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Progressive Waste Solutions Ltd. Reports Results for the Three and Six Months Ended June 30, 2012

Wednesday, July 25, 2012

Progressive Waste Solutions Ltd. Reports Results for the Three and Six Months Ended June 30, 201206:30 EDT Wednesday, July 25, 2012TORONTO, ONTARIO--(Marketwire - July 25, 2012) -Progressive Waste Solutions Ltd. (the "Company") (TSX:BIN)(NYSE:BIN) reported financial results for the three and six months ended June 30, 2012. Second quarter consolidated revenue growth of 1.3% to $475.4 million with adjusted EBITDA(A) of $132.7 million and free cash flow(B)of $56.5 million Excluding the quarter-over-quarter impact of foreign currency exchange ("FX") and a $6.4 million decline attributable to recycled commodity prices, consolidated revenue and adjusted EBITDA(A) would have increased 4.4% and 4.0% to $490.1 million and $141.8 million, respectively Consolidated core price growth of 1.6% quarter-over-quarter On track to achieve lower end of revenue and adjusted EBITDA(A), but higher end of free cash flow(B), guidance for 2012 Management Commentary(All amounts are in United States ("U.S.") dollars, unless otherwise stated)"In the second quarter, I am pleased that our core business continued to demonstrate resilience in the face of this challenging economic environment. We achieved consolidated revenue growth of 1.3% to $475.4 million and generated adjusted EBITDA(A) of $132.7 million and free cash flow(B) of $56.5 million. Excluding the quarter-over-quarter impact of FX and a $6.4 million decline to revenues resulting from lower recycled commodity prices, revenue would have increased 4.4% to $490.1 million and adjusted EBITDA(A) would have increased 4.0% to $141.8 million," said Joseph Quarin, Vice Chairman and Chief Executive Officer, Progressive Waste Solutions Ltd. "We had core price growth of 2.7% in Canada and 0.9% in the U.S., for a combined improvement of 1.6%. We achieved our objective of increasing pricing for our consolidated collection and transfer services, and our disposal services in Canada and U.S. south operations."Mr. Quarin continued, "Our Canadian and U.S. south operations both delivered another strong and stable performance in the quarter. These two segments combined represent 83% of our total revenue and 88% of our total adjusted EBITDA(A), with adjusted EBITDA(A) margins of 36.3% in Canada and 28.6% in the U.S. south. These segments grew in the period as a result of organic improvement and contributions from acquisitions and we are pleased with the performance. In our U.S. northeast segment, our core commercial collection business remained solid in the second quarter, and we achieved higher adjusted EBITDA(A) margins on a sequential basis. However, economic conditions continue to affect the pricing of recycled commodities as well as transfer and landfill volumes in this region. We are executing on plans that we expect will improve our financial results in our U.S. northeast segment going forward."We are on track to achieve the lower end of our revenue and adjusted EBITDA(A) guidance for 2012, assuming there is no further deterioration in the economic environment affecting recycled commodity pricing or waste volumes," Mr. Quarin added. "We expect to deliver consolidated revenue of about $1.88 billion, with adjusted EBITDA(A) of approximately $535 million, at parity. We estimate free cash flow(B) will be at the higher end of our 2012 guidance of $170 to $190 million. We expect to achieve these results even with the significant decline in recycled commodity prices since May of this year. With our high levels of free cash flow(B) and our balance sheet strength, we have significant resources to deploy to continue to create value for our shareholders."Reported revenues increased $5.9 million or 1.3% from $469.5 million in the second quarter of 2011 to $475.4 million in the second quarter of 2012. Expressed on a reportable basis, at parity, revenues increased 3.0% quarter over quarter due in large part to a 3.5% increase attributable to acquisitions, and higher overall pricing and fuel surcharges which outpaced lower volumes and commodity values. The impact on comparative revenues resulting from a decline in recycled commodity prices was 1.4%. Adjusted EBITDA(A) was $132.7 million, or (2.8)% lower, in the second quarter of 2012 versus $136.4 million in the same quarter a year ago. Adjusted operating income(A) was $64.7 million, or (8.0)% lower, in the quarter compared to $70.3 million in the same period last year. Adjusted net income(A) was $28.8 million, or $0.25 per weighted average diluted share ("diluted share"), compared to $33.7 million, or $0.28 per diluted share in the comparative period. Share repurchases in the quarter totalled $31.2 million and dividends paid to shareholders totalled $16.2 million. Together, this represents a combined $47.4 million return to shareholders in the second quarter of 2012 compared to $15.6 in the same quarter last year. Year-to-date, reported revenues increased $21.3 million or 2.4% from $892.4 million in 2011 to $913.7 million. Expressed on a reportable basis, and assuming Canadian and U.S. dollar parity, revenues increased 3.6% on a comparative basis for the six months ended which is due in large part to a 4.0% increase attributable to acquisitions, and higher overall pricing and fuel surcharges which outpaced lower volumes and commodity values. The year-to-date impact on comparative revenues resulting from a decline in recycled commodity prices was 1.5%. For the year-to-date period, adjusted EBITDA(A) was $249.0 million, or (4.1)% lower, in 2012 versus $259.7 million in the same period last year. Excluding the impact of FX and the decline in recycled commodity pricing, adjusted EBITDA(A) would have been $265.4 million on a year-to-date basis. Adjusted operating income(A) was $117.7 million, or (11.0)% lower, in the year-to-date period than the $132.2 million recorded in the same period last year. Adjusted net income(A) was $52.9 million, or $0.45 per diluted share, compared to $61.9 million, or $0.51 per diluted share in the comparative period. Share repurchases year-to-date totalled $60.5 million and dividends paid to shareholders totalled $31.0 million. For the current year-to-date period, this represents a combined $91.5 million return to shareholders compared to $54.5 million a year ago. Other highlights for the three and six months ended June 30, 2012In July 2012, we exercised a portion of the accordion feature on our U.S. credit facility which increased our available lending by $131.1 million to $1.25 billion. In July 2012, we exercised a portion of the accordion feature on our Canadian credit facility which increased our available lending by $70.0 million to $595 million. In March 2012, we received a modification to our operating permit for the Ridge landfill that increased the amount of annual waste allowable at the site from 0.9 to 1.3 million tonnes annually. We repurchased and cancelled approximately 2.9 million common shares year-to-date. At the close of the period, there were 115.4 million common shares outstanding. 2012 OutlookThe Company is updating its outlook assuming no change in the current economic environment affecting recycled commodity pricing or waste volumes for the balance of 2012. Our outlook has been prepared assuming parity between the Canadian and U.S. dollar.The outlook provided below is forward-looking. Our actual results may differ materially and are subject to risks and uncertainties.Revenue is estimated to be approximately $1.88 billion Adjusted EBITDA(A) is estimated to be approximately $535 million Amortization expense, as a percentage of revenue, is estimated to be about 14.2% Capital and landfill expenditures, including internal infrastructure, are estimated to be $240 to $255 million The effective tax rate is estimated to be between 39% and 40% of income before income tax expense and net loss from equity accounted investee Cash taxes are estimated to be $48 to $50 million Adjusted net income(A) per diluted share is estimated to be about $1.10 Free cash flow(B) is estimated to be $170 to $190 million, including additional internal infrastructure investment Expected annual cash dividend of $0.56 Canadian ("C") per share, payable on a quarterly basis Progressive Waste Solutions Ltd.Condensed Consolidated Statements of Operations and Comprehensive Income or Loss("Statement of Operations and Comprehensive Income or Loss")For the periods ended June 30, 2012 and 2011 (unaudited - stated in accordance with accounting principles generally accepted in the U.S. and in thousands of U.S. dollars, except share and net income or loss per share amounts)Three months endedSix months ended2012201120122011REVENUES$475,435$469,512$913,710$892,362EXPENSESOPERATING286,878279,504552,219526,309SELLING, GENERAL AND ADMINISTRATION54,88450,378114,176108,985RESTRUCTURING-278-1,125AMORTIZATION68,37066,467132,024129,286NET GAIN ON SALE OF CAPITAL ASSETS(366)(356)(750)(1,779)OPERATING INCOME65,66973,241116,041128,436INTEREST ON LONG-TERM DEBT13,97416,54228,23833,060NET FOREIGN EXCHANGE (GAIN) LOSS-(29)7(32)NET LOSS (GAIN) ON FINANCIAL INSTRUMENTS2,717(429)2,172(2,355)OTHER EXPENSES52609105795INCOME BEFORE INCOME TAX EXPENSE AND NET LOSS FROM EQUITY ACCOUNTED INVESTEE48,92656,54885,51996,968INCOME TAX EXPENSECurrent13,66812,99724,09324,695Deferred6,8666,92210,96112,54220,53419,91935,05437,237NET LOSS FROM EQUITY ACCOUNTED INVESTEE15221926NET INCOME28,37736,60750,44659,705Foreign currency translation adjustment(10,957)4,780(1,334)18,754Derivatives designated as cash flow hedges, net of income tax $1,146 and $758 (2011 - $2,683 and $848)(2,131)(4,980)(1,410)(1,573)Settlement of derivatives designated as cash flow hedges, net of income tax $58 and ($79) (2011 - ($271) and ($403))(110)503146748OTHER COMPREHENSIVE (LOSS) INCOME(13,198)303(2,598)17,929COMPREHENSIVE INCOME$15,179$36,910$47,848$77,634Net income per weighted average share, basic$0.24$0.30$0.43$0.49Net income per weighted average share, diluted$0.24$0.30$0.43$0.49Weighted average number of shares outstanding (thousands), basic116,416120,748117,152121,220Weighted average number of shares outstanding (thousands), diluted116,416120,748117,152121,220Progressive Waste Solutions Ltd.Condensed Consolidated Balance Sheets ("Balance Sheet")June 30, 2012 (unaudited) and December 31, 2011 (stated in accordance with accounting principles generally accepted in the United States of America ("U.S.") and in thousands of U.S. dollars except issued and outstanding share amounts)June 30,December 31,20122011ASSETSCURRENTCash and cash equivalents$18,248$14,143Accounts receivable213,670212,099Other receivables374414Prepaid expenses33,82131,484Restricted cash474452Other assets5451,972267,132260,564OTHER RECEIVABLES193376FUNDED LANDFILL POST-CLOSURE COSTS9,3909,200INTANGIBLES241,268257,731GOODWILL793,948774,409LANDFILL DEVELOPMENT ASSETS17,97015,869DEFERRED FINANCING COSTS16,67219,983CAPITAL ASSETS799,491776,058LANDFILL ASSETS954,441958,792INVESTMENT IN EQUITY ACCOUNTED INVESTEE3,9473,973OTHER ASSETS78649$3,104,530$3,077,604LIABILITIESCURRENTAccounts payable$130,162$115,292Accrued charges115,097124,496Dividends payable15,85414,540Income taxes payable45510,693Deferred revenues18,43017,645Current portion of long-term debt1,5001,500Landfill closure and post-closure costs8,3409,468Other liabilities3,8633,484293,701297,118LONG-TERM DEBT1,366,7411,311,593LANDFILL CLOSURE AND POST-CLOSURE COSTS97,67692,034OTHER LIABILITIES9,0197,484DEFERRED INCOME TAXES87,55676,2341,854,6931,784,463SHAREHOLDERS' EQUITYCommon shares (authorized - unlimited, issued and outstanding - 115,222,146 (December 31, 2011 - 118,040,683))1,777,5551,824,231Restricted shares (issued and outstanding - 185,000 (December 31, 2011 - 252,150))(3,870)(5,353)Additional paid in capital2,5162,789Accumulated deficit(462,015)(466,775)Accumulated other comprehensive loss(64,349)(61,751)Total shareholders' equity1,249,8371,293,141$3,104,530$3,077,604Progressive Waste Solutions Ltd.Condensed Consolidated Statements of Cash Flows ("Statement of Cash Flows")For the periods ended June 30, 2012 and 2011 (unaudited - stated in accordance with accounting principles generally accepted in the U.S. and in thousands of U.S. dollars)Three months endedSix months ended2012201120122011NET INFLOW (OUTFLOW) OF CASH RELATED TO THE FOLLOWING ACTIVITIESOPERATINGNet income$28,377$36,607$50,446$59,705Items not affecting cashRestricted share expense6241791,358353Accretion of landfill closure and post-closure costs1,3061,2762,6142,545Amortization of intangibles12,88711,93625,81524,100Amortization of capital assets34,23732,15168,13664,600Amortization of landfill assets21,24622,38038,07340,586Interest on long-term debt (amortization of deferred financing costs)1,6781,3623,3682,715Net gain on sale of capital assets(366)(356)(750)(1,779)Net loss (gain) on financial instruments2,717(429)2,172(2,355)Deferred income taxes6,8666,92210,96112,542Net loss from equity accounted investee15221926Landfill closure and post-closure expenditures(2,666)(359)(4,200)(2,060)Changes in non-cash working capital items15,990(19,059)(9,753)(53,692)Cash generated from operating activities122,91192,632188,259147,286INVESTINGAcquisitions(41,861)(77,655)(48,405)(90,035)Restricted cash deposits(20)(12)(22)(12)Proceeds from other receivables99119223234Funded landfill post-closure costs(74)(81)(160)(179)Purchase of capital assets(33,885)(33,031)(71,271)(48,933)Purchase of landfill assets(15,788)(11,376)(28,493)(20,883)Proceeds from the sale of capital assets8487771,5673,450Investment in landfill development assets(548)(2,495)(2,814)(3,117)Cash utilized in investing activities(91,229)(123,754)(149,375)(159,475)FINANCINGPayment of deferred financing costs--(55)(1,020)Proceeds from long-term debt80,046133,130178,987236,613Repayment of long-term debt(56,664)(85,953)(122,509)(170,769)Proceeds from the exercise of stock options-563310855Repurchase of common shares(31,168)-(60,476)(23,500)Dividends paid to shareholders(16,212)(15,594)(30,981)(31,023)Cash (utilized in) generated from financing activities(23,998)32,146(34,724)11,156Effect of foreign currency translation on cash and cash equivalents(436)93(55)518NET CASH INFLOW (OUTFLOW)7,2481,1174,105(515)CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD OR YEAR11,00011,77414,14313,406CASH AND CASH EQUIVALENTS, END OF PERIOD$18,248$12,891$18,248$12,891SUPPLEMENTAL CASH FLOW INFORMATION:Cash and cash equivalents are comprised of:Cash$18,245$12,891$18,245$12,891Cash equivalents3-3-$18,248$12,891$18,248$12,891Cash paid during the period for:Income taxes$15,657$16,349$32,167$31,392Interest$12,463$14,982$26,307$31,278FX Impact on Consolidated ResultsThe following tables have been prepared to assist readers in assessing the FX impact on selected results for the three and six months ended June 30, 2012.Three months endedJune 30, 2011June 30, 2012June 30, 2012June 30, 2012June 30, 2012(unaudited)(unaudited)(unaudited)(unaudited)(unaudited)(as reported)(organic, acquisition and other non-operating changes)(holding FX constant with the comparative period)(FX impact)(as reported)Condensed Consolidated Statement of OperationsRevenues$469,512$14,238$483,750$(8,315)$475,435Operating expenses279,50411,984291,488(4,610)286,878Selling, general and administration50,3785,50255,880(996)54,884Restructuring expenses278(278)---Amortization66,4672,99669,463(1,093)68,370Net gain on sale of capital assets(356)(15)(371)5(366)Operating income73,241(5,951)67,290(1,621)65,669Interest on long-term debt16,542(2,358)14,184(210)13,974Net foreign exchange gain(29)29---Net (gain) loss on financial instruments(429)3,1792,750(33)2,717Other expense609(554)55(3)52Income before net income tax expense and net loss from equity accounted investee56,548(6,247)50,301(1,375)48,926Net income tax expense19,9191,07220,991(457)20,534Net loss from equity accounted investee22(7)15-15Net income$36,607$(7,312)$29,295$(918)$28,377Adjusted EBITDA(A)(*)$136,443$(1,068)$135,375$(2,690)$132,685Adjusted operating income(A)(*)$70,332$(4,050)$66,282$(1,601)$64,681Adjusted net income(A)(*)$33,674$(3,912)$29,762$(915)$28,847Free cash flow(B)(*)(**)$65,553$(7,776)$57,777$(1,241)$56,536Note:(*) Prior period amounts have been adjusted to conform to the current period's presentation.(**) Please refer to the free cash flow section for further details.Six months endedJune 30, 2011June 30, 2012June 30, 2012June 30, 2012June 30, 2012(unaudited)(unaudited)(unaudited)(unaudited)(unaudited)(as reported)(organic, acquisition and other non-operating changes)(holding FX constant with the comparative period)(FX impact)(as reported)Condensed Consolidated Statement of OperationsRevenues$892,362$32,347$924,709$(10,999)$913,710Operating expenses526,30931,996558,305(6,086)552,219Selling, general and administration108,9856,575115,560(1,384)114,176Restructuring expenses1,125(1,125)---Amortization129,2864,181133,467(1,443)132,024Net gain on sale of capital assets(1,779)1,022(757)7(750)Operating income128,436(10,302)118,134(2,093)116,041Interest on long-term debt33,060(4,538)28,522(284)28,238Net foreign exchange (gain) loss(32)397-7Net (gain) loss on financial instruments(2,355)4,5572,202(30)2,172Other expense795(686)109(4)105Income before net income tax expense and net loss from equity accounted investee96,968(9,674)87,294(1,775)85,519Net income tax expense37,237(1,598)35,639(585)35,054Net loss from equity accounted investee26(7)19-19Net income$59,705$(8,069)$51,636$(1,190)$50,446Adjusted EBITDA(A)(*)$259,714$(7,183)$252,531$(3,538)$248,993Adjusted operating income(A)(*)$132,207$(12,386)$119,821$(2,102)$117,719Adjusted net income(A)(*)$61,903$(7,775)$54,128$(1,215)$52,913Free cash flow(B)(*)(**)$138,793$(36,984)$101,809$(1,562)$100,247Note:(*)Prior period amounts have been adjusted to conform to the current period's presentation.(**)Please refer to the free cash flow section for further details.Other Financial Highlights(all amounts are in thousands of U.S. dollars, excluding per share amounts)Three months endedSix months endedJune 30June 302012201120122011Operating income$65,669$73,241$116,041$128,436Transaction and related costs - SG&A1,0824581,370773Fair value movements in stock options - SG&A(2,694)(3,824)(1,050)1,520Restricted share expense - SG&A6241791,358353Restructuring expenses-278-1,125Adjusted operating income64,68170,332117,719132,207Net gain on sale of capital assets(366)(356)(750)(1,779)Amortization68,37066,467132,024129,286Adjusted EBITDA$132,685$136,443$248,993$259,714Net income$28,377$36,607$50,446$59,705Transaction and related costs - SG&A1,0824581,370773Fair value movements in stock options - SG&A(2,694)(3,824)(1,050)1,520Restricted share expense - SG&A6241791,358353Restructuring expenses-278-1,125Net loss (gain) on financial instruments2,717(429)2,172(2,355)Other expenses52609105795Net income tax expense or (recovery)(1,311)(204)(1,488)(13)Adjusted net income$28,847$33,674$52,913$61,903Adjusted net income per weighted average share, basic(A)(*)$0.25$0.28$0.45$0.51Adjusted net income per weighted average share, diluted(A)(*)$0.25$0.28$0.45$0.51Replacement and growth expendituresReplacement expenditures$35,736$33,019$72,110$51,061Growth expenditures13,93711,38827,65418,755Total replacement and growth expenditures$49,673$44,407$99,764$69,816Free cash flow(B)Cash generated from operating activities (statement of cash flows)$122,911$92,632$188,259$147,286Free cash flow(B)$56,536$65,553$100,247$138,793Free cash flow (B) per weighted average share, diluted$0.49$0.54$0.86$1.14DividendsDividends declared (common shares)$15,993$15,605$32,344$30,910Note:(*)Prior period amounts have been adjusted to conform to the current period's presentation.Segment Highlights - Additional details regarding the FX impact on our comparative results can be found in the Foreign Currency sections of this report.(all amounts are in thousands of U.S. dollars, unless otherwise stated)Three months endedJune 3020112012Change2012Change(as reported)(holding FX constant with the comparative period)(as reported)Revenues$469,512$483,750$14,238$475,435$5,923Canada$196,734$206,494$9,760$198,179$1,445U.S. south$179,177$195,521$16,344$195,521$16,344U.S. northeast$93,601$81,735$(11,866)$81,735$(11,866)Operating expenses$279,504$291,488$11,984$286,878$7,374Canada$108,823$114,857$6,034$110,247$1,424U.S. south$108,828$120,265$11,437$120,265$11,437U.S. northeast$61,853$56,366$(5,487)$56,366$(5,487)SG&A (as reported)$50,378$55,880$5,502$54,884$4,506Canada$15,649$16,648$999$15,917$268U.S. south$17,687$19,285$1,598$19,285$1,598U.S. northeast$7,614$7,696$82$7,696$82Corporate$9,428$12,251$2,823$11,986$2,558EBITDA(A)(as reported)$139,630$136,382$(3,248)$133,673$(5,957)Canada$72,262$74,989$2,727$72,015$(247)U.S. south$52,662$55,971$3,309$55,971$3,309U.S. northeast$24,134$17,673$(6,461)$17,673$(6,461)Corporate$(9,428)$(12,251)$(2,823)$(11,986)$(2,558)Adjusted SG&A$53,565$56,887$3,322$55,872$2,307Canada$15,649$16,648$999$15,917$268U.S. south$17,687$19,285$1,598$19,285$1,598U.S. northeast$7,614$7,696$82$7,696$82Corporate$12,615$13,258$643$12,974$359Adjusted EBITDA(A)$136,443$135,375$(1,068)$132,685$(3,758)Canada$72,262$74,989$2,727$72,015$(247)U.S. south$52,662$55,971$3,309$55,971$3,309U.S. northeast$24,134$17,673$(6,461)$17,673$(6,461)Corporate$(12,615)$(13,258)$(643)$(12,974)$(359)Six months endedJune 3020112012Change2012Change(as reported)(holding FX constant with the comparative period)(as reported)Revenues$892,362$924,709$32,347$913,710$21,348Canada$368,654$383,096$14,442$372,097$3,443U.S. south$347,352$382,928$35,576$382,928$35,576U.S. northeast$176,356$158,685$(17,671)$158,685$(17,671)Operating expenses$526,309$558,305$31,996$552,219$25,910Canada$201,452$211,971$10,519$205,885$4,433U.S. south$209,110$236,395$27,285$236,395$27,285U.S. northeast$115,747$109,939$(5,808)$109,939$(5,808)SG&A (as reported)$108,985$115,560$6,575$114,176$5,191Canada$31,233$32,772$1,539$31,831$598U.S. south$34,470$38,884$4,414$38,884$4,414U.S. northeast$15,761$15,693$(68)$15,693$(68)Corporate$27,521$28,211$690$27,768$247EBITDA(A)(as reported)$257,068$250,844$(6,224)$247,315$(9,753)Canada$135,969$138,353$2,384$134,381$(1,588)U.S. south$103,772$107,649$3,877$107,649$3,877U.S. northeast$44,848$33,053$(11,795)$33,053$(11,795)Corporate$(27,521)$(28,211)$(690)$(27,768)$(247)Adjusted SG&A$106,339$113,873$7,534$112,498$6,159Canada$31,233$32,772$1,539$31,831$598U.S. south$34,470$38,884$4,414$38,884$4,414U.S. northeast$15,761$15,693$(68)$15,693$(68)Corporate$24,875$26,524$1,649$26,090$1,215Adjusted EBITDA(A)$259,714$252,531$(7,183)$248,993$(10,721)Canada$135,969$138,353$2,384$134,381$(1,588)U.S. south$103,772$107,649$3,877$107,649$3,877U.S. northeast$44,848$33,053$(11,795)$33,053$(11,795)Corporate$(24,875)$(26,524)$(1,649)$(26,090)$(1,215)RevenuesGross revenue by service type The table below presents gross revenue by service type prepared on a consolidated basis and includes the impact of FX. Three months endedSix months endedJune 30June 302012%2011%2012%2011%Commercial$164,74634.7$161,38534.4$327,10835.8$315,92935.4Industrial84,34617.787,54518.6160,91117.6163,18818.3Residential108,19622.899,53821.2209,68522.9190,33321.3Transfer and disposal163,57934.4171,15436.5304,44533.3312,70735.0Recycling17,4403.717,0913.634,2213.734,8393.9Other6,6901.46,2911.312,0501.310,6341.2Gross revenues544,997114.7543,004115.61,048,420114.61,027,630115.1Intercompany(69,562)(14.7)(73,492)(15.6)(134,710)(14.6)(135,268)(15.1)Revenues$475,435100.0$469,512100.0$913,710100.0$892,362100.0Revenue growth or decline components - expressed in percentages and excluding FXThe table below has been prepared using reported revenues for 2012 and gross revenues for 2011. The table has also been prepared assuming Canadian and U.S. dollar parity. For 2011, the amounts are presented as if Waste Services, Inc.'s operations were combined with ours for the six months ended June 30, 2010.Three months endedSix months endedJune 30June 3020122011 (*)20122011 (*)PriceCore price1.61.51.41.7Fuel surcharges0.41.20.61.1Recycling and other(1.4)0.4(1.5)0.4Total price growth0.63.10.53.2Volume(1.1)0.3(0.9)0.4Total organic (decline) growth(0.5)3.4(0.4)3.6Acquisitions3.56.14.06.6Total growth excluding FX3.09.53.610.2FX(1.7)(1.2)Total growth including FX1.32.4Note:(*)Prior period amounts have been adjusted to conform to the current period's presentation.Free cash flow(B)Purpose and objectiveThe purpose of presenting this non-GAAP measure is to provide similar disclosures presented by other U.S. publicly listed companies in our industry and to provide investors and analysts with an additional measure of our value and liquidity. We use this non-GAAP measure to assess our relative performance to our peers and to assess the availability of funds for growth investment, share repurchases, debt repayment or dividend increases.Free cash flow(B)- cash flow approach Three months endedSix months endedJune 30June 302012 (*)2011Change2012 (*)2011ChangeCash generated from operating activities$122,911$92,632$30,279$188,259$147,286$40,973Operating and investingStock option (recovery) expense(2,694)(3,824)1,130(1,050)1,520(2,570)Acquisition and related costs1,0824586241,370773597Restructuring expenses-278(278)-1,125(1,125)Other expenses52609(557)105795(690)Changes in non-cash working capital items(15,990)19,059(35,049)9,75353,692(43,939)Capital and landfill asset purchases(49,673)(44,407)(5,266)(99,764)(69,816)(29,948)Proceeds from the sale of capital assets848777711,5673,450(1,883)FinancingNet realized foreign exchange (gain) loss-(29)297(32)39Free cash flow(B)$56,536$65,553$(9,017)$100,247$138,793$(38,546)Note:(*)Capital and landfill asset purchases include infrastructure expenditures of approximately $3,300 and $6,900, for the three and six months ended June 30, 2012, respectively.Free cash flow(B)- adjusted EBITDA(A) approachWe typically calculate free cash flow(B) using an operations approach which is similar to the calculation required by our Canadian and U.S. facilities.Three months endedSix months endedJune 30June 302012 (*)2011Change2012 (*)2011ChangeAdjusted EBITDA(A)$132,685$136,443$(3,758)$248,993$259,714$(10,721)Capital and landfill asset purchases(49,673)(44,407)(5,266)(99,764)(69,816)(29,948)Proceeds from the sale of capital assets848777711,5673,450(1,883)Landfill closure and post-closure expenditures(2,666)(359)(2,307)(4,200)(2,060)(2,140)Landfill closure and post-closure cost accretion expense1,3061,276302,6142,54569Interest on long-term debt(13,974)(16,542)2,568(28,238)(33,060)4,822Non-cash interest expense1,6781,3623163,3682,715653Current income tax expense(13,668)(12,997)(671)(24,093)(24,695)602Free cash flow(B)$56,536$65,553$(9,017)$100,247$138,793$(38,546)Note:(*)Capital and landfill asset purchases include infrastructure expenditures of approximately $3,300 and $6,900, for the three and six months ended June 30, 2012, respectively.Long-term debt to adjusted EBITDA(A)Our adjusted EBITDA(A) ratio prepared on a combined basis, assuming FX parity, is 2.61 times. Foreign Currency(in thousands of U.S. dollars unless otherwise stated)We have elected to report our financial results in U.S. dollars. However, we earn a significant portion of our revenues and earnings in Canada. We have provided our guidance assuming parity between the Canadian and U.S. dollar. If the U.S. dollar strengthens one cent our reported revenues will decline by approximately $7,600. EBITDA(A) is similarly impacted by approximately $2,500, assuming a strengthening U.S. dollar. The impact on net income for a similar change in FX rate, results in an approximately $1,000 decline. Should the U.S. dollar weaken by one cent, our reported results will improve by similar amounts.20122011Condensed Consolidated Balance SheetCondensed Consolidated Statement of Operations and Comprehensive Income or LossCondensed Consolidated Balance SheetCondensed Consolidated Statement of Operations and Comprehensive Income or LossCurrentAverageCumulative AverageCurrentAverageCumulative AverageDecember 31$0.9833$1.0109March 31$1.0009$0.9988$0.9988$1.0290$1.0142$1.0142June 30$0.9813$0.9899$0.9943$1.0370$1.0334$1.0237Quarterly dividend declaredThe Company's Board of Directors declared a quarterly dividend of $0.14 Canadian per share to shareholders of record September 28, 2012. The dividend will be paid on October 15, 2012. The Company has designated these dividends as eligible dividends for the purposes of the Income Tax Act (Canada).Definitions of Adjusted EBITDA and Free cash flow(A) All references to "Adjusted EBITDA" in this document are to revenues less operating expense and SG&A, excluding certain non-operating or non-recurring SG&A expense, on the consolidated statement of operations and comprehensive income or loss. Adjusted EBITDA excludes some or all of the following: certain SG&A expenses, restructuring expenses, goodwill impairment, amortization, net gain or loss on sale of capital assets, interest on long-term debt, net foreign exchange gain or loss, net gain or loss on financial instruments, other expenses, income taxes and income or loss from equity accounted investee. Adjusted EBITDA is a term used by us that does not have a standardized meaning prescribed by U.S. GAAP and is therefore unlikely to be comparable to similar measures used by other companies. Adjusted EBITDA is a measure of our operating profitability, and by definition, excludes certain items as detailed above. These items are viewed by us as either non-cash (in the case of goodwill impairment, amortization, net gain or loss on financial instruments, net foreign exchange gain or loss, deferred income taxes and net income or loss from equity accounted investee) or non-operating (in the case of certain SG&A expenses, restructuring expenses, net gain or loss on sale of capital assets, interest on long-term debt, other expenses, and current income taxes). Adjusted EBITDA is a useful financial and operating metric for us, our Board of Directors, and our lenders, as it represents a starting point in the determination of free cash flow(B). The underlying reasons for the exclusion of each item are as follows:Certain SG&A expenses - SG&A expense includes certain non-operating or non-recurring expenses. These expenses include transaction costs related to acquisitions, fair value adjustments attributable to stock options, restricted share expense and a non-recurring one-time charge resulting from the non-renewal of the Company's former Vice Chairman and Chief Executive Officer's agreement. These expenses are not considered an expense indicative of continuing operations. Certain SG&A costs represent a different class of expense than those included in adjusted EBITDA. Restructuring expenses - restructuring expenses includes costs to integrate various operating locations with our own, exiting certain property and building and office leases, employee severance and employee relocation costs incurred in connection with our acquisition of WSI. These expenses are not considered an expense indicative of continuing operations. Accordingly, restructuring expenses represent a different class of expense than those included in adjusted EBITDA.Goodwill impairment - as a non-cash item goodwill impairment has no impact on the determination of free cash flow(B).Amortization - as a non-cash item amortization has no impact on the determination of free cash flow(B).Net gain or loss on sale of capital assets - proceeds from the sale of capital assets are either reinvested in additional or replacement capital assets or used to repay revolving credit facility borrowings.Interest on long-term debt - interest on long-term debt is a function of our debt/equity mix and interest rates; as such, it reflects our treasury/financing activities and represents a different class of expense than those included in adjusted EBITDA.Net foreign exchange gain or loss - as non-cash items, foreign exchange gains or losses have no impact on the determination of free cash flow(B).Net gain or loss on financial instruments - as non-cash items, gains or losses on financial instruments have no impact on the determination of free cash flow(B).Other expenses - other expenses typically represent amounts paid to certain management of acquired companies who are retained by us post acquisition and amounts paid to certain executives in respect of acquisitions successfully completed. These expenses are not considered an expense indicative of continuing operations. Accordingly, other expenses represent a different class of expense than those included in adjusted EBITDA.Income taxes - income taxes are a function of tax laws and rates and are affected by matters which are separate from our daily operations.Net income or loss from equity accounted investee - as a non-cash item, net income or loss from our equity accounted investee has no impact on the determination of free cash flow(B).(B) We have adopted a measure called "free cash flow" to supplement net income or loss as a measure of our operating performance. Free cash flow is a term which does not have a standardized meaning prescribed by U.S. GAAP, is prepared before dividends declared and shares repurchased, and may not be comparable to similar measures prepared by other companies. The purpose of presenting this non-GAAP measure is to provide disclosure similar to the disclosure provided by other U.S. publicly listed companies in our industry and to provide investors and analysts with an additional measure of our value and liquidity. We use this non-GAAP measure to assess our performance relative to other U.S. publicly listed companies and to assess the availability of funds for growth investment, debt repayment, share repurchases or dividend increases. All references to "free cash flow" in this document have the meaning set out in this note. About Progressive Waste Solutions Ltd.As North America's third largest full-service waste management company, we provide non-hazardous solid waste collection, recycling and disposal services to commercial, industrial, municipal and residential customers in 12 U.S. states and the District of Columbia and six Canadian provinces. We serve our customers with vertically integrated collection and disposal assets. Progressive Waste Solutions Ltd.'s shares are listed on the New York and Toronto Stock Exchanges under the symbol BIN. To find out more about Progressive Waste Solutions, visit our website at www.progressivewaste.com. Progressive Waste Solutions Ltd. Chaya CooperbergVP, Investor Relations and Corporate CommunicationsTel: (905) 532-7517Email: chaya.cooperberg@progressivewaste.comManagement will hold a conference call on Wednesday, July 25, 2012, at 8:30 a.m. (ET) to discuss results for the three and six months ended June 30, 2012. Participants may listen to the call by dialing 1-888-300-0053, conference ID 92969161, at approximately 8:20 a.m. (ET). International or local callers should dial 647-427-3420. The call will also be webcast live at www.streetevents.com and at www.progressivewaste.com. A supplemental slide presentation will be available at www.progressivewaste.com.A replay will be available after the call until Wednesday, August 8, 2012, at midnight, and can be accessed by dialing 1-855-859-2056, conference ID 92969161. International or local callers can access the replay by dialing 404-537-3406. The audio webcast will also be archived at www.streetevents.com and www.progressivewaste.com. FOR FURTHER INFORMATION PLEASE CONTACT: Chaya CooperbergProgressive Waste Solutions Ltd.VP, Investor Relations and Corporate Communications(905) 532-7517chaya.cooperberg@progressivewaste.comwww.progressivewaste.com