Waste Connections increases profits in Q4 2016

Waste Connections Inc., Toronto, has announced its results for the fourth quarter of 2016. Revenue in the fourth quarter, which included $497.9 million from the Progressive Waste acquisition completed on June 1, 2016, totaled $1.049 billion, up from $531.9 million in the year ago period.

Operating income, which included $23.0 million of impairments and other items primarily related to the expected divestiture of certain assets acquired in the Progressive Waste acquisition and $16.0 million of items also related to that transaction, was $139.2 million compared to $101.7 million in the fourth quarter of 2015, which included acquisition-related transaction costs of $2.9 million associated with the acquisition of Rock River Environmental Services.

Net income attributable to Waste Connections in the fourth quarter was $85.6 million, or $0.49 per share on a diluted basis of 175.9 million shares. In the year ago period, the company reported net income attributable to Waste Connections of $52.1 million, or $0.42 per share on a diluted basis of 123.1 million shares.

Adjusted net income attributable to Waste Connections in the fourth quarter was $120.3 million, or $0.68 per share, versus $59.8 million, or $0.49 per share, in the prior year period. Adjusted EBITDA (Earnings Before Interest, Tax, Depreciation and Amortization) in the fourth quarter was $325.4 million, as compared to adjusted EBITDA of $175.6 million in the prior year period. Adjusted net income attributable to Waste Connections, adjusted net income attributable to Waste Connections per diluted share and adjusted EBITDA, all non-GAAP measures, primarily exclude the impact of acquisition-related items and impairments and other operating items, as reflected in the detailed reconciliation in the attached tables.

"Our acquisition of Progressive Waste made 2016 a transformational year for Waste Connections,” says Ronald J. Mittelstaedt, chairman and CEO. “More importantly, our culture and operating playbook enabled us to drive significant improvements in safety, quality of revenue and operating performance within these operations, all pacing 12 to 18 months ahead of our initial expectations. This was evident in the fourth quarter as our results once again exceeded expectations. This underlying strength, together with the previously announced acquisition of Groot Industries and continuing improvements in recycled commodity values and E&P waste activity, should position us well for 2017.”

Mittelstaedt adds, "Free cash flow generation is synonymous with our name. Waste Connections' industry-leading 50-plus percent conversion of EBITDA to free cash flow should drive a more than 15 percent year-over-year increase in free cash flow per share in 2017, and our strong financial profile provides us the flexibility to fund a continuing, above average amount of expected acquisition activity while increasing the return of capital to shareholders."

For the year ended Dec. 31, 2016, revenue was $3.376 billion, as compared to revenue of $2.117 billion in 2015. Operating income, which included $118.3 million of items primarily related to the Progressive Waste acquisition and $27.7 million of impairments and other items, was $452.3 million, compared to operating loss of $61.5 million in the prior year. In 2015, the Company recorded net impairment charges of approximately $497.1 million against its E&P segment.

Net income attributable to Waste Connections in 2016 was $246.5 million, or $1.60 per share on a diluted basis of 154.1 million shares. In 2015, the Company reported net loss attributable to Waste Connections of $95.8 million, or $0.78 per share on a diluted basis of 123.5 million shares.

Adjusted net income attributable to Waste Connections in 2016 was $395.2 million, or $2.57 per share, compared to $244.9 million, or $1.98 per share, in the prior year. Adjusted EBITDA* in 2016 was $1.071 billion, as compared to $710.6 million in the prior year.

Waste Connections also announced its outlook for 2017, which assumes no change in the current economic environment. The company's outlook excludes any impact from additional divestitures and 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 Securities and Exchange Commission and the securities commissions or similar regulatory authorities in Canada. Certain components of the outlook for 2017 are subject to quarterly fluctuations.

• Revenue is estimated to be approximately $4.45 billion.
• Adjusted EBITDA is estimated to be approximately $1.41 billion, or about 31.7 percent of revenue.
• Adjusted free cash flow is estimated to be approximately $725 million, or about 16.3 percent of revenue
  

The full release is available here.