Waste Connections Reports Fourth Quarter Results And Provides 2014 Outlook

THE WOODLANDS, Texas, Feb. 10, 2014 /PRNewswire/ -- Waste Connections, Inc. (NYSE: WCN) today announced its results for the fourth quarter of 2013.  Revenue totaled $485.9 million, an 8.3% increase over revenue of $448.8 million in the year ago period.  Operating income was $99.1 million compared to $80.2 million in the fourth quarter of 2012.  Adjusted EBITDA* in the fourth quarter was $164.5 million, or 33.9% of revenue, compared to $142.3 million, or 31.7% of revenue, in the prior year period.  Adjusted EBITDA, a non-GAAP measure, excludes the impact of items such as acquisition-related costs and expenses incurred in connection with the relocation of our corporate headquarters from California to Texas, as shown in the detailed reconciliation in the attached table.

Net income attributable to Waste Connections in the quarter was $49.4 million, or $0.40 per share on a diluted basis of 124.4 million shares.  In the year ago period, the Company reported net income attributable to Waste Connections of $36.0 million, or $0.29 per share on a diluted basis of 123.7 million shares.

Adjusted net income attributable to Waste Connections* in the quarter was $54.5 million, or $0.44 per share, versus $45.9 million, or $0.37 per share, in the prior year period.  Adjusted net income and adjusted net income per diluted share, both non-GAAP measures, primarily exclude the impact of acquisition-related items such as amortization of intangibles, transaction costs and adjustment to accrued deferred tax liabilities, as well as expenses incurred in connection with the relocation of our corporate headquarters from California to Texas, all net of tax, as shown in the detailed reconciliation in the attached table.

"Continuing strength in solid waste disposal volumes, E&P waste and roll off activity enabled us to exceed the upper end of our fourth quarter outlook and provide a good entry point into 2014.  We met our full year 2013 adjusted free cash flow* target of $300 million despite pulling forward into 2013 an additional $20 million of capital expenditures and constructing our new E&P landfill in the West Texas Permian," said Ronald J. Mittelstaedt, Chairman and Chief Executive Officer.  "As we look at 2014, we believe we are uniquely positioned to both expand margins and, more importantly, increase free cash flow.  Consistent pricing growth within solid waste and expected double-digit growth in higher margin E&P waste activity should drive our margin expansion.  Expected growth in free cash flow is particularly notable given the anticipated increase in cash taxes resulting from the loss of bonus depreciation." 

Mr. Mittelstaedt added, "With over $325 million of free cash flow expected in the upcoming year, we remain well positioned to both fund additional growth opportunities, including potential acquisitions and newly permitted E&P waste facilities, and increase the return of capital to stockholders."

For the year ended December 31, 2013, revenue was $1.93 billion, a 16.1% increase over revenue of $1.66 billion in 2012.  Operating income was $394.7 million compared to $316.1 million in the prior year.  Adjusted EBITDA* in 2013 was $657.0 million, or 34.1% of revenue, compared to $528.4 million, or 31.8% of revenue, in the prior year.

Net income attributable to Waste Connections in 2013 was $195.7 million, or $1.58 per share on a diluted basis of 124.2 million shares.  In 2012, the Company reported net income attributable to Waste Connections of $159.1 million, or $1.31 per share on a diluted basis of 121.8 million shares.  Adjusted net income attributable to Waste Connections* in 2013 was $221.8 million, or $1.79 per share, compared to $188.1 million, or $1.54 per share, in the prior year.

2014 OUTLOOK

Waste Connections also announced its outlook for 2014, which assumes no change in the current economic environment.  The Company's outlook excludes the impact of any additional acquisitions, potential newly permitted E&P waste facilities, and expensing of acquisition-related transaction costs.  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 2014 are subject to quarterly fluctuations.

• Revenue is estimated to be between $2.02 billion and $2.04 billion.
• Adjusted EBITDA* is estimated to be between $700 million and $705 million, or approximately 34.6% of revenue, the components of which as a percentage of revenue are as follows:
  • Operating income is estimated to be approximately 22.0% of revenue;
  • Depreciation and depletion expense is estimated to be approximately 11.2% of revenue;
  • Amortization of intangibles expense is estimated to be approximately 1.3% of revenue; and,
  • Closure and post-closure accretion expense is estimated to be approximately 0.15% of revenue.
• Net interest expense is estimated to be approximately $67.5 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 $1.0 million.
• Net cash provided by operating activities is estimated to be approximately 25.5% of revenue.
• Capital expenditures are estimated to be between $180 million and $190 million.

CONFERENCE CALL

Waste Connections will be hosting a conference call related to fourth quarter earnings and 2014 outlook on February 11^th at 8:30 A.M. Eastern Time.  The call will be broadcast live over the Internet at www.streetevents.com or through a link on our website at www.wasteconnections.com.  A playback of the call will be available at both of these websites.

Waste Connections, Inc. is an integrated solid waste services company that provides waste collection, transfer, disposal and recycling services in mostly exclusive and secondary markets.  Through its R360 Environmental Solutions subsidiary, the Company also is a leading provider of non-hazardous oilfield waste treatment, recovery and disposal services in several of the most active natural resource producing areas in the United States, including the Permian, Bakken and Eagle Ford Basins.  Waste Connections serves more than two million residential, commercial, industrial, and exploration and production customers from a network of operations in 31 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:  expected operating performance, pricing growth, volume growth and margin growth; expected 2014 financial results, capital expenditures and outlook; the Company's ability to finance additional growth opportunities; and the expected amount of capital returned to stockholders.  These statements can be identified by the use of forward-looking terminology such as "believes," "expects," "may," "will," "should," or "anticipates," or the negative thereof or comparable terminology, or by discussions of strategy.  Factors that could cause actual results to differ from those projected include, but are not limited to, the following:  (1) our results are vulnerable to economic conditions; (2) our industry is highly competitive and includes larger and better capitalized companies, companies with lower prices, return expectations or other advantages, and governmental service providers, which could adversely affect our ability to compete and our operating results; (3) our E&P waste business depends on the level of drilling and production activity in the basins in which we operate and the willingness of E&P companies to outsource their waste services activities; (4) we have limited experience in running an E&P waste treatment, recovery and disposal business; (5) competition for acquisition candidates, consolidation within the waste industry and economic and market conditions may limit our ability to grow through acquisitions; (6)  our indebtedness could adversely affect our financial condition and limit our financial flexibility; (7) price increases may not be adequate to offset the impact of increased costs, or may cause us to lose volume; (8) fluctuations in prices for recycled commodities that we sell and rebates we offer to customers may cause our revenues and operating results to decline; (9) the seasonal nature of our business and "event-driven" waste projects cause our results to fluctuate; (10) we may lose contracts through competitive bidding, early termination or governmental action; (11) increases in labor costs could impact our financial results; (12) increases in the price of diesel or compressed natural gas fuel may adversely affect our collection business and reduce our operating margins; (13) labor union activity could divert management attention and adversely affect our operating results; (14) we could face significant withdrawal liability if we withdraw from participation in one or more multiemployer pension plans in which we participate and the accrued pension benefits are not fully funded; (15) our financial results could be adversely affected by impairments of goodwill or indefinite-lived intangibles; (16) we may incur charges related to capitalized expenditures of landfill development projects, which would decrease our earnings; (17) pending or future litigation or governmental proceedings could result in material adverse consequences, including judgments or settlements; (18) 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; (19) increases in insurance costs and the amount that we self-insure for various risks could reduce our operating margins and reported earnings; (20) a portion of our growth and future financial performance depends on our ability to integrate acquired businesses, and the success of our acquisitions; (21) each business that we acquire or have acquired may have liabilities or risks that we fail or are unable to discover, or that become more adverse to our business than we anticipated at the time of acquisition; (22) our financial results are based upon estimates and assumptions that may differ from actual results; (23) our accruals for our landfill site closure and post-closure costs may be inadequate; (24) we depend significantly on the services of the members of our senior and regional management team, and the departure of any of those persons could cause our operating results to suffer; (25) our decentralized decision-making structure could allow local managers to make decisions that adversely affect our operating results; (26) liabilities for environmental damage may adversely affect our financial condition, business and earnings; (27) we rely on computer systems to run our business and disruptions or privacy breaches in these systems could impact our ability to service our customers and adversely affect our financial results, damage our reputation, and expose us to litigation risk; and (28) 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 –

SOURCE Waste Connections, Inc.