Waste Connections Reports Fourth Quarter Results And Provides 2020 Outlook

Fourth Quarter 2019 Highlights

-  Revenue of $1.362 billion, up 7.9%

-  Net income attributable to Waste Connections of $133.3 million, or $0.50 per share

-  Adjusted net income attributable to Waste Connections* of $181.4 million, or $0.69 per share

-  Adjusted EBITDA* of $419.0 million, or 30.8% of revenue

Full-Year 2019 Highlights

-  Revenue of $5.389 billion, up 9.5%

-  Net income attributable to Waste Connections of $566.8 million, or $2.14 per share

-  Adjusted net income attributable to Waste Connections* of $719.6 million or $2.72 per share

-  Adjusted EBITDA* of $1.674 billion, or 31.1% of revenue, up 6.8%

-  Net cash provided by operating activities of $1.541 billion, up 9.2%

-  Adjusted free cash flow* of $916.8 million, or 17.0% of revenue

-  Completes acquisitions with approximately $300 million of total annualized revenue

Looking at 2020

-  Expects revenue in the range of $5.725 billion to $5.775 billion, excluding additional acquisitions

-  Expects net income attributable to Waste Connections in the range of $653.0 million to $668.0 million

-  Expects adjusted EBITDA* in the range of $1.760 billion to $1.785 billion

-  Expects net cash provided by operating activities in the range of $1.600 billion to $1.625 billion

-  Expects adjusted free cash flow* in the range of $975.0 million to $1.0 billion

TORONTO, Feb. 12, 2020 /PRNewswire/ -- Waste Connections, Inc. WCN ("Waste Connections" or the "Company") today announced its results for the fourth quarter of 2019. 

"2019 ended on a high note, as financial results for the fourth quarter exceeded expectations on better than expected solid waste price growth, E&P waste activity and acquisition contribution.  We are also extremely pleased with our results for the full year, as underlying adjusted EBITDA* margins in solid waste collection, transfer and disposal expanded by 50 basis points.  Moreover, our ability to deliver full year adjusted free cash flow* of $916.8 million or 17.0% of revenue and 54.8% of adjusted EBITDA* on a 16.2% increase in capital expenditures as we reinvested in and expanded our business is indicative of our disciplined focus on quality of revenue and free cash flow generation," said Worthing F. Jackman, President and Chief Executive Officer. 

Mr. Jackman added, "Acquisition activity also accelerated into year-end, as we announced an additional $130 million in acquired annualized revenue in December, including a new market entry in Pennsylvania and tuck-ins in Illinois and Tennessee.  Acquisitions completed in 2019 provide rollover revenue growth of approximately $170 million in 2020, and the pace of acquisition activity remains elevated.  Along with strong pricing growth, this already sets us up for high single digit growth in revenue and adjusted free cash flow*.  Positive solid waste volumes, any increases in values for recycled commodities or renewable energy credits since year-end, or additional acquisitions closed during the year would provide upside to our initial 2020 outlook."

Mr. Jackman concluded, "Over 55% of our operating locations either posted zero safety-related incidents in 2019 or drove further year-over-year improvements.  We would like to recognize the tireless efforts of our more than 18,000 employees for our continuing success."

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

Q4 2019 Results

Revenue in the fourth quarter totaled $1.362 billion, up from $1.262 billion in the prior year period.  Operating income, which included $29.0 million of impairments and other operating items primarily related to the Company's sale of a non-strategic materials processing facility and $3.7 million of acquisition-related costs, was $194.2 million.  This compares to $200.0 million in the prior year period, which included $14.0 million of impairments and other operating items and $2.8 million of acquisition-related costs. 

Net income attributable to Waste Connections in the fourth quarter was $133.3 million, or $0.50 per share on a diluted basis of 264.6 million shares.  In the prior year period, the Company reported $132.5 million, or $0.50 per share on a diluted basis of 264.5 million shares.

Adjusted net income attributable to Waste Connections* in the fourth quarter was $181.4 million, or $0.69 per share, versus $166.2 million, or $0.63 per share, in the prior year period.  Adjusted EBITDA* in the fourth quarter was $419.0 million, as compared to adjusted EBITDA* of $397.2 million in the prior year period.  Adjusted net income attributable to Waste Connections, adjusted net income attributable to Waste Connections per diluted share and adjusted EBITDA, all non-GAAP measures, primarily exclude the impact 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. 

Full Year 2019 Results

For the year ended December 31, 2019, revenue was $5.389 billion, as compared to revenue of $4.923 billion in 2018.  Operating income, which included $77.4 million of impairments and other operating items, fair value accounting changes to certain equity awards, and other acquisition-related costs, was $837.8 million.  This compares to operating income of $832.2 million in the prior year, which included $40.7 million of impairments and other operating items, fair value accounting changes to certain equity awards, and other acquisition-related costs. 

Net income attributable to Waste Connections in 2019 was $566.8 million, or $2.14 per share on a diluted basis of 264.5 million shares.  In 2018, the Company reported net income attributable to Waste Connections of $546.9 million, or $2.07 per share on a diluted basis of 264.4 million shares.

Adjusted net income attributable to Waste Connections* in 2019 was $719.6 million, or $2.72 per share, compared to $667.3 million, or $2.52 per share, in the prior year. Adjusted EBITDA* in 2019 was $1.674 billion, as compared to $1.566 billion in the prior year.  Adjusted net income attributable to Waste Connections, adjusted net income attributable to Waste Connections per diluted share and adjusted EBITDA, all non-GAAP measures, primarily exclude the impact of the Tax Act, acquisition-related items and impairments and other operating items, as reflected in the detailed reconciliations in the attached tables. 

2020 Outlook

Waste Connections also announced its outlook for 2020, which assumes no change in the current economic environment, unless otherwise indicated.  The Company's outlook excludes any impact from additional acquisitions that may close during the year, and expensing of transaction-related items.  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 filings with the Securities and Exchange Commission and the securities commissions or similar regulatory authorities in Canada. Certain components of the outlook for 2020 are subject to quarterly fluctuations.  See reconciliations in the attached tables.

• Revenue is estimated in the range of $5.725 billion to $5.775 billion, including the following:
• Solid waste price and volume growth of approximately 5.0% and 0.0%, respectively
• E&P waste revenue down approximately 10.0%
• Values for recycled commodities and renewable energy credits as of year-end 2019
• Net income attributable to Waste Connections is estimated in the range of $653.0 million to $668.0 million
• Adjusted EBITDA* is estimated in the range of $1.760 billion to $1.785 billion, or 30.7% - 30.9% of revenue
• Net cash provided by operating activities is estimated in the range of $1.600 billion to $1.625 billion
• Capital expenditures are estimated at $625 million
• Adjusted free cash flow* is estimated in the range of $975.0 million to $1.0 billion.

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

Q4 2019 Earnings and 2020 Outlook Conference Call

Waste Connections will be hosting a conference call related to fourth quarter earnings and 2020 outlook on February 13^th at 8:30 A.M. Eastern Time.  To access the call, listeners should dial 800-582-1443 (within North America) or 303-223-0118 (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 February 20, 2020 by calling 800-633-8284 (within North America) or 402-977-9140 (international) and entering Passcode #21950919.  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 February 13^th, providing the Company's first quarter 2020 outlook for revenue, 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 non-hazardous 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 seven million residential, commercial, industrial, and exploration and production customers in 42 states in the U.S., and six provinces in Canada.  The Company also provides intermodal services for the rail haul 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 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 2020 financial results, outlook and related assumptions, adjusted free cash flow, capital expenditures and potential acquisition activity. 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 –

 

 

 

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 December 31, 2019:                               

Revenue Breakdown: The following table reflects a breakdown of our revenue for the three month periods ended December 31, 2018 and 2019:

Contribution from Acquisitions: The following table reflects revenues from acquisitions, net of divestitures, for the three and twelve month periods ended December 31, 2018 and 2019:

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 twelve month periods ended December 31, 2018 and 2019:

Debt to Book Capitalization as of December 31, 2019:  39%

Internalization for the three months ended December 31, 2019:  56%

Days Sales Outstanding for the three months ended December 31, 2019:  45 (30 net of deferred revenue)

Share Information for the three months ended December 31, 2019:

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 income tax provision, 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.  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 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. 

2020 OUTLOOK

NON-GAAP RECONCILIATION SCHEDULE

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

Reconciliation of Adjusted EBITDA:

Reconciliation of Adjusted Free Cash Flow:

 

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SOURCE Waste Connections, Inc.