News Releases

THE WOODLANDS, Texas, Feb. 9, 2015 /PRNewswire/ -- Waste Connections, Inc. (NYSE: WCN) today announced its results for the fourth quarter of 2014.  Revenue totaled $526.2 million, an 8.3% increase over revenue of $485.9 million in the year ago period.  Operating income was $114.0 million compared to $99.4 million in the fourth quarter of 2013.  Adjusted EBITDA* in the fourth quarter was $178.2 million, or 33.9% of revenue, compared to $164.5 million, or 33.9% of revenue, in the prior year period.  Adjusted EBITDA, a non-GAAP measure, excludes the impact of items such as impairments and other operating charges or gains, and acquisition-related costs, as shown in the detailed reconciliation in the attached table.

Net income attributable to Waste Connections in the quarter was $60.8 million, or $0.49 per share on a diluted basis of 124.8 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 124.4 million shares.

Adjusted net income attributable to Waste Connections* in the quarter was $63.3 million, or $0.51 per share, versus $54.5 million, or $0.44 per share, in the prior year period.  Adjusted net income and adjusted net income per diluted share, both non-GAAP measures, exclude certain items net of tax, as shown in the detailed reconciliation in the attached table, that affect comparability of results between periods.

"Q4 capped off an exceptional year for Waste Connections, with solid waste volume growth and increased E&P disposal activity once again driving better than expected revenue in the period and providing strong momentum into 2015.  More importantly, the quality of revenue growth in 2014 enabled us to expand margins and deliver over $320 million of adjusted free cash flow* despite a record amount of capital expenditures in the year, including the construction of three new disposal facilities and pulling forward an additional $20 million of capital expenditures to take advantage of the extension of bonus depreciation enacted late in the year," said Ronald J. Mittelstaedt, Chairman and Chief Executive Officer. 

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

Mr. Mittelstaedt added, "As we look at 2015, we believe our solid waste business is well positioned for continued strength in organic growth and margin expansion.  E&P waste activity will undoubtedly be impacted by the recent precipitous drop in crude oil prices.  But just as we outperformed macro E&P spending activity in 2014 with our E&P waste revenue growth up over 20%, we believe we are also well positioned to outperform any macro decrease in E&P spending activity in 2015 given our asset positioning within each basin and the additional facilities we have either opened or acquired that were not reflected in full year 2014 results.  Regardless of the actual level of E&P activity in 2015, we believe the strong free cash flow generative characteristics of our solid waste and E&P waste businesses should position us for double-digit free cash flow growth in 2015." 

Mr. Mittelstaedt concluded, "With over $350 million of free cash flow expected in the upcoming year, we have the flexibility to fund additional growth opportunities and increase the return of capital to stockholders.  To that end, we are pleased to announce additional acquisitions in both solid waste and E&P waste with combined revenue of approximately $30 million completed in January, and the recent resumption of our share repurchase program."

For the year ended December 31, 2014, revenue was $2.08 billion, a 7.8% increase over revenue of $1.93 billion in 2013.  Operating income was $449.3 million compared to $393.4 million in the prior year.  Adjusted EBITDA* in 2014 was $717.1 million, or 34.5% of revenue, compared to $657.0 million, or 34.1% of revenue, in the prior year.

Net income attributable to Waste Connections in 2014 was $232.5 million, or $1.86 per share on a diluted basis of 124.8 million shares.  In 2013, the Company reported net income attributable to Waste Connections of $195.7 million, or $1.58 per share on a diluted basis of 124.2 million shares.  Adjusted net income attributable to Waste Connections* in 2014 was $254.2 million, or $2.04 per share, compared to $221.7 million, or $1.79 per share, in the prior year.

2015 OUTLOOK

Waste Connections also announced its outlook for 2015, which assumes no change in the current economic environment and an estimated 25% to 30% year-over-year reduction in E&P linear feet drilled.  The Company's outlook excludes the impact of any additional acquisitions and expensing of acquisition-related transaction costs.  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 SEC filings.  Certain components of the outlook for 2015 are subject to quarterly fluctuations.

• Revenue is estimated to be approximately $2.15 billion, of which $260 million to $275 million is expected to be E&P waste-related.
• Adjusted EBITDA* is estimated to be between 33.5% and 34.0% of revenue, the components of which as a percentage of revenue are as follows:
  • Operating income is estimated to be between 21.0% and 21.5% of revenue;
  • Depreciation and depletion expense is estimated to be approximately 11.2% of revenue;
  • Amortization of intangibles expense is estimated to be approximately 1.25% of revenue; and,
  • Closure and post-closure accretion expense is estimated to be approximately 0.15% of revenue.
• Net interest expense is estimated to be approximately $60 million.
• Effective tax rate is expected to be approximately 39.4%.
• Noncontrolling interests is estimated to reduce net income by approximately $0.5 million.
• Net cash provided by operating activities is estimated to be approximately 26.0% of revenue.
• Capital expenditures are estimated to be between $200 million and $210 million.

CONFERENCE CALL

Waste Connections will be hosting a conference call related to fourth quarter earnings and 2015 outlook on February 10^th 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.

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

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 is also a leading provider of non-hazardous oilfield waste treatment, recovery and disposal services in several of the most active natural resource producing areas in the United States, including the Permian, Bakken and Eagle Ford Basins.  Waste Connections serves more than two million residential, commercial, industrial, and exploration and production customers from a network of operations in 32 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.

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.

Information Regarding Forward-Looking Statements

Certain statements contained in this release are forward-looking in nature, including statements related to: the Company's expected 2015 financial results, capital expenditures, outlook and related assumptions, including expectations with respect to E&P linear feet drilled and the impact of crude oil prices on E&P waste activity, and the Company's ability to generate adjusted free cash flow; trends in our business; the expected contribution from recently completed acquisitions; expected acquisition activity; the Company's ability to finance additional acquisitions and newly permitted E&P waste facilities; and the Company's ability to grow and expand margins.  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) negative trends or volatility in crude oil prices may adversely affect the level of exploration, development and production activity of E&P companies and the demand for our E&P waste services; (2) our results are vulnerable to economic conditions; (3) our E&P waste business depends on the willingness of E&P companies to outsource their waste services activities; (4) 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; (5) our financial and operating performance may be affected by the inability to renew landfill operating permits, obtain new landfills and expand existing ones; (6) competition for acquisition candidates, consolidation within the waste industry and economic and market conditions may limit our ability to grow through acquisitions; (7) our indebtedness could adversely affect our financial condition and limit our financial flexibility; (8) price increases may not be adequate to offset the impact of increased costs, or may cause us to lose volume; (9) fluctuations in prices for recycled commodities that we sell and rebates we offer to customers may cause our revenues and operating results to decline; (10) we have limited experience in running an E&P waste treatment, recovery and disposal business; (11) the seasonal nature of our business and "event-driven" waste projects cause our results to fluctuate; (12) we may lose contracts through competitive bidding, early termination or governmental action; (13) alternatives to landfill disposal may cause our revenues and operating results to decline; (14) increases in labor costs could impact our financial results; (15) increases in the price of diesel or compressed natural gas fuel may adversely affect our collection business and reduce our operating margins; (16) labor union activity could divert management attention and adversely affect our operating results; (17) 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; (18) our financial results could be adversely affected by impairments of goodwill or indefinite-lived intangibles; (19) pending or future litigation or governmental proceedings could result in material adverse consequences, including judgments or settlements; (20) 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; (21) increases in insurance costs and the amount that we self-insure for various risks could reduce our operating margins and reported earnings; (22) we rely on computer systems to run our business and disruptions or privacy breaches in these systems could impact our ability to service our customers and adversely affect our financial results, damage our reputation, and expose us to litigation risk; (23) a portion of our growth and future financial performance depends on our ability to integrate acquired businesses, and the success of our acquisitions; (24) each business that we acquire or have acquired may have liabilities or risks that we fail or are unable to discover, or that become more adverse to our business than we anticipated at the time of acquisition; (25) extensive and evolving environmental, health and safety laws and regulations may restrict our operations and growth and increase our costs; (26) our E&P waste business could be adversely affected by changes in laws regulating E&P waste; (27) 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; (28) future changes in laws regulating the flow of solid waste in interstate commerce could adversely affect our operating results;.(29) extensive regulations that govern the design, operation and closure of landfills may restrict our landfill operations or increase our costs of operating landfills; (30) our financial results are based upon estimates and assumptions that may differ from actual results; (31) our accruals for our landfill site closure and post-closure costs may be inadequate; (32) we depend significantly on the services of the members of our senior and regional management team, and the departure of any of those persons could cause our operating results to suffer; (33) our decentralized decision-making structure could allow local managers to make decisions that adversely affect our operating results; (34) liabilities for environmental damage may adversely affect our financial condition, business and earnings; and (35) 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.  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 –

Debt to Book Capitalization as of December 31, 2014:  47%

Internalization for the three months ended December 31, 2014:  53%

Days Sales Outstanding for the three months ended December 31, 2014:  45 (31 net of deferred revenue)

Share Information for the three months ended December 31, 2014:

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 net income, plus income tax provision, plus interest expense, plus depreciation and amortization expense, plus closure and post-closure accretion expense, plus or minus any impairments and other operating charges or gains, plus other expense, less other income.  The Company further adjusts this calculation to exclude the effects of other items management believes impact the ability to assess the operating performance of our business.  This measure is not a substitute for, and should be used in conjunction with, GAAP financial measures.  Other companies may calculate adjusted EBITDA differently.

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. 

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. 

Logo - http://photos.prnewswire.com/prnh/20140128/SF54441LOGO

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/waste-connections-reports-fourth-quarter-results-and-provides-2015-outlook-300032931.html

SOURCE Waste Connections, Inc.