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WASTE CONNECTIONS REPORTS SECOND QUARTER 2022 RESULTS AND RAISES FULL YEAR OUTLOOK

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  • 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.

Waste Connections logo. (PRNewsFoto/Waste Connections, Inc.) (PRNewsFoto/WASTE CONNECTIONS_ INC_)
Waste Connections logo. (PRNewsFoto/Waste Connections, Inc.) (PRNewsFoto/WASTE CONNECTIONS_ INC_)

"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