Waste Connections, Inc. (WCN)

WCN 
$44.35
*  
0.70
1.6%
Get WCN Alerts
*Delayed - data as of Dec. 18, 2014 12:46 ET  -  Find a broker to begin trading WCN now
Exchange: NYSE
Industry: Public Utilities
Community Rating:
View:    WCN Real Time
 
 
Symbol List Views
FlashQuotes InfoQuotes
Stock Details
Summary Quote Real-Time Quote After Hours Quote Pre-market Quote Historical Quote Option Chain
CHARTS
Basic Chart Interactive Chart
COMPANY NEWS
Company Headlines Press Releases Market Stream
STOCK ANALYSIS
Analyst Research Guru Analysis Stock Report Competitors Stock Consultant Stock Comparison
FUNDAMENTALS
Call Transcripts Annual Report Income Statement Revenue/EPS SEC Filings Short Interest Dividend History
HOLDINGS
Ownership Summary Institutional Holdings Insiders
(SEC Form 4)
 Save Stocks

Waste Connections (WCN)

Q4 2012 Earnings Call

February 21, 2013 8:30 am ET

Executives

Ronald J. Mittelstaedt - Chairman, Chief Executive Officer, Chairman of Special Equity Award Committee and Chairman of Executive Committee

Worthing F. Jackman - Chief Financial Officer and Executive Vice President

Analysts

Hamzah Mazari - Crédit Suisse AG, Research Division

Michael E. Hoffman - Wunderlich Securities Inc., Research Division

Corey Greendale - First Analysis Securities Corporation, Research Division

Albert Leo Kaschalk - Wedbush Securities Inc., Research Division

Adam R. Thalhimer - BB&T Capital Markets, Research Division

Joe Box - KeyBanc Capital Markets Inc., Research Division

Alex Ovshey Ovshey - Goldman Sachs Group Inc., Research Division

Barbara Noverini - Morningstar Inc., Research Division

Presentation

Operator

Good day, ladies and gentlemen, and welcome to the Fourth Quarter 2012 Waste Connections Earnings Conference Call. My name is Shanelle, and I will be your operator for today. [Operator Instructions] As a reminder, this conference is being recorded for replay purposes.

I would now like to turn the conference over to Mr. Ron Mittelstaedt. Please proceed.

Ronald J. Mittelstaedt

Okay, thank you, operator, and good morning. I'd like to welcome everyone to this conference call to discuss our fourth quarter 2012 results and provide a detailed outlook for the first quarter and full year 2013. I'm joined this morning by Steve Bouck, our President; Darrell Chambliss, our COO; Worthing Jackman, our CFO; and several other members of our senior management team.

As noted in our earnings release, better-than-expected pricing growth, disposal volumes and recycled commodity value enabled us to exceed the upper end of our fourth quarter outlook for solid waste, and this strength has continued into Q1.

However, E&P waste activity slowed down sector-wide during the quarter, as many E&P companies have already depleted their drilling budgets for the year. Margins in our E&P segment were hampered by the slower activity and further affected by startup costs at new facilities and R360's continuing use of third parties for certain activities. The good news though, is that we expect revenue and margins for E&P waste to ramp during 2013, as drilling activity picks up, new facilities startup cost abate and we begin to internalize or eliminate some activities currently being outsourced. While put simply, solid waste is doing quite well and performance within E&P waste while off to a slower-than-expected start should improve as the year progresses.

Despite the slowdown in E&P waste activity during the quarter, a strong cash flow characteristics of our strategy is evidenced by adjusted free cash flow in the period, which exceeded our expectations and was about $276 million or 16.6% of revenue for the full year.

More importantly, we believe free cash flow in 2013 remains on pace to exceed $300 million. Our outlook for 2013 already reflects expected double-digit year-over-year growth in revenue, adjusted EPS and free cash flow. Additional acquisitions, any increase in recycled commodity values, improvement in the economy or potential newly permitted E&P facilities should provide further upside.

Before we get into much more detail, let me turn the call over to Worthing for our forward-looking disclaimer, as well as other housekeeping items.

Worthing F. Jackman

All right, thank you, Ron, good morning. We must inform everyone listening that certain matters discussed in this conference call are forward-looking statements, intended to qualify for the Safe Harbor from the liability established by the Private Securities Litigation Reform Act of 1995, including statements relating to expected volume and pricing trends, recycled commodity prices, expectations regarding period-to-period comparisons, potential acquisition activity, the contribution from closed acquisitions, timing of permitting activities, the impact of increased regulatory enforcement of the E&P waste treatment and disposal, the impact of the relocation of the company's corporate headquarters in California to Texas, comparative results among our segments and our first quarter and full year 2013 outlook for financial results. Such forward-looking statements are subject to various risks and uncertainties, which could cause actual results to differ materially from those currently anticipated. These risks and uncertainties are set forth in the company's periodic filings with the Securities and Exchange Commission. Stockholders, potential investors and other participants are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. Forward-looking statements made herein are made only as of the date of this conference call, and the company undertakes no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.

On the call, we'll discuss non-GAAP measures, such as adjusted operating income before depreciation and amortization, adjusted net income and adjusted net income per diluted share and adjusted free cash flow. Please refer to our earnings release for a reconciliation of such non-GAAP measures to the most comparable GAAP measure, as we use certain non-GAAP measures to evaluate and monitor the ongoing financial performance of our operations, and other companies may calculate these non-GAAP measures differently.

I'll now turn the call back over to Ron.

Ronald J. Mittelstaedt

Okay. Thank you, Worthing. As noted earlier, solid waste revenues exceeded our expectations in the fourth quarter, while the contribution from the R360 acquisition was lower than expected due primarily to a slowdown in that sector during the period.

Revenue in Q4 was $448.8 million, up 18.2% over the prior year period. Internal growth in the quarter was about flat, broken down as follows: positive 2.9% from core price; positive 0.3% from surcharges; negative 2.4%, volume; and negative 0.8% from recycling, intermodal and other services. Net pricing, or core price plus surcharges, exceeded expectations in the quarter, increasing sequentially to 3.2% from 2.9% in the prior quarter due to higher surcharges.

Read the rest of this transcript for free on seekingalpha.com