TORONTO, ONTARIO, May 9, 2003 (CCNMatthews via COMTEX) --
BFI Canada Income Fund (TSX:BFC.UN) today announced its financial results for the three months ended March 31, 2003.
Highlights
- Revenues and EBITDA (1) increased 19% period over period to $38.3 and $12.1 million, respectively
- Lachenaie landfill received a vertical expansion permit and the Quebec government provided final zoning approval for the proposed long-term landfill site expansion
- Distributions continued at an annualized rate of $1.20 per trust unit
- Free cash flow available for distribution (2) increased to $9.6 million
'The F.A. acquisition, new contracts and organic revenue growth generated from our core collection and landfill customer base have all contributed to strong revenue and EBITDA growth,'said Keith Carrigan, President and Chief Executive Officer. 'Consistent revenue and EBITDA are a feature of our industry, and they will help to power ongoing growth for the fund. Management is united in its focus to increase free cash flow available for distribution.'
Three months Three months
ended March ended March
(in millions except for per unit amounts) 31, 2003 31, 2002(3)
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Revenues $ 38.3 $ 32.3
Operating expenses 19.8 16.9
Selling, general and administration expenses 6.4 5.2
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Income before the undernoted 12.1 10.2
Amortization 9.9 7.2
Interest on long-term debt 1.3 3.0
Other income - (0.1)
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Income before income taxes 0.9 0.1
Income tax recovery (1.8) -
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Net income $ 2.7 $ 0.1
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Net income per trust unit, basic &diluted $ 0.10 NA
Number of units outstanding (thousands) 26,500 NA
Maintenance capital expenditures $ 1.0 $ 3.7
Growth capital expenditures 2.0 -
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Total capital expenditures $ 3.0 $ 3.7
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Free cash flow available for distribution $ 9.6 $ 3.5
Free cash flow available for
distribution per trust unit $ 0.36 NA
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Aggregate distributions declared $ 8.0
Aggregate distributions declared
per trust unit $ 0.30
Operations highlights
Revenues of $38.3 million were 19% or $6.0 million higher than the comparative period. Growth is largely due to the F.A. acquisition and organic revenue growth in the landfill and collection segments. New contract wins towards the end of fiscal 2002 also contributed to the increase in revenue performance for the current period.
Operating expenses experienced a $2.9 million or 17% increase to $19.8 million. The F.A. acquisition, servicing new contract wins, and incremental costs required to service higher solid-waste collection and disposal volumes contributed principally to the current period increase.
Selling, general and administration expenses increased by $1.2 million to $6.4 million. The F.A. acquisition, public company costs and additional corporate personnel required to function as a public company totalled $0.7 million in aggregate.
EBITDA of $12.1 million was $1.9 million or 19% higher than the same period a year ago. The rise in revenue, albeit partially offset by higher operating and selling, general and administration expenses, resulted in a commensurate rise in EBITDA. Management's principle objective remains to reap operating efficiencies and the reduction of selling, general and administration costs.
The Fund paid cash distributions to unitholders of $0.30 for the three month period ended March 31, 2003 and declared a distribution of $0.10 per unit to unitholders of record on March 31, 2003, paid April 15, 2003.
Outlook
The remaining permitted airspace capacity at the Lachenaie landfill is expected to be exhausted by April 2004. However, the Fund has recently received local and provincial zoning by-law approval to expand the footprint of the existing landfill by 500 additional acres. The Fund's predecessor applied for and successfully received landfill airspace expansions for the Lachenaie site prior to reaching permitted capacities in each of 1985 and 1995. The Fund recently applied for and received vertical expansion over existing placed waste providing an additional 1.1 million tonnes capacity. This additional capacity will provide airspace to April 2004. While the granting of the permit is entirely within the discretion of the Quebec Government, management is confident that final approval will be obtained prior to the expiry of the Fund's current permit, because:
- there will be a critical shortage of sanitary landfills in the Province of Quebec, especially in the Montreal metropolitan area, by 2005;
- BFI Canada's highly sophisticated operations have a perfect environmental track record; and
- the expansion design is similar to the Fund's current operations.
The potential available airspace capacity at this expansion site, if approved, is estimated to be approximately 39.5 million additional tonnes which would equate to an operating life span of 40 years, based on current disposal volumes and a six day per week operation. The Fund will commence construction and development of the expansion site as soon as it is permitted. Based on the current plan, which allows for contingencies, management expects to continue landfill operations through construction of the proposed expansion without interruption.
Looking ahead, management's principal objective is to increase distributable cash by continuing to enhance the Fund's service offerings, improving efficiencies and growing through strategic acquisitions. In this regard, management continuously reviews and evaluates potential strategic acquisitions; especially those that can increase free cash flow and, accordingly, distributions. Future strategic initiatives may be financed with borrowings, the additional issuance of units, from working capital or from cash flow generated from operations.
Management is actively reviewing financing alternatives to efficiently finance its future growth initiatives.
Management expects that the fund will be able maintain the current distribution level. Future increases will be considered by the Trustees as appropriate.
New Accounting Policy
Effective March 2003, the Canadian Institute of Chartered Accountants issued a new Canadian accounting standard for asset retirement obligations, which requires the recognition of an obligation associated with the retirement of a tangible long-lived asset that an entity is legally obligated to settle. The new standard is effective for fiscal years beginning on or after January 1, 2004 and requires the Fund to retroactively restate all comparative consolidated financial statements. Accordingly, the impact of new accounting standard, which is expected to have a material effect on landfill assets and closure and post-closure costs, will require the March 31, 2003 consolidated financial statements to be restated for all future comparative purposes.
(1) All references to 'EBITDA'are to 'income before the following'on the consolidated statement of operations, or more explicitly, to 'earnings before interest on long-term debt, amortization 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 expenses (specifically amortization, interest on long-term debt and income taxes). These expenses are viewed by management as either non-cash (in the case of both amortization and future income taxes) or non-operating (in the case of both interest on long-term debt and current income taxes). EBITDA is a u seful financial metric for investors as it represents a starting point in the determination of free cash flow available for distribution. The underlying reasons for exclusion of each item are as follows:
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.
Amortization - as a non-cash item amortization has no impact on the determination of free cash flow available for distribution.
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 (loss) are detailed in the consolidated statement of operations beginning with 'income before the following'and ending with 'net income'.
(2) 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 less interest on long-term debt, current income taxes and maintenance capital expenditures. 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 to 'free cash flow available for distribution'have the meaning set out in this note.
(3) Operating results for the period from January 1, 2002 to March 31, 2002 are the results of 3743276 Canada Inc., one of the predecessors of BFI Canada Holdings Inc. The Fund indirectly acquired all of the issued and outstanding shares of 3743276 Canada Inc. on April 25, 2002 in connection with the closing of its initial public offering of units. The Fund has only consolidated the results of BFI Canada Holdings Inc. with its results since April 25, 2002. Reference is made to the prospectus of the Fund dated April 16, 2002 relating to the initial public offering for a complete description of the transactions effected concurrently with the closing of such offering.
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 Initial Annual Information Form for the period ended December 31, 2002. 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.
Management will hold a conference call on Monday, May 12, 2003 at 8:30 am (ET). To access the call, participants should dial 1-800-470-5906, at approximately 8:20 am. The conference call will also be Webcast live at www.bficanada.com or www.vcall.com and subsequently archived on the BFI Canada site.
A rebroadcast of the call will be available until midnight on May 19, 2003. To access the rebroadcast, dial (416) 626-4100 and quote the reservation number 21142868.
BFI Canada Income Fund, through its subsidiaries, is one of Canada's largest full-service waste management companies providing non-hazardous solid waste collection and landfill disposal services for commercial, industrial and residential customers in the provinces of British Columbia, Alberta, Manitoba, Ontario and Quebec. Through its wholly-owned subsidiaries, the Fund operates one and owns and operates three landfills, carries on collection operations in 18 markets, and operates two transfer collection stations, seven material recovery collection facilities and one landfill gas to energy facility. BFI Canada's business does not include any management, collection or disposal of hazardous or liquid waste. The Fund's units are listed on the Toronto Stock Exchange under the symbol BFC.UN. For more information on the Fund, visit www.bficanada.com.
The Fund provides a full Management Discussion and Analysis document on its website: www.bficanada.com
BFI CANADA INCOME FUND
Consolidated Balance Sheets
March 31, 2003 (unaudited) and December 31, 2002 (audited)
(in thousands of dollars)
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March 31, December
2003 31, 2002
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ASSETS
CURRENT
Cash and cash equivalents $ 5,768 $ 5,666
Accounts receivable 22,864 24,962
Other receivables 1,309 415
Prepaid expenses 3,330 3,959
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33,271 35,002
OTHER RECEIVABLES 4,190 1,509
INTANGIBLES 74,677 77,805
GOODWILL 49,171 49,171
DEFERRED COSTS 2,224 1,832
DEFERRED FINANCING COSTS 1,838 2,058
CAPITAL ASSETS 88,382 89,665
LANDFILL ASSETS 120,079 122,399
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$ 373,832 $ 379,441
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LIABILITIES
CURRENT
Accounts payable $ 10,869 $ 15,410
Accrued charges 3,850 6,076
Distribution payable 2,650 2,650
Income taxes payable 751 157
Deferred revenue 6,353 5,360
Current portion of long-term debt 257 252
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24,730 29,905
LONG-TERM DEBT 83,168 76,985
LANDFILL CLOSURE AND POST-CLOSURE COSTS 8,617 8,013
FUTURE INCOME TAX LIABILITIES 23,283 25,298
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139,798 140,201
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UNITHOLDERS'EQUITY 234,034 239,240
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$ 373,832 $ 379,441
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BFI CANADA INCOME FUND
Consolidated Statement of Operations
For the three months ended March 31, 2003
(unaudited)
(in thousands of dollars, except income per unit amounts)
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REVENUES $ 38,324
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OPERATING EXPENSES 19,827
SELLING, GENERAL AND ADMINISTRATION EXPENSES 6,446
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INCOME BEFORE THE FOLLOWING 12,051
AMORTIZATION 9,917
INTEREST ON LONG-TERM DEBT 1,230
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INCOME BEFORE INCOME TAXES 904
INCOME TAX EXPENSE (RECOVERY)
Current 175
Future (2,015)
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(1,840)
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NET INCOME $ 2,744
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Net income per trust unit, basic and diluted $ 0.10
Weighted average number of units outstanding (thousands) 26,500
BFI CANADA INCOME FUND
Consolidated Statement of Cash Flows
For the three months ended March 31, 2003
(unaudited)
(in thousands of dollars)
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NET INFLOW (OUTFLOW) OF CASH RELATED
TO THE FOLLOWING ACTIVITIES
OPERATING
Net income $ 2,744
Items not affecting cash
Amortization of intangibles 3,128
Amortization of deferred financing costs 220
Amortization of capital assets 4,214
Amortization of landfill assets 2,355
Gain on disposal of capital assets (7)
Provision for landfill closure and post-closure costs 604
Future income taxes (2,015)
Landfill closure and post-closure expenditures -
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11,243
Changes in non-cash working capital items (3,478)
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Cash generated from operating activities 7,765
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INVESTING
Investment in other receivables (2,850)
Proceeds from other receivables 238
Purchase of capital assets (2,932)
Landfill assets (35)
Proceeds on disposal of capital assets 8
Deferred costs (392)
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Cash utilized in investing activities (5,963)
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FINANCING
Proceeds from revolving loan 6,250
Distributions paid to unitholders (7,950)
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Cash utilized in financing activities (1,700)
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NET CASH INFLOW 102
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 5,666
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CASH AND CASH EQUIVALENTS, END OF PERIOD $ 5,768
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SUPPLEMENTAL CASH FLOW INFORMATION:
Cash and cash equivalents are comprised of:
Cash $ 2,673
Cash equivalents 3,095
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$ 5,768
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Cash paid during the period for:
Income taxes $ 43
Interest $ 1,722
BFI CANADA INCOME FUND
Consolidated Statement of Unitholders'Equity
For the three months ended March 31, 2003
(unaudited)
(in thousands of dollars)
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BALANCE, BEGINNING OF PERIOD $ 239,240
Net income 2,744
Distributions (7,950)
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BALANCE, END OF PERIOD $ 234,034
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----------------------------------------------------------------------- BFI Canada Income Fund
Joseph D. Quarin
Chief Financial Officer
(416) 401-7722
Email: joe.quarin@bficanada.com
or
BFI Canada Income Fund
Anne Plasterer
Manager, Investor and Employee Relations
(416) 401-7729
Email: anne.plasterer@bficanada.com
NEWS RELEASE TRANSMITTED BY CCNMatthews Copyright (C) 2003, CCNMatthews. All rights reserved.
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