Credit Suisse Global Industrials Conference Dec 4, 2013

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Credit Suisse Global Industrials Conference Dec 4, 2013

  1. 1. Collecting Value Credit Suisse Global Industrials Conference December 4, 2013
  2. 2. Forward Looking Statements This presentation includes "forward-looking statements" within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995 and applicable Canadian securities legislation. Words such as "expect," "estimate," "project," "budget," "forecast," "anticipate," "intend," "plan," "may," "will," "could," "should," "believes," "predicts," "potential," and "continue" or variations of such words, other similar words or similar expressions are intended to identify such forward-looking statements. These forward-looking statements may include, without limitation, statements relating to future financial and operating results, our financial condition and our plans, objectives, prospects, expectations and intentions. These forward-looking statements involve significant risks and uncertainties and other factors and assumptions that could cause actual results to differ materially from the forward-looking statements. Most of these factors and assumptions are outside of our control and are difficult to predict. In addition to the factors and assumptions contained in this presentation, the following factors and assumptions, among others, could cause or contribute to such material differences: downturns in the worldwide economy; our ability to realize all of the anticipated benefits of future acquisitions; our ability to obtain, renew and maintain certain permits, licenses and approvals relating to our landfill operations; and fuel cost and commodity price fluctuations. Additional factors and assumptions that could cause Progressive Waste Solutions Ltd.'s results to differ materially from those described in the forward-looking statements can be found in the most recent annual information form under the heading “Risk Factors”. Progressive Waste Solutions Ltd. cautions that the foregoing list of factors is not exclusive and that investors should not place undue reliance on such forward-looking statements. All subsequent written and oral forward-looking statements concerning Progressive Waste Solutions Ltd., or other matters attributable to Progressive Waste Solutions Ltd. or any person acting on its behalf are expressly qualified in their entirety by the cautionary statements above. Progressive Waste Solutions Ltd. does not undertake any obligation to update any forward-looking statement, whether written or oral, relating to the matters discussed in this communication, except as required by law. 2
  3. 3. Snapshot • One of the largest solid waste management companies in N.A. • Over 4 million Commercial, Industrial and Residential customers • Top 3 market share position by number of collection routes in over 80% of the markets in which we operate • Strong vertically integrated asset base in the U.S. and Canada with significant and strategic landfill internalization rates • More than 7,000 employees • Quarterly cash dividend of $0.15 per share ($0.60/share annually) • Listed on the NYSE & TSX : “BIN” 3
  4. 4. Industry Dynamics • • • • • • • • 4 $60 billion+ industry in N.A. with scale concentrated in top four players Essential service with multi-year contracts Strong and predictable cash flow Recession resistance with operating leverage to an economic recovery due to high fixed cost infrastructure (typically a late-cycle performer) Assets are underutilized, presenting margin expansion opportunity Competitive dynamics vary by local market and success is driven by local market customer density and asset mix Top players represent ~36% of industry revenues with many further consolidation opportunities remaining Industry growth driven by price and volume improvements, with recycling and waste diversion growth creating new revenue opportunities
  5. 5. Consistent Strong Results Revenue 5-year CAGR is 17.3% Adjusted EBITDA(A) 5-year CAGR is 15.2% Free Cash Flow(B) 5-year CAGR is 22.8% $1,840 $1,897 Revenue US $MM $559 2005 $680 2006 US $MM $1,430 $854 $1,047 $1,008 $170 2007 2008 2009 2010 2011 2012 2005 $208 2006 $291 2007 $194 $95 $48 $50 2005 2006 2009 172.5 $119 $64 2007 2008 2009 2010 2011 2012 $292 2008 $257 $199(1) US$MM $520 $416 262.5 Free Cash Flow (B) 5 $535 Adjusted EBITDA (A) 2011 (A) Please refer to the definition and explanation of (A) on slide 17. (B) Please refer to the definition and explanation of (B) on slide 19. (1) Free cash flow excluding $26.5 million on discretionary infrastructure projects in 2012 2012 2010 2012 includes $30 MM revenue & EBITDA impact of lower recycled commodities prices
  6. 6. Q3 Highlights • Achieved strongest organic growth of the past five years • Strong volume performance and price improvements • Higher labor and repair and maintenance costs driven by industrial volume growth and strategic capital allocation decisions • Focused on operating our business to improve EBITDA, free cash flow(B) and long-term return on invested capital (“ROIC”) • Company unified to operate as one team to make the best capital decisions across our portfolio of assets (A) Please refer to the definition and explanation of (A) on slide 17. (B) Please refer to the definition and explanation of (B) on slide 19.
  7. 7. Operating Model for Continuous Improvement  Build dense collection network    organically or by acquisition  Revenue/hour Balance with franchise markets Complement with strategic landfills Drive internalization opportunities  Critical mass matters  Density drives productivity  Strategic plans that drive  revenue and EBITDA per asset up year over year Year over year ROC improvement Business model drives improvement year-over-year      Decentralized decision-making  Local market execution and accountability  Goal oriented and execution to a result  Performance driven by metrics  Commitment to year over year performance improvement 7 Culture Passion Training Teamwork
  8. 8. Integrated Assets Support Operating Strategy 126 non-hazardous solid waste collection operations Market focused strategy Electricity Natural Gas Leading collection operations in dense urban markets Strategically located landfills in close proximity to urban markets Gas-to-Energy Plant 67 transfer stations* strategically located near many collection routes 49 Landfill Transfer station 30 landfill sites* 5 gas-to-energy systems *Owned and / or operated Material recovery Recycled goods material recovery facilities* process a variety of materials
  9. 9. Positioning Asset Base for the Future • Integrated assets are critical. – The right combinations of collection, recycling, transfer and disposal assets provide operating leverage • Acquisitions can contribute incremental operating leverage. – ‘Tuck-in’ collection companies that integrate into existing routes and assets can help achieve higher route density and landfill internalization • The right assets, at the right price, will position our company for future success. – Strategic assets, including acquisitions and internal infrastructure projects, both collection and post-collection, need to meet our measures for return on invested capital 9
  10. 10. Focusing on Operational Execution • Management focused on internal execution. – Drive productive organic growth – Maintain an optimized cost structure • Sales initiatives are taking hold. – ‘Highgraded’ field sales teams – Added strategic price management tools and field sales training programs • Positioned well for the longer term. – Serve higher growth, open markets that are most levered to an economic recovery – Opportunity to continue to grow in the markets we serve 10
  11. 11. Committed to Improving Return on Invested Capital • Focused on the disciplined investment of free cash flow(B), with the goal of improving our return on invested capital (“ROIC”). • Deploying cash to generate the highest available returns for our shareholders. • Compensation programs directly tied to improving ROIC at the company level. 11 (B) Please refer to the definition and explanation of (B) on slide 19.
  12. 12. Capital Expenditures $USD (MM) $220(2) $208 -$218(1) $143 Growth Replacement $122 $171 30% 26% 36%40% 29% 61% As a % of revenue: Replacement 7.3% Growth 4.8% 74% 70% 60%64% 2010 2011 2012 7.0% 2.9% 6.9% 2.4% 2013E 8.2% 3.5% (1) Does not include anticipated internal infrastructure investments of $39MM - $44MM. (2) Does not include internal infrastructure investments of $26.5MM. 12 • 200 150 50 0 2009 2013 Replacement CAPEX • 100 39% 71% 250 Includes capital for construction at several landfills and utility relocation at Seneca Meadows. Also reflects sale of redundant properties in 2013. 2013 Growth CAPEX • Includes capital related to municipal contract wins.
  13. 13. Internal Infrastructure Investments Key Areas Strategic Positioning Internal Infrastructure Investment Opportunities Expected  More strategic and discretionary than normal growth CAPEX  Projects span 12-24 months  Timing dependent on factors such as permitting and equipment lead times What we expect  Capital expenditures of approximately $80MM  Roughly $26MM spent in 2012, and $39-44MM of capital outlay expected in 2013, with balance of spend in 2014. Impact  Higher internalization, incremental organic revenue and free cash flow starting in 2013 and beyond  Low-risk projects resulting in high margin, long-term free cash flow and high return on capital  Expect aggregate return in the mid-to-high teens 13
  14. 14. 2013 Capital Allocation • Focused on the optimal allocation of our cash • Target long-term leverage between 2.5x – 3.0x – Total long-term debt is $1.61B at September 30, 2013 vs. $1.62B at June 30, 2013 – Funded debt to EBITDA, as defined and calculated in accordance with our consolidated facility, was 3.0x at September 30, 2013 – Comfortable with current leverage level and believe optimal long-term leverage range for the Company is between 2.5x and 3.0x • Balance sheet stability combined with strong levels of free cash flow provide flexibility to direct capital where we expect to generate the most value 14
  15. 15. Progressive Waste Solutions Priorities 1. Optimization of asset base, including post-collection, to position for the future.  Investments in assets will be strategic, not thematic, and need to meet our measures for return on invested capital 2. Operational execution to deliver organic growth and cost efficiency.  Continued focus on internal execution at the field level to drive productive organic growth  Focus on managing costs at field level 3. Disciplined deployment of capital to improve ROIC.  Strict oversight of replacement and growth capital  Allocation of free cash flow to generate the highest available returns for our shareholders 15
  16. 16. Collecting Value November 2013
  17. 17. Non-GAAP Disclosure (A) All references to “Adjusted EBITDA” in this document are to revenues less operating expense and SG&A, excluding certain non-operating or non-recurring SG&A expense, on the consolidated statement of operations and comprehensive income or loss. Adjusted EBITDA excludes some or all of the following: certain SG&A expenses, restructuring expenses, goodwill impairment, amortization, net gain or loss on sale of capital assets, interest on long-term debt, net foreign exchange gain or loss, net gain or loss on financial instruments, loss on extinguishment of debt, other expenses, income taxes and income or loss from equity accounted investee. Adjusted EBITDA is a term used by us that does not have a standardized meaning prescribed by U.S. GAAP and is therefore unlikely to be comparable to similar measures used by other companies. Adjusted EBITDA is a measure of our operating profitability, and by definition, excludes certain items as detailed above. These items are viewed by us as either non-cash (in the case of goodwill impairment, amortization, net gain or loss on financial instruments, net foreign exchange gain or loss, deferred income taxes and net income or loss from equity accounted investee) or non-operating (in the case of certain SG&A expenses, restructuring expenses, net gain or loss on sale of capital assets, interest on long-term debt, loss on extinguishment of debt, other expenses, and current income taxes). Adjusted EBITDA is a useful financial and operating metric for us, our Board of Directors, and our lenders, as it represents a starting point in the determination of free cash flow(B). The underlying reasons for the exclusion of each item are as follows: Certain SG&A expenses – SG&A expense includes certain non-operating or non-recurring expenses. Non-operating expenses include transaction costs or recoveries related to acquisitions, fair value adjustments attributable to stock options and restricted share expense. Non-recurring expenses include certain equity based compensation, payments made to senior management on their departure, severance and other non-recurring expenses from time-to-time. These expenses are not considered an expense indicative of continuing operations. Certain SG&A costs represent a different class of expense than those included in adjusted EBITDA. Restructuring expenses – restructuring expenses includes costs to integrate various operating locations with our own, exiting certain property and building and office leases, employee severance and employee relocation costs incurred in connection with our acquisition of WSI. These expenses are not considered an expense indicative of continuing operations. Accordingly, restructuring expenses represent a different class of expense than those included in adjusted EBITDA. Goodwill impairment – as a non-cash item goodwill impairment has no impact on the determination of free cash flow(B). Amortization – as a non-cash item amortization has no impact on the determination of free cash flow(B). Net gain or loss on sale of capital assets – proceeds from the sale of capital assets are either reinvested in additional or replacement capital assets or used to repay revolving credit facility borrowings. Interest on long-term debt – interest on long-term debt is a function of our debt/equity mix and interest rates; as such, it reflects our treasury/financing activities and represents a different class of expense than those included in adjusted EBITDA. Net foreign exchange gain or loss – as non-cash items, foreign exchange gains or losses have no impact on the determination of free cash flow(B). Net gain or loss on financial instruments – as non-cash items, gains or losses on financial instruments have no impact on the determination of free cash flow(B). Loss on extinguishment of debt – loss on extinguishment of debt is a function of our debt financing; as such, it reflects our treasury/financing activities and represents a different class of expense than those included in adjusted EBITDA. Other expenses – other expenses typically represent amounts paid to certain management of acquired companies who are retained by us post acquisition and amounts paid to certain executives in respect of acquisitions successfully completed. These expenses are not considered an expense indicative of continuing operations. Accordingly, other expenses represent a different class of expense than those included in adjusted EBITDA. Income taxes – income taxes are a function of tax laws and rates and are affected by matters which are separate from our daily operations. Net income or loss from equity accounted investee – as a non-cash item, net income or loss from our equity accounted investee has no impact on the determination of free cash flow(B). All references to “Adjusted EBITA” in this document represent Adjusted EBITDA after deducting amortization of capital and landfill assets. All references to “Adjusted operating income or adjusted operating EBIT” in this document represent Adjusted EBITDA after adjusting for net gain or loss on the sale of capital assets and all amortization expense, including amortization expense recognized on the impairment of intangible assets. All references to “Adjusted net income” are to adjusted operating income after adjusting net gain or loss on financial instruments, loss on extinguishment of debt, other expenses and net income tax expense or recovery. Adjusted EBITA, Adjusted operating income or adjusted operating EBIT and Adjusted net income should not be construed as measures of income or of cash flows. Collectively, these terms do not have standardized meanings prescribed by U.S. GAAP and are therefore unlikely to be comparable to similar measures used by other companies. Each of these measures are important for investors and are used by management in the management of its business. Adjusted operating income or adjusted operating EBIT removes the impact of a company’s capital structure and its tax rates when comparing the results of companies within or across industry sectors. Management uses Adjusted operating EBIT as a measure of how its operations are performing and to focus attention on amortization and depreciation expense to drive higher returns on invested capital. In addition, Adjusted operating EBIT is used by management as a means to measure the performance of its operating locations and is a significant metric in the determination of compensation for certain employees. Adjusted EBITA accomplishes a similar comparative result as Adjusted operating EBIT, but further removes amortization attributable to intangible assets. Intangible assets are measured at fair value when we complete an acquisition and amortized over their estimated useful lives. We view capital and landfill asset amortization as a proxy for the amount of capital reinvestment required to continue operating our business steady state. We believe that the replacement of intangible assets is not required to continue our operations as the costs associated with continuing operations are already captured in operating or selling, general and administration expenses. Accordingly, we view Adjusted EBITA as a measure that eliminates the impact of a company’s acquisitive nature and permits a higher degree of comparability across companies within our industry or across different sectors from an operating performance perspective. Finally, Adjusted net income is a measure of our overall earnings and profits and is further used to calculate our net income per share. Adjusted net income reflects what we believe is our “operating” net income which excludes certain non-operating income or expenses. Adjusted net income is an important measure of a company’s ability to generate profit and earnings for its shareholders which is used to compare company performance both amongst and between industry sectors. 17
  18. 18. Non-GAAP Disclosure – continued 2013 174,586 $ (111) 6,061 792 1,635 4,074 187,037 (7,227) 219,038 398,848 (174,229) 224,619 $ 179,088 2,045 (813) 1,215 3,010 184,545 (975) 202,352 385,922 (163,146) 222,776 Net income $ 20,094 $ 32,158 $ Transaction and related costs (recoveries) - SG&A 64 675 4,811 237 Fair value movements in stock options - SG&A(*) 266 (143) Restricted share expense (recovery) - SG&A(*) Non-operating or non-recurring expenses - SG&A 1,635 3,010 Impairment of intangible assets - Amortization 4,074 Net loss (gain) on financial instruments 2,597 (3,988) Other expenses Net income tax expense or (recovery) (2,193) 173 Adjusted net income(A) $ 31,348 $ 32,122 $ Note: (*)Amounts exclude long-term incentive plan ("LTIP") compensation. (*)(*)Amortization is presented net of amortization expense recorded on the impairment of intangible assets. 81,728 $ (111) 6,061 792 1,635 4,074 1,537 (1,981) 93,735 $ 82,604 2,045 (813) 1,215 3,010 (1,816) 105 (1,315) 85,035 18 $ 50,776 64 4,811 266 1,635 4,074 61,626 (822) 74,097 134,901 (59,666) 75,235 2013 Nine months ended September 30 2012 63,047 $ 675 237 (143) 3,010 66,826 (225) 70,328 136,929 (56,937) 79,992 $ Operating income Transaction and related costs (recoveries) - SG&A Fair value movements in stock options - SG&A(*) Restricted share expense (recovery) - SG&A(*) Non-operating or non-recurring expenses - SG&A Impairment of intangible assets - Amortization Adjusted operating income or adjusted operating EBIT(A) Net gain on sale of capital assets Amortization(*)(*) Adjusted EBITDA(A) Amortization of capital and landfill assets Adjusted EBITA(A) $ Three months ended September 30 2012 $ $
  19. 19. Non-GAAP Disclosure – continued (B) We have adopted a measure called “free cash flow” to supplement net income or loss as a measure of our operating performance. Free cash flow is a term which does not have a standardized meaning prescribed by U.S. GAAP, is prepared before dividends declared and shares repurchased, and may not be comparable to similar measures prepared by other companies. The purpose of presenting this non-GAAP measure is to provide disclosure similar to the disclosure provided by other U.S. publicly listed companies in our industry and to provide investors and analysts with an additional measure of our value and liquidity. We use this non-GAAP measure to assess our performance relative to other U.S. publicly listed companies and to assess the availability of funds for growth investment, debt repayment, share repurchases or dividend increases. All references to “free cash flow” in this document have the meaning set out in this note. 2013 Adjusted EBITDA(A) Recovery (purchase) of restricted shares(*)(*) Capital and landfill asset purchases(*) Proceeds from the sale of capital assets Landfill closure and postclosure expenditures Landfill closure and postclosure cost accretion expense Interest on long-term debt Non-cash interest expense Current income tax expense Free cash flow(B) $ 2012 134,901 $ Three months ended September 30 Change 136,929 $ (2,028) 2013 $ 398,848 2012 $ Nine months ended September 30 Change 385,922 $ 12,926 101 642 (1,591) (541) (1,050) (89,990) (74,233) (15,757) (214,466) (173,997) (40,469) 1,248 540 708 15,632 2,107 13,525 (1,305) $ (541) (1,201) (104) (3,534) (5,401) 1,867 1,422 (14,815) 877 (5,447) 26,992 1,313 (14,696) 1,701 (14,219) 35,593 4,237 (45,272) 2,582 (23,104) 133,332 3,927 (42,934) 5,069 (38,312) 135,840 310 (2,338) (2,487) 15,208 (2,508) $ $ 109 (119) (824) 8,772 (8,601) $ $ $ Note: (*)Capital and landfill asset purchases include infrastructure expenditures of approximately $5,900 and $6,900 for the three months and $34,000 and $13,800 for the nine months ended September 30, 2013 and 2012, respectively. (*)(*)Amounts exclude LTIP compensation. 19

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