PONTE VEDRA, Fla., Aug. 1, 2018 /PRNewswire/ — Advanced Disposal Services, Inc. (NYSE: ADSW), (d/b/a Advanced Disposal) announced today revenue of $398.1 million for the three months ended June 30, 2018 versus $383.1 million in the same period of the prior year. Net income during the second quarter 2018 was $9.7 million, or $0.11 per diluted share and adjusted net income, which excludes certain gains and expenses, was $17.3 million, or $0.19 per diluted share. Second quarter 2017 net loss was $0.2 million, or $0.00 per diluted share, and adjusted net income was $13.8 million, or $0.16 per diluted share, in the prior year.
“Advanced Disposal continues to improve its overall profitability led by disciplined pricing that is helping to drive gains in operating income, net income, and adjusted EBITDA,” said Richard Burke, CEO. “We have also generated operating cash flow of $163.2 million and adjusted free cash flow of $81.3 million year-to-date. Based on our year-to-date results, we remain on track to achieve our full year guidance targets.”
Second Quarter Financial Highlights
- Revenue of $398.1 million was up 3.9% overall and 6.2% excluding an $8.8 million reduction related to the adoption of the new revenue recognition standard
- Achieved average yield of 3.2% and organic volume growth of 1.2%
- Year-over-year growth from acquisitions was 2.6% as the company benefited from the rollover impact of acquisitions completed in 2017 and six tuck-in acquisitions completed year-to-date 2018
- Net income was $9.7 million, or $0.11 per diluted share, an increase of $9.9 million versus the prior year
- Adjusted net income improved $3.5 million to $17.3 million and adjusted diluted earnings per share of $0.19 was $0.03 higher than second quarter 2017
- Adjusted EBITDA improved $2.2 million to $112.0 million despite a $4.9 million adjusted EBITDA decline from the sale of recyclables and net fuel costs
- Cash provided by operating activities during the second quarter of 2018 improved $8.7 million to $84.7 million and was $163.2 million year-to-date 2018
- Adjusted free cash flow was $81.3 million year-to-date 2018
Fiscal Year 2018 Guidance
Advanced Disposal reaffirms its full year revenue guidance of $1,520 million to $1,540 million, adjusted EBITDA guidance of $426 million to $436 million, and adjusted free cash flow guidance of $134 million to $144 million.
This guidance is based on current economic conditions and assumes no significant changes in the overall economy. Please refer to the Special Note Regarding Forward-Looking Statements section of this press release.
Advanced Disposal will conduct a quarterly earnings conference call on August 2, 2018 at 10:00 a.m. EST. The call can be accessed by dialing (866) 478-7805 and asking for conference ID 7172495 or the Advanced Disposal Q2 2018 earnings call. This call will be recorded and available via replay approximately two hours after the completion of the earnings call for thirty days. You may access the recording by dialing (855) 859-2056 or through the link on the investor relations page of our website at www.AdvancedDisposal.com.
The calculation of free cash flow and adjusted free cash flow, as well as details of charges and other expenses that are excluded from EBITDA and net income (loss) in arriving at adjusted EBITDA and adjusted net income, are contained in the “Reconciliation of Certain Non-GAAP Measures” section of this press release.
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SUPPLEMENTAL UNAUDITED FINANCIAL INFORMATION AND OPERATING DATA |
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Advanced Disposal Services, Inc. |
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Condensed Consolidated Statements of Operations (Unaudited) |
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(in millions, except share and per share data) |
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Three Months Ended June 30, |
Six Months Ended June 30, |
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2018 |
2017 |
2018 |
2017 |
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Service revenues |
$ |
398.1 |
$ |
383.1 |
$ |
762.8 |
$ |
730.5 |
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Operating costs and expenses |
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|
Operating |
250.7 |
240.2 |
486.8 |
469.1 |
|||||||||||
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Selling, general and administrative |
44.5 |
40.6 |
90.0 |
85.7 |
|||||||||||
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Depreciation and amortization |
69.2 |
67.5 |
133.9 |
128.9 |
|||||||||||
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Acquisition and development costs |
0.1 |
0.4 |
0.3 |
0.8 |
|||||||||||
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(Gain) loss on disposal of assets and asset impairments |
(1.4) |
10.3 |
(3.3) |
10.6 |
|||||||||||
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Restructuring charges |
— |
— |
0.1 |
— |
|||||||||||
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Total operating costs and expenses |
363.1 |
359.0 |
707.8 |
695.1 |
|||||||||||
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Operating income |
35.0 |
24.1 |
55.0 |
35.4 |
|||||||||||
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Other (expense) income |
|||||||||||||||
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Interest expense |
(23.6) |
(23.1) |
(46.6) |
(45.6) |
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Other income (expense), net |
2.0 |
(1.3) |
7.9 |
(1.8) |
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Total other expense |
(21.6) |
(24.4) |
(38.7) |
(47.4) |
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Income (loss) before income taxes |
13.4 |
(0.3) |
16.3 |
(12.0) |
|||||||||||
|
Income tax expense (benefit) |
3.7 |
(0.1) |
4.5 |
(4.8) |
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Net income (loss) |
$ |
9.7 |
$ |
(0.2) |
$ |
11.8 |
(7.2) |
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Net income (loss) attributable to common stockholders per share |
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Basic income (loss) per share |
$ |
0.11 |
$ |
— |
$ |
0.13 |
$ |
(0.08) |
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Diluted income (loss) per share |
$ |
0.11 |
$ |
— |
$ |
0.13 |
$ |
(0.08) |
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Basic average shares outstanding |
88,555,647 |
88,275,698 |
88,535,860 |
88,206,590 |
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Diluted average shares outstanding |
89,272,966 |
88,275,698 |
89,147,337 |
88,206,590 |
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Advanced Disposal Services, Inc. |
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Condensed Consolidated Balance Sheets (Unaudited) |
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(in millions, except share data) |
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June 30, 2018 |
December 31, 2017 |
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Assets |
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Current assets |
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Cash and cash equivalents |
$ |
6.9 |
$ |
6.8 |
|||
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Accounts receivable, net of allowance for doubtful accounts of $4.6 and $5.4, respectively |
208.5 |
199.9 |
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Prepaid expenses and other current assets |
40.0 |
37.9 |
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Total current assets |
255.4 |
244.6 |
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Other assets |
30.9 |
23.0 |
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Property and equipment, net of accumulated depreciation of $1,460.0 and $1,355.5, respectively |
1,730.8 |
1,728.8 |
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Goodwill |
1,210.3 |
1,208.2 |
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Other intangible assets, net of accumulated amortization of $268.3 and $247.6, respectively |
271.2 |
288.7 |
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Total assets |
$ |
3,498.6 |
$ |
3,493.3 |
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Liabilities and Stockholders’ Equity |
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Current liabilities |
|||||||
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Accounts payable |
$ |
125.1 |
$ |
92.3 |
|||
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Accrued expenses |
106.5 |
113.0 |
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Deferred revenue |
70.3 |
69.1 |
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Current maturities of landfill retirement obligations |
20.2 |
20.2 |
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Current maturities of long-term debt |
49.2 |
74.1 |
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Total current liabilities |
371.3 |
368.7 |
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Other long-term liabilities |
58.7 |
61.5 |
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Long-term debt, less current maturities |
1,855.6 |
1,884.2 |
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Accrued landfill retirement obligations, less current maturities |
210.8 |
205.7 |
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Deferred income taxes |
93.9 |
88.6 |
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Total liabilities |
2,590.3 |
2,608.7 |
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Equity |
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Common stock: $.01 par value, 1,000,000,000 shares authorized, 88,575,377 and 88,491,194 shares outstanding, respectively |
0.9 |
0.9 |
|||||
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Treasury Stock at cost, 2,274 and 2,274 shares, respectively |
— |
— |
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Additional paid-in capital |
1,493.3 |
1,487.4 |
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Accumulated deficit |
(588.7) |
(603.3) |
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Accumulated other comprehensive income (loss) |
2.8 |
(0.4) |
|||||
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Total stockholders’ equity |
908.3 |
884.6 |
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Total liabilities and stockholders’ equity |
$ |
3,498.6 |
$ |
3,493.3 |
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Advanced Disposal Services, Inc. |
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Consolidated Statements of Cash Flows (Unaudited) |
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(in millions) |
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Six Months Ended June 30, |
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2018 |
2017 |
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Cash flows from operating activities |
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Net income (loss) |
$ |
11.8 |
$ |
(7.2) |
|||
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Adjustments to reconcile net income (loss) to net cash provided by operating activities |
|||||||
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Depreciation and amortization |
133.9 |
128.9 |
|||||
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Change in fair value of derivative instruments |
(5.6) |
2.4 |
|||||
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Amortization of debt issuance costs and original issue discount |
3.3 |
3.2 |
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Accretion on landfill retirement obligations |
7.6 |
7.4 |
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Other accretion and amortization |
2.3 |
1.9 |
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Provision for doubtful accounts |
1.8 |
2.2 |
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(Gain) loss on disposition of property and equipment |
(3.4) |
0.9 |
|||||
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Impairment of assets |
— |
13.0 |
|||||
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Gain on disposition of businesses and assets |
— |
(2.8) |
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Stock based compensation |
4.9 |
4.7 |
|||||
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Deferred tax expense (benefit) |
4.8 |
(6.4) |
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Earnings in equity investee |
(0.9) |
(0.6) |
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Changes in operating assets and liabilities, net of businesses acquired |
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Increase in accounts receivable |
(10.5) |
(7.8) |
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Decrease in prepaid expenses and other current assets |
5.5 |
1.5 |
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Decrease in other assets |
0.5 |
0.1 |
|||||
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Increase in accounts payable |
26.9 |
18.3 |
|||||
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Decrease in accrued expenses |
(6.1) |
(9.8) |
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Increase in deferred revenue |
0.5 |
0.8 |
|||||
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(Decrease) increase in other long-term liabilities |
(5.8) |
0.2 |
|||||
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Capping, closure and post-closure obligations |
(8.3) |
(4.1) |
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Assumption of long term care and closure reserve |
— |
24.0 |
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Net cash provided by operating activities |
163.2 |
170.8 |
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Cash flows from investing activities |
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Purchases of property and equipment and landfill construction and development |
(86.5) |
(79.9) |
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Proceeds from sale of property and equipment and insurance recoveries |
4.2 |
3.0 |
|||||
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Acquisition of businesses, net of cash acquired |
(5.9) |
(84.3) |
|||||
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Proceeds from sale of businesses |
— |
8.7 |
|||||
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Net cash used in investing activities |
(88.2) |
(152.5) |
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Cash flows from financing activities |
|||||||
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Proceeds from borrowings on debt instruments |
53.0 |
120.0 |
|||||
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Repayment on debt instruments, including capital leases |
(128.9) |
(141.3) |
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Proceeds from issuance of common stock |
1.0 |
4.7 |
|||||
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Net cash used in financing activities |
(74.9) |
(16.6) |
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Net increase in cash and cash equivalents |
0.1 |
1.7 |
|||||
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Cash and cash equivalents, beginning of period |
6.8 |
1.2 |
|||||
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Cash and cash equivalents, end of period |
$ |
6.9 |
$ |
2.9 |
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You should read the following information in conjunction with our audited consolidated financial statements and notes thereto as of and for the year ended December 31, 2017, appearing in our Annual Report on Form 10-K as filed with the Securities and Exchange Commission and our unaudited condensed consolidated financial statements and notes thereto as of and for the three and six months ended June 30, 2018, appearing in our Form 10-Q, to be filed with the Securities and Exchange Commission. The information presented is considered unaudited.
REVENUE
The following table reflects our revenue by line of business for the periods presented (in millions and as a percentage of revenue):
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Three Months Ended June 30, |
Six Months Ended June 30, |
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2018 |
2017 |
2018 |
2017 |
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Collection |
$ |
269.9 |
67.8 |
% |
$ |
252.8 |
66.0 |
% |
$ |
530.4 |
69.5 |
% |
$ |
494.0 |
67.6 |
% |
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Disposal |
148.0 |
37.2 |
% |
144.6 |
37.7 |
% |
272.1 |
35.7 |
% |
262.5 |
35.9 |
% |
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Sale of recyclables |
4.4 |
1.1 |
% |
9.4 |
2.5 |
% |
9.8 |
1.3 |
% |
17.6 |
2.4 |
% |
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Fuel charges and environmental charges |
30.5 |
7.7 |
% |
25.1 |
6.6 |
% |
58.5 |
7.7 |
% |
49.1 |
6.7 |
% |
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Other revenue |
25.1 |
6.3 |
% |
27.7 |
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