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8-K - FORM 8-K - Waste Connections US, Inc. | c07070e8vk.htm |
EX-99.2 - EXHIBIT 99.2 - Waste Connections US, Inc. | c07070exv99w2.htm |
Exhibit 99.1
WASTE CONNECTIONS REPORTS THIRD QUARTER 2010 RESULTS
| Revenue of $345.8 million, up 9.4% over prior year period | ||
| Internal growth of 8.2% and operating margins above expectations | ||
| GAAP EPS and adjusted EPS* of $0.53, up 20.5% over prior year period | ||
| YTD net cash provided by operating activities of $242.3 million | ||
| YTD free cash flow* of $170.5 million, or 17.3% of revenue | ||
| Announces acquisitions with total annualized revenue of approximately $20 million | ||
| Repurchased approximately 4.5% of common stock YTD |
FOLSOM, CA, October 19, 2010 - Waste Connections, Inc. (NYSE: WCN) today announced its results for
the third quarter of 2010. Revenue totaled $345.8 million, a 9.4% increase over revenue of $316.0
million in the year ago period. Operating income was $75.7 million, or 21.9% of revenue, versus
$64.8 million in the third quarter of 2009. Net income attributable to Waste Connections in the
quarter was $41.0 million, or $0.53 per share on a diluted basis of 77.9 million shares. In the
year ago period, the Company reported net income attributable to Waste Connections of $34.2
million, or $0.43 per share on a diluted basis of 79.8 million shares. The effective tax rate in
the quarter was 39.2% compared to 36.0% in the year ago period.
Adjusted net income attributable to Waste Connections in the quarter was $41.4 million*, or $0.53
per share*, adjusting primarily for acquisition-related costs expensed due to the implementation of
new accounting guidance for business combinations effective January 1, 2009. Adjusted net income
attributable to Waste Connections in the prior year period was $35.0 million*, or $0.44 per share*,
also adjusted primarily for acquisition-related costs.
Non-cash costs for equity-based compensation, amortization of acquisition-related intangibles, and
amortization of debt discount related to convertible debt instruments in connection with the
adoption of new accounting guidance on January 1, 2009, were $6.5 million ($4.0 million net of
taxes, or approximately $0.05 per share) in the quarter compared to $7.2 million ($4.5 million net
of taxes, or approximately $0.06 per share) in the year ago period.
We once again are extremely pleased with our results in the quarter as we exceeded the upper end
of our expectations. Increased special waste activity and MSW volumes at our landfills, combined
with continuing strength in recycled commodity values and discipline in core pricing, were the
primary drivers of an approximate 110 basis points expansion in adjusted operating income before
depreciation and amortization* as a percentage of revenue and a more than 20% increase in earnings
per share compared to the year-ago period, said Ronald J. Mittelstaedt, Chairman and Chief
Executive Officer. Our strong operating performance and free cash flow generation continue to
de-lever our balance sheet despite increasing outlays for share repurchases and acquisitions. The
stock split and quarterly dividend initiation also announced today reinforce our commitment to
broaden our investor base and maximize returns to shareholders, while maintaining continuing
flexibility to fund our growth strategy.
Mr. Mittelstaedt added, Recent acquisition activity brings the total annualized revenue for signed
or completed transactions year-to-date to approximately $40 million. In October, we acquired an
E&P waste treatment and disposal company outside Lake Charles, Louisiana, that complements the
integrated asset platform we acquired in Louisiana in July. We also signed an agreement to acquire
Stutzman Refuse & Disposal Inc., a provider of solid waste collection and recycling services across
14 counties in central Kansas and contiguous to our existing operations; we expect this transaction
to close in early November.
* | A non-GAAP measure; see accompanying Non-GAAP Reconciliation Schedule. |
For the nine months ended September 30, 2010, revenue was $983.8 million, an 11.6% increase over
revenue of $881.5 million in the year ago period. Operating income was $204.6 million, versus
$171.8 million for the same period in 2009. Net income attributable to Waste Connections for the
nine months ended September 30, 2010, was $99.0 million, or $1.26 per share on a diluted basis of
78.3 million shares. In the year ago period, the Company reported net income attributable to Waste
Connections of $86.6 million, or $1.08 per share on a diluted basis of 80.5 million shares.
Adjusted net income attributable to Waste Connections for the nine months ended September 30, 2010,
was $108.3 million*, or $1.38 per share*, compared to $88.6 million*, or $1.10 per share* in the
year ago period.
For the nine months ended September 30, 2010, non-cash costs for equity-based compensation,
amortization of acquisition-related intangibles, loss on the early redemption of the 2026 Notes
(net of make-whole payment), and amortization of debt discount related to convertible debt
instruments in connection with the adoption of new accounting guidance on January 1, 2009, were
$22.8 million ($14.1 million net of taxes, or approximately $0.18 per share), compared to $19.8
million ($12.3 million net of taxes, or approximately $0.15 per share) in the year ago period.
Waste Connections will be hosting a conference call related to third quarter earnings and fourth
quarter outlook on October 20th 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 web site at
www.wasteconnections.com. A playback of the call will be available at both of these web sites.
Waste Connections, Inc. is an integrated solid waste services company that provides solid waste
collection, transfer, disposal and recycling services in mostly secondary markets in the Western
and Southern U.S. The Company serves approximately two million residential, commercial and
industrial customers from a network of operations in 27 states. The Company also provides
intermodal services for the movement of containers in the Pacific Northwest. Waste Connections,
Inc. was founded in September 1997 and is headquartered in Folsom, California.
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 web
site or through contacting us directly at (916) 608-8200.
* | 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 share repurchases, dividend payments, expected revenues from closed
acquisitions, the closing of signed acquisitions and future acquisition activity. 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. Our business and operations are subject to a variety of risks and
uncertainties and, consequently, actual results may differ materially from those projected by any
forward-looking statements. Factors that could cause actual results to differ from those projected
include, but are not limited to, the following: (1) our acquisitions may not be successful,
resulting in changes in strategy, operating losses or a loss on sale of the business acquired;
(2) a portion of our growth and future financial performance depends on our ability to integrate
acquired businesses into our organization and operations; (3) downturns in the worldwide economy
adversely affect operating results; (4) our results are vulnerable to economic conditions and
seasonal factors affecting the regions in which we operate; (5) 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; (6) we may be unable to compete effectively
with larger and better capitalized companies and governmental service providers; (7) we may lose
contracts through competitive bidding, early termination or governmental action; (8) price
increases may not be adequate to offset the impact of increased costs or may cause us to lose
volume; (9) increases in the price of fuel may adversely affect our business and reduce our
operating margins; (10) increases in labor and disposal and related transportation costs could
impact our financial results; (11) efforts by labor unions could divert management attention and
adversely affect operating results; (12) we could face significant withdrawal liability if we
withdraw from participation in one or more multiemployer pension plans in which we participate;
(13) increases in insurance costs and the amount that we self-insure for various risks could reduce
our operating margins and reported earnings; (14) competition for acquisition candidates,
consolidation within the waste industry and economic and market conditions may limit our ability to
grow through acquisitions; (15) our indebtedness could adversely affect our financial condition; we
may incur substantially more debt in the future; (16) each business that we acquire or have
acquired may have liabilities or risks that we fail or are unable to discover, including
environmental liabilities; (17) liabilities for environmental damage may adversely affect our
financial condition, business and earnings; (18) our accruals for our landfill site closure and
post-closure costs may be
- 2 -
inadequate; (19) the financial soundness of our customers could affect our business and operating
results; (20) we depend significantly on the services of the members of our senior, regional and
district management team, and the departure of any of those persons could cause our operating
results to suffer; (21) our decentralized decision-making structure could allow local managers to
make decisions that adversely affect our operating results; (22) we may incur additional charges
related to capitalized expenditures of landfill development projects, which would decrease our
earnings; (23) because we depend on railroads for our intermodal operations, our operating results
and financial condition are likely to be adversely affected by any reduction or deterioration in
rail service; (24) our financial results are based upon estimates and assumptions that may differ
from actual results; (25) the adoption of new accounting standards or interpretations could
adversely affect our financial results; (26) our financial and operating performance may be
affected by the inability to renew landfill operating permits, obtain new landfills and expand
existing ones; (27) future changes in laws or renewed enforcement of laws regulating the flow of
solid waste in interstate commerce could adversely affect our operating results; (28) extensive and
evolving environmental and health and safety laws and regulations may restrict our operations and
growth and increase our costs; (29) climate change regulations may adversely affect operating
results; (30) extensive regulations that govern the design, operation and closure of landfills may
restrict our landfill operations or increase our costs of operating landfills; (31) alternatives to
landfill disposal may cause our revenues and operating results to decline; (32) fluctuations in
prices for recycled commodities that we sell and rebates we offer to customers may cause our
revenues and operating results to decline; and (33) unusually adverse weather conditions may
interfere with our operations, harming our operating results. 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 and subsequent Quarterly Reports
on Form 10-Q. 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 / (916) 608-8266
worthingj@wasteconnections.com
Worthing Jackman / (916) 608-8266
worthingj@wasteconnections.com
- 3 -
WASTE CONNECTIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2010
(Unaudited)
(in thousands, except share and per share amounts)
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2010
(Unaudited)
(in thousands, except share and per share amounts)
Three months ended | Nine months ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2009 | 2010 | 2009 | 2010 | |||||||||||||
Revenues |
$ | 315,990 | $ | 345,785 | $ | 881,496 | $ | 983,802 | ||||||||
Operating expenses: |
||||||||||||||||
Cost of operations |
180,440 | 193,638 | 510,830 | 557,974 | ||||||||||||
Selling, general and administrative |
35,753 | 38,455 | 104,411 | 110,465 | ||||||||||||
Depreciation |
31,226 | 34,441 | 86,127 | 99,349 | ||||||||||||
Amortization of intangibles |
3,671 | 3,616 | 9,351 | 10,800 | ||||||||||||
Loss (gain) on disposal of assets |
139 | (50 | ) | (1,037 | ) | 572 | ||||||||||
Operating income |
64,761 | 75,685 | 171,814 | 204,642 | ||||||||||||
Interest expense |
(12,259 | ) | (9,419 | ) | (36,817 | ) | (30,842 | ) | ||||||||
Interest income |
134 | 135 | 1,275 | 453 | ||||||||||||
Loss on extinguishment of debt |
| | | (10,193 | ) | |||||||||||
Other income, net |
879 | 1,500 | 1,055 | 1,970 | ||||||||||||
Income before income tax provision |
53,515 | 67,901 | 137,327 | 166,030 | ||||||||||||
Income tax provision |
(19,252 | ) | (26,644 | ) | (50,070 | ) | (66,323 | ) | ||||||||
Net income |
$ | 34,263 | $ | 41,257 | $ | 87,257 | $ | 99,707 | ||||||||
Less: net income attributable to
noncontrolling interests |
(113 | ) | (271 | ) | (691 | ) | (748 | ) | ||||||||
Net income attributable to Waste Connections |
$ | 34,150 | $ | 40,986 | $ | 86,566 | $ | 98,959 | ||||||||
Earnings per common share attributable to
Waste Connections common stockholders: |
||||||||||||||||
Basic |
$ | 0.43 | $ | 0.53 | $ | 1.09 | $ | 1.28 | ||||||||
Diluted |
$ | 0.43 | $ | 0.53 | $ | 1.08 | $ | 1.26 | ||||||||
Shares used in the per share calculations: |
||||||||||||||||
Basic |
78,837,984 | 77,062,885 | 79,618,566 | 77,419,498 | ||||||||||||
Diluted |
79,824,616 | 77,852,569 | 80,468,180 | 78,281,132 | ||||||||||||
- 4 -
WASTE CONNECTIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands, except share and per share amounts)
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands, except share and per share amounts)
December 31, | September 30, | |||||||
2009 | 2010 | |||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and equivalents |
$ | 9,639 | $ | 13,556 | ||||
Accounts receivable, net of allowance for doubtful accounts
of $4,058 and $4,241 at December 31, 2009 and
September 30, 2010, respectively |
138,972 | 155,082 | ||||||
Deferred income taxes |
17,748 | 18,554 | ||||||
Prepaid expenses and other current assets |
33,495 | 27,372 | ||||||
Total current assets |
199,854 | 214,564 | ||||||
Property and equipment, net |
1,308,392 | 1,303,463 | ||||||
Goodwill |
906,710 | 910,286 | ||||||
Intangible assets, net |
354,303 | 344,690 | ||||||
Restricted assets |
27,377 | 28,823 | ||||||
Other assets, net |
23,812 | 22,237 | ||||||
$ | 2,820,448 | $ | 2,824,063 | |||||
LIABILITIES AND EQUITY |
||||||||
Current liabilities: |
||||||||
Accounts payable |
$ | 86,669 | $ | 80,471 | ||||
Book overdraft |
12,117 | 11,743 | ||||||
Accrued liabilities |
93,380 | 103,065 | ||||||
Deferred revenue |
50,138 | 53,598 | ||||||
Current portion of long-term debt and notes payable |
2,609 | 1,849 | ||||||
Total current liabilities |
244,913 | 250,726 | ||||||
Long-term debt and notes payable |
867,554 | 831,123 | ||||||
Other long-term liabilities |
45,013 | 49,460 | ||||||
Deferred income taxes |
305,932 | 319,870 | ||||||
Total liabilities |
1,463,412 | 1,451,179 | ||||||
Commitments and contingencies |
||||||||
Equity: |
||||||||
Preferred stock: $0.01 par value; 7,500,000 shares authorized; none issued and
outstanding |
| | ||||||
Common stock: $0.01 par value; 150,000,000 shares authorized; 78,599,083 and
76,757,970 shares issued and outstanding at December 31, 2009 and September 30,
2010, respectively |
786 | 767 | ||||||
Additional paid-in capital |
625,173 | 543,555 | ||||||
Retained earnings |
732,738 | 831,697 | ||||||
Accumulated other comprehensive loss |
(4,892 | ) | (7,114 | ) | ||||
Total Waste Connections equity |
1,353,805 | 1,368,905 | ||||||
Noncontrolling interests |
3,231 | 3,979 | ||||||
Total equity |
1,357,036 | 1,372,884 | ||||||
$ | 2,820,448 | $ | 2,824,063 | |||||
- 5 -
WASTE CONNECTIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2010
(Unaudited)
(Dollars in thousands)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2010
(Unaudited)
(Dollars in thousands)
Nine months ended | ||||||||
September 30, | ||||||||
2009 | 2010 | |||||||
Cash flows from operating activities: |
||||||||
Net income |
$ | 87,257 | $ | 99,707 | ||||
Adjustments to reconcile net income to net cash
provided by operating activities: |
||||||||
Loss (gain) on disposal of assets |
(1,037 | ) | 572 | |||||
Depreciation |
86,127 | 99,349 | ||||||
Amortization of intangibles |
9,351 | 10,800 | ||||||
Deferred income taxes, net of acquisitions |
28,605 | 15,925 | ||||||
Loss on redemption of 2026 Notes, net of make-whole payment |
| 2,255 | ||||||
Amortization of debt issuance costs |
1,455 | 1,332 | ||||||
Amortization of debt discount |
3,513 | 1,245 | ||||||
Equity-based compensation |
6,965 | 8,488 | ||||||
Interest income on restricted assets |
(369 | ) | (397 | ) | ||||
Closure and post-closure accretion |
1,496 | 1,323 | ||||||
Excess tax benefit associated with equity-based compensation |
(696 | ) | (8,935 | ) | ||||
Net change in operating assets and liabilities, net of acquisitions |
19,578 | 10,634 | ||||||
Net cash provided by operating activities |
242,245 | 242,298 | ||||||
Cash flows from investing activities: |
||||||||
Payments for acquisitions, net of cash acquired |
(422,078 | ) | (17,391 | ) | ||||
Capital expenditures for property and equipment |
(84,289 | ) | (86,121 | ) | ||||
Proceeds from disposal of assets |
4,348 | 5,786 | ||||||
Increase in restricted assets, net of interest income |
(2,014 | ) | (1,048 | ) | ||||
Increase in other assets |
(887 | ) | (2,034 | ) | ||||
Net cash used in investing activities |
(504,920 | ) | (100,808 | ) | ||||
Cash flows from financing activities: |
||||||||
Proceeds from long-term debt |
217,000 | 331,253 | ||||||
Principal payments on notes payable and long-term debt |
(175,053 | ) | (384,346 | ) | ||||
Change in book overdraft |
47 | (374 | ) | |||||
Proceeds from option and warrant exercises |
4,952 | 23,244 | ||||||
Excess tax benefit associated with equity-based compensation |
696 | 8,935 | ||||||
Payments for repurchase of common stock |
(40,168 | ) | (116,285 | ) | ||||
Debt issuance costs |
(42 | ) | | |||||
Net cash provided by (used in) financing activities |
7,432 | (137,573 | ) | |||||
Net increase (decrease) in cash and equivalents |
(255,243 | ) | 3,917 | |||||
Cash and equivalents at beginning of period |
265,264 | 9,639 | ||||||
Cash and equivalents at end of period |
$ | 10,021 | $ | 13,556 | ||||
- 6 -
ADDITIONAL STATISTICS
THREE MONTHS ENDED SEPTEMBER 30, 2009 AND 2010
(Dollars in thousands)
THREE MONTHS ENDED SEPTEMBER 30, 2009 AND 2010
(Dollars in thousands)
Internal Growth: The following table reflects revenue growth for operations owned for at least 12
months:
Three months ended | ||||
September 30, 2010 | ||||
Core Price |
2.6 | % | ||
Surcharges |
0.3 | % | ||
Volume |
3.2 | % | ||
Intermodal, Recycling and Other |
2.1 | % | ||
Total |
8.2 | % | ||
Uneliminated Revenue Breakdown:
Three months ended | Three months ended | |||||||||||||||
September 30, 2009 | September 30, 2010 | |||||||||||||||
Collection |
$ | 235,735 | 65.2 | % | $ | 244,936 | 61.8 | % | ||||||||
Disposal and Transfer |
107,438 | 29.7 | % | 125,473 | 31.7 | % | ||||||||||
Intermodal, Recycling and Other |
18,613 | 5.1 | % | 25,885 | 6.5 | % | ||||||||||
Total before inter-company elimination |
$ | 361,786 | 100.0 | % | $ | 396,294 | 100.0 | % | ||||||||
Inter-company elimination |
$ | 45,796 | $ | 50,509 | ||||||||||||
Reported Revenue |
$ | 315,990 | $ | 345,785 | ||||||||||||
Days Sales Outstanding for the three months ended September 30, 2010: 41 (27 net of deferred
revenue)
Internalization for the three months ended September 30, 2010: 66%
Other Cash Flow Items:
Three months ended | Three months ended | |||||||
September 30, 2009 | September 30, 2010 | |||||||
Cash Interest Paid |
$ | 6,031 | $ | 4,189 | ||||
Cash Taxes Paid |
$ | 12,240 | $ | 14,755 |
Debt to Book Capitalization as of September 30, 2010: 38%
Share Information for the three months ended September 30, 2010:
Basic shares outstanding |
77,062,885 | |||
Dilutive effect of options and warrants |
487,842 | |||
Dilutive effect of restricted stock |
301,842 | |||
Diluted shares outstanding |
77,852,569 |
- 7 -
NON-GAAP RECONCILIATION SCHEDULE
(in thousands)
(in thousands)
Reconciliation of Adjusted Operating Income before Depreciation and Amortization:
Adjusted operating income before depreciation and amortization, 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. Waste Connections defines adjusted operating income before
depreciation and amortization as operating income, plus depreciation and amortization expense, plus
closure and post-closure accretion expense, plus or minus any gain or loss on disposal of assets.
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. Management uses
adjusted operating income before depreciation and amortization as one of the principal measures to
evaluate and monitor the ongoing financial performance of the Companys operations. Other
companies may calculate adjusted operating income before depreciation and amortization differently.
Three months ended | Three months ended | |||||||
September 30, 2009 | September 30, 2010 | |||||||
Operating income |
$ | 64,761 | $ | 75,685 | ||||
Plus: Depreciation and amortization |
34,897 | 38,057 | ||||||
Plus: Closure and post-closure accretion |
584 | 443 | ||||||
Plus/less: Loss (gain) on disposal of assets |
139 | (50 | ) | |||||
Adjustments: |
||||||||
Plus: Acquisition-related transaction costs (a) |
897 | 782 | ||||||
Adjusted operating income before depreciation and amortization |
$ | 101,278 | $ | 114,917 | ||||
As % of revenues |
32.1 | % | 33.2 | % |
Nine months ended | Nine months ended | |||||||
September 30, 2009 | September 30, 2010 | |||||||
Operating income |
$ | 171,814 | $ | 204,642 | ||||
Plus: Depreciation and amortization |
95,478 | 110,149 | ||||||
Plus: Closure and post-closure accretion |
1,496 | 1,323 | ||||||
Plus/less: Loss (gain) on disposal of assets |
(1,037 | ) | 572 | |||||
Adjustments: |
||||||||
Plus: Acquisition-related transaction costs (a) |
4,179 | 1,177 | ||||||
Plus: Loss on prior corporate office lease (b) |
1,621 | | ||||||
Adjusted operating income before depreciation and amortization |
$ | 273,551 | $ | 317,863 | ||||
As % of revenues |
31.0 | % | 32.3 | % |
(a) | Reflects the addback of acquisition-related costs expensed due to the implementation of new accounting guidance for business combinations effective January 1, 2009. | |
(b) | Reflects the addback of a loss on the Companys prior corporate office lease due to the relocation of the Companys corporate offices. |
- 8 -
NON-GAAP RECONCILIATION SCHEDULE (continued)
(in thousands, except per share amounts)
(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. The Company 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 may exclude items that have an impact on the
Companys 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. Management uses adjusted net income and adjusted net income per diluted share
as one of the principal measures to evaluate and monitor ongoing financial performance of the
Companys operations. Other companies may calculate adjusted net income and adjusted net income
per diluted share differently.
Three months ended | Nine months ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2009 | 2010 | 2009 | 2010 | |||||||||||||
Reported net income attributable to Waste Connections |
$ | 34,150 | $ | 40,986 | $ | 86,566 | $ | 98,959 | ||||||||
Adjustments: |
||||||||||||||||
Loss on extinguishment of debt, net of taxes (a) |
| | | 6,320 | ||||||||||||
Acquisition-related transaction costs, net of taxes (b) |
751 | 485 | 2,806 | 730 | ||||||||||||
Loss on prior corporate office lease, net of taxes (c) |
| | 1,008 | | ||||||||||||
Loss (gain) on disposal of assets, net of taxes (d) |
86 | (31 | ) | (645 | ) | 777 | ||||||||||
Impact of deferred tax adjustment (e) |
| | (1,142 | ) | 1,547 | |||||||||||
Adjusted net income attributable to Waste Connections |
$ | 34,987 | $ | 41,440 | $ | 88,593 | $ | 108,333 | ||||||||
Diluted earnings per common share attributable to Waste
Connections common stockholders: |
||||||||||||||||
Reported net income |
$ | 0.43 | $ | 0.53 | $ | 1.08 | $ | 1.26 | ||||||||
Adjusted net income |
$ | 0.44 | $ | 0.53 | $ | 1.10 | $ | 1.38 | ||||||||
(a) | Reflects the elimination of costs associated with the early redemption of outstanding debt. | |
(b) | Reflects the elimination of acquisition-related costs due to the implementation of new accounting guidance for business combinations effective January 1, 2009. | |
(c) | Reflects the elimination of a loss on the Companys prior corporate office lease due to the relocation of the Companys corporate offices. | |
(d) | Reflects the elimination of a loss (gain) on disposal of assets. | |
(e) | Reflects (1) the elimination in 2009 of a benefit to the income tax provision primarily from a reduction in the Companys deferred tax liabilities, and (2) the elimination in 2010 of an increase to the income tax provision associated with an adjustment in the Companys deferred tax liabilities primarily resulting from a voter-approved increase in Oregon state income tax rates. |
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NON-GAAP RECONCILIATION SCHEDULE (continued)
(in thousands)
(in thousands)
Reconciliation of Free Cash Flow:
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. Waste Connections
defines 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. This measure is not a substitute for, and should be used in
conjunction with, GAAP liquidity or financial measures. Management uses free cash flow as one of
the principal measures to evaluate and monitor the ongoing financial performance of the Companys
operations. Other companies may calculate free cash flow differently.
Three months ended | Three months ended | |||||||
September 30, 2009 | September 30, 2010 | |||||||
Net cash provided by operating activities |
$ | 91,197 | $ | 102,164 | ||||
Less: Change in book overdraft |
(2,189 | ) | 1,799 | |||||
Plus: Proceeds from disposal of assets |
219 | 861 | ||||||
Plus: Excess tax benefit associated with equity-based compensation |
599 | 2,512 | ||||||
Less: Capital expenditures for property and equipment |
(31,596 | ) | (35,626 | ) | ||||
Free cash flow |
$ | 58,230 | $ | 71,710 | ||||
As % of revenues |
18.4 | % | 20.7 | % |
Nine months ended | Nine months ended | |||||||
September 30, 2009 | September 30, 2010 | |||||||
Net cash provided by operating activities |
$ | 242,245 | $ | 242,298 | ||||
Plus/less: Change in book overdraft |
47 | (374 | ) | |||||
Plus: Proceeds from disposal of assets |
4,348 | 5,786 | ||||||
Plus: Excess tax benefit associated with equity-based compensation |
696 | 8,935 | ||||||
Less: Capital expenditures for property and equipment |
(84,289 | ) | (86,121 | ) | ||||
Free cash flow |
$ | 163,047 | $ | 170,524 | ||||
As % of revenues |
18.5 | % | 17.3 | % |
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