Waste Connections Reports Third Quarter 2013 Results
THE WOODLANDS, TX -- (Marketwired) -- 10/22/13 --
Revenue of $503.6 million, up 18.3%
Double digit increase in landfill volumes drives 2.2% organic solid waste volume growth
Adjusted EBITDA* of $177.1 million, or 35.2% of revenue, up 28.0%
GAAP EPS of $0.49 and adjusted EPS* of $0.51, up 18.6%
YTD net cash provided by operating activities of $385.4 million
YTD adjusted free cash flow* increases 17.6% to $263.4 million, or 18.3% of revenue
Announces $25 million revenue follow-on acquisition in Minnesota
Waste Connections, Inc. (NYSE: WCN) today announced its results for the third quarter of 2013. Revenue totaled $503.6 million, an 18.3% increase over revenue of $425.7 million in the year ago period. Operating income was $115.6 million compared to $89.1 million in the third quarter of 2012. Operating income in the current year period included approximately $1.7 million ($1.1 million net of taxes) associated with gains on the disposal of assets and on the Company's prior office leases resulting primarily from the relocation of our corporate headquarters from California to Texas. Adjusted EBITDA* in the third quarter of 2013 was $177.1 million, up 28.0% over adjusted EBITDA* of $138.3 million in the prior year period. Adjusted EBITDA, a non-GAAP measure, excludes the impact of items such as gains on both the disposal of assets and from litigation settlements, 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 $60.7 million, or $0.49 per share on a diluted basis of 124.3 million shares. In the year ago period, the Company reported net income attributable to Waste Connections of $49.4 million, or $0.40 per share on a diluted basis of 123.7 million shares.
Adjusted net income attributable to Waste Connections* in the quarter was $63.7 million or $0.51 per share versus $53.2 million, or $0.43 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 gains on both the disposal of assets and from litigation settlements, 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.
"Double digit increases in municipal solid waste disposal volumes and continuing improvement in roll off activity enabled us once again to meet or exceed the upper end of our expectations for the quarter. Strong solid waste organic growth and roll over contribution from the R360 acquisition drove 18% and 28% year-over-year increases in the third quarter for revenue and adjusted EBITDA. Our strong operating performance and free cash flow generation positioned us to increase our dividend 15% and pull forward almost $10 million of next year's landfill equipment purchases into the fourth quarter of this year to take advantage of bonus depreciation tax benefits, in addition to the previously discussed accelerated CNG fleet purchases," said Ronald J. Mittelstaedt, Chairman and Chief Executive Officer. "As anticipated, acquisition activity has increased as we approach year-end. In October, we signed an agreement to acquire an approximate $25 million annual revenue collection operation in Minnesota's Twin Cities region, expanding our footprint in that market following the SKB transfer and landfill acquisition completed last year."
* A non-GAAP measure; see accompanying Non-GAAP Reconciliation Schedule.
Mr. Mittelstaedt added, "While it's early to discuss our formal outlook for 2014, we believe the upcoming year is already setting up nicely. Continued pricing strength and positive volumes within solid waste and an expected double digit growth in E&P waste from both new development projects and increased activity from customer conversions to offsite facilities, should result in an approximate 50 basis points year-over-year expansion in adjusted EBITDA margins, excluding the impact of acquisitions. The newly announced Minnesota transaction, combined with other municipal solid waste and E&P waste acquisitions we expect to complete later this year and next, provide incremental growth for 2014."
For the nine months ended September 30, 2013, revenue was $1.44 billion, a 19.0% increase over revenue of $1.21 billion in the year ago period. Operating income was $295.6 million compared to $235.9 million for the same period in 2012. Adjusted EBITDA* for the nine months ended September 30, 2013, was $492.5 million, up 27.5% over adjusted EBITDA* of $386.1 million in the prior year period. Net income attributable to Waste Connections for the nine months ended September 30, 2013, was $146.2 million, or $1.18 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 $123.1 million, or $1.02 per share on a diluted basis of 121.2 million shares. Adjusted net income attributable to Waste Connections* for the nine months ended September 30, 2013, was $167.3 million, or $1.35 per share, compared to $142.2 million, or $1.17 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 third quarter earnings and fourth quarter outlook on October 23rd 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
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 pricing strength and waste volume growth, expectations with respect to E&P waste and customer activity, the timing, cost and tax impacts of landfill equipment and CNG fleet purchases, and expectations regarding incremental growth. 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 -
|
|
|
|
WASTE CONNECTIONS, INC. |
|
|
CONDENSED CONSOLIDATED STATEMENTS OF INCOME |
|
|
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2012 AND 2013 |
|
|
(Unaudited) |
|
|
(in thousands, except share and per share amounts) |
|
|
|
|
|
|
|
Three months ended September 30, |
|
|
Nine months ended September 30, |
|
|
|
|
2012 |
|
|
2013 |
|
|
2012 |
|
|
2013 |
|
|
Revenues |
|
$ |
425,654 |
|
|
$ |
503,646 |
|
|
$ |
1,212,815 |
|
|
$ |
1,442,918 |
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of operations |
|
|
243,243 |
|
|
|
274,141 |
|
|
|
698,351 |
|
|
|
794,588 |
|
|
|
Selling, general and administrative |
|
|
47,977 |
|
|
|
53,536 |
|
|
|
143,899 |
|
|
|
159,690 |
|
|
|
Depreciation |
|
|
42,313 |
|
|
|
55,863 |
|
|
|
119,331 |
|
|
|
162,277 |
|
|
|
Amortization of intangibles |
|
|
6,267 |
|
|
|
6,211 |
|
|
|
18,115 |
|
|
|
18,861 |
|
|
|
Loss (gain) on disposal of assets |
|
|
244 |
|
|
|
(1,129 |
) |
|
|
715 |
|
|
|
1,993 |
|
|
|
Gain from litigation settlement |
|
|
(3,537 |
) |
|
|
- |
|
|
|
(3,537 |
) |
|
|
- |
|
|
|
Loss (gain) on prior office leases |
|
|
- |
|
|
|
(596 |
) |
|
|
- |
|
|
|
9,902 |
|
|
Operating income |
|
|
89,147 |
|
|
|
115,620 |
|
|
|
235,941 |
|
|
|
295,607 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
(11,949 |
) |
|
|
(17,911 |
) |
|
|
(36,063 |
) |
|
|
(55,851 |
) |
|
Other income (expense), net |
|
|
|
