| TORONTO, ONTARIO, Mar 7, 2005 (CCNMatthews via COMTEX) --
BFI Canada Income Fund (the "Fund") (TSX:BFC.UN) today announced its financial results for the three months and year ended December 31, 2004.
Financial highlights for the three months ended
(stated in thousands of Canadian dollars)
- Revenues and EBITDA(A) increased 19.9% and 15.7%, respectively, over the comparative three months ended December 31, 2003
- Free cash flow available for distribution(B) for the three months ended December 31, 2004 totalled $10,307 and is $2,501 higher than the comparative three months ended December 31, 2003. Higher EBITDA(A) partially offset by higher interest expense, maintenance capital expenditures and a revision to estimated future cash flows for closure costs is the principal reason for the increase. Excluding the revision to estimated future cash flows for closure costs, free cash flow available for distribution(B) would have been $12,070 or $4,264 higher than the comparative three months ended December 31, 2003
- Aggregate distributions declared totalled $9,292 for the three months ended December 31, 2004, representing a payout ratio of 90.2% of free cash flow available for distribution(B). Excluding the revision to estimated future cash flows amounting to $1,763 for the three months ended December 31, 2004, due principally to closure costs specific to the non-operating portion of the Fund's Lachenaie landfill, the payout ratio would have been 77.0% of free cash flow available for distribution(B)
- Acquisitions and volume and price growth are the principal reasons for the Fund's revenue and EBITDA(A) growth
Financial highlights for the year ended
(stated in thousands of Canadian dollars)
- Revenues and EBITDA(A) increased 14.5% and 12.7%, respectively, over the comparative year ended December 31, 2003
- Free cash flow available for distribution(B) for the year ended December 31, 2004 totalled $41,438 and is $4,759 higher than the comparative year ended December 31, 2003. Higher EBITDA(A) partially offset by higher interest expense, maintenance capital expenditures and a revision to estimated future cash flows for closure costs is the principal reason for the increase. Excluding the revision to estimated future cash flows for closure costs, free cash flow available for distribution(B) would have been $43,340 or $6,661 higher than the comparative year ended December 31, 2003
- Aggregate distributions declared totalled $35,195 for the year ended December 31, 2004, representing a payout ratio of 84.9% of free cash flow available for distribution(B). Excluding the revision to estimated cash flows amounting to $1,902 for the year ended December 31, 2004, due principally to closure costs specific to the non-operating portion of the Fund's Lachenaie landfill, the payout ratio would have been 81.2% of free cash flow available for distribution(B)
- Acquisitions and volume and price growth are the principal reasons for the Fund's revenue and EBITDA(A) growth
Other highlights for the year ended
(stated in thousands of Canadian dollars)
- Fund completed the refinancing of its term and revolving loans in June 2004, and issued $47,000, 6.123% 5 year, and $58,000, 7.015% 10 year, debentures and concurrently entered into a new $60,000 revolving credit facility
- Fund completed the acquisition of Twin Oaks Environmental Ltd. ("Twin Oaks") and Complete Disposal Services Ltd. ("CDS") in April and November 2004, respectively
- Fund entered into agreements in 2004 to acquire the Ridge landfill and IESI Corporation ("IESI"), one of the leading regional, full service non-hazardous solid waste management companies in the United States. Both transactions closed in January 2005
Management Commentary
"By all measures, 2004 was a strong year for BFI Canada as we continued our growth, both organically and through acquisitions, resulting in revenue, EBITDA(A) and free cash flow available for distribution(B) increases of 14.5%, 12.7% and 13.0%, respectively," said Keith Carrigan, President and Chief Executive Officer. "The results for the year represent a new benchmark for us and one we can grow from for 2005."
Mr. Carrigan said the Fund "benefited from many organic initiatives to increase volumes and improve efficiencies in each of our operating locations in Canada. Of the 14.5% growth in revenues for 2004, approximately 2% was due to higher volumes of non-hazardous solid waste entering the Lachenaie landfill; approximately 6% was a result of our collection operations benefiting from the acquisition of Twin Oaks and CDS during the year; with the balance, approximately 7%, resulting from ongoing measures geared to continue organic growth and optimize results."
"Over the last three years as a public company BFI Canada has demonstrated an ability to grow revenue, EBITDA(A) and free cash flow available for distribution(B) in the Canadian waste management industry, thus validating our business's alignment with the income trust structure," said Mr. Carrigan. "We have grown our business and increased distributions declared for our unitholders by growing both organically and through strategic acquisitions, and we look forward to positive contributions from our 2004 acquisitions and our acquisition of the Ridge landfill, in 2005. We are also very excited about our future growth opportunities in the United States and replicating the success we have achieved in Canada through our recently completed acquisition of IESI Corporation." Three months ended Year ended
------------------- -----------------
(in thousands, except per
trust unit amounts) 2004 2003 2004 2003
--------- --------- --------- ---------
(unau- (unau- (unau-
dited) dited) dited) (1)
--------- --------- --------- ---------
(1)
Revenues $ 51,983 $ 43,370 $ 191,956 $ 167,626
Operating expenses 27,399 22,264 99,378 84,892
Selling, general and
administration expenses 7,932 6,712 28,012 25,452
---------------------------------------------------------------------
Income before the following 16,652 14,394 64,566 57,282
Amortization 14,178 11,944 47,467 45,375
Interest on long-term debt 1,910 1,266 6,138 5,137
Write-off of deferred
financing costs - - 748 -
Net gain on sale of capital
assets and landfill assets (166) (769) (192) (527)
Gain on settlement of
bond forward contracts - - (1,550) -
---------------------------------------------------------------------
Income before income taxes 730 1,953 11,955 7,297
Income tax recovery (4,903) (1,728) (8,007) (5,840)
---------------------------------------------------------------------
Net income $ 5,633 $ 3,681 $ 19,962 $ 13,137
---------------------------------------------------------------------
---------------------------------------------------------------------
Net income per trust
unit, basic & diluted $ 0.21 $ 0.14 $ 0.75 $ 0.50
Number of trust units
outstanding 26,500 26,500 26,500 26,500
Maintenance capital and
landfill expenditures $ 1,893 $ 4,481 $ 11,935 $ 11,586
Growth capital and
landfill expenditures 5,237 682 10,886 5,409
---------------------------------------------------------------------
Total capital and
landfill expenditures $ 7,130 $ 5,163 $ 22,821 $ 16,995
---------------------------------------------------------------------
---------------------------------------------------------------------
Free cash flow available
for distribution(B) $ 10,307 $ 7,806 $ 41,438 $ 36,679
Free cash flow available
for distribution(B) per
trust unit $ 0.39 $ 0.29 $ 1.56 $ 1.38
Aggregate distributions
declared $ 9,292 $ 8,446 $ 35,195 $ 32,627
Aggregate distributions
declared per trust unit $ 0.35 $ 0.32 $ 1.33 $ 1.23
Notes:
(1) Operating results, net income per trust unit, basic & diluted, and free cash flow available for distribution(B) and per trust unit have been restated to reflect the adoption of the new accounting standard for asset retirement obligations. The impact of adopting the new accounting standard on the comparative period and annual results are detailed in the BFI Canada Income Fund first quarter report for the period ended March 31, 2004.
Operating highlights
(all amounts are in thousands of Canadian dollars, except per trust unit amounts)
Revenues for the three months and year ended December 31, 2004 increased $8,613 and $24,330 or 19.9% and 14.5%, respectively. Strategic acquisitions, price increases, organic growth and favourable commodity prices combined to account for the period over period and year over year solid waste collection ("collection") segment increase. Higher volumes of accepted non-hazardous solid waste entering the Lachenaie landfill is the principal reason for the period over period and year over year landfill and energy ("landfill") segment increase.
Operating expenses for the three months and year ended December 31, 2004 increased $5,135 and $14,486, respectively. Strategic acquisitions, higher disposal and labour expenditures, related principally to the collection of additional volumes of waste, and higher costs to service new and existing customers combined to account for the period over period and year over year increase in the collection segment. The increase in the landfill segment for the period and year ended December 31, 2004 is due principally to landfill royalty costs related to the Lachenaie north expansion and additional volumes of accepted non-hazardous solid waste entering the Lachenaie landfill, partially offset by a decline in equipment rental charges at the Lethbridge landfill.
Selling, general and administration ("SG&A") expenses for the three months and year ended December 31, 2004 increased $1,220 and $2,560, respectively. The increase for the three months ended December 31, 2004, is principally a function of the Twin Oaks and CDS acquisitions. For the year ended December 31, 2004, the increase is principally a function of the Twin Oaks and CDS acquisitions and additional long-term incentive plan ("LTIP") accruals totalling $360 versus the prior year ended December 31, 2003.
EBITDA(A) for the three months and year ended December 31, 2004 increased $2,258 and $7,284 or 15.7% and 12.7%, respectively. Strategic acquisitions, price and volume growth in the collection segment, and an increase in accepted non-hazardous solid waste at BFI Canada-owned landfills, partially offset by landfill royalty costs related to the Lachenaie north expansion, were the principal contributors to EBITDA(A) growth for the respective period and year then ended.
Free cash flow available for distribution(B) totalled $10,307 and $41,438 for the three months and year ended December 31, 2004, respectively, versus $7,806 and $36,679 for the comparative three months and year ended December 31, 2003. Excluding the revision to estimated future cash flows for closure costs specific to the non-operating portion of the Lachenaie landfill, free cash flow available for distribution(B) would have been $12,070 or $4,264 higher than the comparative three months ended December 31, 2003, and $43,340 or $6,661 higher than the comparative year ended December 31, 2003.
The Fund paid cash distributions to unitholders of $1.3175 per trust unit for the year ended December 31, 2004 and declared a distribution payable to unitholders of record on December 31, 2004, payable January 14, 2005, of $0.116875 per trust unit. In August 2004, the Fund increased its current distribution rate by 10.0% to an annualized rate of $1.4025 per trust unit beginning with the distribution payable on September 15, 2004 to unitholders of record on August 31, 2004.
On January 21, 2005, the Fund announced that it will increase future distributions by 12.0% to an annualized rate of $1.5708 per trust unit beginning with the distribution payable on March 15, 2005 to unitholders of record on February 28, 2005.
(A) All references to "EBITDA" in this press release are to "income before the following" on the consolidated statements of operations. Income before the following may exclude some or all of the following: "amortization, interest on long-term debt, net gain on sale of capital and landfill assets or net (gain) loss on sale of capital and landfill assets, write-off of deferred financing costs, gain on settlement of bond forward contracts and income taxes". EBITDA is a term used by the Fund that does not have a standardized meaning prescribed by Canadian generally accepted accounting principles ("GAAP") and is therefore unlikely to be comparable to similar measures used by other issuers. EBITDA is a measure of the Fund's operating profitability, and by definition, excludes certain items (specifically amortization, interest on long-term debt, net gain on sale of capital and landfill assets or net (gain) loss on sale of capital and landfill assets, write-off of deferred financing costs, gain on settlement of bond forward contracts and income taxes). These items are viewed by management as either non-cash (in the case of amortization, write-off of deferred financing costs and future income taxes) or non-operating (in the case of interest on long-term debt, net gain on sale of capital and landfill assets or net (gain) loss on sale of capital and landfill assets, gain on settlement of bond forward contracts and current income taxes). EBITDA is a useful financial and operating metric for investors as it represents a starting point in the determination of free cash flow available for distribution(B). The underlying reasons for exclusion of each item are as follows:
Amortization - as a non-cash item amortization has no impact on the determination of free cash flow available for distribution(B).
Interest on long-term debt - interest on long-term debt is a function of an entity's debt/equity mix and interest rates; as such, it reflects the treasury/financing activities of the entity and represents a different class of expense than the components of EBITDA.
Net gain on sale of capital and landfill assets - the net gain on sale of capital and landfill assets has no impact on the determination of free cash flow available for distribution(B), because the proceeds were reinvested in other capital assets.
Net (gain) loss on sale of capital and landfill assets - the net gain on sale of capital and landfill assets has no impact on the determination of free cash flow available for distribution(B), because the proceeds were either reinvested in other capital assets or used to repay the Fund's revolving credit facility.
Write-off of deferred financing costs - as a non-cash item write-off of deferred financing costs has no impact on the determination of free cash flow available for distribution(B).
Gain on settlement of bond forward contracts - the gain on settlement of bond forward contracts is a treasury/financing activity and represents a different class of revenue than the components of EBITDA.
Income taxes - income taxes are a function of tax laws and rates and are affected by matters which are separate from the daily operations of the Fund.
EBITDA should not be construed as a measure of income or of cash flows. The reconciling items between EBITDA and net income are detailed in the consolidated statements of operations beginning with "income before the following" and ending with "net income".
(B) The Fund has adopted a measurement called free cash flow available for distribution to supplement net income as a measure of operating performance. Free cash flow available for distribution is a term which does not have a standardized meaning prescribed by GAAP and is therefore unlikely to be comparable to similar measures used by other issuers. The objective of presenting this non-GAAP measure is to calculate the amount which is available for distribution to unitholders. Free cash flow available for distribution is calculated as EBITDA(A) less amortization of capitalized landfill asset closure and post-closure costs, interest on long-term debt, current income taxes and maintenance capital expenditures. Additionally, the Fund's gain on settlement of two bond forward contracts on June 25, 2004 will be amortized to free cash flow available for distribution over the underlying terms of the senior secured debentures. Free cash flow available for distribution is not necessarily indicative of cash available to fund cash needs and should not be considered as an alternative to cash flow as a measure of liquidity. All references in this press release to "free cash flow available for distribution" have the meaning set out in this note.
Forward-looking statements
This document may contain forward-looking statements relating to the Fund's operations or to the environment in which it operates, which are based on the Fund's operations, estimates, forecasts and projections. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict, or are beyond the Fund's control. A number of important factors could cause actual outcomes and results to differ materially from those expressed in these forward-looking statements. These factors include those set forth in the Fund's Annual Information Form for the period ended December 31, 2003. Consequently, readers should not rely on such forward-looking statements. In addition, these forward-looking statements relate to the date on which they are made. Although the forward-looking statements contained herein are based upon what management believes to be reasonable assumptions, the Fund cannot assure unitholders that actual results will be consistent with these forward looking statements, and the Fund disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
About BFI Canada
BFI Canada Income Fund, through its subsidiaries, is one of North America's largest full-service waste management companies, providing non-hazardous solid waste collection and landfill disposal services for municipal, commercial, industrial and residential customers in five provinces and nine U.S. states. Its two brands, IESI and BFI Canada, are leaders in their respective markets and serve almost 1 million customers with vertically integrated collection and disposal assets. The Fund's units are listed on the Toronto Stock Exchange under the symbol BFC.UN.
To find out more about BFI Canada Income Fund (TSX: BFC.UN), visit our website at www.bficanada.com.
Management will hold a conference call on Tuesday, March 8, 2005 at 8:30 am (EST) to discuss results for the three months and year ended December 31, 2004. To access the call, participants should dial 800-814-4861, at approximately 8:20 am. The conference call will also be Webcast live at www.bficanada.com or www.ccnmatthews.com and subsequently archived on the BFI Canada site.
A rebroadcast of the call will be available until midnight on Monday, March 15, 2005. To access the rebroadcast, dial 877-289-8525 and quote the reservation number 21114192#. BFI CANADA INCOME FUND
Consolidated Balance Sheets
December 31, 2004 (unaudited) and December 31, 2003
- (in thousands of dollars)
---------------------------------------------------------------------
December 31, 2004 December 31, 2003
----------------- -----------------
ASSETS (unaudited)
CURRENT
Cash and cash equivalents $ 13,282 $ 6,704
Accounts receivable 33,348 25,838
Other receivables 1,403 1,203
Prepaid expenses 2,568 2,081
---------------------------------------------------------------------
50,601 35,826
OTHER RECEIVABLES 3,028 3,284
FUNDED LANDFILL POST-CLOSURE COSTS 570 -
INTANGIBLES 72,856 66,993
GOODWILL 50,889 49,171
DEFERRED COSTS 12,159 3,069
DEFERRED FINANCING COSTS 1,860 1,176
CAPITAL ASSETS 95,325 84,359
LANDFILL ASSETS 110,382 113,084
---------------------------------------------------------------------
$ 397,670 $ 356,962
---------------------------------------------------------------------
---------------------------------------------------------------------
LIABILITIES
CURRENT
Accounts payable $ 23,206 $ 11,866
Accrued charges 7,501 5,836
Distribution payable 3,097 2,816
Income taxes payable 636 346
Deferred revenues 6,623 6,400
Current portion of long-term debt 22,224 271
---------------------------------------------------------------------
63,287 27,535
LONG-TERM DEBT 105,240 81,313
LANDFILL CLOSURE AND POST-CLOSURE COSTS 6,143 2,642
FUTURE INCOME TAX LIABILITIES 13,907 21,146
---------------------------------------------------------------------
188,577 132,636
---------------------------------------------------------------------
UNITHOLDERS' EQUITY 209,093 224,326
---------------------------------------------------------------------
$ 397,670 $ 356,962
---------------------------------------------------------------------
---------------------------------------------------------------------
BFI CANADA INCOME FUND
Consolidated Statements of Operations
For the three months (unaudited) and year ended December 31, 2004
(unaudited) and December 31, 2003 - (in thousands of dollars, except
net income per trust unit amounts)
---------------------------------------------------------------------
Three months ended Year ended
-------------------- ------------------
2004 2003 2004 2003
--------- --------- -------- --------
(unau- (unau- (unau-
dited) dited) dited)
REVENUES $ 51,983 $ 43,370 $ 191,956 $ 167,626
---------------------------------------------------------------------
EXPENSES
OPERATING 27,399 22,264 99,378 84,892
SELLING, GENERAL AND
ADMINISTRATION 7,932 6,712 28,012 25,452
---------------------------------------------------------------------
INCOME BEFORE THE
FOLLOWING 16,652 14,394 64,566 57,282
AMORTIZATION 14,178 11,944 47,467 45,375
INTEREST ON LONG-TERM DEBT 1,910 1,266 6,138 5,137
WRITE-OFF OF DEFERRED
FINANCING COSTS - - 748 -
NET GAIN ON SALE OF CAPITAL
AND LANDFILL ASSETS (166) (769) (192) (527)
GAIN ON SETTLEMENT OF BOND
FORWARD CONTRACTS - - (1,550) -
---------------------------------------------------------------------
INCOME BEFORE INCOME TAXES 730 1,953 11,955 7,297
INCOME TAX EXPENSE (RECOVERY)
Current 225 (75) 540 450
Future (5,128) (1,653) (8,547) (6,290)
---------------------------------------------------------------------
(4,903) (1,728) (8,007) (5,840)
---------------------------------------------------------------------
NET INCOME $ 5,633 $ 3,681 $ 19,962 $ 13,137
---------------------------------------------------------------------
---------------------------------------------------------------------
Net income per trust
unit, basic and diluted $ 0.21 $ 0.14 $ 0.75 $ 0.50
Weighted average number
of trust units
outstanding (thousands) 26,500 26,500 26,500 26,500
BFI CANADA INCOME FUND
Consolidated Statements of Cash Flows
For the three months (unaudited) and year ended December 31, 2004
(unaudited) and December 31, 2003 - (in thousands of dollars, except
net income per trust unit amounts)
---------------------------------------------------------------------
Three months ended Year ended
------------------ -------------------
2004 2003 2004 2003
------- -------- -------- ---------
NET (OUTFLOW) INFLOW OF CASH
RELATED TO THE FOLLOWING (unau- (unau- (unau-
ACTIVITIES dited) dited) dited)
OPERATING
Net income $ 5,633 $ 3,681 $ 19,962 $ 13,137
Items not affecting cash
Amortization of
intangibles 3,422 3,126 12,972 12,346
Amortization of deferred
financing costs 259 221 918 882
Amortization of capital
assets 4,255 4,315 15,960 16,622
Amortization of landfill
assets 6,242 4,282 17,617 15,525
Gain on disposal of
capital assets (166) (769) (192) (785)
Loss on disposal of
landfill assets - - - 258
Write-off of deferred
financing costs - - 748 -
Accretion of landfill
closure and post-closure
costs 51 30 202 118
Future income taxes (5,128) (1,653) (8,547) (6,290)
Landfill closure and
post-closure expenditures (336) (1,454) (1,328) (2,204)
---------------------------------------------------------------------
14,232 11,779 58,312 49,609
Changes in non-cash
working capital items 691 1,620 330 (2,226)
---------------------------------------------------------------------
Cash generated from
operating activities 14,923 13,399 58,642 47,383
---------------------------------------------------------------------
INVESTING
Acquisitions (28,324) - (32,951) (2,376)
Investment in other
receivables - - (1,138) (2,850)
Proceeds from other
receivables 223 304 924 1,089
Funded landfill
post-closure costs (354) - (354) -
Purchase of capital assets (4,772) (3,917) (15,462) (13,762)
Purchase of landfill assets (2,359) (1,246) (7,359) (3,233)
Proceeds on disposal of
capital assets 179 3,525 222 3,691
Proceeds on disposal of
landfill assets - 195 - 195
Deferred costs (1,469) (343) (4,077) (1,237)
---------------------------------------------------------------------
Cash utilized in
investing activities (36,876) (1,482) (60,195) (18,483)
---------------------------------------------------------------------
FINANCING
Payment of deferred
financing costs (371) - (2,261) -
Proceeds from revolving
loan 22,000 - 27,800 8,650
Proceeds from senior
secured debentures - - 105,000 -
Repayment of revolving
term, loan and acquired debt - (4,050) (87,494) (4,050)
Distributions paid to
unitholders (9,292) (8,446) (34,914) (32,462)
---------------------------------------------------------------------
Cash generated from
(utilized in) financing
activities 12,337 (12,496) 8,131 (27,862)
---------------------------------------------------------------------
NET CASH (OUTFLOW) INFLOW (9,616) (579) 6,578 1,038
CASH AND CASH
EQUIVALENTS, BEGINNING
OF PERIOD 22,898 7,283 6,704 5,666
---------------------------------------------------------------------
CASH AND CASH
EQUIVALENTS, END OF
PERIOD $ 13,282 $ 6,704 $ 13,282 $ 6,704
---------------------------------------------------------------------
---------------------------------------------------------------------
SUPPLEMENTAL CASH FLOW
INFORMATION:
Cash and cash equivalents
are comprised of:
Cash $ 8,609 $ 3,864 $ 8,609 $ 3,864
Cash equivalents 4,673 2,840 4,673 2,840
---------------------------------------------------------------------
$ 13,282 $ 6,704 $ 13,282 $ 6,704
---------------------------------------------------------------------
---------------------------------------------------------------------
Cash paid during the
period for:
Income taxes $ - $ 44 $ 909 $ 1,309
Interest $ 1,810 $ 1,250 $ 5,460 $ 5,183
BFI CANADA INCOME FUND
Consolidated Statements of Unitholders' Equity
For the three months (unaudited) and year ended December 31, 2004
(unaudited) and December 31, 2003 - (in thousands of dollars, except
net income per trust unit amounts)
---------------------------------------------------------------------
Three months ended Year ended
------------------- -------------------
2004 2003 2004 2003
--------- --------- --------- ---------
(unau- (unau- (unau-
dited) dited) dited)
BALANCE, BEGINNING OF
PERIOD $ 212,752 $ 229,091 $ 224,326 $ 243,816
Net income 5,633 3,681 19,962 13,137
Distributions (9,292) (8,446) (35,195) (32,627)
---------------------------------------------------------------------
BALANCE, END OF PERIOD $ 209,093 $ 224,326 $ 209,093 $ 224,326
---------------------------------------------------------------------
---------------------------------------------------------------------
BFI Canada Income Fund
Joseph D. Quarin
Chief Financial Officer
(416) 401-7722
joe.quarin@bficanada.com
or
BFI Canada Income Fund
Anne MacMicken
Manager, Investor and Employee Relations
(416) 401-7729
anne.macmicken@bficanada.com
NEWS RELEASE TRANSMITTED BY CCNMatthews
Copyright (C) 2005, CCNMatthews. All rights reserved. |