01—Abstract
Summary
Summary of the 40-F filed March 28, 2014. Cited figures are marked; the original filing is the authoritative source.
Progressive Waste Solutions Ltd. filed its Form 40-F annual report for the fiscal year ended December 31, 2013, incorporating its Annual Information Form, MD&A and audited consolidated financial statements.
The company reported revenues of $2,026,039 thousanda for 2013, up from $1,896,741 thousand in 2012, with net income of $117,970 thousand (versus $94,357 thousand) and adjusted EBITDA of $530,775 thousand (versus $519,659 thousand). Adjusted net income was $127,152 thousand, and free cash flow was $191,031 thousand, compared with $172,460 thousand in 2012. Growth was driven mainly by acquisitions, which contributed approximately $117,300 thousand of revenue growth, with core pricing and volume adding further gains.
The company reported total indebtedness of approximately $1,548 millionb at year-end, with a funded debt to EBITDA ratio of 2.88 times against a covenant maximum of 4.00 times. The company repurchased no shares in 2013 and expects to resume buybacks in 2014 if no significant acquisitions occur. Management also flagged headwinds for 2014, including the Calgary landfill closure, the loss of a Canadian residential contract, and the Sandy-related revenue decline in the U.S. northeast, as well as an expected rise in cash taxes once U.S. loss carryforwards are used up, currently expected by the fourth quarter of 2015.
The filing describes a vertically integrated non-hazardous solid waste business with 120 collection operations, 72 transfer stations, 31 landfills and 47 material recovery facilities across North America. Credit ratings were BBB- from S&P and Ba1 from Moody's on the credit facility, and the company's common shares trade on the TSX and NYSE under the symbol BIN. The board declared a quarterly dividend of C$0.15c per share, payable April 15, 2014.
02—Key points
Key Highlights
- Revenue rose to $2,026,039 thousand in 2013 from $1,896,741 thousand in 2012, with acquisitions contributing approximately $117,300 thousand of the growth.
- Net income increased to $117,970 thousand from $94,357 thousand, and adjusted net income was $127,152 thousand.
- Adjusted EBITDA was $530,775 thousand versus $519,659 thousand, and free cash flow was $191,031 thousand versus $172,460 thousand.
- Total indebtedness was approximately $1,548 million, with a funded debt to EBITDA ratio of 2.88 times against a 4.00 times covenant maximum.
- No common shares were repurchased in 2013 because of acquisition-related leverage, and the company intends to resume buybacks in 2014 if no significant acquisitions occur.
- Management expects 2014 headwinds from the Calgary landfill closure, a lost Canadian residential contract and Sandy-related declines in the U.S. northeast, and cash taxes are expected to rise once U.S. loss carryforwards are used.
- Credit facility ratings are BBB- (S&P) and Ba1 (Moody's), and the board declared a quarterly dividend of C$0.15 per share.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2013filed March 28, 2014Financial Statements
FY2013 against FY2012
| Line item | FY2013FY2012 | Change |
|---|---|---|
| Revenue | $2.03B$1.90B | +6.8% |
| SG&A Expenses | $255.17M$230.74M | +10.6% |
| Operating Income | $232.92M$237.71M | −2.0% |
| Interest Expense | $60.75M$57.43M | +5.8% |
| Net Income | $117.97M$94.36M | +25.0% |
| EPS (Basic) | $1.02$0.81 | +25.9% |
| EPS (Diluted) | $1.02$0.81 | +25.9% |
| Shares Outstanding (Basic) | 115.17M116.18M | −0.9% |
| Shares Outstanding (Diluted) | 115.17M116.18M | −0.9% |
05—Questions
Frequently Asked Questions
How did revenue and profitability change in 2013?
Revenues increased to $2,026,039 thousand from $1,896,741 thousand, and net income rose to $117,970 thousand from $94,357 thousand. Acquisitions were the largest contributor to revenue growth, with core pricing and volume improvements also adding to results. Adjusted EBITDA reached $530,775 thousand compared with $519,659 thousand in 2012.
How leveraged is the company and how is its debt structured?
Total indebtedness was approximately $1,548 million at December 31, 2013. The funded debt to EBITDA ratio was 2.88 times, below the 4.00 times covenant maximum. The debt consists mainly of a $1.85 billion revolver and a $500 million term B facility under a consolidated credit agreement, with the revolver maturity extended to October 24, 2018.
Will the company return capital to shareholders?
The company paid quarterly dividends totaling C$0.58 per share in 2013 and declared a C$0.15 quarterly dividend payable April 15, 2014. It repurchased no shares in 2013 because of acquisition-driven leverage and intends to resume share repurchases in 2014 provided no significant acquisitions are completed.
What risks or headwinds does management identify for 2014?
Management cites the Calgary landfill closure and a lost residential collection contract in eastern Canada as headwinds, with a Canadian revenue impact of approximately C$4,100 thousand and C$4,400 thousand respectively. Sandy is expected to reduce U.S. northeast revenue by approximately $8,000 thousand. Current income tax expense is expected to increase by approximately $35,000 to $40,000 thousand annually once U.S. carryforward losses are fully utilized.
What is the company's exposure to New York City and other key markets?
Revenue from New York City municipal contracts represented 2.1% of consolidated revenue in 2013. Texas, New York, Florida, Ontario and Quebec were key revenue sources, with Texas at more than 14.7%, New York at more than 14.1%, Florida at more than 15.1%, Ontario at 14.3% and Quebec at 9.4% of total revenue in 2013.
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