EX-99.1 3 v111244_ex99-1.htm

WASTE CONNECTIONS REPORTS FIRST QUARTER 2008 RESULTS

 
-
Reports revenue of $250.3 million, up 14.3%, and earnings per share of $0.34
 
-
Reports internal growth of 8.1%
 
-
Reports free cash flow of $35.4 million, or 14.2% of revenue, up 42.4%
 
-
Repurchases approximately $31.5 million of common stock


FOLSOM, CA, April 21, 2008 - Waste Connections, Inc. (NYSE: WCN) today announced its results for the first quarter 2008. Revenue totaled $250.3 million, a 14.3% increase over revenue of $219.0 million in the year ago period. Operating income was $50.8 million, a 9.4% increase over operating income of $46.4 million in the first quarter of 2007. Net income in the quarter was $23.1 million, or $0.34 per share on a diluted basis of 68.1 million shares. In the year ago period, the Company reported net income of $22.4 million and diluted earnings per share of $0.32. Non-cash costs for equity-based compensation and amortization of acquisition-related intangibles were $3.5 million ($2.1 million net of taxes, or approximately $0.03 per share) in the quarter compared to $2.7 million ($1.7 million net of taxes, or approximately $0.02 per share) in the year ago period.

“We continue to be extremely pleased with the underlying strength of our business in the face of spiraling fuel costs and more difficult weather conditions during the quarter. Excluding the dilutive margin impact of acquisitions completed since the year ago period, operating margins were almost flat year-over-year despite an almost 40% increase in average fuel costs resulting in fuel as a percentage of revenue increasing more than 150 basis points in the quarter,” said Ronald J. Mittelstaedt, Chairman and Chief Executive Officer. “Continuing pricing strength and the improving performance of recently completed acquisitions position us to recover a significant portion of this recent spike in fuel costs should diesel prices remain at record levels for the remainder of the year.”

Waste Connections will be hosting a conference call related to first quarter earnings and second quarter outlook on April 22nd at 8:30 A.M. Eastern Time. The call will be broadcast live over the Internet at www.streetevents.com and through a link on the Company’s web site at www.wasteconnections.com. A playback of the call will be available at both of these sites.

For non-GAAP measures, 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 1.5 million residential, commercial and industrial customers from a network of operations in 23 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.
 
 
 
 
 

Certain statements contained in this press release are forward-looking in nature.  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.  Waste Connections’ 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) Waste Connections may be unable to compete effectively with larger and better capitalized companies and governmental service providers; (2) increases in the price of fuel may adversely affect Waste Connections’ business and reduce its operating margins; (3) increases in labor and disposal and related transportation costs could impact Waste Connections’ financial results; (4) increases in insurance costs and the amount that Waste Connections self-insures for various risks could reduce its operating margins and reported earnings; (5) Waste Connections depends significantly on the services of the members of its senior, regional and district management team, and the departure of any of those persons could cause its operating results to suffer; (6) Waste Connections’ financial results are based upon estimates and assumptions that may differ from actual results; (7) efforts by labor unions could divert management attention and adversely affect operating results; (8) Waste Connections’ results are vulnerable to economic conditions and seasonal factors affecting the regions in which it operates; (9) Waste Connections may lose contracts through competitive bidding, early termination or governmental action; (10) Waste Connections may be subject in the normal course of business to judicial and administrative proceedings that could interrupt its operations, require expensive remediation, result in adverse judgments or settlements and create negative publicity; (11) competition for acquisition candidates, consolidation within the waste industry and economic and market conditions may limit Waste Connections’ ability to grow through acquisitions; (12) Waste Connections’ growth and future financial performance depend significantly on its ability to integrate acquired businesses into its organization and operations; (13) Waste Connections’ acquisitions may not be successful, resulting in changes in strategy, operating losses or a loss on sale of the business acquired; (14) because Waste Connections depends on railroads for its intermodal operations, its operating results and financial condition are likely to be adversely affected by any reduction or deterioration in rail service; (15) Waste Connections’ decentralized decision-making structure could allow local managers to make decisions that adversely affect Waste Connections’ operating results; (16) Waste Connections may incur additional charges related to capitalized expenditures, which would decrease its earnings; (17) each business that Waste Connections acquires or has acquired may have liabilities that Waste Connections fails or is unable to discover, including environmental liabilities; (18) liabilities for environmental damage may adversely affect Waste Connections’ business and earnings; and (19) the adoption of new accounting standards or interpretations could adversely affect Waste Connections’ financial results. These risks and uncertainties, as well as others, are discussed in greater detail in Waste Connections’ filings with the Securities and Exchange Commission, including its most recent Annual Report on Form 10-K.  There may be additional risks of which Waste Connections is not presently aware or that it currently believes are immaterial which could have an adverse impact on its business.  Waste Connections makes 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
 
 
 
 
 

WASTE CONNECTIONS, INC.
CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED MARCH 31, 2007 AND 2008
(Unaudited)
(in thousands, except share and per share amounts)


   
Three months ended
March 31,
  
   
2007
  
2008
  
           
Revenues
  
$
218,951
  
$
250,300
  
Operating expenses:
              
Cost of operations
    
128,869
    
149,132
  
Selling, general and administrative
    
23,910
    
27,090
  
Depreciation and amortization
    
19,590
    
23,223
  
Loss on disposal of assets
    
160
    
57
  
Operating income
    
46,422
    
50,798
  
               
Interest expense, net
    
(7,818
)
  
(9,319
)
Minority interests
    
(2,840
)
  
(3,373
)
Other income (expense), net
   
51
    
(12
)
Income before income taxes
    
35,815
    
38,094
  
               
Income tax provision
    
(13,435
)
  
(14,976
)
Net income
    
22,380
  
$
23,118
  
               
Basic earnings per common share
  
$
0.33
  
$
0.35
  
               
Diluted earnings per common share
  
$
0.32
  
$
0.34
  
               
Shares used in the per share calculations:
              
Basic
    
68,465,359
    
66,789,398
  
Diluted
    
70,583,096
    
68,121,953
  

 
 
 
 

WASTE CONNECTIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands, except share and per share amounts)


   
December 31,
  
March 31,
  
   
2007
  
2008
  
ASSETS
          
Current assets:
          
Cash and equivalents
  
$
10,298
  
$
9,505
  
Accounts receivable, net of allowance for doubtful
accounts of $4,387 and $3,716 at December 31, 2007
and March 31, 2008, respectively
    
123,882
    
116,193
  
Deferred income taxes
    
14,732
    
15,552
  
Prepaid expenses and other current assets
    
21,953
    
15,512
  
Total current assets
    
170,865
    
156,762
  
               
Property and equipment, net
    
865,330
    
870,316
  
Goodwill
    
811,049
    
824,929
  
Intangible assets, net
    
93,957
    
109,376
  
Restricted assets
    
19,300
    
20,090
  
Other assets, net
    
21,457
    
21,512
  
   
$
1,981,958
  
$
2,002,985
  
               
LIABILITIES AND STOCKHOLDERS' EQUITY
              
Current liabilities:
              
Accounts payable
  
$
59,912
  
$
51,194
  
Bank overdraft
    
8,835
    
5,239
  
Accrued liabilities
    
69,578
    
76,185
  
Deferred revenue
    
44,074
    
44,343
  
Current portion of long-term debt and notes payable
    
13,315
    
13,473
  
Total current liabilities
    
195,714
    
190,434
  
               
Long-term debt and notes payable
    
719,518
    
744,514
  
Other long-term liabilities
    
38,053
    
45,517
  
Deferred income taxes
    
223,308
    
227,197
  
Total liabilities
    
1,176,593
    
1,207,662
  
               
Commitments and contingencies
              
Minority interests
    
30,220
    
30,751
  
               
Stockholders' 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;
67,052,135 and 66,397,922 shares issued and outstanding at
December 31, 2007 and March 31, 2008, respectively
    
670
    
664
  
Additional paid-in capital
    
254,284
    
229,151
  
Retained earnings
    
524,481
    
547,599
  
Accumulated other comprehensive income
    
(4,290
)
  
(12,842
)
Total stockholders' equity
    
775,145
    
764,572
  
   
$
1,981,958
  
$
2,002,985
  
 

 
 
 

WASTE CONNECTIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 2007 AND 2008
(Unaudited)
(Dollars in thousands)


   
Three months ended
  
   
March 31,
  
   
2007
  
2008
  
           
           
Cash flows from operating activities:
          
Net income
  
$
22,380
  
$
23,118
  
Adjustments to reconcile net income to net cash provided by operating activities:
              
Loss on disposal of assets
    
160
    
57
  
Depreciation
   
18,558
    
21,827
  
Amortization of intangibles
    
1,032
    
1,396
  
Deferred income taxes, net of acquisitions
    
2,852
    
7,989
  
Minority interests
    
2,840
    
3,373
  
Amortization of debt issuance costs
   
482
    
486
  
Stock-based compensation
    
1,663
    
2,065
  
Interest income on restricted assets
    
(107
)
  
(170
)
Closure and post-closure accretion
    
253
    
333
  
Excess tax benefit associated with equity-based compensation
    
(2,260
)
  
(1,101
)
Net change in operating assets and liabilities, net of acquisitions
    
13,061
    
5,220
  
Net cash provided by operating activities
    
60,914
    
64,593
  
               
Cash flows from investing activities:
              
Payments for acquisitions, net of cash acquired
    
(35,860
)
  
(32,327
)
Capital expenditures for property and equipment
    
(36,147
)
  
(24,108
)
Proceeds from disposal of assets
    
215
    
301
  
Increase in restricted assets, net of interest income
    
(581
)
  
(621
)
Decrease (increase) in other assets
    
(517
)
  
96
  
Net cash used in investing activities
    
(72,890
)
  
(56,659
)
               
Cash flows from financing activities:
              
Proceeds from long-term debt
    
21,000
    
80,500
  
Principal payments on notes payable and long-term debt
    
(23,616
)
  
(57,487
)
Change in book overdraft
    
-
    
(3,596
)
Proceeds from option and warrant exercises
    
6,513
    
5,124
  
Excess tax benefit associated with equity-based compensation
    
2,260
    
1,101
  
Distributions to minority interest holders
    
(2,352
)
  
(2,842
)
Payments for repurchase of common stock
    
(5,414
)
  
(31,527
)
Debt issuance costs
    
(100
)
  
-
  
Net cash used in financing activities
    
(1,709
)
  
(8,727
)
               
Net decrease in cash and equivalents
    
(13,685
)
  
(793
)
Cash and equivalents at beginning of period
    
34,949
    
10,298
  
Cash and equivalents at end of period
  
$
21,264
  
$
9,505
  
               

 
 
 

ADDITIONAL STATISTICS
THREE MONTHS ENDED MARCH 31, 2008
(Dollars in thousands)



Internal Growth: The following table reflects revenue growth for operations owned for at least 12 months:

 
Three Months Ended
March 31, 2008
Price
5.3%
Volume
2.2%
Intermodal, Recycling and Other
0.6%
Total
8.1%


Uneliminated Revenue Breakdown:

   
Three Months Ended
March 31, 2008
  
Collection
  
$
186,161
    
65.9
%
Disposal and Transfer
    
72,158
    
25.6
%
Intermodal, Recycling and Other
    
23,960
    
8.5
%
Total
  
$
282,279
    
100.0
%
               
Inter-company elimination
  
$
31,979
        


Days Sales Outstanding for the three months ended March 31, 2008: 42 (26 net of deferred revenue)


Internalization for the three months ended March 31, 2008: 68%


Other Cash Flow Items for the three months ended March 31, 2008:
Cash Interest Paid: $6,998
Cash Taxes Paid: $ 215


Debt to Capitalization: 49.8%


Share Information for the three months ended March 31, 2008:

Basic shares outstanding
    
66,789,398
  
Dilutive effect of options and warrants
    
1,189,879
  
Dilutive effect of restricted stock
    
142,676
  
Diluted shares outstanding
    
68,121,953
  
         
Shares repurchased
    
1,041,271
  



 
 
 

NON-GAAP RECONCILIATION SCHEDULE
(in thousands)

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 and excess tax benefit associated with equity-based compensation, plus or minus change in book overdraft, less capital expenditures for property and equipment and distributions to minority interest holders. This measure should be used in conjunction with GAAP financial measures. Management uses free cash flow as one of the principal measures to evaluate and monitor the ongoing financial performance of our operations. Other companies may calculate free cash flow differently.

Free cash flow reconciliation:

   
Three Months Ended
March 31, 2007
  
Three Months Ended
March 31, 2008
  
Net cash provided by operating activities
  
$
60,914
  
$
64,593
  
Change in book overdraft
    
-
    
(3,596
)
Plus: Proceeds from disposal of assets
    
215
    
301
  
Plus: Excess tax benefit associated with equity-based compensation
    
2,260
    
1,101
  
Less: Capital expenditures for property and equipment
    
(36,147
)
  
(24,108
)
Less: Distributions to minority interest holders
    
(2,352
)
  
(2,842
)
Free cash flow
  
$
24,890
  
$
35,449
  
 
Free cash flow as % of revenues
    
11.4
%
  
14.2
%