DAILY NEWS Feb 25, 2013 12:29 PM - 0 comments

Progressive Waste Solutions release year-end results and 2013 outlook

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By: SWR Staff
2013-02-25

On February 14, 2013, Progressive Waste Solutions Ltd. reported financial results for the three months and year ended December 31, 2012.

  • Core business of solid waste collection, transfer and disposal demonstrated resilience throughout 2012

  • Completed 19 strategic acquisitions in 2012, including seven in the fourth quarter, which strengthened the Company's network of integrated assets

  • Consolidated revenues of $495.8 million in the fourth quarter, up 8.4%, and$1,896.7 million in 2012, up 3.1%

  • Adjusted EBITDA(A) of $133.7 million in the fourth quarter and $519.7 millionfor 2012

  • Earnings per share of $0.10 in the fourth quarter and $0.81 in 2012, versus($2.48) and ($1.63), respectively, in 2011. On an adjusted basis, net income per share was $0.24 in the quarter and $0.97 for the year, compared to $0.32 and$1.12 in the respective 2011 periods. The decline in recycled commodity prices reduced adjusted net income(A) per share by $0.02 per share in the fourth quarter of 2012 and by $0.15 per share for the year

Management Commentary

(All amounts are in United States ("U.S.") dollars, unless otherwise stated)

"The strength of our core collection, transfer and disposal operations, combined with 19 strategic "tuck-in" acquisitions, softened the impact of a 1.6% decline in revenues from lower recycled commodity prices in 2012. In 2013, we are well positioned for growth with a strengthened network of integrated assets and the market-focused strategies to continue to execute our operating model and drive value on these assets. Acquisitions we completed in 2012 generate annualized revenues of approximately $200 million, and the contribution to 2013 revenue growth is expected to be approximately $138 million. Revenues for 2013 will also realize the benefits of internal infrastructure projects and new municipal contract wins. All of these contributions together will more than offset the impact of municipal contracts that concluded in the third and fourth quarters of 2012 and the scheduled closure of our Calgary landfill in mid-2013," saidJoseph Quarin , Vice Chairman and Chief Executive Officer, Progressive Waste Solutions Ltd. "We remain focused on the disciplined execution of our local market strategies and deployment of free cash flow(B) to improve our overall return on invested capital. We are excited about the opportunities we have to create value in 2013 and beyond."

Fourth quarter ended December 31, 2012

Reported revenues increased $38.6 million or 8.4% from $457.2 million in the fourth quarter of 2011 to $495.8 million in the fourth quarter of 2012. Expressed on a reportable basis and assuming a foreign currency exchange ("FX") rate of parity between the Canadian and U.S. dollar ("FX parity"), revenues increased 7.0% due in large part to a 6.4% increase attributable to acquisitions. Higher overall core pricing, fuel surcharges and marginally higher volumes were principally offset by lower recycled commodity pricing. The impact of lower recycled commodity prices on comparative revenues was 1.0%.

Operating income was $58.6 million in the fourth quarter of 2012 versus($293.0) million in the fourth quarter of 2011. Net income was $11.8 millionversus ($296.2) million in the fourth quarter of 2012 and 2011, respectively.

Adjusted amounts

Adjusted EBITDA(A) was $133.7 million in the fourth quarter which was slightly lower than the $133.9 million posted in the same quarter a year ago. On an adjusted basis, adjusted operating income(A) was $61.6 million or (19.0)% lower in the quarter compared to $76.0 million in the same period last year. Adjusted net income(A) was $28.2 million, or $0.24 per share, compared to $38.0 million, or $0.32 per share in the comparative period.

Year ended December 31, 2012

For the year ended December 31, 2012, reported revenues increased $56.6 million or 3.1% from $1,840.1 million in 2011 to $1,896.7 million. Expressed on a reportable basis and at FX parity, revenues increased 3.5% on a comparative basis. This increase is due in large part to a 4.5% increase attributable to acquisitions and higher overall core pricing and fuel surcharges, which outpaced lower volumes and recycled commodity pricing. The annual impact on comparative revenues resulting from a decline in recycled commodity prices was 1.6%.

Operating income was $237.7 million in 2012 versus ($88.4) million in 2011 and net income was $94.4 million in 2012 compared to ($196.1) million in 2011.

Adjusted amounts

For the year, adjusted EBITDA(A) was $519.7 million or (2.8)% lower in 2012 versus $534.5 million in 2011. Adjusted operating income(A) was $246.1 million, or (12.4)% lower compared to the $280.9 million recorded last year. Adjusted net income(A) was $113.2 million, or $0.97 per share, compared to$135.0 million, or $1.12 per share in the comparative year.

Share repurchases totalled $65.6 million in 2012 and dividends paid to shareholders totalled $63.5 million. For 2012, this represents a combined$129.1 million return to shareholders compared to $140.4 million a year ago.

Acquisitions

  • We invested $185.7 million in the fourth quarter and $308.3 million for the year on strategic "tuck-in" acquisitions in various markets

  • In the fourth quarter, we completed seven acquisitions, three in the U.S. south, three in the U.S. northeast and one in Canada. For the year, we completed a total of 19 acquisitions, eight in the U.S. south, five in the U.S. northeast and six in Canada

  • We continue to identify collection and transfer assets in and around the markets we serve in order to improve asset density and facilitate higher internalization at our landfills. We also evaluate new markets for growth opportunities

Other highlights for the year ended December 31, 2012

  • In October 2012, we entered into a consolidated $2.35 billion Credit Agreement and concurrently repaid all outstanding indebtedness under our U.S. and Canadian credit facilities and our series B, senior secured debenture

  • In August 2012, we received approval to renew our normal course issuer bid for an additional 12 months

  • In March 2012, we received a modification to our operating permit for the Ridge landfill that increased the amount of annual waste allowable at the site from 0.9 to 1.3 million tonnes annually

  • We repurchased and cancelled approximately 3.2 million common shares in 2012. At the close of the year, there were 115.2 million common shares outstanding

2013 Outlook

The Company is providing its outlook assuming no change in the current economic environment and excluding the impact of any acquisitions we may complete in 2013. Our outlook has been prepared assuming FX parity.

The purpose of presenting this outlook is to provide investors and analysts with our expected results for the coming year.

Our outlook, which is forward-looking, was approved by management onFebruary 13, 2013. Our actual results may differ materially and are subject to risks and uncertainties. Please refer to the 2013 outlook assumptions and factors and Caution regarding forward looking statements sections of this press release for further information.

  • Revenue is estimated to be $2.00 to $2.02 billion, representing an increase of 5.4% to 6.5%

  • Adjusted EBITDA(A) is estimated to be $545 to $555 million

  • Amortization expense, as a percentage of revenue, is estimated to be approximately 14.4%

  • The effective tax rate is estimated to be approximately 40% of income before income tax expense and net loss from equity accounted investee, on an adjusted basis

  • Cash taxes are estimated to be $52 to $54 million

  • Adjusted net income(A) per diluted share is estimated to be $1.02 to $1.06

  • Free cash flow(B) is estimated to be $200 to $215 million, excluding additional internal infrastructure investment

  • Capital and landfill expenditures are estimated to be $210 to $220 million, plus an additional $40 to $45 million of internal infrastructure investment

  • Expected annual cash dividend of C$0.56 per share, payable on a quarterly basis

Commodity pricing

Revenues and earnings are impacted by changes in recycled commodity prices, which principally include old corrugated cardboard ("OCC") and other paper fibers, including newsprint, sorted office paper and mixed paper. Other commodities we receive include wood, plastics, aluminum and metals. Our results of operations may be affected by changing prices or market requirements for recyclable materials. The resale and purchase price of, and market demand for, recyclable materials can be volatile due to changes in economic conditions and numerous other factors beyond our control. These fluctuations may affect our consolidated financial condition, results of operations and cash flows. Based on current volumes, a ten dollar change in the price of an average basket of commodities results in an approximately $8.0 million change to revenues and an approximately $0.04 change to net income per share on an annual basis. Our outlook provided for 2013 assumes an average price per ton of OCC of $106.00, which is equal to the 2012 average price per ton based on our market weighting of the Official Board Markets index.

Progressive Waste Solutions Ltd.  
Consolidated Statements of Operations and Comprehensive Income or Loss ("Statement of Operations and Comprehensive Income or Loss")  
For the three months (unaudited) and years ended December 31, 2012 (unaudited) and 2011 (stated in accordance with accounting principles generally accepted in the United States of America ("U.S.") and in thousands of U.S. dollars, except share and net income per share amounts)  
  Three months ended   Year ended  
  2012   2011   2012   2011  
                         
REVENUES $ 495,822   $ 457,212   $ 1,896,741   $ 1,840,096  
EXPENSES                        
  OPERATING   305,236     273,283     1,154,764     1,094,067  
  SELLING, GENERAL AND ADMINISTRATION   59,814     58,178     230,740     218,600  
  RESTRUCTURING   -     411     -     1,609  
  GOODWILL IMPAIRMENT   -     360,557     -     360,557  
  AMORTIZATION   71,766     58,372     274,118     257,066  
  NET LOSS (GAIN) ON SALE OF CAPITAL ASSETS   383     (541 )   (592 )   (3,412 )
OPERATING INCOME (LOSS)   58,623     (293,048 )   237,711     (88,391 )
INTEREST ON LONG-TERM DEBT   14,494     13,723     57,428     62,086  
NET FOREIGN EXCHANGE (GAIN) LOSS   (3 )   10     9     (73 )
NET LOSS (GAIN) ON FINANCIAL INSTRUMENTS   3,541     (1,101 )   1,725     (4,984 )
LOSS ON EXTINGUISHMENT OF DEBT   16,924     -     16,924     -  
OTHER EXPENSES   -     45     105     872  
INCOME (LOSS) BEFORE INCOME TAX EXPENSE AND NET LOSS                        
  FROM EQUITY ACCOUNTED INVESTEE   23,667     (305,725 )   161,520     (146,292 )
INCOME TAX EXPENSE                        
  Current   10,969     9,009     49,281     47,433  
  Deferred   934     (18,584 )   17,841     2,315  
    11,903     (9,575 )   67,122     49,748  
NET LOSS FROM EQUITY ACCOUNTED INVESTEE   11     38     41     96  
NET INCOME (LOSS)   11,753     (296,188 )   94,357     (196,136 )
                         
OTHER COMPREHENSIVE (LOSS) INCOME:                        
  Foreign currency translation adjustment   (6,322 )   13,320     11,702     (12,520 )
                         
  Derivatives designated as cash flow hedges, net of income tax ($1,089) and ($863) (2011 - ($294) and $3,117)   2,025     550     1,604     (5,790 )
  Settlement of derivatives designated as cash flow hedges, net of income tax ($170) and ($177) (2011 - ($165) and ($646))   314     306     329     1,201  
    2,339     856     1,933     (4,589 )
TOTAL OTHER COMPREHENSIVE (LOSS) INCOME   (3,983 )   14,176     13,635     (17,109 )
COMPREHENSIVE INCOME (LOSS) $ 7,770   $ (282,012 ) $ 107,992   $ (213,245 )
                         
                         
Net income (loss) per weighted average share, basic $ 0.10   $ (2.48 ) $ 0.81   $ (1.63 )
Net income (loss) per weighted average share, diluted $ 0.10   $ (2.48 ) $ 0.81   $ (1.63 )
Weighted average number of shares outstanding (thousands), basic   115,163     119,554     116,178     120,683  
Weighted average number of shares outstanding (thousands), diluted   115,163     119,554     116,178     120,683  

 

   
   
Progressive Waste Solutions Ltd.  
Consolidated Balance Sheets ("Balance Sheet")  
December 31, 2012 (unaudited) and December 31, 2011 (stated in accordance with accounting principles generally accepted in the U.S. and in thousands of U.S. dollars except issued and outstanding share amounts)  
  December 31,   December 31,  
  2012   2011  
ASSETS            
CURRENT            
  Cash and cash equivalents $ 29,940   $ 14,143  
  Accounts receivable   238,958     212,099  
  Other receivables   440     414  
  Prepaid expenses   38,762     31,484  
  Income taxes recoverable   2,928     -  
  Restricted cash   476     452  
  Other assets   1,573     1,972  
    313,077     260,564  
             
OTHER RECEIVABLES   72     376  
FUNDED LANDFILL POST-CLOSURE COSTS   9,885     9,200  
INTANGIBLES   287,847     257,731  
GOODWILL   929,114     774,409  
LANDFILL DEVELOPMENT ASSETS   19,715     15,869  
DEFERRED FINANCING COSTS   20,060     19,983  
CAPITAL ASSETS   927,518     776,058  
LANDFILL ASSETS   963,720     958,792  
INVESTMENT IN EQUITY ACCOUNTED INVESTEE   4,062     3,973  
OTHER ASSETS   491     649  
  $ 3,475,561   $ 3,077,604  
             
LIABILITIES            
CURRENT            
  Accounts payable $ 120,341   $ 115,292  
  Accrued charges   131,528     124,496  
  Dividends payable   16,206     14,540  
  Income taxes payable   1,986     10,693  
  Deferred revenues   19,002     17,645  
  Current portion of long-term debt   6,907     1,500  
  Landfill closure and post-closure costs   8,871     9,468  
  Other liabilities   2,527     3,484  
    307,368     297,118  
             
LONG-TERM DEBT   1,681,370     1,311,593  
LANDFILL CLOSURE AND POST-CLOSURE COSTS   104,281     92,034  
OTHER LIABILITIES   6,166     7,484  
DEFERRED INCOME TAXES   103,795     76,234  
    2,202,980     1,784,463  
             
             
SHAREHOLDERS' EQUITY            
  Common shares (authorized - unlimited, issued and outstanding - 114,993,864 (December 31, 2011 - 118,040,683))   1,773,530     1,824,231  
  Restricted shares (issued and outstanding - 172,500 (December 31, 2011 - 252,150))   (3,460 )   (5,353 )
  Additional paid in capital   2,166     2,789  
  Accumulated deficit   (451,539 )   (466,775 )
  Accumulated other comprehensive loss   (48,116 )   (61,751 )
  Total shareholders' equity   1,272,581     1,293,141  
  $ 3,475,561   $ 3,077,604  

 

   
   
Progressive Waste Solutions Ltd.  
Consolidated Statements of Cash Flows ("Statement of Cash Flows")  
For the three months (unaudited) and years ended December 31, 2012 (unaudited) and 2011 (stated in accordance with accounting principles generally accepted in the U.S. and in thousands of U.S. dollars, except share and net income per share amounts)  
  Three months ended   Year ended  
  2012   2011   2012   2011  
                 
NET INFLOW (OUTFLOW) OF CASH RELATED TO THE FOLLOWING ACTIVITIES
OPERATING                        
  Net income (loss) $ 11,753   $ (296,188 ) $ 94,357   $ (196,136 )
  Items not affecting cash                        
    Restricted share expense   819     726     2,034     2,107  
    Write-off of deferred financing costs   11,726     -     11,726     -  
    Accretion of landfill closure and post-closure costs   1,313     1,255     5,240     5,071  
    Goodwill impairment   -     360,557     -     360,557  
    Amortization of intangibles   14,379     12,582     53,585     49,559  
    Amortization of capital assets   37,841     33,343     141,192     131,088  
    Amortization of landfill assets   19,546     12,447     79,341     76,419  
    Interest on long-term debt (amortization of deferred financing costs)   596     1,680     5,665     6,035  
    Net loss (gain) on sale of capital assets   383     (541 )   (592 )   (3,412 )
    Net loss (gain) on financial instruments   3,541     (1,101 )   1,725     (4,984 )
    Deferred income taxes   934     (18,584 )   17,841     2,315  
    Net loss from equity accounted investee   11     38     41     96  
  Landfill closure and post-closure expenditures   (1,336 )   (1,183 )   (6,737 )   (4,345 )
  Changes in non-cash working capital items   (27,322 )   10,186     (68,657 )   (28,664 )
Cash generated from operating activities   74,184     115,217     336,761     395,706  
INVESTING                        
  Acquisitions   (168,608 )   (351 )   (282,313 )   (139,857 )
  Restricted cash deposits   (1 )   (6 )   (24 )   (18 )
  Investment in other receivables   -     -     (148 )   -  
  Proceeds from other receivables   110     118     440     474  
  Funded landfill post-closure costs   (117 )   (71 )   (404 )   (381 )
  Purchase of capital assets   (54,410 )   (35,315 )   (180,322 )   (112,348 )
  Purchase of landfill assets   (18,471 )   (19,006 )   (66,556 )   (58,665 )
  Proceeds from the sale of capital assets   654     721     2,761     5,925  
  Investment in landfill development assets   (461 )   (1,717 )   (3,968 )   (6,428 )
Cash utilized in investing activities   (241,304 )   (55,627 )   (530,534 )   (311,298 )
FINANCING                        
  Payment of deferred financing costs   (16,975 )   (5 )   (17,315 )   (4,811 )
  Proceeds from long-term debt   1,617,304     49,184     1,924,480     380,347  
  Repayment of long-term debt   (1,401,816 )   (60,456 )   (1,568,323 )   (318,086 )
  Proceeds from the exercise of stock options   39     1,530     403     2,385  
  Repurchase of common shares   -     (40,270 )   (65,633 )   (79,326 )
  Purchase of, net of proceeds from, restricted shares   -     -     (541 )   (4,226 )
  Dividends paid to shareholders   (16,260 )   (14,647 )   (63,478 )   (61,078 )
Cash generated from (utilized in) financing activities   182,292     (64,664 )   209,593     (84,795 )
Effect of foreign currency translation on cash and cash equivalents   (655 )   2,341     (23 )   1,124  
NET CASH INFLOW (OUTFLOW)   14,517     (2,733 )   15,797     737  
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD OR YEAR   15,423     16,876     14,143     13,406  
CASH AND CASH EQUIVALENTS, END OF YEAR $ 29,940   $ 14,143   $ 29,940   $ 14,143  
SUPPLEMENTAL CASH FLOW INFORMATION:                        
  Cash and cash equivalents are comprised of:                        
    Cash $ 28,929   $ 14,142   $ 28,929   $ 14,142  
    Cash equivalents   1,011     1     1,011     1  
  $ 29,940   $ 14,143   $ 29,940   $ 14,143  
  Cash paid during the period or year for:                        
    Income taxes $ 11,833   $ 8,911   $ 53,531   $ 49,509  
    Interest $ 17,170   $ 12,694   $ 57,109   $ 59,289  

 

   
   
FX Impact on Consolidated Results  
The following tables have been prepared to assist readers in assessing the FX impact on selected results for the three months and year ended December 31, 2012.  
   
          Three months ended  
  December 31, 2011   December 31, 2012   December 31, 2012   December 31, 2012   December 31, 2012  
  (as reported)   (organic, acquisition and other non-operating changes)   (holding FX constant with the comparative period)   (FX impact)   (as reported)  
                     
Consolidated Statement of Operations              
Revenues $ 457,212   $ 32,310   $ 489,522   $ 6,300   $ 495,822  
Operating expenses   273,283     28,452     301,735     3,501     305,236  
Selling, general and administration   58,178     859     59,037     777     59,814  
Restructuring expenses   411     (411 )   -     -     -  
Goodwill impairment   360,557     (360,557 )   -     -     -  
Amortization   58,372     12,573     70,945     821     71,766  
Net (gain) loss on sale of capital assets   (541 )   936     395     (12 )   383  
Operating (loss) income   (293,048 )   350,458     57,410     1,213     58,623  
Interest on long-term debt   13,723     673     14,396     98     14,494  
Net foreign exchange loss (gain)   10     (13 )   (3 )   -     (3 )
Net (gain) loss on financial instruments   (1,101 )   4,630     3,529     12     3,541  
Loss on extinguishment of debt   -     17,012     17,012     (88 )   16,924  
Other expense   45     (46 )   (1 )   1     -  
(Loss) income before net income tax                              
(recovery) expense and                              
net loss from equity accounted investee   (305,725 )   328,202     22,477     1,190     23,667  
Net income tax (recovery) expense   (9,575 )   21,140     11,565     338     11,903  
Net loss from equity accounted investee   38     (28 )   10     1     11  
Net (loss) income $ (296,188 ) $ 307,090   $ 10,902   $ 851   $ 11,753  
                               
Adjusted EBITDA (A) $ 133,861   $ (2,153 ) $ 131,708   $ 2,029   $ 133,737  
Adjusted operating income (A) $ 76,030   $ (15,663 ) $ 60,367   $ 1,221   $ 61,588  
Adjusted net income(A) $ 37,995   $ (10,642 ) $ 27,353   $ 799   $ 28,152  
Free cash flow (B) $ 59,281   $ (23,565 ) $ 35,716   $ 904   $ 36,620  

 

                 
              Year ended  
  December 31, 2011   December 31, 2012   December 31, 2012   December 31, 2012   December 31, 2012  
  (as reported)   (organic, acquisition and other non-operating changes)   (holding FX constant with the comparative year)   (FX impact)   (as reported)  
                     
Consolidated Statement of Operations              
Revenues $ 1,840,096   $ 64,582   $ 1,904,678   $ (7,937 ) $ 1,896,741  
Operating expenses   1,094,067     65,120     1,159,187     (4,423 )   1,154,764  
Selling, general and administration   218,600     13,105     231,705     (965 )   230,740  
Restructuring expenses   1,609     (1,609 )   -     -     -  
Goodwill impairment   360,557     (360,557 )   -     -     -  
Amortization   257,066     18,127     275,193     (1,075 )   274,118  
Net gain on sale of capital assets   (3,412 )   2,822     (590 )   (2 )   (592 )
Operating (loss) income   (88,391 )   327,574     239,183     (1,472 )   237,711  
Interest on long-term debt   62,086     (4,388 )   57,698     (270 )   57,428  
Net foreign exchange (gain) loss   (73 )   82     9     -     9  
Net (gain) loss on financial instruments   (4,984 )   6,714     1,730     (5 )   1,725  
Loss on extinguishment of debt   -     17,012     17,012     (88 )   16,924  
Other expense   872     (766 )   106     (1 )   105  
(Loss) income before net income tax expense and net loss from equity accounted investee   (146,292 )   308,920     162,628     (1,108 )   161,520  
Net income tax expense   49,748     17,752     67,500     (378 )   67,122  
Net loss from equity accounted investee   96     (55 )   41     -     41  
Net (loss) income $ (196,136 ) $ 291,223   $ 95,087   $ (730 ) $ 94,357  
                               
Adjusted EBITDA (A) $ 534,536   $ (12,308 ) $ 522,228   $ (2,569 ) $ 519,659  
Adjusted operating income (A) $ 280,882   $ (33,257 ) $ 247,625   $ (1,492 ) $ 246,133  
Adjusted net income(A) $ 135,003   $ (21,003 ) $ 114,000   $ (813 ) $ 113,187  
Free cash flow (B) $ 262,464   $ (89,095 ) $ 173,369   $ (909 ) $ 172,460  

 

   
   
Other Financial Highlights  
(all amounts are in thousands of U.S. dollars, excluding per share amounts)  
   
  Three months ended   Year ended  
      December 31       December 31  
  2012   2011   2012   2011  
                         
Operating income (loss) $ 58,623   $ (293,048 ) $ 237,711   $ (88,391 )
Transaction and related costs - SG&A   462     141     2,507     1,880  
Fair value movements in stock options - SG&A   703     (2,685 )   (110 )   (6,808 )
Restricted share expense - SG&A   819     726     2,034     2,107  
Payments made to executives and senior management on departure - SG&A   981     9,928     3,991     9,928  
Restructuring expenses and goodwill impairment   -     360,968     -     362,166  
Adjusted operating income (A)   61,588     76,030     246,133     280,882  
Net loss (gain) on sale of capital assets   383     (541 )   (592 )   (3,412 )
Amortization   71,766     58,372     274,118     257,066  
Adjusted EBITDA (A) $ 133,737   $ 133,861   $ 519,659   $ 534,536  
                         
Net income (loss) $ 11,753   $ (296,188 ) $ 94,357   $ (196,136 )
Transaction and related costs - SG&A   462     141     2,507     1,880  
Fair value movements in stock options - SG&A   703     (2,685 )   (110 )   (6,808 )
Restricted share expense - SG&A   819     726     2,034     2,107  
Payments made to executives and senior management on departure - SG&A   981     9,928     3,991     9,928  
Restructuring expenses and goodwill impairment   -     360,968     -     362,166  
Net loss (gain) on financial instruments   3,541     (1,101 )   1,725     (4,984 )
Loss on extinguishment of debt   16,924     -     16,924     -  
Other expenses   -     45     105     872  
Net income tax recovery   (7,031 )   (33,839 )   (8,346 )   (34,022 )
Adjusted net income (A) $ 28,152   $ 37,995   $ 113,187   $ 135,003  
Adjusted net income per weighted average share, basic (A)(*) $ 0.24   $ 0.32   $ 0.97   $ 1.12  
Adjusted net income per weighted average share, diluted (A)(*) $ 0.24   $ 0.32   $ 0.97   $ 1.12  
                         
Replacement and growth expenditures                        
Replacement expenditures $ 35,336   $ 38,741   $ 154,928   $ 126,808  
Growth expenditures   37,545     15,580     91,950     44,205  
Total replacement and growth expenditures $ 72,881   $ 54,321   $ 246,878   $ 171,013  
                         
Free cash flow (B)                        
Cash generated from operating activities (statement of cash flows) $ 74,184   $ 115,217   $ 336,761   $ 395,706  
Free cash flow(B) $ 36,620   $ 59,281   $ 172,460   $ 262,464  
Free cash flow(B) per weighted average share, diluted $ 0.32   $ 0.50   $ 1.48   $ 2.17  
                         
Dividends                        
Dividends declared (common shares) $ 16,264   $ 14,418   $ 64,815   $ 60,646  
                         
Note:
(*)Prior period or year amounts have been adjusted to conform to the current period or year's presentation.

 

   
   
Segment Highlights - Additional details regarding the FX impact on our comparative results can be found in the Foreign Currency sections of this report.  
(all amounts are in thousands of U.S. dollars, unless otherwise stated)  
   
          Three months ended  
                  December 31  
  2011   2012   Change   2012   Change  
  (as reported)   (holding FX constant with the comparative period)       (as reported)      
                               
Revenues $ 457,212   $ 489,522   $ 32,310   $ 495,822   $ 38,610  
Canada $ 185,590   $ 192,721   $ 7,131   $ 199,021   $ 13,431  
U.S. south $ 185,426   $ 201,725   $ 16,299   $ 201,725   $ 16,299  
U.S. northeast $ 86,196   $ 95,076   $ 8,880   $ 95,076   $ 8,880  
                               
Operating expenses $ 273,283   $ 301,735   $ 28,452   $ 305,236   $ 31,953  
Canada $ 101,656   $ 107,910   $ 6,254   $ 111,411   $ 9,755  
U.S. south $ 112,929   $ 127,051   $ 14,122   $ 127,051   $ 14,122  
U.S. northeast $ 58,698   $ 66,774   $ 8,076   $ 66,774   $ 8,076  
                               
SG&A (as reported) $ 58,178   $ 59,037   $ 859   $ 59,814   $ 1,636  
Canada $ 15,350   $ 16,956   $ 1,606   $ 17,528   $ 2,178  
U.S. south $ 18,624   $ 20,600   $ 1,976   $ 20,600   $ 1,976  
U.S. northeast $ 7,272   $ 8,506   $ 1,234   $ 8,506   $ 1,234  
Corporate $ 16,932   $ 12,975   $ (3,957 ) $ 13,180   $ (3,752 )
                               
EBITDA (A) (as reported) $ 125,751   $ 128,750   $ 2,999   $ 130,772   $ 5,021  
Canada $ 68,584   $ 67,855   $ (729 ) $ 70,082   $ 1,498  
U.S. south $ 53,873   $ 54,074   $ 201   $ 54,074   $ 201  
U.S. northeast $ 20,226   $ 19,796   $ (430 ) $ 19,796   $ (430 )
Corporate $ (16,932 ) $ (12,975 ) $ 3,957   $ (13,180 ) $ 3,752  
                               
Adjusted SG&A $ 50,068   $ 56,079   $ 6,011   $ 56,849   $ 6,781  
Canada $ 15,350   $ 16,956   $ 1,606   $ 17,528   $ 2,178  
U.S. south $ 18,624   $ 20,600   $ 1,976   $ 20,600   $ 1,976  
U.S. northeast $ 7,272   $ 8,506   $ 1,234   $ 8,506   $ 1,234  
Corporate $ 8,822   $ 10,017   $ 1,195   $ 10,215   $ 1,393  
                               
Adjusted EBITDA (A) $ 133,861   $ 131,708   $ (2,153 ) $ 133,737   $ (124 )
Canada $ 68,584   $ 67,855   $ (729 ) $ 70,082   $ 1,498  
U.S. south $ 53,873   $ 54,074   $ 201   $ 54,074   $ 201  
U.S. northeast $ 20,226   $ 19,796   $ (430 ) $ 19,796   $ (430 )
Corporate $ (8,822 ) $ (10,017 ) $ (1,195 ) $ (10,215 ) $ (1,393 )

 

             
          Year ended  
              December 31  
  2011   2012   Change   2012   Change  
  (as reported)   (holding FX constant with the comparative period)       (as reported)      
                               
Revenues $ 1,840,096   $ 1,904,678   $ 64,582   $ 1,896,741   $ 56,645  
Canada $ 757,594   $ 784,751   $ 27,157   $ 776,814   $ 19,220  
U.S. south $ 723,315   $ 780,331   $ 57,016   $ 780,331   $ 57,016  
U.S. northeast $ 359,187   $ 339,596   $ (19,591 ) $ 339,596   $ (19,591 )
                               
Operating expenses $ 1,094,067   $ 1,159,187   $ 65,120   $ 1,154,764   $ 60,697  
Canada $ 415,497   $ 437,398   $ 21,901   $ 432,975   $ 17,478  
U.S. south $ 439,700   $ 485,184   $ 45,484   $ 485,184   $ 45,484  
U.S. northeast $ 238,870   $ 236,605   $ (2,265 ) $ 236,605   $ (2,265 )
                               
SG&A (as reported) $ 218,600   $ 231,705   $ 13,105   $ 230,740   $ 12,140  
Canada $ 61,689   $ 66,046   $ 4,357   $ 65,378   $ 3,689  
U.S. south $ 72,186   $ 78,070   $ 5,884   $ 78,070   $ 5,884  
U.S. northeast $ 30,775   $ 31,465   $ 690   $ 31,465   $ 690  
Corporate $ 53,950   $ 56,124   $ 2,174   $ 55,827   $ 1,877  
                               
EBITDA (A) (as reported) $ 527,429   $ 513,786   $ (13,643 ) $ 511,237   $ (16,192 )
Canada $ 280,408   $ 281,307   $ 899   $ 278,461   $ (1,947 )
U.S. south $ 211,429   $ 217,077   $ 5,648   $ 217,077   $ 5,648  
U.S. northeast $ 89,542   $ 71,526   $ (18,016 ) $ 71,526   $ (18,016 )
Corporate $ (53,950 ) $ (56,124 ) $ (2,174 ) $ (55,827 ) $ (1,877 )
                               
Adjusted SG&A $ 211,493   $ 223,263   $ 11,770   $ 222,318   $ 10,825  
Canada $ 61,689   $ 66,046   $ 4,357   $ 65,378   $ 3,689  
U.S. south $ 72,186   $ 78,070   $ 5,884   $ 78,070   $ 5,884  
U.S. northeast $ 30,775   $ 31,465   $ 690   $ 31,465   $ 690  
Corporate $ 46,843   $ 47,682   $ 839   $ 47,405   $ 562  
                               
Adjusted EBITDA (A) $ 534,536   $ 522,228   $ (12,308 ) $ 519,659   $ (14,877 )
Canada $ 280,408   $ 281,307   $ 899   $ 278,461   $ (1,947 )
U.S. south $ 211,429   $ 217,077   $ 5,648   $ 217,077   $ 5,648  
U.S. northeast $ 89,542   $ 71,526   $ (18,016 ) $ 71,526   $ (18,016 )
Corporate $ (46,843 ) $ (47,682 ) $ (839 ) $ (47,405 ) $ (562 )

 

   
   
Revenues  
Gross revenue by service type  
The table below presents gross revenue by service type prepared on a consolidated basis and includes the impact of FX.  
                 
  Three months ended           Year ended  
          December 31           December 31  
  2012   %   2011   %   2012   %   2011     %  
                                           
Commercial $ 171,384   34.6   $ 158,230   34.6   $ 665,715   35.1   $ 638,611     34.7  
Industrial   88,293   17.8     80,550   17.6     336,353   17.7     333,258     18.1  
Residential   117,267   23.7     101,834   22.3     440,725   23.2     395,156     21.5  
Transfer and disposal   168,318   33.9     160,312   35.1     640,923   33.8     651,863     35.4  
Recycling   15,592   3.1     17,828   3.9     65,344   3.4     75,253     4.1  
Other   7,467   1.5     5,369   1.2     26,467   1.4     21,945     1.2  
Gross revenues   568,321   114.6     524,123   114.7     2,175,527   114.6     2,116,086     115.0  
                                           
Intercompany   (72,499 ) (14.6 )   (66,911 ) (14.7 )   (278,786 ) (14.6 )   (275,990 )   (15.0 )
Revenues $ 495,822   100.0   $ 457,212   100.0   $ 1,896,741   100.0   $ 1,840,096     100.0  

Revenue growth or decline components - expressed in percentages and excluding FX

The table below has been prepared using reported revenues for 2012 and gross revenues for 2011. The table has also been prepared assuming Canadian and U.S. dollar parity. For 2011, the amounts are presented as if Waste Services, Inc.'s operations were combined with ours for the six months ended June 30, 2010.

 

  Three months ended   Year ended
      December 31       December 31
  2012   2011 (*)   2012   2011 (*)
               
Price              
  Core price 1.2   1.2   1.4   1.4
  Fuel surcharges 0.3   0.9   0.4   1.1
  Recycling and other (1.0 ) (0.2 ) (1.6 ) 0.4
  Total price growth 0.5   1.9   0.2   2.9
               
Volume 0.1   0.6   (1.2 ) 0.6
Total organic (decline) growth 0.6   2.5   (1.0 ) 3.5
               
Acquisitions 6.4   5.6   4.5   6.0
Total growth excluding FX 7.0   8.1   3.5   9.5
               
FX 1.4       (0.4 )  
Total growth including FX 8.4       3.1    
               
Note:              
(*)Prior period or year amounts have been adjusted to conform to the current period or year's presentation.

Free cash flow (B)

Purpose and objective

The purpose of presenting this non-GAAP measure is to provide investors and analysts with an additional measure of our value and liquidity. We use this non-GAAP measure to assess our relative performance to our peers and to assess the availability of funds for growth investment, share repurchases, debt repayment or dividend increases.

Free cash flow (B) - cash flow approach  
   
  Three months ended   Year ended  
          December 31           December 31  
  2012 (*)   2011   Change   2012 (*)   2011   Change  
                                     
Cash generated from operating activities $ 74,184   $ 115,217   $ (41,033 ) $ 336,761   $ 395,706   $ (58,945 )
                                     
Operating and investing                                    
Stock option recovery   703     (2,685 )   3,388     (110 )   (6,808 )   6,698  
Acquisition and related costs   462     141     321     2,507     1,880     627  
Payments made to executive and senior management on departure   981     9,928     (8,947 )   3,991     9,928     (5,937 )
Restructuring expenses   -     411     (411 )   -     1,609     (1,609 )
Other expenses   -     45     (45 )   105     872     (767 )
Changes in non-cash working capital items   27,322     (10,186 )   37,508     68,657     28,664     39,993  
Capital and landfill asset purchases   (72,881 )   (54,321 )   (18,560 )   (246,878 )   (171,013 )   (75,865 )
Proceeds from the sale of capital assets   654     721     (67 )   2,761     5,925     (3,164 )
                                     
Financing                                    
Loss on extinguishment of debt (net of non-cash portion)   5,198     -     5,198     5,198     -     5,198  
Purchase of restricted shares   -     -     -     (541 )   (4,226 )   3,685  
Net realized foreign exchange (gain) loss   (3 )   10     (13 )   9     (73 )   82  
Free cash flow(B) $ 36,620   $ 59,281   $ (22,661 ) $ 172,460   $ 262,464   $ (90,004 )
                                     
Note:                                    
(*)Capital and landfill asset purchases include infrastructure expenditures of approximately $12,300 and $26,100, for the three months and year ended December 31, 2012, respectively.  

 

   
Free cash flow (B) - adjusted EBITDA (A) approach  
We typically calculate free cash flow(B) using an operations approach which is a better reflection of how we manage the business and free cash flow(B).  
   
  Three months ended   Year ended  
          December 31           December 31  
  2012 (*)   2011   Change   2012 (*)   2011   Change  
                                     
Adjusted EBITDA(A) $ 133,737   $ 133,861   $ (124 ) $ 519,659   $ 534,536   $ (14,877 )
                                     
Purchase of restricted shares   -     -     -     (541 )   (4,226 )   3,685  
Capital and landfill asset purchases   (72,881 )   (54,321 )   (18,560 )   (246,878 )   (171,013 )   (75,865 )
Proceeds from the sale of capital assets   654     721     (67 )   2,761     5,925     (3,164 )
Landfill closure and post-closure expenditures   (1,336 )   (1,183 )   (153 )   (6,737 )   (4,345 )   (2,392 )
Landfill closure and post-closure cost accretion expense   1,313     1,255     58     5,240     5,071     169  
Interest on long-term debt   (14,494 )   (13,723 )   (771 )   (57,428 )   (62,086 )   4,658  
Non-cash interest expense   596     1,680     (1,084 )   5,665     6,035     (370 )
Current income tax expense   (10,969 )   (9,009 )   (1,960 )   (49,281 )   (47,433 )   (1,848 )
Free cash flow(B) $ 36,620   $ 59,281   $ (22,661 ) $ 172,460   $ 262,464   $ (90,004 )
                                     
Note:                                    
(*)Capital and landfill asset purchases include infrastructure expenditures of approximately $12,300 and $26,100, for the three months and year ended December 31, 2012, respectively.  

Funded debt to EBITDA (as defined and calculated in accordance with our consolidated facility)


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