BFI Canada Income Fund (TSX: BFC.UN) today reported strong financial results for the three months and year ended December 31, 2006. The Fund’s 2006 financial results include a full year to date contribution from IESI Corporation (“IESI”), the Fund’s U.S. segment, which was acquired by the Fund on January 21, 2005. Accordingly, the financial results, as reported, for the year ended December 31, 2005 excludes the Fund’s U.S segment financial results for the period from January 1 to January 20, 2005. All amounts are in thousands of Canadian dollars, unless otherwise stated.
“In 2006, the Fund continued to grow profitably, delivering benchmark financial performance and demonstrating the value of our business model,” said Keith Carrigan, Vice Chairman and Chief Executive Officer. “Growth was achieved in every business segment through both organic improvement and contributions from 12 “tuck-in” acquisitions. We are especially pleased with the continuing improvement in organic revenues, which reflects the successful integration of our U.S. segments. Organic Canadian and U.S. segment revenue growth, which excludes acquisitions and fuel and environmental surcharges, was 12.9 per cent and 10.7 per cent year over year, respectively, and 9.6 per cent and 7.3 per cent quarter over quarter, respectively.
“This solid performance resulted in comparable consolidated year over year revenue and EBITDA growth of 10.5 per cent and 11.6 per cent, respectively, and consolidated quarter over quarter revenue and EBITDA growth of 12.6 per cent and 21.9 per cent, respectively. On the basis of these improvements, year over year free cash flow available for distribution(B) increased 15.2 per cent and quarter over quarter free cash flow available for distribution increased(B) 28.6 per cent.”
Mr. Carrigan continued, “In recognition of our strong cash flow performance, our Trustees authorized in August 2006 the fifth increase in trust unit distributions since the Fund’s inception, raising annualized distributions by 7.1 per cent to $1.818 per trust unit. Despite this increase, our payout ratio declined to 75.6 per cent and 80.5 per cent in the three months and year ended December 31, 2006, respectively. This offers further evidence that our formula for creating value for unitholders is working.”
In respect of 2007, Mr. Carrigan said, “we believe we are well positioned with a clear focus on business fundamentals. Our operating agenda includes adding new customers, increasing route density and renewing contracts at our traditionally high rate. To support our growth objectives, we are also committed to pursuing strategic acquisitions that deliver additional value for our unitholders. While 2006 was a year of solid financial performance, we think there are many opportunities in 2007 to continue our advancement and plan to firmly act on these.”
Financial Highlights for the Three Months and Year Ended December 31, 2006 (as reported)
– Total consolidated revenues increased 12.6 per cent to $200.3 million, and 13.9 per cent to $771.8 million, respectively.
– Total organic and acquisition revenue growth increased 14.8 per cent and 15.5 per cent, respectively.
– Total organic and acquisition EBITDA growth increased 24.2 per cent and 16.1 per cent, respectively.
– Free cash flow available for distribution(B) increased to $39.3 million or 28.6 per cent and $142.0 million or 17.5 per cent, respectively.
– The Fund’s payout ratio of was 75.6 per cent and 80.5 per cent, respectively.
– The Fund’s payout ratio excluding the effects of the foreign currency hedge was 77.4 per cent and 82.8 per cent, respectively.
Other Highlights for the Three months and Year Ended December 31, 2006
– Based on the Fund’s performance and consideration of the current and forecasted foreign currency exchange rate, Trustees of the Fund approved a 7.1 per cent increase to distributions from an annual rate of $1.698 per trust unit to $1.818 per trust unit effective for the distribution paid on September 15, 2006 to unitholders of record on August 31, 2006. Distributions to holders of participating preferred shares (“PPSs”) have increased by an equivalent amount.
– The Fund completed 12 “tuck-in” acquisitions in 2006 for aggregate cash consideration, including payments in respect of contingent consideration, totalling approximately $13,900 and $33,600, respectively.
– Effective February 10, 2006, the Fund entered into a Fourth Amended and Restated Credit Agreement in Canada. The amended and restated credit agreement increases the total available credit under the facility, subject to lender consent, from $80,000 to $120,000 and matures, subject to one year extensions, on June 30, 2010. Borrowing rates under the Fourth Amended and Restated Credit Agreement are more favourable than the predecessor credit agreement.
– Effective March 10, 2006, the Fund amended its Amended and Restated Revolving Credit and Term Loan Agreement in the U.S. The amendments increased the total available credit under the facility, subject to lender consent, from U.S. $500,000 to U.S. $550,000 and borrowing rates under the amended credit agreement are more favourable than the predecessor credit agreement.
– Effective September 30, 2006, the Fund exercised a portion of the accordion available through its U.S. term loan and revolving credit facility which increased the facility to U.S. $450,000 in aggregate. Available lending under the U.S. term loan and revolving credit facility increased by U.S. $10,000 and U.S. $55,000 to U.S. $195,000 and U.S. $255,000, respectively.
– In November 2006, the Fund entered into a 22 year agreement for variable rate demand solid waste disposal revenue bonds (“IRBs”). The IRBs are made available, to a maximum of U.S. $35,000, are available to fund a portion of landfill construction, equipment, vehicle, and container expenditures in the Fund’s Pennsylvania operations. The IRBs bear interest at a discount to LIBOR. A portion of the Fund’s U.S. $22,500 drawings under this facility have beenused to repay the Fund’s U.S. revolving credit facility with the balance used to finance landfill construction and equipment expenditures.
– The Fund received a reaffirmed rating of “BBB” low stable from the Dominion Bond Rating Service on its series A and B senior secured debentures and a reaffirmed rating of “BB” from the Standard & Poor’s Rating Service on its U.S. term loan. The Fund also received an upgraded rating, to “Ba3” from “B1”, from Moody’s Investor Services.