WASTE CONNECTIONS, INC. THE WOODLANDS, Texas, July 27, 2015 /PRNewswire/ -- Waste Connections, Inc. (NYSE: WCN) today announced its results for the second quarter of 2015. Revenue in the second quarter was $531.3 million, as compared to revenue of $524.7 million in the year ago period. Operating income was $110.0 million compared to $118.5 million in the second quarter of 2014. Adjusted EBITDA* in the current year period was $177.7 million, as compared to adjusted EBITDA of $182.5 million in the prior year period. Adjusted EBITDA, a non-GAAP measure, excludes the impact of items such as impairments and other operating charges or gains, and acquisition-related costs, as shown in the detailed reconciliation in the attached table.
http://photos.prnewswire.com/prnvar/20140128/SF54441LOGO
Net income attributable to Waste Connections in the quarter was $57.4 million, or $0.46 per share on a diluted basis of 124.4 million shares. In the year ago period, the Company reported net income attributable to Waste Connections of $62.7 million, or $0.50 per share on a diluted basis of 124.8 million shares.
Adjusted net income attributable to Waste Connections* in the quarter was $61.7 million, or $0.50 per share, versus $66.4 million, or $0.53 per share, in the prior year period. Adjusted net income and adjusted net income per diluted share, both non-GAAP measures, primarily exclude the impact of acquisition-related items such as amortization of intangibles and transaction costs, all net of tax, as shown in the detailed reconciliation in the attached table.
"Strong organic growth and an approximate 180 basis points year-over-year margin expansion in solid waste enabled us to once again meet or exceed the upper end of expectations for the quarter. We are pleased to report that solid waste collection activity, disposal volumes and recycled commodity values improved throughout the period, providing good momentum into the second half of the year. And E&P waste activity played out as expected," said Ronald J. Mittelstaedt, Chief Executive Officer and Chairman. "Given these trends and our expected continuing strong operating performance, we believe we are on track to report approximately $2.11 billion and $705 million of revenue and adjusted EBITDA, respectively, in 2015, meeting or exceeding full year expectations updated in April. In addition, with year-to-date free cash flow of $220 million, or over 21% of revenue, we remain on track to deliver at least $350 million of free cash flow for the year."
Mr. Mittelstaedt added, "Our recently announced $500 million note offering will expand our available liquidity to more than $1 billion, pre-positioning the balance sheet for any increase in acquisition activity or return of capital to stockholders. But as always, discipline and prudence remain hallmarks of our capital deployment strategy."
For the six months ended June 30, 2015, revenue was $1.04 billion, as compared to revenue of $1.01 billion in the year ago period. Operating income was $211.9 million compared to $218.4 million for the same period in 2014.
* A non-GAAP measure; see accompanying Non-GAAP Reconciliation Schedule
Adjusted EBITDA for the six months ended June 30, 2015, was $346.0 million, as compared to adjusted EBITDA of $346.6 million in the prior year period. Net income attributable to Waste Connections for the six months ended June 30, 2015, was $109.2 million, or $0.88 per share on a diluted basis of 124.4 million shares. In the year ago period, the Company reported net income attributable to Waste Connections of $111.7 million, or $0.89 per share on a diluted basis of 124.8 million shares. Adjusted net income attributable to Waste Connections* for the six months ended June 30, 2015, was $118.6 million, or $0.95 per share, compared to $121.3 million, or $0.97 per share, in the year ago period.
Waste Connections, Inc. is an integrated solid waste services company that provides waste collection, transfer, disposal and recycling services in mostly exclusive and secondary markets. Through its R360 Environmental Solutions subsidiary, the Company is also a leading provider of non-hazardous oilfield waste treatment, recovery and disposal services in several of the most active natural resource producing areas in the United States, including the Permian, Bakken and Eagle Ford Basins. Waste Connections serves more than two million residential, commercial, industrial, and exploration and production customers from a network of operations in 32 states. The Company also provides intermodal services for the movement of cargo and solid waste containers in the Pacific Northwest. Waste Connections, Inc. was founded in September 1997 and is headquartered in The Woodlands, Texas.
For more information, visit the Waste Connections web site at www.wasteconnections.com. Copies of financial literature, including this release, are available on the Waste Connections website or through contacting us directly at (832) 442-2200.
Information Regarding Forward-Looking Statements
Certain statements contained in this release are forward-looking in nature, including statements related to: the Company's expected 2015 financial results; capital expenditures; the Company's ability to generate free cash flow; trends in our business; expected acquisition activity; the Company's ability to close its recently announced note offering; the Company's ability to finance additional acquisitions; and the expected return of capital to stockholders. These statements can be identified by the use of forward-looking terminology such as "believes," "expects," "may," "will," "should," or "anticipates," or the negative thereof or comparable terminology, or by discussions of strategy. Factors that could cause actual results to differ from those projected include, but are not limited to, the following: (1) negative trends or volatility in crude oil prices may adversely affect the level of exploration, development and production activity of E&P companies and the demand for our E&P waste services; (2) our results are vulnerable to economic conditions; (3) our E&P waste business depends on the willingness of E&P companies to outsource their waste services activities; (4) our industry is highly competitive and includes larger and better capitalized companies, companies with lower prices, return expectations or other advantages, and governmental service providers, which could adversely affect our ability to compete and our operating results; (5) our financial and operating performance may be affected by the inability to renew landfill operating permits, obtain new landfills and expand existing ones; (6) competition for acquisition candidates, consolidation within the waste industry and economic and market conditions may limit our ability to grow through acquisitions; (7) our indebtedness could adversely affect our financial condition and limit our financial flexibility; (8) price increases may not be adequate to offset the impact of increased costs, or may cause us to lose volume; (9) fluctuations in prices for recycled commodities that we sell and rebates we offer to customers may cause our revenues and operating results to decline; (10) we have limited experience in running an E&P waste treatment, recovery and disposal business; (11) the seasonal nature of our business and "event-driven" waste projects cause our results to fluctuate; (12) we may lose contracts through competitive bidding, early termination or governmental action; (13) alternatives to landfill disposal may cause our revenues and operating results to decline; (14) increases in labor costs could impact our financial results; (15) increases in the price of diesel or compressed natural gas fuel may adversely affect our collection business and reduce our operating margins; (16) labor union activity could divert management attention and adversely affect our operating results; (17) we could face significant withdrawal liability if we withdraw from participation in one or more multiemployer pension plans in which we participate and the accrued pension benefits are not fully funded; (18) our financial results could be adversely affected by impairments of goodwill or indefinite-lived intangibles; (19) pending or future litigation or governmental proceedings could result in material adverse consequences, including judgments or settlements; (20) we may be subject in the normal course of business to judicial, administrative or other third-party proceedings that could interrupt or limit our operations, require expensive remediation, result in adverse judgments, settlements or fines and create negative publicity; (21) increases in insurance costs and the amount that we self-insure for various risks could reduce our operating margins and reported earnings; (22) we rely on computer systems to run our business and disruptions or privacy breaches in these systems could impact our ability to service our customers and adversely affect our financial results, damage our reputation, and expose us to litigation risk; (23) a portion of our growth and future financial performance depends on our ability to integrate acquired businesses, and the success of our acquisitions; (24) each business that we acquire or have acquired may have liabilities or risks that we fail or are unable to discover, or that become more adverse to our business than we anticipated at the time of acquisition; (25) extensive and evolving environmental, health and safety laws and regulations may restrict our operations and growth and increase our costs; (26) our E&P waste business could be adversely affected by changes in laws regulating E&P waste; (27) changes in laws or government regulations regarding hydraulic fracturing could increase our customers' costs of doing business and reduce oil and gas production by our customers, which could adversely impact our business; (28) future changes in laws regulating the flow of solid waste in interstate commerce could adversely affect our operating results; (29) extensive regulations that govern the design, operation and closure of landfills may restrict our landfill operations or increase our costs of operating landfills; (30) our financial results are based upon estimates and assumptions that may differ from actual results; (31) our accruals for our landfill site closure and post-closure costs may be inadequate; (32) we depend significantly on the services of the members of our senior and regional management team, and the departure of any of those persons could cause our operating results to suffer; (33) our decentralized decision-making structure could allow local managers to make decisions that adversely affect our operating results; (34) liabilities for environmental damage may adversely affect our financial condition, business and earnings; and (35) if we are not able to develop and protect intellectual property, or if a competitor develops or obtains exclusive rights to a breakthrough technology, our financial results may suffer. These risks and uncertainties, as well as others, are discussed in greater detail in our filings with the Securities and Exchange Commission, including our most recent Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q. There may be additional risks of which we are not presently aware or that we currently believe are immaterial which could have an adverse impact on our business. We make no commitment to revise or update any forward-looking statements in order to reflect events or circumstances that may change.
- financial tables attached -
CONTACT:
Worthing Jackman / (832) 442-2266 Mary Anne Whitney / (832) 442-2253
worthingj@wasteconnections.com maryannew@wasteconnections.com
WASTE CONNECTIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF NET INCOME
THREE AND SIX MONTHS ENDED JUNE 30, 2014 AND 2015
(Unaudited)
(in thousands, except share and per share amounts)
Three months ended Six months ended
June 30, June 30,
-------- --------
2014 2015 2014 2015
---- ---- ---- ----
Revenues $524,693 $531,312 $1,006,402 $1,037,412
Operating expenses:
Cost of operations 286,950 297,437 550,011 578,560
Selling, general and
administrative 56,526 57,264 112,172 115,409
Depreciation 57,105 59,639 112,922 116,945
Amortization of intangibles 6,720 7,264 13,456 14,263
Impairments and other
operating charges (gains) (1,074) (316) (549) 346
Operating income 118,466 110,024 218,390 211,889
Interest expense (15,940) (15,322) (32,851) (31,018)
Other income (expense), net 911 92 1,053 (128)
--- --- ----- ----
Income before income tax
provision 103,437 94,794 186,592 180,743
Income tax provision (40,537) (37,153) (74,470) (71,020)
------- ------- ------- -------
Net income 62,900 57,641 112,122 109,723
Less: net income attributable to noncontrolling interests
(236) (281) (443) (539)
---- ---- ---- ----
Net income attributable to
Waste Connections $62,664 $57,360 $111,679 $109,184
======= ======= ======== ========
Earnings per common share attributable to Waste
Connections' common stockholders:
Basic $0.50 $0.46 $0.90 $0.88
===== ===== ===== =====
Diluted $0.50 $0.46 $0.89 $0.88
===== ===== ===== =====
Shares used in the per share calculations:
Basic 124,230,572 124,079,184 124,096,619 124,044,130
=========== =========== =========== ===========
Diluted 124,848,351 124,352,062 124,781,097 124,360,059
=========== =========== =========== ===========
Cash dividends per common
share $0.115 $0.13 $0.23 $0.26
====== ===== ===== =====
WASTE CONNECTIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands, except share and per share amounts)
December 31,
2014 June 30,
2015
----
ASSETS
Current assets:
Cash and equivalents $14,353 $15,624
Accounts receivable, net of
allowance for doubtful accounts of
$9,175 and $8,343 at December 31,
2014 and June 30, 2015,
respectively 259,969 256,139
Deferred income taxes 49,508 42,581
Prepaid expenses and other current
assets 42,314 28,072
------ ------
Total current assets 366,144 342,416
Property and equipment, net 2,594,205 2,598,865
Goodwill 1,693,789 1,722,324
Intangible assets, net 509,995 537,657
Restricted assets 40,841 41,737
Other assets, net 40,293 41,472
------ ------
$5,245,267 $5,284,471
========== ==========
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable $120,717 $129,836
Book overdraft 12,446 12,424
Accrued liabilities 120,947 132,509
Deferred revenue 80,915 84,563
Current portion of contingent
consideration 21,637 23,986
Current portion of long-term debt
and notes payable 3,649 3,942
----- -----
Total current liabilities 360,311 387,260
Long-term debt and notes payable 1,971,152 1,930,483
Long-term portion of contingent
consideration 48,528 49,099
Other long-term liabilities 92,900 99,052
Deferred income taxes 538,635 545,186
------- -------
Total liabilities 3,011,526 3,011,080
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;
123,984,527 and 123,419,698 shares
issued and outstanding at December
31, 2014 and June 30, 2015,
respectively 1,240 1,234
Additional paid-in capital 811,289 775,472
Accumulated other comprehensive loss (5,593) (7,597)
Retained earnings 1,421,249 1,498,230
--------- ---------
Total Waste Connections' equity 2,228,185 2,267,339
Noncontrolling interest in
subsidiaries 5,556 6,052
----- -----
Total equity 2,233,741 2,273,391
--------- ---------
$5,245,267 $5,284,471
========== ==========
WASTE CONNECTIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 2014 AND 2015
(Unaudited)
(Dollars in thousands)
Six months ended
June 30,
--------
2014 2015
---- ----
Cash flows from operating
activities:
Net income $112,122 $109,723
Adjustments to reconcile net income
to net cash provided by operating
activities:
Gain on disposal of
assets and
impairments (1,465) (582)
Depreciation 112,922 116,945
Amortization of
intangibles 13,456 14,263
Deferred income
taxes, net of
acquisitions 7,114 14,725
Amortization of debt
issuance costs 1,594 1,777
Equity-based
compensation 9,444 9,580
Interest income on
restricted assets (235) (215)
Interest accretion 2,427 3,704
Excess tax benefit
associated with
equity-based
compensation (7,096) (1,850)
Adjustments to
contingent
consideration not
settled in cash 916 928
Net change in
operating assets
and liabilities,
net of acquisitions 28,482 50,219
------ ------
Net cash provided by
operating
activities 279,681 319,217
------- -------
Cash flows from investing
activities:
Payments for
acquisitions, net
of cash acquired (29,596) (91,724)
Proceeds from
adjustment to
acquisition
consideration 843 -
Capital expenditures
for property and
equipment (83,679) (102,170)
Proceeds from
disposal of assets 5,863 1,290
Increase in
restricted assets,
net of interest
income (2,015) 296
Other 589 568
--- ---
Net cash used in
investing
activities (107,995) (191,740)
-------- --------
Cash flows from financing
activities:
Proceeds from long-
term debt 122,000 336,000
Principal payments
on notes payable
and long-term debt (259,682) (381,226)
Payment of
contingent
consideration
recorded at
acquisition date (542) (190)
Change in book
overdraft 18 (21)
Proceeds from option
and warrant
exercises 2,958 417
Excess tax benefit
associated with
equity-based
compensation 7,096 1,850
Payments for
repurchase of
common stock - (41,311)
Payments for cash
dividends (28,496) (32,203)
Tax withholdings
related to net
share settlements
of restricted stock
units (6,729) (6,359)
Distributions to
noncontrolling
interests (371) (43)
Debt issuance costs (125) (3,120)
Net cash used in
financing
activities (163,873) (126,206)
-------- --------
Net increase in cash
and equivalents 7,813 1,271
Cash and equivalents
at beginning of
period 13,591 14,353
------ ------
Cash and equivalents
at end of period $21,404 $15,624
======= =======
ADDITIONAL STATISTICS
(Dollars in thousands)
Solid Waste Internal Growth: The following table reflects a breakdown of the components of our solid waste internal growth for the three months ended June 30, 2015:
Three months ended
June 30, 2015
-------------
Solid Waste Internal Growth:
Core Price 2.9%
Surcharges (0.1%)
Volume 2.4%
Recycling (0.5%)
-----
Total Solid Waste Internal
Growth 4.7%
---
Revenue Breakdown: The following table reflects a breakdown of our revenue for the three month periods ending June 30, 2014 and 2015:
Three Months Ended June 30, 2014
--------------------------------
%
Revenue Inter-company
Elimination Reported
Revenue
-------
Solid Waste
Collection $322,763 $(903) $321,860 61.3%
Solid Waste
Disposal
and
Transfer 158,913 (61,091) 97,822 18.7%
Solid Waste
Recycling 14,836 (485) 14,351 2.7%
E&P Waste
Treatment,
Recovery
and
Disposal 82,646 (3,717) 78,929 15.1%
Intermodal
and Other 11,970 (239) 11,731 2.2%
------ ---- ------ ---
Total $591,128 $(66,435) $524,693 100.0%
======== ======== ======== =====
Three Months Ended June 30, 2015
--------------------------------
%
Revenue Inter-company
Elimination Reported
Revenue
-------
Solid Waste
Collection $342,583 $(981) $341,602 64.3%
Solid Waste
Disposal
and
Transfer 171,932 (64,838) 107,094 20.1%
Solid Waste
Recycling 12,332 (278) 12,054 2.3%
E&P Waste
Treatment,
Recovery
and
Disposal 55,851 (3,362) 52,489 9.9%
Intermodal
and Other 18,073 - 18,073 3.4%
------ --- ------ ---
Total $600,771 $(69,459) $531,312 100.0%
======== ======== ======== =====
Contribution from Acquisitions: The following table reflects revenues from acquisitions, net of divestitures, for the three month periods ending June 30, 2014 and 2015:
Three months ended
June 30,
--------
2014 2015
---- ----
Solid waste, net $3,655 $6,199
E&P waste - 5,161
--- -----
Acquisitions, net $3,655 $11,360
====== =======
ADDITIONAL STATISTICS (continued)
Other Cash Flow Items: The following table reflects cash interest and cash taxes for the three and six month periods ending June 30, 2014 and 2015:
Three months ended Six months ended
June 30, June 30,
-------- --------
2014 2015 2014 2015
---- ---- ---- ----
Cash
Interest
Paid $19,188 $21,083 $31,030 $28,127
Cash
Taxes
Paid 40,612 32,072 41,261 32,535
Debt to Book Capitalization as of June 30, 2015: 46%
Internalization for the three months ended June 30, 2015: 53%
Days Sales Outstanding for the three months ended June 30, 2015: 44 (29 net of deferred revenue)
Share Information for the three months ended June 30, 2015:
Basic shares outstanding 124,079,184
Dilutive effect of options
and warrants 31,246
Dilutive effect of restricted
stock units 241,632
-------
Diluted shares outstanding 124,352,062
NON-GAAP RECONCILIATION SCHEDULE
(in thousands)
Reconciliation of Adjusted EBITDA:
Adjusted EBITDA, a non-GAAP financial measure, is provided supplementally because it is widely used by investors as a performance and valuation measure in the solid waste industry. Management uses adjusted EBITDA as one of the principal measures to evaluate and monitor the ongoing financial performance of the Company's operations. Waste Connections defines adjusted EBITDA as net income, plus income tax provision, plus interest expense, plus depreciation and amortization expense, plus closure and post-closure accretion expense, plus or minus any loss or gain on impairments or other operating charges, plus other expense, less other income. The Company further adjusts this calculation to exclude the effects of other items management believes impact the ability to assess the operating performance of our business. This measure is not a substitute for, and should be used in conjunction with, GAAP financial measures. Other companies may calculate adjusted EBITDA differently.
Three months ended Six months ended
June 30, June 30,
-------- --------
2014 2015 2014 2015
---- ---- ---- ----
Net Income $62,900 $57,641 $112,122 $109,723
Plus: Income tax
provision 40,537 37,153 74,470 71,020
Plus: Interest expense 15,940 15,322 32,851 31,018
Plus: Depreciation and
amortization 63,825 66,903 126,378 131,208
Plus: Closure and
post-closure
accretion 861 987 1,739 1,942
Plus/less:
Impairments and other
operating charges
(gains) (a) (1,074) (316) (549) 346
Plus/less: Other
expense (income), net (911) (92) (1,053) 128
Adjustments:
Plus: Acquisition-
related costs (b) 390 82 648 594
Adjusted EBITDA $182,468 $177,680 $346,606 $345,979
======== ======== ======== ========
As % of revenues 34.8% 33.4% 34.4% 33.4%
____________________________________
(a) Reflects the addback of impairments and other operating charges (gains).
(b) Reflects the addback of acquisition-related transaction costs.
NON-GAAP RECONCILIATION SCHEDULE (continued)
(in thousands)
Reconciliation of Free Cash Flow:
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 free cash flow as one of the principal measures to evaluate and monitor the ongoing financial performance of the Company's operations. Waste Connections defines free cash flow as net cash provided by operating activities, plus proceeds from disposal of assets, plus or minus change in book overdraft, plus excess tax benefit associated with equity-based compensation, less capital expenditures for property and equipment and distributions to noncontrolling interests. This measure is not a substitute for, and should be used in conjunction with, GAAP liquidity or financial measures. Other companies may calculate free cash flow differently.
Three months ended Six months ended
June 30, June 30,
-------- --------
2014 2015 2014 2015
---- ---- ---- ----
Net cash provided
by operating
activities $134,724 $156,647 $279,681 $319,217
Plus/Less: Change
in book overdraft (117) (47) 18 (21)
Plus: Proceeds from
disposal of assets 4,551 692 5,863 1,290
Plus: Excess tax
benefit associated
with equity-based
compensation 2,036 371 7,096 1,850
Less: Capital
expenditures for
property and
equipment (48,087) (60,464) (83,679) (102,170)
Less: Distributions
to noncontrolling
interests - - (371) (43)
Free cash flow $93,107 $97,199 $208,608 $220,123
======= ======= ======== ========
As % of revenues 17.7% 18.3% 20.7% 21.2%
NON-GAAP RECONCILIATION SCHEDULE (continued)
(in thousands, except per share amounts)
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. Waste Connections provides adjusted net income to exclude the effects of items management believes impact the comparability of operating results between periods. Adjusted net income has limitations due to the fact that it excludes items that have an impact on the Company's financial condition and results of operations. Adjusted net income and adjusted net income per diluted share are not a substitute for, and should be used in conjunction with, GAAP financial measures. Other companies may calculate adjusted net income and adjusted net income per diluted share differently.
Three months ended Six months ended
June 30, June 30,
-------- --------
2014 2015 2014 2015
---- ---- ---- ----
Reported net income
attributable to Waste
Connections $62,664 $57,360 $111,679 $109,184
Adjustments:
Amortization of
intangibles (a) 6,720 7,264 13,456 14,263
Acquisition-related
costs (b) 390 82 648 594
Impairments and other
operating charges
(gains) (c) (1,074) (316) (549) 346
Tax effect (d) (2,315) (2,696) (5,198) (5,830)
Impact of deferred tax
adjustment (e) - - 1,220 -
Adjusted net income
attributable to Waste
Connections $66,385 $61,694 $121,256 $118,557
======= ======= ======== ========
Diluted earnings per
common share
attributable to Waste
Connections' common
stockholders:
Reported net income $0.50 $0.46 $0.89 $0.88
Adjusted net income $0.53 $0.50 $0.97 $0.95
____________________________________________
(a) Reflects the elimination of the non-cash amortization of acquisition-related intangible assets.
(b) Reflects the elimination of acquisition-related transaction costs.
(c) Reflects the addback of impairments and other operating charges (gains).
(d) The aggregate tax effect of the adjustments in footnotes (a) through (c) is calculated based on the
applied tax rates for the respective periods.
(e) Reflects the elimination of an increase to the income tax provision associated with an increase in the
Company's deferred tax liabilities resulting from the enactment of New York State's 2014-2015 Budget
Act on March 31, 2014.
Logo - http://photos.prnewswire.com/prnh/20140128/SF54441LOGO
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/waste-connections-reports-second-quarter-2015-results-300119093.html
SOURCE Waste Connections, Inc.
