Waste Connections (WCN), an integrated solid waste services company that provides waste collection, transfer, disposal and recycling services, has posted a 17.95 percent increase in profit for the quarter ended Mar. 31, 2014.
The company earned $49.02 million or $0.39 a share in the first-quarter, compared with $41.56 million or $0.34 a share a year ago.
Revenue during the first-quarter grew 7.07 percent to $481.71 million from $449.89 million in the last year period.
Gross margin expanded by 140 basis points over the previous year period to 45.39 percent.
Total expenses as a percentage of revenues decreased to 79.12 percent from 80.68 percent in the same period last year. That resulted in improvement of 156 basis points in operating margin to 20.88 percent.
The company disclosed operating income of $100.59 million, compared with an operating income of $86.91 million in the last year period.
"Notable strength in solid waste disposal volumes and an almost 20% increase in E&P waste activity once again drove better than expected margins and free cash flow in the period. Adjusted EBITDA as a percentage of revenue in the first quarter was 34.1%, up 160 basis points year-over-year and about 80 basis points above our expectations. Adjusted free cash flow, our primary focus, increased 15% and was 24% of revenue in the period," said Ronald J. Mittelstaedt, chief executive officer and chairman.
Mittelstaedt added, "We are also pleased to announce the acquisition of two development stage landfills to further strengthen our competitive positions in existing markets. In New York's Hudson Valley region, we acquired a recently permitted C&D landfill to increase our internalization within that market and offer third parties a strategically-located disposal alternative. In the West Texas Permian, we acquired a recently permitted E&P waste landfill to expand our disposal footprint within that rapidly growing basin. We expect to spend an additional $10 million to $15 million of capex to construct and open these two landfills over the next year or so."
Waste Connections has generated cash of $144.96 million from operating activities during the quarter, up by 9.02 percent or $12.00 million when compared with the last year period. It has generated 30.09 cents of operating cash flow in every sales dollar for the quarter, up from 29.55 cents for the same period last year.
The company has spent $62.53 million in cash to meet investing activities during the quarter, as against cash outgo of $19.11 million in the year period. It has made net capital expenditure of $34.28 million during the quarter, which was lower by 5.26 percent or $1.90 million from a year ago.
The company's free cash flow accounted for 76.35 percent of operating cash flow for the quarter, compared with 72.79 percent in the last year period.
The company has spent $80.17 million in cash to meet financing activities during the quarter, as against cash outgo of $122.78 million in the last year period.
The company has made net repayment of $63.97 million debt during the quarter. It has raised net of $0.53 million by issuing common stocks. The company's cash dividend payment increased 15.69 percent or $1.93 million to $14.24 million.
As on Mar. 31, 2014, Waste Connections' cash balance stood at $15.85 million, up by 11.02 percent or $1.57 million from Mar. 31, 2013.
Waste Connections continued to witness negative working capital. It stood at negative $30.95 million as on Mar. 31, 2014, compared with negative $99.06 million on Mar. 31, 2013. The company's current ratio increased to 0.91 as at Mar. 31, 2014 from 0.75 on Mar. 31, 2013.
Waste Connections has witnessed a decrease in total debt over the last year. As at Mar. 31, 2014, the company's total debt stood at $2021.46 million, down 5.71 percent or $122.44 million from Mar. 31, 2013.
The company's total debt accounts for 40.07 percent of total assets on Mar. 31, 2014, compared with 42.97 percent on Mar. 31, 2013.
The company witnessed a decline in debt to equity ratio to 0.97 on Mar. 31, 2014 when compared with 1.12 on Mar. 31, 2013.
Interest coverage ratio, which determines how easily a company can pay interest expenses on outstanding debt, has improved to 5.95 from 4.57 in the same period last year.
