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Progressive Waste Solutions Ltd. Reports Results for the Three Months and Year Ended December 31, 2013

TORONTO, ONTARIO--(Marketwired - Feb 13, 2014) - Progressive Waste Solutions Ltd. (the "Company") ( BIN )( BIN.TO ) reported financial results for the three months and year ended December 31, 2013.

Fourth quarter highlights

  • Consolidated revenues of approximately $502.0 million, up 1.2%, despite the negative impact of approximately $11.3 million foreign currency exchange relative to the year-ago quarter. Excluding the negative impact of foreign exchange, consolidated revenues increased 3.5%
  • Organic revenue growth driven by higher core price of 1.6%
  • Adjusted EBITDA (A) of $131.9 million and free cash flow (B) , excluding internal infrastructure investment, of $62.3 million, an increase of 27.3%. Excluding the negative impact of foreign exchange, adjusted EBITDA (A) was $135.5 million and free cash flow (B) , excluding internal infrastructure investment, was $63.3 million
  • Adjusted net income (A) per share of $0.29 versus $0.24 in the same quarter last year

Management Commentary

(All amounts are in United States ("U.S.") dollars, unless otherwise stated)

"With our fourth-quarter results, we achieved a solid finish to the year, in line with or better than our expectations. Organic revenues were driven by higher pricing in every service line. Our consolidated core price improvement of 1.6% reflects the focused sales execution we are applying across our collection, transfer and disposal service lines, and which helped to offset the impact of lower volumes due to the unusually harsh weather in December," said Joseph Quarin, President and Chief Executive Officer, Progressive Waste Solutions Ltd.

"2013 marked a pivotal year for Progressive Waste Solutions, as we established a firm foundation for improved operational execution going forward. We welcomed several new members to the senior team, including Kevin Walbridge to the role of Executive Vice President, Chief Operating Officer effective January 1, 2014, and Dan Pio to the role of Executive Vice President, Strategy and Business Development. At the same time, we unified our entire organizational structure and leadership group, improving our ability to strategically manage our capital and drive cost efficiencies and best practices throughout our business. And by aligning our management team's compensation to greater asset utilization and capital efficiency, we believe we have all of the components in place to continue to improve our return on invested capital."

Mr. Quarin continued, "We have a strong sense of momentum as we enter 2014, with plans to create value for shareholders both through operational execution and through strategic and disciplined capital allocation. Our guidance for this fiscal year reflects the growth we expect to achieve in our organic business in the U.S. and Canada, through price and volume improvements, as well as cost efficiencies, but is muted by the impact of foreign currency exchange we have assumed in our outlook. We do not have operational exposure to the volatility of the Canadian dollar, but there is an impact to our reportable results which are denominated in U.S. currency. In providing our guidance for 2014, we are highlighting our sensitivity to foreign currency translation, in order to demonstrate the underlying operational strength in our performance outlook."

Fourth quarter ended December 31, 2013

Reported revenues increased $6.2 million or 1.2% from $495.8 million in the fourth quarter of 2012 to $502.0 million in the fourth quarter of 2013. Expressed on a reportable basis and assuming a foreign currency exchange ("FX") rate of parity between the Canadian and U.S. dollar ("FX parity"), revenues increased 3.5% due in large part to a 2.5% increase attributable to acquisitions. The remaining increase is a function of higher overall core pricing and recycled commodity pricing which outpaced lower volumes and fuel surcharges.

Operating income was $58.3 million in the fourth quarter of 2013 versus $58.6 million in the fourth quarter of 2012. Net income was $36.2 million versus $11.8 million in the fourth quarters of 2013 and 2012, respectively.

Adjusted amounts

Adjusted EBITDA (A) was $131.9 million in the fourth quarter of 2013 versus $133.7 million posted in the same quarter a year ago. Adjusted operating EBIT (A) was $59.1 million or (4.0)% lower in the quarter compared to $61.6 million in the same period last year. Adjusted net income (A) was $33.4 million, or $0.29 per diluted share, compared to $28.2 million, or $0.24 per diluted share in the comparative period.

Year ended December 31, 2013

For the year ended December 31, 2013, reported revenues increased $129.3 million or 6.8% from $1,896.7 million in 2012 to $2,026.0 million. Expressed on a reportable basis and at FX parity, revenues increased 8.1% on a comparative basis. The increase is due in large part to a 6.2% increase attributable to acquisitions and higher overall core pricing, recycled commodity pricing and volumes.

For the year ended December 31, operating income was $232.9 million in 2013 versus $237.7 million in 2012. Net income was $118.0 million versus $94.4 million for the years ended December 31, 2013 and 2012, respectively.

Adjusted amounts

For the year ended December 31, adjusted EBITDA (A) was $530.8 million or 2.1% higher in 2013 versus $519.7 million in 2012. These results were affected by a negative $0.8 million foreign exchange impact relative to our Q3 2013 guidance foreign exchange assumption. Adjusted operating EBIT (A) was $246.2 million compared to the $246.1 million recorded last year. Adjusted net income (A) was $127.2 million, or $1.10 per diluted share, compared to $113.2 million, or $0.97 per diluted share in the same period last year.

Other highlights for the three months ended December 31, 2013

  • Consolidated core price increased 1.6%, reflecting organic average price change, net of rollbacks and excluding fuel surcharges, across the Company's customer base
  • Consolidated organic volume declined 1.1%. Included in the consolidated organic volume decline in the quarter was an approximately 260 basis point decrease related to Superstorm Sandy volumes we received in the prior year coupled with the completion of three municipal contracts in the Company's Canadian operations and the closure of the Calgary landfill to municipal solid waste. Excluding these three events, our consolidated organic volume growth would have been 1.5%

2014 Outlook

The Company is providing its outlook assuming no change in the current economic environment and excluding the impact of any acquisitions we may complete in 2014. Our outlook has been prepared assuming an FX rate of $0.90.

In fiscal year 2014, we expect solid improvement in revenue, adjusted EBITDA (A) and adjusted EBITDA (A) margins, expressed in constant currency, where constant currency refers to 2013 actual and 2014 outlook amounts translated at the same average FX rate.

Readers are reminded that the Company's 2013 financial results were translated to U.S. dollars at an average FX rate of $0.9707 compared to $0.90 for our 2014 outlook. Readers are further reminded that we earn a significant portion of our revenues and income in Canada. Based on our 2014 guidance outlook, if the U.S. dollar strengthens by one cent our reported revenues will decline by approximately $8,200. EBITDA (A) is similarly impacted by approximately $2,500, assuming a strengthening U.S. dollar. The impact on net income and free cash flow (B) for a similar change in FX rate, results in an approximately $1,100 and $900 decline, respectively. Should the U.S. dollar weaken by one cent, our reported revenues, EBITDA (A) , net income and free cash flow (B) will improve by amounts similar to those outlined above as a result of a strengthening U.S. dollar.

The purpose of presenting this outlook is to provide investors and analysts with our expected results for the coming year.

Our outlook, which is forward-looking, was approved by management on February 12, 2014. Our actual results may differ materially and are subject to risks and uncertainties. Please refer to the 2014 outlook assumptions and factors and Caution regarding forward looking statements sections of this press release for further information.

Our 2014 outlook is as follows (in millions of U.S. dollars, except per share amounts and where otherwise stated ):

2014 Guidance
Revenue $1,990 to $2,010
Adjusted EBITDA (A) $528 to $538
Amortization expense, as a percentage of revenue 14.2 %
Adjusted operating EBIT (A) $245 to $253
Interest on long-term debt $64 to $66
Effective tax rate as a percentage of income before income tax expense and net (income) loss from equity accounted investee 30% to 32 %
Cash taxes (expressed on an adjusted basis) $35 to $37
Adjusted net income (A) per diluted share $1.06 to $1.15
Free cash flow (B) excluding additional internal infrastructure investment $210 to $225
Capital and landfill expenditures excluding internal infrastructure investment and includes net proceeds on sale $212 to $216
Internal infrastructure investment $20
Expected annual cash dividend, payable on a quarterly basis C$0.60 per share

The table set out below, compares our 2014 outlook to our 2013 actual results translated at an average FX rate of $0.90 (in millions of U.S. dollars, except per share amounts and where otherwise stated:

2013 results
translated at
an average FX
rate of 90 cents
2014
Guidance
Revenue $1,970 $1,990 to $2,010
Adjusted EBITDA (A) $513 $528 to $538
Amortization expense, as a percentage of revenue 14.6 % 14.2 %
Adjusted operating EBIT (A) $237 $245 to $253
Interest on long-term debt $57 $64 to $66
Effective tax rate as a percentage of income before income tax expense and net (income) loss from equity accounted investee 33 % 30% to 32 %
Cash taxes (expressed on an adjusted basis) $30 $35 to $37
Adjusted net income (A) per diluted share $1.07 $1.06 to $1.15
Free cash flow (B) excluding additional internal infrastructure investment $224 $210 to $225
Capital and landfill expenditures excluding internal infrastructure investment and includes net proceeds on sale $209 $212 to $216
Internal infrastructure investment $37 $20
Actual or expected annual cash dividend, payable on a quarterly basis C$0.58 per share C$0.60 per share
Progressive Waste Solutions Ltd.
Consolidated Statements of Operations and Comprehensive Income or Loss ("Statement of Operations and Comprehensive Income or Loss")
For the three months (unaudited) and years ended December 31, 2013 (unaudited) and 2012 (stated in accordance with accounting principles generally accepted in the United States of America ("U.S.") and in thousands of U.S. dollars, except share and net income per share amounts)
...
Three months ended Year ended
2013 2012 2013 2012
REVENUES $ 502,007 $ 495,822 $ 2,026,039 $ 1,896,741
EXPENSES
OPERATING 310,193 305,236 1,249,252 1,154,764
SELLING, GENERAL AND ADMINISTRATION 60,671 59,814 255,173 230,740
AMORTIZATION 73,379 71,766 296,491 274,118
NET (GAIN) LOSS ON SALE OF CAPITAL ASSETS (566 ) 383 (7,793 ) (592 )
OPERATING INCOME 58,330 58,623 232,916 237,711
INTEREST ON LONG-TERM DEBT 15,482 14,494 60,754 57,428
NET FOREIGN EXCHANGE LOSS (GAIN) 419 (3 ) (1,061 ) 9
NET (GAIN) LOSS ON FINANCIAL INSTRUMENTS (5,819 )