Toronto-based Waste Connections Inc. reported 4.7 percent waste price and volume growth and revenue of more than $1 billion during its first quarter. The firm also is proposing a three-for-two stock split for its shareholders.
“2017 is off to a great start, with 15 percent same store landfill tonnage increases, better than expected contribution from recent acquisitions, increased E&P waste activity, and higher recycled commodity prices all driving results above our outlook for the first quarter. Adjusted EBITDA margin was 50 basis points above our expectations, and most importantly, adjusted free cash flow was $237.5 million, putting us well on our way to our full year adjusted free cash flow outlook of $725 million,” Waste Connections Chairman and CEO Ronald J. Mittelstaedt said in a statement. “We are extremely pleased with our first quarter performance and encouraged by both continuing strong solid waste fundamentals and the notable ramping of E&P waste activity and related margins.”
The company also proposes to split its common shares on a three-for-two basis. The proposed share split has been approved by the company's board and requires the approval of shareholders at an annual and special meeting of shareholders to be held on May 23, 2017. The share split is also subject to the requirements of the TSX and NYSE. Following shareholder approval of the share split, it is expected that shareholders of record as of the close of business on June 7, 2017, will receive from the Company’s transfer agent on June 16, 2017 one additional common share for every two shares held.
"We believe the stock split, our fourth such split since our founding almost twenty years ago, demonstrates our continuing commitment to both broaden our shareholder base and enhance liquidity for investors,” Mittelstaedt said.
Core price grew 2.6 percent in the quarter while volume grew 2.1 percent. Recycling also contributed 1.5 percent of growth. Cumulatively, solid waste internal growth was 6.2 percent.
Solid waste collection accounted for 70.2 percent of reported revenue ($766.1 million vs. $355.3 million in 2016). Solid waste disposal and transfer accounted for 19.6 percent ($213.6 million vs. $104.0 million 2016). Solid waste recycling ($41.3 million), E&P waste treatment, recover and disposal ($36.9 million) and intermodal and other ($33.4 million) accounted for the rest.
Revenue in the first quarter, which included $490.3 million from the Progressive Waste acquisition completed on June 1, 2016, totaled $1.091 billion, up from $514.7 million in the year ago period. Operating income, which included $141.7 million in non-cash impairments and other charges, was $26.4 million compared to $91.0 million in the first quarter of 2016.
Net income attributable to Waste Connections in the first quarter was $14.9 million. In the year ago period, the company reported net income attributable to Waste Connections of $44.8 million.
Adjusted net income attributable to Waste Connections in the first quarter was $130.3 million versus $55.2 million in the prior year period.
Adjusted EBITDA in the first quarter was $332.8 million, as compared to adjusted EBITDA of $169.7 million in the prior year period.
Those measures exclude two impairment charges: $77.3 million against the company’s E&P segment resulting from the early adoption of FASB’s recent accounting pronouncement simplifying the test for goodwill impairment and $53.5 million related to the expected divestiture of certain assets acquired in the Progressive Waste acquisition.
The firm also reported adjusted free cash flow of $237.5 million compared with $113.6 million in the first quarter of 2016.