IESI-BFC Ltd.
TSX : BIN
NYSE : BIN

IESI-BFC Ltd.

April 28, 2011 16:30 ET

IESI-BFC Ltd. Announces Strong Results for the Three Months Ended March 31, 2011

TORONTO, ONTARIO--(Marketwire - April 28, 2011) -IESI-BFC Ltd. (the "Company") (TSX:BIN)(NYSE:BIN) reported financial results for the three months ended March 31, 2011.

(All amounts are in thousands of United States ("U.S.") dollars, unless otherwise stated)

Management Commentary

Reported revenues increased $158.8 million or 60.1% from $264.0 million in the first quarter of 2010 to $422.9 million in the first quarter of 2011 due in large part to our acquisition of Waste Services, Inc. ("WSI").

Organic gross revenue, which includes intercompany revenues, grew 3.9% on a consolidated basis and is comprised of total price and volume growth of 3.3% and 0.6%, respectively. Total price and volume improvements in Canada were 4.2% and 0.7%, respectively, and 2.6% and 0.5% in the U.S. Each revenue growth component has been prepared on a comparable basis, as if WSI's operations were combined with ours in the current and previously comparable quarter, and has assumed a foreign currency exchange ("FX") rate of parity when prepared on a consolidated basis.

Strong revenue growth translated into strong adjusted EBITDA(A) and operating income growth. Adjusted EBITDA(A) was $123.1 million, or 62.1% higher, in the first quarter of 2011 versus $75.9 million in the same quarter a year ago. Our first quarter adjusted EBITDA(A) margin was 29.1% compared to 28.8% in the first quarter of 2010. Adjusted operating income(A) was $61.7 million, or 69.1% higher, in the quarter versus $36.5 million in the comparative period last year.

We also generated higher adjusted net income(A) quarter over quarter. Adjusted net income(A) for the first quarter of 2011 was $28.1 million, or $0.23 per weighted average diluted share ("diluted share"), compared to $18.7 million, or $0.20 per diluted share in the comparative period.

Free cash flow(B) for the quarter totaled $70.6 million and was 68.6% higher than $41.9 million achieved in the comparative period last year. Our free cash flow(B) margin was 16.7% in the quarter compared to 15.9% in the first quarter of 2010. Free cash flow(B) growth was the result of strong operating income, partially offset by higher interest expense and higher capital and landfill purchases. The increase in each of these measures is largely attributable to our acquisition of WSI.

"Our first-quarter results were in line with expectations and we believe we are on track to achieve the outlook we provided for our 2011 financial performance," said Keith Carrigan, Vice Chairman and Chief Executive Officer of IESI-BFC Ltd. "We overcame a number of headwinds in the quarter to achieve revenue growth of 60.1% and consolidated organic gross revenue growth of 3.9%. Our revenue improvement, combined with lower SG&A expenses as a percentage of revenue, translated into adjusted EBITDA(A) margin expansion of 30 basis points and free cash flow(B) margin expansion of 80 basis points, compared with the same period a year ago. We are pleased with these results, particularly given the challenges that we faced in the quarter due to harsher comparative weather conditions in certain parts of the United States and Canada."

Mr. Carrigan continued, "In Canada, we delivered solid pricing growth, but harsher weather conditions in the quarter, and most notably in March, resulted in us receiving lower municipal solid and special waste volumes at our landfills. However, our outlook for the year anticipates that we will fully recoup these volumes as the spring seasonal cycle and our organic sales activities take effect, which will result in a stronger comparative volume performance over the balance of the year. Like Canada, the U.S. northeast segment experienced harsher weather conditions as well. However, special and municipal solid waste volumes and higher pricing drove landfill revenue growth, while acquisitions boosted the industrial service line. In the U.S. south segment, we achieved volume growth in almost all service lines."

"With our anticipated revenue and adjusted EBITDA(A) growth through the balance of the year, we reaffirm our free cash flow(B) guidance of approximately $270 million in 2011," Mr. Carrigan added. "We will continue to deploy these proceeds strategically in order to deliver the optimal return to our shareholders. Even following an active year of acquisitions, we have a robust pipeline and there are attractive opportunities. However, as always, we continue to take a disciplined and balanced approach to apply our capital in the most accretive manner possible."

Financial and Other Highlights
For the Three Months Ended March 31, 2011
  • Revenues increased $158.8 million or 60.1% ($149.7 million or 56.7%, excluding FX)
  • Adjusted EBITDA(A) increased $123.1 million or 62.1% ($120.1 million or 58.1%, excluding FX)
  • Adjusted EBITDA(A) margin, on a reported basis, was 29.1%
  • Free cash flow(B) increased $28.7 million or 68.6% ($27.2 million or 65.0%, excluding FX)
  • Free cash flow(B) margin of 16.7%
  • Adjusted net income(A) per diluted share, $0.23
  • Consolidated total price increased 3.3%, prepared on a comparable basis
  • Consolidated volumes increased 0.6%, prepared on a comparable basis
Other Highlights for the Three Months Ended March 31, 2011
  • Successful secondary offering of 10,906 common shares held by TC Carting III, L.L.C., an affiliate of Thayer Hidden Creek Partners, L.L.C.
  • Repurchase of 1,000 common shares from the underwriters in the secondary offering, at the public offering price of $23.50 per share.

Acquisition of WSI

On July 2, 2010, we completed our acquisition of WSI. WSI's Canadian operations are included in our Canadian segment, while their Florida operations are included in our U.S. south segment. WSI's operating results have been included with our own since the date of acquisition. In addition, we have elected to exclude corporate allocated costs from the operating results of our reportable segments. Accordingly, expenses specific to corporate activities have been presented separately from those presented for our reporting segments, for each current and comparative period presented.

Annual General Meeting

The Company also announced details of its annual general meeting, which are as follows:

Annual General Meeting of Shareholders
Wednesday, May 25, 2011 at 2:00 pm (ET)
The Design Exchange
234 Bay Street
Toronto, Ontario M5K 1B2
Financial Highlights
(in thousands of U.S. dollars, except per weighted average share amounts, unless otherwise stated)
Three months ended March 31
20112010
(unaudited)(unaudited)
Operating results
Revenues$422,850$264,042
Operating expenses246,805151,069
Selling, general and administration ("SG&A")58,60739,791
Restructuring expenses847-
Amortization62,81939,517
Net gain on sale of capital assets(1,423)(62)
Operating income55,19533,727
Interest on long-term debt16,5187,937
Net foreign exchange (gain) loss(3)30
Net gain on financial instruments(1,926)(542)
Other expenses18624
Income before net income tax expense and net loss from equity accounted investee40,42026,278
Net income tax expense17,3189,543
Net loss from equity accounted investee425
Net income$23,098$16,710
Net income per weighted average share, basic$0.19$0.18
Net income per weighted average share, diluted$0.19$0.18
Weighted average number of shares outstanding (thousands), basic121,69782,344
Weighted average number of shares outstanding (thousands), diluted121,69793,431
Adjusted EBITDA(A)$123,097$75,941
Adjusted operating income(A)$61,701$36,486
Adjusted net income(A)(1)$28,099$18,684
Adjusted net income(A)per weighted average share, basic$0.23$0.20
Adjusted net income(A)per weighted average share, diluted$0.23$0.20
Replacement and growth expenditures (see page 9)
Replacement expenditures$18,042$11,899
Growth expenditures7,3678,184
Total replacement and growth expenditures$25,409$20,083
Free cash flow(B)
Cash generated from operating activities (condensed consolidated statement of cash flows)$54,654$44,040
Free cash flow(B)$70,567$41,860
Free cash flow(B) per weighted average share, diluted$0.58$0.45
Dividends
Dividends declared (common shares)$15,305$9,893
Dividends declared (participating preferred shares ("PPSs"))-1,327
Total dividends declared$15,305$11,220
Total dividends declared per weighted average share, diluted$0.13$0.12
Note:
(1)Prior period amounts have been adjusted to reflect the current period's presentation.
20112010
Condensed
Consolidated
Balance
Sheet
Condensed Consolidated Statement
of Operations and
Comprehensive Income
Condensed
Consolidated
Balance
Sheet
Condensed Consolidated
Statement
of Operations and
Comprehensive Income
CurrentAverageCumulative AverageCurrentAverageCumulative Average
December 31$1.0054$0.9708
March 31$1.0290$1.0142$1.0142$0.9846$0.9607$0.9607
FX Impact on Consolidated Results
The following table has been prepared to assist readers in assessing the impact of FX on selected results for the three months ended March 31, 2011.
Three
months
ended
March
31, 2010
March
31, 2011
March
31, 2011
March
31, 2011
March
31, 2011
(unaudited)(unaudited)(unaudited)(unaudited)(unaudited)
(as reported)(organic, acquisition and other non-operating changes)(holding FX constant with the comparative period)(FX impact)(as reported)
Condensed Consolidated Statement of Operations
Revenues$264,042$149,737$413,779$9,071$422,850
Operating expenses151,06990,849241,9184,887246,805
SG&A39,79117,34757,1381,46958,607
Restructuring expenses-80280245847
Amortization39,51722,02461,5411,27862,819
Net gain on sale of capital assets(62)(1,356)(1,418)(5)(1,423)
Operating income33,72720,07153,7981,39755,195
Interest on long-term debt7,9378,30916,24627216,518
Net foreign exchange loss (gain)30(34)(4)1(3)
Net gain on financial instruments(542)(1,350)(1,892)(34)(1,926)
Other expenses241541788186
Income before net income tax expense and net loss from equity accounted investee26,27812,99239,2701,15040,420
Net income tax expense9,5437,36516,90841017,318
Net loss from equity accounted investee25(21)4-4
Net income$16,710$5,648$22,358$740$23,098
Adjusted EBITDA(A)$75,941$44,157$120,098$2,999$123,097
Adjusted operating income(A)$36,486$23,489$59,975$1,726$61,701
Adjusted net income(A)$18,684$8,378$27,062$1,037$28,099
Free cash flow(B)$41,860$27,205$69,065$1,502$70,567
Management's Discussion
(all amounts are in thousands of U.S. dollars, unless otherwise stated)
Segment Highlights – expressed on a reportable basis (excluding the acquisition of WSI on prior period amounts)
Three months ended March 31
20102011Change2011Change
(as reported)(holding FX constant with the comparative period)(2011 holding FX constant with the comparative period less 2010 as reported)(as reported)(2011 as reported less
2010 as reported)
Revenues$264,042$413,779$149,737$422,850$158,808
Canada$100,095$162,849$62,754$171,920$71,825
U.S. south$87,800$168,175$80,375$168,175$80,375
U.S. northeast$76,147$82,755$6,608$82,755$6,608
Operating expenses$151,069$241,918$90,849$246,805$95,736
Canada$50,295$87,742$37,447$92,629$42,334
U.S. south$53,067$100,282$47,215$100,282$47,215
U.S. northeast$47,707$53,894$6,187$53,894$6,187
SG&A (as reported)$39,791$57,138$17,347$58,607$18,816
Canada$9,418$14,762$5,344$15,584$6,166
U.S. south$9,839$16,783$6,944$16,783$6,944
U.S. northeast$7,754$8,147$393$8,147$393
Corporate$12,780$17,446$4,666$18,093$5,313
EBITDA(A)(as reported)$73,182$114,723$41,541$117,438$44,256
Canada$40,382$60,345$19,963$63,707$23,325
U.S. south$24,894$51,110$26,216$51,110$26,216
U.S. northeast$20,686$20,714$28$20,714$28
Corporate$(12,780)$(17,446)$(4,666)$(18,093)$(5,313)
Adjusted SG&A$37,032$51,763$14,731$52,948$15,916
Canada$9,418$14,762$5,344$15,584$6,166
U.S. south$9,839$16,783$6,944$16,783$6,944
U.S. northeast$7,754$8,147$393$8,147$393
Corporate$10,021$12,071$2,050$12,434$2,413
Adjusted EBITDA(A)$75,941$120,098$44,157$123,097$47,156
Canada$40,382$60,345$19,963$63,707$23,325
U.S. south$24,894$51,110$26,216$51,110$26,216
U.S. northeast$20,686$20,714$28$20,714$28
Corporate$(10,021)$(12,071)$(2,050)$(12,434)$(2,413)
Revenues
Gross revenue by service type
(prepared on a reportable basis – excluding WSI's operations in the previously comparable quarter)
The following table compares gross revenues, which include intercompany revenues, for the three months ended March 31, 2011 to the comparative period by service offering. This table has been prepared on a "reportable basis", which excludes WSI's results for the previously comparable quarter.
Three months ended March 31, 2011Three months ended March 31, 2010
Canada -
stated in
thousands
of Canadian
dollars
Canada -
percent-
age of
gross
revenue
U.S.U.S. -
percent-
age of
gross
revenue
Canada -
stated in
thousands
of Canadian
dollars
Canada -
percent-
age of
gross
revenue
U.S.U.S. -
percent-
age of
gross
revenue
Commercial$72,40138.5$79,85227.9$45,25738.3$48,28725.6
Industrial32,11217.141,71414.619,23516.323,76012.6
Residential29,61915.760,56021.116,58014.043,68823.2
Transfer and disposal44,59623.787,37430.529,73025.162,59633.2
Recycling and other9,4935.016,9515.97,4566.310,2265.4
Gross revenues$188,221100.0$286,451100.0$118,258100.0$188,557100.0
Total collection$143,62576.3$199,07769.5$88,52874.9$125,96166.8
Transfer and disposal44,59623.787,37430.529,73025.162,59633.2
Gross revenues$188,221100.0$286,451100.0$118,258100.0$188,557100.0
Gross revenue by service type
(prepared on a comparable basis – including WSI's operations in the previously comparative quarter)
The following table compares gross revenues, which include intercompany revenues, for the three months ended March 31, 2011 to the comparative period by service offering. This table has been prepared on a "comparable basis" as if WSI's operations were combined with ours in the current and previously comparable quarter.
Three months ended March 31, 2011Three months ended March 31, 2010
Canada -
stated in
thousands
of Canadian
dollars
Canada -
percent-
age of
gross
revenue
U.S.U.S. -
percent-
age of
gross
revenue
Canada -
stated in
thousands
of Canadian
dollars
(*)
Canada -
percent-age of
gross
revenue
U.S.
(*)
U.S. -
percent-
age of
gross
revenue
Commercial$72,40138.5$79,85227.9$66,41438.0$72,52128.7
Industrial32,11217.141,71414.630,74917.635,85914.2
Residential29,61915.760,56021.129,47016.853,43221.1
Transfer and disposal44,59623.787,37430.540,88423.476,98630.4
Recycling and other9,4935.016,9515.97,3844.214,1865.6
Gross revenues$188,221100.0$286,451100.0$174,901100.0$252,984100.0
Note:
(*)Prior period amounts have been adjusted for divestitures and have been adjusted to conform to the current period's presentation.
Gross revenue growth or decline components – expressed in percentages and excluding FX
(prepared on a comparable basis)
The table below has been prepared on a "comparable basis" as outlined above. However, component percentages presented for 2010 have not been prepared on a comparable basis and accordingly do not include WSI's results.
Three months ended
March 31, 2011
Three months ended
March 31, 2010
CanadaU.S.Canada
(**)
U.S.
(**)
Price
Price3.01.75.33.4
Fuel surcharges1.20.91.0(0.3)
Total price growth4.22.66.33.1
Volume0.70.59.01.0
Total organic gross revenue growth4.93.115.34.1
Acquisitions, net of divestitures2.710.12.62.4
Total gross revenue growth7.613.217.96.5
Note:
(**)Prior period amounts have been adjusted to conform to the current period's presentation.

On a "comparable basis", prepared as if WSI's operations were combined with ours in the current and previously comparable quarter, our Canadian segment delivered price growth in every service line, excluding industrial, which was only slightly behind last year's mark. The primary headwind to comparative gross revenue growth was lower landfill volumes. Weather conditions in 2011, most notably in March, was the primary cause of the volume decline. We remain optimistic that we will fully recoup these volumes, which, all else equal, will result in stronger comparative quarterly performances over the balance of the year. All other service lines delivered solid comparative volume growth, through a combination of both organic and acquisition growth, while industrial volumes were essentially flat. Rising diesel fuel prices also contributed to the increase in comparable fuel surcharges.

U.S. south segment gross revenue growth, presented on a "comparable basis", increased on the back of acquisitions. Volume growth across all service lines, excluding residential, also contributed to the comparative increase in gross revenues. Residential volumes were only down marginally on a comparative basis. Acquisitions pushed comparative pricing marginally lower in our commercial, and landfill and disposal service lines, but stronger volumes more than offset lower contributions from pricing. Fuel surcharges also contributed to gross revenue growth period over period.

The increase in U.S. northeast gross revenue growth is largely attributable to our landfill and industrial service lines. Like Canada, the U.S. northeast segment shared similar comparative weather conditions. However, higher special and municipal solid waste volumes and higher comparative pricing contributed to landfill revenue growth, while acquisitions supported growth in the industrial service line. Acquisitions were the primary reasons for higher gross revenues in our commercial service line, partially offset by volume and pricing which fell marginally short of prior year marks. On a comparative basis, commodity pricing showed continued resilience, while volumes were up slightly but largely unchanged from 2010 levels. Fuel surcharges were relatively unchanged from the prior year.

Operating expenses

The comparative increase in operating expenses is due principally to our mix of business attributable to our acquisition of WSI and other "tuck-in" acquisitions, FX, higher fuel costs and higher overall collected waste volumes in our pre-existing base business. Acquisitions are the primary reason for higher disposal, labour, vehicle operating and insurance costs. Acquisitions also led to higher subcontract costs. Commodity rebates also contributed to the increase in operating expenses due to higher comparative commodity pricing. The increase in commodity rebates was most notable in our U.S. northeast and Canadian businesses. On a sequential basis, however, we realized a 100 basis point improvement in operating expense as a percentage of revenues compared to the fourth quarter of 2010. In addition, the rising price of fuel and resulting increase in fuel surcharges has also contributed to a higher level of operating expenses relative to revenues quarter over quarter. As a percentage of reportable revenues, disposal and vehicle operating costs are the primary reasons for this increase which we attribute principally to the composition of revenues we acquired on our acquisition of WSI and other recently completed acquisitions.

Looking at Canada in isolation, the increase in operating expenses as a percentage of reportable revenues is principally attributable to the mix of revenues we acquired from our acquisition of WSI and other "tuck-in" acquisitions. The mix of revenues acquired on our acquisition of WSI and from other "tuck-in" acquisitions also impacted operating expenses as a percentage of reportable revenues in our U.S. south segment, however, unlike Canada, the impact was favourable. Our U.S. northeast segment incurred higher comparative trucking and disposal costs due in part to higher comparative volumes. In addition, an acquisition completed in the first quarter also contributed to the increase in operating costs as a percentage of revenues in the U.S. northeast coupled with higher commodity rebates and higher vehicle operating costs.

SG&A expenses

Excluding the impact of FX, the comparable increase is the result of higher SG&A expense attributable to our acquisition of WSI and other "tuck-in" acquisitions, coupled with organic growth. The increase is primarily attributable to salaries, which includes higher comparative fair value charges for stock options. Facility cost increases also contributed to the comparative increase.

Corporate SG&A includes certain executive costs, accounting, internal audit, treasury, investor relations, corporate development, environmental management, information technology, human resources and other administrative support functions. Corporate SG&A also includes transaction and related costs and charges for fair value changes to stock options. While we experienced an increase in corporate salary and office costs resulting from our acquisition of WSI, and higher charges for fair value changes in stock options, we did realize a decline in professional fees due in large part to a reduction in legal fees. As a percentage of reportable revenues, SG&A expense, expressed on an adjusted basis, is 12.5% (2010 – 14.0%). Rationalizing personnel and operating locations, since our acquisition of WSI, is the primary reason for the comparative improvement.

Free cash flow(B)

Purpose and objective

The purpose of presenting this non-GAAP measure is to provide disclosure similar to that 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.

Free cash flow(B)- cash flow approach

Three months ended March 31
20112010Change
Cash generated from operating activities
(from statement of cash flows)$54,654$44,040$10,614
Operating and investing
Stock option expense5,3447614,583
Acquisition and related costs3151,998(1,683)
Restructuring expenses847-847
Other expenses18624162
Changes in non-cash working capital items34,63315,09019,543
Capital and landfill asset purchases(25,409)(20,083)(5,326)
Financing
Net realized foreign exchange loss(3)30(33)
Free cash flow(B)$70,567$41,860$28,707
Free cash flow(B)– adjusted EBITDA(A)approach
Three months ended March 31
20112010Change
Adjusted EBITDA(A)$123,097$75,941$47,156
Restricted share expense174413(239)
Capital and landfill asset purchases(25,409)(20,083)(5,326)
Landfill closure and post-closure expenditures(1,701)(385)(1,316)
Landfill closure and post-closure cost accretion expense1,269880389
Interest on long-term debt(16,518)(7,937)(8,581)
Non-cash interest expense1,353709644
Current income tax expense(11,698)(7,678)(4,020)
Free cash flow(B)$70,567$41,860$28,707

Excluding FX, free cash flow(B) increased over the comparative period. The acquisition of WSI contributed to the free cash flow(B) and adjusted EBITDA(A) growth that we enjoyed on a comparative basis. In addition, we also realized improvements to free cash flow(B) and adjusted EBITDA(A) resulting from a combination of organic growth and other "tuck-in" acquisitions. Higher debt levels resulting principally from our acquisition of WSI and higher interest rates in Canada and the U.S. was a partial offset to adjusted EBITDA(A) improvements. Higher capital and landfill asset purchases, due in large part to the acquisition of WSI and other "tuck-in" acquisitions, also partially offset adjusted EBITDA(A) growth. Proportionately, capital and landfill asset purchases were lower than the comparative period due in large part to the timing of spend and contract wins. Cash taxes increased comparatively, which was most pronounced in our Canadian business. Higher cash taxes in Canada are the result of continuing organic base business growth, coupled with the acquisition of WSI. WSI's Canadian operations had no meaningful loss carryforwards to shelter income subject to tax.

Capital and landfill purchases

Capital and landfill purchases characterized as replacement and growth expenditures are as follows:

Three months ended March 31
20112010Change
Replacement$18,042$11,899$6,143
Growth7,3678,184(817)
Total$25,409$20,083$5,326

Capital and landfill purchases – replacement

Capital and landfill purchases characterized as "replacement" expenditures represent cash outlays to sustain current cash flows and are funded from free cash flow(B). Replacement expenditures include the replacement of existing capital assets and all construction spending at our landfills.

Excluding the impact of FX, replacement expenditures increased. The increase is principally attributable to higher vehicle and equipment and landfill asset spending. A larger comparative base business profile, combined with the timing of spend, are the principal reasons for the increase.

Capital and landfill purchases – growth

Capital and landfill purchases characterized as "growth" expenditures represent cash outlays to generate new or future cash flows and are generally funded from free cash flow(B). Growth expenditures include capital assets, including facilities (new or expansion), to support new contract wins and organic business growth.

Growth expenditures declined comparatively. The decline is entirely attributable to lower comparable vehicle purchases resulting from the timing of contract wins in Canada.

Readers are reminded that revenue, adjusted EBITDA(A), and cash flow contributions realized from growth expenditures will materialize over future periods.

Long-term debt
(all amounts are in thousands of U.S. dollars, unless otherwise stated)
Summary details of our long-term debt facilities at March 31, 2011 are as follows:
Available lendingFacility drawnLetters of credit (not reported as long-term debt on the Condensed Consolidated Balance Sheet)Available capacity
Canadian long-term debt facilities - stated in Canadian dollars
Senior secured debenture, series B$58,000$58,000$-$-
Revolving credit facility$525,000$328,000$54,073$142,927
U.S. long-term debt facilities - stated in U.S. dollars
Revolving credit facility$1,077,500$777,000$144,839$155,661
Variable rate demand solid waste disposal revenue bonds ("IRBs")(2)$194,000$109,000$-$85,000
Other$4,293$4,293$-$-
Note:
(2)IRB drawings at floating rates of interest, will, under the terms of the underlying agreement, typically be used to repay revolving credit advances on our U.S. facility. However, IRB drawings bearing interest at floating rates requires us to issue letters of credit equal to the principal amount of the IRB drawn.
Funded debt to EBITDA (as defined and calculated in accordance with our Canadian and U.S. long-term debt facilities)
At March 31, 2011, funded long-term debt to EBITDA is as follows:
March 31, 2011December 31, 2010
CanadaU.S.CanadaU.S.
Funded debt to EBITDA1.903.211.913.20
Funded debt to EBITDA maximum3.004.003.004.00

Canadian facility

On March 31, 2011, advances under our Canadian facility were $328,000 Canadian dollars ("C$") and total letters of credit amounted to approximately C$54,100. Available capacity at March 31, 2011, excluding the accordion, was approximately C$142,900 and our funded debt to EBITDA ratio (as defined and calculated in accordance with our Canadian facility) was 1.9 times.

We increased Canadian facility advances since December 31, 2010 by C$3,000. Satisfaction of accrued dividends, income taxes payable, and payments on accrued management compensation amounts owing for 2010 are the primary reasons for the increase. Advances were partially offset by repayments resulting from our application of excess free cash flow(B) to Canadian facility borrowings.

U.S. facility

On March 31, 2011, advances under our U.S. facility were $777,000 and total letters of credit amounted to approximately $144,800. Available capacity under the facility at Mach 31, 2011, excluding the accordion, was approximately $155,700 and our funded debt to EBITDA ratio (as defined and calculated in accordance with our U.S. facility) was 3.21 times.

The increase in U.S. facility advances since December 31, 2010 totals $16,000 and is due in part to the purchase of 1,000 shares in the secondary public offering at a cost of $23,500. We also completed one "tuck-in" acquisition in the quarter for total cash consideration of approximately $12,400. These amounts were partially offset by debt repayments from excess free cash flow(B).

Long-term debt to pro forma adjusted EBITDA(A)

Our pro forma adjusted EBITDA(A) ratio prepared on a combined basis, assuming FX parity, is approximately 2.6 times.

Definitions of Adjusted EBITDA and Free cash flow

(A) All references to "Adjusted EBITDA" in this press release are to revenues less operating expense and SG&A, excluding certain non-operating or non-recurring SG&A expense, on the condensed consolidated statement of operations and comprehensive income. Adjusted EBITDA excludes some or all of the following: certain SG&A expenses, restructuring expenses, 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, 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 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, 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. These expenses include transaction costs related to acquisitions and fair value adjustments attributable to stock options. 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.

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).

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).

Adjusted EBITDA should not be construed as a measure of income or of cash flows. The reconciling items between adjusted EBITDA and net income are detailed in the condensed consolidated statement of operations and comprehensive income or loss beginning with operating income before restructuring expenses, amortization and net gain or loss on sale of capital assets and ending with net income and includes certain adjustments for expenses recorded to SG&A which management views as not being indicative of continuing operations. A reconciliation between operating income and adjusted EBITDA is provided in the table that follows. Adjusted operating income and adjusted net income are also presented in the reconciliation below.

Three months ended March 31
20112010
Operating income$55,195$33,727
Transaction and related costs - SG&A3151,998
Fair value movements in stock options - SG&A5,344761
Restructuring expenses847-
Adjusted operating income61,70136,486
Net (gain) or loss on sale of capital assets(1,423)(62)
Amortization62,81939,517
Adjusted EBITDA$123,097$75,941
Net income$23,098$16,710
Transaction and related costs - SG&A3151,998
Fair value movements in stock options - SG&A5,344761
Restructuring expenses847-
Net (gain) or loss on financial instruments(1,926)(542)
Other expenses18624
Net income tax expense or recovery235(267)
Adjusted net income$28,099$18,684

(B) We have adopted a measure called "free cash flow" to supplement net income or loss as a measure of 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 is therefore unlikely to be comparable to similar measures used by other companies. The purpose of presenting this non-GAAP measure is to provide similar disclosures to other U.S. publicly listed companies in the waste industry. We use this non-GAAP measure to assess our performance relative to other publically 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 press release have the meaning set out in this note.

About IESI-BFC Ltd.

As North America's third largest full-service waste management company, we provide non-hazardous solid waste collection and disposal services to commercial, industrial, municipal and residential customers in 12 U.S. states and the District of Columbia and six Canadian provinces. We serve our customers with vertically integrated collection and disposal assets. IESI-BFC's shares are listed on the New York and Toronto Stock Exchanges under the symbol BIN.

To find out more about IESI-BFC, visit our website at www.iesi-bfc.com.

Management will hold a conference call on Friday, April 29, 2011, at 8:00 a.m. (ET) to discuss results for the three months ended March 31, 2011. Participants may listen to the call by dialling 1-888-300-0053, conference ID 58005300, at approximately 7:50 a.m. (ET). International or local callers should dial 647-427-3420. The call will also be webcast live at http://www.streetevents.com/ and at http://www.iesi-bfc.com/.
A replay will be available after the call until Friday, May 13, 2011, at midnight, and can be accessed by dialling 1-800-642-1687, conference ID 58005300. International or local callers can access the replay by dialling 706-645-9291. The audio webcast will also be archived at http://www.streetevents.com/ and http://www.iesi-bfc.com/.
IESI-BFC Ltd.
Condensed Consolidated Balance Sheets
March 31, 2011 (unaudited) and December 31, 2010 (stated in accordance with accounting principles generally accepted in the United States of America and in thousands of U.S. dollars)
March 31, 2011December 31, 2010
ASSETS
CURRENT
Cash and cash equivalents$11,774$13,406
Accounts receivable197,849207,098
Other receivables493472
Prepaid expenses35,70427,254
Restricted cash434434
Other assets4,8381,928
251,092250,592
OTHER RECEIVABLES698806
FUNDED LANDFILL POST-CLOSURE COSTS9,2208,949
INTANGIBLES268,359272,082
GOODWILL1,094,8971,081,868
LANDFILL DEVELOPMENT ASSETS10,51912,174
DEFERRED FINANCING COSTS20,95921,157
CAPITAL ASSETS751,022758,287
LANDFILL ASSETS974,111975,691
INVESTMENT IN EQUITY ACCOUNTED INVESTEE4,2104,117
OTHER ASSETS9,2964,764
$3,394,383$3,390,487
LIABILITIES
CURRENT
Accounts payable$81,222$100,181
Accrued charges123,804136,629
Dividends payable15,52915,296
Income taxes payable9,75614,425
Deferred revenues18,39820,378
Current portion of long-term debt1,5001,500
Landfill closure and post-closure costs6,6538,229
Other liabilities6,0056,091
262,867302,729
LONG-TERM DEBT1,285,9941,258,159
LANDFILL CLOSURE AND POST-CLOSURE COSTS94,38990,010
OTHER LIABILITIES7,6447,329
DEFERRED INCOME TAXES94,50985,665
1,745,4031,743,892
SHAREHOLDERS' EQUITY
Common shares (authorized - unlimited, issued and outstanding - 120,660,739 (December 31, 2010 - 121,429,737))1,863,3681,878,286
Restricted shares (issued and outstanding - 67,150 (December 31, 2010 - 277,150))(1,127)(5,169)
Additional paid in capital3,0067,092
Deficit(189,251)(188,972)
Accumulated other comprehensive loss(27,016)(44,642)
Total shareholders' equity1,648,9801,646,595
$3,394,383$3,390,487
IESI-BFC Ltd.
Condensed Consolidated Statements of Operations and Comprehensive Income
For the three months ended March 31, 2011 and 2010 (unaudited - stated in accordance with accounting principles generally accepted in the United States of America and in thousands of U.S. dollars, except net income per share amounts)
20112010
REVENUES$422,850$264,042
EXPENSES
OPERATING246,805151,069
SELLING, GENERAL AND ADMINISTRATION58,60739,791
RESTRUCTURING847-
AMORTIZATION62,81939,517
NET GAIN ON SALE OF CAPITAL ASSETS(1,423)(62)
OPERATING INCOME55,19533,727
INTEREST ON LONG-TERM DEBT16,5187,937
NET FOREIGN EXCHANGE (GAIN) LOSS(3)30
NET GAIN ON FINANCIAL INSTRUMENTS(1,926)(542)
OTHER EXPENSES18624
INCOME BEFORE INCOME TAX EXPENSE AND NET LOSS FROM EQUITY
ACCOUNTED INVESTEE40,42026,278
INCOME TAX EXPENSE
Current11,6987,678
Deferred5,6201,865
17,3189,543
NET LOSS FROM EQUITY ACCOUNTED INVESTEE425
NET INCOME23,09816,710
OTHER COMPREHENSIVE INCOME (LOSS)
Foreign currency translation adjustment13,9745,347
Derivatives designated as cash flow hedges, net of income tax ($1,835) (2010 - ($116))3,407166
Settlement of derivatives designated as cash flow hedges, net of income tax ($132) (2010 - $51)245(95)
COMPREHENSIVE INCOME$40,724$22,128
NET INCOME - CONTROLLING INTEREST$23,098$14,734
NET INCOME - NON-CONTROLLING INTEREST$-$1,976
COMPREHENSIVE INCOME - CONTROLLING INTEREST$40,724$19,512
COMPREHENSIVE INCOME - NON-CONTROLLING INTEREST$-$2,616
Net income per weighted average share, basic$0.19$0.18
Net income per weighted average share, diluted$0.19$0.18
Weighted average number of shares outstanding (thousands), basic121,69782,344
Weighted average number of shares outstanding (thousands), diluted121,69793,431
IESI-BFC Ltd.
Condensed Consolidated Statements of Cash Flows
For the three months ended March 31, 2011 and 2010 (unaudited - stated in accordance with accounting principles generally accepted in the United States of America and in thousands of U.S. dollars)
Three months ended
20112010
NET INFLOW (OUTFLOW) OF CASH RELATED TO THE FOLLOWING ACTIVITIES
OPERATING
Net income$23,098$16,710
Items not affecting cash
Restricted share expense174413
Accretion of landfill closure and post-closure costs1,269880
Amortization of intangibles12,1647,057
Amortization of capital assets32,44919,067
Amortization of landfill assets18,20613,393
Interest on long-term debt (amortization of deferred financing costs)1,353709
Net gain on sale of capital assets(1,423)(62)
Net gain on financial instruments(1,926)(542)
Deferred income taxes5,6201,865
Loss from equity accounted investee425
Landfill closure and post-closure expenditures(1,701)(385)
Changes in non-cash working capital items(34,633)(15,090)
Cash generated from operating activities54,65444,040
INVESTING
Acquisitions(12,380)(52,447)
Proceeds from other receivables115139
Funded landfill post-closure costs(98)(10)
Purchase of capital assets(15,902)(13,902)
Purchase of landfill assets(9,507)(6,181)
Proceeds from the sale of capital assets2,67364
Investment in landfill development assets(622)(264)
Cash utilized in investing activities(35,721)(72,601)
FINANCING
Payment of deferred financing costs(1,020)(1)
Proceeds from long-term debt103,48380,768
Repayment of long-term debt(84,816)(38,891)
Common shares issued, net of issue costs-(6)
Proceeds from exercise of stock options292-
Repurchase of common shares(23,500)-
Dividends paid to share and participating preferred shareholders(15,429)(11,220)
Cash (utilized in) generated from financing activities(20,990)30,650
Effect of foreign currency translation on cash and cash equivalents425342
NET CASH (OUTFLOW) INFLOW(1,632)2,431
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR13,4064,991
CASH AND CASH EQUIVALENTS, END OF PERIOD$11,774$7,422
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash and cash equivalents are comprised of:
Cash$11,773$7,422
Cash equivalents1-
$11,774$7,422
Cash paid during the period for:
Income taxes$15,043$3,840
Interest$16,296$8,401

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