Quarterly Results

Fourth Quarter 2021
Waste Connections Reports Fourth Quarter 2021 Results And Provides 2022 Outlook

Fourth Quarter Highlights

  • Strong price-led organic growth and acquisition activity, along with continuing underlying margin expansion, drives Q4 results above expectations and provides higher entry point into 2022
  • Revenue of $1.624 billion, net income(a) of $166.3 million, and adjusted EBITDA(b) of $495.4 million, or 30.5% of revenue
  • Net income and adjusted net income(b) of $0.64 and $0.83 per share, respectively

Full Year 2021 Highlights

  • Revenue of $6.151 billion, up 13.0%
  • Net income of $618.0 million, or $2.36 per share, and adjusted net income(b) of $846.6 million, or $3.23 per share, up 22.3%
  • Adjusted EBITDA(b) of $1.919 billion, up 15.5%, and adjusted EBITDA margin of 31.2%, up 70 basis points
  • Net cash provided by operating activities of $1.698 billion, up 20.6%
  • Adjusted free cash flow(b) of $1.010 billion, up 19.9% on capital expenditures of $744.3 million, up 24.7%
  • Completes acquisitions with approximately $400 million of total annualized revenue in 2021

Expectations for 2022

  • Strong pricing and acquisition growth to drive double digit percentage increases in revenue and adjusted free cash flow(b), along with continuing underlying margin expansion
  • Revenue of approximately $6.875 billion, up 11.8%, excluding additional acquisitions
  • Net income of approximately $846 million and adjusted EBITDA(b) of approximately $2.145 billion, or about 31.2% of revenue
  • Net cash provided by operating activities of approximately $2.000 billion
  • Adjusted free cash flow(b) of approximately $1.150 billion, up 13.9%, on capital expenditures up 14.2% to approximately $850 million, including $100 million for new landfill gas and resource recovery facilities
  • Increasing return of capital to shareholders, including opportunistic share repurchases

 

TORONTO, Feb. 16, 2022 /PRNewswire/ -- Waste Connections, Inc. (TSX/NYSE: WCN) ("Waste Connections" or the "Company") today announced its results for the fourth quarter of 2021 and outlook for 2022.   

"2021's results are a reflection of how a culture of commitment and accountability to all stakeholders enabled us to excel in a challenging operating environment, overcome inflationary pressures and supply chain issues, execute our growth strategy, expand margins, support employee health and welfare, and position the Company well for 2022 and beyond.  The year ended on a high note, as strong solid waste organic growth and acquisition activity, along with continuing underlying margin expansion, drove Q4 financial results once again above expectations.  We are also extremely pleased with our results for the full year, as adjusted EBITDA(b) margin expanded 70 basis points.  Moreover, we delivered 20% growth in adjusted free cash flow(b)  to $1.010 billion, in spite of capital expenditures up 25%, as we continued to reinvest in and grow our business," said Worthing F. Jackman, President and Chief Executive Officer. 

"Acquisition activity accelerated in the fourth quarter, resulting in approximately $400 million in acquired annualized revenues in 2021 and setting up acquisition contribution approaching 6% in 2022, including transactions completed year to date.  Along with solid waste pricing growth of about 6.5%, this already positions us for double-digit percentage growth in revenue, adjusted EBITDA(b) and adjusted free cash flow(b) in 2022.  Additional acquisitions expected to be completed during the year, improvement in commodity-driven revenues and E&P waste activity, or moderation of inflationary trends would provide incremental benefit."

Mr. Jackman continued, "The strength and consistency of our results reflect the durability of our market model and the benefits of an intentional culture focused on employees and value creation.  Proactive pricing, along with a step-up in capital expenditures and over $1 billion in acquisition outlays in 2021, positions us for continued double digit growth in 2022, while preserving the balance sheet strength and flexibility to capitalize on another potential above average year of acquisition activity, invest in sustainability-focused growth projects and increase return of capital to shareholders."

Q4 2021 Results

Revenue in the fourth quarter totaled $1.624 billion, up from $1.398 billion in the year ago period.  Operating income was $249.3 million, which included $28.4 million primarily related to impairments and other acquisition-related costs.  This compares to operating income of $197.1 million in the fourth quarter of 2020, which included $29.0 million primarily related to impairments and other acquisition-related costs.  Net income in the fourth quarter was $166.3 million, or $0.64 per share on a diluted basis of 261.3 million shares.  In the year ago period, the Company reported net income of $130.7 million, or $0.50 per share on a diluted basis of 263.6 million shares. 

Adjusted net income(b) in the fourth quarter was $217.1 million, or $0.83 per diluted share, versus $178.6 million, or $0.68 per diluted share, in the prior year period.  Adjusted EBITDA(b) in the fourth quarter was $495.4 million and 30.5% of revenue, as compared to $426.6 million and 30.5% of revenue 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.

Full Year 2021 Results

For the year ended December 31, 2021, revenue was $6.151 billion, up from $5.446 billion in the year ago period.  Operating income, which included $32.3 million in impairments and other operating items, $11.3 million in acquisition-related costs, and $8.4 million in fair value accounting changes to equity awards, was $1.040 billion, as compared to operating income of $412.4 million for the same period in 2020, which included $482.1 million in costs primarily related to impairments and other operating items. 

Net income in 2021 was $618.0 million, or $2.36 per share on a diluted basis of 261.7 million shares.  In the year ago period, the Company reported net income of $204.7 million, or $0.78 per share on a diluted basis of 263.7 million shares. 

Adjusted net income(b) in 2021 was $846.6 million, or $3.23 per diluted share, compared to $695.8 million, or $2.64 per diluted share, in the year ago period. Adjusted EBITDA(b) in 2021 was $1.919 billion and 31.2% of revenue, up from $1.662 billion and 30.5% of revenue in the prior year period. 

2022 Outlook

Waste Connections also announced its outlook for 2022, 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 2022 are subject to quarterly fluctuations.  See reconciliations in the attached tables.

  • Revenue is estimated at approximately $6.875 billion;
  • Net income is estimated at approximately $846 million;
  • Adjusted EBITDA(b) is estimated at approximately $2.145 billion, or about 31.2% of revenue;
  • Net cash provided by operating activities is estimated at approximately $2.0 billion;
  • Capital expenditures are estimated to be approximately $850 million;
  • Adjusted free cash flow(b) is estimated at approximately $1.150 billion, or 16.7% of revenue; and
  • Fully diluted share count is estimated at 259.0 million.

Q4 2021 Earnings and 2022 Outlook Conference Call

Waste Connections will be hosting a conference call related to fourth quarter earnings and 2022 outlook on February 17th 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 800-935-9319 (within North America) or 212-231-2925 (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 February 24th, 2022, by calling 800-633-8284 (within North America) or 402-977-9140 (international) and entering Passcode #22014930.

Waste Connections will be filing a Form 8-K on EDGAR and on SEDAR (as an "Other" document) prior to markets opening on February 17th, providing the Company's first quarter 2022 outlook for revenue, price plus volume growth for solid waste, and adjusted EBITDA(b).

------------------------------------------------------------------------------------------------------------------

 (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.

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

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 updated 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.

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 financial results, outlook and related assumptions, 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  

Joe Box / (832) 442-2153

maryannew@wasteconnections.com  

joe.box@wasteconnections.com

 

WASTE CONNECTIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF NET INCOME
THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2020 AND 2021
(Unaudited)
(in thousands of U.S. dollars, except share and per share amounts)

 
   

Three months ended

December 31,

 

Twelve months ended

December 31,

   
   

2020

 

2021

 

2020

 

2021

 
                   

Revenues

 

$

1,398,251

 

$

1,624,319

 

$

5,445,990

 

$

6,151,361

 

Operating expenses:

                         

Cost of operations

   

846,851

   

980,865

   

3,276,808

   

3,654,074

 

Selling, general and administrative

   

133,419

   

157,452

   

537,632

   

612,337

 

Depreciation

   

161,462

   

175,142

   

621,102

   

673,730

 

Amortization of intangibles

   

35,239

   

39,042

   

131,302

   

139,279

 

Impairments and other operating items

   

24,136

   

22,497

   

466,718

   

32,316

 

Operating income

   

197,144

   

249,321

   

412,428

   

1,039,625

 
                           

Interest expense

   

(42,813)

   

(38,625)

   

(162,375)

   

(162,796)

 

Interest income

   

857

   

573

   

5,253

   

2,916

 

Other income (expense), net

   

1,654

   

833

   

(1,392)

   

6,285

 

Loss on early extinguishment of debt

   

-

   

-

   

-

   

(115,288)

 

Income before income tax provision

   

156,842

   

212,102

   

253,914

   

770,742

 
                           

Income tax provision

   

(26,268)

   

(45,675)

   

(49,922)

   

(152,253)

 

Net income

   

130,574

   

166,427

   

203,992

   

618,489

 

Plus (less): Net loss (income) attributable to
noncontrolling interests

   

90

   

(117)

   

685

   

(442)

 

Net income attributable to Waste Connections

 

$

130,664

 

$

166,310

 

$

204,677

 

$

618,047

 
                           

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

                         

Basic

 

$

0.50

 

$

0.64

 

$

0.78

 

$

2.37

 
                           

Diluted

 

$

0.50

 

$

0.64

 

$

0.78

 

$

2.36

 
                           

Shares used in the per share calculations:

                         

Basic

   

263,001,985

   

260,547,806

   

263,189,699

   

261,166,723

 

Diluted

   

263,598,602

   

261,258,425

   

263,687,539

   

261,728,470

 
                           
                           

Cash dividends per common share

 

$

0.205

 

$

0.230

 

$

0.760

 

$

0.845

 
                                     

 

WASTE CONNECTIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands of U.S. dollars, except share and per share amounts)

 
   

December 31,

2020

 

December 31,

2021

 

ASSETS

             

Current assets:

             

Cash and equivalents

 

$

617,294

 

$

147,441

 

Accounts receivable, net of allowance for credit losses of $19,380 and $18,480 at
December 31, 2020 and 2021, respectively

   

630,264

   

709,614

 

Prepaid expenses and other current assets

   

160,714

   

175,722

 

Total current assets

   

1,408,272

   

1,032,777

 

Restricted cash

   

97,095

   

72,174

 

Restricted investments

   

57,516

   

59,014

 

Property and equipment, net

   

5,284,506

   

5,721,949

 

Operating lease right-of-use assets

   

170,923

   

160,567

 

Goodwill

   

5,726,650

   

6,187,643

 

Intangible assets, net

   

1,155,079

   

1,350,597

 

Other assets, net

   

92,323

   

115,203

 

Total assets

 

$

13,992,364

 

$

14,699,924

 

LIABILITIES AND EQUITY

             

Current liabilities:

             

Accounts payable

 

$

290,820

 

$

392,868

 

Book overdraft

   

17,079

   

16,721

 

Deferred revenue

   

233,596

   

273,720

 

Accrued liabilities

   

404,923

   

442,596

 

Current portion of operating lease liabilities

   

30,671

   

38,017

 

Current portion of contingent consideration

   

43,297

   

62,804

 

Current portion of long-term debt and notes payable

   

8,268

   

6,020

 

Total current liabilities

   

1,028,654

   

1,232,746

 
               

Long-term portion of debt and notes payable

   

4,708,678

   

5,040,500

 

Long-term portion of operating lease liabilities

   

147,223

   

129,628

 

Long-term portion of contingent consideration

   

28,439

   

31,504

 

Deferred income taxes

   

760,044

   

850,921

 

Other long-term liabilities

   

455,888

   

421,080

 

Total liabilities

   

7,128,926

   

7,706,379

 

Commitments and contingencies

             

Equity:

             

Common shares: 262,899,174 shares issued and 262,824,990 shares outstanding at 
     December 31, 2020; 260,283,158 shares issued and 260,212,496 shares outstanding 
     at December 31, 2021

   

4,030,368

   

3,693,027

 

Additional paid-in capital

   

170,555

   

199,482

 

Accumulated other comprehensive income (loss)

   

(651)

   

39,584

 

Treasury shares: 74,184 and 70,662 shares at December 31, 2020 and 2021, 
     respectively

   

-

   

-

 

Retained earnings

   

2,659,001

   

3,056,845

 

Total Waste Connections' equity

   

6,859,273

   

6,988,938

 

Noncontrolling interest in subsidiaries

   

4,165

   

4,607

 

Total equity

   

6,863,438

   

6,993,545

 
   

$

13,992,364

 

$

14,699,924

 

 

WASTE CONNECTIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
TWELVE MONTHS ENDED DECEMBER 31, 2020 AND 2021
(Unaudited)
(in thousands of U.S. dollars)

 
   

Twelve months ended December 31,

 
   

2020

 

2021

 

Cash flows from operating activities:

             

Net income

 

$

203,992

 

$

618,489

 

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

             

Loss on disposal of assets and impairments

   

445,647

   

27,727

 

Depreciation

   

621,102

   

673,730

 

Amortization of intangibles

   

131,302

   

139,279

 

Loss on early extinguishment of debt

   

-

   

115,288

 

Deferred income taxes, net of acquisitions

   

(50,487)

   

14,563

 

Current period provision for expected credit losses

   

15,509

   

9,719

 

Amortization of debt issuance costs

   

7,509

   

5,055

 

Share-based compensation

   

45,751

   

58,221

 

Interest accretion

   

17,205

   

15,970

 

Payment of contingent consideration recorded in earnings

   

(10,371)

   

(520)

 

Adjustments to contingent consideration

   

18,418

   

2,954

 

Other

   

2,426

   

(1,260)

 

Net change in operating assets and liabilities, net of acquisitions

   

(39,482)

   

19,014

 

Net cash provided by operating activities

   

1,408,521

   

1,698,229

 
               

Cash flows from investing activities:

             

Payments for acquisitions, net of cash acquired

   

(388,789)

   

(960,449)

 

Capital expenditures for property and equipment

   

(597,053)

   

(744,315)

 

Capital expenditures for undeveloped landfill property

   

(67,508)

   

-

 

Investment in noncontrolling interest

   

-

   

(25,000)

 

Proceeds from disposal of assets

   

19,084

   

42,768

 

Other

   

(11,777)

   

(6,486)

 

Net cash used in investing activities

   

(1,046,043)

   

(1,693,482)

 
               

Cash flows from financing activities:

             

Proceeds from long-term debt

   

1,815,625

   

2,112,193

 

Principal payments on notes payable and long-term debt

   

(1,542,958)

   

(1,893,100)

 

Premiums paid on early extinguishment of debt

   

-

   

(110,617)

 

Payment of contingent consideration recorded at acquisition date

   

(12,566)

   

(12,934)

 

Change in book overdraft

   

1,096

   

(367)

 

Payments for repurchase of common shares

   

(105,654)

   

(338,993)

 

Payments for cash dividends

   

(199,883)

   

(220,203)

 

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

   

(23,446)

   

(18,606)

 

Debt issuance costs

   

(11,117)

   

(18,521)

 

Proceeds from issuance of shares under employee share purchase plan

   

-

   

1,222

 

Proceeds from sale of common shares held in trust

   

679

   

430

 

Net cash used in financing activities

   

(78,224)

   

(499,496)

 

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

   

6,914

   

(25)

 

Net increase (decrease) in cash, cash equivalents and restricted cash

   

291,168

   

(494,774)

 

Cash, cash equivalents and restricted cash at beginning of year

   

423,221

   

714,389

 

Cash, cash equivalents and restricted cash at end of year

 

$

714,389

 

$

219,615

 

 

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 twelve month periods ended December 31, 2021:

 
   

Three months ended
December 31, 2021

 

Twelve months
ended December 31,
2021

Core Price

 

5.0

%

 

4.7

%

Surcharges

 

0.7

%

 

0.3

%

Volume

 

1.2

%

 

1.6

%

Recycling

 

2.6

%

 

1.8

%

Foreign Exchange Impact

 

0.5

%

 

0.9

%

Total

 

10.0

%

 

9.3

%

 

Revenue Breakdown: The following table reflects a breakdown of our revenue for the three month periods ended December 31, 2020 and 2021:

 
   

 Three months ended December 31, 2020

   

Revenue

 

Inter-company

Elimination

 

Reported

Revenue

 

%

Solid Waste Collection

 

$

1,024,099

 

$

(3,341)

 

$

1,020,758

 

73.0

%

Solid Waste Disposal and Transfer

   

493,093

   

(200,272)

   

292,821

 

20.9

%

Solid Waste Recycling

   

26,688

   

(909)

   

25,779

 

1.9

%

E&P Waste Treatment, Recovery and Disposal

   

27,690

   

(2,163)

   

25,527

 

1.8

%

Intermodal and Other

   

33,427

   

(61)

   

33,366

 

2.4

%

Total

 

$

1,604,997

 

$

(206,746)

 

$

1,398,251

 

100.0

%

   
   
   

Three months ended December 31, 2021

   

Revenue

 

Inter-company

Elimination

 

Reported
Revenue

 

%

Solid Waste Collection

 

$

1,169,428

 

$

(2,780)

 

$

1,166,648

 

71.8

%

Solid Waste Disposal and Transfer

   

533,122

   

(216,957)

   

316,165

 

19.5

%

Solid Waste Recycling

   

75,317

   

(5,646)

   

69,671

 

4.3

%

E&P Waste Treatment, Recovery and Disposal

   

37,570

   

(3,244)

   

34,326

 

2.1

%

Intermodal and Other

   

39,592

   

(2,083)

   

37,509

 

2.3

%

Total

 

$

1,855,029

 

$

(230,710)

 

$

1,624,319

 

100.0

%

 
 
 

Contribution from Acquisitions: The following table reflects revenues from acquisitions, net of divestitures, for the three and twelve month periods ended December 31, 2020 and 2021:

 
   

Three months ended
December 31,

 

Twelve months ended

December 31,

   

2020

 

2021

 

2020

 

2021

Acquisitions, net

 

$

52,721

 

$

79,363

 

$

197,231

 

$

215,398

 
 
 

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 twelve month periods ended December 31, 2020 and 2021:

 
   

Three months ended

December 31,

 

Twelve months ended

December 31,

   

2020

 

2021

 

2020

 

2021

Cash Interest Paid

 

$

55,910

 

$

36,839

 

$

142,310

 

$

157,485

Cash Taxes Paid

   

43,603

   

56,094

   

104,618

   

146,198

 

Debt to Book Capitalization as of December 31, 2021: 42%

 

Internalization for the three months ended December 31, 2021: 55%

 

Days Sales Outstanding for the three months ended December 31, 2021: 40 (25 net of deferred revenue)

 

Share Information for the three months ended December 31, 2021:

 

     

Basic shares outstanding

 

260,547,806

Dilutive effect of equity-based awards 

 

710,619

Diluted shares outstanding

 

261,258,425

 

 

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 loss on early extinguishment of debt.  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

December 31,

 

Twelve months ended

December 31,

   

2020

 

2021

 

2020

 

2021

Net income attributable to Waste Connections

 

$

130,664

 

$

166,310

 

$

204,677

 

$

618,047

Plus/(less): Net income (loss) attributable to noncontrolling 
     interests

   

(91)

   

117

   

(685)

   

442

Plus: Income tax provision

   

26,269

   

45,675

   

49,922

   

152,253

Plus: Interest expense

   

42,813

   

38,625

   

162,375

   

162,796

Less: Interest income

   

(857)

   

(573)

   

(5,253)

   

(2,916)

Plus: Depreciation and amortization

   

196,701

   

214,184

   

752,404

   

813,009

Plus: Closure and post-closure accretion

   

3,755

   

3,579

   

15,095

   

14,497

Plus: Impairments and other operating items

   

24,136

   

22,497

   

466,718

   

32,316

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

   

(1,654)

   

(833)

   

1,392

   

(6,285)

Plus: Loss on early extinguishment of debt

   

-

   

-

   

-

   

115,288

Adjustments:

                       

Plus: Transaction-related expenses(a)

   

5,306

   

5,098

   

9,803

   

11,318

Plus/(less): Fair value changes to equity awards(b)

   

(485)

   

755

   

5,536

   

8,393

Adjusted EBITDA

 

$

426,557

 

$

495,434

 

$

1,661,984

 

$

1,919,158

                         

As % of revenues

   

30.5%

   

30.5%

   

30.5%

   

31.2%

____________________________

(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. 

 
   

Twelve months ended

December 31,

 
   

2020

 

2021

 

Net cash provided by operating activities

 

$

1,408,521

 

$

1,698,229

 

Plus/(less): Change in book overdraft

   

1,096

   

(367)

 

Plus: Proceeds from disposal of assets

   

19,084

   

42,768

 

Less: Capital expenditures for property and equipment

   

(597,053)

   

(744,315)

 

Adjustments:

             

   Payment of contingent consideration recorded in earnings(a)

   

10,371

   

520

 

Cash received for divestitures(b)

   

(10,673)

   

(17,118)

 

Transaction-related expenses(c)

   

9,803

   

30,771

 

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

   

5,770

   

397

 

Tax effect(e)

   

(5,021)

   

(1,287)

 

Adjusted free cash flow

 

$

841,898

 

$

1,009,598

 
               

As % of revenues

   

15.5%

   

16.4%

 

 

___________________________

(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 settlement of an acquired compensation 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

December 31,

 

Twelve months ended

December 31,

   

2020

 

2021

 

2020

 

2021

Reported net income attributable to Waste Connections

 

$

130,664

 

$

166,310

 

$

204,677

 

$

618,047

Adjustments:

                       

Amortization of intangibles(a)

   

35,239

   

39,042

   

131,302

   

139,279

Impairments and other operating items(b)

   

24,136

   

22,497

   

466,718

   

32,316

Transaction-related expenses(c) 

   

5,306

   

5,098

   

9,803

   

11,318

Fair value changes to equity awards(d)

   

(485)

   

755

   

5,536

   

8,393

Loss on early extinguishment of debt(e)

   

-

   

-

   

-

   

115,288

Tax effect(f)

   

(16,235)

   

(16,574)

   

(153,758)

   

(78,041)

Tax items(g)

   

-

   

-

   

31,508

   

-

Adjusted net income attributable to Waste Connections

 

$

178,625

 

$

217,128

 

$

695,786

 

$

846,600

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

                       

Reported net income

 

$

0.50

 

$

0.64

 

$

0.78

 

$

2.36

Adjusted net income

 

$

0.68

 

$

0.83

 

$

2.64

 

$

3.23

                         

 

____________________________

(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) 

Reflects the make-whole premium and related fees associated with the early termination of $1.5 billion in senior notes.  

(f) 

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

(g) 

Reflects the impact of a portion of the Company's 2019 inter-entity payments no longer being deductible for tax purposes due to the finalization of tax regulations on April 7, 2020 under Internal Revenue Code section 267A and an increase in deferred tax liabilities resulting from the E&P impairment.

 

 

2022 OUTLOOK
NON-GAAP RECONCILIATION SCHEDULE
(in thousands of U.S. dollars, except where noted)

 

Reconciliation of Adjusted EBITDA:

 
     

2022 Outlook

     

Estimates

 

Observation

Net income attributable to Waste Connections

 

$

846,000

   

    Plus: Income tax provision

   

239,000

 

Approximate 22.0% effective rate

    Plus: Interest expense, net

   

160,000

   

    Plus: Depreciation and Depletion

   

745,000

 

Approximately 10.8% of revenue

    Plus: Amortization

   

140,000

   

    Plus: Closure and post-closure accretion

   

15,000

   

Adjusted EBITDA

 

$

2,145,000

 

Approximately 31.2% of revenue

 

Reconciliation of Adjusted Free Cash Flow:

 
   

2022 Outlook

   

Estimates

Net cash provided by operating activities

 

$

2,000,000

    Less: Capital expenditures

   

(850,000)

Adjusted free cash flow

 

$

1,150,000

 

 

SOURCE Waste Connections, Inc.