Waste Connections releases Q4 results

Waste Connections releases Q4 results

Waste Connections Inc. announced its results for the fourth quarter of 2019 on Feb. 12.

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February 13, 2020

Waste Connections Inc., Toronto, announced its results for the fourth quarter of 2019 on Feb. 12. 

"2019 ended on a high note, as financial results for the fourth quarter exceeded expectations on better-than-expected solid waste price growth, E&P waste activity and acquisition contribution. We are also extremely pleased with our results for the full year, as underlying adjusted EBITDA margins in solid waste collection, transfer and disposal expanded by 50 basis points. Moreover, our ability to deliver full-year adjusted free cash flow of $916.8 million, or 17.0 percent of revenue and 54.8 percent of adjusted EBITDA on a 16.2 percent increase in capital expenditures as we reinvested in and expanded our business, is indicative of our disciplined focus on quality of revenue and free cash flow generation," Worthing F. Jackman, president and CEO of Waste Connections, says.  

Jackman added, "Acquisition activity also accelerated into year-end, as we announced an additional $130 million in acquired annualized revenue in December, including a new market entry in Pennsylvania and tuck-ins in Illinois and Tennessee. Acquisitions completed in 2019 provide rollover revenue growth of approximately $170 million in 2020, and the pace of acquisition activity remains elevated. Along with strong pricing growth, this already sets us up for high single-digit growth in revenue and adjusted free cash flow. Positive solid waste volumes, any increases in values for recycled commodities or renewable energy credits since year-end, or additional acquisitions closed during the year would provide upside to our initial 2020 outlook."

Jackman concluded, "Over 55 percent of our operating locations either posted zero safety-related incidents in 2019 or drove further year-over-year improvements. We would like to recognize the tireless efforts of our more than 18,000 employees for our continuing success."

Q4 results

Revenue in the fourth quarter totaled $1.362 billion, up from $1.262 billion in the prior year period. Operating income, which included $29 million of impairments and other operating items primarily related to the company's sale of a non-strategic materials processing facility and $3.7 million of acquisition-related costs, was $194.2 million. This compares to $200 million in the prior year period, which included $14 million of impairments and other operating items and $2.8 million of acquisition-related costs. 

Net income attributable to Waste Connections in the fourth quarter was $133.3 million, or $0.50 per share on a diluted basis of 264.6 million shares. In the prior year period, the company reported $132.5 million, or $0.50 per share on a diluted basis of 264.5 million shares.

Adjusted net income attributable to Waste Connections in the fourth quarter was $181.4 million, or $0.69 per share, versus $166.2 million, or $0.63 per share, in the prior year period. Adjusted EBITDA in the fourth quarter was $419 million, as compared to adjusted EBITDA of $397.2 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 the Tax Cuts and Jobs Act of 2017, fair value accounting changes to certain equity awards, and acquisition-related items.

Full year 2019 results

For the year ended Dec. 31, 2019, revenue was $5.389 billion, as compared to revenue of $4.923 billion in 2018. Operating income, which included $77.4 million of impairments and other operating items, fair value accounting changes to certain equity awards and other acquisition-related costs, was $837.8 million. This compares to operating income of $832.2 million in the prior year, which included $40.7 million of impairments and other operating items, fair value accounting changes to certain equity awards, and other acquisition-related costs. 

Net income attributable to Waste Connections in 2019 was $566.8 million, or $2.14 per share on a diluted basis of 264.5 million shares. In 2018, the company reported net income attributable to Waste Connections of $546.9 million, or $2.07 per share on a diluted basis of 264.4 million shares.

Adjusted net income attributable to Waste Connections in 2019 was $719.6 million, or $2.72 per share, compared to $667.3 million, or $2.52 per share, in the prior year. Adjusted EBITDA in 2019 was $1.674 billion, as compared to $1.566 billion in the prior year. 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 the Tax Act, acquisition-related items and impairments and other operating items.

2020 outlook

Waste Connections also announced its outlook for 2020, which assumes no change in the current economic environment, unless otherwise indicated. The company's outlook excludes any impact from additional acquisitions that may close during the year, and expensing of transaction-related items.

  • Revenue is estimated in the range of $5.725 billion to $5.775 billion, including the following:
    • Solid waste price and volume growth of approximately 5 percent and 0 percent respectively
    • E&P waste revenue down approximately 10 percent
    • Values for recycled commodities and renewable energy credits as of year-end 2019
  • Net income attributable to Waste Connections is estimated in the range of $653.0 million to $668.0 million
  • Adjusted EBITDA is estimated in the range of $1.760 billion to $1.785 billion, or 30.7-30.9 percent of revenue
  • Net cash provided by operating activities is estimated in the range of $1.600 billion to $1.625 billion
  • Capital expenditures are estimated at $625 million
  • Adjusted free cash flow is estimated in the range of $975 million to $1 billion.