Fourth Quarter 2021 Results and Full Year Highlights
- Fourth Quarter revenue of $1,539.5
million, increase of 24.6%
- Fourth Quarter Adjusted EBITDA1 of
$388.3 million, increase of 24.8%;
Net loss of $77.4 million; Adjusted
Net Income1 of $25.9
million
- Full Year revenue of $5,525.5
million, increase of 31.7%
- Full Year Adjusted EBITDA1 of $1,463.7 million, increase of 35.9%; Net loss of
$606.8 million; Adjusted Net
Income1 of $155.1
million
- Full Year Adjusted EBITDA margin1 of 26.5%,
increase of 80 basis points; Solid waste Adjusted EBITDA
margin1 of 30.9%, increase of 90 basis points
- Full Year Adjusted Cash Flows from Operating
Activities1 of $1,080.2
million; cash flows from operating activities of
$897.9 million; Adjusted Free Cash
Flow1 of $540.3
million
- Full Year Adjusted earnings per share1 of
$0.43; Loss per share of $(1.83)
- Completed acquisitions of approximately $785 million in annualized revenue
Full Year 2022 Guidance2
- Revenue is estimated to be between $6,265 million and $6,365
million
- Adjusted EBITDA2 is estimated to be between
$1,690 million and $1,730 million
- Adjusted Free Cash Flow2 is estimated to be
between $665 million and $695 million
- Net Leverage2 is estimated to be approximately
4.3x
VAUGHAN, ON, Feb. 9, 2022 /PRNewswire/ - GFL Environmental
Inc. (NYSE: GFL) (TSX: GFL) ("GFL", "we" or "our") today announced
its results for the fourth quarter and full year 2021, as well
as guidance for full year 2022.
"Our employees delivered another exceptional year of results,
allowing us to exceed our increased full year 2021 guidance," said
Patrick Dovigi, Founder and Chief
Executive Officer of GFL. "In 2021, we grew revenue by 31.7%,
driven by strong organic growth and acquisitions that outperformed
expectations. We also expanded our Adjusted EBITDA
margin1 and solid waste Adjusted EBITDA
margin1 by 80 bps and 90 bps, respectively,
demonstrating the effectiveness of our proactive pricing and
efficiency initiatives to counteract increased inflationary cost
pressures. I am especially proud that we were able to accomplish
these results despite the continued impact of the COVID-19 pandemic
in many of the markets we serve, especially in Canada."
Mr. Dovigi added, "I am also proud of the meaningful
advancements we made during the year on our ESG commitments. We
enhanced the diversity of our Board of Directors with the
appointment of Violet Konkle and
Jessica McDonald as independent
directors. We published our 2020 Sustainability Update Report,
highlighting the success of our sustainability programs and
continued investment in our sustainability initiatives, including
joint venture arrangements through GFL Renewables for renewable
natural gas facilities at four of our MSW landfills. These RNG
projects, when combined with near-term arrangements at five
additional MSW landfills, are anticipated to generate annual free
cash flow of approximately $105
million to $125 million. We
continue to evaluate other opportunities to unlock value through
RNG projects."
Mr. Dovigi continued, "We remain focused on executing on our
strategy to create long-term value for all our stakeholders. In
2021, we closed 46 accretive acquisitions, completed financing
initiatives to further reduce our cost of capital and realized
approximately $260 million from the
sale of non-core solid waste assets which we expect to continue to
reinvest in organic and inorganic initiatives. Our integration
plans for the acquisitions that closed in 2021 are significantly
advanced and on schedule. Entering into 2022, we continue to manage
a robust M&A pipeline, setting us up for another outsized year
of acquisitions."
GFL also announced today that it intends to divest of its
infrastructure services division ("GFL Infrastructure") for cash
and an equity interest in a new entity, Green Infrastructure
Partners Inc. ("GIPI"). GFL's soil remediation division,
currently included in its infrastructure segment, will be combined
with its liquid waste segment and rebranded as "environmental
services". Subject to completion of the divestiture, GFL
Infrastructure's results will be excluded from GFL's 2022 financial
reporting.
In connection with the intended acquisition of GFL
Infrastructure, GIPI will acquire Coco Paving, Inc. and its
affiliates (collectively, "Coco") to create a leading
infrastructure services growth vehicle. Coco is one of Canada's largest vertically integrated
infrastructure services businesses with operations across
Ontario, Quebec, Manitoba and Saskatchewan. Coco's operations include access
to over 250 aggregate sites, 33 asphalt plants, eight concrete
plants and one of Canada's largest
asphalt cement terminals. The acquisition of Coco is subject to
certain customary closing conditions, including clearance under the
Competition Act (Canada). Closing
of the Coco transaction is expected to occur in early spring 2022.
GIPI will benefit from two highly regarded brands in GFL
Infrastructure and Coco, significant scale and a broad portfolio of
service offerings across both private and public infrastructure
projects. Given the fragmented Canadian infrastructure services
market, GIPI will be well positioned to expand its platform by
pursuing both tuck-ins and potentially larger-sized
acquisitions.
"The spin-off of GFL Infrastructure is part of GFL's ongoing
strategy to rationalize our balance sheet to maximize the value of
our asset base," said Mr. Dovigi. "We believe that our investment
in the combined complementary businesses of GFL Infrastructure and
Coco through Green Infrastructure Partners will result in greater
value creation for our shareholders than GFL Infrastructure's value
contribution within GFL. Post-divestiture, we continue to see lots
of opportunity to leverage the greater weighting in our solid waste
segment both organically and through accretive acquisitions. This
will also increase the comparability of our business mix with our
publicly traded peers."
Mr. Dovigi concluded, "Our Adjusted Free Cash Flow1
grew by 50.1% in 2021 putting us on track to achieve our goal of
generating $1 billion of Adjusted
Free Cash Flow in the next few years. I am very excited about the
opportunities that still lie ahead of us. Our success in 2021
highlighted the effectiveness of our growth strategies and has set
us up for success in 2022 and beyond."
Fourth Quarter and Full Year 2021 Results
Revenue increased by 24.6% to $1,539.5
million in the fourth quarter of 2021, compared to the
fourth quarter of 2020. Solid waste revenue increased by 20.2%,
including 6.5% from core pricing, surcharge and commodity price
increases and 3.4% from positive volume. Adjusted
EBITDA1 increased by 24.8% to $388.3 million in the fourth quarter of 2021,
compared to the fourth quarter of 2020. Adjusted EBITDA
margin1 was 25.2% in the fourth quarter of 2021, in line
with the prior year period. Net loss decreased to $77.4 million in the fourth quarter of 2021,
compared to a net loss of $594.2
million in the fourth quarter of 2020. Cash flows from
operating activities increased by 73.6% to $283.8 million in the fourth quarter of 2021,
compared to the fourth quarter of 2020.
Revenue for the year ended December 31,
2021 was $5,525.5 million, an
increase of 31.7%, compared to the year ended December 31, 2020. Adjusted EBITDA1
increased by 35.9% to $1,463.7
million for the year ended December
31, 2021, compared to the year ended December 31, 2020. Adjusted EBITDA
margin1 was 26.5% for the year ended December 31, 2021, compared to 25.7% for the year
ended December 31, 2020. Net loss
decreased to $606.8 million for the
year ended December 31, 2021,
compared to a net loss of $1,102.4
million for the year ended December
31, 2020. Cash flows from operating activities increased by
78.8% to $897.9 million for the year
ended December 31, 2021, compared to
the year ended December 31, 2020.
Full Year 2022 Guidance2
GFL also provided its guidance for 2022, assuming the inclusion
of GFL Infrastructure and excluding this segment as noted in the
parentheticals below.
- Revenue is estimated to be between $6,265 million and $6,365
million ($5,825 million and
$5,925 million excluding GFL
Infrastructure), representing year-over-year growth of 14% to 16%,
resulting from expected organic growth of 5.0% to 6.0%, revenue
from net M&A roll over of 8.0% to 8.5% and changes in foreign
exchange resulting in 0.5% revenue growth.
- Adjusted EBITDA2 is estimated to be between
$1,690 million and $1,730 million ($1,625
million and $1,665 million
excluding GFL Infrastructure), assuming Adjusted EBITDA
margin2 of 27.0% to 27.2% (or 27.9% to 28.1% excluding
GFL Infrastructure).
- Adjusted Free Cash Flow2 is estimated to be between
$665 million and $695 million ($625
million and $655 million
excluding GFL Infrastructure), assuming Adjusted Free Cash
Flow2 margin of 10.6% to 10.9% (or 10.7% to 11.1%
excluding GFL Infrastructure).
- Net Leverage2 is estimated to be approximately 4.3x
(approximately 4.3x excluding GFL Infrastructure), resulting from
growth in Adjusted EBITDA2 and Adjusted Free Cash
Flow2.
The 2022 guidance excludes any impact from acquisitions not yet
completed and refinancing opportunities. Implicit in
forward-looking information in respect of our expectations for 2022
are certain current assumptions, including, among others, no
changes to the current economic environment and that none of the
jurisdictions in which GFL operates institute additional COVID-19
emergency measures including shelter-in-place or similar orders.
The 2022 guidance assumes that GFL will continue to execute on its
strategy of organically growing our business, leveraging our
scalable network to attract and retain customers across multiple
service lines, realize operational efficiencies, and extract
procurement and cost synergies. See "Forward-Looking
Information".
2022 to 2023 Potential Growth
Opportunities3
- GFL expects to continue to organically grow revenue by
approximately 5.0% in 2023 and to realize Adjusted EBITDA
margin3 between 28.2% to 28.4%, potentially resulting in
revenue growth between $305 million
and $335 million, Adjusted
EBITDA3 growth between $85
million and $95 million and
Adjusted Free Cash Flow3 growth between $55 million and $60
million during 2023.
- GFL manages a robust pipeline of potential acquisition targets.
In 2023, GFL assumes the deployment of $450
million to $525 million for
acquisitions, financed from free cash flow generated by the
business, resulting in potential additional revenue between
$250 million and $300 million, additional Adjusted
EBITDA3 between $60
million and $75 million and
additional Adjusted Free Cash Flow3 between $45 million and $55
million.
- GFL Renewables has entered into joint venture arrangements with
established partners at four MSW landfills to date and is currently
evaluating potential arrangements at five additional MSW landfills.
These nine projects are expected to generate approximately
$105 million and $125 million in incremental annual free cash
flow.
Based on the above potential 2022 to 2023 growth opportunities,
GFL's launch off point for 2024 could be Adjusted Free Cash
Flow3 between $890 million
and $970 million.
______________________
|
(1)
|
A non-IFRS measure;
see accompanying Non-IFRS Reconciliation Schedule; see "Non-IFRS
Measures" for an explanation of the composition of non-IFRS
measures.
|
(2)
|
Information
contained in the section titled "Full Year 2022 Guidance" includes
non-IFRS measures and ratios, including Adjusted EBITDA, Adjusted
EBITDA margin, Adjusted Free Cash Flow and Net Leverage. Due to the
uncertainty of the likelihood, amount and timing of effects of
events or circumstances to be excluded from these measures, GFL
does not have information available to provide a quantitative
reconciliation of such projections to comparable IFRS measures. See
"Non-IFRS Measures" below. See Fourth Quarter and Full Year 2021
Results for the equivalent historical non-IFRS
measure.
|
(3)
|
Information
contained in the section titled "2022 to 2023 Potential Growth
Opportunities" includes non-IFRS measures, including Adjusted
EBITDA, Adjusted EBITDA margin and Adjusted Free Cash Flow. Due to
the uncertainty of the likelihood, amount and timing of effects of
events or circumstances to be excluded from these measures, GFL
does not have information available to provide a quantitative
reconciliation of such projections to the comparable IFRS measure.
See "Non-IFRS Measures" below. See Fourth Quarter and Full Year
2021 Results for the equivalent historical non-IFRS measure.
Information contained in the section titled "2022 to 2023 Potential
Growth Opportunities" excludes GFL Infrastructure.
|
Q4 2021 Earnings and 2022 Guidance Call
GFL will host a conference call related to our
fourth quarter and full year 2021 earnings and our 2022
guidance on Thursday, February 10,
2022 at 8:30 am Eastern Time.
A live audio webcast of the conference call can be accessed by
logging onto our Investors page at investors.gflenv.com or by
clicking here. Listeners may access the call toll-free by dialing
1-844-200-6205 (access code: 572773) approximately 15 minutes prior
to the scheduled start time.
We encourage participants who will be dialing in to pre-register
for the conference call using the following link:
https://www.incommglobalevents.com/registration/q4inc/9607/gfl-environmental-q4-earnings-call/.
Callers who pre-register will be given a conference access code and
PIN to gain immediate access to the call and bypass the live
operator on the day of the call. Participants may pre-register at
any time, including up to and after the call start time. For those
unable to listen live, an audio replay of the call will be
available until February 24, 2022 by
dialing 1-866-813-9403 (access code: 489450). A copy of the
presentation for the call will be available on our website at
investors.gflenv.com or by clicking here.
About GFL
GFL, headquartered in Vaughan,
Ontario, is the fourth largest diversified environmental
services company in North America,
providing a comprehensive line of non-hazardous solid waste
management, infrastructure & soil remediation and liquid waste
management services through its platform of facilities throughout
Canada and in more than half
of the U.S. states. Across its organization, GFL has a workforce of
more than 18,000 employees.
For more information, visit the GFL website at gflenv.com. To
subscribe for investor email alerts please visit
investors.gflenv.com or click here.
Forward-Looking Information
This release includes certain "forward-looking statements" and
"forward-looking information" (collectively, "forward-looking
information") within the meaning of applicable U.S. and Canadian
securities laws, respectively. Forward-looking information includes
all statements that do not relate solely to historical or current
facts and may relate to our future outlook, financial guidance and
anticipated events or results and may include statements regarding
our financial performance, financial condition or results, business
strategy, growth strategies, budgets, operations and services.
Particularly, statements regarding our expectations of future
results, performance, achievements, prospects or opportunities or
the markets in which we operate is forward-looking information. In
some cases, forward-looking information can be identified by the
use of forward-looking terminology such as "plans", "targets",
"expects" or "does not expect", "is expected", "an opportunity
exists", "budget", "scheduled", "estimates", "outlook",
"forecasts", "projection", "prospects", "strategy", "intends",
"anticipates", "does not anticipate", "believes", or "potential" or
variations of such words and phrases or statements that certain
actions, events or results "may", "could", "would", "might",
"will", "will be taken", "occur" or "be achieved", although not all
forward-looking information includes those words or phrases. In
addition, any statements that refer to expectations, intentions,
projections, guidance, potential or other characterizations of
future events or circumstances contain forward-looking information.
Statements containing forward-looking information are not
historical facts nor assurances of future performance but instead
represent management's expectations, estimates and projections
regarding future events or circumstances.
Forward-looking information is based on our opinions, estimates
and assumptions that we considered appropriate and reasonable as of
the date such information is stated, is subject to known and
unknown risks, uncertainties, assumptions and other important
factors that may cause the actual results, level of activity,
performance or achievements to be materially different from those
expressed or implied by such forward-looking information, including
but not limited to certain assumptions set out herein in the
sections titled "Full Year 2022 Guidance" and "2022 to 2023
Potential Growth Opportunities"; our ability to obtain and maintain
existing financing on acceptable terms; our ability to source and
execute on acquisitions on terms acceptable to us; our ability to
find purchasers for non-core assets on terms acceptable to us;
currency exchange and interest rates; the impact of competition;
the changes and trends in our industry or the global economy;
changes in laws, rules, regulations, and global standards;
and the duration and severity of the COVID-19 pandemic, including
variants, and its impact on the economy, the North American
financial markets, our operations, our M&A pipeline and our
financial results. Other important factors that could materially
affect our forward-looking information can be found in the "Risk
Factors" section of GFL's annual information form for the year
ended December 31, 2021 and GFL's
other periodic filings with the U.S. Securities and Exchange
Commission and the securities commissions or similar regulatory
authorities in Canada.
Shareholders, potential investors and other readers are urged to
consider these risks carefully in evaluating our forward-looking
information and are cautioned not to place undue reliance on such
information. There can be no assurance that the underlying
opinions, estimates and assumptions will prove to be correct.
Although we have attempted to identify important risk factors that
could cause actual results to differ materially from those
contained in forward-looking information, there may be other
factors not currently known to us or that we currently believe are
not material that could also cause actual results or future events
to differ materially from those expressed in such forward-looking
information. There can be no assurance that such information will
prove to be accurate, as actual results and future events could
differ materially from those anticipated in such information. The
forward-looking information contained in this release represents
our expectations as of the date of this release (or as the date it
is otherwise stated to be made), and is subject to change after
such date. However, we disclaim any intention or obligation or
undertaking to update or revise any forward-looking information
whether as a result of new information, future events or otherwise,
except as required under applicable U.S. or Canadian securities
laws. The purpose of disclosing our financial outlook set out in
this release is to provide investors with more information
concerning the financial impact of our business initiatives and
growth strategies.
Non-IFRS Measures
This release makes reference to certain non-IFRS measures. These
measures are not recognized measures under IFRS and do not have a
standardized meaning prescribed by IFRS and are therefore unlikely
to be comparable to similar measures presented by other companies.
Accordingly, these measures should not be considered in isolation
or as a substitute for analysis of our financial information
reported under IFRS. Rather, these non-IFRS measures are used to
provide investors with supplemental measures of our operating
performance and thus highlight trends in our core business that may
not otherwise be apparent when relying solely on IFRS measures. We
also believe that securities analysts, investors and other
interested parties frequently use non-IFRS measures in the
evaluation of issuers. Our management also uses non-IFRS measures
in order to facilitate operating performance comparisons from
period to period, to prepare annual operating budgets and forecasts
and to determine components of management compensation.
In addition, GFL's projected full year 2022 and potential 2022
to 2023 growth opportunities for Adjusted EBITDA, Adjusted EBITDA
margin, Adjusted Free Cash Flow and Net Leverage are anticipated to
exclude the effects of other events or circumstances in 2022 and
throughout 2023 that are not representative or indicative of GFL's
results of operations. Such excluded items are not currently
determinable, but may be significant, such as changes in the
foreign exchange rate, the mark-to-market (gain) loss on the
Purchase Contracts, the cost of refinancings and acquisition,
integration, rebranding and other costs. Due to the uncertainty of
the likelihood, amount and timing of any such items, GFL does not
have information available to provide a quantitative reconciliation
of such projections to the comparable IFRS measure.
EBITDA represents, for the applicable period, net income (loss)
plus (a) interest and other finance costs, plus
(b) depreciation and amortization of property and equipment,
landfill assets and intangible assets, less (c) the
provision for income taxes, in each case to the extent deducted or
added to/from net income (loss). We present EBITDA to assist
readers in understanding the mathematical development of Adjusted
EBITDA. Management does not use EBITDA as a financial performance
metric.
Adjusted EBITDA is a supplemental measure used by management and
other users of our financial statements including our lenders and
investors, to assess the financial performance of our business
without regard to financing methods or capital structure. Adjusted
EBITDA is also a key metric that management uses prior to execution
of any strategic investing or financing opportunity. For example,
management uses Adjusted EBITDA as a measure in determining the
value of acquisitions, expansion opportunities and dispositions. In
addition, Adjusted EBITDA is utilized by financial institutions to
measure borrowing capacity. Adjusted EBITDA is calculated by adding
and deducting, as applicable from EBITDA, certain expenses, costs,
charges or benefits incurred in such period which in management's
view are either not indicative of underlying business performance
or impact the ability to assess the operating performance of our
business, including: (a) (gain) loss on foreign exchange, (b)
(gain) loss on sale of property and equipment, (c) mark-to-market
(gain) loss on fuel hedges, (d) mark-to-market (gain) loss on
Purchase Contracts, (e) share-based payments, (f) impairment and
other charges, (g) gain on divestiture, (h) transaction costs, (i)
IPO transaction costs, (j) acquisition, rebranding and other
integration costs (included in cost of sales related to acquisition
activity), and (k) deferred purchase consideration. We use Adjusted
EBITDA to facilitate a comparison of our operating performance on a
consistent basis reflecting factors and trends affecting our
business.
Adjusted EBITDA margin represents Adjusted EBITDA divided by
revenue. Management and other users of our financial statements
including our lenders and investors use Adjusted EBITDA margin to
facilitate a comparison of the operating performance of each of our
operating segments on a consistent basis reflecting factors and
trends affecting our business.
Acquisition EBITDA represents, for the applicable period,
management's estimates of the annual Adjusted EBITDA of an acquired
business, based on its most recently available historical financial
information at the time of acquisition, as adjusted to give effect
to (a) the elimination of expenses related to the prior owners and
certain other costs and expenses that are not indicative of the
underlying business performance, if any, as if such business had
been acquired on the first day of such period ("Acquisition EBITDA
Adjustments"), and (b) contract and acquisition annualization for
contracts entered into and acquisitions completed by such acquired
business prior to our acquisition. Further adjustments are made to
such annual Adjusted EBITDA to reflect estimated operating cost
savings and synergies, if any, anticipated to be realized upon
acquisition and integration of the business into our operations. We
use Acquisition EBITDA for the acquired businesses to adjust our
Adjusted EBITDA to include a proportional amount of the Acquisition
EBITDA of the acquired businesses based upon the respective number
of months of operation for such period prior to the date of our
acquisition of each such business.
Adjusted Cash Flows from Operating Activities represents cash
flows from operating activities adjusted for (a) costs associated
with IPO related debt repayments, (b) prepayment penalties for
early note redemption, (c) IPO transaction costs, (d) transaction
costs, (e) acquisition, rebranding and other integration costs, (f)
M&A related net working capital investment, (g) tax refund from
CARES Act, (h) cash interest paid on TEUs, and (i) deferred
purchase consideration. Management uses Adjusted Cash Flows from
Operating Activities to evaluate and monitor the ongoing financial
performance of GFL.
Adjusted Free Cash Flow represents Adjusted Cash Flows from
Operating Activities adjusted for (a) proceeds from asset
divestitures, (b) normalization for excess proceeds from asset
divestitures, (c) proceeds on disposal of assets, and (c) purchase
of property and equipment and intangible assets. Adjusted Cash
Flows from Operating Activities and Adjusted Free Cash Flow are
supplemental measures used by investors as a valuation and
liquidity measure in our industry. Management uses Adjusted Free
Cash Flow to evaluate and monitor the ongoing financial performance
of GFL.
Adjusted Net Income (Loss) represents net income (loss) adjusted
for (a) amortization of intangible assets, (b) ARO discount rate
depreciation adjustment, (c) incremental depreciation of property
and equipment due to recapitalization, (d) IPO transaction costs,
(e) prepayment penalties for early note redemption, (f) other loss
on extinguishment of debt, (g) amortization of deferred financing
costs (h) mark-to-market (gain) loss on Purchase Contracts, (i)
gain on divestiture, (j) (gain) loss on foreign exchange, (k)
transaction costs, (l) acquisition, rebranding and other
integration costs, (m) impairment and other charges, (n) TEU
amortization expense, and (o) the tax impact of the forgoing.
Adjusted earnings (loss) per share is defined as Adjusted Net
Income (Loss) divided by the weighted average shares in the period.
We believe that Adjusted earnings (loss) per share provides a
meaningful comparison of current results to prior periods' results
by excluding items that GFL does not believe reflect its
fundamental business performance.
Net Leverage is a supplemental measure used by management to
evaluate borrowing capacity and capital allocation strategies. Net
Leverage is equal to our total long-term debt, as adjusted for fair
value, deferred financings and other adjustments and reduced by our
cash, divided by Run-Rate EBITDA.
Run-Rate EBITDA represents Adjusted EBITDA for the applicable
period as adjusted to give effect to management's estimates of (a)
Acquisition EBITDA Adjustments (as defined above) and (b) the
impact of annualization of certain new municipal and disposal
contracts and cost savings initiatives, entered into, commenced or
implemented, as applicable, in such period, as if such contracts or
costs savings initiatives had been entered into, commenced or
implemented, as applicable, on the first day of such period.
Run-Rate EBITDA has not been adjusted to take into account the
impact of the cancellation of contracts and cost increases
associated with these contracts. These adjustments reflect monthly
allocations of Acquisition EBITDA for the acquired businesses based
on straight line proration. As a result, these estimates do not
take into account the seasonality of a particular acquired
business. While we do not believe the seasonality of any one
acquired business is material when aggregated with other acquired
businesses, the estimates may result in a higher or lower
adjustment to our Run-Rate EBITDA than would have resulted had we
adjusted for the actual results of each of the acquired businesses
for the period prior to our acquisition. We primarily use Run-Rate
EBITDA to show how GFL would have performed if each of the interim
acquisitions had been consummated at the start of the period as
well as to show the impact of the annualization of certain new
municipal and disposal contracts and cost savings initiatives. We
also believe that Run-Rate EBITDA is useful to investors and
creditors to monitor and evaluate our borrowing capacity and
compliance with certain of our debt covenants. Run-Rate EBITDA as
presented herein is calculated in accordance with the terms of our
revolving credit agreement.
All references to "$" in this press release are to Canadian
dollars, unless otherwise noted.
GFL Environmental
Inc.
Consolidated Statements of Operations and Comprehensive
Loss (In millions of dollars except per share
amounts) (unaudited)
|
|
|
Three months
ended December
31,
|
|
Year
ended December
31,
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Revenue
|
$
|
1,539.5
|
|
$
|
1,235.6
|
|
$
|
5,525.5
|
|
$
|
4,196.2
|
Expenses
|
|
|
|
|
|
|
|
Cost of
sales
|
1,431.6
|
|
1,363.0
|
|
4,997.9
|
|
4,006.1
|
Selling,
general and administrative expenses
|
169.9
|
|
144.8
|
|
591.9
|
|
508.4
|
Interest
and other finance costs
|
105.2
|
|
137.9
|
|
434.1
|
|
597.6
|
Deferred
purchase consideration
|
—
|
|
—
|
|
—
|
|
2.0
|
(Gain)
loss on sale of property and equipment
|
(0.8)
|
|
2.2
|
|
1.9
|
|
4.6
|
(Gain)
loss on foreign exchange
|
(19.1)
|
|
(112.9)
|
|
16.2
|
|
(37.3)
|
Mark-to-market loss on Purchase Contracts
|
30.0
|
|
355.9
|
|
349.6
|
|
449.2
|
Impairment and other charges
|
—
|
|
21.4
|
|
—
|
|
21.4
|
Gain on
divestiture
|
(86.4)
|
|
—
|
|
(153.3)
|
|
—
|
|
1,630.4
|
|
1,912.3
|
|
6,238.3
|
|
5,552.0
|
Loss before income
taxes
|
(90.9)
|
|
(676.7)
|
|
(712.8)
|
|
(1,355.8)
|
Current
income tax expense
|
11.1
|
|
(3.8)
|
|
23.9
|
|
1.3
|
Deferred
tax recovery
|
(24.6)
|
|
(78.7)
|
|
(129.9)
|
|
(254.7)
|
Income tax
recovery
|
(13.5)
|
|
(82.5)
|
|
(106.0)
|
|
(253.4)
|
Net
loss
|
(77.4)
|
|
(594.2)
|
|
(606.8)
|
|
(1,102.4)
|
|
|
|
|
|
|
|
|
Items
that may be subsequently reclassified to net loss
|
|
|
|
|
|
|
|
Currency
translation adjustment
|
(35.9)
|
|
(262.5)
|
|
(9.1)
|
|
(227.5)
|
Reclassification to net loss of fair value movements
on cash flow hedges, net of tax
|
—
|
|
(13.1)
|
|
(4.4)
|
|
(13.1)
|
Fair
value movements on cash flow hedges, net of tax
|
(5.5)
|
|
(11.4)
|
|
1.3
|
|
1.8
|
Other comprehensive
loss
|
(41.4)
|
|
(287.0)
|
|
(12.2)
|
|
(238.8)
|
Total comprehensive
loss
|
$
|
(118.8)
|
|
$
|
(881.2)
|
|
$
|
(619.0)
|
|
$
|
(1,341.2)
|
|
|
|
|
|
|
|
|
Loss per
share
|
|
|
|
|
|
|
|
|
|
Basic and
diluted(1)
|
$
|
(0.25)
|
|
$
|
(1.69)
|
|
$
|
(1.83)
|
|
$
|
(3.10)
|
Weighted and diluted
weighted average number of shares
outstanding(2)
|
363,051,517
|
|
360,366,000
|
|
361,566,007
|
|
360,383,291
|
(1)
|
Basic and diluted
loss per share is calculated on net loss adjusted for amounts
attributable to preferred shareholders. Refer to Note 15 in our
audited consolidated financial statements and the related notes for
the year ended December 31, 2021.
|
(2)
|
Basic and diluted
loss per share includes the minimum conversion of TEUs into
subordinate voting shares, which as at December 31, 2021
represented 25,658,711 subordinate voting shares (33,991,500
subordinate voting shares as at December 31, 2020).
|
GFL Environmental
Inc.
Consolidated Statements of Financial Position (In millions
of dollars) (unaudited)
|
|
|
|
|
|
December 31,
2021
|
|
December 31,
2020
|
Assets
|
|
|
|
Cash
|
$
|
190.4
|
|
$
|
27.2
|
Trade
and other receivables, net
|
1,134.7
|
|
867.3
|
Prepaid
expenses and other assets
|
170.6
|
|
133.7
|
Current
assets
|
1,495.7
|
|
1,028.2
|
|
|
|
|
Property
and equipment, net
|
6,010.6
|
|
5,074.8
|
Intangible assets, net
|
3,330.0
|
|
3,093.4
|
Other
long-term assets
|
36.3
|
|
33.2
|
Goodwill
|
7,501.1
|
|
6,500.4
|
Non-current
assets
|
16,878.0
|
|
14,701.8
|
Total
assets
|
18,373.7
|
|
15,730.0
|
|
|
|
|
Liabilities
|
|
|
|
Accounts
payable and accrued liabilities
|
1,319.7
|
|
1,014.8
|
Income
taxes payable
|
25.8
|
|
9.1
|
Long-term debt
|
17.2
|
|
4.6
|
Lease
obligations
|
50.9
|
|
37.5
|
Due to
related party
|
12.8
|
|
12.8
|
Tangible
equity units
|
56.9
|
|
59.2
|
Landfill
closure and post-closure obligations
|
39.1
|
|
55.3
|
Current
liabilities
|
1,522.4
|
|
1,193.3
|
|
|
|
|
Long-term debt
|
7,961.8
|
|
6,161.5
|
Lease
obligations
|
257.4
|
|
153.7
|
Other
long-term liabilities
|
41.0
|
|
37.2
|
Due to
related party
|
18.0
|
|
30.8
|
Deferred
income tax liabilities
|
723.9
|
|
573.5
|
Tangible
equity units
|
1,231.6
|
|
1,327.9
|
Landfill
closure and post-closure obligations
|
841.5
|
|
680.3
|
Non-current
liabilities
|
11,075.2
|
|
8,964.9
|
Total
liabilities
|
12,597.6
|
|
10,158.2
|
|
|
|
|
Shareholders'
equity
|
|
|
|
Share
capital
|
8,462.9
|
|
7,644.8
|
Contributed
surplus
|
77.4
|
|
54.3
|
Deficit
|
(2,510.5)
|
|
(1,885.8)
|
Accumulated other
comprehensive loss
|
(253.7)
|
|
(241.5)
|
Total shareholders'
equity
|
5,776.1
|
|
5,571.8
|
Total liabilities
and shareholders' equity
|
$
|
18,373.7
|
|
$
|
15,730.0
|
GFL Environmental
Inc.
Consolidated Statements of Cash Flows
(In millions of dollars)
(unaudited)
|
|
|
|
|
|
Three months
ended
December
31,
|
|
Year
ended
December
31,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Operating
activities
|
|
|
|
|
|
|
|
Net
loss
|
$
|
(77.4)
|
|
$
|
(594.2)
|
|
$
|
(606.8)
|
|
$
|
(1,102.4)
|
Adjustments for non-cash items
|
|
|
|
|
|
|
|
Depreciation of property and equipment
|
278.9
|
|
439.7
|
|
931.8
|
|
810.6
|
Amortization of intangible assets
|
126.7
|
|
107.5
|
|
461.2
|
|
427.0
|
Gain on
divestiture
|
(86.4)
|
|
—
|
|
(153.3)
|
|
—
|
Impairment and other charges
|
—
|
|
21.4
|
|
—
|
|
21.4
|
Interest
and other finance costs
|
105.2
|
|
137.9
|
|
434.1
|
|
597.6
|
Share-based payments
|
14.5
|
|
10.8
|
|
45.7
|
|
37.9
|
(Gain)
loss on unrealized foreign exchange on long-term debt and
TEUs
|
(19.1)
|
|
(119.6)
|
|
14.8
|
|
(37.3)
|
Loss on
sale of property and equipment
|
(0.8)
|
|
2.2
|
|
1.9
|
|
4.6
|
Mark-to-market loss on Purchase Contracts
|
30.0
|
|
355.9
|
|
349.6
|
|
449.2
|
Mark-to-market loss on fuel hedges
|
—
|
|
—
|
|
—
|
|
1.8
|
Current
income tax expense
|
11.1
|
|
(3.8)
|
|
23.9
|
|
1.3
|
Deferred
tax recovery
|
(24.6)
|
|
(78.7)
|
|
(129.9)
|
|
(254.7)
|
Interest
paid in cash on Amortizing Notes component of TEUs
|
(0.9)
|
|
(1.4)
|
|
(4.2)
|
|
(4.9)
|
Interest
paid in cash, excluding interest paid on Amortizing
Notes
|
(88.3)
|
|
(124.8)
|
|
(286.4)
|
|
(402.2)
|
Prepayment penalties for early note
redemption
|
—
|
|
(35.5)
|
|
(49.3)
|
|
(35.5)
|
Income
taxes (paid) received in cash, net
|
(4.4)
|
|
(1.0)
|
|
(11.0)
|
|
4.3
|
Investment in acquisition related net working capital
items
|
(5.6)
|
|
(15.9)
|
|
(41.0)
|
|
(15.9)
|
Changes
in non-cash working capital items, excluding investment in
acquisition related net working capital items
|
36.5
|
|
72.5
|
|
(46.1)
|
|
21.1
|
Landfill
closure and post-closure expenditures
|
(11.6)
|
|
(9.5)
|
|
(37.1)
|
|
(21.7)
|
|
283.8
|
|
163.5
|
|
897.9
|
|
502.2
|
Investing
activities
|
|
|
|
|
|
|
|
Proceeds
on disposal of assets
|
89.3
|
|
5.5
|
|
259.7
|
|
16.0
|
Purchase
of property and equipment
|
(229.4)
|
|
(122.6)
|
|
(647.2)
|
|
(428.3)
|
Business
acquisitions, net of cash acquired
|
(996.5)
|
|
(2,776.7)
|
|
(2,299.7)
|
|
(3,941.2)
|
|
(1,136.6)
|
|
(2,893.8)
|
|
(2,687.2)
|
|
(4,353.5)
|
Financing
activities
|
|
|
|
|
|
|
|
Repayment of lease obligations
|
(14.6)
|
|
(12.6)
|
|
(74.0)
|
|
(72.7)
|
Issuance
of long-term debt
|
205.9
|
|
2,036.1
|
|
3,816.0
|
|
4,667.9
|
Repayment of long-term debt
|
(639.2)
|
|
(1,772.8)
|
|
(2,010.8)
|
|
(6,200.3)
|
Payment
of contingent purchase consideration and holdbacks
|
(4.0)
|
|
(19.7)
|
|
(23.6)
|
|
(31.1)
|
Issuance
of share capital, net of issuance costs
|
372.5
|
|
785.1
|
|
372.5
|
|
4,042.7
|
Issuance
of TEUs, net of issuance costs
|
—
|
|
—
|
|
—
|
|
1,006.9
|
Repayment of Amortizing Notes
|
(14.0)
|
|
(13.4)
|
|
(54.1)
|
|
(42.8)
|
Dividends issued and paid
|
(4.8)
|
|
(4.4)
|
|
(17.9)
|
|
(13.1)
|
Return
of capital
|
—
|
|
—
|
|
—
|
|
(0.8)
|
Payment
of financing costs
|
—
|
|
—
|
|
(30.6)
|
|
(41.0)
|
Issuance
of loan from related party
|
(2.5)
|
|
(21.3)
|
|
—
|
|
29.0
|
Repayment of loan to related party
|
—
|
|
(2.9)
|
|
(12.8)
|
|
(6.4)
|
|
(100.7)
|
|
974.1
|
|
1,964.7
|
|
3,338.3
|
|
|
|
|
|
|
|
|
(Decrease) increase in
cash
|
(953.5)
|
|
(1,756.2)
|
|
175.4
|
|
(513.0)
|
Changes due to foreign
exchange revaluation of cash
|
(5.6)
|
|
(33.8)
|
|
(12.2)
|
|
(34.6)
|
Cash, beginning of
period
|
1,149.5
|
|
1,817.2
|
|
27.2
|
|
574.8
|
Cash, end of
year
|
190.4
|
|
27.2
|
|
190.4
|
|
27.2
|
SUPPLEMENTAL DATA
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,
2021, as well as our audited consolidated financial
statements and notes thereto for the year ended December 31, 2020.
Revenue Growth
The following table summarizes the revenue growth in our
segments:
|
Three months ended
December 31, 2021
|
|
Contribution from
Acquisitions
|
|
Organic
Growth
|
|
Foreign
Exchange
|
|
Total Revenue
Growth
|
Solid waste
|
|
|
|
|
|
|
|
Canada
|
9.9
%
|
|
9.3
%
|
|
— %
|
|
19.2
%
|
USA
|
15.4
|
|
10.1
|
|
(3.6)
|
|
21.9
|
Total solid
waste
|
13.6
|
|
9.9
|
|
(2.4)
|
|
21.1
|
Infrastructure and soil
remediation
|
5.1
|
|
(1.7)
|
|
(0.3)
|
|
3.1
|
Liquid waste
|
85.4
|
|
4.7
|
|
(1.1)
|
|
89.0
|
Total
|
19.2
%
|
|
8.1
%
|
|
(2.1)
%
|
|
25.2
%
|
|
Year ended December
31, 2021
|
|
Contribution
from
Acquisitions
|
|
Organic
Growth
|
|
Foreign
Exchange
|
|
Total Revenue
Growth
|
Solid waste
|
|
|
|
|
|
|
|
Canada
|
5.2
%
|
|
9.7
%
|
|
— %
|
|
14.9
%
|
USA
|
46.7
|
|
8.2
|
|
(6.7)
|
|
48.2
|
Total solid
waste
|
31.0
|
|
8.7
|
|
(4.1)
|
|
35.6
|
Infrastructure and soil
remediation
|
4.1
|
|
(5.0)
|
|
(0.6)
|
|
(1.5)
|
Liquid waste
|
44.0
|
|
3.9
|
|
(2.3)
|
|
45.6
|
Total
|
28.9
%
|
|
6.6
%
|
|
(3.5)
%
|
|
32.0
%
|
Detail of Solid Waste Organic Growth
The following table summarizes the components of our solid waste
organic growth for the periods indicated:
|
Three months
ended December 31,
2021
|
|
Year
ended December 31,
2021
|
Price and
surcharges
|
5.1
%
|
|
4.4 %
|
Volume
|
3.4
|
|
3.2
|
Commodity
price
|
1.4
|
|
1.1
|
Total organic
growth
|
9.9
%
|
|
8.7 %
|
Segment Results
The following table summarizes the segment results for the
periods indicated:
|
Three months ended
December 31, 2021
|
|
Three months ended
December 31, 2020
|
|
Revenue
|
|
Adjusted
EBITDA(1)
|
|
Adjusted
EBITDA
Margin(2)
|
|
Revenue
|
|
Adjusted
EBITDA(1)
|
|
Adjusted
EBITDA
Margin(2)
|
Solid waste
|
|
|
|
|
|
|
|
|
|
|
|
Canada
|
$
|
382.0
|
|
$
|
107.0
|
|
28.0
%
|
|
$
|
320.3
|
|
$
|
87.6
|
|
27.3 %
|
USA
|
811.0
|
|
250.6
|
|
30.9
|
|
671.8
|
|
211.8
|
|
31.5
|
Total solid
waste
|
1,193.0
|
|
357.6
|
|
30.0
|
|
992.1
|
|
299.4
|
|
30.2
|
Infrastructure and soil
remediation
|
136.6
|
|
22.6
|
|
16.5
|
|
132.4
|
|
16.4
|
|
12.4
|
Liquid waste
|
209.9
|
|
45.5
|
|
21.7
|
|
111.1
|
|
26.1
|
|
23.5
|
Corporate
|
—
|
|
(37.4)
|
|
—
|
|
—
|
|
(30.7)
|
|
—
|
Total
|
$
|
1,539.5
|
|
$
|
388.3
|
|
25.2
%
|
|
$
|
1,235.6
|
|
$
|
311.2
|
|
25.2 %
|
|
Year ended December
31, 2021
|
|
Year ended December
31, 2020
|
|
Revenue
|
|
Adjusted
EBITDA(1)
|
|
Adjusted
EBITDA
Margin(2)
|
|
Revenue
|
|
Adjusted
EBITDA(1)
|
|
Adjusted
EBITDA
Margin(2)
|
Solid waste
|
|
|
|
|
|
|
|
|
|
|
|
Canada
|
$
|
1,410.9
|
|
$
|
411.5
|
|
29.2
%
|
|
$
|
1,229.3
|
|
$
|
338.2
|
|
27.5 %
|
USA
|
2,992.7
|
|
948.6
|
|
31.7
|
|
2,025.8
|
|
639.2
|
|
31.6
|
Total solid
waste
|
4,403.6
|
|
1,360.1
|
|
30.9
|
|
3,255.1
|
|
977.4
|
|
30.0
|
Infrastructure and soil
remediation
|
519.5
|
|
92.2
|
|
17.7
|
|
527.3
|
|
91.6
|
|
17.4
|
Liquid waste
|
602.4
|
|
147.5
|
|
24.5
|
|
413.8
|
|
97.9
|
|
23.7
|
Corporate
|
—
|
|
(136.1)
|
|
—
|
|
—
|
|
(90.2)
|
|
—
|
Total
|
$
|
5,525.5
|
|
$
|
1,463.7
|
|
26.5
%
|
|
$
|
4,196.2
|
|
$
|
1,076.7
|
|
25.7 %
|
Net Leverage
The following table presents the calculation of Net Leverage for
the periods indicated (all amounts are in millions of dollars
unless otherwise stated):
|
December 31,
2021
|
|
December 31,
2020
|
Total long-term
debt
|
$
|
7,979.0
|
|
$
|
6,166.1
|
Deferred finance costs
and other adjustments
|
57.9
|
|
58.5
|
Total long-term debt
excluding deferred finance costs and other adjustments
|
$
|
7,921.1
|
|
$
|
6,107.6
|
Less: cash
|
(190.4)
|
|
(27.2)
|
|
7,730.7
|
|
6,080.4
|
Trailing twelve months
Adjusted EBITDA(1)
|
1,463.7
|
|
1,076.7
|
Acquisition EBITDA
Adjustments(2)
|
163.8
|
|
238.3
|
Run-Rate
EBITDA(2)
|
$
|
1,627.5
|
|
$
|
1,315.0
|
Net
Leverage(2)
|
4.75x
|
|
4.62x
|
(1)
|
A non-IFRS measure;
see accompanying Non-IFRS Reconciliation Schedule; see "Non-IFRS
Measures" for an explanation of the composition of non-IFRS
measures.
|
(2)
|
See "Non-IFRS
Measures" for an explanation of the composition of non-IFRS
measures and ratios.
|
NON-IFRS RECONCILIATION SCHEDULE
Adjusted EBITDA
The following tables provide a reconciliation of our Net Loss to
EBITDA and Adjusted EBITDA for the periods presented:
($
millions)
|
|
Three months
ended
December 31,
2021
|
|
Three months
ended
December 31,
2020
|
Net
loss(1)
|
|
$
|
(77.4)
|
|
$
|
(594.2)
|
Add:
|
|
|
|
|
Interest and other
finance costs
|
|
105.2
|
|
137.9
|
Depreciation of
property and equipment
|
|
278.9
|
|
439.7
|
Amortization of
intangible assets
|
|
126.7
|
|
107.5
|
Income tax
recovery(1)
|
|
(13.5)
|
|
(82.5)
|
EBITDA
|
|
419.9
|
|
8.4
|
Add:
|
|
|
|
|
Gain on foreign
exchange(2)
|
|
(19.1)
|
|
(112.9)
|
(Gain) loss on sale of
property and equipment
|
|
(0.8)
|
|
2.2
|
Mark-to-market loss on
Purchase Contracts(3)
|
|
30.0
|
|
355.9
|
Share-based
payments(4)
|
|
14.5
|
|
10.8
|
Impairment and other
charges
|
|
—
|
|
21.4
|
Gain on
divestiture(5)
|
|
(86.4)
|
|
—
|
Transaction
costs(6)
|
|
21.0
|
|
24.1
|
Acquisition,
rebranding and other integration costs(8)
|
|
9.2
|
|
1.3
|
Adjusted
EBITDA
|
|
$
|
388.3
|
|
$
|
311.2
|
($
millions)
|
|
Year
ended
December 31,
2021
|
|
Year
ended
December 31,
2020
|
Net
loss(1)
|
|
$
|
(606.8)
|
|
$
|
(1,102.4)
|
Add:
|
|
|
|
|
Interest and other
finance costs
|
|
434.1
|
|
597.6
|
Depreciation of
property and equipment
|
|
931.8
|
|
810.6
|
Amortization of
intangible assets
|
|
461.2
|
|
427.0
|
Income tax
recovery(1)
|
|
(106.0)
|
|
(253.4)
|
EBITDA
|
|
1,114.3
|
|
479.4
|
Add:
|
|
|
|
|
Loss
(gain) on foreign exchange(2)
|
|
16.2
|
|
(37.3)
|
Loss on
sale of property and equipment
|
|
1.9
|
|
4.6
|
Mark-to-market loss on fuel hedges
|
|
—
|
|
1.8
|
Mark-to-market loss on Purchase
Contracts(3)
|
|
349.6
|
|
449.2
|
Share-based payments(4)
|
|
45.7
|
|
37.9
|
Impairment and other charges
|
|
—
|
|
21.4
|
Gain on
divestiture(5)
|
|
(153.3)
|
|
—
|
Transaction costs(6)
|
|
64.2
|
|
60.1
|
IPO
transaction costs(7)
|
|
—
|
|
46.2
|
Acquisition, rebranding and other integration
costs(8)
|
|
25.1
|
|
11.4
|
Deferred purchase
consideration
|
|
—
|
|
2.0
|
Adjusted
EBITDA
|
|
$
|
1,463.7
|
|
$
|
1,076.7
|
(1)
|
Subsequent to the
original issuance of the December 31, 2020 annual consolidated
financial statements, GFL determined the mark-to-market loss on
Purchase Contracts should not be treated as a temporary difference
for deferred income tax purposes. As a result, to correct this
immaterial error, deferred income tax liabilities increased by
$107.5 million to $573.5 million and income tax recovery decreased
by $107.5 million to $82.5 million for the three months ended
December 31, 2020. For the year ended December 31, 2020, to correct
this immaterial error, deferred income tax liabilities increased by
$107.5 million to $573.5 million and income tax recovery decreased
by $107.5 million to $253.4 million.
|
(2)
|
Consists of
(i) non-cash gains and losses on foreign exchange and interest
rate swaps entered into in connection with our debt instruments and
(ii) gains and losses attributable to foreign exchange rate
fluctuations.
|
(3)
|
This is a non-cash
item that consists of the fair value "mark-to-market" adjustment on
the Purchase Contracts.
|
(4)
|
This is a non-cash
item and consists of the amortization of the estimated fair value
of share-based options granted to certain members of management
under share-based option plans.
|
(5)
|
Consists of gain
resulting from the divestiture of certain landfill assets, as well
as hauling and ancillary operations.
|
(6)
|
Consists of
acquisition, integration and other costs such as legal, consulting
and other fees and expenses incurred in respect of acquisitions and
financing activities completed during the applicable period. We
expect to incur similar costs in connection with other acquisitions
in the future and, under IFRS, such costs relating to acquisitions
are expensed as incurred and not capitalized. This is part
of SG&A.
|
(7)
|
Consists of costs
associated with the IPO, such as legal, audit, regulatory and other
fees and expenses incurred in connection with the IPO, as well as
underwriting fees related to the TEUs that were expensed
as incurred.
|
(8)
|
Consists of costs
related to the rebranding of equipment acquired through business
acquisitions. We expect to incur similar costs in connection with
other acquisitions in the future. This is part of cost of
sales.
|
Adjusted Net Income
The following tables provide a reconciliation of our Net Loss to
Adjusted Net Income for the periods presented:
($
millions)
|
|
Three months
ended
December 31,
2021
|
|
Three months
ended
December 31,
2020
|
Net
loss(1)
|
|
$
|
(77.4)
|
|
$
|
(594.2)
|
Add:
|
|
|
|
|
Amortization of intangible
assets(2)
|
|
126.7
|
|
107.5
|
ARO
discount rate depreciation adjustment(3)
|
|
40.1
|
|
231.7
|
Incremental depreciation of property and equipment
due to recapitalization
|
|
4.5
|
|
4.7
|
Prepayment penalties for early note
redemption(5)
|
|
—
|
|
35.5
|
Amortization of deferred financing costs
|
|
3.2
|
|
10.1
|
Mark-to-market loss on Purchase
Contracts(7)
|
|
30.0
|
|
355.9
|
Gain on
divestiture
|
|
(86.4)
|
|
—
|
Gain on
foreign exchange(8)
|
|
(19.1)
|
|
(112.9)
|
Transaction costs(9)
|
|
21.0
|
|
24.1
|
Acquisition, rebranding and other integration
costs(10)
|
|
9.2
|
|
1.3
|
Impairment and other charges
|
|
—
|
|
21.4
|
TEU
amortization expense
|
|
0.6
|
|
0.3
|
Tax
effect(11)
|
|
(26.5)
|
|
(71.0)
|
Adjusted Net
Income
|
|
$
|
25.9
|
|
$
|
14.4
|
Adjusted earnings
per share basic and diluted
|
|
$
|
0.07
|
|
$
|
0.04
|
($
millions)
|
|
Year
ended
December 31,
2021
|
|
Year
ended
December 31,
2020
|
Net
loss(1)
|
|
$
|
(606.8)
|
|
$
|
(1,102.4)
|
Add:
|
|
|
|
|
Amortization of intangible
assets(2)
|
|
461.2
|
|
427.0
|
ARO
discount rate depreciation adjustment(3)
|
|
54.9
|
|
231.7
|
Incremental depreciation of property and equipment
due to recapitalization
|
|
18.4
|
|
19.0
|
IPO
transaction costs(4)
|
|
—
|
|
46.2
|
Prepayment penalties for early note
redemption(5)
|
|
49.3
|
|
35.5
|
Other
loss on extinguishment of debt(6)
|
|
—
|
|
133.2
|
Amortization of deferred financing costs
|
|
19.7
|
|
36.1
|
Mark-to-market loss on Purchase
Contracts(7)
|
|
349.6
|
|
449.2
|
Gain on
divestiture
|
|
(153.3)
|
|
—
|
Loss
(gain) on foreign exchange(8)
|
|
16.2
|
|
(37.3)
|
Transaction costs(9)
|
|
64.2
|
|
60.1
|
Acquisition, rebranding and other integration
costs(10)
|
|
25.1
|
|
11.4
|
Impairment and other charges
|
|
—
|
|
21.4
|
TEU
amortization expense
|
|
2.0
|
|
2.5
|
Tax
effect(11)
|
|
(145.4)
|
|
(271.4)
|
Adjusted Net
Income
|
|
$
|
155.1
|
|
$
|
62.2
|
Adjusted earnings
per share basic and diluted
|
|
$
|
0.43
|
|
$
|
0.17
|
(1)
|
Subsequent to the
original issuance of the December 31, 2020 annual consolidated
financial statements, GFL determined the mark-to-market loss on
Purchase Contracts should not be treated as a temporary difference
for deferred income tax purposes. As a result, to correct this
immaterial error, deferred income tax liabilities increased by
$107.5 million to $573.5 million and income tax recovery decreased
by $107.5 million to $82.5 million for the three months ended
December 31, 2020. For the year ended December 31, 2020, to correct
this immaterial error, deferred income tax liabilities increased by
$107.5 million to $573.5 million and income tax recovery decreased
by $107.5 million to $253.4 million.
|
(2)
|
This is a non-cash
item and consists of the amortization of intangible assets such as
customer lists, municipal contracts, non-compete agreements, trade
name and other licenses.
|
(3)
|
This is a non-cash
item and consists of depreciation expense related to the difference
between the ARO calculated using the credit adjusted risk-free
discount rate required for measurement of the ARO through purchase
accounting compared to the risk-free discount rate required for
quarterly valuations.
|
(4)
|
Consists of costs
associated with the IPO, such as legal, audit, regulatory and other
fees and expenses incurred in connection with the IPO, as well as
underwriting fees related to the TEUs that were expenses as
incurred.
|
(5)
|
Consists of
prepayment penalty costs associated with the early redemption of
the 8.500% 2027 Notes and the 7.000% 2026 Notes.
|
(6)
|
This is a non-cash
item and consists of the losses associated with the early
redemption of certain notes using a portion of the net proceeds of
the IPO and the redemption of the PIK Notes as part of the
IPO.
|
(7)
|
This is a non-cash
item that consists of the fair value "mark-to-market" adjustment on
the Purchase Contracts.
|
(8)
|
Consists of (i)
non-cash gains and losses on foreign exchange and interest rate
swaps entered into in connection with our debt instruments and (ii)
gains and losses attributable to foreign exchange rate
fluctuations.
|
(9)
|
Consists of
acquisition, integration and other costs such as legal, consulting
and other fees and expenses incurred in respect of acquisitions and
financing activities completed during the applicable period. We
expect to incur similar costs in connection with other acquisitions
in the future and, under IFRS, such costs relating to acquisitions
are expensed as incurred and not capitalized. This is part of
SG&A.
|
(10)
|
Consists of costs
related to the rebranding of equipment acquired through business
acquisitions. We expect to incur similar costs in connection with
other acquisitions in the future. This is part of cost of
sales.
|
(11)
|
Consists of the tax
effect of the adjustments to net income (loss).
|
Adjusted Cash Flows from Operating Activities and Adjusted
Free Cash Flow
The tables below set forth the reconciliation of our cash flows
from operating activities to Adjusted Cash Flows from Operating
Activities and Adjusted Free Cash Flow for the periods
presented:
($
millions)
|
|
Three months
ended
December 31,
2021
|
|
Three months
ended
December 31,
2020
|
Cash flows from
operating activities
|
|
$
|
283.8
|
|
$
|
163.5
|
Add:
|
|
|
|
|
Prepayment penalties
for early note redemption(2)
|
|
—
|
|
35.5
|
Transaction
costs(4)
|
|
21.0
|
|
24.1
|
Acquisition,
rebranding and other integration costs(5)
|
|
9.2
|
|
1.3
|
M&A related net
working capital investment(6)
|
|
5.6
|
|
15.9
|
Cash interest paid on
TEUs(8)
|
|
0.9
|
|
1.4
|
Adjusted Cash Flows
from Operating Activities
|
|
320.5
|
|
241.7
|
Less:
|
|
|
|
|
Proceeds from asset
divestitures(9)
|
|
84.9
|
|
—
|
Proceeds on disposal
of assets
|
|
4.4
|
|
5.5
|
Purchase of property
and equipment and intangible assets
|
|
(229.4)
|
|
(122.6)
|
Adjusted Free Cash
Flow
|
|
$
|
180.4
|
|
$
|
124.6
|
($
millions)
|
|
Year
ended
December 31,
2021
|
|
Year
ended
December 31,
2020
|
Cash flows from
operating activities
|
|
$
|
897.9
|
|
$
|
502.2
|
Add:
|
|
|
|
|
Costs associated with
IPO related debt repayments(1)
|
|
—
|
|
106.6
|
Prepayment penalties
for early note redemption(2)
|
|
49.3
|
|
35.5
|
IPO transaction
costs(3)
|
|
—
|
|
46.2
|
Transaction
costs(4)
|
|
64.2
|
|
60.1
|
Acquisition,
rebranding and other integration costs(5)
|
|
25.1
|
|
11.4
|
M&A related net
working capital investment(6)
|
|
41.0
|
|
15.9
|
Tax refund from CARES
Act(7)
|
|
(1.5)
|
|
(12.5)
|
Cash interest paid on
TEUs(8)
|
|
4.2
|
|
4.9
|
Deferred purchase
consideration
|
|
—
|
|
2.0
|
Adjusted Cash Flows
from Operating Activities
|
|
1,080.2
|
|
772.3
|
Less:
|
|
|
|
|
Proceeds from asset
divestitures(9)
|
|
242.5
|
|
—
|
Normalization for
excess proceeds from asset divestitures(10)
|
|
(152.4)
|
|
—
|
Proceeds on disposal
of assets
|
|
17.2
|
|
16.0
|
Purchase of property
and equipment and intangible assets
|
|
(647.2)
|
|
(428.3)
|
Adjusted Free Cash
Flow
|
|
$
|
540.3
|
|
$
|
360.0
|
(1)
|
Consists of costs,
including related fees, premiums, accrued interest and the
termination of swap arrangements, associated with the
extinguishment of certain notes and the PIK Notes.
|
(2)
|
Consists of
prepayment penalty costs associated with the early redemption of
the 8.500% 2027 Notes and the 7.000% 2026 Notes.
|
(3)
|
Consists of costs
associated with the IPO, such as legal, audit, regulatory and other
fees and expenses incurred in connection with the IPO, as well as
underwriting fees related to the TEUs that were expensed
as incurred.
|
(4)
|
Consists of
acquisition, integration and other costs such as legal, consulting
and other fees and expenses incurred in respect of acquisitions and
financing activities completed during the applicable period. We
expect to incur similar costs in connection with other acquisitions
in the future and, under IFRS, such costs relating to acquisitions
are expensed as incurred and not capitalized. This is part
of SG&A.
|
(5)
|
Consists of costs
related to the rebranding of equipment acquired through business
acquisitions. We expect to incur similar costs in connection with
other acquisitions in the future. This is part of cost of
sales.
|
(6)
|
Consists of net
non-cash working capital in the period in relation to
acquisitions.
|
(7)
|
Consists of tax
refunds received related to loss carry-backs under the CARES Act
applied to prior year taxable income.
|
(8)
|
Consists of interest
paid in cash on the Amortizing Notes.
|
(9)
|
Consists of proceeds
on divestiture of certain landfill assets, as well as hauling and
ancillary operations.
|
(10)
|
Consists of excess
proceeds from divestiture of certain landfill assets, as well as
hauling and ancillary operations. Amount has been included on the
basis that the excess proceeds will be redeployed into the business
in 2022 and to reflect a normalized level of capital
expenditures.
|
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SOURCE GFL Environmental Inc.