ADS Waste Holdings, Inc. Investor Presentation April 2014 - - PowerPoint PPT Presentation

ADS Waste Holdings, Inc. Investor Presentation April 2014

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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. (“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,” “approximately,” “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, demand for the Company’s products and financial results. The foregoing is not an exclusive list of all forward-looking statements. Forward-looking statements are based

• n 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

• f 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

• f them. The Company undertakes no obligation to publicly update any forward-looking statement, whether as

a result of new information, future developments or otherwise, except as may be required by law.

Disclaimer

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I. Company Overview II. Operations Overview III. 2013 Financial Overview

Table of Contents

Company ¡Overview ¡

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We provide integrated, non-hazardous solid waste collection, transfer, recycling and disposal services to residential, commercial, industrial and construction customers across 17 states and the Bahamas We are dedicated to finding effective, sustainable solutions to preserve the environment for future generations Our mission is to be the most trusted provider of environmental services in the US, and become Ø our customers’ partner of choice, Ø our industry’s employer of choice, and Ø our shareholders’ investment of choice Company Mission

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Leading vertically integrated solid waste services platform Diversified business with long term contracts and long lived assets Essential service with recession- resistant demand and stable cash flows Favorable industry dynamics and significant barriers to entry Best in class management team Multiple

• pportunities for

balanced growth

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Operating Strategies

Ø Capitalize on our vertically integrated geographic hubs

Ø Control the waste stream from inception through disposal or beneficial reuse Ø Locally managed

Ø Generate sustainable long term growth

Ø Organic volume growth Ø Pursue municipal contracting opportunities Ø National accounts program

Ø Maintain financial discipline – focus on deleveraging

Ø Maximize free cash flow from operations Ø Pricing discipline Ø Attention to ROE and capital deployed Ø Asset swaps/strategic divestitures

Ø Implement best practices

Ø Service First. Safety Always. Ø Routing/driver productivity Ø Environmental compliance

Ø Continue disciplined acquisition strategy

Ø Tuck ins to leverage integrated geographic hubs Ø Effective new market strategy

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Management Philosophy Ø Strategic Direction Ø Operational Control Ø Local Execution Ø People always make the difference Ø Strongly believe in a highly incentivized work force focused on local execution Ø Service First. Safety Always!

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Advanced Disposal Locations

Highly Experienced Management Team

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– The Company is led by a seasoned management team, with the three most senior executives having combined industry experience of 61 years – Senior management is backed by an impressive group of area managers comprised of the best and brightest from ADS and Veolia

Charles Appleby Chairman and CEO 22 years experience

– Served as Director, President and CFO of Advanced Disposal since inception before becoming CEO in August 2006 – Also served as President of CAVCO, a private investment company, where he was responsible for the securities portfolio, detailed analysis and review of potential investment opportunities and administration

• perations from 1996 through June 2004

– Certified public accountant in Florida

Richard Burke President and COO 26 years experience

– 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

Steven Carn CFO 13 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

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Company Overview Through our over 3,000 vehicle fleet and over 5,300 employees:

§ We service:

• More than 2.3MM residential customers through over 732

exclusive municipal contracts

• More than 302k commercial, industrial and construction

customers § We collect over 7MM tons of waste annually § We dispose of over 15MM tons annually in our landfills § We collect 590k tons of recyclables each year and process 184k tons in our 25 recycling facilities § 58% of our MSW landfills reuse our landfill gas

• We produce electricity to power over 25k homes

§ Largest privately held solid waste disposal company in the US with ~$1.3B of annual revenues § Internalize 64% of waste collected

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2013 Focus and Accomplishments

Ø Completed the integration of the companies and achieve estimated synergies

Ø Original estimate of $29.5MM updated to $45MM Ø IT integration Ø Accounting/finance integration Ø HR and Risk Management integration Ø Effective purchasing programs established Ø Consolidated Corp/Region offices Ø Rebranding complete

Ø Institutionalized the Advanced Disposal culture/Management Philosophy

Ø Incentivized managers to act like owners/entrepreneurs Ø Significant executive management field involvement

Ø Focused on Operations

Ø Achieve operational efficiencies – disposal and route optimization Ø Headcount reductions Ø Comprehensive safety training programs Ø Price/volume increases; customer retention

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2013 Focus and Accomplishments (cont.)

Ø Completed DOJ mandated and other strategic asset divestitures

Ø Completed divestiture of Middle GA operations to Waste Industries Ø NJ transfer stations Ø Exited NY/NJ marketplace Ø Continue to evaluate asset swap potential

Ø Completed acquisitions/new municipal contracts

Ø $30.5MM acquisitions ($8.9MM EBITDA @ 3.4x) Ø Tuck-ins across all regions Ø Revenue of approximately $30MM in new muni contracts and $95MM in renewals

Ø Positioned the company for maximum value creation

Multiple opportunities for balanced growth

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Grow commercial & industrial customer base

– Heightened sales focus on large commercial and industrial (C&I) project opportunities such as Marcellus Shale, special waste streams, and coal ash – C&I and construction and demolition (C&D) customers are expected to lead volume growth in an economic recovery

Municipal contracts and privatizations

– Proven, systematic and replicable approach to contract bids – Geographically integrated operating structure and local management’s deep ties in their communities provide a competitive edge – Capitalize on further privatization of collection and disposal facilities

National accounts program

– Nationwide waste brokerage program expected to be key source of organic growth – Provides access to a network of vendors for sourcing and allocating business; enhances internalization of waste from access to new contracts and the ability to consummate volume swaps

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

Disciplined tuck-in acquisitions

– Enhance geographic hubs and supplement vertical integration, while targeting markets with favorable disposal market dynamics and opportunities for multi-year contracts – Through 12/31/13, we completed over 17 acquisitions and development projects at an average multiple of 3.4x

CNG conversion

• pportunity

– Conversion to CNG could provide significant EBITDA uplift to the current plan – Investing $3.3MM in the conversion of a fleet of 45 trucks could result in $1.1MM of annual savings

Operations Overview

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Vertically integrated environmental services platform

Collection Services 91 Collection Operations 71 Transfer Stations 42 Landfills 25 Recycling Facilities Transfer Stations Recycling Facilities Landfill Services

YTD 2013 revenue by region YTD 2013 revenue by type

Midwest 39% East 25% South 36% Landfill Gas 1% Residential 29% Transfer / Landfill 17% Rolloff 18% National Accounts 2% Other 4% Commercial 27% Commodity Sales 3%

Stable collection operations

– Provides curbside collection services for more than 2.3MM residential customers through 732 municipal contracts – Long-term contracts of 5 years or longer with local government entities and under a subscription basis for individual households – Very predictable waste generation – Services 302,000 C&I and construction customers – Typically billed monthly, current or in advance of service provided – Contracts typically 3--5 years in length based on estimated weight and service time

Residential Commercial 2013 Collection revenue by customer type Roll off

– Controls over 28k tons of waste per day, serving residential, C&I, and C&D customers – Fleet of over 3,000 front line vehicles with – Provides roll-off containers and permanent (contract-based) and temporary (not contract-based) roll-off services for C&D customers – Billed bi-monthly in arrears

17 Commercial 37% Residential 39% Rolloff Temporary 9% Rolloff Permanent 15%

Overview of recycling operations

– The company operates 25 recycling facilities – Approximately 590k tons sold, controlled or managed annually – Materials recycled include paper, cardboard, glass aluminum and other metals – Performs small container pickup/transfer as well as bulk/bale collection for larger customers – $10/ton change in average consolidated commodity pricing would impact EBITDA by only ~$4.3MM per year

Overview Opportunity for growth

– Expansion and facilities improvement – Increasing demand from customers for sustainable waste options – Ability to leverage existing footprint – Partnerships with existing providers

YTD 2013 sale of recyclables - revenue YTD 2013 sale of recyclables - volume

18 OCC 50% Other Fiber 15% Other Non Fiber 16% Single Stream 19% OCC 32% Other Fiber 20% Other Non Fiber 14% Single Stream 34%

Disposal operations – landfill and transfer stations

– The Company owns and operates 42 landfills for municipal, construction and demolition purposes – Landfill expansion continues through strategic acquisitions and transfer station development – Landfill operations are a highly profitable segment in the waste disposal value chain – Outstanding history of compliance with state and federal environmental regulations - environmental auditing conducted regularly to ensure minimal impact

• n surroundings

– The Company’s landfills process more than 15MM tons per year – Transfer stations receive, consolidate and transfer solid waste to landfills and recycling facilities – Transfer stations enable the Company to internalize waste volumes beyond the disposal footprint through transfer and disposal contracts as well as leverage disposal options and pricing for “non-internalized” waste volumes – The Company operates 71 strategically located transfer stations – Transfer stations are part of the vertical integration of the disposal services, allowing for enhanced relationships and growth and acquisition opportunities

Landfill YTD 2013 disposal revenue by region YTD 2013 disposal revenue by type Transfer Disposal operations include landfills and transfer stations

19 MSW 70% C&D 10% Landfill Gas 2% Special Waste 17% Midwest 40% East 30% South 30%

CNG Summary

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WAUNAKEE, WI 18 Routed CNG 26 Routed Diesel NORTHBROOK, IL 31 Routed CNG 34 Routed Diesel EVANSVILLE, IN 30 Routed CNG 2 Routed Diesel FORT MYERS, FL 35 Routed CNG 13 Routed Diesel BALLGROUND, GA 29 Routed CNG 22 Routed Diesel AUGUSTA, GA 12 Routed CNG 26 Routed Diesel

155 total collection and 3 service trucks

2013 Financial Overview

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2013 ¡Financial ¡Summary ¡Highlights ¡

• Revenue from Continuing Operations of $1.3 billion

– Collection revenue positively impacted by tuck-in acquisitions, new residential contracts and cost recovery fees – Disposal revenue impacted by closure of Moretown Landfill $7.5MM and lower special waste and shale volumes – Continued headwind from commodity pricing negatively impacted revenue

• EBITDA of $362.2MM with 27.5% Margins (excludes restructuring, integration and

rebranding costs, discontinued operations and proforma adjustments) – Closure of Moretown and major lost contracts accounted for 92% of the decrease in EBITDA Year over Year – Recycling prices impacted EBITDA negatively $3.5MM

• Cash Flow

– Company generated $180.3MM of cash flow from operations 2013 – Revolver funded $8.0MM at December 31, 2013 – Capex spend $158.1MM or 11.1% of revenue – Refinanced Term B Loan Feb 2014 – LIBOR Floor Reduced 50bps to 0.75% from 1.25% with annual interest savings of $8.9MM. Cost refinance ~ $1.4MM

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ADS ¡Compara?ve ¡Income ¡Statement ¡

Year Ended December 31, 2013 2012 2011

Service revenues $ 1,319.1 $ 537.9 $ 427.4 Operating costs and expenses Operating expenses 825.9 333.2 261.8 Selling, general and administrative 177.8 104.5 61.6 Depreciation and amortization 278.9 104.1 76.5 Acquisition and development costs 1.2 1.2 3.5 Loss on disposal of assets 2.6 2.1 14.1 Asset impairment, including goodwill 0.6 43.7 — Restructuring charges 10.0 9.9 — Total operating costs and expenses 1,297.0 598.7 417.5 Operating income (loss) 22.1 (60.8) 9.9 Other income (expense) Interest expense (163.1) (49.4) (24.5) Interest income 0.2 0.1 0.1 Debt conversion costs and early extinguishment of debt — (9.4) (4.8) Other, net 0.1 1.2 0.4 Total other expense (162.8) (57.5) (28.8) Loss from continuing operations before income taxes (140.7) (118.3) (18.9) Income tax (benefit) provision (45.4) (13.5) 3.5 Loss from continuing operations (95.3) (104.8) (22.4) Discontinued operations Loss from discontinued operations before income tax (29.6) (93.8) (0.2) Income tax benefit (7.1) (4.6) (0.4) Discontinued operations, net (22.5) (89.2) 0.2 Net loss (117.8) (194.0) (22.2) Less: Net loss attributable to noncontrolling interests — (1.4) (0.2) Net loss attributable to ADS Waste Holdings, Inc. $ (117.8) $ (192.6) $ (22.0)

$ in millions

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Price ¡Growth ¡Year ¡Over ¡Year ¡

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Volume ¡Growth ¡Year ¡Over ¡Year ¡

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Non-­‑GAAP ¡Reconcilia?on ¡Schedule ¡– ¡Adjusted ¡proforma ¡EBITDA ¡

Three Months Ended Twelve Months Ended December 31, December 31, 2013 2012 2013 2012

Net loss $ (36.0 ) $ (186.2 ) $ (117.8 ) $ (194.0 ) Less: loss from discontinued operations (5.5 ) (79.3 ) (22.5 ) (89.2 ) Loss from continuing operations (30.5 ) (106.9 ) (95.3 ) (104.8 ) Additions/deductions: (Benefit) provision for income taxes (11.0 ) (15.1 ) (45.4 ) (13.5 ) Interest expense 41.0 31.9 163.1 49.4 Depreciation and amortization 69.1 42.7 278.9 104.1 Accretion on landfill retirement obligation 2.6 3.0 14.1 7.9 EBITDA from continuing operations 71.1 (44.4 ) 315.4 43.1 EBITDA adjustments: Acquisition and development costs 0.2 (1.6 ) 1.2 1.2 Stock option expense 1.6 0.4 4.6 1.3 Earnings in equity investee (0.1 ) ― (0.9 ) ― Restructuring charges 5.9 9.9 10.0 9.9 Interest income non-cash (0.3 ) ― (0.2 ) (0.1 ) Debt conversion costs and early extinguishment of debt ― 9.4 ― 9.4 Cash dividends received 0.2 ― 0.6 ― Impairment of assets 0.6 43.7 0.6 43.7 Other non-cash impairments 2.5 ― 2.5 ― Loss on sale of assets 1.9 1.4 2.6 2.1 Acquisition and integration costs 4.6 31.0 25.8 32.2 Adjusted EBITDA from continuing operations 88.3 49.8 362.2 142.8 Impact of acquisitions: Veolia acquisition – continuing operations ― 36.8 ― 216.9 Other acquisitions/new contracts 4.5 1.4 6.6 1.9 Synergies to be achieved ― ― 7.2 25.5 Adjusted proforma EBITDA $ 92.8 $ 88.0 $ 376.0 $ 387.1 Revenue from continuing operations $ 333.6 $ 196.9 $ 1,319.1 $ 537.9 Adjusted EBITDA from continuing operations $ 88.3 $ 49.8 $ 362.2 $ 142.8 Adjusted EBITDA margin from continuing

• perations

26.5 % 25.3 % 27.5 % 26.6 % ¡

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Non-­‑GAAP ¡Reconcilia?on ¡Schedule ¡– ¡ ¡Quarterly ¡adjusted ¡EBITDA ¡

Three Months Ended March 31, 2013 Three Months Ended June 30, 2013 Three Months Ended September 30, 2013 Three Months Ended December 31, 2013 Loss from continuing operations (25.4) $ (18.8) $ (20.6) $ (30.5) $ Additions/deductions: (Benefit) provision for income taxes (14.2) (11.0) (9.2) (11.0) Interest expense 46.2 37.4 38.5 41.0 Depreciation and amortization 66.7 70.1 73.0 69.1 Accretion on landfill retirement obligations 4.0 3.8 3.9 2.5 EBITDA from continuing operations 77.3 81.5 85.6 71.1 EBITDA adjustments: Acquisition and development costs 0.1 0.1 0.8 0.2 Stock option expense 1.1 1.3 0.6 1.6 Earnings in equity investee (0.2) (0.4) (0.2) (0.1) Restructuring charges 1.2 0.7 2.2 5.9 Interest income non-cash

• 0.1

(0.3) Other non-cash impairments

• 2.5

Cash dividends received

• 0.4

0.2 Impairment of assets

• 0.6

Loss on sale of assets 0.1 (0.3) 0.9 1.9 Acquisition and integration costs 1.3 10.9 8.8 4.6 Adjusted EBITDA from continuing operations 80.9 $ 93.8 $ 99.2 $ 88.3 $ Revenue from continuing operations 307.2 $ 333.7 $ 344.7 $ 333.6 $ Adjusted EBITDA margin from continuing operations 26.3% 28.1% 28.8% 26.5%

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$387 $4 ($4) ($5) ($2) $376 ($10) $6 2012 Adj Pro Forma EBITDA Major Lost Contracts NY/NJ Divestiture Synergies Sale of Recyclables Collection / Disposal Pro Forma Acquisitions Bahamas Dividend 2013 Adj Pro Forma EBITDA

2012 ¡– ¡2013 ¡Adjusted ¡Proforma ¡EBITDA ¡Bridge ¡

EBITDA Bridge ($ in millions)

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Adjusted Free Cash Flow

2013 2012 Net cash provided by operating activities 180.3 $ 55.2 $ Capital expenditures (158.1) (86.4) Proceeds from the sale of property and equipment 3.4 1.5 Free cash flow 25.6 (29.7) Restructuring payments 10.0 9.9 Bonuses paid in connection with the acquisition of Veolia 9.9

• Costs associated with integration of Veolia acquisition

25.8 32.2 Adjusted free cash flow 71.3 $ 12.4 $ Revenue from continuing operations 1,319.1 $ 537.9 $ Revenue from discontinued operations 104.3 127.6 Total revenue 1,423.4 $ 665.5 $ Adjusted free cash flow as a percentage of total revenue 5.0% 1.9% Capital expenditures as a percentage of total revenue 11.1% 13.0% Significant Uses Of Cash Not Expected to Occur Each Year Veolia net working capital and net company debt payment 20.6 $ Refinancing Costs 22.5 Seller Financing Divestitures 15.0 58.1 $