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Press release from Marketwire

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

Core business continues to demonstrate stability in spite of steep declines in recycled commodity prices in the quarter

Friday, October 26, 2012

Progressive Waste Solutions Ltd. Reports Results for the Three and Nine Months Ended September 30, 201206:30 EDT Friday, October 26, 2012TORONTO, ONTARIO--(Marketwire - Oct. 26, 2012) -Progressive Waste Solutions Ltd. (the "Company") (TSX:BIN)(NYSE:BIN) reported financial results for the three and nine months ended September 30, 2012. Consolidated core price grew 1.6% quarter-over-quarter Two strategic "tuck-in" acquisitions completed in the U.S. northeast and one in Canada Excluding the quarter-over-quarter decline of $12.4 million attributable to recycled commodity prices, as well as one-time items and the impact of foreign currency exchange ("FX"), consolidated revenue and adjusted EBITDA(A) would have increased 2.5% and 6.7% Adjusted earnings per share of $0.28 in the third quarter versus $0.29 in the year-ago quarter. The decline in recycled commodity prices in the third quarter reduced adjusted earnings per share by $0.07. Updated outlook for 2012 Completed refinancing of credit facility and received a rating upgrade from Moody's Management Commentary(All amounts are in United States ("U.S.") dollars, unless otherwise stated)"In the third quarter, our base business continued to demonstrate stability, with resilience in our commercial and residential collection service lines. We achieved consolidated revenues of $487.2 million and adjusted EBITDA(A) of $136.9 million, with core price growth of 2.2% in Canada and 1.2% in the U.S., for a combined core price increase of 1.6%. Our strong core price activity was offset by a mixed volume performance relative to the year-ago quarter and lower recycled commodity prices continued to affect our consolidated performance, as it has affected the solid waste services industry in North America throughout this year. Excluding the $12.4 million quarter-over-quarter impact of lower recycled commodity prices, at parity, as well as the impact of one-time items and FX, revenue would have increased 2.5% to $502.8 million and adjusted EBITDA(A) would have increased 6.7% to $151.8 million. Adjusted EBITDA(A) in the third quarter includes one-time charges of $1.4 million related to a tax assessment and end of collection contract retention payments," said Joseph Quarin, Vice Chairman and Chief Executive Officer, Progressive Waste Solutions Ltd. "Our Canadian and U.S. south operations continued to perform well in the third quarter, with quarter-over-quarter revenue growth of 1.2% and 2.7%, respectively, driven by higher pricing in our collection business and contributions from strategic 'tuck-in' acquisitions. Adjusted EBITDA(A) margins in these segments remained solid, at 36% in Canada and 28.3% in the U.S. south, in spite of lower recycled commodity prices."Mr. Quarin continued, "In our U.S. northeast segment, on a sequential basis and as a result of our focused efforts, pricing remained stable in our collection and disposal service lines, cost controls were maintained, and adjusted EBITDA(A) margins improved to 21.8%. Weak economic conditions in this region continued to affect third-party volume at our transfer stations and landfills and delayed special waste activity as well. During the quarter, we acquired two collection companies in this region that will help increase internal waste volumes at our landfills and which will partially offset the decline in disposal volumes. We are making progress on our plan to improve our performance in our U.S. northeast operations and are committed to further development and integration of our assets in this region." "In addition to investing in 'tuck-in' acquisitions in the third quarter, we continued to deploy capital towards several internal infrastructure projects that we expect will deliver attractive returns in 2013 and beyond. With our strong free cash flow(B) profile, we have the resources to enhance the strategic position of Progressive Waste Solutions, with the objective of creating long-term shareholder value. Given the current interest rate environment and the availability of attractive debt financing, we have taken the opportunity to further position Progressive Waste Solutions for future growth with a refinancing of our credit facilities, which will give us a significant source of liquidity as we continue to grow our business.""We are updating our guidance for 2012 given the significant decline in recycled commodity prices in the third quarter, combined with lower transfer station and landfill volumes, including delayed special waste activity, in our U.S. northeast segment," Mr. Quarin added. "Our outlook for the balance of 2012 assumes recycled commodity prices in the fourth quarter will not improve from September levels."Reported revenues decreased ($3.3) million or (0.7)% from $490.5 million in the third quarter of 2011 to $487.2 million in the third quarter of 2012. Expressed on a reportable basis, at parity, revenues were flat quarter over quarter due in large part to a 3.9% increase attributable to acquisitions, and higher overall pricing and fuel surcharges being offset by lower volumes and commodity values. The impact on comparative revenues resulting from a decline in recycled commodity prices was 2.5%. Adjusted EBITDA(A) was $136.9 million ($138.3 million excluding one-time items), or (2.9)% lower, in the third quarter of 2012 versus $141.0 million in the same quarter a year ago. Adjusted operating income(A) was $66.8 million, or (8.0)% lower, in the quarter compared to $72.6 million in the same period last year. Adjusted net income(A) was $32.1 million, or $0.28 per weighted average diluted share ("diluted share"), compared to $35.1 million, or $0.29 per diluted share in the comparative period. Share repurchases in the quarter totalled $5.2 million and dividends paid to shareholders totalled $16.2 million. Together, this represents a combined $21.4 million return to shareholders in the third quarter of 2012. Year-to-date, reported revenues increased $18.0 million or 1.3% from $1,382.9 million in 2011 to $1,400.9 million. Expressed on a reportable basis, and assuming Canadian and U.S. dollar parity, revenues increased 2.3% on a comparative basis for the nine months ended. This increase is due in large part to a 3.9% 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 1.8%. For the year-to-date period, adjusted EBITDA(A) was $385.9 million ($387.3 million excluding one-time items), or (3.7)% lower, in 2012 versus $400.7 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 $415.7 million ($417.1 million excluding one-time items) on a year-to-date basis. Adjusted operating income(A) was $184.5 million, or (9.9)% lower, in the year-to-date period than the $204.9 million recorded in the same period last year. Adjusted net income(A) was $85.0 million, or $0.73 per diluted share, compared to $97.0 million, or $0.80 per diluted share in the comparative period. Share repurchases year-to-date totalled $65.6 million and dividends paid to shareholders totalled $47.2 million. For the current year-to-date period, this represents a combined $112.8 million return to shareholders compared to $85.5 million a year ago. AcquisitionsWe invested $72.5 million in the third quarter and $122.6 million year-to-date on strategic "tuck-in" acquisitions in various markets. In the third quarter, we completed three acquisitions, two in the U.S. northeast and one in Canada. Year-to-date, we completed a total of 12 acquisitions, five in the U.S. south, two in the U.S. northeast and five in Canada. We continue to actively identify collection and transfer assets in and around the markets we serve in order to improve asset density and facilitate higher internalization at our landfills. We also evaluate new markets for growth opportunities. Other highlights for the three and nine months ended September 30, 2012In October 2012, we entered into a consolidated $2,350 million Credit Agreement and concurrently repaid all outstanding indebtedness under our U.S. and Canadian credit facilities and our series B, senior secured debenture. In August 2012, we received approval to renew our normal course issuer bid for an additional 12 months. In 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 3.2 million common shares year-to-date. At the close of the period, there were 115.3 million common shares outstanding. 2012 OutlookThe Company is updating its outlook provided on July 25, 2012. The outlook assumes no change in the current economic environment and assumes recycled commodity pricing remains at September 2012 levels. 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 continues to be estimated at approximately $1,880 million Adjusted EBITDA(A) is estimated to be $515 to $520 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 $250 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 $50 million Adjusted net income(A) per diluted share is estimated to be $0.99 to $1.00 Free cash flow(B) is estimated to be at the low end of the range provided of $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 September 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 endedNine months ended2012201120122011REVENUES$487,209$490,522$1,400,919$1,382,884EXPENSESOPERATING297,309294,475849,528820,784SELLING, GENERAL AND ADMINISTRATION56,75051,437170,926160,422RESTRUCTURING-73-1,198AMORTIZATION70,32869,408202,352198,694NET GAIN ON SALE OF CAPITAL ASSETS(225)(1,092)(975)(2,871)OPERATING INCOME63,04776,221179,088204,657INTEREST ON LONG-TERM DEBT14,69615,30342,93448,363NET FOREIGN EXCHANGE LOSS (GAIN)5(51)12(83)NET GAIN ON FINANCIAL INSTRUMENTS(3,988)(1,528)(1,816)(3,883)OTHER-32105827INCOME BEFORE INCOME TAX EXPENSE AND NET LOSSFROM EQUITY ACCOUNTED INVESTEE52,33462,465137,853159,433INCOME TAX EXPENSECurrent14,21913,72938,31238,424Deferred5,9468,35716,90720,89920,16522,08655,21959,323NET LOSS FROM EQUITY ACCOUNTED INVESTEE11323058NET INCOME32,15840,34782,604100,052Foreign currency translation adjustment19,358(44,594)18,024(25,840)Derivatives designated as cash flow hedges, net of income tax ($532) and $226 (2011 - $2,563 and $3,411)989(4,767)(421)(6,340)Settlement of derivatives designated as cash flow hedges, net of income tax $72 and ($7) (2011 - ($78) and ($481))(131)14715895OTHER COMPREHENSIVE INCOME (LOSS)20,216(49,214)17,618(31,285)COMPREHENSIVE INCOME (LOSS)$52,374$(8,867)$100,222$68,767Net income per weighted average share, basic$0.28$0.33$0.71$0.83Net income per weighted average share, diluted$0.28$0.33$0.71$0.83Weighted average number of shares outstanding (thousands), basic115,268120,767116,519121,067Weighted average number of shares outstanding (thousands), diluted115,268120,767116,519121,067Progressive Waste Solutions Ltd.Condensed Consolidated Balance Sheets ("Balance Sheet")September 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)September 30,December 31,20122011ASSETSCURRENTCash and cash equivalents$15,423$14,143Accounts receivable234,894212,099Other receivables442414Prepaid expenses36,62731,484Restricted cash475452Other assets2,3211,972290,182260,564OTHER RECEIVABLES187376FUNDED LANDFILL POST-CLOSURE COSTS9,8779,200INTANGIBLES249,407257,731GOODWILL840,437774,409LANDFILL DEVELOPMENT ASSETS19,05615,869DEFERRED FINANCING COSTS15,38519,983CAPITAL ASSETS855,593776,058LANDFILL ASSETS966,815958,792INVESTMENT IN EQUITY ACCOUNTED INVESTEE4,0773,973OTHER ASSETS918649$3,251,934$3,077,604LIABILITIESCURRENTAccounts payable$123,275$115,292Accrued charges118,743124,496Dividends payable16,39014,540Income taxes payable1,58510,693Deferred revenues19,10517,645Current portion of long-term debt1,5001,500Landfill closure and post-closure costs7,5729,468Other liabilities3,1483,484291,318297,118LONG-TERM DEBT1,467,8471,311,593LANDFILL CLOSURE AND POST-CLOSURE COSTS103,66292,034OTHER LIABILITIES7,8597,484DEFERRED INCOME TAXES101,03176,2341,971,7171,784,463SHAREHOLDERS' EQUITYCommon shares (authorized - unlimited, issued and outstanding - 114,949,780 (December 31, 2011 - 118,040,683))1,773,4341,824,231Restricted shares (issued and outstanding - 212,500 (December 31, 2011 - 252,150))(4,364)(5,353)Additional paid in capital2,3082,789Accumulated deficit(447,028)(466,775)Accumulated other comprehensive loss(44,133)(61,751)Total shareholders' equity1,280,2171,293,141$3,251,934$3,077,604Progressive Waste Solutions Ltd.Condensed Consolidated Statements of Cash Flows ("Statement of Cash Flows")For the periods ended September 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 endedNine months ended2012201120122011NET INFLOW (OUTFLOW) OF CASH RELATED TO THE FOLLOWING ACTIVITIESOPERATINGNet income$32,158$40,347$82,604$100,052Items not affecting cashRestricted share (recovery) expense(143)1,0281,2151,381Accretion of landfill closure and post-closure costs1,3131,2713,9273,816Amortization of intangibles13,39112,87739,20636,977Amortization of capital assets35,21533,145103,35197,745Amortization of landfill assets21,72223,38659,79563,972Interest on long-term debt (amortization of deferred financing costs)1,7011,6405,0694,355Net gain on sale of capital assets(225)(1,092)(975)(2,871)Net gain on financial instruments(3,988)(1,528)(1,816)(3,883)Deferred income taxes5,9468,35716,90720,899Net loss from equity accounted investee11323058Landfill closure and post-closure expenditures(1,201)(1,102)(5,401)(3,162)Changes in non-cash working capital items(31,582)14,842(41,335)(38,850)Cash generated from operating activities74,318133,203262,577280,489INVESTINGAcquisitions(65,300)(49,471)(113,705)(139,506)Restricted cash deposits(1)-(23)(12)Investment in other receivables(148)-(148)-Proceeds from other receivables107122330356Funded landfill post-closure costs(127)(131)(287)(310)Purchase of capital assets(54,641)(28,100)(125,912)(77,033)Purchase of landfill assets(19,592)(18,776)(48,085)(39,659)Proceeds from the sale of capital assets5401,7542,1075,204Investment in landfill development assets(693)(1,594)(3,507)(4,711)Cash utilized in investing activities(139,855)(96,196)(289,230)(255,671)FINANCINGPayment of deferred financing costs(285)(3,786)(340)(4,806)Proceeds from long-term debt128,18994,550307,176331,163Repayment of long-term debt(43,998)(86,861)(166,507)(257,630)Proceeds from the exercise of stock options54-364855Repurchase of common shares(5,157)(15,556)(65,633)(39,056)Purchase of, net of proceeds from, restricted shares(541)(4,226)(541)(4,226)Dividends paid to shareholders(16,237)(15,408)(47,218)(46,431)Cash generated from (utilized in) financing activities62,025(31,287)27,301(20,131)Effect of foreign currency translation on cash and cash equivalents687(1,735)632(1,217)NET CASH (OUTFLOW) INFLOW(2,825)3,9851,2803,470CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD OR YEAR18,24812,89114,14313,406CASH AND CASH EQUIVALENTS, END OF PERIOD$15,423$16,876$15,423$16,876SUPPLEMENTAL CASH FLOW INFORMATION:Cash and cash equivalents are comprised of:Cash$15,418$16,875$15,418$16,875Cash equivalents5151$15,423$16,876$15,423$16,876Cash paid during the period for:Income taxes$9,531$9,206$41,698$40,598Interest$13,632$15,317$39,939$46,595FX Impact on Consolidated ResultsThe following tables have been prepared to assist readers in assessing the FX impact on selected results for the three and nine months ended September 30, 2012.Three months endedSeptember 30, 2011September 30, 2012September 30, 2012September 30, 2012September 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$490,522$(75)$490,447$(3,238)$487,209Operating expenses294,4754,672299,147(1,838)297,309Selling, general and administration51,4375,67157,108(358)56,750Restructuring expenses73(73)---Amortization69,4081,37370,781(453)70,328Net gain on sale of capital assets(1,092)864(228)3(225)Operating income76,221(12,582)63,639(592)63,047Interest on long-term debt15,303(523)14,780(84)14,696Net foreign exchange (gain) loss(51)565-5Net gain on financial instruments(1,528)(2,473)(4,001)13(3,988)Other expense32(34)(2)2-Income before net income tax expense and net loss from equity accounted investee62,465(9,608)52,857(523)52,334Net income tax expense22,086(1,790)20,296(131)20,165Net loss from equity accounted investee32(20)12(1)11Net income$40,347$(7,798)$32,549$(391)$32,158Adjusted EBITDA(A)$140,961$(2,972)$137,989$(1,060)$136,929Adjusted operating income(A)$72,645$(5,208)$67,437$(611)$66,826Adjusted net income(A)$35,105$(2,586)$32,519$(397)$32,122Free cash flow(B)(*)$64,390$(28,546)$35,844$(251)$35,593Note: (*)Prior period amounts have been adjusted to conform to the current period's presentation.Nine months endedSeptember 30, 2011September 30, 2012September 30, 2012September 30, 2012September 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$1,382,884$32,272$1,415,156$(14,237)$1,400,919Operating expenses820,78436,668857,452(7,924)849,528Selling, general and administration160,42212,246172,668(1,742)170,926Restructuring expenses1,198(1,198)---Amortization198,6945,554204,248(1,896)202,352Net gain on sale of capital assets(2,871)1,886(985)10(975)Operating income204,657(22,884)181,773(2,685)179,088Interest on long-term debt48,363(5,061)43,302(368)42,934Net foreign exchange (gain) loss(83)9512-12Net gain on financial instruments(3,883)2,084(1,799)(17)(1,816)Other expense827(720)107(2)105Income before net income tax expense and net loss from equity accounted investee159,433(19,282)140,151(2,298)137,853Net income tax expense59,323(3,388)55,935(716)55,219Net loss from equity accounted investee58(27)31(1)30Net income$100,052$(15,867)$84,185$(1,581)$82,604Adjusted EBITDA(A)$400,675$(10,155)$390,520$(4,598)$385,922Adjusted operating income(A)$204,852$(17,594)$187,258$(2,713)$184,545Adjusted net income(A)$97,008$(10,361)$86,647$(1,612)$85,035Free cash flow(B)(*)$203,183$(65,530)$137,653$(1,813)$135,840Note:(*)Prior period amounts have been adjusted to conform to the current period's presentation.Other Financial Highlights(all amounts are in thousands of U.S. dollars, excluding per share amounts)Three months endedNine months endedSeptember 30September 302012201120122011Operating income$63,047$76,221$179,088$204,657Transaction and related costs - SG&A6759662,0451,739Fair value movements in stock options - SG&A237(5,643)(813)(4,123)Restricted share (recovery) expense - SG&A(143)1,0281,2151,381Payment made to senior executive on departure - SG&A3,010-3,010-Restructuring expenses-73-1,198Adjusted operating income66,82672,645184,545204,852Net gain on sale of capital assets(225)(1,092)(975)(2,871)Amortization70,32869,408202,352198,694Adjusted EBITDA$136,929$140,961$385,922$400,675Net income$32,158$40,347$82,604$100,052Transaction and related costs - SG&A6759662,0451,739Fair value movements in stock options - SG&A237(5,643)(813)(4,123)Restricted share expense - SG&A(143)1,0281,2151,381Payment made to senior executive on departure - SG&A3,010-3,010-Restructuring expenses-73-1,198Net gain on financial instruments(3,988)(1,528)(1,816)(3,883)Other expenses-32105827Net income tax expense or (recovery)173(170)(1,315)(183)Adjusted net income$32,122$35,105$85,035$97,008Adjusted net income per weighted average share, basic(A)(*)$0.28$0.29$0.73$0.80Adjusted net income per weighted average share, diluted(A)(*)$0.28$0.29$0.73$0.80Replacement and growth expendituresReplacement expenditures$47,482$37,006$119,592$88,067Growth expenditures26,7519,87054,40528,625Total replacement and growth expenditures$74,233$46,876$173,997$116,692Free cash flow(B)Cash generated from operating activities (statement of cash flows)$74,318$133,203$262,577$280,489Free cash flow(B)$35,593$64,390$135,840$203,183Free cash flow(B) per weighted average share, diluted$0.31$0.53$1.17$1.68DividendsDividends declared (common shares)$16,207$15,318$48,551$46,228Note:(*)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 endedSeptember 3020112012Change2012Change(as reported)(holding FX constant with the comparative period)(as reported)Revenues$490,522$490,447$(75)$487,209$(3,313)Canada$203,350$208,934$5,584$205,696$2,346U.S. south$190,537$195,678$5,141$195,678$5,141U.S. northeast$96,635$85,835$(10,800)$85,835$(10,800)Operating expenses$294,475$299,147$4,672$297,309$2,834Canada$112,389$117,517$5,128$115,679$3,290U.S. south$117,661$121,738$4,077$121,738$4,077U.S. northeast$64,425$59,892$(4,533)$59,892$(4,533)SG&A (as reported)$51,437$57,108$5,671$56,750$5,313Canada$15,106$16,259$1,153$16,019$913U.S. south$19,092$18,586$(506)$18,586$(506)U.S. northeast$7,742$7,266$(476)$7,266$(476)Corporate$9,497$14,997$5,500$14,879$5,382EBITDA(A)(as reported)$144,610$134,192$(10,418)$133,150$(11,460)Canada$75,855$75,158$(697)$73,998$(1,857)U.S. south$53,784$55,354$1,570$55,354$1,570U.S. northeast$24,468$18,677$(5,791)$18,677$(5,791)Corporate$(9,497)$(14,997)$(5,500)$(14,879)$(5,382)Adjusted SG&A$55,086$53,311$(1,775)$52,971$(2,115)Canada$15,106$16,259$1,153$16,019$913U.S. south$19,092$18,586$(506)$18,586$(506)U.S. northeast$7,742$7,266$(476)$7,266$(476)Corporate$13,146$11,200$(1,946)$11,100$(2,046)Adjusted EBITDA(A)$140,961$137,989$(2,972)$136,929$(4,032)Canada$75,855$75,158$(697)$73,998$(1,857)U.S. south$53,784$55,354$1,570$55,354$1,570U.S. northeast$24,468$18,677$(5,791)$18,677$(5,791)Corporate$(13,146)$(11,200)$1,946$(11,100)$2,046Nine months endedSeptember 3020112012Change2012Change(as reported)(holding FX constant with the comparative period)(as reported)Revenues$1,382,884$1,415,156$32,272$1,400,919$18,035Canada$572,004$592,030$20,026$577,793$5,789U.S. south$537,889$578,606$40,717$578,606$40,717U.S. northeast$272,991$244,520$(28,471)$244,520$(28,471)Operating expenses$820,784$857,452$36,668$849,528$28,744Canada$313,841$329,488$15,647$321,564$7,723U.S. south$326,771$358,133$31,362$358,133$31,362U.S. northeast$180,172$169,831$(10,341)$169,831$(10,341)SG&A (as reported)$160,422$172,668$12,246$170,926$10,504Canada$46,339$49,029$2,690$47,850$1,511U.S. south$53,562$57,470$3,908$57,470$3,908U.S. northeast$23,503$22,959$(544)$22,959$(544)Corporate$37,018$43,210$6,192$42,647$5,629EBITDA(A)(as reported)$401,678$385,036$(16,642)$380,465$(21,213)Canada$211,824$213,513$1,689$208,379$(3,445)U.S. south$157,556$163,003$5,447$163,003$5,447U.S. northeast$69,316$51,730$(17,586)$51,730$(17,586)Corporate$(37,018)$(43,210)$(6,192)$(42,647)$(5,629)Adjusted SG&A$161,425$167,184$5,759$165,469$4,044Canada$46,339$49,029$2,690$47,850$1,511U.S. south$53,562$57,470$3,908$57,470$3,908U.S. northeast$23,503$22,959$(544)$22,959$(544)Corporate$38,021$37,726$(295)$37,190$(831)Adjusted EBITDA(A)$400,675$390,520$(10,155)$385,922$(14,753)Canada$211,824$213,513$1,689$208,379$(3,445)U.S. south$157,556$163,003$5,447$163,003$5,447U.S. northeast$69,316$51,730$(17,586)$51,730$(17,586)Corporate$(38,021)$(37,726)$295$(37,190)$831RevenuesGross 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 endedNine months endedSeptember 30September 302012%2011%2012%2011%Commercial$167,22334.3$164,45233.5$494,33135.3$480,38134.7Industrial87,14917.989,52018.2248,06017.7252,70818.3Residential113,77323.4102,98921.0323,45823.1293,32221.2Transfer and disposal168,16034.5178,84436.5472,60533.7491,55135.5Recycling15,5313.222,5864.649,7523.657,4254.2Other6,9501.45,9421.219,0001.416,5761.2Gross revenues558,786114.7564,333115.01,607,206114.81,591,963115.1Intercompany(71,577)(14.7)(73,811)(15.0)(206,287)(14.8)(209,079)(15.1)Revenues$487,209100.0$490,522100.0$1,400,919100.0$1,382,884100.0Revenue 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 endedNine months endedSeptember 30September 3020122011 (*)20122011 (*)PriceCore price1.61.41.51.6Fuel surcharges0.21.10.41.1Recycling and other(2.5)0.8(1.8)0.6Total price growth(0.7)3.30.13.3Volume(3.2)1.0(1.7)0.6Total organic (decline) growth(3.9)4.3(1.6)3.9Acquisitions3.95.43.96.2Total growth excluding FX-9.72.310.1FX(0.7)(1.0)Total growth including FX(0.7)1.3Note:(*)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 endedNine months endedSeptember 30September 302012 (*)2011Change2012 (*)2011ChangeCash generated from operating activities$74,318$133,203$(58,885)$262,577$280,489$(17,912)Operating and investingStock option expense (recovery)237(5,643)5,880(813)(4,123)3,310Acquisition and related costs675966(291)2,0451,739306Payment made to senior executive on departure3,010-3,0103,010-3,010Restructuring expenses-73(73)-1,198(1,198)Other expenses-32(32)105827(722)Changes in non-cash working capital items31,582(14,842)46,42441,33538,8502,485Capital and landfill asset purchases(74,233)(46,876)(27,357)(173,997)(116,692)(57,305)Proceeds from the sale of capital assets5401,754(1,214)2,1075,204(3,097)FinancingPurchase of restricted shares(541)(4,226)3,685(541)(4,226)3,685Net realized foreign exchange loss (gain)5(51)5612(83)95Free cash flow(B)$35,593$64,390$(28,797)$135,840$203,183$(67,343)Note:(*)Capital and landfill asset purchases include infrastructure expenditures of approximately $6,900 and $13,800, for the three and nine months ended September 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 in place at September 30, 2012. Three months endedNine months endedSeptember 30September 302012 (*)2011Change2012 (*)2011ChangeAdjusted EBITDA(A)$136,929$140,961$(4,032)$385,922$400,675$(14,753)Purchase of restricted shares(541)(4,226)3,685(541)(4,226)3,685Capital and landfill asset purchases(74,233)(46,876)(27,357)(173,997)(116,692)(57,305)Proceeds from the sale of capital assets5401,754(1,214)2,1075,204(3,097)Landfill closure and post- closure expenditures(1,201)(1,102)(99)(5,401)(3,162)(2,239)Landfill closure and post- closure cost accretion expense1,3131,271423,9273,816111Interest on long-term debt(14,696)(15,303)607(42,934)(48,363)5,429Non-cash interest expense1,7011,640615,0694,355714Current income tax expense(14,219)(13,729)(490)(38,312)(38,424)112Free cash flow(B)$35,593$64,390$(28,797)$135,840$203,183$(67,343)Note:(*)Capital and landfill asset purchases include infrastructure expenditures of approximately $6,900 and $13,800, for the three and nine months ended September 30, 2012, respectively.Long-term debt to adjusted EBITDA(A)Our adjusted EBITDA(A) ratio prepared on a combined basis, assuming FX parity, is 2.80 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$1.0237September 30$1.0166$1.0052$0.9979$0.9626$1.0202$1.0225Quarterly dividend declaredThe Company's Board of Directors declared a quarterly dividend of $0.14 Canadian per share to shareholders of record December 31, 2012. The dividend will be paid on January 16, 2013. 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 payments made to senior executives on their departure. 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 one of North America's largest full-service waste management companies, we provide non-hazardous solid waste collection, recycling and disposal services to commercial, industrial, municipal and residential customers in 13 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. Management will hold a conference call on Friday, October 26, 2012, at 8:30 a.m. (ET) to discuss results for the three and nine months ended September 30, 2012. Participants may listen to the call by dialing 1-888-300-0053, conference ID 35210439, 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, November 9, 2012, at midnight, and can be accessed by dialing 1-855-859-2056, conference ID 35210439. 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: Contact Information: Progressive Waste Solutions Ltd.Chaya CooperbergVP, Investor Relations and Corporate Communications(905) 532-7517chaya.cooperberg@progressivewaste.comwww.progressivewaste.com