Fourth Quarter Highlights

  • Strong price-led organic growth and acquisition activity, along with continuing underlying margin expansion, drives Q4 results above expectations and provides higher entry point into 2022
  • Revenue of $1.624 billion, net income(a) of $166.3 million, and adjusted EBITDA(b) of $495.4 million, or 30.5% of revenue
  • Net income and adjusted net income(b) of $0.64 and $0.83 per share, respectively

Full Year 2021 Highlights

  • Revenue of $6.151 billion, up 13.0%
  • Net income of $618.0 million, or $2.36 per share, and adjusted net income(b) of $846.6 million, or $3.23 per share, up 22.3%
  • Adjusted EBITDA(b) of $1.919 billion, up 15.5%, and adjusted EBITDA margin of 31.2%, up 70 basis points
  • Net cash provided by operating activities of $1.698 billion, up 20.6%
  • Adjusted free cash flow(b) of $1.010 billion, up 19.9% on capital expenditures of $744.3 million, up 24.7%
  • Completes acquisitions with approximately $400 million of total annualized revenue in 2021

Expectations for 2022

  • Strong pricing and acquisition growth to drive double digit percentage increases in revenue and adjusted free cash flow(b), along with continuing underlying margin expansion
  • Revenue of approximately $6.875 billion, up 11.8%, excluding additional acquisitions
  • Net income of approximately $846 million and adjusted EBITDA(b) of approximately $2.145 billion, or about 31.2% of revenue
  • Net cash provided by operating activities of approximately $2.000 billion
  • Adjusted free cash flow(b) of approximately $1.150 billion, up 13.9%, on capital expenditures up 14.2% to approximately $850 million, including $100 million for new landfill gas and resource recovery facilities
  • Increasing return of capital to shareholders, including opportunistic share repurchases

 

TORONTO, Feb. 16, 2022 /PRNewswire/ -- Waste Connections, Inc. (TSX/NYSE: WCN) ("Waste Connections" or the "Company") today announced its results for the fourth quarter of 2021 and outlook for 2022.   

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

"2021's results are a reflection of how a culture of commitment and accountability to all stakeholders enabled us to excel in a challenging operating environment, overcome inflationary pressures and supply chain issues, execute our growth strategy, expand margins, support employee health and welfare, and position the Company well for 2022 and beyond.  The year ended on a high note, as strong solid waste organic growth and acquisition activity, along with continuing underlying margin expansion, drove Q4 financial results once again above expectations.  We are also extremely pleased with our results for the full year, as adjusted EBITDA(b) margin expanded 70 basis points.  Moreover, we delivered 20% growth in adjusted free cash flow(b)  to $1.010 billion, in spite of capital expenditures up 25%, as we continued to reinvest in and grow our business," said Worthing F. Jackman, President and Chief Executive Officer. 

"Acquisition activity accelerated in the fourth quarter, resulting in approximately $400 million in acquired annualized revenues in 2021 and setting up acquisition contribution approaching 6% in 2022, including transactions completed year to date.  Along with solid waste pricing growth of about 6.5%, this already positions us for double-digit percentage growth in revenue, adjusted EBITDA(b) and adjusted free cash flow(b) in 2022.  Additional acquisitions expected to be completed during the year, improvement in commodity-driven revenues and E&P waste activity, or moderation of inflationary trends would provide incremental benefit."

Mr. Jackman continued, "The strength and consistency of our results reflect the durability of our market model and the benefits of an intentional culture focused on employees and value creation.  Proactive pricing, along with a step-up in capital expenditures and over $1 billion in acquisition outlays in 2021, positions us for continued double digit growth in 2022, while preserving the balance sheet strength and flexibility to capitalize on another potential above average year of acquisition activity, invest in sustainability-focused growth projects and increase return of capital to shareholders."

Q4 2021 Results

Revenue in the fourth quarter totaled $1.624 billion, up from $1.398 billion in the year ago period.  Operating income was $249.3 million, which included $28.4 million primarily related to impairments and other acquisition-related costs.  This compares to operating income of $197.1 million in the fourth quarter of 2020, which included $29.0 million primarily related to impairments and other acquisition-related costs.  Net income in the fourth quarter was $166.3 million, or $0.64 per share on a diluted basis of 261.3 million shares.  In the year ago period, the Company reported net income of $130.7 million, or $0.50 per share on a diluted basis of 263.6 million shares. 

Adjusted net income(b) in the fourth quarter was $217.1 million, or $0.83 per diluted share, versus $178.6 million, or $0.68 per diluted share, in the prior year period.  Adjusted EBITDA(b) in the fourth quarter was $495.4 million and 30.5% of revenue, as compared to $426.6 million and 30.5% of revenue 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.

Full Year 2021 Results

For the year ended December 31, 2021, revenue was $6.151 billion, up from $5.446 billion in the year ago period.  Operating income, which included $32.3 million in impairments and other operating items, $11.3 million in acquisition-related costs, and $8.4 million in fair value accounting changes to equity awards, was $1.040 billion, as compared to operating income of $412.4 million for the same period in 2020, which included $482.1 million in costs primarily related to impairments and other operating items. 

Net income in 2021 was $618.0 million, or $2.36 per share on a diluted basis of 261.7 million shares.  In the year ago period, the Company reported net income of $204.7 million, or $0.78 per share on a diluted basis of 263.7 million shares. 

Adjusted net income(b) in 2021 was $846.6 million, or $3.23 per diluted share, compared to $695.8 million, or $2.64 per diluted share, in the year ago period. Adjusted EBITDA(b) in 2021 was $1.919 billion and 31.2% of revenue, up from $1.662 billion and 30.5% of revenue in the prior year period. 

2022 Outlook

Waste Connections also announced its outlook for 2022, which assumes no change in the current economic environment.  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 at approximately $6.875 billion;
  • Net income is estimated at approximately $846 million;
  • Adjusted EBITDA(b) is estimated at approximately $2.145 billion, or about 31.2% of revenue;
  • Net cash provided by operating activities is estimated at approximately $2.0 billion;
  • Capital expenditures are estimated to be approximately $850 million;
  • Adjusted free cash flow(b) is estimated at approximately $1.150 billion, or 16.7% of revenue; and
  • Fully diluted share count is estimated at 259.0 million.

Q4 2021 Earnings and 2022 Outlook Conference Call

Waste Connections will be hosting a conference call related to fourth quarter earnings and 2022 outlook on February 17th 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 800-935-9319 (within North America) or 212-231-2925 (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 February 24th, 2022, by calling 800-633-8284 (within North America) or 402-977-9140 (international) and entering Passcode #22014930.

Waste Connections will be filing a Form 8-K on EDGAR and on SEDAR (as an "Other" document) prior to markets opening on February 17th, providing the Company's first quarter 2022 outlook for revenue, price plus volume growth for solid waste, and adjusted EBITDA(b).

------------------------------------------------------------------------------------------------------------------

 (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.

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. 

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 updated 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.

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 financial results, outlook and related assumptions, potential acquisition activity and return of capital to shareholders. 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 TWELVE MONTHS ENDED DECEMBER 31, 2020 AND 2021
(Unaudited)
(in thousands of U.S. dollars, except share and per share amounts)




Three months ended

December 31,


Twelve months ended

December 31,





2020


2021


2020


2021












Revenues


$

1,398,251


$

1,624,319


$

5,445,990


$

6,151,361


Operating expenses:














Cost of operations



846,851



980,865



3,276,808



3,654,074


Selling, general and administrative



133,419



157,452



537,632



612,337


Depreciation



161,462



175,142



621,102



673,730


Amortization of intangibles



35,239



39,042



131,302



139,279


Impairments and other operating items



24,136



22,497



466,718



32,316


Operating income



197,144



249,321



412,428



1,039,625
















Interest expense



(42,813)



(38,625)



(162,375)



(162,796)


Interest income



857



573



5,253



2,916


Other income (expense), net



1,654



833



(1,392)



6,285


Loss on early extinguishment of debt



-



-



-



(115,288)


Income before income tax provision



156,842



212,102



253,914



770,742
















Income tax provision



(26,268)



(45,675)



(49,922)



(152,253)


Net income



130,574



166,427



203,992



618,489


Plus (less): Net loss (income) attributable to
noncontrolling interests



90



(117)



685



(442)


Net income attributable to Waste Connections


$

130,664


$

166,310


$

204,677


$

618,047
















Earnings per common share attributable to
Waste Connections' common shareholders:














Basic


$

0.50


$

0.64


$

0.78


$

2.37
















Diluted


$

0.50


$

0.64


$

0.78


$

2.36
















Shares used in the per share calculations:














Basic



263,001,985



260,547,806



263,189,699



261,166,723


Diluted



263,598,602



261,258,425



263,687,539



261,728,470






























Cash dividends per common share


$

0.205


$

0.230


$

0.760


$

0.845





















 

WASTE CONNECTIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands of U.S. dollars, except share and per share amounts)




December 31,

2020


December 31,

2021


ASSETS








Current assets:








Cash and equivalents


$

617,294


$

147,441


Accounts receivable, net of allowance for credit losses of $19,380 and $18,480 at
December 31, 2020 and 2021, respectively



630,264



709,614


Prepaid expenses and other current assets



160,714



175,722


Total current assets



1,408,272



1,032,777


Restricted cash



97,095



72,174


Restricted investments



57,516



59,014


Property and equipment, net



5,284,506



5,721,949


Operating lease right-of-use assets



170,923



160,567


Goodwill



5,726,650



6,187,643


Intangible assets, net



1,155,079



1,350,597


Other assets, net



92,323



115,203


Total assets


$

13,992,364


$

14,699,924


LIABILITIES AND EQUITY








Current liabilities:








Accounts payable


$

290,820


$

392,868


Book overdraft



17,079



16,721


Deferred revenue



233,596



273,720


Accrued liabilities



404,923



442,596


Current portion of operating lease liabilities



30,671



38,017


Current portion of contingent consideration



43,297



62,804


Current portion of long-term debt and notes payable



8,268



6,020


Total current liabilities



1,028,654



1,232,746










Long-term portion of debt and notes payable



4,708,678



5,040,500


Long-term portion of operating lease liabilities



147,223



129,628


Long-term portion of contingent consideration



28,439



31,504


Deferred income taxes



760,044



850,921


Other long-term liabilities



455,888



421,080


Total liabilities



7,128,926



7,706,379


Commitments and contingencies








Equity:








Common shares: 262,899,174 shares issued and 262,824,990 shares outstanding at 
     December 31, 2020; 260,283,158 shares issued and 260,212,496 shares outstanding 
     at December 31, 2021



4,030,368



3,693,027


Additional paid-in capital



170,555



199,482


Accumulated other comprehensive income (loss)



(651)



39,584


Treasury shares: 74,184 and 70,662 shares at December 31, 2020 and 2021, 
     respectively



-



-


Retained earnings



2,659,001



3,056,845


Total Waste Connections' equity



6,859,273



6,988,938


Noncontrolling interest in subsidiaries



4,165



4,607


Total equity



6,863,438



6,993,545




$

13,992,364


$

14,699,924


 

WASTE CONNECTIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
TWELVE MONTHS ENDED DECEMBER 31, 2020 AND 2021
(Unaudited)
(in thousands of U.S. dollars)




Twelve months ended December 31,




2020


2021


Cash flows from operating activities:








Net income


$

203,992


$

618,489


Adjustments to reconcile net income to net cash provided by operating activities:








Loss on disposal of assets and impairments



445,647



27,727


Depreciation



621,102



673,730


Amortization of intangibles



131,302



139,279


Loss on early extinguishment of debt



-



115,288


Deferred income taxes, net of acquisitions



(50,487)



14,563


Current period provision for expected credit losses



15,509



9,719


Amortization of debt issuance costs



7,509



5,055


Share-based compensation



45,751



58,221


Interest accretion



17,205



15,970


Payment of contingent consideration recorded in earnings



(10,371)



(520)


Adjustments to contingent consideration



18,418



2,954


Other



2,426



(1,260)


Net change in operating assets and liabilities, net of acquisitions



(39,482)



19,014


Net cash provided by operating activities



1,408,521



1,698,229










Cash flows from investing activities:








Payments for acquisitions, net of cash acquired



(388,789)



(960,449)


Capital expenditures for property and equipment



(597,053)



(744,315)


Capital expenditures for undeveloped landfill property



(67,508)



-


Investment in noncontrolling interest



-



(25,000)


Proceeds from disposal of assets



19,084



42,768


Other



(11,777)



(6,486)


Net cash used in investing activities



(1,046,043)



(1,693,482)










Cash flows from financing activities:








Proceeds from long-term debt



1,815,625



2,112,193


Principal payments on notes payable and long-term debt



(1,542,958)



(1,893,100)


Premiums paid on early extinguishment of debt



-



(110,617)


Payment of contingent consideration recorded at acquisition date



(12,566)



(12,934)


Change in book overdraft



1,096



(367)


Payments for repurchase of common shares



(105,654)



(338,993)


Payments for cash dividends



(199,883)



(220,203)


Tax withholdings related to net share settlements of equity-based compensation



(23,446)



(18,606)


Debt issuance costs



(11,117)



(18,521)


Proceeds from issuance of shares under employee share purchase plan



-



1,222


Proceeds from sale of common shares held in trust



679



430


Net cash used in financing activities



(78,224)



(499,496)


Effect of exchange rate changes on cash, cash equivalents and restricted cash



6,914



(25)


Net increase (decrease) in cash, cash equivalents and restricted cash



291,168



(494,774)


Cash, cash equivalents and restricted cash at beginning of year



423,221



714,389


Cash, cash equivalents and restricted cash at end of year


$

714,389


$

219,615


 

ADDITIONAL STATISTICS

 (in thousands of U.S. dollars, except where noted)


Solid Waste Internal Growth:  The following table reflects a breakdown of the components of our solid waste internal growth for the three and twelve month periods ended December 31, 2021:




Three months ended
December 31, 2021


Twelve months
ended December 31,
2021

Core Price


5.0

%


4.7

%

Surcharges


0.7

%


0.3

%

Volume


1.2

%


1.6

%

Recycling


2.6

%


1.8

%

Foreign Exchange Impact


0.5

%


0.9

%

Total


10.0

%


9.3

%

 

Revenue Breakdown: The following table reflects a breakdown of our revenue for the three month periods ended December 31, 2020 and 2021:




 Three months ended December 31, 2020



Revenue


Inter-company

Elimination


Reported

Revenue


%

Solid Waste Collection


$

1,024,099


$

(3,341)


$

1,020,758


73.0

%

Solid Waste Disposal and Transfer



493,093



(200,272)



292,821


20.9

%

Solid Waste Recycling



26,688



(909)



25,779


1.9

%

E&P Waste Treatment, Recovery and Disposal



27,690



(2,163)



25,527


1.8

%

Intermodal and Other



33,427



(61)



33,366


2.4

%

Total


$

1,604,997


$

(206,746)


$

1,398,251


100.0

%







Three months ended December 31, 2021



Revenue


Inter-company

Elimination


Reported
Revenue


%

Solid Waste Collection


$

1,169,428


$

(2,780)


$

1,166,648


71.8

%

Solid Waste Disposal and Transfer



533,122



(216,957)



316,165


19.5

%

Solid Waste Recycling



75,317



(5,646)



69,671


4.3

%

E&P Waste Treatment, Recovery and Disposal



37,570



(3,244)



34,326


2.1

%

Intermodal and Other



39,592



(2,083)



37,509


2.3

%

Total


$

1,855,029


$

(230,710)


$

1,624,319


100.0

%




Contribution from Acquisitions: The following table reflects revenues from acquisitions, net of divestitures, for the three and twelve month periods ended December 31, 2020 and 2021:




Three months ended
December 31,


Twelve months ended

December 31,



2020


2021


2020


2021

Acquisitions, net


$

52,721


$

79,363


$

197,231


$

215,398




ADDITIONAL STATISTICS (continued)

(in thousands of U.S. dollars, except where noted)


Other Cash Flow Items: The following table reflects cash interest and cash taxes for the three and twelve month periods ended December 31, 2020 and 2021:




Three months ended

December 31,


Twelve months ended

December 31,



2020


2021


2020


2021

Cash Interest Paid


$

55,910


$

36,839


$

142,310


$

157,485

Cash Taxes Paid



43,603



56,094



104,618



146,198


Debt to Book Capitalization as of December 31, 2021: 42%


Internalization for the three months ended December 31, 2021: 55%


Days Sales Outstanding for the three months ended December 31, 2021: 40 (25 net of deferred revenue)


Share Information for the three months ended December 31, 2021:





Basic shares outstanding


260,547,806

Dilutive effect of equity-based awards 


710,619

Diluted shares outstanding


261,258,425

 

NON-GAAP RECONCILIATION SCHEDULE
(in thousands of U.S. dollars, except where noted)


Reconciliation of Adjusted EBITDA:


Adjusted EBITDA, a non-GAAP financial measure, is provided supplementally because it is widely used by investors as a performance and valuation measure in the solid waste industry.  Management uses adjusted EBITDA as one of the principal measures to evaluate and monitor the ongoing financial performance of Waste Connections' operations.  Waste Connections defines adjusted EBITDA as net income attributable to Waste Connections, plus or minus net income (loss) attributable to noncontrolling interests, plus income tax provision, plus interest expense, less interest income, plus depreciation and amortization expense, plus closure and post-closure accretion expense, plus or minus any loss or gain on impairments and other operating items, plus other expense, less other income, plus loss on early extinguishment of debt.  Waste Connections further adjusts this calculation to exclude the effects of other items management believes impact the ability to assess the operating performance of its business.  This measure is not a substitute for, and should be used in conjunction with, GAAP financial measures.  Other companies may calculate adjusted EBITDA differently. 




Three months ended

December 31,


Twelve months ended

December 31,



2020


2021


2020


2021

Net income attributable to Waste Connections


$

130,664


$

166,310


$

204,677


$

618,047

Plus/(less): Net income (loss) attributable to noncontrolling 
     interests



(91)



117



(685)



442

Plus: Income tax provision



26,269



45,675



49,922



152,253

Plus: Interest expense



42,813



38,625



162,375



162,796

Less: Interest income



(857)



(573)



(5,253)



(2,916)

Plus: Depreciation and amortization



196,701



214,184



752,404



813,009

Plus: Closure and post-closure accretion



3,755



3,579



15,095



14,497

Plus: Impairments and other operating items



24,136



22,497



466,718



32,316

Plus/(less): Other expense (income), net



(1,654)



(833)



1,392



(6,285)

Plus: Loss on early extinguishment of debt



-



-



-



115,288

Adjustments:













Plus: Transaction-related expenses(a)



5,306



5,098



9,803



11,318

Plus/(less): Fair value changes to equity awards(b)



(485)



755



5,536



8,393

Adjusted EBITDA


$

426,557


$

495,434


$

1,661,984


$

1,919,158














As % of revenues



30.5%



30.5%



30.5%



31.2%

____________________________

(a)  Reflects the addback of acquisition-related transaction costs.

(b)  Reflects fair value accounting changes associated with certain equity awards.

 

NON-GAAP RECONCILIATION SCHEDULE (continued)
(in thousands of U.S. dollars, except where noted)


Reconciliation of Adjusted Free Cash Flow:


Adjusted free cash flow, a non-GAAP financial measure, is provided supplementally because it is widely used by investors as a valuation and liquidity measure in the solid waste industry.  Management uses adjusted free cash flow as one of the principal measures to evaluate and monitor the ongoing financial performance of Waste Connections' operations.  Waste Connections defines adjusted free cash flow as net cash provided by operating activities, plus or minus change in book overdraft, plus proceeds from disposal of assets, less capital expenditures for property and equipment and distributions to noncontrolling interests.  Waste Connections further adjusts this calculation to exclude the effects of items management believes impact the ability to assess the operating performance of its business.  This measure is not a substitute for, and should be used in conjunction with, GAAP liquidity or financial measures.  Other companies may calculate adjusted free cash flow differently. 




Twelve months ended

December 31,




2020


2021


Net cash provided by operating activities


$

1,408,521


$

1,698,229


Plus/(less): Change in book overdraft



1,096



(367)


Plus: Proceeds from disposal of assets



19,084



42,768


Less: Capital expenditures for property and equipment



(597,053)



(744,315)


Adjustments:








   Payment of contingent consideration recorded in earnings(a)



10,371



520


Cash received for divestitures(b)



(10,673)



(17,118)


Transaction-related expenses(c)



9,803



30,771


Pre-existing Progressive Waste share-based grants(d)



5,770



397


Tax effect(e)



(5,021)



(1,287)


Adjusted free cash flow


$

841,898


$

1,009,598










As % of revenues



15.5%



16.4%



___________________________

(a) 

Reflects the addback of acquisition-related payments for contingent consideration that were recorded as expenses in earnings and as a component of cash flows from operating activities as the amounts paid exceeded the fair value of the contingent consideration recorded at the acquisition date.

(b) 

Reflects the elimination of cash received in conjunction with the divestiture of certain operations.

(c) 

Reflects the addback of acquisition-related transaction costs and settlement of an acquired compensation liability.

(d) 

Reflects the cash settlement of pre-existing Progressive Waste share-based awards during the period.

(e) 

The aggregate tax effect of footnotes (a) through (d) is calculated based on the applied tax rates for the respective periods.

 

NON-GAAP RECONCILIATION SCHEDULE (continued)
(in thousands of U.S. dollars, except per share amounts)


Reconciliation of Adjusted Net Income attributable to Waste Connections and Adjusted Net Income per Diluted Share attributable to Waste Connections:


Adjusted net income attributable to Waste Connections and adjusted net income per diluted share attributable to Waste Connections, both non-GAAP financial measures, are provided supplementally because they are widely used by investors as a valuation measure in the solid waste industry.  Management uses adjusted net income attributable to Waste Connections and adjusted net income per diluted share attributable to Waste Connections as one of the principal measures to evaluate and monitor the ongoing financial performance of Waste Connections' operations.  Waste Connections provides adjusted net income attributable to Waste Connections to exclude the effects of items management believes impact the comparability of operating results between periods.  Adjusted net income attributable to Waste Connections has limitations due to the fact that it excludes items that have an impact on the Company's financial condition and results of operations.  Adjusted net income attributable to Waste Connections and adjusted net income per diluted share attributable to Waste Connections are not a substitute for, and should be used in conjunction with, GAAP financial measures.  Other companies may calculate these non-GAAP financial measures differently. 




Three months ended

December 31,


Twelve months ended

December 31,



2020


2021


2020


2021

Reported net income attributable to Waste Connections


$

130,664


$

166,310


$

204,677


$

618,047

Adjustments:













Amortization of intangibles(a)



35,239



39,042



131,302



139,279

Impairments and other operating items(b)



24,136



22,497



466,718



32,316

Transaction-related expenses(c) 



5,306



5,098



9,803



11,318

Fair value changes to equity awards(d)



(485)



755



5,536



8,393

Loss on early extinguishment of debt(e)



-



-



-



115,288

Tax effect(f)



(16,235)



(16,574)



(153,758)



(78,041)

Tax items(g)



-



-



31,508



-

Adjusted net income attributable to Waste Connections


$

178,625


$

217,128


$

695,786


$

846,600

Diluted earnings per common share attributable to Waste 
     Connections' common shareholders:













Reported net income


$

0.50


$

0.64


$

0.78


$

2.36

Adjusted net income


$

0.68


$

0.83


$

2.64


$

3.23















____________________________

(a)

Reflects the elimination of the non-cash amortization of acquisition-related intangible assets.

(b) 

Reflects the addback of impairments and other operating items.

(c) 

Reflects the addback of acquisition-related transaction costs.

(d) 

Reflects fair value accounting changes associated with certain equity awards.

(e) 

Reflects the make-whole premium and related fees associated with the early termination of $1.5 billion in senior notes.  

(f) 

The aggregate tax effect of the adjustments in footnotes (a) through (e) is calculated based on the applied tax rates for the respective periods.

(g) 

Reflects the impact of a portion of the Company's 2019 inter-entity payments no longer being deductible for tax purposes due to the finalization of tax regulations on April 7, 2020 under Internal Revenue Code section 267A and an increase in deferred tax liabilities resulting from the E&P impairment.

 

2022 OUTLOOK
NON-GAAP RECONCILIATION SCHEDULE
(in thousands of U.S. dollars, except where noted)


Reconciliation of Adjusted EBITDA:





2022 Outlook




Estimates


Observation

Net income attributable to Waste Connections


$

846,000



    Plus: Income tax provision



239,000


Approximate 22.0% effective rate

    Plus: Interest expense, net



160,000



    Plus: Depreciation and Depletion



745,000


Approximately 10.8% of revenue

    Plus: Amortization



140,000



    Plus: Closure and post-closure accretion



15,000



Adjusted EBITDA


$

2,145,000


Approximately 31.2% of revenue

 

Reconciliation of Adjusted Free Cash Flow:




2022 Outlook



Estimates

Net cash provided by operating activities


$

2,000,000

    Less: Capital expenditures



(850,000)

Adjusted free cash flow


$

1,150,000

 

Cision View original content to download multimedia:https://www.prnewswire.com/news-releases/waste-connections-reports-fourth-quarter-2021-results-and-provides-2022-outlook-301484011.html

SOURCE Waste Connections, Inc.

Copyright 2022 PR Newswire

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