Advanced Disposal reports $20 million loss in Q4 2016

Advanced Disposal Services Inc., Ponte Vedra, Florida, has announced revenue for the three months ended Dec. 31, 2016 of $352 million versus $349.6 million in the same period of the prior year. Net loss during fourth quarter 2016 was $20.1 million, or $0.24 per share, versus a net loss of $8.8 million, or $0.14 per share, in fourth quarter 2015. The company achieved quarterly adjusted earnings before interest, tax, depreciation and amortization (EBITDA) and adjusted EBITDA margins of $107.7 million and 30.6 percent, respectively, or an increase of $6.2 million in adjusted EBITDA and 160 basis points in adjusted EBITDA margins versus fourth quarter 2015.

During the fourth quarter, the company completed its initial public offering, which raised nearly $375 million net of fees between the initial share issuance and the underwriters exercising their option to purchase additional shares. Those proceeds were used to repay debt, driving improvements in the company's leverage ratio. The company says it also received credit ratings upgrades by both Standard & Poor's and Moody's.

Based on the momentum generated from the initial public offering and subsequent ratings upgrades, the company refinanced its outstanding debt and credit facility in the fourth quarter. This debt refinancing coupled with the debt repayments from the initial public offering is expected to save the company over $30 million in cash interest savings annually.

A $64.7 million pretax loss on debt extinguishments and modifications was recorded, which is the driver of the decline of fourth quarter net income. However, fourth quarter adjusted net income, which includes an adjustment for the debt refinancing charge, was $17.2 million or an increase of $11.7 million versus fourth quarter 2015. Strong pricing was a key driver of the increase in adjusted net income with average yield for the quarter of 2.7 percent. Additionally, the company benefited from the rollover impact of accretive acquisitions exceeding lower margin divestitures.

For the full year ended Dec. 31, 2016, revenue was $1,404.6 million versus $1,396.4 million for the prior year period. Net loss improved $3.2 million to $30.4 million, and adjusted net income increased $17.6 million to $33.5 million. Additionally, adjusted EBITDA of $411.1 million was $11.1 million better year-over-year, and adjusted EBITDA margins also improved 70 basis points to 29.3 percent.

"Advanced Disposal has undergone transformational changes during 2016," says Richard Burke, CEO. "I am pleased we were able to improve our capital structure and begin the next chapter of our company's history as a public company, while at the same time producing strong results for both fourth quarter and the full year 2016. We were also able to continue to execute on our strategy of entering vertically integrated operations in secondary markets earlier this month by closing on the acquisition of CGS Services Inc. in Indiana. Overall, the combination of continued execution of our operating strategy, along with capital structure improvements, positions us well to generate strong cash provided by operating activities in 2017."

Advanced Disposal's guidance is based on current economic conditions and does not assume any significant changes in the overall economy during 2017.

• Revenue is estimated to be between $1,450 million and $1,475 million.This includes $25 million of revenue in 2017 related to the company's recently announced acquisition of CGS Services, Inc.
• Adjusted EBITDA is estimated to be between $423 million and $433 million.
• Capital expenditures are estimated to be between$171 million and $180 million.
• Adjusted free cash flow is estimated to be between $121 million and $141 million.

The full release is available here.