WASTE CONNECTIONS, INC. 
By THE WOODLANDS, Texas, Feb. 10, 2014 /PRNewswire/ -- Waste Connections, Inc. (NYSE: WCN) today announced its results for the fourth quarter of 2013. Revenue totaled $485.9 million, an 8.3% increase over revenue of $448.8 million in the year ago period. Operating income was $99.1 million compared to $80.2 million in the fourth quarter of 2012. Adjusted EBITDA* in the fourth quarter was $164.5 million, or 33.9% of revenue, compared to $142.3 million, or 31.7% of revenue, in the prior year period. Adjusted EBITDA, a non-GAAP measure, excludes the impact of items such as acquisition-related costs and expenses incurred in connection with the relocation of our corporate headquarters from California to Texas, as shown in the detailed reconciliation in the attached table.
Net income attributable to Waste Connections in the quarter was $49.4 million, or $0.40 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 $36.0 million, or $0.29 per share on a diluted basis of 123.7 million shares.
Adjusted net income attributable to Waste Connections* in the quarter was $54.5 million, or $0.44 per share, versus $45.9 million, or $0.37 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, transaction costs and adjustment to accrued deferred tax liabilities, as well as expenses incurred in connection with the relocation of our corporate headquarters from California to Texas, all net of tax, as shown in the detailed reconciliation in the attached table.
"Continuing strength in solid waste disposal volumes, E&P waste and roll off activity enabled us to exceed the upper end of our fourth quarter outlook and provide a good entry point into 2014. We met our full year 2013 adjusted free cash flow* target of $300 million despite pulling forward into 2013 an additional $20 million of capital expenditures and constructing our new E&P landfill in the West Texas Permian," said Ronald J. Mittelstaedt, Chairman and Chief Executive Officer. "As we look at 2014, we believe we are uniquely positioned to both expand margins and, more importantly, increase free cash flow. Consistent pricing growth within solid waste and expected double-digit growth in higher margin E&P waste activity should drive our margin expansion. Expected growth in free cash flow is particularly notable given the anticipated increase in cash taxes resulting from the loss of bonus depreciation."
Mr. Mittelstaedt added, "With over $325 million of free cash flow expected in the upcoming year, we remain well positioned to both fund additional growth opportunities, including potential acquisitions and newly permitted E&P waste facilities, and increase the return of capital to stockholders."
For the year ended December 31, 2013, revenue was $1.93 billion, a 16.1% increase over revenue of $1.66 billion in 2012. Operating income was $394.7 million compared to $316.1 million in the prior year. Adjusted EBITDA* in 2013 was $657.0 million, or 34.1% of revenue, compared to $528.4 million, or 31.8% of revenue, in the prior year.
Net income attributable to Waste Connections in 2013 was $195.7 million, or $1.58 per share on a diluted basis of 124.2 million shares. In 2012, the Company reported net income attributable to Waste Connections of $159.1 million, or $1.31 per share on a diluted basis of 121.8 million shares. Adjusted net income attributable to Waste Connections* in 2013 was $221.8 million, or $1.79 per share, compared to $188.1 million, or $1.54 per share, in the prior year.
2014 OUTLOOK
Waste Connections also announced its outlook for 2014, which assumes no change in the current economic environment. The Company's outlook excludes the impact of any additional acquisitions, potential newly permitted E&P waste facilities, and expensing of acquisition-related transaction costs. The outlook provided below is forward looking, and actual results may differ materially depending on risks and uncertainties detailed at the end of this release and in our periodic SEC filings. Certain components of the outlook for 2014 are subject to quarterly fluctuations.
-- Revenue is estimated to be between $2.02 billion and $2.04 billion.
-- Adjusted EBITDA* is estimated to be between $700 million and $705
million, or approximately 34.6% of revenue, the components of which as a
percentage of revenue are as follows:
-- Operating income is estimated to be approximately 22.0% of revenue;
-- 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; and,
-- Closure and post-closure accretion expense is estimated to be
approximately 0.15% of revenue.
-- Net interest expense is estimated to be approximately $67.5 million.
-- Effective tax rate is expected to be approximately 39.2%.
-- Net income attributable to noncontrolling interests is estimated to
reduce net income by approximately $1.0 million.
-- Net cash provided by operating activities is estimated to be
approximately 25.5% of revenue.
-- Capital expenditures are estimated to be between $180 million and $190
million.
CONFERENCE CALL
Waste Connections will be hosting a conference call related to fourth quarter earnings and 2014 outlook on February 11(th) at 8:30 A.M. Eastern Time. The call will be broadcast live over the Internet at www.streetevents.com or through a link on our website at www.wasteconnections.com. A playback of the call will be available at both of these websites.
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 also is 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 31 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.
* 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, pricing growth, volume growth and margin growth; expected 2014 financial results, capital expenditures and outlook; the Company's ability to finance additional growth opportunities; and the expected amount of capital returned 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) our results are vulnerable to economic conditions; (2) 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; (3) our E&P waste business depends on the level of drilling and production activity in the basins in which we operate and the willingness of E&P companies to outsource their waste services activities; (4) we have limited experience in running an E&P waste treatment, recovery and disposal business; (5) competition for acquisition candidates, consolidation within the waste industry and economic and market conditions may limit our ability to grow through acquisitions; (6) our indebtedness could adversely affect our financial condition and limit our financial flexibility; (7) price increases may not be adequate to offset the impact of increased costs, or may cause us to lose volume; (8) fluctuations in prices for recycled commodities that we sell and rebates we offer to customers may cause our revenues and operating results to decline; (9) the seasonal nature of our business and "event-driven" waste projects cause our results to fluctuate; (10) we may lose contracts through competitive bidding, early termination or governmental action; (11) increases in labor costs could impact our financial results; (12) increases in the price of diesel or compressed natural gas fuel may adversely affect our collection business and reduce our operating margins; (13) labor union activity could divert management attention and adversely affect our operating results; (14) 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; (15) our financial results could be adversely affected by impairments of goodwill or indefinite-lived intangibles; (16) we may incur charges related to capitalized expenditures of landfill development projects, which would decrease our earnings; (17) pending or future litigation or governmental proceedings could result in material adverse consequences, including judgments or settlements; (18) 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; (19) increases in insurance costs and the amount that we self-insure for various risks could reduce our operating margins and reported earnings; (20) a portion of our growth and future financial performance depends on our ability to integrate acquired businesses, and the success of our acquisitions; (21) 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; (22) our financial results are based upon estimates and assumptions that may differ from actual results; (23) our accruals for our landfill site closure and post-closure costs may be inadequate; (24) 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; (25) our decentralized decision-making structure could allow local managers to make decisions that adversely affect our operating results; (26) liabilities for environmental damage may adversely affect our financial condition, business and earnings; (27) 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; and (28) 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. 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 INCOME
THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2012 AND 2013
(Unaudited)
(in thousands, except share and per share amounts)
Three months ended Twelve months ended
December 31, December 31,
------------------- --------------------
2012 2013 2012 2013
---- ---- ---- ----
Revenues $448,803 $485,877 $1,661,618 $1,928,795
Operating
expenses:
Cost of
operations 258,007 270,232 956,357 1,064,819
Selling,
general and
administrative 53,555 52,947 197,454 212,637
Depreciation 49,696 56,176 169,027 218,454
Amortization
of
intangibles 6,441 6,550 24,557 25,410
Loss on
disposal of
assets 912 860 1,627 2,853
Gain from
litigation
settlement (14) - (3,551) -
Loss on
prior
office
leases - - - 9,902
--- -----
Operating
income 80,206 99,112 316,147 394,720
Interest
expense (16,974) (17,728) (53,037) (73,579)
Other income
(expense),
net 330 (100) 1,993 (220)
--- ---- ----- ----
Income
before
income tax
provision 63,562 81,284 265,103 320,921
Income tax
provision (27,476) (31,867) (105,443) (124,916)
------- ------- -------- --------
Net income 36,086 49,417 159,660 196,005
Plus (less):
Net loss
(income)
attributable
to
noncontrolling
interests (97) 9 (567) (350)
--- --- ---- ----
Net income
attributable
to Waste
Connections $35,989 $49,426 $159,093 $195,655
======= ======= ======== ========
Earnings per
common
share
attributable
to Waste
Connections'
common
stockholders:
Basic $0.29 $0.40 $1.31 $1.58
===== ===== ===== =====
Diluted $0.29 $0.40 $1.31 $1.58
===== ===== ===== =====
Shares used
in the per
share
calculations:
Basic 122,963,136 123,716,885 121,172,381 123,597,540
=========== =========== =========== ===========
Diluted 123,687,624 124,386,756 121,824,349 124,165,052
=========== =========== =========== ===========
Cash
dividends
per common
share $0.10 $0.115 $0.37 $0.415
===== ====== ===== ======
WASTE CONNECTIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands, except share and per share amounts)
December December
31, 2012 31,
2013
----
ASSETS
Current
assets:
Cash and
equivalents $23,212 $13,591
Accounts
receivable, 31, 2012
net of and 2013,
allowance respectively
for
doubtful
accounts
of $6,548
and $7,348
at
December 235,762 234,001
Deferred
income
taxes 45,798 41,275
Prepaid
expenses
and other
current
assets 57,714 39,638
------ ------
Total
current
assets 362,486 328,505
Property
and
equipment,
net 2,457,606 2,450,649
Goodwill 1,636,557 1,675,154
Intangible
assets,
net 541,908 527,871
Restricted
assets 34,889 35,921
Other
assets,
net 42,580 46,152
------ ------
$5,076,026 $5,064,252
======== ========
LIABILITIES
AND EQUITY
Current
liabilities:
Accounts
payable $130,260 $105,394
Book
overdraft 12,567 12,456
Accrued
liabilities 121,829 119,026
Deferred
revenue 69,930 71,917
Current
portion of
contingent
consideration 49,018 30,840
Current
portion of
long-term
debt and
notes
payable 33,968 5,385
------ -----
Total
current
liabilities 417,572 345,018
Long-term
debt and
notes
payable 2,204,967 2,067,590
Long-term
portion of
contingent
consideration 30,346 24,710
Other long-
term
liabilities 75,129 77,035
Deferred
income
taxes 464,882 501,692
------- -------
Total
liabilities 3,192,896 3,016,045
Commitments
and
contingencies
Equity:
Preferred
stock:
$0.01 par
value;
7,500,000
shares
authorized;
none
issued and
outstanding - -
Common
stock: issued and
$0.01 par outstanding
value; at
250,000,000 December
shares 31, 2012
authorized; and 2013,
123,019,494 respectively
and
123,566,487
shares 1,230 1,236
Additional
paid-in
capital 779,904 796,085
Accumulated
other
comprehensive
loss (6,165) (1,869)
Retained
earnings 1,103,188 1,247,630
--------- ---------
Total Waste
Connections'
equity 1,878,157 2,043,082
Noncontrolling
interest
in
subsidiaries 4,973 5,125
----- -----
Total
equity 1,883,130 2,048,207
--------- ---------
$5,076,026 $5,064,252
======== ========
WASTE CONNECTIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
TWELVE MONTHS ENDED DECEMBER 31, 2012 AND 2013
(Unaudited)
(Dollars in thousands)
Twelve months ended
December 31,
2012 2013
---- ----
Cash flows from operating
activities:
Net income $159,660 $196,005
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Loss on disposal of assets 1,627 2,853
Depreciation 169,027 218,454
Amortization of intangibles 24,557 25,410
Deferred income taxes, net
of acquisitions 29,689 38,680
Amortization of debt
issuance costs 1,993 3,655
Equity-based compensation 17,289 15,397
Interest income on
restricted assets (603) (386)
Interest accretion 4,000 4,812
Excess tax benefit
associated with equity-
based compensation (5,033) (3,765)
Payment of contingent
consideration recorded in
earnings - (5,059)
Net change in operating
assets and liabilities,
net of acquisitions 14,121 (11,995)
------ -------
Net cash provided by
operating activities 416,327 484,061
------- -------
Cash flows from investing
activities:
Payments for acquisitions,
net of cash acquired (1,579,869) (64,156)
Proceeds from adjustment to
acquisition consideration - 18,000
Capital expenditures for
property and equipment (153,517) (209,874)
Proceeds from disposal of
assets 2,741 11,019
Decrease (increase) in
restricted assets, net of
interest income 2,983 (646)
Other (6,185) (5,358)
------ ------
Net cash used in investing
activities (1,733,847) (251,015)
--------- --------
Cash flows from financing
activities:
Proceeds from long-term
debt 1,647,000 327,600
Principal payments on notes
payable and long-term
debt (609,014) (493,560)
Payment of contingent
consideration recorded at
acquisition date (12,473) (23,941)
Change in book overdraft 398 (110)
Proceeds from option and
warrant exercises 4,057 2,464
Excess tax benefit
associated with equity-
based compensation 5,033 3,765
Payments for repurchase of
common stock (18,597) -
Payments for cash dividends (44,465) (51,213)
Tax withholdings related to
net share settlements of
restricted stock units (6,062) (5,439)
Distributions to
noncontrolling interests (198) (198)
Debt issuance costs (7,174) (2,035)
Proceeds from common stock
offering, net 369,584 -
------- ---
Net cash provided by (used
in) financing activities 1,328,089 (242,667)
--------- --------
Net increase (decrease) in
cash and equivalents 10,569 (9,621)
Cash and equivalents at
beginning of period 12,643 23,212
------ ------
Cash and equivalents at end
of period $23,212 $13,591
======= =======
ADDITIONAL STATISTICS
THREE AND TWELVE MONTHS ENDED
DECEMBER 31, 2013
(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 and
twelve months ended December
31, 2013:
Three months ended Twelve months ended
December 31, 2013 December 31, 2013
----------------- -----------------
Solid Waste Internal
Growth:
Core Price 2.6% 2.6%
Surcharges 0.3% 0.3%
Volume 1.4% 0.7%
Recycling (0.5%) (0.5%)
----- -----
Total Solid Waste
Internal Growth 3.8% 3.1%
--- ---
Revenue Breakdown: The
following table reflects a
breakdown of our revenue
for the three and twelve
month periods ending
December 31, 2013:
Three months Twelve months
ended ended
December 31, December 31,
2013 2013
-------------
Solid Waste Collection $306,603 56.1% $1,219,091 56.0%
Solid Waste Disposal
and Transfer 144,866 26.5 579,379 26.6
E&P Waste Treatment,
Disposal and Recovery 67,566 12.4 262,286 12.0
Solid Waste Recycling 16,025 2.9 71,831 3.3
Intermodal and Other 11,336 2.1 46,038 2.1
------ --- ------ ---
546,396 100.0% 2,178,625 100.0%
Inter-company
elimination (60,519) (249,830)
------- --------
Reported Revenue $485,877 $1,928,795
======== ========
Contribution from
Acquisitions: The following
table reflects revenues from
acquisitions, net of
divestitures, for the three
and twelve month periods
ending December 31, 2012 and
2013:
Three months Twelve months
ended ended
December 31, December 31,
------------ ------------
2012 2013 2012 2013
---- ---- ---- ----
Solid waste, net $28,955 $2,112 $118,626 $31,529
E&P waste, net 40,189 16,301 40,189 187,261
------ ------ ------ -------
Acquisitions, net $69,144 $18,413 $158,815 $218,790
===== ===== ====== ======
Days Sales Outstanding for the
three months ended December 31,
2013: 44 (31 net of deferred
revenue)
Internalization for the three
months ended December 31, 2013:
54%
Other Cash Flow Items:
Three months ended Twelve months ended
December 31, 2013 December 31, 2013
----------------- -----------------
Cash Interest
Paid $23,955 $66,985
Cash Taxes Paid $30,700 $81,710
Debt to Book Capitalization as
of December 31, 2013: 50%
Share Information for the three
months ended December 31, 2013:
Basic shares
outstanding 123,716,885
Dilutive effect of
options and warrants 164,000
Dilutive effect of
restricted stock units 505,871
-------
Diluted shares
outstanding 124,386,756
===========
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 disposal
of assets, plus other expense, less
other income. The Company further
adjusts this calculation to exclude the
effects of 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 Twelve months
ended ended
December 31, December 31,
------------ ------------
2012 2013 2012 2013
---- ---- ---- ----
Net
Income $36,086 $49,417 $159,660 $196,005
Plus:
Income
tax
provision 27,476 31,867 105,443 124,916
Plus:
Interest
expense 16,974 17,728 53,037 73,579
Plus:
Depreciation
and
amortization 56,137 62,726 193,584 243,864
Plus:
Closure
and
post-
closure
accretion 711 727 2,581 2,967
Plus:
Loss
on
disposal
of
assets 912 860 1,627 2,853
Plus/
less:
Other
expense
(income),
net (330) 100 (1,993) 220
Adjustments:
Plus:
Loss
on
prior
office
leases
(a) - - - 9,902
Plus:
Acquisition-
related
costs
(b) 2,805 972 6,415 1,946
Plus:
Corporate
relocation
expenses
(c) 1,540 113 8,031 750
Plus:
NEO
equity
grants
(d) - - 3,585 -
Less:
Gain
from
litigation
settlement
(e) (14) - (3,551) -
--- --- ------ ---
Adjusted
EBITDA $142,297 $164,510 $528,419 $657,002
====== ====== ====== ======
As %
of
revenues 31.7% 33.9% 31.8% 34.1%
(a) Reflects
the
addback of
the loss
on prior
office
leases
resulting
primarily
from the
relocation
of the
Company's
corporate
headquarters
from
California
to Texas.
(b) Reflects
the
addback of
acquisition-
related
transaction
and
severance
costs.
(c) Reflects
the
addback of
costs
associated
with the
relocation
of the
Company's
corporate
headquarters
from
California
to Texas.
(d) Reflects
the
addback of
equity
compensation
expense
incurred
at the
time the
Company's
NEOs'
employment
contracts
were
modified.
(e) Reflects
the
elimination
of a gain
from an
arbitration
award.
NON-GAAP RECONCILIATION SCHEDULE
(continued)
(in thousands)
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. Waste
Connections defines adjusted 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. The Company further adjusts
this calculation to exclude the effects
of items management believes impact the
ability to assess the operating
performance of its business. This
measure is not a substitute for, and
should be used in conjunction with,
GAAP liquidity or financial measures.
Other companies may calculate adjusted
free cash flow differently.
Three months Twelve months
ended ended
December 31, December 31,
------------ ------------
2012 2013 2012 2013
---- ---- ---- ----
Net cash provided by operating activities $89,588 $98,657 $416,327 $484,061
Plus/Less: Change in book overdraft 3,781 264 398 (110)
Plus: Proceeds from disposal of assets 633 1,945 2,741 11,019
Plus: Excess tax benefit associated with equity-based compensation 1,618 226 5,033 3,765
Less: Capital expenditures for property and equipment (42,522) (69,002) (153,517) (209,874)
Less: Distributions to noncontrolling interests (104) - (198) (198)
Adjustments:
Payment of contingent consideration recorded in earnings (a) - - - 5,059
Corporate office relocation (b) (385) 113 8,031 2,159
Payment for termination of corporate lease (c) - 9,690 - 9,690
Tax effect (d) (589) (3,749) (3,056) (3,992)
---- ------ ------ ------
Adjusted free cash flow $52,020 $38,144 $275,759 $301,579
======= ======= ======== ========
As % of revenues 11.6% 7.9% 16.6% 15.6%
(a) Reflects
the
addback of
acquisition-
related
payments
for
contingent
consideration
that were
recorded
as
expenses
in
earnings
and a
component
of cash
flow from
operating
activities
as the
amounts
paid
exceeded
the fair
value of
the
contingent
consideration
recorded
at the
acquisition
date.
(b) Reflects
the
addback of
third
party
expenses
and
reimbursable
advances
to
employees
associated
with the
relocation
of our
corporate
headquarters
from
California
to Texas.
(c) Reflects
the
addback
for the
payment to
terminate
the
remaining
lease
obligation
of our
former
headquarters
in Folsom,
California.
(d) The
aggregate
tax effect
of the
adjustments
in
footnotes
(b) and
(c) is
calculated
based on
the
applied
tax rates
for the
respective
periods.
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 the 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 Twelve months
ended ended
December 31, December 31,
------------ ------------
2012 2013 2012 2013
---- ---- ---- ----
Reported
net
income
attributable
to
Waste
Connections $35,989 $49,426 $159,093 $195,655
Adjustments:
Amortization
of
intangibles
(a) 6,441 6,550 24,557 25,410
Acquisition-
related
expenses
(b) 2,805 722 6,415 3,383
Loss
on
disposal
of
assets
(c) 912 860 1,627 2,853
Corporate
relocation
expenses
(d) 1,540 113 8,031 750
Loss
on
prior
office
leases
(e) - - - 9,902
NEO
equity
grants
(f) - - 3,585 -
Gain
from
litigation
settlement
(g) (14) - (3,551) -
Tax
effect
(h) (4,388) (3,154) (14,309) (16,179)
Impact
of
deferred
tax
adjustment
(i) 2,602 - 2,602 -
Adjusted
net
income
attributable
to
Waste
Connections $45,887 $54,517 $188,050 $221,774
Diluted
earnings
per
common
share
attributable
to
Waste
Connections
common
stockholders:
Reported
net
income $0.29 $0.40 $1.31 $1.58
===== ===== ===== =====
Adjusted
net
income $0.37 $0.44 $1.54 $1.79
===== ===== ===== =====
(a) Reflects
the
elimination
of the
non-cash
amortization
of
acquisition-
related
intangible
assets.
(b) Reflects
the
elimination
of
acquisition-
related
expenses,
including
transaction
costs,
severance
costs and
adjustments
to the
fair value
of
contingent
consideration.
(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
the loss
on prior
office
leases
resulting
primarily
from the
relocation
of the
Company's
corporate
headquarters
from
California
to Texas.
(f) Reflects
the
addback of
equity
compensation
expense
incurred
at the
time our
NEOs'
employment
contracts
were
modified.
(g) Reflects
the
elimination
of a gain
from an
arbitration
award.
(h) The
aggregate
tax effect
of the
adjustments
in
footnotes
(a)
through
(g) is
calculated
based on
the
applied
tax rates
for the
respective
periods.
(i) 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.
SOURCE Waste Connections, Inc.
