EX-99.1 3 v120512_ex99-1.htm Unassociated Document


WASTE CONNECTIONS REPORTS SECOND QUARTER 2008 RESULTS

 
-
Reports revenue of $267.0 million, up 10.8%, and earnings per share of $0.39
 
-
Reports pricing growth of 5.4% and internal growth of 4.6%
 
-
Reports YTD free cash flow of $79.2 million, or 15.3% of revenue, up 54.0%
 
-
Increases available capital to fund potential acquisition activity


FOLSOM, CA, July 22, 2008 - Waste Connections, Inc. (NYSE: WCN) today announced its results for the second quarter 2008. Revenue totaled $267.0 million, a 10.8% increase over revenue of $241.1 million in the year ago period. Operating income was $55.6 million versus $53.8 million in the second quarter of 2007. Net income in the quarter was $26.2 million, or $0.39 per share on a diluted basis of 67.8 million shares. In the year ago period, the Company reported net income of $25.3 million and diluted earnings per share of $0.36. Non-cash costs for equity-based compensation and amortization of acquisition-related intangibles were $3.3 million ($2.0 million net of taxes, or approximately $0.03 per share) in the quarter compared to $2.5 million ($1.5 million net of taxes, or approximately $0.02 per share) in the year ago period.

“We remain extremely pleased with our performance in the year considering the rapid escalation in fuel costs and weakening economic environment. A 55% year-over-year increase in average fuel prices drove an approximate $8 million increase in fuel expense in the quarter and resulted in fuel costs as a percentage of revenue increasing approximately 285 basis points, or 50 basis points ($1.3 million) above expectations for the quarter. Fortunately, continuing pricing strength and operating improvements enabled us to recover most of the dollar impact of this unprecedented increase,” said Ronald J. Mittelstaedt, Chairman and Chief Executive Officer. “Our strong free cash flow, expansion of our credit facility and recently executed private note placement agreement position us to fund a potential increase in acquisition activity later in the year, with access to additional capital if necessary.”

For the six months ended June 30, 2008, revenue was $517.3 million, a 12.5% increase over revenue of $460.0 million in the year ago period. Operating income was $106.4 million versus $100.2 million for the same period in 2007. Net income for the six months ended June 30, 2008, was $49.4 million, or $0.73 per share on a diluted basis of 68.0 million shares. In the year ago period, the Company reported net income of $47.6 million, or $0.67 per share on a diluted basis of 70.6 million shares. Non-cash costs for equity-based compensation and amortization of acquisition-related intangibles for the six months ended June 30, 2008, were $6.8 million ($4.1 million net of taxes, or approximately $0.06 per share) compared to $5.2 million ($3.2 million net of taxes, or approximately $0.04 per share) in the year ago period.

Waste Connections will be hosting a conference call related to second quarter earnings and third quarter outlook on July 23rd 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 more than one 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 AND SIX MONTHS ENDED JUNE 30, 2007 AND 2008
(Unaudited)
(in thousands, except share and per share amounts)

 
     
Three months ended
June 30,
  
Six months ended
June 30, 
  
   
2007
  
2008
  
2007
  
2008
  
                   
Revenues
  
$
241,084
  
$
267,033
  
$
460,035
  
$
517,333
  
Operating expenses:
                          
Cost of operations
    
141,574
    
159,862
    
270,443
    
308,994
  
Selling, general and administrative
    
24,790
    
27,065
    
48,700
    
54,155
  
Depreciation and amortization
    
20,930
    
24,065
    
40,520
    
47,288
  
Loss on disposal of assets
    
32
    
451
    
192
    
508
  
Operating income
    
53,758
    
55,590
    
100,180
    
106,388
  
                           
Interest expense, net
    
(8,295
)
  
(8,920
)
  
(16,113
)
  
(18,240
)
Minority interests
    
(4,130
)
  
(3,807
)
  
(6,970
)
  
(7,179
)
Other income, net
   
365
    
345
    
417
    
333
  
Income before income taxes
    
41,698
    
43,208
    
77,514
   
81,302
  
                           
Income tax provision
    
(16,432
)
  
(16,974
)
  
(29,868
)
  
(31,950
)
Net income
  
$
25,266
  
$
26,234
  
$
47,646
  
$
49,352
  
                           
Basic earnings per common share
  
$
0.37
  
$
0.39
  
$
0.70
  
$ 0.74
                           
Diluted earnings per common share
  
$
0.36
  
$
0.39
  
$
0.67
  
$ 0.73
                           
Shares used in the per share calculations:
                          
Basic
    
68,592,474
    
66,468,457
    
68,529,546
    
66,628,927
  
Diluted
    
70,625,086
    
67,842,845
    
70,606,846
    
67,982,399
  




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

 



   
December 31,
  
June 30,
  
   
2007
  
2008
  
ASSETS
          
Current assets:
          
Cash and equivalents
  
$
10,298
  
$
10,645
  
Accounts receivable, net of allowance for doubtful
              
 accounts of $4,387 and $3,603 at December 31, 2007
              
 and June 30, 2008, respectively
    
123,882
    
127,112
  
Deferred income taxes
    
14,732
    
16,591
  
Prepaid expenses and other current assets
    
21,953
    
18,285
  
 Total current assets
    
170,865
    
172,633
  
               
Property and equipment, net
    
865,330
    
873,035
  
Goodwill
    
811,049
    
824,969
  
Intangible assets, net
    
93,957
    
108,096
  
Restricted assets
    
19,300
    
20,486
  
Other assets, net
    
21,457
    
21,380
  
   
$
1,981,958
  
$
2,020,599
  
               
LIABILITIES AND STOCKHOLDERS' EQUITY
              
Current liabilities:
              
Accounts payable
  
$
59,912
  
$
63,311
  
Book overdraft
    
8,835
    
9,157
  
Accrued liabilities
    
69,578
    
76,734
  
Deferred revenue
    
44,074
    
46,764
  
Current portion of long-term debt and notes payable
    
13,315
    
13,481
  
Total current liabilities
    
195,714
    
209,447
  
               
Long-term debt and notes payable
    
719,518
    
701,100
  
Other long-term liabilities
    
38,053
    
36,817
  
Deferred income taxes
    
223,308
    
238,649
  
Total liabilities
    
1,176,593
    
1,186,013
  
               
Commitments and contingencies
              
Minority interests
    
30,220
    
31,372
  
               
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 66,540,160 shares issued and outstanding at
December 31, 2007 and June 30, 2008, respectively
    
670
    
665
  
Additional paid-in capital
    
254,284
    
234,218
  

Retained earnings
    
524,481
    
573,833
  
Accumulated other comprehensive income
    
(4,290
)
  
(5,502
)
Total stockholders' equity
    
775,145
    
803,214
  
   
$
1,981,958
  
$
2,020,599
  
 


WASTE CONNECTIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 2007 AND 2008
(Unaudited)
(Dollars in thousands)


   
Six months ended
  
   
 June 30,
  
   
2007
  
2008
  
           
           
Cash flows from operating activities:
          
Net income
  
$
47,646
  
$
49,352
  
Adjustments to reconcile net income to
             
net cash provided by operating activities:
              
Loss on disposal of assets
    
192
    
508
  
Depreciation
   
38,459
    
44,474
  
Amortization of intangibles
    
2,061
    
2,814
  
Deferred income taxes, net of acquisitions
    
3,741
    
13,769
  
Minority interests
    
6,970
    
7,179
  
Amortization of debt issuance costs
   
961
    
970
  
Stock-based compensation
    
3,134
    
3,956
  
Interest income on restricted assets
    
(261
)
  
(287
)
Closure and post-closure accretion
    
522
    
729
  
Excess tax benefit associated with equity-based compensation
    
(8,534
)
  
(1,928
)
Net change in operating assets and liabilities, net of acquisitions
    
12,387
    
8,391
  
Net cash provided by operating activities
    
107,278
    
129,927
  
               
Cash flows from investing activities:
              
Payments for acquisitions, net of cash acquired
    
(40,591
)
  
(33,437
)
Capital expenditures for property and equipment
    
(64,509
)
  
(48,323
)
Proceeds from disposal of assets
    
559
    
1,366
  
Increase in restricted assets, net of interest income
    
(750
)
  
(900
)
Decrease (increase) in other assets
    
(485
)
  
112
  
Net cash used in investing activities
    
(105,776
)
  
(81,182
)
               
Cash flows from financing activities:
              
Proceeds from long-term debt
    
42,000
    
90,500
  
Principal payments on notes payable and long-term debt
    
(45,668
)
  
(111,046
)
Change in book overdraft
    
5,838
    
322
  
Proceeds from option and warrant exercises
    
21,082
    
7,543
  
Excess tax benefit associated with equity-based compensation
    
8,534
    
1,928
  
Distributions to minority interest holders
    
(6,272
)
  
(6,027
)
Payments for repurchase of common stock
    
(51,894
)
  
(31,527
)
Debt issuance costs
    
(100
)
  
(91
)
Net cash used in financing activities
    
(26,480
)
  
(48,398
)
               
Net increase (decrease) in cash and equivalents
    
(24,978
)
  
347
  
Cash and equivalents at beginning of period
    
34,949
    
10,298
  
Cash and equivalents at end of period
  
$
9,971
  
$
10,645
  
               


ADDITIONAL STATISTICS
THREE MONTHS ENDED JUNE 30, 2008
(Dollars in thousands)



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

 
Three Months Ended
June 30, 2008
Price
5.4%
Volume
(1.5%)
Intermodal, Recycling and Other
0.7%
Total
4.6%


Uneliminated Revenue Breakdown:

   
Three Months Ended
June 30, 2008
  
Collection
  
$
196,047
    
65.1
%
Disposal and Transfer
    
79,913
    
26.5
%
Intermodal, Recycling and Other
    
25,327
    
8.4
%
Total
  
$
301,287
    
100.0
%
               
Inter-company elimination
  
$
34,254
        


Days Sales Outstanding for the three months ended June 30, 2008: 43 (27 net of deferred revenue)


Internalization for the three months ended June 30, 2008: 66%


Other Cash Flow Items for the three months ended June 30, 2008:
Cash Interest Paid: $10,088
Cash Taxes Paid: $12,319


Debt to Capitalization: 47.1%
 

Share Information for the three months ended June 30, 2008:

Basic shares outstanding
66,468,457
Dilutive effect of options and warrants
1,214,259
Dilutive effect of restricted stock
160,129
Diluted shares outstanding
67,842,845
   
   




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 is not a substitute for, and 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
June 30, 2008
  
Six Months Ended
June 30, 2008
  
Net cash provided by operating activities
  
$
65,334
  
$
129,927
  
Plus: Change in book overdraft
    
3,918
    
322
  
Plus: Proceeds from disposal of assets
    
1,065
    
1,366
  
Plus: Excess tax benefit associated with equity-based compensation
    
827
    
1,928
  
Less: Capital expenditures for property and equipment
    
(24,215
)
  
(48,323
)
Less: Distributions to minority interest holders
    
(3,185
)
  
(6,027
)
Free cash flow
  
$
43,744
  
$
79,193
  
 
Free cash flow as % of revenues
    
16.4
%
  
15.3
%

 

   
Three Months Ended
June 30, 2007
  
Six Months Ended
June 30, 2007
  
Net cash provided by operating activities
  
$
46,364
  
$
107,278
  
Plus: Change in book overdraft
    
5,838
    
5,838
  
Plus: Proceeds from disposal of assets
    
344
    
559
  
Plus: Excess tax benefit associated with equity-based compensation
    
6,274
    
8,534
  
Less: Capital expenditures for property and equipment
    
(28,362
)
  
(64,509
)
Less: Distributions to minority interest holders
    
(3,920
)
  
(6,272
)
Free cash flow
  
$
26,538
  
$
51,428
  
 
Free cash flow as % of revenues
    
11.0
%
  
11.2
%