Waste Connections Reports Third Quarter 2016 Results

TORONTO, Oct. 26, 2016 /PRNewswire/ -- Waste Connections, Inc. (TSX/NYSE: WCN) ("Waste Connections" or the "Company") today announced its results for the third quarter of 2016.  Revenue in the third quarter, which included $513.1 million from the Progressive Waste acquisition completed on June 1, 2016, was $1.085 billion, as compared to revenue of $547.9 million in the year ago period.  Operating income, which included $20.3 million of items primarily related to the Progressive Waste acquisition, was $158.7 million, as compared to a loss of $375.2 million in the third quarter of 2015, which included net impairment charges of approximately $493.4 million associated with the Company's E&P segment.

Net income attributable to Waste Connections in the third quarter was $88.6 million, or $0.50 per share on a diluted basis of 175.8 million shares.  In the year ago period, the Company reported net loss attributable to Waste Connections of $257.0 million, or $2.08 per share on a diluted basis of 123.3 million shares.

Adjusted net income attributable to Waste Connections* in the third quarter was $126.5 million, or $0.72 per share, versus $66.5 million, or $0.54 per share, in the prior year period.  Adjusted EBITDA* in the quarter was $342.3 million, as compared to adjusted EBITDA* of $189.0 million in the prior year period.  Adjusted net income, adjusted net income per diluted share and adjusted EBITDA, all non-GAAP measures, primarily exclude the impact of acquisition-related items and impairments and other operating items, as reflected in the detailed reconciliation in the attached tables.

"Our results continue to track at or above the increased expectations we communicated in August, and we are extremely pleased that safety, pricing and operational improvements within recently acquired operations continue ahead of schedule," said Ronald J. Mittelstaedt, Chief Executive Officer and Chairman.  "Adjusted free cash flow remains notably strong at $205.8 million in the period, which reflects the first full quarter of combined operations since completing the Progressive Waste acquisition, and $440.3 million year-to-date, or 18.9% of revenue."

Mr. Mittelstaedt added, "Our strong free cash flow profile following the Progressive Waste acquisition positioned us for an outsized double-digit percentage increase in our quarterly cash dividend, while maintaining a payout ratio at less than 20% of expected annual free cash flow.  This financial strength and flexibility, together with our expanded footprint following the acquisition, keep us well positioned to execute our growth strategy at a time when acquisition dialogue is near record high levels, while increasing our return of capital to shareholders." 

For the nine months ended September 30, 2016 revenue was $2.33 billion, as compared to revenue of $1.59 billion in the year ago period.  Operating income, which included $102.0 million of items related to the Progressive Waste acquisition, was $313.1 million compared to a loss of $163.3 million for the same period in 2015.

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

Net income attributable to Waste Connections for the nine months ended September 30, 2016, was $160.9 million, or $1.10 per share on a diluted basis of 146.7 million shares.  In the year ago period, the Company reported net loss attributable to Waste Connections of $147.8 million, or $1.19 per share on a diluted basis of 123.8 million shares. 

Adjusted net income attributable to Waste Connections* for the nine months ended September 30, 2016, was $274.9 million, or $1.87 per share, compared to $185.1 million, or $1.49 per share, in the year ago period. Adjusted EBITDA* for the nine months ended September 30, 2016, was $745.6 million, as compared to $535.0 million in the prior year period. 

* 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 and the District of Columbia 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 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 (which include "forward-looking information" as that term is defined in applicable securities laws in Canada) within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995 (PSLRA). 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," "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 potential operating trends and acquisition activity, future financial performance and return of capital to shareholders of the Company. Important factors that could cause actual results to differ, possibly materially, from those indicated by the forward-looking statements include, without limitation, the following:  the possibility that any of the anticipated benefits of the combination of the Company and Waste Connections US, Inc. (f/k/a Waste Connections, Inc.) will not be realized; the ability of the combined company to successfully achieve business objectives, including integrating the two companies or the effects of unexpected costs, liabilities or delays; the potential benefits and synergies of the transaction; and expectations for other economic, business and/or competitive factors.  In addition, you should carefully consider the risks and uncertainties and other factors that may affect future results of the combined company that are disclosed in filings that have been made by the Company (including, under its former name, Progressive Waste Solutions Ltd.) and by Waste Connections US, Inc. (including, under its former name, Waste Connections, Inc.) with the Securities and Exchange Commission 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 September 30, 2016:

Revenue Breakdown: The following table reflects a breakdown of our revenue for the three month periods ending September 30, 2015 and 2016:

Contribution from Acquisitions: The following table reflects revenues from acquisitions, net of divestitures, for the three month periods ending September 30, 2015 and 2016:

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 ending September 30, 2015 and 2016:

Debt to Book Capitalization as of September 30, 2016:  39%

Internalization for the three months ended September 30, 2016:  52%

Days Sales Outstanding for the three months ended September 30, 2016: 42 (31 net of deferred revenue)

Share Information for the three months ended September 30, 2016:

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 the Company's operations.  Waste Connections defines adjusted EBITDA as net income (loss), plus or minus income tax provision (benefit), plus interest expense, 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.  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. 

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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 a principal measure 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.  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 to Adjusted Net Income and Adjusted Net Income per Diluted Share:
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 the Company's 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.

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http://www.wasteconnections.com