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8-K - FORM 8-K - Waste Connections US, Inc.d572692d8k.htm

Exhibit 99.1

 

LOGO

WASTE CONNECTIONS REPORTS SECOND QUARTER 2013 RESULTS

 

   

Revenue of $489.4 million, up 19.1%

 

   

Double digit increase in landfill volumes drives positive organic volume growth

 

   

Adjusted EBITDA* of $169.4 million, or 34.6% of revenue, up 28.7%

 

   

GAAP EPS of $0.35 and adjusted EPS* of $0.47, up 20.5%

 

   

YTD net cash provided by operating activities of $255.5 million

 

   

YTD adjusted free cash flow* increases 18.4% to $175.7 million, or 18.7% of revenue

THE WOODLANDS, TX, July 23, 2013 - Waste Connections, Inc. (NYSE: WCN) today announced its results for the second quarter of 2013. Revenue totaled $489.4 million, a 19.1% increase over revenue of $410.7 million in the year ago period. Operating income was $93.1 million compared to $81.7 million in the second quarter of 2012. Operating income in the current year period included approximately $13.9 million ($8.6 million net of taxes) associated with both the loss on the Company’s prior corporate office lease resulting from the relocation of our corporate headquarters from California to Texas, and a loss on disposal of assets. Adjusted EBITDA* in the second quarter of 2013 was $169.4 million, up 28.7% over adjusted EBITDA* of $131.5 million in the prior year period. Adjusted EBITDA, a non-GAAP measure, excludes the impact of items such as acquisition-related costs and expenses incurred in connection with the relocation of our corporate headquarters from California to Texas, as shown in the detailed reconciliation in the attached table.

Net income attributable to Waste Connections in the quarter was $44.0 million, or $0.35 per share on a diluted basis of 124.1 million shares. In the year ago period, the Company reported net income attributable to Waste Connections of $42.4 million, or $0.34 per share on a diluted basis of 124.0 million shares.

Adjusted net income attributable to Waste Connections* in the quarter was $57.8 million or $0.47 per share versus $48.2 million, or $0.39 per share, in the prior year period. Adjusted net income and adjusted net income per diluted share, both non-GAAP measures, primarily exclude the impact of acquisition-related items such as amortization of intangibles and acquisition-related expenses, as well as both the loss on our prior corporate lease and expenses incurred in connection with the relocation of our corporate headquarters from California to Texas, all net of tax, as shown in the detailed reconciliation in the attached table.

“Favorable solid waste trends experienced earlier this year accelerated during the second quarter, resulting in revenue, adjusted EBITDA, and adjusted free cash flow all exceeding our expectations. Our solid waste business continues to benefit from an improving economy, with municipal solid waste volumes at our landfills showing the strongest year over year increases in several years, up approximately 14% in the second quarter. In addition, E&P waste activity played out about as expected in the period despite unusually wet weather in the Bakken,” said Ronald J. Mittelstaedt, Chairman and Chief Executive Officer.

Mr. Mittelstaedt added, “Free cash flow generation remains a hallmark of our differentiated strategy and a primary driver of shareholder value creation. As a result of our strong free cash flow during the first half of the year, we expect to pull forward up to $10 million of next year’s CNG fleet purchases into the latter part of this year to take advantage of cash tax benefits from bonus depreciation. In addition, we expect to commence construction of a new E&P waste landfill in the West Texas Permian, which should provide incremental growth into 2014.”

 

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


For the six months ended June 30, 2013, revenue was $939.3 million, a 19.3% increase over revenue of $787.2 million in the year ago period. Operating income was $180.0 million compared to $146.8 million for the same period in 2012. Adjusted EBITDA* for the six months ended June 30, 2013, was $315.4 million, up 27.3% over adjusted EBITDA* of $247.8 million in the prior year period. Net income attributable to Waste Connections for the six months ended June 30, 2013, was $85.5 million, or $0.69 per share on a diluted basis of 124.0 million shares. In the year ago period, the Company reported net income attributable to Waste Connections of $73.7 million, or $0.61 per share on a diluted basis of 120.0 million shares. Adjusted net income attributable to Waste Connections* for the six months ended June 30, 2013, was $103.5 million, or $0.84 per share, compared to $88.9 million, or $0.74 per share, in the year ago period.

Waste Connections, Inc. is an integrated solid waste services company that provides waste collection, transfer, disposal and recycling services in mostly exclusive and secondary markets. Through its R360 Environmental Solutions subsidiary, the Company also is 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 two million residential, commercial, industrial, and exploration and production customers from a network of operations in 31 states. The Company also provides intermodal services for the movement of cargo and solid waste containers in the Pacific Northwest. Waste Connections, Inc. was founded in September 1997 and is headquartered in The Woodlands, Texas.

Waste Connections will be hosting a conference call related to second quarter earnings and third quarter outlook on July 24th 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 website at www.wasteconnections.com. A playback of the call will be available at both of these websites.

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 (832) 442-2200.

 

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

 

- 2 -


Information Regarding Forward-Looking Statements

Certain statements contained in this release are forward-looking in nature, including statements related to: economic trends and the impact of such trends on our business, expectations with respect to waste volume growth, expectations with respect to E&P waste activity, the timing of completion of the integration of R360 into our business, and the timing and cost of CNG fleet purchases. 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. 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, which may reduce the anticipated benefit from acquired businesses; (2) a portion of our growth and future financial performance depends on our ability to integrate acquired businesses into our organization and operations; (3) our indebtedness could adversely affect our financial condition and limit our financial flexibility; (4) competition for acquisition candidates, consolidation within the waste industry and economic and market conditions may limit our ability to grow through acquisitions; (5) our industry is highly competitive and includes larger and better capitalized companies, companies with lower prices, return expectations or other advantages, and governmental service providers, which could adversely affect our ability to compete and our operating results; (6) we may lose contracts through competitive bidding, early termination or governmental action; (7) price increases may not be adequate to offset the impact of increased costs or may cause us to lose volume; (8) economic downturns adversely affect operating results; (9) our results are vulnerable to economic conditions and seasonal factors affecting the regions in which we operate; (10) the E&P waste disposal business depends on oil and gas prices and the level of drilling and production activity in the basins in which we operate;(11) we have limited experience in running an E&P waste treatment, recovery and disposal business; (12) our E&P waste business is dependent upon the willingness of our customers to outsource their waste management activities; (13) changes in laws or government regulations regarding hydraulic fracturing could increase our customers’ costs of doing business and reduce oil and gas production by our customers, which could adversely impact our business; (14) our E&P waste business could be adversely affected by changes in laws regulating E&P waste; (15) 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; (16) increases in the price of diesel fuel may adversely affect our collection business and reduce our operating margins; (17) increases in labor and disposal and related transportation costs could impact our financial results; (18) efforts by labor unions could divert management attention and adversely affect operating results; (19) we could face significant withdrawal liability if we withdraw from participation in one or more multiemployer pension plans in which we participate and the accrued pension benefits are not fully funded; (20) increases in insurance costs and the amount that we self-insure for various risks could reduce our operating margins and reported earnings; (21) each business that we acquire or have acquired may have liabilities or risks that we fail or are unable to discover, including environmental liabilities; (22) liabilities for environmental damage may adversely affect our financial condition, business and earnings; (23) our accruals for our landfill site closure and post-closure costs may be inadequate; (24) the financial soundness of our customers could affect our business and operating results; (25) 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; (26) our decentralized decision-making structure could allow local managers to make decisions that adversely affect our operating results; (27) we may incur charges related to capitalized expenditures of landfill development projects, which would decrease our earnings; (28) 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; (29) our financial results could be adversely affected by impairments of goodwill or indefinite-lived intangibles; (30) our financial results are based upon estimates and assumptions that may differ from actual results; (31) the adoption of new accounting standards or interpretations could adversely affect our financial results; (32) pending or future litigation or governmental proceedings could result in material adverse consequences, including judgments or settlements; and (33) if we are not able to develop and protect intellectual property, or if a competitor develops or obtains exclusive rights to a breakthrough technology, our financial results may suffer. 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 / (832) 442-2266    Mary Anne Whitney / (832) 442-2253
worthingj@wasteconnections.com    maryannew@wasteconnections.com

 

- 3 -


WASTE CONNECTIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

THREE AND SIX MONTHS ENDED JUNE 30, 2012 AND 2013

(Unaudited)

(in thousands, except share and per share amounts)

 

     Three months ended
June 30,
    Six months ended
June 30,
 
     2012     2013     2012     2013  

Revenues

   $ 410,731      $ 489,381      $ 787,161      $ 939,272   

Operating expenses:

        

Cost of operations

     238,427        268,484        455,107        520,447   

Selling, general and administrative

     44,747        52,903        95,922        106,154   

Depreciation

     39,846        54,766        77,018        106,414   

Amortization of intangibles

     6,217        6,211        11,849        12,650   

Loss (gain) on disposal of assets

     (243     3,445        472        3,122   

Loss on prior corporate office lease

     —          10,498        —          10,498   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     81,737        93,074        146,793        179,987   

Interest expense

     (11,829     (18,928     (24,114     (37,940

Other income (expense), net

     20        (1,706     838        (965
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income tax provision

     69,928        72,440        123,517        141,082   

Income tax provision

     (27,413     (28,445     (49,564     (55,408
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

     42,515        43,995        73,953        85,674   

Less: net income attributable to noncontrolling interests

     (100     (28     (234     (151
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to Waste Connections

   $ 42,415      $ 43,967      $ 73,719      $ 85,523   
  

 

 

   

 

 

   

 

 

   

 

 

 

Earnings per common share attributable to Waste Connections’ common stockholders:

        

Basic

   $ 0.34      $ 0.36      $ 0.62      $ 0.69   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

   $ 0.34      $ 0.35      $ 0.61      $ 0.69   
  

 

 

   

 

 

   

 

 

   

 

 

 

Shares used in the per share calculations:

        

Basic

     123,466,890        123,610,969        119,327,512        123,496,519   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     124,027,617        124,080,423        119,952,039        123,993,311   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash dividends per common share

   $ 0.09      $ 0.10      $ 0.18      $ 0.20   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

- 4 -


WASTE CONNECTIONS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in thousands, except share and per share amounts)

 

     December 31,     June 30,  
     2012     2013  

ASSETS

    

Current assets:

    

Cash and equivalents

   $ 23,212      $ 16,212   

Accounts receivable, net of allowance for doubtful accounts of $6,548 and $5,915 at December 31, 2012 and June 30, 2013, respectively

     235,762        240,557   

Deferred income taxes

     45,798        45,005   

Prepaid expenses and other current assets

     57,714        30,967   
  

 

 

   

 

 

 

Total current assets

     362,486        332,741   

Property and equipment, net

     2,457,606        2,427,985   

Goodwill

     1,636,557        1,638,160   

Intangible assets, net

     541,908        527,149   

Restricted assets

     34,889        35,166   

Other assets, net

     42,580        43,327   
  

 

 

   

 

 

 
   $ 5,076,026      $ 5,004,528   
  

 

 

   

 

 

 

LIABILITIES AND EQUITY

    

Current liabilities:

    

Accounts payable

   $ 130,260      $ 120,503   

Book overdraft

     12,567        12,477   

Accrued liabilities

     121,829        127,177   

Deferred revenue

     69,930        71,049   

Current portion of contingent consideration

     49,018        56,856   

Current portion of long-term debt and notes payable

     33,968        55,319   
  

 

 

   

 

 

 

Total current liabilities

     417,572        443,381   

Long-term debt and notes payable

     2,204,967        2,020,384   

Long-term portion of contingent consideration

     30,346        24,847   

Other long-term liabilities

     75,129        82,153   

Deferred income taxes

     464,882        480,853   
  

 

 

   

 

 

 

Total liabilities

     3,192,896        3,051,618   

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; 250,000,000 shares authorized; 123,019,494 and 123,472,760 shares issued and outstanding at December 31, 2012 and June 30, 2013, respectively

     1,230        1,235   

Additional paid-in capital

     779,904        785,980   

Accumulated other comprehensive loss

     (6,165     (3,288

Retained earnings

     1,103,188        1,164,057   
  

 

 

   

 

 

 

Total Waste Connections’ equity

     1,878,157        1,947,984   

Noncontrolling interest in subsidiaries

     4,973        4,926   
  

 

 

   

 

 

 

Total equity

     1,883,130        1,952,910   
  

 

 

   

 

 

 
   $ 5,076,026      $ 5,004,528   
  

 

 

   

 

 

 

 

- 5 -


WASTE CONNECTIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

SIX MONTHS ENDED JUNE 30, 2012 AND 2013

(Unaudited)

(Dollars in thousands)

 

     Six months ended  
     June 30,  
     2012     2013  

Cash flows from operating activities:

    

Net income

   $ 73,953      $ 85,674   

Adjustments to reconcile net income to net cash provided by operating activities

    

Loss on disposal of assets

     472        3,122   

Depreciation

     77,018        106,414   

Amortization of intangibles

     11,849        12,650   

Deferred income taxes, net of acquisitions

     12,629        14,990   

Amortization of debt issuance costs

     831        2,016   

Equity-based compensation

     10,821        7,446   

Interest income on restricted assets

     (212     (196

Interest accretion

     1,750        2,533   

Excess tax benefit associated with equity-based compensation

     (3,283     (2,667

Loss on prior corporate office lease

     —          10,498   

Net change in operating assets and liabilities, net of acquisitions

     19,112        13,043   
  

 

 

   

 

 

 

Net cash provided by operating activities

     204,940        255,523   
  

 

 

   

 

 

 

Cash flows from investing activities:

    

Payments for acquisitions, net of cash acquired

     (150,222     (1,181

Proceeds from adjustment to acquisition consideration

     —          18,000   

Capital expenditures for property and equipment

     (67,445     (87,541

Proceeds from disposal of assets

     1,497        3,622   

Increase in restricted assets, net of interest income

     (577     (81

Other

     (5,666     (1,140
  

 

 

   

 

 

 

Net cash used in investing activities

     (222,413     (68,321
  

 

 

   

 

 

 

Cash flows from financing activities:

    

Proceeds from long-term debt

     334,000        93,500   

Principal payments on notes payable and long-term debt

     (530,551     (256,732

Payment of contingent consideration

     (3,849     (2,743

Change in book overdraft

     136        (90

Proceeds from option and warrant exercises

     851        1,330   

Excess tax benefit associated with equity-based compensation

     3,283        2,667   

Payments for repurchase of common stock

     (5,233     —     

Payments for cash dividends

     (21,122     (24,654

Tax withholdings related to net share settlements of restricted stock units

     (6,010     (5,362

Distributions to noncontrolling interests

     (94     (198

Debt issuance costs

     (20     (1,920

Proceeds from common stock offering, net

     369,584        —     
  

 

 

   

 

 

 

Net cash provided by (used in) financing activities

     140,975        (194,202
  

 

 

   

 

 

 

Net increase (decrease) in cash and equivalents

     123,502        (7,000

Cash and equivalents at beginning of period

     12,643        23,212   
  

 

 

   

 

 

 

Cash and equivalents at end of period

   $ 136,145      $ 16,212   
  

 

 

   

 

 

 

 

- 6 -


ADDITIONAL STATISTICS

THREE AND SIX MONTHS ENDED JUNE 30, 2013

(Dollars in thousands)

Revenue Growth: The following table reflects changes in our revenue for the three months ended June 30, 2013:

 

     Three months ended
June 30, 2013
 

Solid Waste Internal Growth:

  

Core Price

     2.6

Surcharges

     0.2

Volume

     0.9

Recycling

     (0.8 %) 
  

 

 

 

Total Solid Waste Internal Growth

     2.9

Intermodal and Other

     (0.5 %) 

Acquisitions, net

     16.7
  

 

 

 

Total

     19.1
  

 

 

 

Revenue Breakdown: The following table reflects a breakdown of our revenue for the three and six month periods ending June 30, 2013:

 

     Three months ended
June 30, 2013
    Six months ended
June 30, 2013
 

Solid Waste Collection

   $ 306,472        55.1   $ 599,616        56.4

Solid Waste Disposal and Transfer

     153,600        27.6     276,371        26.0

E&P Waste Treatment, Disposal and Recovery

     66,183        11.9     126,115        11.9

Solid Waste Recycling

     18,610        3.4     37,404        3.5

Intermodal and Other

     11,255        2.0     23,373        2.2
  

 

 

   

 

 

   

 

 

   

 

 

 

Total before inter-company elimination

     556,120        100.0     1,062,879        100.0

Inter-company elimination

     (66,739       (123,607  
  

 

 

     

 

 

   

Reported Revenue

   $ 489,381        $ 939,272     
  

 

 

     

 

 

   

Days Sales Outstanding for the three months ended June 30, 2013: 45 (32 net of deferred revenue)

Internalization for the three months ended June 30, 2013: 54%

Other Cash Flow Items:

 

     Three months ended
June 30, 2013
     Six months ended
June 30, 2013
 

Cash Interest Paid

   $ 24,106       $ 33,901   

Cash Taxes Paid

   $ 17,641       $ 18,340   

Debt to Book Capitalization as of June 30, 2013: 52%

Share Information for the three months ended June 30, 2013:

 

Basic shares outstanding

     123,610,969   

Dilutive effect of options and warrants

     191,872   

Dilutive effect of restricted stock units

     277,582   
  

 

 

 

Diluted shares outstanding

     124,080,423   

 

- 7 -


NON-GAAP RECONCILIATION SCHEDULE

(in thousands)

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 income before income tax provision, plus interest expense, plus depreciation and amortization expense, plus closure and post-closure accretion expense, plus or minus any loss or gain on disposal of assets, plus other expense, less other income. 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. Other companies may calculate adjusted EBITDA differently.

 

     Three months ended
June 30, 2012
    Three months ended
June 30, 2013
 

Income before income tax provision

   $ 69,928      $ 72,440   

Plus: Interest expense

     11,829        18,928   

Plus: Depreciation and amortization

     46,063        60,977   

Plus: Closure and post-closure accretion

     612        753   

Plus/less: Loss (gain) on disposal of assets

     (243     3,445   

Plus/less: Other expense (income), net

     (20     1,706   

Adjustments:

    

Plus: Loss on prior corporate office lease (a)

     —          10,498   

Plus: Acquisition-related costs (b)

     382        333   

Plus: Corporate relocation expenses (c)

     2,990        270   
  

 

 

   

 

 

 

Adjusted EBITDA

   $ 131,541      $ 169,350   
  

 

 

   

 

 

 

As % of revenues

     32.0     34.6
     Six months ended
June 30, 2012
    Six months ended
June 30, 2013
 

Income before income tax provision

   $ 123,517      $ 141,082   

Plus: Interest expense

     24,114        37,940   

Plus: Depreciation and amortization

     88,867        119,064   

Plus: Closure and post-closure accretion

     1,225        1,514   

Plus: Loss on disposal of assets

     472        3,122   

Plus/less: Other expense (income), net

     (838     965   

Adjustments:

    

Plus: Loss on prior corporate office lease (a)

     —          10,498   

Plus: Acquisition-related costs (b)

     2,159        806   

Plus: Corporate relocation expenses (c)

     4,717        422   

Plus: NEO one-time equity grants (d)

     3,585        —     
  

 

 

   

 

 

 

Adjusted EBITDA

   $ 247,818      $ 315,413   
  

 

 

   

 

 

 

As % of revenues

     31.5     33.6

 

(a) Reflects the addback of the loss on the prior corporate office lease resulting from the relocation of the Company’s corporate headquarters from California to Texas.
(b) Reflects the addback of acquisition-related transaction costs.
(c) Reflects the addback of costs associated with the relocation of the Company’s corporate headquarters from California to Texas.
(d) Reflects the addback of one-time equity compensation expense incurred at the time the Company’s NEOs’ employment contracts were modified.

 

- 8 -


NON-GAAP RECONCILIATION SCHEDULE (continued)

(in thousands)

 

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 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. The Company 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.

 

     Three months ended
June 30, 2012
    Three months ended
June 30, 2013
 

Net cash provided by operating activities

   $ 104,359      $ 122,565   

Less: Change in book overdraft

     (184     (73

Plus: Proceeds from disposal of assets

     744        2,899   

Plus: Excess tax benefit associated with equity-based compensation

     278        569   

Less: Capital expenditures for property and equipment

     (39,492     (50,636

Adjustment:

    

Corporate office relocation, net of taxes (a)

     4,240        167   
  

 

 

   

 

 

 

Adjusted free cash flow

   $ 69,945      $ 75,491   
  

 

 

   

 

 

 

As % of revenues

     17.0     15.4

 

     Six months ended
June 30, 2012
    Six months ended
June 30, 2013
 

Net cash provided by operating activities

   $ 204,940      $ 255,523   

Plus/less: Change in book overdraft

     136        (90

Plus: Proceeds from disposal of assets

     1,497        3,622   

Plus: Excess tax benefit associated with equity-based compensation

     3,283        2,667   

Less: Capital expenditures for property and equipment

     (67,445     (87,541

Less: Distributions to noncontrolling interests

     (94     (198

Adjustment:

    

Corporate office relocation, net of taxes (a)

     6,024        1,671   
  

 

 

   

 

 

 

Adjusted free cash flow

   $ 148,341      $ 175,654   
  

 

 

   

 

 

 

As % of revenues

     18.8     18.7

 

(a) Reflects the addback of third party expenses and reimbursable advances to employees associated with the relocation of our corporate headquarters from California to Texas.

 

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NON-GAAP RECONCILIATION SCHEDULE (continued)

(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. Management uses adjusted net income and adjusted net income per diluted share 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 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 excludes items that have an impact on the Company’s 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. Other companies may calculate adjusted net income and adjusted net income per diluted share differently.

 

     Three months ended
June 30,
     Six months ended
June 30,
 
     2012     2013      2012      2013  

Reported net income attributable to Waste Connections

   $ 42,415      $ 43,967       $ 73,719       $ 85,523   

Adjustments:

          

Amortization of intangibles, net of taxes (a)

     3,855        3,835         7,346         7,811   

Acquisition-related expenses, net of taxes (b)

     237        1,248         1,338         1,540   

Loss (gain) on disposal of assets, net of taxes (c)

     (151     2,127         292         1,928   

Corporate relocation expenses, net of taxes (d)

     1,854        167         2,924         261   

Loss on prior corporate office lease, net of taxes (e)

     —          6,483         —           6,483   

NEO one-time equity grants, net of taxes (f)

     —          —           3,315         —     
  

 

 

   

 

 

    

 

 

    

 

 

 

Adjusted net income attributable to Waste Connections

   $ 48,210      $ 57,827       $ 88,934       $ 103,546   
  

 

 

   

 

 

    

 

 

    

 

 

 

Diluted earnings per common share attributable to Waste Connections common stockholders:

          

Reported net income

   $ 0.34      $ 0.35       $ 0.61       $ 0.69   
  

 

 

   

 

 

    

 

 

    

 

 

 

Adjusted net income

   $ 0.39      $ 0.47       $ 0.74       $ 0.84   
  

 

 

   

 

 

    

 

 

    

 

 

 

 

(a) Reflects the elimination of the non-cash amortization of acquisition-related intangible assets.
(b) Reflects the elimination of acquisition-related expenses, including transaction costs and adjustments to the fair value of contingent consideration.
(c) Reflects the elimination of a loss (gain) on disposal of assets.
(d) Reflects the addback of costs associated with the relocation of the Company’s corporate headquarters from California to Texas.
(e) Reflects the addback of the loss on the prior corporate office lease resulting from the relocation of the Company’s corporate headquarters from California to Texas.
(f) Reflects the addback of one-time equity compensation expense incurred at the time our NEOs’ employment contracts were modified.

 

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