Where. ADS Waste Holdings, Inc. WasteExpo Investor Summit June 1, 2015

Transcription

1 Where ADS Waste Holdings, Inc. WasteExpo Investor Summit June 1, 2015

2 Disclaimer This presentation contains forward-looking statements within the meaning of the federal securities laws. Such forward-looking statements are subject to risks and uncertainties, including, in particular, statements about ADS Waste Holdings, Inc. s ( ADS or the Company ) plans, strategies, prospects and industry estimates. These statements identify prospective information and include words such as believes, expects, may, will, should, seeks, intends, plans, estimates, or anticipates or similar expressions. Examples of forward-looking statements include, but are not limited to, statements regarding: expected cost savings, sales increases, margins growth, cash flows, capital expenditures, market and industry growth rates and trends, including trends towards outsourcing, product line and market expansion, market share, operational and expense improvements (including headcount, technological, customer service and business improvement initiatives), retention rates, acquisitions and their subsequent integration, seasonal operating fluctuations, commodity prices, governmental regulations, demand for the Company s products and financial results. The foregoing is not an exhaustive list of all forward-looking statements. Forward-looking statements are based on the Company s current expectations and assumptions regarding its business, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. The Company s actual results may differ materially from those contemplated by the forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance. The matters referred to herein may not in fact occur. You are cautioned, therefore, against relying on any of these forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made. Factors or events that could cause the Company s actual results to differ may emerge from time to time, and it is not possible to predict all of them. The Company undertakes no obligation to update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law. 2

3 Advanced Disposal snapshot Collection Services Transfer Stations Recycling Facilities Landfill Services FY 2014 revenue by line of business Commodity Sales 2% Commercial 27% Residential 29% 92 Collection Operations 76 Transfer Stations 24 Recycling Facilities 40 Landfills 2.7M residential customers serviced; 732 exclusive municipal contracts; 302K commercial, industrial & construction customers 3,100 vehicle fleet bringing 4.4M tons of waste annually to transfer stations 597K tons of recyclables collected annually and 179K tons processed in 24 facilities 16M annual tons disposed in our 40 landfills with 64% being internalized waste Other 5% Landfill Gas 1% Rolloff 18% Transfer / Landfill 18% Vertically integrated geographic hubs operated in 17 states and the Bahamas Revenue: $1,403 million EBITDA: $377 million Leading collection operations primarily in secondary markets; investing in automation and CNG Strategically located landfills throughout the network provides competitive advantage 3

4 Expected years Strategic position in attractive markets with long-lived landfill network Over 3 million customers across 17 states and the Bahamas Revenue by market type Urban market revenue 25% Secondary market revenue 47% Franchise revenue 28% More than 70% of revenue from franchise and secondary markets Average expected life active landfills Corporate Headquarters Regional Headquarters Hauling/Collection Landfill Recycling Transfer Stations Not Listed C&D MSW Total 4

5 Volume (thousands of tons) Favorable industry dynamics and significant barriers to entry Significant barriers to entry Regulatory hurdles and on-going compliance Relationships with municipal clients difficult to duplicate Lack of cost effective alternatives Fewer, larger landfills favor well-capitalized incumbents Current regulatory environment and the high cost of landfill compliance and development have led to a steady stream of landfill closings Survivors of this trend were larger, private sector operations with the resources to add new capacity Despite fewer landfills, the average volume of the remaining landfills has increased considerably Declining number of active municipal solid waste landfills Geographic and political constraints on new landfills 6,000 4,000 2,000 0 Lengthy & controversial permitting processes Municipal Private Substantial capital costs for landfill development Source: Waste Business Journal 5

6 Waste Management Republic Services Waste Connections ADS Progressive Waste Recology Rumpke Casella Waste Pro Waste Industries WCA Well positioned to compete as the largest privately owned solid waste company in the United States Twice the size of next largest private company competitor and internalization consistent with industry norms (a) Internalization Rate (b) $16 $5 68% 68% 66% 64% 53% $13 $ $3 $8 $8.8 Republic Services Waste Management Casella ADS Waste Connections $2 $2 $1.8 $2.0 $1.4 $1 $0.7 $0.5 $0.5 $0.5 $0.5 $0.3 $0 Public Private Non-US Operations (a) Fourth largest in the US and fifth largest in North America as measured by 2014 revenue for ADS and public companies; 2013 revenue for private companies (b) As of December 2014 Note: Waste Management excludes Wheelabrator; Waste Connections excludes E&P segment Source: Public filings, Waste 360 6

7 ADS core operating strategies and management philosophy Capitalize on our vertically integrated geographic hubs Control the waste stream from inception through disposal or beneficial reuse Generate sustainable long term growth Organic volume growth Pursue municipal contracting opportunities Maintain financial discipline focus on deleveraging Maximize free cash flow from operations Pricing discipline Attention to ROE and capital deployed Asset swaps/strategic divestitures Implement best practices SERVICE FIRST. SAFETY ALWAYS. Routing/driver productivity Environmental compliance Continue disciplined acquisition strategy Tuck-ins to leverage integrated geographic hubs Effective new market strategy Corporate provides strategic direction Region provides operational direction and strategic control District and General Managers execute locally SERVICE FIRST. SAFETY ALWAYS. 7

8 Highly experienced management team The Company is led by a seasoned management team, with the three most senior executives having combined industry experience of 64 years Senior management is backed by an impressive group of region and local managers comprised of the best and brightest from across the company Richard Burke CEO 27 years experience John Spegal COO 23 years experience Prior to joining Advanced Disposal, spent 6 years with AIR-serv Group LLC as Regional Vice President Prior to AIR-serv, spent 20 years with Allied Waste /Browning Ferris Industries in various management roles throughout the Mid-Atlantic, Southeast and Southern regions Joined Veolia in 1999 as Area Manager for Southeast Wisconsin area; served as Regional Vice President for the Eastern and Southern markets and was appointed President and CEO of Veolia in 2007 Prior to joining Veolia, spent 12 years with Waste Management in a variety of leadership positions 8 Steven Carn CFO 14 years experience Joined Advanced Disposal in April 2001 and served as Chief Accounting Officer until August 2006 and currently serves as Chief Financial Officer Certified Public Accountant in Ohio

9 ADS investment highlights

10 Key drivers of value Organic price volume growth Accretive tuck in acquisition New residential municipal contract awards Revenue growth Balance Sheet efficiency Interest savings Leverage EBITDA margin Operating leverage and increase density Cost controls and efficiencies Leverage SG&A Capital spend controls Prudent capital allocation Return on invested capital Free cash flow Increase EBITDA Manage Capex Reduce DSO Increase DPO 10

11 Multiple opportunities for balanced growth and enhanced customer retention Revenue growth Disciplined tuck-in acquisitions Municipal contracts and privatizations Grow commercial & industrial customer base Enhance geographic hubs and supplement vertical integration, while targeting markets with favorable disposal market dynamics and opportunities for multi-year contracts Completed 29 acquisitions and development projects since January 2013 at an average multiple of 4.0x post synergy Proven, systematic and replicable approach to contract bids Geographically integrated operating structure with local management s deep ties to communities providing a competitive edge Capitalize on further privatization of waste streams and disposal facilities Heightened sales focus on large commercial and industrial (C&I) project opportunities such as special waste streams, and coal ash C&I and construction and demolition (C&D) customers are expected to lead volume growth on an economic recovery New market growth Focus on landfill and distribution assets in secondary markets and general avoidance of markets with many large competitors and suboptimal pricing dynamics Retain existing customers & enhance revenue quality Provide a best-in-class customer experience to minimize customer defections ROI-based pricing that considers the full lifecycle of costs Increase fee participation 11

12 Targeting $30-$50 million per year in disciplined tuck-in acquisitions and new municipal contracts Revenue growth Spending within target at attractive multiples Acquisition Strategy $60 Acquisitions and New Municipal Contracts Best targets are companies within our vertically integrated footprint where we can leverage synergies $50 $ Willing to look at any deal that fits in with our vertically integrated geographic hub model and can be used as a way to gain entry into a new marketplace $ Have a track record of identifying targets that reduce overall leverage $20 $49.8 $31.4 $ Acquisitions and new municipal contracts are an important part of our growth strategy $ $ YTD Annual Spend Average Multiple 12

13 Core prices trending favorably on a sequential basis Revenue growth Last eight quarters average core price growth of 1.9% outpacing inflation 4.6% 1.0% 3.2% 0.9% 2.4% 1.4% 2.9% 0.8% 0.3% 1.1% 0.5% 1.0% 1.5% 2.0% 0.7% 0.6% 2.2% 1.6% 0.9% 0.8% 0.6% 0.2% 0.3% 0.1% 1.2% 0.8% 0.3% 0.4% 0.5% 0.4% 0.4% 1.0% 0.3% 0.6% 0.1% 0.3% 0.6% 0.6% (0.7%) 2Q13 3Q13 4Q13 YTD13 1Q14 2Q14 3Q14 4Q14 YTD14 1Q15 Collection Disposal Cost Recovery Fees 13

14 Cost controls and efficiencies EBITDA margin Labor Repairs and Maintenance Fuel Incentive pay and reduce driver shortages Route efficiencies and productivity improvements Residential route fleet automation at 51% as of Q Procurement efficiencies and national account pricing Preventive maintenance program and standardization Reduce mechanic shortages Fuel hedge ~ 95% or 23.8 million diesel gallons hedged for 2015 at avg. $3.39 per gallon 11% of routes converted to CNG as of Q Risk Safety improvements claim prevention Insurance program changes Self Insured Retention Program or Captive Other Costs Leachate and landfill site costs timing of capping to minimize leachate and gas issues SG&A IT and telecommunication efficiencies Reduce bad debt Consolidation of back office functions 14

15 New leadership team driving value creation EBITDA margin and free cash flow Adjusted EBITDA and adjusted EBITDA margins are improving with new management team 2013 AEBITDA $ AEBITDA $376.9 TTM Q (a) $384.4 $80.7 $93.9 $99.1 $88.5 $77.0 $96.2 $105.5 $98.2 $84.5 Q Q Q Q Q Q Q Q Q (a) TTM Q equals full year 2014 AEBITDA plus Q less Q

16 Revenue & EBITDA Bridge YTD 2014 Free cash flow Revenue grew 6.4% in 2014 $37.8 $19.6 ($5.2) $1,402.9 $1,319.1 $16.7 $14.9 YTD 2013 Acquisitions Muni Contracts Organic Volume Price Recycling YTD 2014 Adjusted EBITDA grew by 4.1% despite weather and recycling headwinds $19.6 ($10.8) $362.2 $10.8 $10.2 ($4.9) ($3.7) ($6.5) $ % 26.9% YTD 2013 Acq / Muni Organic Volume Weather Recycling Price Costs Closed / Broker /Hedge YTD

17 Higher EBITDA and balance sheet efficiency driving free cash flow gains Free cash flow Adjusted free cash flow grew ~$23 million in 2014 Free cash flow growth strategy $ % of revenue $ % of revenue Continuing to expand EBITDA and driving profitable growth to generate cash Reduced DSO by four days since Q Increased DPO by four days over same time period And grew another $16 million in Q1 Deleveraging over time, resulting in lower interest expense Prudently managing capital spending $24.3 $8.2 Q Q

18 Investing for the future while deleveraging over time ROIC and leverage Capital balances replacement and growth needs (a) Debt covenant leverage continues to decline All Other Replacement Containers Growth Cell Construction Infrastructure Trucks $166 $166 % of revenue 11.8% 6.5 x $21 $8 0.6% 6.1 x 6.0 x $35 2.5% $32 $55 $ % $ Capital by Asset Class 2014 Capital by Category Q Q Q (a) Excludes the impact of land purchase for future airspace of $8.8 at one landfill and capital related to the start of a major municipal contract of $