EX-99.1 2 c99449exv99w1.htm EXHIBIT 99.1 Exhibit 99.1
Exhibit 99.1
(WASTE CONNECTIONS INC. LOGO)
WASTE CONNECTIONS REPORTS FIRST QUARTER 2010 RESULTS
    Reports revenue of $307.5 million, up 17.1%
 
    Reports operating margins above expectations and EPS of $0.35
 
    Reports net cash provided by operating activities of $80.2 million, or 26.1% of revenue
 
    Reports free cash flow* of $55.7 million, or 18.1% of revenue
 
    Repurchased approximately $49.8 million of common stock during the quarter
FOLSOM, CA, April 20, 2010 - Waste Connections, Inc. (NYSE: WCN) today announced its results for the first quarter of 2010. Revenue totaled $307.5 million, a 17.1% increase over revenue of $262.7 million in the year ago period. Operating income was $59.6 million, or 19.4% of revenue, versus $47.6 million in the first quarter of 2009. Net income attributable to Waste Connections in the quarter was $27.6 million, or $0.35 per share on a diluted basis of 78.7 million shares. In the year ago period, the Company reported net income attributable to Waste Connections of $22.0 million, or $0.27 per share on a diluted basis of 80.8 million shares.
Net income attributable to Waste Connections in the quarter includes an approximate $1.5 million, or $0.02 per share, increase in the income tax provision associated with an adjustment in deferred tax liabilities primarily resulting from a voter-approved increase in Oregon state income tax rates in the period. Results in the prior year period included approximately $3.0 million ($1.8 million net of taxes, or approximately $0.02 per share) primarily related to acquisition-related costs expensed due to the implementation of new accounting guidance for business combinations effective January 1, 2009, and a loss on the Company’s prior corporate office lease due to the relocation of the Company’s corporate offices.
Non-cash costs for equity-based compensation, amortization of acquisition-related intangibles, and amortization of debt discount related to convertible debt instruments in connection with the adoption of new accounting guidance on January 1, 2009, were $7.8 million ($4.8 million net of taxes, or approximately $0.06 per share) in the quarter compared to $5.8 million ($3.5 million net of taxes, or approximately $0.04 per share) in the year ago period.
“We are extremely pleased with our results in the quarter as we once again exceeded the upper end of our expectations. Positive organic growth, strong recycled commodity prices, and acquisitions completed since the year-ago period contributed to 20+% increases in both adjusted operating income before depreciation and amortization* and earnings per share. We’re encouraged by improving volume trends throughout the quarter and continue to believe that organic volume growth could turn positive by the third quarter,” said Ronald J. Mittelstaedt, Chairman and Chief Executive Officer. “We returned most of our free cash flow in the quarter to stockholders through the repurchase of approximately two percent of outstanding shares and remain well positioned with one of the strongest balance sheets in our sector to fund additional growth opportunities.”
Waste Connections will be hosting a conference call related to first quarter earnings and second quarter outlook on April 21st at 8:30 A.M. Eastern Time. The call will be broadcast live over the Internet at www.streetevents.com or through a link on our website at www.wasteconnections.com. A playback of the call will be available at both of these websites.
     
*   A non-GAAP measure; see accompanying Non-GAAP Reconciliation Schedule.

 

 


 

Waste Connections, Inc. is an integrated solid waste services company that provides solid waste collection, transfer, disposal and recycling services in mostly secondary markets in the Western and Southern U.S. The Company serves approximately two million residential, commercial and industrial customers from a network of operations in 26 states. The Company also provides intermodal services for the movement of containers in the Pacific Northwest. Waste Connections, Inc. was founded in September 1997 and is headquartered in Folsom, California.
For more information, visit the Waste Connections web site at www.wasteconnections.com. Copies of financial literature, including this release, are available on the Waste Connections web site or through contacting us directly at (916) 608-8200.
Information Regarding Forward-Looking Statements
Certain statements contained in this release are forward-looking in nature, including statements related to expected volume growth and ability to fund growth opportunities. These statements can be identified by the use of forward-looking terminology such as “believes,” “expects,” “may,” “will,” “should,” or “anticipates,” or the negative thereof or comparable terminology, or by discussions of strategy. Our business and operations are subject to a variety of risks and uncertainties and, consequently, actual results may differ materially from those projected by any forward-looking statements. Factors that could cause actual results to differ from those projected include, but are not limited to, the following: (1) our acquisitions may not be successful, resulting in changes in strategy, operating losses or a loss on sale of the business acquired; (2) a portion of our growth and future financial performance depends on our ability to integrate acquired businesses into our organization and operations; (3) downturns in the worldwide economy adversely affect operating results; (4) our results are vulnerable to economic conditions and seasonal factors affecting the regions in which we operate; (5) we may be subject in the normal course of business to judicial, administrative or other third party proceedings that could interrupt or limit our operations, require expensive remediation, result in adverse judgments, settlements or fines and create negative publicity; (6) we may be unable to compete effectively with larger and better capitalized companies and governmental service providers; (7) we may lose contracts through competitive bidding, early termination or governmental action; (8) price increases may not be adequate to offset the impact of increased costs or may cause us to lose volume; (9) increases in the price of fuel may adversely affect our business and reduce our operating margins; (10) increases in labor and disposal and related transportation costs could impact our financial results; (11) efforts by labor unions could divert management attention and adversely affect operating results; (12) we could face significant withdrawal liability if we withdraw from participation in one or more multiemployer pension plans in which we participate; (13) increases in insurance costs and the amount that we self-insure for various risks could reduce our operating margins and reported earnings; (14) competition for acquisition candidates, consolidation within the waste industry and economic and market conditions may limit our ability to grow through acquisitions; (15) our indebtedness could adversely affect our financial condition; we may incur substantially more debt in the future; (16) each business that we acquire or have acquired may have liabilities or risks that we fail or are unable to discover, including environmental liabilities; (17) liabilities for environmental damage may adversely affect our financial condition, business and earnings; (18) our accruals for our landfill site closure and post-closure costs may be inadequate; (19) the financial soundness of our customers could affect our business and operating results; (20) we depend significantly on the services of the members of our senior, regional and district management team, and the departure of any of those persons could cause our operating results to suffer; (21) our decentralized decision-making structure could allow local managers to make decisions that adversely affect our operating results; (22) because we depend on railroads for our intermodal operations, our operating results and financial condition are likely to be adversely affected by any reduction or deterioration in rail service; (23) we may incur additional charges related to capitalized expenditures, which would decrease our earnings; (24) our financial results are based upon estimates and assumptions that may differ from actual results; (25) the adoption of new accounting standards or interpretations could adversely affect our financial results; (26) our financial and operating performance may be affected by the inability to renew landfill operating permits, obtain new landfills and expand existing ones; (27) future changes in laws or renewed enforcement of laws regulating the flow of solid waste in interstate commerce could adversely affect our operating results; (28) extensive and evolving environmental and health and safety laws and regulations may restrict our operations and growth and increase our costs; (29) climate change regulations may adversely affect operating results; (30) extensive regulations that govern the design, operation and closure of landfills may restrict our landfill operations or increase our costs of operating landfills; (31) alternatives to landfill disposal may cause our revenues and operating results to decline; (32) fluctuations in prices for recycled commodities that we sell and rebates we offer to customers may cause our revenues and operating results to decline; and (33) unusually adverse weather conditions may interfere with our operations, harming our operating results. These risks and uncertainties, as well as others, are discussed in greater detail in our filings with the Securities and Exchange Commission, including our most recent Annual Report on Form 10-K. There may be additional risks of which we are not presently aware or that we currently believe are immaterial which could have an adverse impact on our business. We make no commitment to revise or update any forward-looking statements in order to reflect events or circumstances that may change.
— financial tables attached —
CONTACT:
Worthing Jackman / (916) 608-8266
worthingj@wasteconnections.com

 

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WASTE CONNECTIONS, INC.
CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED MARCH 31, 2009 AND 2010
(Unaudited)
(in thousands, except share and per share amounts)
                 
    Three months ended  
    March 31,  
    2009     2010  
 
 
Revenues
  $ 262,675     $ 307,540  
Operating expenses:
               
Cost of operations
    154,703       176,990  
Selling, general and administrative
    32,515       35,658  
Depreciation
    24,840       31,444  
Amortization of intangibles
    2,476       3,585  
Loss on disposal of assets
    507       257  
 
           
Operating income
    47,634       59,606  
 
               
Interest expense
    (12,249 )     (12,262 )
Interest income
    1,024       154  
Other income, net
    6       179  
 
           
Income before income taxes
    36,415       47,677  
 
               
Income tax provision
    (14,103 )     (19,863 )
 
           
Net income
    22,312       27,814  
Less: net income attributable to the noncontrolling interests
    (334 )     (240 )
 
           
Net income attributable to Waste Connections
  $ 21,978     $ 27,574  
 
           
 
               
Earnings per common share attributable to Waste Connections’ common stockholders:
               
Basic
  $ 0.27     $ 0.35  
 
           
 
               
Diluted
  $ 0.27     $ 0.35  
 
           
 
               
Shares used in the per share calculations:
               
Basic
    79,963,438       77,706,888  
 
           
Diluted
    80,758,941       78,676,068  
 
           

 

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WASTE CONNECTIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands, except share and per share amounts)
                 
    December 31,     March 31,  
    2009     2010  
ASSETS
               
Current assets:
               
Cash and equivalents
  $ 9,639     $ 14,346  
Accounts receivable, net of allowance for doubtful accounts of $4,058 and $3,603 at December 31, 2009 and March 31, 2010, respectively
    138,972       136,725  
Deferred income taxes
    17,748       16,240  
Prepaid expenses and other current assets
    33,495       23,441  
 
           
Total current assets
    199,854       190,752  
 
               
Property and equipment, net
    1,308,392       1,291,197  
Goodwill
    906,710       907,715  
Intangible assets, net
    354,303       350,783  
Restricted assets
    27,377       27,889  
Other assets, net
    23,812       21,668  
 
           
 
  $ 2,820,448     $ 2,790,004  
 
           
 
               
LIABILITIES AND EQUITY
               
Current liabilities:
               
Accounts payable
  $ 86,669     $ 68,776  
Book overdraft
    12,117       11,136  
Accrued liabilities
    93,380       98,583  
Deferred revenue
    50,138       51,587  
Current portion of long-term debt and notes payable
    2,609       1,980  
 
           
Total current liabilities
    244,913       232,062  
 
               
Long-term debt and notes payable
    867,554       865,815  
Other long-term liabilities
    45,013       40,501  
Deferred income taxes
    305,932       310,099  
 
           
Total liabilities
    1,463,412       1,448,477  
 
               
Commitments and contingencies
               
 
               
Equity:
               
Preferred stock: $0.01 par value; 7,500,000 shares authorized; none issued and outstanding
           
Common stock: $0.01 par value; 150,000,000 shares authorized; 78,599,083 and 77,630,580 shares issued and outstanding at December 31, 2009 and March 31, 2010, respectively
    786       776  
Additional paid-in capital
    625,173       582,243  
Retained earnings
    732,738       760,312  
Accumulated other comprehensive loss
    (4,892 )     (5,275 )
 
           
Total Waste Connections’ equity
    1,353,805       1,338,056  
Noncontrolling interest in subsidiaries
    3,231       3,471  
 
           
Total equity
    1,357,036       1,341,527  
 
           
 
  $ 2,820,448     $ 2,790,004  
 
           

 

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WASTE CONNECTIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 2009 AND 2010
(Unaudited)
(Dollars in thousands)
                 
    Three months ended  
    March 31,  
    2009     2010  
 
 
Cash flows from operating activities:
               
Net income
  $ 22,312     $ 27,814  
Adjustments to reconcile net income to net cash provided by operating activities:
               
Loss on disposal of assets
    507       257  
Depreciation
    24,840       31,444  
Amortization of intangibles
    2,476       3,585  
Deferred income taxes, net of acquisitions
    7,649       5,935  
Amortization of debt issuance costs
    484       848  
Amortization of debt discount
    1,171       1,245  
Equity-based compensation
    2,162       2,940  
Interest income on restricted assets
    (132 )     (133 )
Closure and post-closure accretion
    352       441  
Excess tax benefit associated with equity-based compensation
    (115 )     (2,478 )
Net change in operating assets and liabilities, net of acquisitions
    8,843       8,268  
 
           
Net cash provided by operating activities
    70,549       80,166  
 
           
 
               
Cash flows from investing activities:
               
Payments for acquisitions, net of cash acquired
    (5,298 )     (1,819 )
Capital expenditures for property and equipment
    (29,412 )     (26,754 )
Proceeds from disposal of assets
    161       802  
Increase in restricted assets, net of interest income
    (1,506 )     (379 )
Decrease (increase) in other assets
    166       (349 )
 
           
Net cash used in investing activities
    (35,889 )     (28,499 )
 
           
 
               
Cash flows from financing activities:
               
Proceeds from long-term debt
    75,000       60,000  
Principal payments on notes payable and long-term debt
    (44,372 )     (63,613 )
Change in book overdraft
    4,115       (981 )
Proceeds from option and warrant exercises
    1,018       4,952  
Excess tax benefit associated with equity-based compensation
    115       2,478  
Payments for repurchase of common stock
          (49,796 )
Debt issuance costs
    (42 )      
 
           
Net cash provided by (used in) financing activities
    35,834       (46,960 )
 
           
 
               
Net increase in cash and equivalents
    70,494       4,707  
Cash and equivalents at beginning of period
    265,264       9,639  
 
           
Cash and equivalents at end of period
  $ 335,758     $ 14,346  
 
           

 

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ADDITIONAL STATISTICS
THREE MONTHS ENDED MARCH 31, 2010
(Dollars in thousands)
Internal Growth: The following table reflects revenue growth for operations owned for at least 12 months:
         
    Three Months Ended  
    March 31, 2010  
Core Price
    2.8 %
Surcharges
    (0.1 %)
Volume
    (4.0 %)
Intermodal, Recycling and Other
    2.6 %
 
     
Total
    1.3 %
Uneliminated Revenue Breakdown:
                 
    Three Months Ended  
    March 31, 2010  
Collection
  $ 229,070       65.1 %
Disposal and Transfer
    100,668       28.6 %
Intermodal, Recycling and Other
    22,300       6.3 %
 
           
Total before inter-company elimination
  $ 352,038       100.0 %
 
               
Inter-company elimination
  $ 44,498          
 
             
Reported Revenue
  $ 307,540          
 
             
Days Sales Outstanding for the three months ended March 31, 2010: 40 (25 net of deferred revenue)
Internalization for the three months ended March 31, 2010: 67%
Other Cash Flow Items:
         
    Three Months Ended  
    March 31, 2010  
Cash Interest Paid
  $ 3,880  
Cash Taxes Paid
  $ 603  
Debt to Book Capitalization as of March 31, 2010: 39%
Share Information for the three months ended March 31, 2010:
         
Basic shares outstanding
    77,706,888  
Dilutive effect of options and warrants
    757,288  
Dilutive effect of restricted stock
    211,892  
 
     
Diluted shares outstanding
    78,676,068  

 

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NON-GAAP RECONCILIATION SCHEDULE
(in thousands)
Reconciliation of Adjusted Operating Income before Depreciation and Amortization:
Adjusted operating income before depreciation and amortization, a non-GAAP financial measure, is provided supplementally because it is widely used by investors as a performance and valuation measure in the solid waste industry. Waste Connections defines adjusted operating income before depreciation and amortization as operating income, plus depreciation and amortization expense, plus closure and post-closure accretion expense, plus or minus any gain or loss on disposal of assets. The Company further adjusts this calculation to exclude the effects of items management believes impact the ability to assess the operating performance of our business. This measure is not a substitute for, and should be used in conjunction with, GAAP financial measures. Management uses adjusted operating income before depreciation and amortization as one of the principal measures to evaluate and monitor the ongoing financial performance of the Company’s operations. Other companies may calculate adjusted operating income before depreciation and amortization differently.
                 
    Three Months Ended     Three Months Ended  
    March 31, 2009     March 31, 2010  
Operating income
  $ 47,634     $ 59,606  
Plus: Depreciation and amortization
    27,316       35,029  
Plus: Closure and post-closure accretion
    352       441  
Plus: Loss on disposal of assets
    507       257  
Adjustments:
               
Plus: Acquisition-related transaction costs (a)
    1,263       151  
Plus: Loss on prior corporate office lease (b)
    1,248        
 
           
Adjusted operating income before depreciation and amortization
  $ 78,320     $ 95,484  
 
           
 
               
As % of revenues
    29.8 %     31.0 %
 
     
(a)   Reflects the addback of acquisition-related costs expensed due to the implementation of new accounting guidance for business combinations effective January 1, 2009.
 
(b)   Reflects the addback of a loss on the Company’s prior corporate office lease due to the relocation of the Company’s corporate offices.
Reconciliation of Free Cash Flow:
Free cash flow, a non-GAAP financial measure, is provided supplementally because it is widely used by investors as a valuation and liquidity measure in the solid waste industry. Waste Connections defines free cash flow as net cash provided by operating activities, plus proceeds from disposal of assets, plus or minus change in book overdraft, plus excess tax benefit associated with equity-based compensation, less capital expenditures for property and equipment and distributions to noncontrolling interests. This measure is not a substitute for, and should be used in conjunction with, GAAP liquidity or financial measures. Management uses free cash flow as one of the principal measures to evaluate and monitor the ongoing financial performance of the Company’s operations. Other companies may calculate free cash flow differently.
                 
    Three Months Ended     Three Months Ended  
    March 31, 2009     March 31, 2010  
Net cash provided by operating activities
  $ 70,549     $ 80,166  
Plus/less: Change in book overdraft
    4,115       (981 )
Plus: Proceeds from disposal of assets
    161       802  
Plus: Excess tax benefit associated with equity-based compensation
    115       2,478  
Less: Capital expenditures for property and equipment
    (29,412 )     (26,754 )
Less: Distributions to noncontrolling interests
           
 
           
Free cash flow
  $ 45,528     $ 55,711  
 
           
 
               
As % of revenues
    17.3 %     18.1 %

 

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