News Releases

Waste Connections Reports Second Quarter 2022 Results And Raises Full Year Outlook
  • Accelerating solid waste pricing growth and E&P waste activity drive better than expected Q2 results
  • Revenue of $1.816 billion, up 18.4%
  • Net income(a) of $224.1 million, and adjusted EBITDA(b) of $566.8 million, up 16.9%
  • Adjusted EBITDA(b) margin of 31.2% of revenue, in line with outlook and flat year over year, excluding acquisitions
  • Net income of $0.87 per share, and adjusted net income(b) of $1.00 per share, up 23.5%
  • Year to date net cash provided by operating activities of $973.7 million and adjusted free cash flow(b) of $638.4 million, or 18.4% of revenue
  • Year to date signed or closed acquisitions with approximately $470 million of total annualized revenue
  • Increases full year 2022 outlook to revenue of approximately $7.125 billion, net income of approximately $837.5 million, adjusted EBITDA(b) of approximately $2.190 billion, net cash provided by operating activities of approximately $1.974 billion and adjusted free cash flow(b) of approximately $1.160 billion

 

TORONTO, Aug. 2, 2022 /PRNewswire/ -- Waste Connections, Inc. (TSX/NYSE: WCN) ("Waste Connections" or the "Company") today announced its results for the second quarter of 2022 and updated its outlook for 2022. 

"Accelerating solid waste pricing and E&P waste activity drove a top-to-bottom beat in the period.  Solid waste pricing growth of 8.8% enabled us to overcome increased inflationary pressures during the period and deliver adjusted EBITDA(b) margin in line with our outlook for Q2 and flat on a year over year basis excluding the margin dilutive impact from acquisitions completed since the year ago period," said Worthing F. Jackman, President and Chief Executive Officer. 

"Our outperformance in the first half of 2022, expected further sequential increases in solid waste pricing growth, continuing strength in E&P waste activity, and acquisitions closed year to date, position us to update our outlook for the full year to revenue of approximately $7.125 billion, adjusted EBITDA(b) of approximately $2.190 billion and adjusted free cash flow(b) of approximately $1.160 billion, exceeding our initial outlook as provided in February and another reflection of our culture of accountability in a challenging operating environment."

Mr. Jackman added, "As anticipated, acquisition activity is pacing well above average.  We have closed approximately $245 million in annualized revenues, with another approximately $225 million in total annualized revenue under definitive agreements expected to close during the third quarter, subject to customary closing conditions, and our pipeline remains quite robust.  As such, we believe we are well-positioned for double digit revenue growth in 2023 along with margin expansion from continuing solid waste pricing strength and rollover contribution from acquisitions already signed or closed year to date; additional acquisitions expected to close later this year and early next year would provide further growth." 

Q2 2022 Results

Revenue in the second quarter totaled $1.816 billion, up from $1.534 billion in the year ago period.  Operating income was $329.6 million, which included $6.8 million primarily in impairments and other operating items.  This compares to operating income of $266.8 million in the second quarter of 2021, which included $12.5 million primarily related to fair value accounting changes to equity awards.  Net income in the second quarter was $224.1 million, or $0.87 per share on a diluted basis of 257.7 million shares.  In the year ago period, the Company reported net income of $177.0 million, or $0.68 per share on a diluted basis of 261.4 million shares. 

Adjusted net income(b) in the second quarter was $257.1 million, or $1.00 per diluted share, versus $210.9 million, or $0.81 per diluted share, in the prior year period.  Adjusted EBITDA(b) in the second quarter was $566.8 million, as compared to $484.9 million in the prior year period.  Adjusted net income, adjusted net income per diluted share and adjusted EBITDA, all non-GAAP measures, primarily exclude impairments and acquisition-related items, as reflected in the detailed reconciliations in the attached tables.

Six Months Year to Date Results

For the six months ended June 30, 2022, revenue was $3.463 billion, up from $2.930 billion in the year ago period.  Operating income, which included $13.4 million primarily attributable to transaction-related expenses, was $603.4 million, as compared to operating income of $505.2 million in 2021, which included $14.0 million primarily related to fair value changes in equity awards.   

Net income for the six months ended June 30, 2022 was $404.4 million, or $1.57 per share on a diluted basis of 258.1 million shares.  In the year ago period, the Company reported net income of $337.4 million, or $1.29 per share on a diluted basis of 262.3 million shares. 

Adjusted net income(b) for the six months ended June 30, 2022 was $470.6 million, or $1.82 per diluted share, compared to $396.3 million, or $1.51 per diluted share, in the year ago period. Adjusted EBITDA(b) for the six months ended June 30, 2022 was $1.069  billion, as compared to $918.1 million in the prior year period. 

Updated 2022 Outlook

Waste Connections also updated its outlook for 2022, which assumes no change in the current economic environment or underlying economic trends.  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 2022 are subject to quarterly fluctuations.  See reconciliations in the attached tables.

  • Revenue is estimated to be approximately $7.125 billion, as compared to our original revenue outlook of approximately $6.875 billion.
  • Net income is estimated to be approximately $837.5 million, and adjusted EBITDA(b) is estimated to be approximately $2.190 billion, or about 30.7% of revenue, as compared to our original adjusted EBITDA(b) outlook of $2.145 billion or 31.2% of revenue.
  • Capital expenditures are estimated to be approximately $850 million, in line with our original outlook.
  • Net cash provided by operating activities is estimated to be approximately $1.974 billion, and adjusted free cash flow(b) of approximately $1.160 billion, or about 16.3% of revenue, as compared to our original adjusted free cash flow(b) outlook of $1.150 billion or 16.7% of revenue.

Environmental, Social and Governance

Waste Connections views its Environmental, Social and Governance ("ESG") efforts as integral to its business, with initiatives consistent with its objective of long-term value creation.  In 2020, the Company introduced long-term, aspirational ESG targets and committed over $500 million for investments to meet or exceed such sustainability targets. These investments primarily focus on reducing emissions, increasing resource recovery of both recyclable commodities and clean energy fuels, reducing reliance on off-site disposal for landfill leachate, further improving safety through reduced incidents and enhancing employee engagement through improved voluntary turnover and Servant Leadership scores.  The Company's 2021 Sustainability Report provides progress updates on its targets and investments towards their achievement.  For more information, visit the Waste Connections website at wasteconnections.com/sustainability.

   

 (a) All references to "Net income" refer to the financial statement line item "Net income attributable to Waste Connections"

 (b) A non-GAAP measure; see accompanying Non-GAAP Reconciliation Schedule

 

Q2 2022 Earnings Conference Call

Waste Connections will be hosting a conference call related to second quarter earnings on August 3rd at 8:30 A.M. Eastern Time.  A live audio webcast of the conference call can be accessed by visiting investors.wasteconnections.com and selecting "News & Events" from the website menu. Alternatively, listeners may access the call by dialing 800-747-0365 (within North America) or 212-231-2939 (international) approximately 10 minutes prior to the scheduled start time; a passcode is not required.  A replay of the conference call will be available until August 10, 2022, by calling 800-633-8284 (within North America) or 402-977-9140 (international) and entering Passcode #22019767.

Waste Connections will be filing a Form 8-K on EDGAR and on SEDAR (as an "Other" document) prior to markets opening on August 3rd, providing the Company's third quarter 2022 outlook for revenue, price plus volume growth for solid waste, and adjusted EBITDA(b).

About Waste Connections

Waste Connections is an integrated solid waste services company that provides non-hazardous waste collection, transfer and disposal services, along with resource recovery primarily through recycling and renewable fuels generation.  The Company serves more than eight million residential, commercial and industrial customers in mostly exclusive and secondary markets across 43 states in the U.S. and six provinces in Canada.  Waste Connections also provides non-hazardous oilfield waste treatment, recovery and disposal services in several basins across the U.S., as well as intermodal services for the movement of cargo and solid waste containers in the Pacific Northwest.  For more information, visit Waste Connections at wasteconnections.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 2022 and 2023 financial results, outlook and related assumptions, and potential acquisition activity. 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

 Joe Box / (832) 442-2153

maryannew@wasteconnections.com

 joe.box@wasteconnections.com                  

 

WASTE CONNECTIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF NET INCOME

THREE AND SIX MONTHS ENDED JUNE 30, 2021 AND 2022

(Unaudited)

(in thousands of U.S. dollars, except share and per share amounts)

                           
   

Three months ended
June 30,

 

Six months ended
June 30,

 
   

2021

 

2022

 

2021

 

2022

 
                   

Revenues

 

$

1,533,931

 

$

1,816,435

 

$

2,929,874

 

$

3,462,690

 

Operating expenses:

                         

Cost of operations

   

901,191

   

1,087,892

   

1,727,111

   

2,077,410

 

Selling, general and administrative

   

157,943

   

168,404

   

299,365

   

331,818

 

Depreciation

   

169,221

   

188,937

   

326,624

   

368,887

 

Amortization of intangibles

   

32,707

   

37,462

   

64,899

   

75,098

 

Impairments and other operating items

   

6,081

   

4,150

   

6,715

   

6,028

 

Operating income

   

266,788

   

329,590

   

505,160

   

603,449

 
                           

Interest expense

   

(41,328)

   

(45,079)

   

(83,753)

   

(86,404)

 

Interest income

   

744

   

652

   

1,848

   

790

 

Other income (expense), net

   

(1,235)

   

(2,649)

   

2,312

   

(6,114)

 

Income before income tax provision

   

224,969

   

282,514

   

425,567

   

511,721

 
                           

Income tax provision

   

(47,868)

   

(58,307)

   

(88,159)

   

(107,146)

 

Net income

   

177,101

   

224,207

   

337,408

   

404,575

 

Less: Net income attributable to noncontrolling interests

   

(54)

   

(133)

   

(52)

   

(177)

 

Net income attributable to Waste Connections

 

$

177,047

 

$

224,074

 

$

337,356

 

$

404,398

 
                           

Earnings per common share attributable to Waste Connections' common shareholders:

                         

Basic

 

$

0.68

 

$

0.87

 

$

1.29

 

$

1.57

 
                           

Diluted

 

$

0.68

 

$

0.87

 

$

1.29

 

$

1.57

 
                           

Shares used in the per share calculations:

                         

Basic

   

260,951,405

   

257,179,434

   

261,791,088

   

257,555,033

 

Diluted

   

261,418,573

   

257,736,745

   

262,269,600

   

258,140,714

 
                           
                           

Cash dividends per common share

 

$

0.205

 

$

0.23

 

$

0.41

 

$

0.46

 

 

WASTE CONNECTIONS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in thousands of U.S. dollars, except share and per share amounts)

               
   

December 31,
2021

 

June 30,
2022

 

ASSETS

             

Current assets:

             

Cash and equivalents

 

$

147,441

 

$

217,808

 

Accounts receivable, net of allowance for credit losses of $18,480 and $20,253 at
December 31, 2021 and June 30, 2022, respectively

   

709,614

   

797,877

 

Prepaid expenses and other current assets

   

175,722

   

242,050

 

Total current assets

   

1,032,777

   

1,257,735

 

Restricted cash

   

72,174

   

106,736

 

Restricted investments

   

59,014

   

56,234

 

Property and equipment, net

   

5,721,949

   

5,858,175

 

Operating lease right-of-use assets

   

160,567

   

167,099

 

Goodwill

   

6,187,643

   

6,457,910

 

Intangible assets, net

   

1,350,597

   

1,400,249

 

Other assets, net

   

115,203

   

112,103

 

Total assets

 

$

14,699,924

 

$

15,416,241

 

 

LIABILITIES AND EQUITY

             

Current liabilities:

             

Accounts payable

 

$

392,868

 

$

496,622

 

Book overdraft

   

16,721

   

16,668

 

Deferred revenue

   

273,720

   

305,724

 

Accrued liabilities

   

442,596

   

417,725

 

Current portion of operating lease liabilities

   

38,017

   

35,101

 

Current portion of contingent consideration

   

62,804

   

59,371

 

Current portion of long-term debt and notes payable

   

6,020

   

6,342

 

Total current liabilities

   

1,232,746

   

1,337,553

 
               

Long-term portion of debt and notes payable

   

5,040,500

   

5,633,524

 

Long-term portion of operating lease liabilities

   

129,628

   

139,191

 

Long-term portion of contingent consideration

   

31,504

   

31,264

 

Deferred income taxes

   

850,921

   

994,766

 

Other long-term liabilities

   

421,080

   

410,281

 

Total liabilities

   

7,706,379

   

8,546,579

 

Commitments and contingencies

             

Equity:

             

Common shares: 260,283,158 shares issued and 260,212,496 shares outstanding at
    December 31, 2021; 257,166,050 shares issued and 257,100,591 shares outstanding at
    June 30, 2022

   

3,693,027

   

3,270,242

 

Additional paid-in capital

   

199,482

   

210,767

 

Accumulated other comprehensive income

   

39,584

   

41,438

 

Treasury shares: 70,662 and 65,459 shares at December 31, 2021 and June 30, 2022,
     respectively

   

-

   

-

 

Retained earnings

   

3,056,845

   

3,342,431

 

Total Waste Connections' equity

   

6,988,938

   

6,864,878

 

Noncontrolling interest in subsidiaries

   

4,607

   

4,784

 

Total equity

   

6,993,545

   

6,869,662

 
   

$

14,699,924

 

$

15,416,241

 

 

WASTE CONNECTIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

SIX MONTHS ENDED JUNE 30, 2021 AND 2022

(Unaudited)

(in thousands of U.S. dollars)

               
   

Six months ended June 30,

 
   

2021

 

2022

 

Cash flows from operating activities:

             

Net income

 

$

337,408

 

$

404,575

 

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

             

Loss on disposal of assets and impairments

   

6,229

   

6,048

 

Depreciation

   

326,624

   

368,887

 

Amortization of intangibles

   

64,899

   

75,098

 

Deferred income taxes, net of acquisitions

   

3,520

   

84,991

 

Current period provision for expected credit losses

   

4,903

   

6,907

 

Amortization of debt issuance costs

   

2,689

   

2,484

 

Share-based compensation

   

28,724

   

27,716

 

Interest accretion

   

8,199

   

8,798

 

Payment of contingent consideration recorded in earnings

   

(520)

   

-

 

Adjustments to contingent consideration

   

89

   

(1,030)

 

Other

   

(1,118)

   

(2,173)

 

Net change in operating assets and liabilities, net of acquisitions

   

66,832

   

(8,623)

 

Net cash provided by operating activities

   

848,478

   

973,678

 
               

Cash flows from investing activities:

             

Payments for acquisitions, net of cash acquired

   

(67,493)

   

(546,982)

 

Capital expenditures for property and equipment

   

(271,392)

   

(371,428)

 

Proceeds from disposal of assets

   

7,906

   

16,894

 

Other

   

(1,815)

   

9,566

 

Net cash used in investing activities

   

(332,794)

   

(891,950)

 
               

Cash flows from financing activities:

             

Proceeds from long-term debt

   

311,000

   

1,517,732

 

Principal payments on notes payable and long-term debt

   

(267,050)

   

(920,107)

 

Payment of contingent consideration recorded at acquisition date

   

(5,595)

   

(8,898)

 

Change in book overdraft

   

(190)

   

(54)

 

Payments for repurchase of common shares

   

(305,640)

   

(424,999)

 

Payments for cash dividends

   

(107,330)

   

(118,812)

 

Tax withholdings related to net share settlements of equity-based compensation

   

(18,510)

   

(17,266)

 

Debt issuance costs

   

-

   

(4,668)

 

Proceeds from issuance of shares under employee share purchase plan

   

-

   

1,554

 

Proceeds from sale of common shares held in trust

   

131

   

660

 

Net cash provided by (used in) financing activities

   

(393,184)

   

25,142

 
               

Effect of exchange rate changes on cash, cash equivalents and restricted cash

   

873

   

(1,941)

 
               

Net increase in cash, cash equivalents and restricted cash

   

123,373

   

104,929

 

Cash, cash equivalents and restricted cash at beginning of period

   

714,389

   

219,615

 

Cash, cash equivalents and restricted cash at end of period

 

$

837,762

 

$

324,544

 

 

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 and six month periods ended June 30, 2022:    

         
   

Three months ended

June 30, 2022

 

Six months ended

June 30, 2022

Core Price

   

7.2 %

   

6.8 %

Surcharges

   

1.6 %

   

1.2 %

Volume

   

(0.7 %)

   

(0.1 %)

Recycling

   

0.4 %

   

0.7 %

Foreign Exchange Impact

   

(0.5 %)

   

(0.3 %)

Total

   

8.0 %

   

8.3 %

 

Revenue Breakdown: The following table reflects a breakdown of our revenue for the three month periods ended June 30, 2021
and 2022:

                           
   

 Three months ended June 30, 2021

 
   

Revenue

 

Inter-company
Elimination

 

Reported
Revenue

 

%

Solid Waste Collection

 

$

1,098,319

 

$

(3,232)

 

$

1,095,087

 

71.4

%

Solid Waste Disposal and Transfer

   

544,257

   

(215,481)

   

328,776

 

21.4

%

Solid Waste Recycling

   

41,539

   

(1,113)

   

40,426

 

2.7

%

E&P Waste Treatment, Recovery and Disposal

   

34,607

   

(3,454)

   

31,153

 

2.0

%

Intermodal and Other

   

38,590

   

(101)

   

38,489

 

2.5

%

Total

 

$

1,757,312

 

$

(223,381)

 

$

1,533,931

 

100.0

%

 

   

 Three months ended June 30, 2022

 
   

Revenue

 

Inter-company
Elimination

 

Reported
Revenue

 

%

Solid Waste Collection

 

$

1,297,402

 

$

(3,391)

 

$

1,294,011

 

71.2

%

Solid Waste Disposal and Transfer

   

601,194

   

(238,162)

   

363,032

 

20.0

%

Solid Waste Recycling

   

67,504

   

(2,823)

   

64,681

 

3.6

%

E&P Waste Treatment, Recovery and Disposal

   

54,155

   

(3,712)

   

50,443

 

2.8

%

Intermodal and Other

   

46,310

   

(2,042)

   

44,268

 

2.4

%

Total

 

$

2,066,565

 

$

(250,130)

 

$

1,816,435

 

100.0

%

 

Contribution from Acquisitions: The following table reflects revenues from acquisitions, net of divestitures, for the three and six
month periods ended June 30, 2021 and 2022:

                         
   

Three months ended
June 30,

 

Six months ended
June 30,

   

2021

 

2022

 

2021

 

2022

Acquisitions, net

 

$

44,125

 

$

141,356

 

$

84,666

 

$

251,363

 

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, 2021 and 2022:

                         
   

Three months ended
June 30,

 

Six months ended
June 30,

   

2021

 

2022

 

2021

 

2022

Cash Interest Paid

 

$

56,516

 

$

43,853

 

$

81,962

 

$

76,013

Cash Taxes Paid

   

32,072

   

20,423

   

60,693

   

37,812

 

Debt to Book Capitalization as of June 30, 2022:  45%

 

Internalization for the three months ended June 30, 2022:  55%

 

Days Sales Outstanding for the three months ended June 30, 2022:  40 (25 net of deferred revenue)

 

Share Information for the three months ended June 30, 2022:

     

Basic shares outstanding

 

257,179,434

Dilutive effect of equity-based awards 

 

557,311

Diluted shares outstanding

 

257,736,745

 

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.  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. 

                         
   

Three months ended
June 30,

 

Six months ended
June 30,

   

2021

 

2022

 

2021

 

2022

Net income attributable to Waste Connections

 

$

177,047

 

$

224,074

 

$

337,356

 

$

404,398

Plus: Net income attributable to noncontrolling interests

   

54

   

133

   

52

   

177

Plus: Income tax provision

   

47,868

   

58,307

   

88,159

   

107,146

Plus: Interest expense

   

41,328

   

45,079

   

83,753

   

86,404

Less: Interest income

   

(744)

   

(652)

   

(1,848)

   

(790)

Plus: Depreciation and amortization

   

201,928

   

226,399

   

391,523

   

443,985

Plus: Closure and post-closure accretion

   

3,666

   

3,992

   

7,375

   

8,087

Plus: Impairments and other operating items

   

6,081

   

4,150

   

6,715

   

6,028

Plus/(Less): Other expense (income), net

   

1,235

   

2,649

   

(2,312)

   

6,114

Adjustments:

                       

Plus: Transaction-related expenses(a)

   

57

   

3,692

   

583

   

8,232

Plus: Fair value changes to equity awards(b)

   

6,385

   

(1,009)

   

6,723

   

(847)

Adjusted EBITDA

 

$

484,905

 

$

566,814

 

$

918,079

 

$

1,068,934

                         

As % of revenues

   

31.6 %

   

31.2 %

   

31.3 %

   

30.9 %

____________________________

(a)      Reflects the addback of acquisition-related transaction costs.

(b)     Reflects fair value accounting changes associated with certain equity awards.

 

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. 

                         
   

Three months ended
June 30,

 

Six months ended
June 30,

   

2021

 

2022

 

2021

 

2022

Net cash provided by operating activities

 

$

448,081

 

$

532,781

 

$

848,478

 

$

973,678

Plus/(Less): Change in book overdraft

   

16,659

   

(141)

   

(190)

   

(54)

Plus: Proceeds from disposal of assets

   

5,826

   

1,881

   

7,906

   

16,894

Less: Capital expenditures for property and equipment

   

(174,599)

   

(219,110)

   

(271,392)

   

(371,428)

Adjustments:

                       

   Payment of contingent consideration recorded in earnings(a)

   

-

   

-

   

520

   

-

Cash received for divestitures(b)

   

-

   

-

   

-

   

(5,671)

Transaction-related expenses(c)

   

57

   

3,692

   

583

   

27,096

Pre-existing Progressive Waste share-based grants(d)

   

47

   

(64)

   

144

   

12

Tax effect(e)

   

(26)

   

(1,056)

   

(214)

   

(2,165)

Adjusted free cash flow

 

$

296,045

 

$

317,983

 

$

585,835

 

$

638,362

                         

As % of revenues

   

19.3 %

   

17.5 %

   

20.0 %

   

18.4 %

___________________________

(a)      Reflects the addback of acquisition-related payments for contingent consideration that were recorded as expenses in earnings and as a component of
cash flows from operating activities as the amounts paid exceeded the fair value of the contingent consideration recorded at the acquisition date.

(b)     Reflects the elimination of cash received in conjunction with the divestiture of certain operations.

(c)      Reflects the addback of acquisition-related transaction costs and the settlement of an acquired tax liability.

(d)     Reflects the cash settlement of pre-existing Progressive Waste share-based awards during the period.

(e)      The aggregate tax effect of footnotes (a) through (d) is calculated based on the applied tax rates for the respective periods.

 

 

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. 

                         
   

Three months ended
June 30,

 

Six months ended
June 30,

   

2021

 

2022

 

2021

 

2022

Reported net income attributable to Waste Connections

 

$

177,047

 

$

224,074

 

$

337,356

 

$

404,398

Adjustments:

                       

Amortization of intangibles(a)

   

32,707

   

37,462

   

64,899

   

75,098

Impairments and other operating items(b)

   

6,081

   

4,150

   

6,715

   

6,028

Transaction-related expenses(c) 

   

57

   

3,692

   

583

   

8,232

Fair value changes to equity awards(d)

   

6,385

   

(1,009)

   

6,723

   

(847)

Tax effect(e)

   

(11,393)

   

(11,224)

   

(19,935)

   

(22,316)

Adjusted net income attributable to Waste Connections

 

$

210,884

 

$

257,145

 

$

396,341

 

$

470,593

Diluted earnings per common share attributable to Waste Connections' common shareholders:

                       

Reported net income

 

$

0.68

 

$

0.87

 

$

1.29

 

$

1.57

Adjusted net income

 

$

0.81

 

$

1.00

 

$

1.51

 

$

1.82

____________________________

(a)      Reflects the elimination of the non-cash amortization of acquisition-related intangible assets.

(b)     Reflects the addback of impairments and other operating items.

(c)      Reflects the addback of acquisition-related transaction costs.

(d)     Reflects fair value accounting changes associated with certain equity awards.

(e)      The aggregate tax effect of the adjustments in footnotes (a) through (d) is calculated based on the applied tax rates for the respective periods.

 

UPDATED 2022 OUTLOOK

NON-GAAP RECONCILIATION SCHEDULE

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

     

Reconciliation of Adjusted EBITDA:

     
   

Updated 2022 Outlook

   

Estimates

 

Observation

Net income attributable to Waste Connections

$

837,500

   

    Plus: Income tax provision (a)

 

232,973

 

Approximate 21.8% effective rate

    Plus: Interest expense, net

 

180,000

   

    Plus: Depreciation and Depletion

 

752,000

 

Approximately 10.6% of revenue

    Plus: Amortization

 

152,000

   

    Plus: Closure and post-closure accretion

 

16,000

   

    Plus: Impairments and other operating items (b)

 

6,028

   

    Plus: Other income, net (b)

 

6,114

   

    Adjustments: (b)

       

        Plus: Transaction-related expenses

 

8,232

   

        Plus: Fair value changes to equity awards

 

(847)

   

Adjusted EBITDA

$

2,190,000

 

Approximately 30.7% of revenue

___________________________

(a)      Approximately 21.8% full year effective tax rate, including amounts reported for the six month period ended June 30, 2022.

(b)     Reflects amounts reported for the six month period ended June 30, 2022, as shown on page 9.

 

Reconciliation of Adjusted Free Cash Flow:

       
     

Updated

2022 Outlook

Net cash provided by operating activities

 

$

1,973,888

Less:  Change in book overdraft (a)

   

(54)

Plus: Proceeds from disposal of assets (a)

   

16,894

Less: Capital expenditures for property and equipment         

   

(850,000)

Adjustments: (a)

     

    Cash received for divestitures

   

(5,671)

    Transaction-related expenses

   

27,096

    Pre-existing Progressive Waste share-based grants

   

12

    Tax effect

   

(2,165)

Adjusted free cash flow

 

$

1,160,000

       

As % of revenues

   

16.3 %

       

___________________________

(a)      Reflects amounts reported for the six month period ended June 30, 2022, as shown on page 10.

 

 

SOURCE Waste Connections, Inc.