News Releases

- Revenue of $1.370 billion, up 10.5%
- Reports 6.0% solid waste price + volume growth, exceeding high end of outlook
- Net income attributable to Waste Connections of $148.8 million, or $0.56 per share
- Adjusted net income attributable to Waste Connections* of $181.3 million, or $0.69 per share
- Adjusted EBITDA* of $425.3 million, or 31.1% of revenue
- YTD net cash provided by operating activities of $753.0 million
- YTD adjusted free cash flow* of $503.9 million, or 19.3% of revenue
- YTD acquired annualized revenue of approximately $160 million

TORONTO, July 29, 2019 /PRNewswire/ -- Waste Connections, Inc. (TSX/NYSE: WCN) ("Waste Connections" or the "Company") today announced its results for the second quarter of 2019. 

"Solid waste pricing growth of over 5%, along with a sequential 200 basis points increase in solid waste volumes, drove underlying solid waste collection, transfer and disposal margin expansion of approximately 70 basis points in the quarter.  This helped offset a portion of the impact from lower than expected contributions from higher margin, commodity-related activities, primarily recycling and renewable fuels, and the dilutive margin impact of acquisitions completed since the prior year period.  Our team delivered on the commitments within their control, but the ongoing erosion in recycled commodity values and a precipitous drop in renewable fuel credits impacted overall results," said Worthing F. Jackman, President and Chief Executive Officer.  "In spite of these commodity-related headwinds, we have already generated adjusted free cash flow* of more than $500 million, putting us on track to meet our original expectation for underlying adjusted free cash flow* for the full year."

Mr. Jackman added, "As anticipated, we have already completed an outsized year of acquisition activity with almost half of the year still ahead of us, as we have closed approximately $160 million in total annualized revenue.  We are particularly pleased with the approximate 65% average reduction in safety-related incidents in the three largest acquisitions completed over the last several months, and we look forward to continued improvement, as we are accelerating the timing to automate the residential fleet in our largest acquired location.  In addition, new contract awards are trending above average.  These wins provide foundations for further growth next year but require incremental capex in the current year, which, along with the accelerated fleet conversion referenced above, totals approximately $35 million, and will impact reported adjusted free cash flow*.  The strength of our financial profile and free cash flow generation keeps us well-positioned for additional acquisitions and organic growth opportunities, while maintaining the flexibility to increase the return of capital to shareholders."

Q2 2019 Results

Revenue in the second quarter totaled $1.370 billion, up from $1.240 billion in the year ago period.  Operating income was $222.1 million; this compares to $210.7 million in the year ago period. 

Net income attributable to Waste Connections in the second quarter was $148.8 million, or $0.56 per share on a diluted basis of 264.5 million shares. In the year ago period, the Company reported net income attributable to Waste Connections of $138.7 million, or $0.52 per share on a diluted basis of 264.3 million shares.

Adjusted net income attributable to Waste Connections* in the second quarter was $181.3 million, or $0.69 per share, versus $172.3 million, or $0.65 per share, in the prior year period.  Adjusted EBITDA* in the second quarter was $425.3 million and 31.1% of revenue, as compared to adjusted EBITDA* of $395.5 million and 31.9% of revenue in the prior year period. 

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

Adjusted net income attributable to Waste Connections, adjusted net income attributable to Waste Connections per diluted share and adjusted EBITDA, all non-GAAP measures, primarily exclude acquisition-related items, as reflected in the detailed reconciliations in the attached tables.

Six Months Year to Date 2019 Results

For the six months ended June 30, 2019, revenue was $2.614 billion, as compared to revenue of $2.380 billion in the year ago period.  Operating income was $407.0 million, which included $31.3 million of expenses primarily related to impairments and other items related to the termination of certain contracts and other acquisition-related costs; this compared to operating income of $399.4 million for the same period in 2018, which included $18.3 million of expenses primarily related to impairments and other items related to the termination of certain contracts and other acquisition-related costs.

Net income attributable to Waste Connections for the six months ended June 30, 2019, was $274.5 million, or $1.04 per share on a diluted basis of 264.4 million shares.  In the year ago period, the Company reported net income attributable to Waste Connections of $263.6 million, or $1.00 per share on a diluted basis of 264.5 million shares. 

Adjusted net income attributable to Waste Connections* for the six months ended June 30, 2019, was $345.2 million, or $1.31 per share, compared to $320.9 million, or $1.21 per share, in the year ago period. Adjusted EBITDA* for the six months ended June 30, 2019, was $811.0 million and 31.0% of revenue, as compared to $752.4 million and 31.6% of revenue in the prior year period. 

Updated 2019 Outlook

Waste Connections also updated its outlook for 2019, which assumes no change in the current economic environment.  The Company's outlook excludes any impact from additional acquisitions that may close during the year, and expensing of transaction-related items.  The outlook provided below is forward looking, and actual results may differ materially depending on risks and uncertainties detailed at the end of this release and in our periodic filings with the U.S. Securities and Exchange Commission and the securities commissions or similar regulatory authorities in Canada. Certain components of the outlook for 2019 are subject to quarterly fluctuations.  See reconciliation in the attached tables.

• Revenue is estimated to be approximately $5.375 billion, as compared to our original revenue outlook of approximately $5.310 billion.
• Net income attributable to Waste Connections is estimated to be approximately $573 million, and adjusted EBITDA* is estimated to be approximately $1.675 billion, or about 31.2% of revenue, as compared to our original adjusted EBITDA* outlook of $1.705 billion.
• Capital expenditures are estimated to be approximately $600 million, as compared to our original capital expenditures outlook of approximately $575 million, due primarily to $35 million of incremental capital expenditures primarily related to contracts awarded during 2019.
• Net cash provided by operating activities is estimated to be approximately $1.510 billion, as compared to our original outlook of $1.525 billion, and adjusted free cash flow*, including the incremental $35 million in capital expenditures noted above, is estimated to be approximately $915 million, or about 17.0% of revenue, as compared to our original adjusted free cash flow* outlook of approximately $950 million.

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

Q2 2019 Conference Call

Waste Connections will be hosting a conference call related to second quarter earnings on July 30^th at 8:30 A.M. Eastern Time.  To access the call, listeners should dial 800-768-9711 (within North America) or 212-231-2912 (international) approximately 10 minutes prior to the scheduled start time and ask the operator for the Waste Connections conference call (a passcode is not required).  A replay of the conference call will be available until August 6, 2019 by calling 800-633-8284 (within North America) or 402-977-9140 (international) and entering Passcode #21925963.  The call will be broadcast live over the Internet through a link on the Company's website at www.wasteconnections.com.  A playback of the call will be available on the Company's website.

Waste Connections will be filing a Form 8-K on EDGAR and on SEDAR (as an "Other" document) prior to markets opening on July 30^th, providing the Company's third quarter 2019 outlook for revenue, price plus volume growth for solid waste and adjusted EBITDA*.

*A non-GAAP measure.

About Waste Connections

Waste Connections is an integrated solid waste services company that provides non-hazardous waste collection, transfer, disposal and recycling services in mostly exclusive and secondary markets in the United States and Canada.  Through its R360 Environmental Solutions subsidiary, Waste Connections 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 seven million residential, commercial, industrial, and exploration and production customers in 42 states in the U.S., and six provinces in Canada.  The Company also provides intermodal services for the rail haul movement of cargo and solid waste containers in the Pacific Northwest.

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 (905) 532-7510.  Investors can also obtain these materials and other documents filed with the U.S. Securities and Exchange Commission ("SEC") and the Canadian securities regulators free of charge at the SEC's website, www.sec.gov, and at the System for Electronic Document Analysis and Retrieval maintained by the Canadian Securities Administrators at www.sedar.com.

Safe Harbor and Forward-Looking Information

This press release contains forward-looking statements within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995 ("PSLRA"), including "forward-looking information" within the meaning of applicable Canadian securities laws. These forward-looking statements are neither historical facts nor assurances of future performance and reflect Waste Connections' current beliefs and expectations regarding future events and operating performance. These forward-looking statements are often identified by the words "may," "might," "believes," "thinks," "expects," "estimate," "continue," "intends" or other words of similar meaning. All of the forward-looking statements included in this press release are made pursuant to the safe harbor provisions of the PSLRA and applicable securities laws in Canada. Forward-looking statements involve risks and uncertainties. Forward-looking statements in this press release include, but are not limited to, statements about expected 2019 financial results, outlook and related assumptions, adjusted free cash flow, capital expenditures, potential acquisition activity and return of capital to shareholders. Important factors that could cause actual results to differ, possibly materially, from those indicated by the forward-looking statements include, but are not limited to, risk factors detailed from time to time in the Company's filings with the SEC and the securities commissions or similar regulatory authorities in Canada.  You should not place undue reliance on forward-looking statements, which speak only as of the date of this press release.  Waste Connections undertakes no obligation to update the forward-looking statements set forth in this press release, whether as a result of new information, future events, or otherwise, unless required by applicable securities laws.

– financial tables attached –

CONTACT:

Mary Anne Whitney / (832) 442-2253

ADDITIONAL STATISTICS
(in thousands of U.S. dollars, except where noted)

Solid Waste Internal Growth: The following table reflects a breakdown of the components of our solid waste internal growth for the three months ended June 30, 2019: 

Revenue Breakdown: The following table reflects a breakdown of our revenue for the three month periods ended June 30, 2018 and 2019:

Contribution from Acquisitions: The following table reflects revenues from solid waste acquisitions, net of divestitures, for the three month periods ended June 30, 2018 and 2019:

ADDITIONAL STATISTICS (continued)
(in thousands of U.S. dollars, except where noted)

Other Cash Flow Items: The following table reflects cash interest and cash taxes for the three and six month periods ended June 30, 2018 and 2019:

Debt to Book Capitalization as of June 30, 2019:  38%

Internalization for the three months ended June 30, 2019:  55%

Days Sales Outstanding for the three months ended June 30, 2019:  44 (31 net of deferred revenue)

Share Information for the three months ended June 30, 2019:

NON-GAAP RECONCILIATION SCHEDULE
(in thousands of U.S. dollars, except where noted)

Reconciliation of Adjusted EBITDA:

Adjusted EBITDA, a non-GAAP financial measure, is provided supplementally because it is widely used by investors as a performance and valuation measure in the solid waste industry.  Management uses adjusted EBITDA as one of the principal measures to evaluate and monitor the ongoing financial performance of Waste Connections' operations.  Waste Connections defines adjusted EBITDA as net income attributable to Waste Connections, plus or minus net income (loss) attributable to noncontrolling interests, plus income tax provision, plus interest expense, less interest income, plus depreciation and amortization expense, plus closure and post-closure accretion expense, plus or minus any loss or gain on impairments and other operating items, plus other expense, less other income, plus foreign currency transaction loss, less foreign currency transaction gain.  Waste Connections further adjusts this calculation to exclude the effects of other items management believes impact the ability to assess the operating performance of its business.  This measure is not a substitute for, and should be used in conjunction with, GAAP financial measures.  Other companies may calculate adjusted EBITDA differently. 

NON-GAAP RECONCILIATION SCHEDULE (continued)
(in thousands of U.S. dollars, except where noted)

Reconciliation of Adjusted Free Cash Flow:

Adjusted free cash flow, a non-GAAP financial measure, is provided supplementally because it is widely used by investors as a 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 Waste Connections' operations.  Waste Connections defines adjusted free cash flow as net cash provided by operating activities, plus or minus change in book overdraft, plus proceeds from disposal of assets, less capital expenditures for property and equipment and distributions to noncontrolling interests.  Waste Connections 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 of U.S. dollars, except per share amounts)

Reconciliation of Adjusted Net Income attributable to Waste Connections and Adjusted Net Income per Diluted Share attributable to Waste Connections:

Adjusted net income attributable to Waste Connections and adjusted net income per diluted share attributable to Waste Connections, both non-GAAP financial measures, are provided supplementally because they are widely used by investors as a valuation measure in the solid waste industry.  Management uses adjusted net income attributable to Waste Connections and adjusted net income per diluted share attributable to Waste Connections as one of the principal measures to evaluate and monitor the ongoing financial performance of Waste Connections' operations.  Waste Connections provides adjusted net income attributable to Waste Connections to exclude the effects of items management believes impact the comparability of operating results between periods.  Adjusted net income attributable to Waste Connections has limitations due to the fact that it excludes items that have an impact on the Company's financial condition and results of operations.  Adjusted net income attributable to Waste Connections and adjusted net income per diluted share attributable to Waste Connections are not a substitute for, and should be used in conjunction with, GAAP financial measures.  Other companies may calculate these non-GAAP financial measures differently. 

SOURCE Waste Connections, Inc.