- Revenue of $1.281 billion, exceeding outlook

- Reports 4.5% solid waste price growth

- Net income attributable to Waste Connections of $150.8 million, or $0.57 per share

- Adjusted net income attributable to Waste Connections* of $181.9 million, or $0.69 per share, up 15.0%

- Adjusted EBITDA* of $416.8 million, or 32.5% of revenue

- YTD net cash provided by operating activities of $1.038 billion

- YTD adjusted free cash flow* of $675.7 million, or 18.5% of revenue

- Signs acquisition with approximately $175 million in annualized revenues

- Increases regular quarterly cash dividend by 14.3%

TORONTO, Oct. 29, 2018 /PRNewswire/ -- Waste Connections, Inc. WCN ("Waste Connections" or the "Company") today announced its results for the third quarter of 2018. 

"Solid waste pricing up 120 basis points year over year plus 140 basis points sequential volume improvement drove better than expected results in the quarter.  This price-led solid waste growth, along with continued strength in E&P waste activity, enabled us to overcome the toughest quarterly comparison for recycled commodity values in the year and certain continuing cost pressures. More importantly, adjusted free cash flow* remains strong at over $675 million year-to-date, or 18.5% of revenue, and 57.8% of adjusted EBITDA*," said Ronald J. Mittelstaedt, Chairman and Chief Executive Officer.  "Our third quarter performance puts us firmly on track to meet or exceed the increased expectations for the full year we communicated in July."

Mr. Mittelstaedt added, "The pace of acquisition activity remains elevated, as we recently signed our largest deal year to date, a multi-market collection company with annualized revenue of approximately $175 million, with operations in three states, including two new markets.  This acquisition, which is expected to close by year end, along with deals already closed, is expected to bring total acquired annualized revenues to approximately $360 million in 2018.  Rollover contribution from these acquisitions plus price-led organic growth already position us for between 8% and 10% revenue growth and continued margin expansion in 2019, with any additional transactions providing further growth.  Moreover, we announced another double-digit percentage increase in the quarterly cash dividend, once again demonstrating that we remain well-positioned to increase our return of capital to shareholders while continuing to fund above average acquisition activity."

Q3 2018 Results

Revenue in the third quarter totaled $1.281 billion, up from $1.206 billion in the year ago period.  Operating income was $232.9 million, which included $6.9 million in fair value accounting changes associated with certain equity awards, and $0.7 million in integration and acquisition-related costs, partially offset by a $2.0 million gain in impairments and other items primarily related to the divestiture of certain assets acquired in the Progressive Waste acquisition.  This compares to operating income of $218.8 million in the third quarter of 2017, which included $7.2 million in charges primarily related to fair value accounting changes for certain equity awards, costs for transactions completed in the period, and certain costs associated with the Progressive Waste acquisition.

* A non-GAAP measure; see accompanying Non-GAAP Reconciliation Schedule

Net income attributable to Waste Connections in the third quarter was $150.8 million, or $0.57 per share on a diluted basis of 264.4 million shares.  In the year ago period, the Company reported net income attributable to Waste Connections of $123.2 million, or $0.47 per share on a diluted basis of 264.3 million shares.

Adjusted net income attributable to Waste Connections* in the third quarter was $181.9 million, or $0.69 per diluted share, versus $158.1 million, or $0.60 per diluted share, in the prior year period.  Adjusted EBITDA* in the third quarter was $416.8 million, as compared to adjusted EBITDA* of $393.4 million in the prior year period.  Adjusted net income attributable to Waste Connections, adjusted net income attributable to Waste Connections per diluted share, adjusted EBITDA, and adjusted free cash flow, all non-GAAP measures, primarily exclude the impact from the enactment of the Tax Cuts and Jobs Act of 2017 (the "Tax Act"), fair value accounting changes to certain equity awards, and acquisition-related items, as shown in the detailed reconciliation in the attached schedules. 

Nine Months Year to Date Results

For the nine months ended September 30, 2018, revenue was $3.661 billion, as compared to revenue of $3.473 billion in the year ago period.  Operating income, which included $23.9 million of expenses primarily related to fair value accounting changes to certain equity awards, impairments and other items related to the termination of certain contracts and other acquisition-related costs, was $632.3 million, compared to $452.1 million for the same period in 2017, which included $167.0 million of expenses primarily related to both goodwill impairment against the Company's E&P segment resulting from the early adoption of FASB's recent accounting pronouncement simplifying the test for goodwill impairment and fair value accounting changes to certain equity awards.

Net income attributable to Waste Connections for the nine months ended September 30, 2018, was $414.4 million, or $1.57 per share on a diluted basis of 264.4 million shares.  In the year ago period, the Company reported net income attributable to Waste Connections of $261.7 million, or $0.99 per share on a diluted basis of 264.1 million shares. 

Adjusted net income attributable to Waste Connections* for the nine months ended September 30, 2018, was $501.1 million, or $1.90 per diluted share, compared to $433.6 million, or $1.64 per diluted share, in the year ago period. Adjusted EBITDA* for the nine months ended September 30, 2018, was $1.169 billion, as compared to $1.100 billion in the prior year period. 

Q3 2018 Earnings Conference Call

Waste Connections will be hosting a conference call related to third quarter earnings on October 30^th at 8:30 A.M. Eastern Time.  To access the call, listeners should dial 888-223-4561 (within North America) or 312-281-1202 (international) approximately 10 minutes prior to the scheduled start time and ask the operator for the Waste Connections conference call (a passcode is not required).  A replay of the conference call will be available until November 6, 2018 by calling 800-633-8284 (within North America) or 402-977-9140 (international) and entering Passcode # 21896131.  The call will be broadcast live over the Internet through a link on the Company's website at www.wasteconnections.com.  A playback of the call will be available on the Company's website.

Waste Connections will be filing a Form 8-K on EDGAR and on SEDAR (as an "Other" document) prior to markets opening on October 30^th, providing the Company's fourth quarter 2018 outlook for revenue, core price plus volume growth for solid waste and adjusted EBITDA*.

* A non-GAAP measure; see accompanying Non-GAAP Reconciliation Schedule

About Waste Connections

Waste Connections is an integrated solid waste services company that provides waste collection, transfer, disposal and recycling services in mostly exclusive and secondary markets in the United States and Canada.  Through its R360 Environmental Solutions subsidiary, Waste Connections 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 six million residential, commercial, industrial, and exploration and production customers in 40 states in the U.S., and six provinces in Canada.  The Company also provides intermodal services for the movement of cargo and solid waste containers in the Pacific Northwest. 

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 (905) 532-7510.  Investors can also obtain these materials and other documents filed with the U.S. Securities and Exchange Commission (SEC) and the Canadian securities regulators free of charge at the SEC's website, www.sec.gov, and at the System for Electronic Document Analysis and Retrieval (SEDAR) maintained by the Canadian Securities Administrators at www.sedar.com.

Safe Harbor and Forward-Looking Information

This press release contains forward-looking statements within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995 ("PSLRA"), including "forward-looking information" within the meaning of applicable Canadian securities laws. These forward-looking statements are neither historical facts nor assurances of future performance and reflect Waste Connections' current beliefs and expectations regarding future events and operating performance. These forward-looking statements are often identified by the words "may," "might," "believes," "thinks," "expects," "estimate," "continue," "intends" or other words of similar meaning. All of the forward-looking statements included in this press release are made pursuant to the safe harbor provisions of the PSLRA and applicable securities laws in Canada. Forward-looking statements involve risks and uncertainties. Forward-looking statements in this press release include, but are not limited to, statements about expected 2018 and 2019 financial results, outlook and related assumptions, potential acquisition activity and the amount of capital returned to shareholders. Important factors that could cause actual results to differ, possibly materially, from those indicated by the forward-looking statements include, but are not limited to, risk factors detailed from time to time in the Company's filings with the SEC and the securities commissions or similar regulatory authorities in Canada.  You should not place undue reliance on forward-looking statements, which speak only as of the date of this press release.  Waste Connections undertakes no obligation to update the forward-looking statements set forth in this press release, whether as a result of new information, future events, or otherwise, unless required by applicable securities laws.

– financial tables attached –

CONTACT:

Mary Anne Whitney / (832) 442-2253

maryannew@wasteconnections.com

 

 

 

 

ADDITIONAL STATISTICS

(in thousands of U.S. dollars, except where noted)

Solid Waste Internal Growth:  The following table reflects a breakdown of the components of our solid waste internal growth for the three months ended September 30, 2018:

Revenue Breakdown: The following table reflects a breakdown of our revenue for the three month periods ended September 30, 2017 and 2018:

 

Contribution from Acquisitions: The following table reflects revenues from acquisitions, net of divestitures, for the three month periods ended September 30, 2017 and 2018:

 

ADDITIONAL STATISTICS (continued)

(in thousands of U.S. dollars, except where noted)

Other Cash Flow Items: The following table reflects cash interest and cash taxes for the three and nine month periods ended September 30, 2017 and 2018:

Debt to Book Capitalization as of September 30, 2018:  37%

Internalization for the three months ended September 30, 2018:  56%

Days Sales Outstanding for the three months ended September 30, 2018:  45 (33 net of deferred revenue)

Share Information for the three months ended September 30, 2018:

 

NON-GAAP RECONCILIATION SCHEDULE

(in thousands of U.S. dollars, except where noted)

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 Waste Connections' operations.  Waste Connections defines adjusted EBITDA as net income attributable to Waste Connections, plus (or minus) net income (loss) attributable to noncontrolling interests, plus or minus income tax provision (benefit), plus interest expense, less interest income, plus depreciation and amortization expense, plus closure and post-closure accretion expense, plus or minus any loss or gain on impairments and other operating items, plus other expense, less other income, plus foreign currency transaction loss, less foreign currency transaction gain.  Waste Connections further adjusts this calculation to exclude the effects of other 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 financial measures.  Other companies may calculate adjusted EBITDA differently. 

 

NON-GAAP RECONCILIATION SCHEDULE (continued)

(in thousands of U.S. dollars, except where noted)

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 Waste Connections' operations.  Waste Connections defines adjusted free cash flow as net cash provided by operating activities, plus or minus change in book overdraft, plus proceeds from disposal of assets, less capital expenditures for property and equipment and distributions to noncontrolling interests.  Waste Connections 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. 

 

NON-GAAP RECONCILIATION SCHEDULE (continued)

(in thousands of U.S. dollars, except per share amounts)

Reconciliation of Net Income attributable to Waste Connections to Adjusted Net Income attributable to Waste Connections and Adjusted Net Income per Diluted Share attributable to Waste Connections:

Adjusted net income attributable to Waste Connections and adjusted net income per diluted share attributable to Waste Connections, 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 attributable to Waste Connections and adjusted net income per diluted share attributable to Waste Connections as one of the principal measures to evaluate and monitor the ongoing financial performance of Waste Connections' operations.  Waste Connections provides adjusted net income attributable to Waste Connections to exclude the effects of items management believes impact the comparability of operating results between periods.  Adjusted net income attributable to Waste Connections 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 attributable to Waste Connections and adjusted net income per diluted share attributable to Waste Connections are not a substitute for, and should be used in conjunction with, GAAP financial measures.  Other companies may calculate these non-GAAP financial measures differently. 

 

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SOURCE Waste Connections, Inc.