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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Advanced Disposal Services Inc | NYSE:ADSW | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 30.30 | 0 | 01:00:00 |
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|
|
☒
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
|
Delaware
|
|
90-0875845
|
(State or other jurisdiction
of incorporation)
|
|
(IRS Employer
Identification No.)
|
|
Title of each class
|
|
Trading symbol
|
|
Name of each exchange on which registered
|
Common Stock, $0.01 par value
|
|
ADSW
|
|
New York Stock Exchange
|
Large accelerated filer
|
|
☒
|
|
Accelerated filer
|
|
☐
|
|
|
|
|
|||
Non-accelerated filer
|
|
☐
|
|
Smaller reporting company
|
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☐
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|
|
|
Emerging growth company
|
|
☐
|
|
•
|
our ability to achieve future profitability will depend on us executing our strategy and controlling costs;
|
•
|
future results may be impacted by the expiration of net operating losses (NOLs);
|
•
|
our tax position may be affected by recent changes in U.S. tax law;
|
•
|
operating in a highly competitive industry and the inability to compete effectively with larger and better capitalized companies and governmental service providers;
|
•
|
our results are vulnerable to economic conditions;
|
•
|
we may lose contracts through competitive bidding, early termination or governmental action;
|
•
|
some of our customers, including governmental entities, have suffered financial difficulties affecting their credit risk, which could negatively impact our operating results;
|
•
|
our financial and operating performance may be affected by the inability, in some instances, to renew or expand existing landfill permits or acquire new landfills. Further, the cost of operation and/or future construction of our existing landfills may become economically unfeasible causing us to abandon or cease operations;
|
•
|
we could be precluded from maintaining permits or entering into certain contracts if we are unable to obtain sufficient third-party financial assurance or adequate insurance coverage;
|
•
|
our accruals for our landfill site closure, post-closure and contamination related costs may be inadequate;
|
•
|
our cash flow may not be sufficient to finance our high level of capital expenditures;
|
•
|
our acquisitions, including our ability to integrate acquired businesses, or that acquired businesses may have unexpected risks or liabilities;
|
•
|
the seasonal nature of our business and "event-driven" waste projects that could cause our results to fluctuate;
|
•
|
adverse and destructive weather conditions that could result in higher fuel costs, higher labor costs, reduced municipal contract productivity and higher disposal costs;
|
•
|
we may be subject in the normal course of business to judicial, administrative or other third-party proceedings that could interrupt or limit our operations, result in adverse judgments, settlements or fines and create negative publicity;
|
•
|
fuel supply and prices may fluctuate significantly and we may not be able to pass on cost increases to our customers;
|
•
|
fluctuations in the prices of commodities may adversely affect our financial condition, results of operations and cash flows;
|
•
|
increases in labor and disposal costs and related transportation costs could adversely impact our financial results;
|
•
|
efforts by labor unions could divert management attention and adversely affect operating results;
|
•
|
we depend significantly on the services of the members of our senior, regional and local management teams, and the departure of any of those persons could cause our operating results to suffer;
|
•
|
we are increasingly dependent on technology in our operations and, if our technology fails, our business could be adversely affected;
|
•
|
a cybersecurity incident could negatively impact our business and our relationships with customers;
|
•
|
operational and safety risks, including the risk of personal injury to employees and others;
|
•
|
we are subject to substantial governmental regulation and failure to comply with these requirements, as well as enforcement actions and litigation arising from an actual or perceived breach of such requirements, could subject us to fines, penalties and judgments, and impose limits on our ability to operate and expand;
|
•
|
our operations being subject to environmental, health and safety laws and regulations, as well as contractual obligations that may result in significant liabilities;
|
•
|
future changes in laws or renewed enforcement of laws regulating the flow of solid waste in interstate commerce could adversely affect our operating results;
|
•
|
fundamental change in the waste management industry as traditional waste streams are increasingly viewed as renewable resources and changes in laws and environmental policies may limit the items that enter the waste stream, any of which may adversely impact volumes and tipping fees at our landfills. Alternatives to landfill disposal may cause our revenues and operating results to decline;
|
•
|
risks associated with our substantial indebtedness and working capital deficit;
|
•
|
risks associated with our ability to implement our growth strategy as and when planned; and
|
•
|
the other risks described in the "Risk Factors" section of our 2018 Annual Report on Form 10-K and our Quarterly Report on Form 10-Q for the three months ended March 31, 2019.
|
|
|
|
|
||
|
|
|
Item 1.
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
Item 2.
|
||
|
|
|
Item 3.
|
||
|
|
|
Item 4.
|
||
|
|
|
|
||
|
|
|
Item 1.
|
||
|
|
|
Item 1a.
|
||
|
|
|
Item 2.
|
||
|
|
|
Item 3.
|
||
|
|
|
Item 4.
|
||
|
|
|
Item 5.
|
||
|
|
|
Item 6.
|
||
|
|
|
|
(in millions, except share data)
|
September 30,
2019 |
|
December 31,
2018 |
||||
Assets
|
|
|
|
||||
Current assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
11.8
|
|
|
$
|
6.8
|
|
Accounts receivable, net of allowance for doubtful accounts of $4.6 and $4.6, respectively
|
212.4
|
|
|
211.4
|
|
||
Prepaid expenses and other current assets
|
34.1
|
|
|
44.8
|
|
||
Total current assets
|
258.3
|
|
|
263.0
|
|
||
Other assets
|
50.8
|
|
|
31.7
|
|
||
Property and equipment, net of accumulated depreciation of $1,684.1 and $1,540.7, respectively
|
1,773.2
|
|
|
1,761.4
|
|
||
Goodwill
|
1,224.8
|
|
|
1,215.1
|
|
||
Other intangible assets, net of accumulated amortization of $310.3 and $286.9, respectively
|
241.1
|
|
|
257.1
|
|
||
Total assets
|
$
|
3,548.2
|
|
|
$
|
3,528.3
|
|
Liabilities and Stockholders' Equity
|
|
|
|
||||
Current liabilities
|
|
|
|
||||
Accounts payable
|
$
|
115.1
|
|
|
$
|
107.8
|
|
Accrued expenses
|
134.9
|
|
|
117.7
|
|
||
Deferred revenue
|
70.4
|
|
|
72.5
|
|
||
Current maturities of landfill retirement obligations
|
27.1
|
|
|
18.6
|
|
||
Current maturities of long-term debt
|
73.4
|
|
|
85.9
|
|
||
Total current liabilities
|
420.9
|
|
|
402.5
|
|
||
Other long-term liabilities
|
85.4
|
|
|
76.7
|
|
||
Long-term debt, less current maturities
|
1,800.6
|
|
|
1,817.1
|
|
||
Accrued landfill retirement obligations, less current maturities
|
231.1
|
|
|
229.4
|
|
||
Deferred income taxes
|
88.5
|
|
|
91.1
|
|
||
Total liabilities
|
2,626.5
|
|
|
2,616.8
|
|
||
Equity
|
|
|
|
||||
Common stock: $.01 par value, 1,000,000,000 shares authorized, 89,200,011 and 88,685,920 issued including shares held in treasury, respectively
|
0.9
|
|
|
0.9
|
|
||
Treasury stock at cost, 18,636 and 2,274 shares, respectively
|
(0.6
|
)
|
|
—
|
|
||
Additional paid-in capital
|
1,519.6
|
|
|
1,501.7
|
|
||
Accumulated deficit
|
(594.9
|
)
|
|
(591.1
|
)
|
||
Accumulated other comprehensive loss
|
(3.3
|
)
|
|
—
|
|
||
Total stockholders' equity
|
921.7
|
|
|
911.5
|
|
||
Total liabilities and stockholders' equity
|
$
|
3,548.2
|
|
|
$
|
3,528.3
|
|
(in millions, except share and per share data)
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Service revenues
|
$
|
419.5
|
|
|
$
|
400.6
|
|
|
$
|
1,222.5
|
|
|
$
|
1,163.4
|
|
Operating costs and expenses
|
|
|
|
|
|
|
|
||||||||
Operating
|
270.1
|
|
|
268.2
|
|
|
796.7
|
|
|
755.1
|
|
||||
Selling, general and administrative
|
48.1
|
|
|
45.4
|
|
|
160.0
|
|
|
135.4
|
|
||||
Depreciation and amortization
|
70.4
|
|
|
68.9
|
|
|
206.6
|
|
|
202.8
|
|
||||
Acquisition and development costs
|
0.1
|
|
|
0.1
|
|
|
1.1
|
|
|
0.4
|
|
||||
Loss (gain) on disposal of assets and asset impairments
|
1.3
|
|
|
0.5
|
|
|
2.0
|
|
|
(2.8
|
)
|
||||
Total operating costs and expenses
|
390.0
|
|
|
383.1
|
|
|
1,166.4
|
|
|
1,090.9
|
|
||||
Operating income
|
29.5
|
|
|
17.5
|
|
|
56.1
|
|
|
72.5
|
|
||||
Other (expense) income
|
|
|
|
|
|
|
|
||||||||
Interest expense
|
(25.0
|
)
|
|
(24.4
|
)
|
|
(77.2
|
)
|
|
(71.0
|
)
|
||||
Other income (expense), net
|
0.5
|
|
|
0.8
|
|
|
(2.3
|
)
|
|
8.7
|
|
||||
Total other expense
|
(24.5
|
)
|
|
(23.6
|
)
|
|
(79.5
|
)
|
|
(62.3
|
)
|
||||
Income (loss) before income taxes
|
5.0
|
|
|
(6.1
|
)
|
|
(23.4
|
)
|
|
10.2
|
|
||||
Income tax expense (benefit)
|
1.4
|
|
|
(1.2
|
)
|
|
(20.0
|
)
|
|
3.3
|
|
||||
Net income (loss)
|
$
|
3.6
|
|
|
$
|
(4.9
|
)
|
|
$
|
(3.4
|
)
|
|
$
|
6.9
|
|
|
|
|
|
|
|
|
|
||||||||
Net income (loss) attributable to common stockholders per share
|
|
|
|
|
|
|
|
||||||||
Basic income (loss) per share
|
$
|
0.04
|
|
|
$
|
(0.06
|
)
|
|
$
|
(0.04
|
)
|
|
$
|
0.08
|
|
Diluted income (loss) per share
|
$
|
0.04
|
|
|
$
|
(0.06
|
)
|
|
$
|
(0.04
|
)
|
|
$
|
0.08
|
|
Basic average shares outstanding
|
89,019,841
|
|
|
88,614,747
|
|
|
88,867,559
|
|
|
88,562,445
|
|
||||
Diluted average shares outstanding
|
90,932,142
|
|
|
88,614,747
|
|
|
88,867,559
|
|
|
89,326,755
|
|
(in millions)
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Net income (loss)
|
$
|
3.6
|
|
|
$
|
(4.9
|
)
|
|
$
|
(3.4
|
)
|
|
$
|
6.9
|
|
Change in fair value of interest rate caps, net of tax for the three months ended September 30, 2019 and 2018 of $0.2 and ($0.3), respectively and for the nine months ended September 30, 2019 and 2018 of $1.5 and ($1.4), respectively
|
(0.4
|
)
|
|
0.7
|
|
|
(3.7
|
)
|
|
3.9
|
|
||||
Comprehensive income (loss)
|
$
|
3.2
|
|
|
$
|
(4.2
|
)
|
|
$
|
(7.1
|
)
|
|
$
|
10.8
|
|
(in millions, except share data)
|
Common Stock
|
|
Treasury Stock
|
|
Additional Paid-In Capital
|
|
Accumulated Deficit
|
|
Accumulated
Other Comprehensive (Loss) Income |
|
Total Stockholders' Equity
|
||||||||||||||||||
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
|
|
|
||||||||||||||||||
Balance at December 31, 2017
|
88,493,468
|
|
|
$
|
0.9
|
|
|
2,274
|
|
|
$
|
—
|
|
|
$
|
1,487.4
|
|
|
$
|
(603.3
|
)
|
|
$
|
(0.4
|
)
|
|
$
|
884.6
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2.1
|
|
|
—
|
|
|
2.1
|
|
||||||
Stock-based compensation
|
22,565
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2.5
|
|
|
—
|
|
|
—
|
|
|
2.5
|
|
||||||
Stock option exercises
|
21,295
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.3
|
|
|
—
|
|
|
—
|
|
|
0.3
|
|
||||||
Unrealized loss resulting from change in fair value of derivative instruments, net of tax of $0.7
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2.2
|
|
|
2.2
|
|
||||||
Impact of implementing new revenue recognition standard, net of tax of ($1.1)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2.8
|
|
|
—
|
|
|
2.8
|
|
||||||
Balance at March 31, 2018
|
88,537,328
|
|
|
$
|
0.9
|
|
|
2,274
|
|
|
$
|
—
|
|
|
$
|
1,490.2
|
|
|
$
|
(598.4
|
)
|
|
$
|
1.8
|
|
|
$
|
894.5
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9.7
|
|
|
—
|
|
|
9.7
|
|
||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2.4
|
|
|
—
|
|
|
—
|
|
|
2.4
|
|
||||||
Stock option exercises
|
40,323
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.7
|
|
|
—
|
|
|
—
|
|
|
0.7
|
|
||||||
Unrealized loss resulting from change in fair value of derivative instruments, net of tax of ($0.4)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1.0
|
|
|
1.0
|
|
||||||
Balance at June 30, 2018
|
88,577,651
|
|
|
$
|
0.9
|
|
|
2,274
|
|
|
$
|
—
|
|
|
$
|
1,493.3
|
|
|
$
|
(588.7
|
)
|
|
$
|
2.8
|
|
|
$
|
908.3
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4.9
|
)
|
|
—
|
|
|
(4.9
|
)
|
||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3.6
|
|
|
—
|
|
|
—
|
|
|
3.6
|
|
||||||
Stock option exercises
|
79,195
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1.5
|
|
|
—
|
|
|
—
|
|
|
1.5
|
|
||||||
Unrealized loss resulting from change in fair value of derivative instruments, net of tax of ($0.3)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.7
|
|
|
0.7
|
|
||||||
Balance at September 30, 2018
|
88,656,846
|
|
|
$
|
0.9
|
|
|
2,274
|
|
|
$
|
—
|
|
|
$
|
1,498.4
|
|
|
$
|
(593.6
|
)
|
|
$
|
3.5
|
|
|
$
|
909.2
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2.5
|
|
|
—
|
|
|
2.5
|
|
||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2.7
|
|
|
—
|
|
|
—
|
|
|
2.7
|
|
||||||
Stock option exercises
|
29,074
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.6
|
|
|
—
|
|
|
—
|
|
|
0.6
|
|
||||||
Unrealized loss resulting from change in fair value of derivative instruments, net of tax of $1.4
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3.5
|
)
|
|
(3.5
|
)
|
||||||
Balance at December 31, 2018
|
88,685,920
|
|
|
$
|
0.9
|
|
|
2,274
|
|
|
$
|
—
|
|
|
$
|
1,501.7
|
|
|
$
|
(591.1
|
)
|
|
$
|
—
|
|
|
$
|
911.5
|
|
|
|
|
|
|
|
|
|
|
Additional Paid-In Capital
|
|
Accumulated Deficit
|
|
Accumulated
Other Comprehensive (Loss) Income |
|
Total Stockholders' Equity
|
||||||||||||||
(in millions, except share data)
|
Common Stock
|
|
Treasury Stock
|
|
|
|
|
||||||||||||||||||||||
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
|
|
|
||||||||||||||||||
Balance at December 31, 2018
|
88,685,920
|
|
|
$
|
0.9
|
|
|
2,274
|
|
|
$
|
—
|
|
|
$
|
1,501.7
|
|
|
$
|
(591.1
|
)
|
|
$
|
—
|
|
|
$
|
911.5
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6.0
|
)
|
|
—
|
|
|
(6.0
|
)
|
||||||
Stock-based compensation
|
18,735
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4.1
|
|
|
—
|
|
|
—
|
|
|
4.1
|
|
||||||
Stock option exercises
|
90,807
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1.9
|
|
|
—
|
|
|
—
|
|
|
1.9
|
|
||||||
Unrealized loss resulting from change in fair value of derivative instruments, net of tax of $0.8
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2.0
|
)
|
|
$
|
(2.0
|
)
|
|||||
Impact of implementing new derivatives standard, net of tax of ($0.2)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.4
|
)
|
|
0.4
|
|
|
$
|
—
|
|
|||||
Balance at March 31, 2019
|
88,795,462
|
|
|
$
|
0.9
|
|
|
2,274
|
|
|
$
|
—
|
|
|
$
|
1,507.7
|
|
|
$
|
(597.5
|
)
|
|
$
|
(1.6
|
)
|
|
$
|
909.5
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1.0
|
)
|
|
—
|
|
|
(1.0
|
)
|
||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2.2
|
|
|
—
|
|
|
—
|
|
|
2.2
|
|
||||||
Stock option exercises and performance stock units vested
|
138,781
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2.0
|
|
|
—
|
|
|
—
|
|
|
2.0
|
|
||||||
Stock repurchases (a)
|
—
|
|
|
—
|
|
|
16,362
|
|
|
$
|
(0.6
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
(0.6
|
)
|
|||
Unrealized loss resulting from change in fair value of derivative instruments, net of tax of $0.5
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1.3
|
)
|
|
(1.3
|
)
|
||||||
Balance at June 30, 2019
|
88,934,243
|
|
|
$
|
0.9
|
|
|
18,636
|
|
|
$
|
(0.6
|
)
|
|
$
|
1,511.9
|
|
|
$
|
(598.5
|
)
|
|
$
|
(2.9
|
)
|
|
$
|
910.8
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3.6
|
|
|
—
|
|
|
$
|
3.6
|
|
|||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2.0
|
|
|
—
|
|
|
—
|
|
|
$
|
2.0
|
|
|||||
Stock option exercises
|
265,768
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5.7
|
|
|
—
|
|
|
—
|
|
|
$
|
5.7
|
|
|||||
Unrealized loss resulting from change in fair value of derivative instruments, net of tax of $0.2
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.4
|
)
|
|
(0.4
|
)
|
||||||
Balance at September 30, 2019
|
89,200,011
|
|
|
$
|
0.9
|
|
|
18,636
|
|
|
$
|
(0.6
|
)
|
|
$
|
1,519.6
|
|
|
$
|
(594.9
|
)
|
|
$
|
(3.3
|
)
|
|
$
|
921.7
|
|
(in millions)
|
Nine Months Ended September 30,
|
||||||
|
2019
|
|
2018
|
||||
Cash flows from operating activities
|
|
|
|
||||
Net (loss) income
|
$
|
(3.4
|
)
|
|
$
|
6.9
|
|
Adjustments to reconcile net (loss) income to net cash provided by operating activities
|
|
|
|
||||
Depreciation and amortization
|
206.6
|
|
|
202.8
|
|
||
Change in fair value of derivative instruments
|
5.8
|
|
|
(4.8
|
)
|
||
Amortization of debt issuance costs and original issue discount
|
4.3
|
|
|
5.0
|
|
||
Accretion on landfill retirement obligations
|
13.2
|
|
|
11.4
|
|
||
Other accretion and amortization
|
5.3
|
|
|
3.2
|
|
||
Provision for doubtful accounts
|
4.2
|
|
|
3.6
|
|
||
Loss (gain) on disposition of property and equipment
|
2.0
|
|
|
(2.6
|
)
|
||
Stock based compensation
|
8.3
|
|
|
8.5
|
|
||
Deferred tax (benefit) expense
|
(16.7
|
)
|
|
3.2
|
|
||
Earnings in equity investee
|
(1.2
|
)
|
|
(1.0
|
)
|
||
Write-off of 2012 Veolia acquisition related indemnification receivable
|
3.9
|
|
|
—
|
|
||
Changes in operating assets and liabilities, net of businesses acquired
|
|
|
|
||||
Increase in accounts receivable
|
(4.0
|
)
|
|
(20.5
|
)
|
||
Decrease in prepaid expenses and other current assets
|
4.8
|
|
|
6.3
|
|
||
Decrease (increase) in other assets
|
2.1
|
|
|
(9.0
|
)
|
||
Increase in accounts payable
|
0.2
|
|
|
16.7
|
|
||
Increase in accrued expenses
|
13.4
|
|
|
8.1
|
|
||
Decrease in deferred revenue
|
(2.1
|
)
|
|
(0.4
|
)
|
||
(Decrease) increase in other long-term liabilities
|
(4.7
|
)
|
|
12.3
|
|
||
Capping, closure and post-closure obligations
|
(12.8
|
)
|
|
(15.3
|
)
|
||
Net cash provided by operating activities
|
229.2
|
|
|
234.4
|
|
||
Cash flows from investing activities
|
|
|
|
||||
Purchases of property and equipment and landfill construction and development
|
(157.6
|
)
|
|
(133.3
|
)
|
||
Proceeds from sale of property and equipment and insurance recoveries
|
3.7
|
|
|
7.3
|
|
||
Acquisition of businesses, net of cash acquired
|
(27.1
|
)
|
|
(6.1
|
)
|
||
Net cash used in investing activities
|
(181.0
|
)
|
|
(132.1
|
)
|
||
Cash flows from financing activities
|
|
|
|
||||
Proceeds from borrowings on debt instruments
|
140.9
|
|
|
84.0
|
|
||
Repayment on debt instruments, including finance leases
|
(193.1
|
)
|
|
(187.3
|
)
|
||
Proceeds from issuance of common stock net of stock repurchases
|
9.0
|
|
|
2.5
|
|
||
Net cash used in financing activities
|
(43.2
|
)
|
|
(100.8
|
)
|
||
Net increase in cash and cash equivalents
|
5.0
|
|
|
1.5
|
|
||
Cash and cash equivalents, beginning of period
|
6.8
|
|
|
6.8
|
|
||
Cash and cash equivalents, end of period
|
$
|
11.8
|
|
|
$
|
8.3
|
|
1.
|
Business Operations
|
2.
|
Basis of Presentation
|
3.
|
Revenue Recognition
|
4.
|
Landfill Liabilities
|
Balance at December 31, 2017
|
$
|
225.9
|
|
Increase in retirement obligation
|
9.7
|
|
|
Accretion of closure and post-closure costs
|
17.0
|
|
|
Acquisition
|
4.9
|
|
|
Asset retirement obligation adjustments
|
10.7
|
|
|
Costs incurred
|
(20.2
|
)
|
|
Balance at December 31, 2018
|
248.0
|
|
|
Increase in retirement obligation
|
8.4
|
|
|
Accretion of closure and post-closure costs
|
13.2
|
|
|
Costs incurred
|
(11.4
|
)
|
|
Balance at September 30, 2019
|
258.2
|
|
|
Less: Current portion
|
(27.1
|
)
|
|
|
$
|
231.1
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Numerator:
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Net income (loss)
|
$
|
3.6
|
|
|
$
|
(4.9
|
)
|
|
$
|
(3.4
|
)
|
|
$
|
6.9
|
|
Denominator:
|
|
|
|
|
|
|
|
|
||||||||
|
Average common shares outstanding
|
89,019,841
|
|
|
88,614,747
|
|
|
88,867,559
|
|
|
88,562,445
|
|
||||
|
Other potentially dilutive common shares
|
1,912,301
|
|
|
—
|
|
|
—
|
|
|
764,310
|
|
||||
|
Average common shares outstanding, assuming dilution
|
90,932,142
|
|
|
88,614,747
|
|
|
88,867,559
|
|
|
89,326,755
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Basic net income (loss) per share
|
$
|
0.04
|
|
|
$
|
(0.06
|
)
|
|
$
|
(0.04
|
)
|
|
$
|
0.08
|
|
|
Diluted net income (loss) per share
|
$
|
0.04
|
|
|
$
|
(0.06
|
)
|
|
$
|
(0.04
|
)
|
|
$
|
0.08
|
|
6.
|
Debt
|
|
September 30,
2019 |
|
December 31,
2018 |
||||
Revolving line of credit with lenders (Revolver), interest at applicable rate plus margin, as defined (6.75% and 6.69% at September 30, 2019 and December 31, 2018, respectively) due quarterly; balance due at maturity in November 2021
|
$
|
25.0
|
|
|
$
|
37.0
|
|
Term loans (Term Loan B); quarterly payments of $3.75 commencing March 31, 2017 through September 30, 2023 with final payment due November 10, 2023; interest at an alternate base rate or adjusted LIBOR rate with a 0.75% floor plus an applicable margin
|
1,376.3
|
|
|
1,387.5
|
|
||
Senior notes (Senior Notes) payable; interest at 5.625% payable in arrears semi-annually commencing May 15, 2017; maturing on November 15, 2024
|
425.0
|
|
|
425.0
|
|
||
Finance lease obligations, maturing through 2024
|
60.9
|
|
|
69.2
|
|
||
Other debt
|
8.2
|
|
|
9.5
|
|
||
|
1,895.4
|
|
|
1,928.2
|
|
||
Less: Original issue discount and debt issuance costs classified as a reduction to long-term debt
|
(21.4
|
)
|
|
(25.2
|
)
|
||
Less: Current portion
|
(73.4
|
)
|
|
(85.9
|
)
|
||
|
$
|
1,800.6
|
|
|
$
|
1,817.1
|
|
|
|
Balance Sheet Location
|
|
September 30, 2019
|
|
December 31,
2018 |
||||
Derivatives Designated as Hedging Instruments
|
|
|
|
|
|
|
|
|
||
2017 Interest rate caps
|
|
Other assets
|
|
$
|
—
|
|
|
$
|
0.7
|
|
2017 Interest rate caps
|
|
Accrued expenses
|
|
(2.2
|
)
|
|
—
|
|
||
2017 Interest rate caps
|
|
Other long-term liabilities
|
|
(2.4
|
)
|
|
—
|
|
||
Derivatives Not Designated as Hedging Instruments
|
|
|
|
|
|
|
|
|
||
2016 Interest rate caps
|
|
Prepaid expenses and other current assets
|
|
—
|
|
|
5.8
|
|
||
Total derivatives
|
|
|
|
$
|
(4.6
|
)
|
|
$
|
6.5
|
|
9.
|
Commitments and Contingencies
|
|
Service
Revenues |
|
Operating
Income (Loss) |
|
Depreciation
and Amortization |
||||||
|
|
|
|
|
|
||||||
Three Months Ended September 30, 2019
|
|
|
|
|
|
||||||
South
|
$
|
160.6
|
|
|
$
|
19.9
|
|
|
$
|
21.8
|
|
East
|
111.4
|
|
|
10.1
|
|
|
21.7
|
|
|||
Midwest
|
147.5
|
|
|
19.0
|
|
|
25.5
|
|
|||
Corporate
|
—
|
|
|
(19.5
|
)
|
|
1.4
|
|
|||
|
$
|
419.5
|
|
|
$
|
29.5
|
|
|
$
|
70.4
|
|
|
|
|
|
|
|
||||||
Three Months Ended September 30, 2018
|
|
|
|
|
|
||||||
South
|
$
|
154.0
|
|
|
$
|
7.3
|
|
|
$
|
21.0
|
|
East
|
104.8
|
|
|
6.1
|
|
|
20.4
|
|
|||
Midwest
|
141.8
|
|
|
20.2
|
|
|
26.4
|
|
|||
Corporate
|
—
|
|
|
(16.1
|
)
|
|
1.1
|
|
|||
|
$
|
400.6
|
|
|
$
|
17.5
|
|
|
$
|
68.9
|
|
|
|
|
|
|
|
||||||
Nine Months Ended September 30, 2019
|
|
|
|
|
|
||||||
South
|
$
|
482.5
|
|
|
$
|
58.3
|
|
|
$
|
66.2
|
|
East
|
315.8
|
|
|
18.6
|
|
|
62.4
|
|
|||
Midwest
|
424.2
|
|
|
52.0
|
|
|
74.0
|
|
|||
Corporate
|
—
|
|
|
(72.8
|
)
|
|
4.0
|
|
|||
|
$
|
1,222.5
|
|
|
$
|
56.1
|
|
|
$
|
206.6
|
|
|
|
|
|
|
|
||||||
Nine Months Ended September 30, 2018
|
|
|
|
|
|
||||||
South
|
$
|
455.5
|
|
|
$
|
54.6
|
|
|
$
|
64.2
|
|
East
|
298.3
|
|
|
17.0
|
|
|
58.8
|
|
|||
Midwest
|
409.6
|
|
|
52.7
|
|
|
76.4
|
|
|||
Corporate
|
—
|
|
|
(51.8
|
)
|
|
3.4
|
|
|||
|
$
|
1,163.4
|
|
|
$
|
72.5
|
|
|
$
|
202.8
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Residential Collection Revenue
|
|
$
|
101.8
|
|
|
$
|
100.3
|
|
|
$
|
304.8
|
|
|
$
|
301.5
|
|
Commercial Collection Revenue
|
|
100.1
|
|
|
95.4
|
|
|
297.6
|
|
|
281.5
|
|
||||
Rolloff Collection Revenue
|
|
70.0
|
|
|
66.7
|
|
|
201.6
|
|
|
192.7
|
|
||||
Disposal Revenue
|
|
78.2
|
|
|
72.9
|
|
|
216.3
|
|
|
203.4
|
|
||||
Fuel and Environmental Charges
|
|
28.7
|
|
|
30.3
|
|
|
85.4
|
|
|
86.3
|
|
||||
Sale of Recyclables
|
|
1.4
|
|
|
3.7
|
|
|
6.8
|
|
|
13.0
|
|
||||
Other Revenue
|
|
39.3
|
|
|
31.3
|
|
|
110.0
|
|
|
85.0
|
|
||||
|
|
$
|
419.5
|
|
|
$
|
400.6
|
|
|
$
|
1,222.5
|
|
|
$
|
1,163.4
|
|
|
|
|
Fair Value Measurement at September 30, 2019
Reporting Date Using |
||||||||||||
|
Total
|
|
Quoted Prices
in Active Markets for Identical Assets (Level 1) |
|
Significant
Other Observable Inputs (Level 2) |
|
Carrying
Value |
||||||||
|
|
|
|
|
|
|
|
||||||||
Recurring fair value measurements
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
$
|
11.8
|
|
|
$
|
11.8
|
|
|
$
|
—
|
|
|
$
|
11.8
|
|
Interest rate caps - liability position
|
(4.6
|
)
|
|
—
|
|
|
(4.6
|
)
|
|
(4.6
|
)
|
||||
Total recurring fair value measurements
|
$
|
7.2
|
|
|
$
|
11.8
|
|
|
$
|
(4.6
|
)
|
|
$
|
7.2
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
Fair Value Measurement at December 31, 2018
Reporting Date Using |
||||||||||||
|
Total
|
|
Quoted Prices
in Active Markets for Identical Assets (Level 1) |
|
Significant
Other Observable Inputs (Level 2) |
|
Carrying
Value |
||||||||
|
|
|
|
|
|
|
|
||||||||
Recurring fair value measurements
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
$
|
6.8
|
|
|
$
|
6.8
|
|
|
$
|
—
|
|
|
$
|
6.8
|
|
Interest rate caps - asset position
|
6.5
|
|
|
—
|
|
|
6.5
|
|
|
6.5
|
|
||||
Total recurring fair value measurements
|
$
|
13.3
|
|
|
$
|
6.8
|
|
|
$
|
6.5
|
|
|
$
|
13.3
|
|
|
September 30,
2019 |
|
December 31,
2018 |
||||
Revolver
|
$
|
25.0
|
|
|
$
|
37.0
|
|
Senior Notes
|
445.3
|
|
|
418.6
|
|
||
Term Loan B
|
1,381.4
|
|
|
1,332.0
|
|
||
|
$
|
1,851.7
|
|
|
$
|
1,787.6
|
|
|
|
Three Months Ended September 30, 2019
|
|
Nine Months Ended September 30, 2019
|
||||
Lease cost
|
|
|
|
|
||||
Finance lease cost
|
|
|
|
|
||||
Amortization of right-of-use assets
|
|
$
|
3.9
|
|
|
$
|
11.8
|
|
Interest on lease liabilities
|
|
0.8
|
|
|
2.4
|
|
||
Operating lease cost
|
|
1.4
|
|
|
4.3
|
|
||
Short-term lease cost
|
|
1.8
|
|
|
4.9
|
|
||
Total lease cost
|
|
$
|
7.9
|
|
|
$
|
23.4
|
|
|
|
|
|
|
||||
Other information
|
|
|
|
|
||||
Cash paid for amounts included in the measurement of lease liabilities
|
|
|
|
|
||||
Operating cash flows from finance leases
|
|
$
|
0.8
|
|
|
$
|
2.4
|
|
Operating cash flows from operating leases
|
|
$
|
1.4
|
|
|
$
|
4.3
|
|
Financing cash flows from finance leases
|
|
$
|
9.1
|
|
|
$
|
26.9
|
|
Right-of-use assets obtained in exchange for new finance lease liabilities
|
|
$
|
1.2
|
|
|
$
|
18.7
|
|
Right-of-use assets obtained in exchange for new operating lease liabilities
|
|
$
|
1.6
|
|
|
$
|
4.4
|
|
|
|
September 30, 2019
|
Weighted average remaining lease terms
|
|
|
Weighted-average remaining lease term (in years) - finance leases
|
|
2.17
|
Weighted-average remaining lease term (in years) - operating leases
|
|
16.34
|
|
|
September 30, 2019
|
|
Discount rates
|
|
|
|
Weighted-average discount rate - finance leases
|
|
4.9
|
%
|
Weighted-average discount rate - operating leases
|
|
5.0
|
%
|
|
|
September 30, 2019
|
||
Operating leases
|
|
|
||
Operating lease right-of-use assets
|
|
$
|
24.7
|
|
|
|
|
||
Accrued expenses
|
|
$
|
4.4
|
|
Other long-term liabilities
|
|
20.7
|
|
|
Total operating lease liabilities
|
|
$
|
25.1
|
|
|
|
|
||
Finance leases
|
|
|
||
Property and equipment, at cost
|
|
$
|
115.5
|
|
Accumulated depreciation
|
|
(28.8
|
)
|
|
Property and equipment, net
|
|
$
|
86.7
|
|
|
|
|
||
Current maturities of long-term debt
|
|
$
|
33.0
|
|
Long term debt, less current maturities
|
|
27.9
|
|
|
Total finance lease liabilities
|
|
$
|
60.9
|
|
Year Ending
|
|
Operating Leases
|
|
Finance Leases
|
||||
2019 (October through December)
|
|
$
|
1.2
|
|
|
$
|
9.4
|
|
2020
|
|
5.1
|
|
|
31.5
|
|
||
2021
|
|
3.7
|
|
|
17.3
|
|
||
2022
|
|
3.0
|
|
|
4.6
|
|
||
2023
|
|
2.4
|
|
|
1.3
|
|
||
2024
|
|
1.9
|
|
|
0.7
|
|
||
Thereafter
|
|
21.5
|
|
|
—
|
|
||
Total lease payments
|
|
38.8
|
|
|
64.8
|
|
||
Less: Imputed interest
|
|
(13.7
|
)
|
|
(3.9
|
)
|
||
Present value of lease liabilities
|
|
$
|
25.1
|
|
|
$
|
60.9
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||||||||||||||
Service revenues
|
$
|
419.5
|
|
|
100.0
|
%
|
|
$
|
400.6
|
|
|
100.0
|
%
|
|
$
|
1,222.5
|
|
|
100.0
|
%
|
|
$
|
1,163.4
|
|
|
100.0
|
%
|
Operating costs and expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Operating
|
265.6
|
|
|
63.3
|
%
|
|
264.4
|
|
|
66.0
|
%
|
|
783.5
|
|
|
64.1
|
%
|
|
743.7
|
|
|
63.9
|
%
|
||||
Accretion of landfill retirement obligations
|
4.5
|
|
|
1.1
|
%
|
|
3.8
|
|
|
0.9
|
%
|
|
13.2
|
|
|
1.1
|
%
|
|
11.4
|
|
|
1.0
|
%
|
||||
Operating expenses
|
270.1
|
|
|
64.4
|
%
|
|
268.2
|
|
|
66.9
|
%
|
|
796.7
|
|
|
65.2
|
%
|
|
755.1
|
|
|
64.9
|
%
|
||||
Selling, general and administrative
|
48.1
|
|
|
11.5
|
%
|
|
45.4
|
|
|
11.3
|
%
|
|
160.0
|
|
|
13.1
|
%
|
|
135.4
|
|
|
11.6
|
%
|
||||
Depreciation and amortization
|
70.4
|
|
|
16.8
|
%
|
|
68.9
|
|
|
17.2
|
%
|
|
206.6
|
|
|
16.9
|
%
|
|
202.8
|
|
|
17.4
|
%
|
||||
Acquisition and development costs
|
0.1
|
|
|
0.1
|
%
|
|
0.1
|
|
|
—
|
%
|
|
1.1
|
|
|
0.1
|
%
|
|
0.4
|
|
|
—
|
%
|
||||
Loss (gain) on disposal of assets and asset impairments
|
1.3
|
|
|
0.2
|
%
|
|
0.5
|
|
|
0.1
|
%
|
|
2.0
|
|
|
0.1
|
%
|
|
(2.8
|
)
|
|
(0.2
|
)%
|
||||
Total operating costs and expenses
|
390.0
|
|
|
93.0
|
%
|
|
383.1
|
|
|
95.6
|
%
|
|
1,166.4
|
|
|
95.4
|
%
|
|
1,090.9
|
|
|
93.8
|
%
|
||||
Operating income
|
$
|
29.5
|
|
|
7.0
|
%
|
|
$
|
17.5
|
|
|
4.4
|
%
|
|
$
|
56.1
|
|
|
4.6
|
%
|
|
$
|
72.5
|
|
|
6.2
|
%
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||||||||||||||
Collection
|
$
|
280.1
|
|
|
66.8
|
%
|
|
$
|
262.7
|
|
|
65.6
|
%
|
|
$
|
827.7
|
|
|
67.7
|
%
|
|
$
|
776.2
|
|
|
66.7
|
%
|
Disposal
|
152.4
|
|
|
36.3
|
%
|
|
146.8
|
|
|
36.6
|
%
|
|
432.0
|
|
|
35.3
|
%
|
|
418.9
|
|
|
36.0
|
%
|
||||
Sale of recyclables
|
2.0
|
|
|
0.5
|
%
|
|
4.0
|
|
|
1.0
|
%
|
|
8.3
|
|
|
0.7
|
%
|
|
13.9
|
|
|
1.2
|
%
|
||||
Fuel and environmental charges
|
29.8
|
|
|
7.1
|
%
|
|
31.6
|
|
|
7.9
|
%
|
|
89.0
|
|
|
7.3
|
%
|
|
90.1
|
|
|
7.7
|
%
|
||||
Other revenue
|
35.0
|
|
|
8.3
|
%
|
|
34.5
|
|
|
8.6
|
%
|
|
97.0
|
|
|
7.9
|
%
|
|
94.9
|
|
|
8.2
|
%
|
||||
Intercompany eliminations
|
(79.8
|
)
|
|
(19.0
|
)%
|
|
(79.0
|
)
|
|
(19.7
|
)%
|
|
(231.5
|
)
|
|
(18.9
|
)%
|
|
(230.6
|
)
|
|
(19.8
|
)%
|
||||
Total service revenues
|
$
|
419.5
|
|
|
100.0
|
%
|
|
$
|
400.6
|
|
|
100.0
|
%
|
|
$
|
1,222.5
|
|
|
100.0
|
%
|
|
$
|
1,163.4
|
|
|
100.0
|
%
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||
Average yield
|
3.0
|
%
|
|
4.3
|
%
|
|
3.4
|
%
|
|
3.2
|
%
|
Recycling
|
(0.5
|
)%
|
|
(1.3
|
)%
|
|
(0.3
|
)%
|
|
(1.1
|
)%
|
Fuel surcharge revenue
|
(0.4
|
)%
|
|
1.2
|
%
|
|
—
|
%
|
|
1.0
|
%
|
Total yield
|
2.1
|
%
|
|
4.2
|
%
|
|
3.1
|
%
|
|
3.1
|
%
|
Organic volume
|
1.1
|
%
|
|
(1.1
|
)%
|
|
0.5
|
%
|
|
0.8
|
%
|
Acquisitions
|
1.5
|
%
|
|
1.1
|
%
|
|
1.5
|
%
|
|
2.4
|
%
|
Divestitures
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
(0.4
|
)%
|
Impact of revenue recognition standard adoption
|
—
|
%
|
|
(2.2
|
)%
|
|
—
|
%
|
|
(2.3
|
)%
|
Total revenue growth
|
4.7
|
%
|
|
2.0
|
%
|
|
5.1
|
%
|
|
3.6
|
%
|
•
|
Average yield increased revenue by 3.0% driven by higher open market price yield as we continue to focus on disciplined pricing and higher price yield in our municipal residential collection business due to the positive impact of higher CPI contract resets;
|
•
|
Recycling revenue decreased revenue by 0.5% due to a continued decrease in recycling commodity prices;
|
•
|
Fuel surcharge revenue decreased revenue by 0.4% due to a decrease in diesel fuel prices. These charges fluctuate in response to changes in prices for diesel fuel on which the surcharge is based and, consequently, any decrease in fuel prices results in a decrease in our revenue. Our fuel surcharges reset on a monthly basis therefore a decrease in our fuel surcharge revenue is delayed in comparison to the decrease in our fuel expense when diesel fuel prices decrease;
|
•
|
Organic volume increased revenue by 1.1% due to an increase in special waste, MSW and C&D disposal volumes and the impact of one extra workday during the three months ended September 30, 2019 compared to the three months ended September 30, 2018. The increase was partially offset by lower rolloff, commercial and residential collection volumes;
|
•
|
Acquisitions increased revenue by 1.5% due to the completion of acquisitions that further enhance our vertical integration strategy.
|
•
|
Average yield increased revenue by 3.4% driven by higher open market price yield as we continue to focus on disciplined pricing and higher price yield in our municipal residential collection business due to the positive impact of higher CPI contract resets;
|
•
|
Recycling revenue decreased revenue by 0.3% due to a continued decrease in recycling commodity prices;
|
•
|
Organic volume increased revenue by 0.5% due to an increase in special waste, MSW and C&D disposal volumes. The increase was partially offset by lower commercial, residential and rolloff collection volumes;
|
•
|
Acquisitions increased revenue by 1.5% due to the completion of acquisitions that further enhance our vertical integration strategy.
|
•
|
Labor and related benefits, which consist of salaries and wages, health and welfare benefits, incentive compensation and payroll taxes;
|
•
|
Transfer and disposal costs which include tipping fees paid to third-party disposal facilities and transfer stations as well as transportation and subcontractor costs (which include costs for independent haulers who transport waste from transfer stations to our disposal facilities and costs for local operators who provide waste handling services associated with markets outside our standard operating areas);
|
•
|
Maintenance and repairs expenses which include labor, maintenance and repairs to our vehicles, equipment and containers;
|
•
|
Fuel costs which include the direct cost of fuel used by our vehicles, net of fuel tax credits;
|
•
|
Franchise and host fees which consist of municipal franchise fees not paid to customers, host community fees and royalties;
|
•
|
Risk management expenses which include casualty insurance premiums, claims payments, estimates for claims incurred but not reported and casualty losses;
|
•
|
Other expenses which include expenses such as facility operating costs, equipment rent, leachate and sulfate treatment and disposal and other landfill maintenance costs;
|
•
|
Accretion expense related to landfill capping, closure and post-closure is included in operating expenses in our condensed consolidated statement of operations, but it is excluded from the table below (refer to “Accretion of Landfill Retirement Obligations” below for a detailed discussion of the changes in amounts).
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Labor and related benefits
|
$
|
88.9
|
|
|
21.2
|
%
|
|
$
|
84.0
|
|
|
21.0
|
%
|
|
$
|
262.8
|
|
|
21.5
|
%
|
|
$
|
249.2
|
|
|
21.4
|
%
|
Transfer and disposal costs
|
58.0
|
|
|
13.8
|
%
|
|
52.9
|
|
|
13.2
|
%
|
|
165.9
|
|
|
13.6
|
%
|
|
155.0
|
|
|
13.3
|
%
|
||||
Maintenance and repairs
|
43.0
|
|
|
10.3
|
%
|
|
40.8
|
|
|
10.2
|
%
|
|
124.6
|
|
|
10.2
|
%
|
|
116.5
|
|
|
10.0
|
%
|
||||
Fuel
|
18.9
|
|
|
4.5
|
%
|
|
20.7
|
|
|
5.2
|
%
|
|
57.8
|
|
|
4.7
|
%
|
|
60.1
|
|
|
5.2
|
%
|
||||
Franchise and host fees
|
11.7
|
|
|
2.8
|
%
|
|
11.0
|
|
|
2.7
|
%
|
|
32.3
|
|
|
2.6
|
%
|
|
30.7
|
|
|
2.6
|
%
|
||||
Risk management
|
9.1
|
|
|
2.2
|
%
|
|
10.4
|
|
|
2.6
|
%
|
|
27.7
|
|
|
2.3
|
%
|
|
27.0
|
|
|
2.3
|
%
|
||||
Other
|
36.0
|
|
|
8.5
|
%
|
|
28.3
|
|
|
7.0
|
%
|
|
102.8
|
|
|
8.4
|
%
|
|
83.4
|
|
|
7.3
|
%
|
||||
Subtotal
|
$
|
265.6
|
|
|
63.3
|
%
|
|
$
|
248.1
|
|
|
61.9
|
%
|
|
$
|
773.9
|
|
|
63.3
|
%
|
|
$
|
721.9
|
|
|
62.1
|
%
|
Greentree expenses, net of insurance recoveries and landfill remediation expenses
|
—
|
|
|
—
|
%
|
|
16.3
|
|
|
4.1
|
%
|
|
9.6
|
|
|
0.8
|
%
|
|
21.8
|
|
|
1.8
|
%
|
||||
Total operating expenses, excluding accretion expense
|
$
|
265.6
|
|
|
63.3
|
%
|
|
$
|
264.4
|
|
|
66.0
|
%
|
|
$
|
783.5
|
|
|
64.1
|
%
|
|
$
|
743.7
|
|
|
63.9
|
%
|
•
|
Labor and related benefits increased by $4.9 or 5.8% to $88.9 which was primarily attributable to higher labor costs as a result of merit increases, acquisition activity, increased temporary labor needs primarily as a result of new municipal contract wins and a labor shortage and the impact of one extra workday during the third quarter 2019 compared to the third quarter 2018;
|
•
|
Transfer and disposal costs increased by $5.1 or 9.6% to $58.0 primarily due to a significant increase in processing costs related to single stream recycling, an increase in third-party transportation costs in our Midwest segment as a result of diverting waste from one of our landfills, an increase in costs due to higher reliance on sub-contractors in the South segment and the impact of one extra workday during the third quarter 2019 compared to the third quarter 2018;
|
•
|
Maintenance and repairs expense increased by $2.2 or 5.4% to $43.0 primarily due to higher labor costs as a result of merit increases and acquisition activity, an increase in the cost of maintenance and repair parts due to inflation and the impact of one extra workday during the third quarter 2019 compared to the third quarter 2018;
|
•
|
Fuel costs decreased $1.8 or 8.7% to $18.9 as a result of lower diesel fuel costs per gallon partially offset by the impact of one extra workday during the third quarter 2019 compared to the third quarter 2018;
|
•
|
Franchise and host fees increased $0.7 or 6.4% to $11.7 primarily due to the acquisition of a landfill in our South segment during fourth quarter of 2018;
|
•
|
Risk management expense decreased $1.3 or 12.5% to $9.1 primarily due to lower frequency of automobile and property liability claims;
|
•
|
Other operating costs increased $7.7 or 27.2% to $36.0 primarily due to an increase in the following: higher leachate and gas treatment costs at several of our landfills partially due to weather related impacts; a loss contract purchase accounting
|
•
|
Labor and related benefits increased by $13.6 or 5.5% to $262.8 which was primarily attributable to the following: higher labor costs as a result of merit increases, acquisition activity, the addition of one company paid holiday and increased temporary labor needs primarily as a result of new municipal contract wins and a labor shortage; an increase in healthcare costs due to an increase in claims activity; and an increase in workers compensation costs due to the severity of claims;
|
•
|
Transfer and disposal costs increased by $10.9 or 7.0% to $165.9 primarily due to the following: a significant increase in processing costs related to single stream recycling; an increase in disposal costs related to higher volumes coming through our transfer stations in the South segment; and an increase in costs due to higher reliance on sub-contractors in the South segment;
|
•
|
Maintenance and repairs expense increased by $8.1 or 7.0% to $124.6 primarily due to higher labor costs as a result of merit increases and acquisition activity and an increase in the cost of maintenance and repair parts due to inflation;
|
•
|
Fuel costs decreased $2.3 or 3.8% to $57.8 as a result of lower diesel fuel costs per gallon partially offset by a CNG tax credit received in the first quarter of fiscal 2018 that did not recur in the first quarter of fiscal 2019;
|
•
|
Franchise and host fees increased $1.6 or 5.2% to $32.3 primarily due to an increase in landfill host fees as a result of higher disposal volumes and the acquisition of a landfill in our South segment during fourth quarter of 2018;
|
•
|
Risk management expense increased $0.7 or 2.6% to $27.7 primarily due to a slight increase in the frequency and severity of automobile and property liability claims;
|
•
|
Other operating costs increased $19.4 or 23.3% to $102.8 primarily due to an increase in the following: higher leachate and gas treatment costs at several of our landfills partially due to weather related impacts; higher site maintenance costs and other facility costs; an increase in vehicle operating costs primarily due to higher reliance on rental equipment and higher vehicle maintenance costs; a loss contract purchase accounting liability reversal in the nine months ended September 30, 2018 that did not recur in the nine months ended September 30, 2019; and higher material costs to support an increase in revenue related to our asphalt operation;
|
•
|
We recorded Greentree expenses, net of insurance recoveries and landfill remediation expenses of $9.6 and $21.8 during the nine months ended September 30, 2019 and 2018, respectively, as further described in Note 9 to the unaudited consolidated financial statements.
|
|
Three Months Ended September 30,
|
|
|
Nine Months Ended September 30,
|
||||||||||||||||||||||||
|
2019
|
|
2018
|
|
|
2019
|
|
2018
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Salaries
|
$
|
29.8
|
|
|
7.1
|
%
|
|
$
|
27.6
|
|
|
6.9
|
%
|
|
|
$
|
92.2
|
|
|
7.5
|
%
|
|
$
|
84.9
|
|
|
7.3
|
%
|
Legal and professional
|
4.6
|
|
|
1.1
|
%
|
|
3.4
|
|
|
0.8
|
%
|
|
|
24.7
|
|
|
2.0
|
%
|
|
10.6
|
|
|
0.9
|
%
|
||||
Other
|
13.7
|
|
|
3.3
|
%
|
|
14.4
|
|
|
3.6
|
%
|
|
|
43.1
|
|
|
3.6
|
%
|
|
39.9
|
|
|
3.4
|
%
|
||||
Total selling, general and administrative expenses
|
$
|
48.1
|
|
|
11.5
|
%
|
|
$
|
45.4
|
|
|
11.3
|
%
|
|
|
$
|
160.0
|
|
|
13.1
|
%
|
|
$
|
135.4
|
|
|
11.6
|
%
|
•
|
Our salaries expense increased by $2.2 or 8.0% to $29.8 primarily due to merit increases, higher projected bonus expense and increased temporary labor needs partially offset by lower stock based compensation expense and a one time multi-employer pension plan withdrawal fee in the third quarter of 2018 that did not recur in the third quarter of 2019;
|
•
|
Legal and professional fees increased $1.2 to $4.6 due to fees associated with the proposed merger as further described in Note 13 to the unaudited consolidated financial statements.
|
•
|
Other selling, general and administrative expenses decreased $0.7 or 4.9% to $13.7 primarily due to lower bad debt expense.
|
•
|
Our salaries expense increased by $7.3 or 8.6% to $92.2 primarily due to merit increases, higher projected bonus expense and increased temporary labor needs partially offset by a one time multi employer pension plan withdrawal fee in the nine months ended September 30, 2018 that did not recur in the nine months ended September 30, 2019;
|
•
|
Legal and professional fees increased $14.1 to $24.7 due to a legal case settlement of $9.0 as further discussed in Note 9 to the unaudited consolidated financial statements and related legal fees of $0.9 and an increase in merger related expenses of $5.7 related to our proposed merger as further described in Note 13 to the unaudited consolidated financial statements.
|
•
|
Other selling, general and administrative expenses increased $3.2 or 8.0% to $43.1 due to an increase in computer hardware and software maintenance costs and an increase in bad debt expense primarily associated with our brokerage business.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Depreciation, amortization and depletion of property and equipment
|
$
|
62.5
|
|
|
14.9
|
%
|
|
$
|
59.1
|
|
|
14.8
|
%
|
|
$
|
183.2
|
|
|
15.0
|
%
|
|
$
|
172.3
|
|
|
14.8
|
%
|
Amortization of other intangible assets
|
7.9
|
|
|
1.9
|
%
|
|
9.8
|
|
|
2.4
|
%
|
|
23.4
|
|
|
1.9
|
%
|
|
30.5
|
|
|
2.8
|
%
|
||||
Depreciation and amortization
|
$
|
70.4
|
|
|
16.8
|
%
|
|
$
|
68.9
|
|
|
17.2
|
%
|
|
$
|
206.6
|
|
|
16.9
|
%
|
|
$
|
202.8
|
|
|
17.4
|
%
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Depreciation and amortization of property and equipment
|
$
|
35.0
|
|
|
8.3
|
%
|
|
$
|
34.7
|
|
|
8.7
|
%
|
|
$
|
105.1
|
|
|
8.6
|
%
|
|
$
|
103.6
|
|
|
8.9
|
%
|
Landfill depletion and amortization
|
27.5
|
|
|
6.6
|
%
|
|
24.4
|
|
|
6.1
|
%
|
|
78.1
|
|
|
6.4
|
%
|
|
68.7
|
|
|
5.9
|
%
|
||||
Depreciation, amortization and depletion of property and equipment
|
$
|
62.5
|
|
|
14.9
|
%
|
|
$
|
59.1
|
|
|
14.8
|
%
|
|
$
|
183.2
|
|
|
15.0
|
%
|
|
$
|
172.3
|
|
|
14.8
|
%
|
•
|
Depreciation and amortization of property and equipment increased $0.3 or 0.9% to $35.0 due mainly to acquisition activity;
|
•
|
Landfill depletion and amortization increased $3.1 or 12.7% to $27.5 due to changes in our landfill estimates, acquisition activity and increased disposal volumes.
|
•
|
Depreciation and amortization of property and equipment increased $1.5 or 1.4% to $105.1 due mainly to acquisition activity;
|
•
|
Landfill depletion and amortization increased $9.4 or 13.7% to $78.1 due to changes in our landfill estimates, acquisition activity and increased disposal volumes.
|
|
Service
Revenues |
|
Operating
Income (Loss) |
|
Depreciation
and Amortization |
||||||
|
|
|
|
|
|
||||||
Three Months Ended September 30, 2019
|
|
|
|
|
|
||||||
South
|
$
|
160.6
|
|
|
$
|
19.9
|
|
|
$
|
21.8
|
|
East
|
111.4
|
|
|
10.1
|
|
|
21.7
|
|
|||
Midwest
|
147.5
|
|
|
19.0
|
|
|
25.5
|
|
|||
Corporate
|
—
|
|
|
(19.5
|
)
|
|
1.4
|
|
|||
|
$
|
419.5
|
|
|
$
|
29.5
|
|
|
$
|
70.4
|
|
|
|
|
|
|
|
|
|
|
|||
Three Months Ended September 30, 2018
|
|
|
|
|
|
||||||
South
|
$
|
154.0
|
|
|
$
|
7.3
|
|
|
$
|
21.0
|
|
East
|
104.8
|
|
|
6.1
|
|
|
20.4
|
|
|||
Midwest
|
141.8
|
|
|
20.2
|
|
|
26.4
|
|
|||
Corporate
|
—
|
|
|
(16.1
|
)
|
|
1.1
|
|
|||
|
$
|
400.6
|
|
|
$
|
17.5
|
|
|
$
|
68.9
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
||||||
Nine Months Ended September 30, 2019
|
|
|
|
|
|
||||||
South
|
$
|
482.5
|
|
|
$
|
58.3
|
|
|
$
|
66.2
|
|
East
|
315.8
|
|
|
18.6
|
|
|
62.4
|
|
|||
Midwest
|
424.2
|
|
|
52.0
|
|
|
74.0
|
|
|||
Corporate
|
—
|
|
|
(72.8
|
)
|
|
4.0
|
|
|||
|
$
|
1,222.5
|
|
|
$
|
56.1
|
|
|
$
|
206.6
|
|
|
|
|
|
|
|
||||||
Nine Months Ended September 30, 2018
|
|
|
|
|
|
||||||
South
|
$
|
455.5
|
|
|
$
|
54.6
|
|
|
$
|
64.2
|
|
East
|
298.3
|
|
|
17.0
|
|
|
58.8
|
|
|||
Midwest
|
409.6
|
|
|
52.7
|
|
|
76.4
|
|
|||
Corporate
|
—
|
|
|
(51.8
|
)
|
|
3.4
|
|
|||
|
$
|
1,163.4
|
|
|
$
|
72.5
|
|
|
$
|
202.8
|
|
|
September 30,
2019 |
|
December 31,
2018 |
||||
|
|
|
|
||||
Cash and cash equivalents
|
$
|
11.8
|
|
|
$
|
6.8
|
|
|
|
|
|
|
|
||
Debt:
|
|
|
|
||||
Current portion
|
73.4
|
|
|
85.9
|
|
||
Long-term portion
|
1,800.6
|
|
|
1,817.1
|
|
||
Total debt
|
$
|
1,874.0
|
|
|
$
|
1,903.0
|
|
|
Nine months ended September 30,
|
||||||
|
2019
|
|
2018
|
||||
Net cash provided by operating activities
|
$
|
229.2
|
|
|
$
|
234.4
|
|
Net cash used in investing activities
|
$
|
(181.0
|
)
|
|
$
|
(132.1
|
)
|
Net cash used in financing activities
|
$
|
(43.2
|
)
|
|
$
|
(100.8
|
)
|
•
|
An increase in cash interest expense of $5.8;
|
•
|
An increase in cash expenditures of $5.7 related to the fee case settlement and related expenses;
|
•
|
An increase of $4.0 due to merger related cash expenditures;
|
•
|
A decrease in cash paid for taxes of $2.9;
|
•
|
An increase of $2.8 in realized gains associated with the 2016 interest rate caps;
|
•
|
A decrease in cash expenditures of $2.6 related to the Greentree landfill waste slide;
|
•
|
A decrease in capping, closure and post closure expenditures of $2.5.
|
•
|
Higher cash expenditures of $24.3 used to fund the purchase of property and equipment and landfill construction and development;
|
•
|
An increase of $21.0 in cash expenditures used to fund acquisitions;
|
•
|
Lower proceeds of $3.6 from sale of property and equipment and insurance proceeds.
|
•
|
A decrease in net payments on debt instruments of $51.1 as we used excess cash to fund purchases of property and equipment, landfill construction and development and acquisitions during the nine months ended September 30, 2019 compared to using the majority of our excess cash to make debt repayments during the nine months ended September 30, 2018;
|
•
|
An increase in proceeds from stock option exercises of $6.5.
|
Year
|
Percentage
|
|
2019
|
104.219
|
%
|
2020
|
102.813
|
%
|
2021
|
101.406
|
%
|
2022 and thereafter
|
100.000
|
%
|
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
Exhibit 101
|
|
Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document.
|
|
|
|
Exhibit 101.INS
|
|
XBRL Instance Document
|
|
|
|
Exhibit 101.SCH
|
|
XBRL Extension Schema Document
|
|
|
|
Exhibit 101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
Exhibit 101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
Exhibit 101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
Exhibit 101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
Exhibit 104
|
|
The cover page from this Report on Form 10-Q, formatted as Inline XBRL.
|
October 30, 2019
|
|
|
|
Advanced Disposal Services, Inc.
|
||
|
|
|
|
|||
|
|
|
|
By:
|
|
/s/ Steven R. Carn
|
|
|
|
|
|
|
Steven R. Carn
|
|
|
|
|
|
|
Chief Financial Officer
|
1 Year Advanced Disposal Services Chart |
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