- Continued momentum from solid execution, along with outsized acquisition activity, drives quarterly beat and increase to full year outlook
- Revenue of $2.248 billion, above outlook and up 11.2% year over year
- Net income(a) of $275.5 million, and adjusted EBITDA(b) of $731.8 million, above outlook and up 16.4%
- Adjusted EBITDA(b) margin of 32.6% of revenue, above outlook and up 150 basis points
- Net income of $1.07 per share, and adjusted net income(b) of $1.24 per share
- Year to date net cash provided by operating activities of $1.102 billion and adjusted free cash flow(b) of $727.4 million, or 16.8% of revenue
- Year to date signed and closed acquisitions with over $650 million of total annualized revenue
- Updates full year 2024 outlook to net income of approximately $1.087 billion, increasing adjusted EBITDA(b) to approximately $2.900 billion or 32.8% on revenue of approximately $8.850 billion
TORONTO, July 24, 2024 /PRNewswire/ — Waste Connections, Inc. (TSX/NYSE: WCN) (“Waste Connections” or the “Company”) today announced its results for the second quarter of 2024 and increased its outlook for the full year.
“Solid operational execution supplemented by incremental acquisitions and increased commodity values drove an across the board beat in the second quarter, positioning us for an increase to our full year outlook. Revenue and adjusted EBITDA(b) increased in the quarter by 11.2% and 16.4%, respectively, as price-led organic solid waste growth and 100 basis points sequential improvement in volumes was augmented by accretive acquisitions. We are extremely pleased by the continued strength of operational execution during the quarter, including sequential improvement in employee retention, as we maintain the strategy that has served to differentiate our results and which positions us for continued outsized growth,” said Ronald J. Mittelstaedt, President and Chief Executive Officer.
“Given the strength of our performance in the first half of 2024, the momentum from continuing trends and contributions from recent acquisitions, we are raising our full year 2024 outlook to approximately $8.850 billion in revenue and approximately $2.900 billion in adjusted EBITDA(b), or 32.8% adjusted EBITDA(b) margin, exceeding our initial outlook and up 130 basis points as compared to the prior year.”
Mr. Mittelstaedt added, “We are also positioned for a record year of private company acquisition activity in 2024. In addition to year-to-date completed acquisitions with over $500 million in annualized revenue, we have an additional $150 million under definitive agreement, expected to close later this year. Continued balance sheet strength provides the flexibility to fund outsized acquisition activity along with an increasing return of capital to shareholders.”
Q2 2024 Results
Revenue in the second quarter totaled $2.248 billion, up from $2.021 billion in the year ago period. Operating income was $424.7 million, which included $15.7 million primarily in impairments and other operating items and transaction-related expenses. This compares to operating income of $344.1 million in the second quarter of 2023, which included $27.8 million primarily in executive separation costs, impairments and other operating items, and transaction-related expenses. Net income in the second quarter was $275.5 million, or $1.07 per share on a diluted basis of 258.6 million shares. In the year ago period, the Company reported net income of $209.2 million, or $0.81 per share on a diluted basis of 258.1 million shares.
Adjusted net income(b) in the second quarter was $320.0 million, or $1.24 per diluted share, versus $262.3 million, or $1.02 per diluted share, in the prior year period. Adjusted EBITDA(b) in the second quarter was $731.8 million, as compared to $628.9 million in the prior year period. Adjusted net income, adjusted net income per diluted share and adjusted EBITDA, all non-GAAP measures, primarily exclude impairments and acquisition-related items, as reflected in the detailed reconciliations in the attached tables.
Six Months Year to Date Results
For the six months ended June 30, 2024, revenue was $4.321 billion, up from $3.922 billion in the year ago period. Operating income, which included $27.2 million primarily attributable to transaction-related expenses and impairments and other operating items was $791.5 million, as compared to operating income of $658.8 million in the prior year period, which included $32.1 million primarily attributable to executive separation costs, impairments and other operating items, and transaction-related expenses.
Net income for the six months ended June 30, 2024 was $505.5 million, or $1.96 per share on a diluted basis of 258.5 million shares. In the year ago period, the Company reported net income of $407.0 million, or $1.58 per share on a diluted basis of 258.1 million shares.
Adjusted net income(b) for the six months ended June 30, 2024 was $588.7 million, or $2.28 per diluted share, compared to $492.7 million, or $1.91 per diluted share, in the year ago period. Adjusted EBITDA(b) for the six months ended June 30, 2024 was $1.382 billion, as compared to $1.196 billion in the prior year period.
Updated 2024 Outlook
Waste Connections also updated its outlook for 2024, which assumes no change in the current economic environment or underlying economic trends. 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 U.S. Securities and Exchange Commission and the securities commissions or similar regulatory authorities in Canada. Certain components of the outlook for 2024 are subject to quarterly fluctuations. See reconciliations in the attached tables.
- Revenue is estimated to be approximately $8.850 billion, up $100 million from our original outlook.
- Net income is estimated to be approximately $1.087 billion, and adjusted EBITDA(b) is estimated to be approximately $2.900 billion, or about 32.8% of revenue, as compared to our original outlook for adjusted EBITDA(b) of $2.860 billion or 32.7% of revenue.
- Capital expenditures are estimated to be approximately $1.150 billion, in line with our original outlook.
- Net cash provided by operating activities is estimated to be approximately $2.337 billion, and adjusted free cash flow(b) is estimated to be approximately $1.200 billion, in line with our original outlook.
|
—————————————————————————————————————————————————- |
|
(a) All references to “Net income” refer to the financial statement line item “Net income attributable to Waste Connections” |
|
(b) A non-GAAP measure; see accompanying Non-GAAP Reconciliation Schedule |
Q2 2024 Earnings Conference Call
Waste Connections will be hosting a conference call related to second quarter earnings on July 25th at 8:30 A.M. Eastern Time. A live audio webcast of the conference call can be accessed by visiting investors.wasteconnections.com and selecting “News & Events” from the website menu. Alternatively, conference call participants can preregister by clicking here. Registered participants will receive dial-in instructions and a personalized code for entry to the conference call. A replay of the conference call will be available until August 1, 2024, by calling 877-344-7529 (within North America) or 412-317-0088 (international) and entering Passcode #10190070.
Waste Connections will be filing a Form 8-K on EDGAR and on SEDAR (as an “Other” document) prior to markets opening on July 25th, providing the Company’s third quarter 2024 outlook for revenue and adjusted EBITDA(b).
About Waste Connections
Waste Connections (wasteconnections.com) is an integrated solid waste services company that provides non-hazardous waste collection, transfer and disposal services, including by rail, along with resource recovery primarily through recycling and renewable fuels generation. The Company serves approximately nine million residential, commercial and industrial customers in mostly exclusive and secondary markets across 46 states in the U.S. and six provinces in Canada. Waste Connections also provides non-hazardous oilfield waste treatment, recovery and disposal services in several basins across the U.S. and Canada, as well as intermodal services for the movement of cargo and solid waste containers in the Pacific Northwest. Waste Connections views its Environmental, Social and Governance (“ESG”) efforts as integral to its business, with initiatives consistent with its objective of long-term value creation and focused on reducing emissions, increasing resource recovery of both recyclable commodities and clean energy fuels, reducing reliance on off-site disposal for landfill leachate, further improving safety and enhancing employee engagement. Visit wasteconnections.com/sustainability for more information and updates on our progress towards targeted achievement.
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 2024 financial results, outlook and related assumptions, 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 –
|
CONTACT: |
|
|
Mary Anne Whitney / (832) 442-2253 |
Joe Box / (832) 442-2153 |
|
WASTE CONNECTIONS, INC. CONDENSED CONSOLIDATED STATEMENTS OF NET INCOME THREE AND SIX MONTHS ENDED JUNE 30, 2023 AND 2024 (Unaudited) (in thousands of U.S. dollars, except share and per share amounts) |
|||||||||||||
|
Three months ended |
Six months ended |
||||||||||||
|
2023 |
2024 |
2023 |
2024 |
||||||||||
|
Revenues |
$ |
2,021,095 |
$ |
2,248,166 |
$ |
3,921,598 |
$ |
4,320,819 |
|||||
|
Operating expenses: |
|||||||||||||
|
Cost of operations |
1,197,349 |
1,301,070 |
2,344,290 |
2,522,853 |
|||||||||
|
Selling, general and administrative |
216,385 |
228,848 |
410,052 |
449,583 |
|||||||||
|
Depreciation |
213,322 |
241,229 |
417,380 |
463,920 |
|||||||||
|
Amortization of intangibles |
39,052 |
44,124 |
78,335 |
84,414 |
|||||||||
|
Impairments and other operating items |
10,859 |
8,190 |
12,724 |
8,544 |
|||||||||
|
Operating income |
344,128 |
424,705 |
658,817 |
791,505 |
|||||||||
|
Interest expense |
(67,545) |
(82,377) |
(135,898) |
(160,864) |
|||||||||
|
Interest income |
1,338 |
4,009 |
4,053 |
6,060 |
|||||||||
|
Other income (expense), net |
(200) |
9,647 |
2,974 |
7,823 |
|||||||||
|
Income before income tax provision |
277,721 |
355,984 |
529,946 |
644,524 |
|||||||||
|
Income tax provision |
(68,551) |
(80,584) |
(122,940) |
(139,996) |
|||||||||
|
Net income |
209,170 |
275,400 |
407,006 |
504,528 |
|||||||||
|
Plus: Net loss attributable to noncontrolling interests |
38 |
77 |
15 |
1,003 |
|||||||||
|
Net income attributable to Waste Connections |
$ |
209,208 |
$ |
275,477 |
$ |
407,021 |
$ |
505,531 |
|||||
|
Earnings per common share attributable to Waste Connections’ common shareholders: |
|||||||||||||
|
Basic |
$ |
0.81 |
$ |
1.07 |
$ |
1.58 |
$ |
1.96 |
|||||
|
Diluted |
$ |
0.81 |
$ |
1.07 |
$ |
1.58 |
$ |
1.96 |
|||||
|
Shares used in the per share calculations: |
|||||||||||||
|
Basic |
257,596,993 |
257,994,105 |
257,485,587 |
257,897,609 |
|||||||||
|
Diluted |
258,110,491 |
258,565,246 |
258,050,350 |
258,523,996 |
|||||||||
|
Cash dividends per common share |
$ |
0.255 |
$ |
0.285 |
$ |
0.510 |
$ |
0.570 |
|||||
|
WASTE CONNECTIONS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (in thousands of U.S. dollars, except share and per share amounts) |
|||||||
|
December 31, |
June 30, |
||||||
|
ASSETS |
|||||||
|
Current assets: |
|||||||
|
Cash and equivalents |
$ |
78,399 |
$ |
78,658 |
|||
|
Accounts receivable, net of allowance for credit losses of $23,553 and $24,017 at |
856,953 |
961,492 |
|||||
|
Prepaid expenses and other current assets |
206,433 |
195,557 |
|||||
|
Total current assets |
1,141,785 |
1,235,707 |
|||||
|
Restricted cash |
105,639 |
113,748 |
|||||
|
Restricted investments |
70,350 |
75,490 |
|||||
|
Property and equipment, net |
7,228,331 |
7,896,221 |
|||||
|
Operating lease right-of-use assets |
261,782 |
296,092 |
|||||
|
Goodwill |
7,404,400 |
7,704,719 |
|||||
|
Intangible assets, net |
1,603,541 |
1,894,860 |
|||||
|
Other assets, net |
100,048 |
84,689 |
|||||
|
Total assets |
$ |
17,915,876 |
$ |
19,301,526 |
|||
|
LIABILITIES AND EQUITY |
|||||||
|
Current liabilities: |
|||||||
|
Accounts payable |
$ |
642,455 |
$ |
663,159 |
|||
|
Book overdraft |
14,855 |
16,204 |
|||||
|
Deferred revenue |
355,203 |
375,626 |
|||||
|
Accrued liabilities |
521,428 |
569,732 |
|||||
|
Current portion of operating lease liabilities |
32,533 |
38,434 |
|||||
|
Current portion of contingent consideration |
94,996 |
97,253 |
|||||
|
Current portion of long-term debt and notes payable |
26,462 |
10,058 |
|||||
|
Total current liabilities |
1,687,932 |
1,770,466 |
|||||
|
Long-term portion of debt and notes payable |
6,724,771 |
7,696,229 |
|||||
|
Long-term portion of operating lease liabilities |
238,440 |
270,281 |
|||||
|
Long-term portion of contingent consideration |
20,034 |
20,806 |
|||||
|
Deferred income taxes |
1,022,480 |
1,068,671 |
|||||
|
Other long-term liabilities |
524,438 |
491,855 |
|||||
|
Total liabilities |
10,218,095 |
11,318,308 |
|||||
|
Commitments and contingencies |
|||||||
|
Equity: |
|||||||
|
Common shares: 257,659,921 shares issued and 257,600,479 shares outstanding at |
3,276,661 |
3,279,130 |
|||||
|
Additional paid-in capital |
284,284 |
290,792 |
|||||
|
Accumulated other comprehensive loss |
(9,826) |
(86,655) |
|||||
|
Treasury shares: 59,442 and 57,692 shares at December 31, 2023 and June 30, 2024, respectively |
– |
– |
|||||
|
Retained earnings |
4,141,690 |
4,499,951 |
|||||
|
Total Waste Connections’ equity |
7,692,809 |
7,983,218 |
|||||
|
Noncontrolling interest in subsidiaries |
4,972 |
– |
|||||
|
Total equity |
7,697,781 |
7,983,218 |
|||||
|
Total liabilities and equity |
$ |
17,915,876 |
$ |
19,301,526 |
|||
|
WASTE CONNECTIONS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS SIX MONTHS ENDED JUNE 30, 2023 AND 2024 (Unaudited) (in thousands of U.S. dollars) |
|||||||
|
Six months ended June 30, |
|||||||
|
2023 |
2024 |
||||||
|
Cash flows from operating activities: |
|||||||
|
Net income |
$ |
407,006 |
$ |
504,528 |
|||
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|||||||
|
Loss (gain) from disposal of assets, impairments and other |
12,558 |
(1,603) |
|||||
|
Depreciation |
417,380 |
463,920 |
|||||
|
Amortization of intangibles |
78,335 |
84,414 |
|||||
|
Deferred income taxes, net of acquisitions |
31,427 |
47,592 |
|||||
|
Current period provision for expected credit losses |
7,035 |
8,756 |
|||||
|
Amortization of debt issuance costs |
3,241 |
5,960 |
|||||
|
Share-based compensation |
41,469 |
40,813 |
|||||
|
Interest accretion |
9,835 |
19,227 |
|||||
|
Adjustments to contingent consideration |
(910) |
(500) |
|||||
|
Other |
(2,828) |
1,694 |
|||||
|
Net change in operating assets and liabilities, net of acquisitions |
12,164 |
(73,114) |
|||||
|
Net cash provided by operating activities |
1,016,712 |
1,101,687 |
|||||
|
Cash flows from investing activities: |
|||||||
|
Payments for acquisitions, net of cash acquired |
(213,152) |
(1,435,704) |
|||||
|
Capital expenditures for property and equipment |
(394,143) |
(387,170) |
|||||
|
Proceeds from disposal of assets |
3,819 |
2,997 |
|||||
|
Proceeds from sale of investment in noncontrolling interests |
– |
37,000 |
|||||
|
Other |
(1,145) |
(11,227) |
|||||
|
Net cash used in investing activities |
(604,621) |
(1,794,104) |
|||||
|
Cash flows from financing activities: |
|||||||
|
Proceeds from long-term debt |
538,421 |
3,140,648 |
|||||
|
Principal payments on notes payable and long-term debt |
(768,059) |
(2,234,998) |
|||||
|
Payment of contingent consideration recorded at acquisition date |
(2,193) |
(12,496) |
|||||
|
Change in book overdraft |
(234) |
1,350 |
|||||
|
Payments for cash dividends |
(131,140) |
(147,271) |
|||||
|
Tax withholdings related to net share settlements of equity-based compensation |
(28,675) |
(31,264) |
|||||
|
Debt issuance costs |
– |
(12,557) |
|||||
|
Proceeds from issuance of shares under employee share purchase plan |
1,841 |
2,183 |
|||||
|
Proceeds from sale of common shares held in trust |
765 |
286 |
|||||
|
Other |
– |
(4,000) |
|||||
|
Net cash provided by (used in) financing activities |
(389,274) |
701,881 |
|||||
|
Effect of exchange rate changes on cash, cash equivalents and restricted cash |
154 |
(1,096) |
|||||
|
Net increase in cash, cash equivalents and restricted cash |
22,971 |
8,368 |
|||||
|
Cash, cash equivalents and restricted cash at beginning of period |
181,364 |
184,038 |
|||||
|
Cash, cash equivalents and restricted cash at end of period |
$ |
204,335 |
$ |
192,406 |
|||
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 and six month periods ended June 30, 2024:
|
Three months ended June 30, 2024 |
Six months ended June 30, 2024 |
||||||
|
Core Price |
7.0 % |
7.4 % |
|||||
|
Surcharges |
(0.2 %) |
(0.4 %) |
|||||
|
Volume |
(2.8 %) |
(3.3 %) |
|||||
|
Recycling |
0.8 % |
0.8 % |
|||||
|
Foreign Exchange Impact |
(0.2 %) |
(0.1 %) |
|||||
|
Total |
4.6 % |
4.4 % |
|||||
Revenue Breakdown: The following table reflects a breakdown of our revenue for the three month periods ended June 30, 2023 and 2024:
|
Three months ended June 30, 2023 |
|||||||||||||||||||||||||
|
Revenue |
Inter-company |
Reported |
% |
||||||||||||||||||||||
|
Solid Waste Collection |
$ |
1,485,705 |
$ |
(4,334) |
$ |
1,481,371 |
73.3 |
% |
|||||||||||||||||
|
Solid Waste Disposal and Transfer |
688,965 |
(281,280) |
407,685 |
20.2 |
% |
||||||||||||||||||||
|
Solid Waste Recycling |
38,319 |
(991) |
37,328 |
1.9 |
% |
||||||||||||||||||||
|
E&P Waste Treatment, Recovery and Disposal |
58,607 |
(3,194) |
55,413 |
2.7 |
% |
||||||||||||||||||||
|
Intermodal and Other |
39,459 |
(161) |
39,298 |
1.9 |
% |
||||||||||||||||||||
|
Total |
$ |
2,311,055 |
$ |
(289,960) |
$ |
2,021,095 |
100.0 |
% |
|||||||||||||||||
|
Three months ended June 30, 2024 |
||||||||||||
|
Revenue |
Inter-company |
Reported |
% |
|||||||||
|
Solid Waste Collection |
$ |
1,583,098 |
$ |
(4,599) |
$ |
1,578,499 |
70.2 |
% |
||||
|
Solid Waste Disposal and Transfer |
756,139 |
(314,104) |
442,035 |
19.7 |
% |
|||||||
|
Solid Waste Recycling |
63,298 |
(2,133) |
61,165 |
2.7 |
% |
|||||||
|
E&P Waste Treatment, Recovery and Disposal |
123,566 |
(5,779) |
117,787 |
5.2 |
% |
|||||||
|
Intermodal and Other |
49,096 |
(416) |
48,680 |
2.2 |
% |
|||||||
|
Total |
$ |
2,575,197 |
$ |
(327,031) |
$ |
2,248,166 |
100.0 |
% |
||||
Contribution from Acquisitions: The following table reflects revenues from acquisitions, net of divestitures, for the three and six month periods ended June 30, 2023 and 2024:
|
Three months ended |
Six months ended |
|||||||||||
|
2023 |
2024 |
2023 |
2024 |
|||||||||
|
Acquisitions, net |
$ |
121,285 |
$ |
120,705 |
$ |
253,394 |
$ |
198,693 |
||||
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 six month periods ended June 30, 2023 and 2024:
|
Three months ended |
Six months ended |
|||||||||||
|
2023 |
2024 |
2023 |
2024 |
|||||||||
|
Cash Interest Paid |
$ |
62,361 |
$ |
71,642 |
$ |
117,492 |
$ |
138,026 |
||||
|
Cash Taxes Paid |
39,713 |
54,974 |
51,040 |
83,381 |
||||||||
Debt to Book Capitalization as of June 30, 2024: 49%
Internalization for the three months ended June 30, 2024: 57%
Days Sales Outstanding for the three months ended June 30, 2024: 39 (24 net of deferred revenue)
Share Information for the three months ended June 30, 2024:
|
Basic shares outstanding |
257,994,105 |
|
|
Dilutive effect of equity-based awards |
571,141 |
|
|
Diluted shares outstanding |
258,565,246 |
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.
|
Three months ended |
Six months ended |
|||||||||||
|
2023 |
2024 |
2023 |
2024 |
|||||||||
|
Net income attributable to Waste Connections |
$ |
209,208 |
$ |
275,477 |
$ |
407,021 |
$ |
505,531 |
||||
|
Less: Net loss attributable to noncontrolling interests |
(38) |
(77) |
(15) |
(1,003) |
||||||||
|
Plus: Income tax provision |
68,551 |
80,584 |
122,940 |
139,996 |
||||||||
|
Plus: Interest expense |
67,545 |
82,377 |
135,898 |
160,864 |
||||||||
|
Less: Interest income |
(1,338) |
(4,009) |
(4,053) |
(6,060) |
||||||||
|
Plus: Depreciation and amortization |
252,374 |
285,353 |
495,715 |
548,334 |
||||||||
|
Plus: Closure and post-closure accretion |
4,567 |
6,087 |
9,087 |
15,492 |
||||||||
|
Plus: Impairments and other operating items |
10,859 |
8,190 |
12,724 |
8,544 |
||||||||
|
Plus/(Less): Other expense (income), net |
200 |
(9,647) |
(2,974) |
(7,823) |
||||||||
|
Adjustments: |
||||||||||||
|
Plus: Transaction-related expenses(a) |
1,824 |
7,256 |
3,905 |
17,103 |
||||||||
|
Plus: Fair value changes to equity awards(b) |
72 |
222 |
445 |
1,507 |
||||||||
|
Plus: Executive separation costs(c) |
15,063 |
– |
15,063 |
– |
||||||||
|
Adjusted EBITDA |
$ |
628,887 |
$ |
731,813 |
$ |
1,195,756 |
$ |
1,382,485 |
||||
|
As % of revenues |
31.1 % |
32.6 % |
30.5 % |
32.0 % |
||||||||
|
____________________________ |
|
(a) Reflects the addback of acquisition-related transaction costs. |
|
(b) Reflects fair value accounting changes associated with certain equity awards. |
|
(c) Reflects the cash and non-cash components of severance expense associated with an executive departure. |
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 liquidity measure in the solid waste industry. Waste Connections calculates 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. Waste Connections further adjusts this calculation to exclude the effects of items management believes impact the ability to evaluate the liquidity of its business operations. 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 ended |
Six months ended |
|||||||||||
|
2023 |
2024 |
2023 |
2024 |
|||||||||
|
Net cash provided by operating activities |
$ |
574,353 |
$ |
611,378 |
$ |
1,016,712 |
$ |
1,101,687 |
||||
|
Plus/(Less): Change in book overdraft |
(5,655) |
1,621 |
(234) |
1,350 |
||||||||
|
Plus: Proceeds from disposal of assets |
2,559 |
1,912 |
3,819 |
2,997 |
||||||||
|
Less: Capital expenditures for property and equipment |
(218,357) |
(217,219) |
(394,143) |
(387,170) |
||||||||
|
Adjustments: |
||||||||||||
|
Transaction-related expenses(a) |
1,015 |
3,704 |
2,264 |
8,680 |
||||||||
|
Executive separation costs(b) |
1,686 |
1,670 |
1,686 |
1,670 |
||||||||
|
Pre-existing Progressive Waste share-based grants(c) |
843 |
1,117 |
841 |
1,131 |
||||||||
|
Tax effect(d) |
(471) |
(1,544) |
(990) |
(2,913) |
||||||||
|
Adjusted free cash flow |
$ |
355,973 |
$ |
402,639 |
$ |
629,955 |
$ |
727,432 |
||||
|
As % of revenues |
17.6 % |
17.9 % |
16.1 % |
16.8 % |
||||||||
|
___________________________ |
|
(a) Reflects the addback of acquisition-related transaction costs. |
|
(b) Reflects the cash component of severance expense associated with an executive departure. |
|
(c) Reflects the cash settlement of pre-existing Progressive Waste share-based awards during the period. |
|
(d) The aggregate tax effect of footnotes (a) through (c) is calculated based on the applied tax rates for the respective periods. |
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.
|
Three months ended |
Six months ended |
|||||||||||
|
2023 |
2024 |
2023 |
2024 |
|||||||||
|
Reported net income attributable to Waste Connections |
$ |
209,208 |
$ |
275,477 |
$ |
407,021 |
$ |
505,531 |
||||
|
Adjustments: |
||||||||||||
|
Amortization of intangibles(a) |
39,052 |
44,124 |
78,335 |
84,414 |
||||||||
|
Impairments and other operating items(b) |
10,859 |
8,190 |
12,724 |
8,544 |
||||||||
|
Transaction-related expenses(c) |
1,824 |
7,256 |
3,905 |
17,103 |
||||||||
|
Fair value changes to equity awards(d) |
72 |
222 |
445 |
1,507 |
||||||||
|
Executive separation costs(e) |
15,063 |
– |
15,063 |
– |
||||||||
|
Tax effect(f) |
(13,746) |
(15,222) |
(24,770) |
(28,385) |
||||||||
|
Adjusted net income attributable to Waste Connections |
$ |
262,332 |
$ |
320,047 |
$ |
492,723 |
$ |
588,714 |
||||
|
Diluted earnings per common share attributable to Waste Connections’ common shareholders: |
||||||||||||
|
Reported net income |
$ |
0.81 |
$ |
1.07 |
$ |
1.58 |
$ |
1.96 |
||||
|
Adjusted net income |
$ |
1.02 |
$ |
1.24 |
$ |
1.91 |
$ |
2.28 |
||||
|
_________________________ |
|
|
(a) |
Reflects the elimination of the non-cash amortization of acquisition-related intangible assets. |
|
(b) |
Reflects the addback of impairments and other operating items. |
|
(c) |
Reflects the addback of acquisition-related transaction costs. |
|
(d) |
Reflects fair value accounting changes associated with certain equity awards. |
|
(e) |
Reflects the cash and non-cash components of severance expense associated with an executive departure. |
|
(f) |
The aggregate tax effect of the adjustments in footnotes (a) through (e) is calculated based on the applied tax rates for the respective periods. |
|
UPDATED 2024 OUTLOOK
|
||||
|
Reconciliation of Adjusted EBITDA: |
||||
|
Updated 2024 Outlook |
||||
|
Estimates |
Observation |
|||
|
Net income attributable to Waste Connections |
$ |
1,087,000 |
||
|
Less: Net loss attributable to noncontrolling interests |
(1,003) |
|||
|
Plus: Income tax provision (a) |
318,672 |
Approximate 22.7% effective rate |
||
|
Plus: Interest expense, net |
318,000 |
|||
|
Plus: Depreciation and Depletion |
958,000 |
Approximately 10.8% of revenue |
||
|
Plus: Amortization |
172,000 |
|||
|
Plus: Closure and post-closure accretion |
28,000 |
|||
|
Plus: Impairments and other operating items (b) |
8,544 |
|||
|
Less: Other income, net (b) |
(7,823) |
|||
|
Adjustments: (b) |
||||
|
Plus: Transaction-related expenses |
17,103 |
|||
|
Plus: Fair value changes to equity awards |
1,507 |
|||
|
Adjusted EBITDA |
$ |
2,900,000 |
Approximately 32.8% of revenue |
|
|
____________________________ |
|
|
(a) |
Approximately 22.7% full year effective tax rate, including amounts reported for the six month period ended June 30, 2024. |
|
(b) |
Reflects amounts reported for the six month period ended June 30, 2024, as shown on page 9. |
|
Reconciliation of Adjusted Free Cash Flow: |
|||
|
Updated 2024 Outlook |
|||
|
Net cash provided by operating activities |
$ |
2,337,085 |
|
|
Plus: Change in book overdraft (a) |
1,350 |
||
|
Plus: Proceeds from disposal of assets (a) |
2,997 |
||
|
Less: Capital expenditures for property and equipment |
(1,150,000) |
||
|
Adjustments: (a) |
|||
|
Transaction-related expenses |
8,680 |
||
|
Executive separation costs |
1,670 |
||
|
Pre-existing Progressive Waste share-based grants |
1,131 |
||
|
Tax effect |
(2,913) |
||
|
Adjusted free cash flow |
$ |
1,200,000 |
|
|
As % of revenues |
13.6 % |
||
|
____________________________ |
|
(a) Reflects amounts reported for the six month period ended June 30, 2024, as shown on page 10. |
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SOURCE Waste Connections, Inc.
