Waste Connections Reports Fourth Quarter Results And Provides 2018 Outlook

Fourth Quarter 2017 Highlights

- Revenue of $1.157 billion, exceeding outlook

- Reports 4.3% solid waste price + volume growth, exceeding outlook

- Net income attributable to Waste Connections of $315.1 million, or $1.19 per share

- Adjusted net income attributable to Waste Connections* of $137.0 million, or $0.52 per share, up 13.0% per share

- Adjusted EBITDA* of $360.7 million, or 31.2% of revenue

Full-Year 2017 Highlights

- Revenue of $4.630 billion

- Reports 4.4% solid waste price + volume growth

- Net cash provided by operating activities of $1.187 billion

- Adjusted free cash flow* of $763.9 million, or 16.5% of revenue

Looking at 2018

- Expects revenue of approximately $4.825 billion, excluding additional acquisitions

- Expects adjusted EBITDA* margin expansion of 60 basis points YoY

- Expects net cash provided by operating activities of approximately $1.350 billion, or 28.0% of revenue

- Expects adjusted free cash flow* of approximately $850.0 million, or 17.6% of revenue

TORONTO, Feb. 14, 2018 /PRNewswire/ -- Waste Connections, Inc. (TSX/NYSE: WCN) ("Waste Connections" or the "Company") today announced its results for the fourth quarter of 2017. Revenue in the fourth quarter totaled $1.157 billion, up from $1.049 billion in the year ago period. Operating income, which included $15.2 million of impairments, primarily related to the Company's termination of a back-up landfill development project no longer deemed necessary, and $7.0 million of acquisition-related costs, was $175.0 million. This compares to $139.2 million in the year ago period, which included $23.0 million of impairments and other operating items and $16.0 million of acquisition-related costs.

Net income attributable to Waste Connections in the fourth quarter, which included a $209.4 million benefit to the income tax provision primarily resulting from enactment of the Tax Cuts and Jobs Act of 2017 (the "Tax Act"), was $315.1 million, or $1.19 per share on a diluted basis of 264.6 million shares. In the year ago period, the Company reported net income attributable to Waste Connections of $85.6 million, or $0.32 per share on a diluted basis of 263.9 million shares. Shares and per share numbers reflect a three-for-two share split completed in June 2017.

Adjusted net income attributable to Waste Connections* in the fourth quarter was $137.0 million, or $0.52 per share, versus $120.3 million, or $0.46 per share, in the prior year period. Adjusted EBITDA* in the fourth quarter was $360.7 million, as compared to adjusted EBITDA* of $325.4 million in the prior year period. Adjusted net income attributable to Waste Connections, adjusted net income attributable to Waste Connections per diluted share and adjusted EBITDA, all non-GAAP measures, primarily exclude the impact of the Tax Act, acquisition-related items and impairments and other operating items, as reflected in the detailed reconciliations in the attached tables.

"Q4 capped off another exceptional year for Waste Connections, with better than expected solid waste volume growth and E&P waste activity once again driving financial results in the period above expectations. Adjusted free cash flow* for the full year of approximately $764 million or 16.5% of revenue and 52.3% of adjusted EBITDA* continues to reflect the results of our differentiated strategy and purposeful focus on both quality of revenue and free cash flow generation," said Ronald J. Mittelstaedt, Chief Executive Officer and Chairman. "We are extremely pleased that adjusted free cash flow per share increased more than 20% in 2017, while the number of safety-related incidents in the year declined more than 20%."

* A non-GAAP measure; see accompanying Non-GAAP Reconciliation Schedule.

Mr. Mittelstaedt added, "Recently completed acquisitions with total annualized revenue of approximately $70 million provide a strong start to what could be another year of above average acquisition activity. In early 2018, we acquired Bay Disposal, LLC and Hampton Roads Recovery Center, LLC (collectively, "Bay Disposal & Recycling"). Bay Disposal & Recycling is an integrated provider of solid waste collection, recycling, transfer and disposal services to almost 70,000 customers in southeastern Virginia and northeastern North Carolina through four collection operations, five recycling facilities, one transfer station and a C&D landfill. We've also completed tuck-in acquisitions in New York and Texas. Our strong financial profile provides us the flexibility to fund this potential above average amount of acquisition activity while continuing to increase the return of capital to shareholders."

For the year ended December 31, 2017, revenue was $4.630 billion, as compared to revenue of $3.376 billion in 2016. Operating income, which included $189.2 million of expenses primarily related to both goodwill impairment 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 impairments and other operating items mostly related to the divestiture or expected divestiture of certain assets acquired in the Progressive Waste acquisition, was $627.1 million. This compares to operating income of $452.3 million in the prior year, which included $146.0 million of expenses primarily related to the Progressive Waste acquisition and the expected divestiture of certain assets acquired in the Progressive Waste acquisition.

Net income attributable to Waste Connections in 2017, which included a $205.6 million benefit to the income tax provision primarily related to the Tax Act, was $576.8 million, or $2.18 per share on a diluted basis of 264.3 million shares. In 2016, the Company reported net income attributable to Waste Connections of $246.5 million, or $1.07 per share on a diluted basis of 231.1 million shares.

Adjusted net income attributable to Waste Connections* in 2017 was $570.7 million, or $2.16 per share, compared to $395.2 million, or $1.71 per share, in the prior year. Adjusted EBITDA* in 2017 was $1.461 billion, as compared to $1.071 billion in the prior year. Adjusted net income attributable to Waste Connections, adjusted net income attributable to Waste Connections per diluted share and adjusted EBITDA, all non-GAAP measures, primarily exclude the impact of the Tax Act, acquisition-related items and impairments and other operating items, as reflected in the detailed reconciliations in the attached tables.

2018 OUTLOOK

Waste Connections also announced its outlook for 2018, which assumes no change in the current economic environment. The Company's outlook excludes any impact from additional acquisitions that may close during the year, and expensing of transaction-related items. The outlook provided below is forward looking, and actual results may differ materially depending on risks and uncertainties detailed at the end of this release and in our periodic filings with the Securities and Exchange Commission and the securities commissions or similar regulatory authorities in Canada. Certain components of the outlook for 2018 are subject to quarterly fluctuations. See reconciliations in the attached tables.

    --  Revenue is estimated to be approximately $4.825 billion.
    --  Net income attributable to Waste Connections is estimated to be
        approximately $570.0 million.
    --  Adjusted EBITDA* is estimated to be approximately $1.550 billion, or
        about 32.1% of revenue.
    --  Net cash provided by operating activities is estimated to be
        approximately $1.350 billion, or 28.0% of revenue.
    --  Adjusted free cash flow* is estimated to be approximately $850.0
        million, or about 17.6% of revenue.

* A non-GAAP measure; see accompanying Non-GAAP Reconciliation Schedule.

CONFERENCE CALL

Waste Connections will be hosting a conference call related to fourth quarter earnings and 2018 outlook on February 15(th) at 8:30 A.M. Eastern Time. The call will be broadcast live over the Internet at www.streetevents.com or through a link on our website at www.wasteconnections.com. A playback of the call will be available at both of these websites.

About Waste Connections
Waste Connections is an integrated solid waste services company that provides waste collection, transfer, disposal and recycling services in mostly exclusive and secondary markets in the United States and Canada. Through its R360 Environmental Solutions subsidiary, Waste Connections is also a leading provider of non-hazardous oilfield waste treatment, recovery and disposal services in several of the most active natural resource producing areas in the United States, including the Permian, Bakken and Eagle Ford Basins. Waste Connections serves more than six million residential, commercial, industrial, and exploration and production customers in 39 states in the U.S., and six provinces in Canada. The Company also provides intermodal services for the movement of cargo and solid waste containers in the Pacific Northwest.

For more information, visit the Waste Connections web site at www.wasteconnections.com. Copies of financial literature, including this release, are available on the Waste Connections website or through contacting us directly at (905) 532-7510. Investors can also obtain these materials and other documents filed with the U.S. Securities and Exchange Commission ("SEC") and the Canadian securities regulators free of charge at the SEC's website, www.sec.gov, and at the System for Electronic Document Analysis and Retrieval maintained by the Canadian Securities Administrators at www.sedar.com.

Safe Harbor and Forward-Looking Information
This press release contains forward-looking statements within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995 ("PSLRA"), including "forward-looking information" within the meaning of applicable Canadian securities laws. These forward-looking statements are neither historical facts nor assurances of future performance and reflect Waste Connections' current beliefs and expectations regarding future events and operating performance. These forward-looking statements are often identified by the words "may," "might," "believes," "thinks," "expects," "estimate," "continue," "intends" or other words of similar meaning. All of the forward-looking statements included in this press release are made pursuant to the safe harbor provisions of the PSLRA and applicable securities laws in Canada. Forward-looking statements involve risks and uncertainties. Forward-looking statements in this press release include, but are not limited to, statements about expected 2018 financial results, potential acquisition activity and the amount of capital returned to shareholders. Important factors that could cause actual results to differ, possibly materially, from those indicated by the forward-looking statements include, but are not limited to, risk factors detailed from time to time in the Company's filings with the U.S. Securities and Exchange Commission and the securities commissions or similar regulatory authorities in Canada. You should not place undue reliance on forward-looking statements, which speak only as of the date of this press release. Waste Connections undertakes no obligation to update the forward-looking statements set forth in this press release, whether as a result of new information, future events, or otherwise, unless required by applicable securities laws.

- financial tables attached -



    CONTACT:


    Worthing Jackman / (832) 442-2266 Mary Anne Whitney / (832) 442-2253

    worthingj@wasteconnections.com    maryannew@wasteconnections.com


                                                               WASTE CONNECTIONS, INC.

                                                   CONDENSED CONSOLIDATED STATEMENTS OF NET INCOME

                                               THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2016 AND 2017

                                                                     (Unaudited)

                                          (in thousands of U.S. dollars, except share and per share amounts)


                                                                                                             Three months ended            Twelve months ended

                                                                                                                December 31,                   December 31,


                                                                                                                           2016                                2017                    2016         2017
                                                                                                                           ----                                ----                    ----         ----

    Revenues                                                                                                                    $1,048,622                                      $1,157,175               $3,375,863              $4,630,488

    Operating expenses:

    Cost of operations                                                                                                  617,948                                         680,373               1,957,712                2,704,775

    Selling, general and administrative                                                                                 124,267                                         126,038                 474,263                  509,638

    Depreciation                                                                                                        122,612                                         135,179                 393,600                  530,187

    Amortization of intangibles                                                                                          21,593                                          25,411                  70,312                  102,297

    Impairments and other operating items                                                                                23,045                                          15,160                  27,678                  156,493

    Operating income                                                                                                    139,157                                         175,014                 452,298                  627,098


    Interest expense                                                                                                   (27,418)                                       (32,534)               (92,709)               (125,297)

    Interest income                                                                                                         155                                           2,042                     602                    5,173

    Other income, net                                                                                                       321                                             175                      53                    3,736

    Foreign currency transaction gain
     (loss)                                                                                                                 782                                           1,302                   1,121                  (2,200)

    Income before income tax provision                                                                                  112,997                                         145,999                 361,365                  508,510


    Income tax (provision) benefit                                                                                     (27,294)                                        169,129               (114,044)                  68,910
                                                                                                                        -------                                         -------                --------                   ------

    Net income                                                                                                           85,703                                         315,128                 247,321                  577,420

    Less: Net income attributable to
     noncontrolling interests                                                                                             (111)                                           (42)                  (781)                   (603)
                                                                                                                           ----                                             ---                    ----                     ----

    Net income attributable to
     Waste Connections                                                                                                             $85,592                                        $315,086                 $246,540                $576,817
                                                                                                                                   =======                                        ========                 ========                ========


    Earnings per common share
     attributable to Waste Connections'
     common shareholders:

    Basic                                                                                                                            $0.33                                           $1.19                    $1.07                   $2.19
                                                                                                                                     =====                                           =====                    =====                   =====


    Diluted                                                                                                                          $0.32                                           $1.19                    $1.07                   $2.18
                                                                                                                                     =====                                           =====                    =====                   =====


    Shares used in the per share
     calculations:

    Basic                                                                                                           263,097,300                                     263,825,060             230,325,012              263,682,608
                                                                                                                    ===========                                     ===========             ===========              ===========

    Diluted                                                                                                         263,894,715                                     264,610,894             231,081,496              264,302,411
                                                                                                                    ===========                                     ===========             ===========              ===========


    Cash dividends per common
     share                                                                                                                           $0.12                                           $0.14                    $0.41                   $0.50
                                                                                                                                     =====                                           =====                    =====                   =====


                                                               WASTE CONNECTIONS, INC.

                                                        CONDENSED CONSOLIDATED BALANCE SHEETS

                                                                     (Unaudited)

                                          (in thousands of U.S. dollars, except share and per share amounts)


                                                     December 31,                                    December 31,
                                                             2016                                             2017
                                                             ----                                             ----

    ASSETS

    Current assets:

    Cash and equivalents                                                                  $154,382                    $433,815

    Accounts receivable, net of
     allowance for doubtful accounts of
     $13,160 and $17,154 at December
     31, 2016 and 2017, respectively                                                       485,138                     554,458

    Current assets held for sale                                                             6,339                       1,596

    Prepaid expenses and other current
     assets                                                                                 97,533                     186,999
                                                                                            ------                     -------

    Total current assets                                                                   743,392                   1,176,868


    Restricted cash and investments                                                         63,406                     167,012

    Property and equipment, net                                                          4,738,055                   4,820,934

    Goodwill                                                                             4,390,261                   4,681,774

    Intangible assets, net                                                               1,067,158                   1,087,436

    Long-term assets held for sale                                                          33,989                      12,625

    Other assets, net                                                                       67,664                      68,032
                                                                                            ------                      ------

                                                                                       $11,103,925                 $12,014,681
                                                                                       ===========                 ===========

    LIABILITIES AND EQUITY

    Current liabilities:

    Accounts payable                                                                      $251,253                    $330,523

    Book overdraft                                                                          10,955                      19,223

    Accrued liabilities                                                                    269,402                     278,039

    Deferred revenue                                                                       134,081                     145,197

    Current portion of contingent
     consideration                                                                          21,453                      15,803

    Current liabilities held for sale                                                        3,383                       2,155

    Current portion of long-term debt
     and notes payable                                                                       1,650                      11,659
                                                                                             -----                      ------

          Total current liabilities                                                        692,177                     802,599


    Long-term debt and notes payable                                                     3,616,760                   3,899,572

    Long-term portion of contingent
     consideration                                                                          30,373                      31,482

    Other long-term liabilities                                                            331,074                     316,191

    Deferred income taxes                                                                  778,664                     690,767
                                                                                           -------                     -------

          Total liabilities                                                              5,449,048                   5,740,611


    Commitments and contingencies

    Equity:

    Common shares: 263,140,668 shares
     issued and 262,803,271 shares
     outstanding at December 31, 2016;
     263,660,803 shares issued and
     263,494,670 shares outstanding at
     December 31, 2017                                                                   4,174,808                   4,187,568

    Additional paid-in capital                                                             102,220                     115,743

    Accumulated other comprehensive
     income (loss)                                                                        (43,001)                    108,413

    Treasury shares: 337,397 and
     166,133 shares at December 31,
     2016 and 2017, respectively                                                                 -                          -

    Retained earnings                                                                    1,413,488                   1,856,946
                                                                                         ---------                   ---------

          Total Waste Connections' equity                                                5,647,515                   6,268,670

    Noncontrolling interest in
     subsidiaries                                                                            7,362                       5,400
                                                                                             -----                       -----

          Total equity                                                                   5,654,877                   6,274,070
                                                                                         ---------                   ---------

                                                                                       $11,103,925                 $12,014,681
                                                                                       ===========                 ===========


                                                     WASTE CONNECTIONS, INC.

                                         CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                                         TWELVE MONTHS ENDED DECEMBER 31, 2016 AND 2017

                                                           (Unaudited)

                                                 (in thousands of U.S. dollars)


                                                                                                                   Twelve months ended December 31,

                                                                                                     2016              2017
                                                                                                     ----              ----

    Cash flows from operating
     activities:

    Net income                                                                              $247,321        $577,420

    Adjustments to reconcile net income
     to net cash provided by operating
     activities:

    Loss on disposal of assets and
     impairments                                                                              26,741         134,491

    Depreciation                                                                             393,600         530,187

    Amortization of intangibles                                                               70,312         102,297

    Foreign currency transaction loss
     (gain)                                                                                  (1,121)          2,200

    Deferred income taxes, net of
     acquisitions                                                                             42,298       (153,283)

    Amortization of debt issuance costs                                                        4,847           4,341

    Share-based compensation                                                                  44,772          39,361

    Interest income on restricted cash
     and investments                                                                           (477)          (589)

    Interest accretion                                                                        10,505          13,822

    Excess tax benefit associated with
     equity-based compensation                                                               (5,196)              -

    Payment of contingent consideration
     recorded in earnings                                                                      (493)       (10,012)

    Adjustments to contingent
     consideration                                                                           (2,623)         17,754

    Net change in operating assets and
     liabilities, net of acquisitions                                                       (35,174)       (70,729)
                                                                                             -------         -------

    Net cash provided by operating
     activities                                                                              795,312       1,187,260
                                                                                             -------       ---------


    Cash flows from investing
     activities:

    Payments for acquisitions, net of
     cash acquired                                                                          (17,131)      (410,695)

    Cash acquired in the Progressive
     Waste acquisition                                                                        65,768               -

    Capital expenditures for property
     and equipment                                                                         (344,723)      (479,287)

    Proceeds from disposal of assets                                                           4,604          28,432

    Change in restricted cash and
     investments, net of interest income                                                       (428)      (102,218)

    Other                                                                                    (4,485)        (2,464)
                                                                                              ------          ------

    Net cash used in investing
     activities                                                                            (296,395)      (966,232)
                                                                                            --------        --------


    Cash flows from financing
     activities:

    Proceeds from long-term debt                                                           3,469,289         973,754

    Principal payments on notes payable
     and long-term debt                                                                  (3,714,044)       (770,106)

    Payment of contingent consideration
     recorded at acquisition date                                                           (16,322)       (17,158)

    Change in book overdraft                                                                 (1,305)          8,241

    Proceeds from option and warrant
     exercises                                                                                     -          1,946

    Excess tax benefit associated with
     equity-based compensation                                                                 5,196               -

    Payments for cash dividends                                                             (92,547)      (131,975)

    Tax withholdings related to net
     share settlements of restricted
     share units                                                                            (11,497)       (13,994)

    Debt issuance costs                                                                     (13,506)        (3,667)

    Proceeds from sale of common shares
     held in trust                                                                            19,870          10,814

    Other                                                                                        (3)        (1,095)

    Net cash provided by (used in)
     financing activities                                                                  (354,869)         56,760
                                                                                            --------          ------

    Effect of exchange rates changes on
     cash and equivalents                                                                      (598)          1,795
                                                                                                ----           -----

    Net increase in cash and equivalents                                                     143,450         279,583

    Cash and equivalents at beginning of
     period                                                                                   10,974         154,382

    Less: change in cash held for sale                                                          (42)          (150)
                                                                                                 ---            ----

    Cash and equivalents at end of
     period                                                                                 $154,382        $433,815
                                                                                            ========        ========

ADDITIONAL STATISTICS
(in thousands of U.S. dollars, except where noted)

Solid Waste Internal Growth: The following table reflects a breakdown of the components of our solid waste internal growth for the three months ended December 31, 2017:


                            U.S.        Canada         Total
                            ----        ------         -----

    Core Price                     3.3%          4.3%          3.5%

    Surcharges                     0.1%          0.1%          0.1%

    Volume                         1.7%        (4.3%)          0.7%

    Recycling                    (0.3%)        (0.5%)        (0.3%)

    Foreign Exchange Impact           -          4.9%          0.8%
                                    ---           ---            ---

    Total                          4.8%          4.5%          4.8%
                                    ===            ===            ===

Revenue Breakdown: The following table reflects a breakdown of our revenue for the three month periods ended December 31, 2016 and 2017:


                    Three Months Ended December 31, 2016
                    ------------------------------------

                             Revenue                       Inter-             Reported             %
                                                           company
                                                         Elimination           Revenue
                                                         -----------           -------

    Solid Waste
     Collection                        $739,986                      $(2,195)            $737,791     70.3%

    Solid Waste
     Disposal and
     Transfer                           350,482                     (135,713)             214,769     20.5%

    Solid Waste
     Recycling                           31,580                       (2,387)              29,193      2.8%

    E&P Waste
     Treatment,
     Recovery and
     Disposal                            35,027                       (2,859)              32,168      3.1%

    Intermodal
     and Other                           34,962                         (261)              34,701      3.3%
                                         ------                          ----               ------       ---

    Total                            $1,192,037                    $(143,415)          $1,048,622    100.0%
                                     ==========                     =========           ==========     =====



                  Three Months Ended December 31, 2017
                  ------------------------------------

                             Revenue                       Inter-             Reported             %
                                                           company
                                                         Elimination           Revenue
                                                         -----------           -------

    Solid Waste
     Collection                        $800,625                      $(2,396)            $798,229     69.0%

    Solid Waste
     Disposal and
     Transfer                           388,010                     (149,909)             238,101     20.6%

    Solid Waste
     Recycling                           30,285                       (1,730)              28,555      2.4%

    E&P Waste
     Treatment,
     Recovery and
     Disposal                            55,812                       (2,547)              53,265      4.6%

    Intermodal
     and Other                           39,331                         (306)              39,025      3.4%
                                         ------                          ----               ------       ---

    Total                            $1,314,063                    $(156,888)          $1,157,175    100.0%
                                     ==========                     =========           ==========     =====

Contribution from Acquisitions: The following table reflects revenues from solid waste acquisitions, net of divestitures, for the three and twelve month periods ended December 31, 2016 and 2017:


                     Three months ended              Twelve months ended
                        December 31,                     December 31,
                        ------------                     ------------

                   2016                 2017         2016                2017
                   ----                 ----         ----                ----

     Acquisitions,
     net                   $507,332          $37,615                          $1,266,395 $1,002,979
                           ========          =======                          ========== ==========

ADDITIONAL STATISTICS (continued)
(in thousands of U.S. dollars, except where noted)

Other Cash Flow Items: The following table reflects cash interest and cash taxes for the three and twelve-month periods ended December 31, 2016 and 2017:


                Three months ended              Twelve months ended
                   December 31,
                                                    December 31,
                                                    ------------

              2016                 2017         2016                2017
              ----                 ----         ----                ----

     Cash
     Interest
     Paid             $31,416           $39,145                          $87,654 $115,645

     Cash
     Taxes
     Paid              33,084            74,101                           69,589  155,532

Debt to Book Capitalization as of December 31, 2017: 38%

Internalization for the three months ended December 31, 2017: 55%

Days Sales Outstanding for the three months ended December 31, 2017: 44 (33 net of deferred revenue)

Share Information for the three months ended December 31, 2017:


    Basic shares outstanding           263,825,060

    Dilutive effect of equity-
     based awards                          785,834
                                           -------

    Diluted shares outstanding         264,610,894
                                       ===========

NON-GAAP RECONCILIATION SCHEDULE
(in thousands of U.S. dollars, except where noted)

Reconciliation of Adjusted EBITDA:

Adjusted EBITDA, a non-GAAP financial measure, is provided supplementally because it is widely used by investors as a performance and valuation measure in the solid waste industry. Management uses adjusted EBITDA as one of the principal measures to evaluate and monitor the ongoing financial performance of Waste Connections' operations. Waste Connections defines adjusted EBITDA as net income attributable to Waste Connections, plus net income attributable to noncontrolling interests, plus or minus income tax provision (benefit), plus interest expense, less interest income, plus depreciation and amortization expense, plus closure and post-closure accretion expense, plus or minus any loss or gain on impairments and other operating items, plus other expense, less other income, plus foreign currency transaction loss, less foreign currency transaction gain. Waste Connections further adjusts this calculation to exclude the effects of other items management believes impact the ability to assess the operating performance of its business. This measure is not a substitute for, and should be used in conjunction with, GAAP financial measures. Other companies may calculate adjusted EBITDA differently.


                            Three months ended               Twelve months ended
                               December 31,                      December 31,
                               ------------                      ------------

                                               2016                              2017       2016 2017
                                               ----                              ----       ---- ----

    Net income attributable
     to Waste Connections                            $85,592                           $315,086         $246,540   $576,817

    Plus: Net income
     attributable to
     noncontrolling
     interests                                           111                                 42              781        603

    Plus (less): Income tax
     provision (benefit)                              27,294                          (169,129)          114,044   (68,910)

    Plus: Interest expense                            27,418                             32,534           92,709    125,297

    Less: interest income                              (155)                           (2,042)           (602)   (5,173)

    Plus: Depreciation and
     amortization                                    144,205                            160,590          463,912    632,484

    Plus: Closure and post-
     closure accretion                                 3,027                              2,976            8,936     11,781

    Plus: Impairments and
     other operating items                            23,045                             15,160           27,678    156,493

    Less: Other income, net                            (321)                             (175)            (53)   (3,736)

    Plus/less: Foreign
     currency transaction
     loss (gain)                                       (782)                           (1,302)         (1,121)     2,200

    Adjustments:

    Plus: Transaction-
     related expenses (a)                              1,015                              1,282           47,842      5,700

    Plus: Pre-existing
     Progressive Waste
     share-based grants
     (b)                                               4,466                              3,033           14,289     16,357

    Plus: Integration-
     related and other
     expenses (c)                                      4,036                              2,645           44,336     10,612

    Plus: Synergy bonus (d)                            6,498                                  -          11,798          -

    Adjusted EBITDA                                 $325,449                           $360,700       $1,071,089 $1,460,525
                                                    ========                           ========       ========== ==========


    As % of revenues                                   31.0%                             31.2%           31.7%     31.5%

____________________________________________



    (a)              Reflects the addback of
                     acquisition-related transaction
                     costs, which for 2016 primarily
                     related to the Progressive Waste
                     acquisition.

    (b)              Reflects share-based compensation
                     costs, including changes in fair
                     value and related expenses,
                     associated with share-based
                     awards granted by Progressive
                     Waste outstanding at the time of
                     the Progressive Waste acquisition.

    (c)              Reflects the addback of rebranding
                     costs and other integration-
                     related items associated with the
                     Progressive Waste acquisition.

    (d)              Reflects the addback of bonuses
                     accrued pursuant to the Company's
                     Synergy Bonus Program in
                     conjunction with the Progressive
                     Waste acquisition.

NON-GAAP RECONCILIATION SCHEDULE (continued)
(in thousands of U.S. dollars, except where noted)

Reconciliation of Adjusted Free Cash Flow:

Adjusted free cash flow, a non-GAAP financial measure, is provided supplementally because it is widely used by investors as a valuation and liquidity measure in the solid waste industry. Management uses adjusted free cash flow as one of the principal measures to evaluate and monitor the ongoing financial performance of Waste Connections' operations. Waste Connections defines adjusted free cash flow as net cash provided by operating activities, plus or minus change in book overdraft, plus proceeds from disposal of assets, plus excess tax benefit associated with equity-based compensation, less capital expenditures for property and equipment and distributions to noncontrolling interests. Waste Connections further adjusts this calculation to exclude the effects of items management believes impact the ability to assess the operating performance of its business. This measure is not a substitute for, and should be used in conjunction with, GAAP liquidity or financial measures. Other companies may calculate adjusted free cash flow differently.


                                Three months ended               Twelve months ended
                                   December 31,                     December 31,
                                   ------------                     ------------

                             2016                  2017        2016                  2017
                             ----                  ----        ----                  ----

    Net cash provided by
     operating
     activities                        $256,481           $298,885                           $795,312   $1,187,260

    Plus/(less): Change
     in book overdraft                  (7,355)           (5,573)                           (1,305)       8,241

    Plus: Proceeds from
     disposal of assets                   1,578              2,606                              4,604       28,432

    Plus: Excess tax
     benefit associated
     with equity-based
     compensation                            45                  -                             5,196            -

    Less: Capital
     expenditures for
     property and
     equipment                        (139,789)         (161,902)                         (344,723)   (479,287)

    Less: Distributions
     to noncontrolling
     interests                                -                 -                               (3)           -

    Adjustments:

         Payment of
          contingent
          consideration
          recorded in
          earnings (a)                       80             10,012                                493       10,012

         Cash received for
          divestitures (b)                    -                 -                                 -    (21,100)

         Transaction-related
          expenses (c)                    3,480              1,282                             45,228        5,700

         Integration-related
          and other expenses
          (d)                             4,005              2,633                             82,526       10,602

         Pre-existing
          Progressive Waste
          share-based grants
          (e)                                 -             5,297                                  -      17,037

         Synergy bonus (f)                    -                 -                                 -      11,798

         Tax effect (g)                 (7,846)           (3,378)                          (36,384)    (14,804)
                                         ------             ------                            -------      -------

    Adjusted free cash
     flow                              $110,679           $149,862                           $550,944     $763,891
                                       ========           ========                           ========     ========


    As % of revenues                      10.6%             13.0%                             16.3%       16.5%

____________________________________________



    (a)              Reflects the addback of
                     acquisition-related payments for
                     contingent consideration that
                     were recorded as expenses in
                     earnings and as a component of
                     cash flows from operating
                     activities as the amounts paid
                     exceeded the fair value of the
                     contingent consideration recorded
                     at the acquisition date.

    (b)              Reflects the elimination of cash
                     received in conjunction with the
                     divestiture of Progressive Waste
                     operations.

    (c)              Reflects the addback of
                     acquisition-related transaction
                     costs, which for 2016 primarily
                     related to the Progressive Waste
                     acquisition.

    (d)              Reflects the addback of rebranding
                     and other integration-related
                     items associated with the
                     Progressive Waste acquisition.

    (e)              Reflects the cash settlement of
                     pre-existing Progressive Waste
                     share-based awards and related
                     payments during the period.

    (f)              Reflects the addback of cash
                     bonuses paid pursuant to the
                     Company's Synergy Bonus Program
                     in conjunction with the
                     Progressive Waste acquisition.

    (g)              The aggregate tax effect of
                     footnotes (a) through (f) is
                     calculated based on the applied
                     tax rates for the respective
                     periods.

NON-GAAP RECONCILIATION SCHEDULE (continued)
(in thousands of U.S. dollars, except per share amounts)

Reconciliation of Net Income attributable to Waste Connections to Adjusted Net Income attributable to Waste Connections and Adjusted Net Income per Diluted Share attributable to Waste Connections:

Adjusted net income attributable to Waste Connections and adjusted net income per diluted share attributable to Waste Connections, both non-GAAP financial measures, are provided supplementally because they are widely used by investors as a valuation measure in the solid waste industry. Management uses adjusted net income attributable to Waste Connections and adjusted net income per diluted share attributable to Waste Connections as one of the principal measures to evaluate and monitor the ongoing financial performance of Waste Connections' operations. Waste Connections provides adjusted net income attributable to Waste Connections to exclude the effects of items management believes impact the comparability of operating results between periods. Adjusted net income attributable to Waste Connections has limitations due to the fact that it excludes items that have an impact on the Company's financial condition and results of operations. Adjusted net income attributable to Waste Connections and adjusted net income per diluted share attributable to Waste Connections are not a substitute for, and should be used in conjunction with, GAAP financial measures. Other companies may calculate these non-GAAP financial measures differently.


                              Three months ended             Twelve months ended
                                 December 31,                    December 31,
                                 ------------                    ------------

                            2016                 2017        2016                2017
                            ----                 ----        ----                ----

    Reported net income
     attributable to Waste
     Connections                     $85,592            $315,086                        $246,540    $576,817

    Adjustments:

    Amortization of
     intangibles (a)                  21,593              25,411                          70,312     102,297

    Impairments and other
     operating items (b)              23,045              15,160                          27,678     156,493

    Transaction-related
     expenses (c)                      1,015               1,282                          47,842       5,700

    Pre-existing
     Progressive Waste
     share-based grants
     (d)                               4,466               3,033                          14,289      16,357

    Integration-related
     and other expenses (e)            4,036               2,645                          44,336      10,612

    Synergy bonus (f)                  6,498                   -                         11,798           -

    Tax effect (g)                  (25,951)           (16,151)                       (69,581)   (91,979)

    Tax items (h)                          -          (209,418)                          1,964   (205,631)

    Adjusted net income
     attributable to Waste
     Connections                    $120,294            $137,048                        $395,178    $570,666


    Diluted earnings per
     common share
     attributable to Waste
     Connections' common
     shareholders:

    Reported net income                $0.32               $1.19                           $1.07       $2.18
                                       =====               =====                           =====       =====

    Adjusted net income                $0.46               $0.52                           $1.71       $2.16
                                       =====               =====                           =====       =====

____________________________________________


    (a)              Reflects the elimination of the non-
                     cash amortization of acquisition-
                     related intangible assets.

    (b)              Reflects the addback of impairments
                     and other operating items.

    (c)              Reflects the addback of acquisition-
                     related transaction costs, which
                     for 2016 primarily related to the
                     Progressive Waste acquisition.

    (d)              Reflects share-based compensation
                     costs, including changes in fair
                     value and related expenses,
                     associated with share-based awards
                     granted by Progressive Waste
                     outstanding at the time of the
                     Progressive Waste acquisition.

    (e)              Reflects the addback of rebranding
                     costs and other integration-
                     related items associated with the
                     Progressive Waste acquisition.

    (f)              Reflects the addback of bonuses
                     accrued pursuant to the Company's
                     Synergy Bonus Program in connection
                     with the Progressive Waste
                     acquisition.

    (g)              The aggregate tax effect of the
                     adjustments in footnotes (a)
                     through (f) is calculated based on
                     the applied tax rates for the
                     respective periods.

    (h)              Reflects in 2016 a change in the
                     geographical apportionment of our
                     deferred tax liabilities resulting
                     from the Progressive Waste
                     acquisition.  In 2017, reflects
                     income tax benefit primarily
                     resulting from a reduction of
                     deferred tax liabilities due to
                     enactment of the Tax Act on
                     December 22, 2017, partially offset
                     by deferred income tax expense due
                     to a portion of the Company's U.S.
                     earnings no longer deemed to be
                     permanently reinvested, also
                     related to the Tax Act.


                                                  2018 OUTLOOK

                                        NON-GAAP RECONCILIATION SCHEDULE

                               (in thousands of U.S. dollars, except where noted)


    Reconciliation of Adjusted EBITDA:
    ----------------------------------


                                                                                 2018 Outlook

                                                                 Estimate                              Observation
                                                                 --------                              -----------

    Net income attributable to
     Waste Connections                                                          $570,000

        Plus: Net income attributable
         to noncontrolling interests                                               1,000

        Plus: Income tax provision                                               171,000                                   Approximate 23.0% effective rate

        Plus: Interest expense, net                                              125,000

        Plus: Depreciation and
         Depletion                                                               569,000                                    Approximately 11.8% of revenue

        Plus: Amortization                                                       102,000                                     Approximately 2.1% of revenue

        Plus: Closure and post-
         closure accretion                                                        12,000                                    Approximately 0.25% of revenue
                                                                                  ------

    Adjusted EBITDA                                                           $1,550,000                                    Approximately 32.1% of revenue
                                                                              ==========


    Reconciliation of Adjusted Free Cash Flow:
    ------------------------------------------


                                                                         2018 Outlook
                                                                         ------------

                                                    Estimate                            Observation
                                                    --------                            -----------

    Net cash provided by
     operating activities                                       $1,350,000                  Approximately 28.0% of revenue

        Less: Capital expenditures                               (500,000)
                                                                  --------

    Adjusted free cash flow                                       $850,000                  Approximately 17.6% of revenue
                                                                  ========

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SOURCE Waste Connections, Inc.