | ) | 274,118 | |||||||||
Net gain on sale of capital assets | (3,412 | ) | 2,822 | (590 | ) | (2 | ) | (592 | ) | ||||||
Operating (loss) income | (88,391 | ) | 327,574 | 239,183 | (1,472 | ) | 237,711 | ||||||||
Interest on long-term debt | 62,086 | (4,388 | ) | 57,698 | (270 | ) | 57,428 | ||||||||
Net foreign exchange (gain) loss | (73 | ) | 82 | 9 | - | 9 | |||||||||
Net (gain) loss on financial instruments | (4,984 | ) | 6,714 | 1,730 | (5 | ) | 1,725 | ||||||||
Loss on extinguishment of debt | - | 17,012 | 17,012 | (88 | ) | 16,924 | |||||||||
Other expense | 872 | (766 | ) | 106 | (1 | ) | 105 | ||||||||
(Loss) income before net income tax expense and net loss from equity accounted investee | (146,292 | ) | 308,920 | 162,628 | (1,108 | ) | 161,520 | ||||||||
Net income tax expense | 49,748 | 17,752 | 67,500 | (378 | ) | 67,122 | |||||||||
Net loss from equity accounted investee | 96 | (55 | ) | 41 | - | 41 | |||||||||
Net (loss) income | $ | (196,136 | ) | $ | 291,223 | $ | 95,087 | $ | (730 | ) | $ | 94,357 | |||
Adjusted EBITDA (A) | $ | 534,536 | $ | (12,308 | ) | $ | 522,228 | $ | (2,569 | ) | $ | 519,659 | |||
Adjusted operating income (A) | $ | 280,882 | $ | (33,257 | ) | $ | 247,625 | $ | (1,492 | ) | $ | 246,133 | |||
Adjusted net income (A) | $ | 135,003 | $ | (21,003 | ) | $ | 114,000 | $ | (813 | ) | $ | 113,187 | |||
Free cash flow (B) | $ | 262,464 | $ | (89,095 | ) | $ | 173,369 | $ | (909 | ) | $ | 172,460 |
Other Financial Highlights | ||||||||||||
(all amounts are in thousands of U.S. dollars, excluding per share amounts) | ||||||||||||
Three months ended | Year ended | |||||||||||
December 31 | December 31 | |||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||
Operating income (loss) | $ | 58,623 | $ | (293,048 | ) | $ | 237,711 | $ | (88,391 | ) | ||
Transaction and related costs - SG&A | 462 | 141 | 2,507 | 1,880 | ||||||||
Fair value movements in stock options - SG&A | 703 | (2,685 | ) | (110 | ) | (6,808 | ) | |||||
Restricted share expense - SG&A | 819 | 726 | 2,034 | 2,107 | ||||||||
Payments made to executives and senior management on departure - SG&A | 981 | 9,928 | 3,991 | 9,928 | ||||||||
Restructuring expenses and goodwill impairment | - | 360,968 | - | 362,166 | ||||||||
Adjusted operating income (A) | 61,588 | 76,030 | 246,133 | 280,882 | ||||||||
Net loss (gain) on sale of capital assets | 383 | (541 | ) | (592 | ) | (3,412 | ) | |||||
Amortization | 71,766 | 58,372 | 274,118 | 257,066 | ||||||||
Adjusted EBITDA (A) | $ | 133,737 | $ | 133,861 | $ | 519,659 | $ | 534,536 | ||||
Net income (loss) | $ | 11,753 | $ | (296,188 | ) | $ | 94,357 | $ | (196,136 | ) | ||
Transaction and related costs - SG&A | 462 | 141 | 2,507 | 1,880 | ||||||||
Fair value movements in stock options - SG&A | 703 | (2,685 | ) | (110 | ) | (6,808 | ) | |||||
Restricted share expense - SG&A | 819 | 726 | 2,034 | 2,107 | ||||||||
Payments made to executives and senior management on departure - SG&A | 981 | 9,928 | 3,991 | 9,928 | ||||||||
Restructuring expenses and goodwill impairment | - | 360,968 | - | 362,166 | ||||||||
Net loss (gain) on financial instruments | 3,541 | (1,101 | ) | 1,725 | (4,984 | ) | ||||||
Loss on extinguishment of debt | 16,924 | - | 16,924 | - | ||||||||
Other expenses | - | 45 | 105 | 872 | ||||||||
Net income tax recovery | (7,031 | ) | (33,839 | ) | (8,346 | ) | (34,022 | ) | ||||
Adjusted net income (A) | $ | 28,152 | $ | 37,995 | $ | 113,187 | $ | 135,003 | ||||
Adjusted net income per weighted average share, basic (A)(*) | $ | 0.24 | $ | 0.32 | $ | 0.97 | $ | 1.12 | ||||
Adjusted net income per weighted average share, diluted (A)(*) | $ | 0.24 | $ | 0.32 | $ | 0.97 | $ | 1.12 | ||||
Replacement and growth expenditures | ||||||||||||
Replacement expenditures | $ | 35,336 | $ | 38,741 | $ | 154,928 | $ | 126,808 | ||||
Growth expenditures | 37,545 | 15,580 | 91,950 | 44,205 | ||||||||
Total replacement and growth expenditures | $ | 72,881 | $ | 54,321 | $ | 246,878 | $ | 171,013 | ||||
Free cash flow (B) | ||||||||||||
Cash generated from operating activities (statement of cash flows) | $ | 74,184 | $ | 115,217 | $ | 336,761 | $ | 395,706 | ||||
Free cash flow(B) | $ | 36,620 | $ | 59,281 | $ | 172,460 | $ | 262,464 | ||||
Free cash flow(B) per weighted average share, diluted | $ | 0.32 | $ | 0.50 | $ | 1.48 | $ | 2.17 | ||||
Dividends | ||||||||||||
Dividends declared (common shares) | $ | 16,264 | $ | 14,418 | $ | 64,815 | $ | 60,646 | ||||
Note: | ||||||||||||
(*)Prior period or year amounts have been adjusted to conform to the current period or year's presentation. |
Segment Highlights - Additional details regarding the FX impact on our comparative results can be found in the Foreign Currency sections of this report. | |||||||||||||||
(all amounts are in thousands of U.S. dollars, unless otherwise stated) | |||||||||||||||
Three months ended | |||||||||||||||
December 31 | |||||||||||||||
2011 | 2012 | Change | 2012 | Change | |||||||||||
(as reported) | (holding FX constant with the comparative period) | (as reported) | |||||||||||||
Revenues | $ | 457,212 | $ | 489,522 | $ | 32,310 | $ | 495,822 | $ | 38,610 | |||||
Canada | $ | 185,590 | $ | 192,721 | $ | 7,131 | $ | 199,021 | $ | 13,431 | |||||
U.S. south | $ | 185,426 | $ | 201,725 | $ | 16,299 | $ | 201,725 | $ | 16,299 | |||||
U.S. northeast | $ | 86,196 | $ | 95,076 | $ | 8,880 | $ | 95,076 | $ | 8,880 | |||||
Operating expenses | $ | 273,283 | $ | 301,735 | $ | 28,452 | $ | 305,236 | $ | 31,953 | |||||
Canada | $ | 101,656 | $ | 107,910 | $ | 6,254 | $ | 111,411 | $ | 9,755 | |||||
U.S. south | $ | 112,929 | $ | 127,051 | $ | 14,122 | $ | 127,051 | $ | 14,122 | |||||
U.S. northeast | $ | 58,698 | $ | 66,774 | $ | 8,076 | $ | 66,774 | $ | 8,076 | |||||
SG&A (as reported) | $ | 58,178 | $ | 59,037 | $ | 859 | $ | 59,814 | $ | 1,636 | |||||
Canada | $ | 15,350 | $ | 16,956 | $ | 1,606 | $ | 17,528 | $ | 2,178 | |||||
U.S. south | $ | 18,624 | $ | 20,600 | $ | 1,976 | $ | 20,600 | $ | 1,976 | |||||
U.S. northeast | $ | 7,272 | $ | 8,506 | $ | 1,234 | $ | 8,506 | $ | 1,234 | |||||
Corporate | $ | 16,932 | $ | 12,975 | $ | (3,957 | ) | $ | 13,180 | $ | (3,752 | ) | |||
EBITDA (A) (as reported) | $ | 125,751 | $ | 128,750 | $ | 2,999 | $ | 130,772 | $ | 5,021 | |||||
Canada | $ | 68,584 | $ | 67,855 | $ | (729 | ) | $ | 70,082 | $ | 1,498 | ||||
U.S. south | $ | 53,873 | $ | 54,074 | $ | 201 | $ | 54,074 | $ | 201 | |||||
U.S. northeast | $ | 20,226 | $ | 19,796 | $ | (430 | ) | $ | 19,796 | $ | (430 | ) | |||
Corporate | $ | (16,932 | ) | $ | (12,975 | ) | $ | 3,957 | $ | (13,180 | ) | $ | 3,752 | ||
Adjusted SG&A | $ | 50,068 | $ | 56,079 | $ | 6,011 | $ | 56,849 | $ | 6,781 | |||||
Canada | $ | 15,350 | $ | 16,956 | $ | 1,606 | $ | 17,528 | $ | 2,178 | |||||
U.S. south | $ | 18,624 | $ | 20,600 | $ | 1,976 | $ | 20,600 | $ | 1,976 | |||||
U.S. northeast | $ | 7,272 | $ | 8,506 | $ | 1,234 | $ | 8,506 | $ | 1,234 | |||||
Corporate | $ | 8,822 | $ | 10,017 | $ | 1,195 | $ | 10,215 | $ | 1,393 | |||||
Adjusted EBITDA (A) | $ | 133,861 | $ | 131,708 | $ | (2,153 | ) | $ | 133,737 | $ | (124 | ) | |||
Canada | $ | 68,584 | $ | 67,855 | $ | (729 | ) | $ | 70,082 | $ | 1,498 | ||||
U.S. south | $ | 53,873 | $ | 54,074 | $ | 201 | $ | 54,074 | $ | 201 | |||||
U.S. northeast | $ | 20,226 | $ | 19,796 | $ | (430 | ) | $ | 19,796 | $ | (430 | ) | |||
Corporate | $ | (8,822 | ) | $ | (10,017 | ) | $ | (1,195 | ) | $ | (10,215 | ) | $ | (1,393 | ) |
Year ended | |||||||||||||||
December 31 | |||||||||||||||
2011 | 2012 | Change | 2012 | Change | |||||||||||
(as reported) | (holding FX constant with the comparative period) | (as reported) | |||||||||||||
Revenues | $ | 1,840,096 | $ | 1,904,678 | $ | 64,582 | $ | 1,896,741 | $ | 56,645 | |||||
Canada | $ | 757,594 | $ | 784,751 | $ | 27,157 | $ | 776,814 | $ | 19,220 | |||||
U.S. south | $ | 723,315 | $ | 780,331 | $ | 57,016 | $ | 780,331 | $ | 57,016 | |||||
U.S. northeast | $ | 359,187 | $ | 339,596 | $ | (19,591 | ) | $ | 339,596 | $ | (19,591 | ) | |||
Operating expenses | $ | 1,094,067 | $ | 1,159,187 | $ | 65,120 | $ | 1,154,764 | $ | 60,697 | |||||
Canada | $ | 415,497 | $ | 437,398 | $ | 21,901 | $ | 432,975 | $ | 17,478 | |||||
U.S. south | $ | 439,700 | $ | 485,184 | $ | 45,484 | $ | 485,184 | $ | 45,484 | |||||
U.S. northeast | $ | 238,870 | $ | 236,605 | $ | (2,265 | ) | $ | 236,605 | $ | (2,265 | ) | |||
SG&A (as reported) | $ | 218,600 | $ | 231,705 | $ | 13,105 | $ | 230,740 | $ | 12,140 | |||||
Canada | $ | 61,689 | $ | 66,046 | $ | 4,357 | $ | 65,378 | $ | 3,689 | |||||
U.S. south | $ | 72,186 | $ | 78,070 | $ | 5,884 | $ | 78,070 | $ | 5,884 | |||||
U.S. northeast | $ | 30,775 | $ | 31,465 | $ | 690 | $ | 31,465 | $ | 690 | |||||
Corporate | $ | 53,950 | $ | 56,124 | $ | 2,174 | $ | 55,827 | $ | 1,877 | |||||
EBITDA (A) (as reported) | $ | 527,429 | $ | 513,786 | $ | (13,643 | ) | $ | 511,237 | $ | (16,192 | ) | |||
Canada | $ | 280,408 | $ | 281,307 | $ | 899 | $ | 278,461 | $ | (1,947 | ) | ||||
U.S. south | $ | 211,429 | $ | 217,077 | $ | 5,648 | $ | 217,077 | $ | 5,648 | |||||
U.S. northeast | $ | 89,542 | $ | 71,526 | $ | (18,016 | ) | $ | 71,526 | $ | (18,016 | ) | |||
Corporate | $ | (53,950 | ) | $ | (56,124 | ) | $ | (2,174 | ) | $ | (55,827 | ) | $ | (1,877 | ) |
Adjusted SG&A | $ | 211,493 | $ | 223,263 | $ | 11,770 | $ | 222,318 | $ | 10,825 | |||||
Canada | $ | 61,689 | $ | 66,046 | $ | 4,357 | $ | 65,378 | $ | 3,689 | |||||
U.S. south | $ | 72,186 | $ | 78,070 | $ | 5,884 | $ | 78,070 | $ | 5,884 | |||||
U.S. northeast | $ | 30,775 | $ | 31,465 | $ | 690 | $ | 31,465 | $ | 690 | |||||
Corporate | $ | 46,843 | $ | 47,682 | $ | 839 | $ | 47,405 | $ | 562 | |||||
Adjusted EBITDA (A) | $ | 534,536 | $ | 522,228 | $ | (12,308 | ) | $ | 519,659 | $ | (14,877 | ) | |||
Canada | $ | 280,408 | $ | 281,307 | $ | 899 | $ | 278,461 | $ | (1,947 | ) | ||||
U.S. south | $ | 211,429 | $ | 217,077 | $ | 5,648 | $ | 217,077 | $ | 5,648 | |||||
U.S. northeast | $ | 89,542 | $ | 71,526 | $ | (18,016 | ) | $ | 71,526 | $ | (18,016 | ) | |||
Corporate | $ | (46,843 | ) | $ | (47,682 | ) | $ | (839 | ) | $ | (47,405 | ) | $ | (562 | ) |
Revenues | |||||||||||||||||||||
Gross revenue by service type | |||||||||||||||||||||
The table below presents gross revenue by service type prepared on a consolidated basis and includes the impact of FX. | |||||||||||||||||||||
Three months ended | Year ended | ||||||||||||||||||||
December 31 | December 31 | ||||||||||||||||||||
2012 | % | 2011 | % | 2012 | % | 2011 | % | ||||||||||||||
Commercial | $ | 171,384 | 34.6 | $ | 158,230 | 34.6 | $ | 665,715 | 35.1 | $ | 638,611 | 34.7 | |||||||||
Industrial | 88,293 | 17.8 | 80,550 | 17.6 | 336,353 | 17.7 | 333,258 | 18.1 | |||||||||||||
Residential | 117,267 | 23.7 | 101,834 | 22.3 | 440,725 | 23.2 | 395,156 | 21.5 | |||||||||||||
Transfer and disposal | 168,318 | 33.9 | 160,312 | 35.1 | 640,923 | 33.8 | 651,863 | 35.4 | |||||||||||||
Recycling | 15,592 | 3.1 | 17,828 | 3.9 | 65,344 | 3.4 | 75,253 | 4.1 | |||||||||||||
Other | 7,467 | 1.5 | 5,369 | 1.2 | 26,467 | 1.4 | 21,945 | 1.2 | |||||||||||||
Gross revenues | 568,321 | 114.6 | 524,123 | 114.7 | 2,175,527 | 114.6 | 2,116,086 | 115.0 | |||||||||||||
Intercompany | (72,499 | ) | (14.6 | ) | (66,911 | ) | (14.7 | ) | (278,786 | ) | (14.6 | ) | (275,990 | ) | (15.0 | ) | |||||
Revenues | $ | 495,822 | 100.0 | $ | 457,212 | 100.0 | $ | 1,896,741 | 100.0 | $ | 1,840,096 | 100.0 |
Revenue growth or decline components - expressed in percentages and excluding FX
The table below has been prepared using reported revenues for 2012 and gross
revenues for 2011. The table has also been prepared assuming Canadian and U.S.
dollar parity. For 2011, the amounts are presented as if
Three months ended | Year ended | |||||||
December 31 | December 31 | |||||||
2012 | 2011 (*) | 2012 | 2011 (*) | |||||
Price | ||||||||
Core price | 1.2 | 1.2 | 1.4 | 1.4 | ||||
Fuel surcharges | 0.3 | 0.9 | 0.4 | 1.1 | ||||
Recycling and other | (1.0 | ) | (0.2 | ) | (1.6 | ) | 0.4 | |
Total price growth | 0.5 | 1.9 | 0.2 | 2.9 | ||||
Volume | 0.1 | 0.6 | (1.2 | ) | 0.6 | |||
Total organic (decline) growth | 0.6 | 2.5 | (1.0 | ) | 3.5 | |||
Acquisitions | 6.4 | 5.6 | 4.5 | 6.0 | ||||
Total growth excluding FX | 7.0 | 8.1 | 3.5 | 9.5 | ||||
FX | 1.4 | (0.4 | ) | |||||
Total growth including FX | 8.4 | 3.1 | ||||||
Note: | ||||||||
(*)Prior period or year amounts have been adjusted to conform to the current period or year's presentation. |
Free cash flow (B)
Purpose and objective
The purpose of presenting this non-GAAP measure is to provide investors and analysts with an additional measure of our value and liquidity. We use this non-GAAP measure to assess our relative performance to our peers and to assess the availability of funds for growth investment, share repurchases, debt repayment or dividend increases.
Free cash flow (B) - cash flow approach | ||||||||||||||||||
Three months ended | Year ended | |||||||||||||||||
December 31 | December 31 | |||||||||||||||||
2012 (*) | 2011 | Change | 2012 (*) | 2011 | Change | |||||||||||||
Cash generated from operating activities | $ | 74,184 | $ | 115,217 | $ | (41,033 | ) | $ | 336,761 | $ | 395,706 | $ | (58,945 | ) | ||||
Operating and investing | ||||||||||||||||||
Stock option recovery | 703 | (2,685 | ) | 3,388 | (110 | ) | (6,808 | ) | 6,698 | |||||||||
Acquisition and related costs | 462 | 141 | 321 | 2,507 | 1,880 | 627 | ||||||||||||
Payments made to executive and senior management on departure | 981 | 9,928 | (8,947 | ) | 3,991 | 9,928 | (5,937 | ) | ||||||||||
Restructuring expenses | - | 411 | (411 | ) | - | 1,609 | (1,609 | ) | ||||||||||
Other expenses | - | 45 | (45 | ) | 105 | 872 | (767 | ) | ||||||||||
Changes in non-cash working capital items | 27,322 | (10,186 | ) | 37,508 | 68,657 | 28,664 | 39,993 | |||||||||||
Capital and landfill asset purchases | (72,881 | ) | (54,321 | ) | (18,560 | ) | (246,878 | ) | (171,013 | ) | (75,865 | ) | ||||||
Proceeds from the sale of capital assets | 654 | 721 | (67 | ) | 2,761 | 5,925 | (3,164 | ) | ||||||||||
Financing | ||||||||||||||||||
Loss on extinguishment of debt (net of non-cash portion) | 5,198 | - | 5,198 | 5,198 | - | 5,198 | ||||||||||||
Purchase of restricted shares | - | - | - | (541 | ) | (4,226 | ) | 3,685 | ||||||||||
Net realized foreign exchange (gain) loss | (3 | ) | 10 | (13 | ) | 9 | (73 | ) | 82 | |||||||||
Free cash flow(B) | $ | 36,620 | $ | 59,281 | $ | (22,661 | ) | $ | 172,460 | $ | 262,464 | $ | (90,004 | ) | ||||
Note: | ||||||||||||||||||
(*)Capital and landfill asset purchases include infrastructure expenditures of approximately $12,300 and $26,100, for the three months and year ended December 31, 2012, respectively. |
Free cash flow (B) - adjusted EBITDA (A) approach | ||||||||||||||||||
We typically calculate free cash flow(B) using an operations approach which is a better reflection of how we manage the business and free cash flow(B). | ||||||||||||||||||
Three months ended | Year ended | |||||||||||||||||
December 31 | December 31 | |||||||||||||||||
2012 (*) | 2011 | Change | 2012 (*) | 2011 | Change | |||||||||||||
Adjusted EBITDA(A) | $ | 133,737 | $ | 133,861 | $ | (124 | ) | $ | 519,659 | $ | 534,536 | $ | (14,877 | ) | ||||
Purchase of restricted shares | - | - | - | (541 | ) | (4,226 | ) | 3,685 | ||||||||||
Capital and landfill asset purchases | (72,881 | ) | (54,321 | ) | (18,560 | ) | (246,878 | ) | (171,013 | ) | (75,865 | ) | ||||||
Proceeds from the sale of capital assets | 654 | 721 | (67 | ) | 2,761 | 5,925 | (3,164 | ) | ||||||||||
Landfill closure and post-closure expenditures | (1,336 | ) | (1,183 | ) | (153 | ) | (6,737 | ) | (4,345 | ) | (2,392 | ) | ||||||
Landfill closure and post-closure cost accretion expense | 1,313 | 1,255 | 58 | 5,240 | 5,071 | 169 | ||||||||||||
Interest on long-term debt | (14,494 | ) | (13,723 | ) | (771 | ) | (57,428 | ) | (62,086 | ) | 4,658 | |||||||
Non-cash interest expense | 596 | 1,680 | (1,084 | ) | 5,665 | 6,035 | (370 | ) | ||||||||||
Current income tax expense | (10,969 | ) | (9,009 | ) | (1,960 | ) | (49,281 | ) | (47,433 | ) | (1,848 | ) | ||||||
Free cash flow(B) | $ | 36,620 | $ | 59,281 | $ | (22,661 | ) | $ | 172,460 | $ | 262,464 | $ | (90,004 | ) | ||||
Note: | ||||||||||||||||||
(*)Capital and landfill asset purchases include infrastructure expenditures of approximately $12,300 and $26,100, for the three months and year ended December 31, 2012, respectively. |
Funded debt to EBITDA (as defined and calculated in accordance with our consolidated facility)
The ratio of funded debt to EBITDA, which includes first year pro forma EBITDA for completed acquisitions, is 3.14 times. The ratio is higher than our target threshold due to the timing of acquisitions, growth and infrastructure spending and lower recycled commodity price performance than expected. Cash flows from acquisitions beyond the first year of operation will contribute to the further improvement of funded debt relative to EBITDA in subsequent periods. Cash flow contributions from growth and infrastructure spending will materialize over future periods and will also improve this relationship.
Foreign Currency
(in thousands of U.S. dollars unless otherwise stated)
We have elected to report our financial results in U.S. dollars. However, we
earn a significant portion of our revenues and earnings in
2012 | 2011 | |||||||||||
Consolidated Balance Sheet |
Consolidated Statement of Operations and Comprehensive Income or Loss |
Consolidated Balance Sheet |
Consolidated Statement of Operations and Comprehensive Income or Loss |
|||||||||
Current | Average | Cumulative Average | Current | Average | Cumulative Average |
|||||||
March 31 | $ | 1.0009 | $ | 0.9988 | $ | 0.9988 | $ | 1.0290 | $ | 1.0142 | $ | 1.0142 |
June 30 | $ | 0.9813 | $ | 0.9899 | $ | 0.9943 | $ | 1.0370 | $ | 1.0334 | $ | 1.0237 |
September 30 | $ | 1.0166 | $ | 1.0052 | $ | 0.9979 | $ | 0.9626 | $ | 1.0202 | $ | 1.0225 |
December 31 | $ | 1.0051 | $ | 1.0088 | $ | 1.0006 | $ | 0.9833 | $ | 0.9774 | $ | 1.0109 |
Update to Company's Board of Directors
The Company's Board of Directors announced that
Quarterly dividend declared
The Company's Board of Directors declared a quarterly dividend of
Definitions
(A) All references to "Adjusted EBITDA" in this document are to revenues less operating expense and SG&A, excluding certain non-operating or non-recurring SG&A expense, on the consolidated statement of operations and comprehensive income or loss. Adjusted EBITDA excludes some or all of the following: certain SG&A expenses, restructuring expenses, goodwill impairment, amortization, net gain or loss on sale of capital assets, interest on long-term debt, net foreign exchange gain or loss, net gain or loss on financial instruments, loss on extinguishment of debt, other expenses, income taxes and income or loss from equity accounted investee. Adjusted 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 companies. Adjusted 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 goodwill impairment, amortization, net gain or loss on financial instruments, net foreign exchange gain or loss, deferred income taxes and net income or loss from equity accounted investee) or non-operating (in the case of certain SG&A expenses, restructuring expenses, net gain or loss on sale of capital assets, interest on long-term debt, loss on extinguishment of debt, other expenses, and current income taxes). Adjusted 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:
Certain SG&A expenses - SG&A expense includes certain non-operating or non-recurring expenses. These expenses include transaction costs related to acquisitions, fair value adjustments attributable to stock options, restricted share expense and payments made to senior executives on their departure. These expenses are not considered an expense indicative of continuing operations. Certain SG&A costs represent a different class of expense than those included in adjusted EBITDA.
Restructuring expenses - restructuring expenses includes costs to integrate various operating locations with our own, exiting certain property and building and office leases, employee severance and employee relocation costs incurred in connection with our acquisition of WSI. These expenses are not considered an expense indicative of continuing operations. Accordingly, restructuring expenses represent a different class of expense than those included in adjusted EBITDA.
Goodwill impairment - as a non-cash item goodwill impairment has no impact on the determination of free cash flow(B).
Amortization - as a non-cash item amortization has no impact on the determination of free cash flow(B).
Net gain or loss on sale of capital assets - proceeds from the sale of capital assets are either reinvested in additional or replacement capital assets or used to repay revolving credit facility borrowings.
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 adjusted EBITDA.
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).
Loss on extinguishment of debt - loss on extinguishment of debt is a function of our debt financing; as such, it reflects our treasury/financing activities and represents a different class of expense than those included in adjusted EBITDA.
Other expenses - other expenses typically represent amounts paid to certain management of acquired companies who are retained by us post acquisition and amounts paid to certain executives in respect of acquisitions successfully completed. These expenses are not considered an expense indicative of continuing operations. Accordingly, other expenses represent a different class of expense than those included in adjusted 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.
Net income or loss from equity accounted investee - as a non-cash item, net income or loss from our equity accounted investee has no impact on the determination of free cash flow(B).
All references to "Adjusted operating income" in this document represent Adjusted EBITDA after adjusting for net gain or loss on sale of capital assets and amortization. All references to "Adjusted net income" are to Adjusted operating income after adjusting for restructuring expenses and goodwill impairment, net gain or loss on financial instruments, loss on extinguishment of debt, other expenses and net income tax expense or recovery.
(B) We have adopted a measure called "free cash flow" to supplement net income or loss as a measure of our operating performance. Free cash flow is a term which does not have a standardized meaning prescribed by U.S. GAAP, is prepared before dividends declared and shares repurchased, and may not be comparable to similar measures prepared by other companies. The purpose of presenting this non-GAAP measure is to provide disclosure similar to the disclosure provided by other U.S. publicly listed companies in our industry and to provide investors and analysts with an additional measure of our value and liquidity. We use this non-GAAP measure to assess our performance relative to other U.S. publicly listed companies and to assess the availability of funds for growth investment, debt repayment, share repurchases or dividend increases. All references to "free cash flow" in this document have the meaning set out in this note.
2013 outlook assumptions and factors
The Company's 2013 outlook includes a variety of assumptions and factors. The Company's 2013 outlook is the aggregation of each location's operating and financial plans for the 2013 period. Each operating location builds its 2013 plan employing a bottom-up approach, which includes a forecast of price, volumes, new business volume, pricing growth and lost business. Each location's outlook includes assumptions around productivity, operating costs, selling, general and administrative costs and capital and landfill expenditures. The assumptions applied at each operating location vary as a result of the environment in which it competes to provide service and the combination of assumptions is unique to each location. Accordingly, the assumptions applied in one location will differ from those applied in another, reflecting differences in the general economic environment, the locations share of the market, competition in the market, the locations operating strategy for the coming year, compensation levels, disposal rates, fuel prices, maintenance costs, to name a few.
The Company has prepared its 2013 outlook assuming the Canadian and U.S. dollars are exchanged at parity. A strengthening of the Canadian dollar relative to the U.S. dollar results in higher reported revenues, EBITDA(A) and net income and also increases the Company's reported balance sheet amounts. Should the Canadian dollar weaken relative to the U.S. dollar, the inverse result will occur.
The current economic environment is unsettled. The Company has assumed that there is no significant positive or negative change to the economic environment in preparing its outlook for 2013. Each operating location considers the economic environment in which it operates when preparing its 2013 outlook. A significant positive or negative change to the economic environment could have a significant impact on the business as a whole, or isolated locations where we operate. Significant economic changes will have the most pronounced impact on our services which are more sensitive to changes in the economic environment, including, most notably, industrial, disposal and material recycling services. Additional information pertaining to the sensitivity of certain services we provide relative to the economic environment are outlined in greater detail in the Risk and Uncertainties section of the Company's Management Discussion and Analysis.
We historically complete several acquisitions in an operating year. However, our outlook does not contemplate us acquiring any companies in 2013. The timing, nature, size and contribution of each acquisition to our financial performance is not known until the acquisition is consummated. Accordingly, we have specifically excluded any acquisitions from our 2013 outlook for these reasons. Readers are cautioned that our actual 2013 results may include acquisitions, which if completed will impact our 2013 results. Acquisitions will contribute additional revenues, earnings, additional capital expense, and typically increase our long-term debt levels. Contributions from acquisitions completed in the prior year are included in our 2013 outlook.
Our estimate for capital and landfill expenditures follows the same bottom-up approach outlined above. Our capital and landfill estimate is subject to many factors and uncertainties, some of which are out of our control, including availability, timing of receipt and cost. Management may also withhold or advance capital at a pace inconsistent with its 2013 outlook due to factors that it deems necessary to best manage the Company's financial resources which could impact the Company's levels of debt and the interest expense expected in its 2013 outlook. Management may also withhold capital and landfill expenditures from its 2013 outlook or accelerate expenditures which are not otherwise contemplated in its 2013 plan.
Cash taxes are derived from estimated levels of income subject to tax across each of the Company's locations and jurisdictions we operate in. We have assumed that losses remain available at current levels to shield income otherwise subject to tax and our estimate of cash tax reflects posted Federal, Provincial or State tax rates, as applicable. A significant change in either Federal, Provincial or State tax rates, or our availability of losses available to shield income otherwise subject to tax could result in a significant change in our cash tax estimate for 2013. Additionally, our operating performance could have a significant impact on our 2013 outlook for cash taxes. Cash taxes are predominantly incurred by the Company from its Canadian operations. A failure of the Canadian operations to deliver on its 2013 outlook would result in a reduction in cash taxes. Outperforming our 2013 outlook will result in higher cash tax amounts. Additionally, our cash tax estimates assume that we will continue to have available to us a similar level of tax deduction that was available to us in the prior year. Changes to either the availability or amount of deduction could result in a significant change to income subject to tax and ultimately cash taxes.
Free cash flow(B) is the result of aggregating each locations performance, capital spend and landfill closure and post-closure cost accretion, coupled with cash taxes and interest expense. As noted above, each of these items is subject to its own set of assumptions and uncertainties. Accordingly, a change in any one or all of these assumptions could have a positive or negative impact on our ability to generate our projected free cash flow(B) amounts for 2013.
Caution regarding forward looking statements
The Company's 2013 outlook is subject to the same risks and uncertainties outlined in the Risk and Uncertainties section of the Company's Management Discussion and Analysis, as applicable and investors are urged to fully review these sections before making an investment decision. This press release contains forward-looking statements and forward-looking information. Forward-looking statements are not based on historical facts but instead reflect our expectations, estimates or projections concerning future results or events. These statements can generally be identified by the use of forward-looking words or phrases such as "anticipate," "believe," "budget," "continue," "could," "estimate," "expect," "forecast," "goals," "intend," "intent," "belief," "may," "plan," "foresee," "likely," "potential," "project," "seek," "strategy," "synergies," "targets," "will," "should," "would," or variations of such words and other similar words. Forward-looking statements include, but are not limited to, statements relating to future financial and operating results and our plans, objectives, prospects, expectations and intentions. These statements represent our intentions, plans, expectations, assumptions and beliefs about future events and are subject to risks, uncertainties and other factors. Numerous important factors could cause our actual results, performance or achievements to differ materially from those expressed in or implied by these forward-looking statements, including, without limitation, those factors outlined in the Risks and Uncertainties section of the Company's Management Discussion and Analysis. We caution that the list of factors is illustrative and by no means exhaustive. In addition, we cannot assure you that any of our expectations, estimates or projections will be achieved.
All forward-looking statements should be evaluated with the understanding of their inherent uncertainty. All forward-looking statements in this press release are qualified by these cautionary statements. The forward-looking statements in this press release are made as of the date of this press release and we disclaim any obligation to publicly update any forward-looking statement to reflect subsequent events or circumstances, except as required by law.
About
As one of
To find out more about
Management will hold a conference call on
A replay will be available after the call until
For more information, contact:
VP, Investor Relations and Corporate Communications
(905) 532-7517
chaya.cooperberg@progressivewaste.com.
www.progressivewaste.com.
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