Waste Connections Reports Fourth Quarter Results and Provides 2012 Outlook

Marketwired

THE WOODLANDS, TX--(Marketwire -02/07/12)- Waste Connections, Inc. (NYSE: WCN - News)

  • Q4 revenue of $379.8 million, up 13.0%
  • Q4 GAAP EPS of $0.34 and adjusted EPS* of $0.35, up 9.4%
  • Full year revenue of $1.51 billion, up 14.1%, and adjusted EPS* of $1.48, up 19.4%
  • Full year net cash provided by operating activities of $388.2 million
  • Full year free cash flow* of $254.5 million, or 16.9% of revenue
  • Increased regular quarterly cash dividend 20.0% to $0.09 per share
  • Expects continuing revenue and free cash flow growth in 2012
  • Expects to complete Alaska Waste acquisition in Q1 2012

Waste Connections, Inc. (NYSE: WCN - News) today announced its results for the fourth quarter of 2011. Revenue totaled $379.8 million, a 13.0% increase over revenue of $336.0 million in the year ago period. Operating income was $74.4 million, versus $67.7 million in the fourth quarter of 2010. Net income attributable to Waste Connections in the quarter was $38.0 million, or $0.34 per share on a diluted basis of 112.4 million shares. In the year ago period, the Company reported net income attributable to Waste Connections of $36.1 million, or $0.31 per share on a diluted basis of 115.3 million shares.

Adjusted net income attributable to Waste Connections in the quarter was $38.8 million*, or $0.35 per share*, adjusting for a loss on disposal of assets and acquisition-related costs expensed during the period. Adjusted net income attributable to Waste Connections in the prior year period was $36.7 million*, or $0.32 per share*, adjusting for acquisition-related costs.

Non-cash costs for equity-based compensation and amortization of acquisition-related intangibles were $8.2 million ($5.1 million net of taxes, or approximately $0.05 per share) in the quarter compared to $6.6 million ($4.1 million net of taxes, or approximately $0.04 per share) in the year ago period.

"We are extremely pleased with our results in the quarter and full year. Better than expected pricing growth in the quarter, increased special waste volumes, and tight cost controls helped cushion the impact of a 30% decline in recycled fiber values during the first half of the fourth quarter. Continued strength in core pricing growth, relative stability in municipal solid waste volumes, and recent modest increases in recycled fiber values should provide a good springboard into 2012," said Ronald J. Mittelstaedt, Chairman and Chief Executive Officer. "We believe our margin expansion and double digit year-over-year growth in revenue, earnings per share and free cash flow in 2011 continue to reflect the benefits of our differentiated strategy."

Mr. Mittelstaedt added, "In 2011, we signed or completed acquisitions with approximately $200 million in total annualized revenue, a record amount for us that surpassed previous highs in 2009 and 2008. We believe acquisition activity could remain strong over the next few years due to increasing capital requirements in many markets to further segment the waste stream, seller concerns regarding wealth preservation, and recently announced divestitures. Our focus on exclusive and secondary markets and our disciplined deployment of capital will continue to guide us in navigating through these potential opportunities."

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

For the year ended December 31, 2011, revenue was $1.51 billion, a 14.1% increase over revenue of $1.32 billion in the prior year. Operating income in 2011 was $317.1 million, up 16.4% from $272.4 million in the prior year. Net income attributable to Waste Connections in 2011 was $165.2 million, or $1.45 per share on a diluted basis of 113.6 million shares. In the prior year, the Company reported net income attributable to Waste Connections of $135.1 million, or $1.16 per share on a diluted basis of 116.9 million shares. Adjusted net income attributable to Waste Connections in 2011, was $167.6 million*, or $1.48 per share*, up 15.6% and 19.4%, respectively, compared to $145.0 million*, or $1.24 per share* in 2010.

For the year ended December 31, 2011, non-cash costs for equity-based compensation, amortization of acquisition-related intangibles, loss on the early redemption of the 2026 Notes (net of make-whole payment), and amortization of debt discount related to convertible debt instruments were $31.9 million ($19.8 million net of taxes, or approximately $0.17 per share), compared to $29.4 million ($18.2 million net of taxes, or approximately $0.16 per share) in the prior year.

2012 OUTLOOK

Waste Connections also announced its outlook for 2012, which assumes no change in the current economic environment and closing of the Alaska Waste acquisition on March 1st. The Company's outlook excludes the impact of any additional acquisitions and expensing of acquisition-related transaction costs, as well as costs incurred in connection with the relocation of the Company's corporate headquarters and equity compensation expense incurred in connection with the anticipated amendment of certain executive employment contracts. 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 2012 are subject to quarterly fluctuations.

  • Revenue is estimated to be approximately $1.615 billion.
  • Depreciation and amortization expense is estimated to be approximately 10.9% of revenue.
  • Closure and post-closure accretion expense is estimated to be approximately 0.15% of revenue.
  • Operating income is estimated to be approximately 21.0% of revenue.
  • Net interest expense is estimated to be approximately $52.0 million.
  • Effective tax rate is expected to be approximately 39.2%.
  • Net income attributable to noncontrolling interests is estimated to reduce net income by approximately $1.2 million.
  • Net cash provided by operating activities is estimated between 24.5% and 25.0% of revenue.
  • Capital expenditures are estimated to be about $145 million.

CONFERENCE CALL

Waste Connections will be hosting a conference call related to fourth quarter results and 2012 outlook on February 8th at 8:30 A.M. Eastern Time. To access the call, listeners should dial 800-638-4930 (domestic) or 617-614-3944 (international) approximately 10 minutes prior to the scheduled start time and ask the operator for the Waste Connections conference call, Passcode # 93823617. A replay of the conference call will be available until February 15, 2012, by calling 888-286-8010 (domestic) or 617-801-6888 (international) and entering Passcode # 74292680. The call also will be broadcast live over the Internet at www.streetevents.com or through a link on our web site at www.wasteconnections.com. A playback of the call will be available at both of these web sites.

Waste Connections, Inc. is an integrated solid waste services company that provides solid waste collection, transfer, disposal and recycling services in mostly exclusive and secondary markets. The Company serves more than two million residential, commercial and industrial customers from a network of operations in 29 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.

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

Information Regarding Forward-Looking Statements

Certain statements contained in this release are forward-looking in nature, including statements related to: completion of the Alaska Waste acquisition and the expected timing thereof; expected revenues and cash flow growth; expected pricing growth, waste volumes and recycled commodity prices; expected levels of acquisition activity in the industry and the drivers of such activity; the Company's anticipated acquisition activity; the Company's focus on exclusive and secondary markets; the Company's deployment of capital; the impact of the relocation of the Company's corporate headquarters to The Woodlands, Texas; the impact of potential equity compensation expense in connection with the amendment of certain executive employment agreements and the execution of such amendments; and the Company's 2012 outlook and the components thereof included in this release. Factors that could cause actual results to differ from those projected include, but are not limited to, the following: (1) our acquisitions may not be successful, resulting in changes in strategy, operating losses or a loss on sale of the business acquired; (2) a portion of our growth and future financial performance depends on our ability to integrate acquired businesses into our organization and operations; (3) competition for acquisition candidates, consolidation within the waste industry and economic and market conditions may limit our ability to grow through acquisitions; (4) we may be unable to compete effectively with larger and better capitalized companies, companies with lower return expectations, and governmental service providers; (5) we may lose contracts through competitive bidding, early termination or governmental action; (6) price increases may not be adequate to offset the impact of increased costs or may cause us to lose volume; (7) economic downturns adversely affect operating results; (8) our results are vulnerable to economic conditions and seasonal factors affecting the regions in which we operate; (9) 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; (10) increases in the price of fuel may adversely affect our business and reduce our operating margins; (11) increases in labor and disposal and related transportation costs could impact our financial results; (12) efforts by labor unions could divert management attention and adversely affect operating results; (13) we could face significant withdrawal liability if we withdraw from participation in one or more underfunded multiemployer pension plans in which we participate; (14) increases in insurance costs and the amount that we self-insure for various risks could reduce our operating margins and reported earnings; (15) our indebtedness could adversely affect our financial condition; we may incur substantially more debt in the future; (16) each business that we acquire or have acquired may have liabilities or risks that we fail or are unable to discover, including environmental liabilities; (17) liabilities for environmental damage may adversely affect our financial condition, business and earnings; (18) our accruals for our landfill site closure and post-closure costs may be inadequate; (19) the financial soundness of our customers could affect our business and operating results; (20) we depend significantly on the services of the members of our senior, regional and district management team, and the departure of any of those persons could cause our operating results to suffer; (21) our decentralized decision-making structure could allow local managers to make decisions that adversely affect our operating results; (22) we may incur charges related to capitalized expenditures of landfill development projects, which would decrease our earnings; (23) because we depend on railroads for our intermodal operations, our operating results and financial condition are likely to be adversely affected by any reduction or deterioration in rail service; (24) our financial results are based upon estimates and assumptions that may differ from actual results; (25) the adoption of new accounting standards or interpretations could adversely affect our financial results; (26) pending or future litigation or governmental proceedings could result in material adverse consequences, including judgments or settlements; and (27) 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 -

 
                          WASTE CONNECTIONS, INC.
                CONDENSED CONSOLIDATED STATEMENTS OF INCOME
          THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2010 AND 2011
                                (Unaudited)
             (in thousands, except share and per share amounts)

                         Three months ended          Twelve months ended
                            December 31,                December 31,
                     --------------------------  --------------------------
                         2010          2011          2010          2011
                     ------------  ------------  ------------  ------------

Revenues             $    335,955  $    379,752  $  1,319,757  $  1,505,366
Operating expenses:
  Cost of operations      191,512       220,081       749,487       857,580
  Selling, general
   and
   administrative          39,395        40,914       149,860       161,967
  Depreciation             33,525        38,193       132,874       147,036
  Amortization of
   intangibles              3,782         5,276        14,582        20,064
  Loss (gain) on
   disposal of
   assets                      (1)          914           571         1,657
                     ------------  ------------  ------------  ------------
Operating income           67,742        74,374       272,383       317,062

Interest expense           (9,292)      (12,571)      (40,134)      (44,520)
Interest income               136           122           590           530
Loss on
 extinguishment of
 debt                           -             -       (10,193)            -
Other income, net             860           807         2,830            57
                     ------------  ------------  ------------  ------------
Income before income
 tax provision             59,446        62,732       225,476       273,129

Income tax provision      (23,011)      (24,543)      (89,334)     (106,958)
                     ------------  ------------  ------------  ------------
Net income                 36,435        38,189       136,142       166,171
Less: net income
 attributable to
 noncontrolling
 interests                   (290)         (231)       (1,038)         (932)
                     ------------  ------------  ------------  ------------
Net income
 attributable to
 Waste Connections   $     36,145  $     37,958  $    135,104  $    165,239
                     ============  ============  ============  ============

Earnings per common
 share attributable
 to Waste
 Connections' common
 stockholders:
  Basic              $       0.32  $       0.34  $       1.17  $       1.47
                     ============  ============  ============  ============

  Diluted            $       0.31  $       0.34  $       1.16  $       1.45
                     ============  ============  ============  ============

Shares used in the
 per share
 calculations:
  Basic               114,212,664   111,504,918   115,646,173   112,720,444
                     ============  ============  ============  ============
  Diluted             115,327,440   112,410,495   116,894,204   113,583,486
                     ============  ============  ============  ============
Cash dividends per
 common share
                     $      0.075  $       0.09  $      0.075  $      0.315
                     ============  ============  ============  ============


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

                                                December 31,   December 31,
                                                    2010           2011
                                               -------------  -------------
ASSETS
Current assets:
  Cash and equivalents                         $       9,873  $      12,643
  Accounts receivable, net of allowance for
   doubtful accounts of $5,084 and $6,617 at
   December 31, 2010 and 2011, respectively          152,156        176,277
  Deferred income taxes                               20,130         20,630
  Prepaid expenses and other current assets           33,402         39,708
                                               -------------  -------------
      Total current assets                           215,561        249,258

Property and equipment, net                        1,337,476      1,450,469
Goodwill                                             927,852      1,116,888
Intangible assets, net                               381,475        449,581
Restricted assets                                     30,441         30,544
Other assets, net                                     23,179         31,265
                                               -------------  -------------
                                               $   2,915,984  $   3,328,005
                                               =============  =============

LIABILITIES AND EQUITY
Current liabilities:
  Accounts payable                             $      85,252  $      95,097
  Book overdraft                                      12,396         12,169
  Accrued liabilities                                 99,075        106,243
  Deferred revenue                                    54,157         64,694
  Current portion of long-term debt and notes
   payable                                             2,657          5,899
                                               -------------  -------------
      Total current liabilities                      253,537        284,102

Long-term debt and notes payable                     909,978      1,172,758
Other long-term liabilities                           47,637         74,324
Deferred income taxes                                334,414        397,134
                                               -------------  -------------
      Total liabilities                            1,545,566      1,928,318

Commitments and contingencies

Equity:
Preferred stock: $0.01 par value; 7,500,000
 shares authorized; none issued and
 outstanding                                               -              -
Common stock: $0.01 par value; 250,000,000
 shares authorized; 113,950,081 and
 110,907,782 shares issued and outstanding at
 December 31, 2010 and 2011, respectively              1,139          1,109
Additional paid-in capital                           509,218        408,721
Retained earnings                                    858,887        988,560
Accumulated other comprehensive loss                  (3,095)        (3,480)
                                               -------------  -------------
    Total Waste Connections' equity                1,366,149      1,394,910
Noncontrolling interest in subsidiaries                4,269          4,777
                                               -------------  -------------
    Total equity                                   1,370,418      1,399,687
                                               -------------  -------------
                                               $   2,915,984  $   3,328,005
                                               =============  =============


                          WASTE CONNECTIONS, INC.
              CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
               TWELVE MONTHS ENDED DECEMBER 31, 2010 AND 2011
                                (Unaudited)
                           (Dollars in thousands)

                                                       Twelve months ended
                                                          December 31,
                                                     ----------------------
                                                        2010        2011
                                                     ----------  ----------


Cash flows from operating activities:
Net income                                           $  136,142  $  166,171
Adjustments to reconcile net income to net cash
 provided by operating activities:
  Loss on disposal of assets                                571       1,657
  Depreciation                                          132,874     147,036
  Amortization of intangibles                            14,582      20,064
  Deferred income taxes, net of acquisitions             26,431      50,989
  Loss on redemption of 2026 Notes, net of make-
   whole payment                                          2,255           -
  Amortization of debt issuance costs                     1,574       1,420
  Amortization of debt discount                           1,245           -
  Equity-based compensation                              11,331      11,879
  Interest income on restricted assets                     (511)       (454)
  Closure and post-closure accretion                      1,766       1,967
  Excess tax benefit associated with equity-based
   compensation                                         (11,997)     (4,763)
  Net change in operating assets and liabilities,
   net of acquisitions                                   15,916      (7,796)
                                                     ----------  ----------
Net cash provided by operating activities               332,179     388,170
                                                     ----------  ----------

Cash flows from investing activities:
  Payments for acquisitions, net of cash acquired       (81,010)   (258,352)
  Capital expenditures for property and equipment      (134,829)   (141,924)
  Proceeds from disposal of assets                        6,659       4,434
  Decrease (increase) in restricted assets, net of
   interest income                                       (2,552)        351
  Increase in other assets                               (2,492)     (5,014)
                                                     ----------  ----------
Net cash used in investing activities                  (214,224)   (400,505)
                                                     ----------  ----------

Cash flows from financing activities:
  Proceeds from long-term debt                          483,253     592,500
  Principal payments on notes payable and long-term
   debt                                                (467,660)   (421,872)
  Change in book overdraft                                  279        (227)
  Proceeds from option and warrant exercises             33,074       5,159
  Excess tax benefit associated with equity-based
   compensation                                          11,997       4,763
  Payments for repurchase of common stock              (166,320)   (116,817)
  Payments for cash dividends                            (8,561)    (35,566)
  Tax withholdings related to net share settlements
   of restricted stock units                             (3,783)     (5,511)
  Distributions to noncontrolling interests                   -        (675)
  Debt issuance costs                                         -      (6,649)
                                                     ----------  ----------
Net cash provided by (used in) financing activities    (117,721)     15,105
                                                     ----------  ----------

Net increase in cash and equivalents                        234       2,770
Cash and equivalents at beginning of period               9,639       9,873
                                                     ----------  ----------
Cash and equivalents at end of period                $    9,873  $   12,643
                                                     ==========  ==========


                            ADDITIONAL STATISTICS
               THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2011
                           (Dollars in thousands)

Internal Growth: The following table reflects revenue growth for operations owned for at least 12 months:

 
                                                        Three months ended
                                                         December 31, 2011
                                                        ------------------
    Core Price                                                         3.0%
    Surcharges                                                         0.8%
    Volume                                                            (0.8%)
    Intermodal, Recycling and Other                                    0.0%
                                                        ------------------
    Total                                                              3.0%
                                                        ------------------

Revenue Breakdown:

 
                                  Three months ended    Twelve months ended
                                   December 31, 2011     December 31, 2011
                                 --------------------  --------------------
Collection                       $  272,282      62.5% $1,069,065      62.0%
Disposal and Transfer               128,368      29.4%    510,330      29.6%
Intermodal, Recycling and Other      35,283       8.1%    144,583       8.4%
                                 ----------  --------  ----------  --------
Total before inter-company
 elimination                     $  435,933     100.0% $1,723,978     100.0%

Inter-company elimination        $  (56,181)           $ (218,612)
                                 ----------            ----------
  Reported Revenue               $  379,752            $1,505,366
                                 ----------            ----------

Days Sales Outstanding for the three months ended December 31, 2011: 43 (27 net of deferred revenue)

Internalization for the three months ended December 31, 2011: 63%

Other Cash Flow Items:

 
                                      Three months ended Twelve months ended
                                      December 31, 2011   December 31, 2011
                                     ------------------- -------------------
Cash Interest Paid                   $            19,306 $            39,499
Cash Taxes Paid                      $            20,625 $            52,729

Debt to Book Capitalization as of December 31, 2011: 46%

Share Information for the three months ended December 31, 2011:

 
  Basic shares outstanding                      111,504,918
  Dilutive effect of options and warrants           364,953
  Dilutive effect of restricted stock units         540,624
                                             --------------
  Diluted shares outstanding                    112,410,495


                      NON-GAAP RECONCILIATION SCHEDULE
                               (in thousands)

Reconciliation of Adjusted Operating Income before Depreciation and Amortization:

Adjusted operating income before depreciation and amortization, 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. Waste Connections defines adjusted operating income before depreciation and amortization as operating income, plus depreciation and amortization expense, plus closure and post-closure accretion expense, plus or minus any gain or loss on disposal of assets. The Company further adjusts this calculation to exclude the effects of 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. Management uses adjusted operating income before depreciation and amortization as one of the principal measures to evaluate and monitor the ongoing financial performance of the Company's operations. Other companies may calculate adjusted operating income before depreciation and amortization differently.

 
                                              Three months    Three months
                                                  ended           ended
                                              December 31,    December 31,
                                                  2010            2011
                                             --------------  --------------
Operating income                             $       67,742  $       74,374
Plus: Depreciation and amortization                  37,307          43,469
Plus: Closure and post-closure accretion                443             516
Plus/less: Loss (gain) on disposal of assets             (1)            914
Adjustments:
  Plus: Acquisition-related transaction
   costs (a)                                            904             467
                                             --------------  --------------
Adjusted operating income before
 depreciation and amortization               $      106,395  $      119,740
                                             --------------  --------------

As % of revenues                                       31.7%           31.5%


                                              Twelve months   Twelve months
                                                  ended           ended
                                              December 31,    December 31,
                                                  2010            2011
                                             --------------  --------------
Operating income                             $      272,383  $      317,062
Plus: Depreciation and amortization                 147,456         167,100
Plus: Closure and post-closure accretion              1,766           1,967
Plus: Loss on disposal of assets                        571           1,657
Adjustments:
  Plus: Acquisition-related transaction
   costs (a)                                          2,081           1,744
                                             --------------  --------------
Adjusted operating income before
 depreciation and amortization               $      424,257  $      489,530
                                             --------------  --------------

As % of revenues                                       32.1%           32.5%

____________________

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


                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. The Company 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 may exclude 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. 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. Other companies may calculate adjusted net income and adjusted net income per diluted share differently.

 

                                      Three months ended Twelve months ended
                                         December 31,        December 31,
                                     ------------------- -------------------
                                        2010      2011      2010      2011
                                     --------- --------- --------- ---------

Reported net income attributable to
 Waste Connections                   $  36,145 $  37,958 $ 135,104 $ 165,239
Adjustments:
  Loss on extinguishment of debt,
   net of taxes (a)                          -         -     6,320         -
  Acquisition-related transaction
   costs, net of taxes (b)                 560       290     1,290     1,327
  Loss on disposal of assets, net of
   taxes (c)                                 -       567       776     1,027
  Impact of deferred tax adjustment
   (d)                                       -         -     1,547         -
                                     --------- --------- --------- ---------
Adjusted net income attributable to
 Waste Connections                   $  36,705 $  38,815 $ 145,037 $ 167,593
                                     ========= ========= ========= =========

Diluted earnings per common share
 attributable to Waste Connections
 common stockholders:
  Reported net income                $    0.31 $    0.34 $    1.16 $    1.45
                                     ========= ========= ========= =========
  Adjusted net income                $    0.32 $    0.35 $    1.24 $    1.48
                                     ========= ========= ========= =========

____________________

 
(a) Reflects the elimination of costs associated with the early redemption
    of outstanding debt.

(b) Reflects the elimination of acquisition-related costs.


(c) Reflects the elimination of a loss on disposal of assets.

(d) Reflects the elimination of an increase to the income tax provision
    associated with an adjustment in the Company's deferred tax liabilities
    primarily resulting from a voter-approved increase in Oregon state
    income tax rates.


                NON-GAAP RECONCILIATION SCHEDULE (continued)
                               (in thousands)

Reconciliation of Free Cash Flow:

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. Waste Connections defines 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. This measure is not a substitute for, and should be used in conjunction with, GAAP liquidity or financial measures. Management uses free cash flow as one of the principal measures to evaluate and monitor the ongoing financial performance of the Company's operations. Other companies may calculate free cash flow differently.

 
                                              Three months    Three months
                                                  ended           ended
                                              December 31,    December 31,
                                                  2010            2011
                                             --------------  --------------
Net cash provided by operating activities    $       86,157  $       90,446
Plus: Change in book overdraft                          653             710
Plus: Proceeds from disposal of assets                  874           1,197
Plus: Excess tax benefit associated with
 equity-based compensation                            3,061             262
Less: Capital expenditures for property and
 equipment                                          (48,708)        (57,872)
Less: Distributions to noncontrolling
 interests                                                -               -
                                             --------------  --------------
Free cash flow                               $       42,037  $       34,743
                                             --------------  --------------

As % of revenues                                       12.5%            9.1%


                                              Twelve months   Twelve months
                                                  ended           ended
                                              December 31,    December 31,
                                                  2010            2011
                                             --------------  --------------
Net cash provided by operating activities    $      332,179  $      388,170
Plus/less: Change in book overdraft                     279            (227)
Plus: Proceeds from disposal of assets                6,659           4,434
Plus: Excess tax benefit associated with
 equity-based compensation                           11,997           4,763
Less: Capital expenditures for property and
 equipment                                         (134,829)       (141,924)
Less: Distributions to noncontrolling
 interests                                                -            (675)
                                             --------------  --------------
Free cash flow                               $      216,285  $      254,541
                                             --------------  --------------

As % of revenues                                       16.4%           16.9%
Contact:
CONTACT:
Worthing Jackman
(832) 442-2200
Email Contact
Mary Anne Whitney
(916) 608-8253
Email Contact

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