01—Abstract
Summary
Summary of the 40-F filed March 31, 2011. Cited figures are marked; the original filing is the authoritative source.
IESI-BFC Ltd. (filed under this name; now Waste Connections, WCN) filed this Form 40-F annual report for the fiscal year ended December 31, 2010.
The filing itself is a wrapper that incorporates by reference the Annual Information Form (Exhibit 99.1, dated March 31, 2011), the MD&A (Exhibit 99.2, incorporated from a Form 6-K dated March 10, 2011), and audited consolidated financial statements (Exhibit 99.3, also incorporated from that Form 6-K). The Annual Information Form describes BIN as one of the largest vertically integrated non-hazardous solid waste companies in North America, serving approximately 250,000 commercial and industrial customers and 3.8 million residential customers across 12 U.S. states, the District of Columbia and six Canadian provinces. It reports 2010 revenues of $1,429.8 milliona, adjusted net income of $101.0 million and adjusted EBITDA of $413.8 million, with total indebtedness of approximately $1,259 million at December 31, 2010.
The key 2010 event was the July 2, 2010 merger with Waste Services Inc. (WSI), completed through an exchange of 0.5833 shares per WSI share. The company also entered a US$950 millionb U.S. credit facility and a C$525 million Canadian facility, both four-year revolvers, and acquired Fred Weber assets in St. Louis for $162.5 million cash in December 2010. All Participating Preferred Shares were exchanged for common shares on December 31, 2010.
In March 2011 a secondary offering of 9,483,648 shares by TC Carting III was completed, along with a 1,000,000-share repurchase for cancellation by the company. The Annual Information Form also discloses risk factors including reliance on third-party disposal customers (about 57% of landfill tonnage in 2010), revenue concentration in Texas, New York and Florida, the New York City municipal contracts (3.4% of 2010 revenue), and approximately $352 millionc of performance and surety bonds outstanding. Management concluded disclosure controls were effective as of year-end 2010, and no changes in internal control over financial reporting were reported.
02—Key points
Key Highlights
- 2010 revenues of $1,429.8 million, adjusted net income of $101.0 million and adjusted EBITDA of $413.8 million.
- Completed the merger with Waste Services Inc. on July 2, 2010, with each WSI share converted into 0.5833 company shares.
- Entered a US$950 million four-year U.S. revolving credit facility (LIBOR + 300 basis points) and a C$525 million four-year Canadian facility, used to refinance prior borrowings.
- Operates 114 collection operations, 61 transfer stations, 30 landfills and 42 material recovery facilities, serving about 250,000 commercial/industrial and 3.8 million residential customers.
- Total indebtedness of approximately $1,259 million as of December 31, 2010; about $352 million of performance and surety bonds in place.
- Approximately 57% of landfill tonnage in 2010 came from third-party disposal customers, a key dependency noted in the risk factors.
- Quarterly dividend of C$0.125 per share, with a March 2011 secondary offering of 9,483,648 shares and a 1,000,000-share repurchase for cancellation.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2010filed March 31, 2011Financial Statements
| Revenue | $1.43B |
| SG&A Expenses | $192.87M |
| Operating Income | $184.50M |
| Interest Expense | $48.79M |
| Net Income | $74.11M |
| EPS (Basic) | $0.77 |
| EPS (Diluted) | $0.76 |
| Shares Outstanding (Basic) | 96.45M |
| Shares Outstanding (Diluted) | 107.48M |
05—Questions
Frequently Asked Questions
What did the company acquire in 2010?
On July 2, 2010 it completed the merger with Waste Services Inc. (WSI), with WSI shareholders receiving 0.5833 company shares per WSI share. On December 23, 2010 it acquired the waste collection, transfer and landfill assets of Fred Weber Inc., Crown Excel Disposal LLC and Weber Gas Energy, LLC in St. Louis, Missouri for cash consideration of $162.5 million.
How much debt does the company carry?
As of December 31, 2010 the company reported total indebtedness of approximately $1,259 million. The filing also notes that the debentures and revolving credit facilities contain financial covenants, and that a failure to comply could result in accelerated repayment.
What are the main revenue concentration risks?
The company derived more than 18.8% of its 2010 revenue from Texas and more than 16.0% from New York, and 8.2% from Florida for the six months after the WSI acquisition. Revenue from New York City municipal contracts represented 3.4% of 2010 revenues, and those contracts can be terminated on 10 days' notice.
What did the company do with its share capital in 2010 and early 2011?
All outstanding Participating Preferred Shares were exchanged for common shares on December 31, 2010. In March 2011 a secondary offering of 9,483,648 shares owned by TC Carting III, L.L.C. was completed, with an option for 1,422,547 additional shares, and the company separately bought 1,000,000 shares from the underwriters for cancellation. As of March 31, 2011 there were 120,727,889 shares outstanding.
What is the dividend policy?
The Board has a policy of paying a fixed quarterly dividend of C$0.125 per share, which was declared at that rate for each quarter of 2010. Dividend amounts remain at the Board's discretion and depend on free cash flow, operating needs, existing debt terms and Ontario solvency tests.
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