EX-99 3 a4439632_ex991.txt WASTE CONNECTIONS EXHIBIT 99.1 Exhibit 99.1 Waste Connections Reports Second Quarter 2003 Earnings of $0.55 Per Share FOLSOM, Calif.--(BUSINESS WIRE)--July 22, 2003--Waste Connections, Inc. (NYSE: WCN) today announced second quarter earnings of $0.55 per share on a diluted basis on 32.8 million shares, an increase of 12.2% over diluted earnings per share of $0.49 in the second quarter of 2002. Revenue for the second quarter of 2003 was $138.9 million, an 8.4% increase over revenue of $128.1 million in the second quarter of 2002. Operating income for the second quarter of 2003 was $37.0 million, a 10.9% increase over operating income of $33.4 million in the second quarter of 2002. For the six months ended June 30, 2003, revenue was $267.3 million, a 14.3% increase over revenue of $233.8 million in the year ago period. Operating income for the six months ended June 30, 2003 was $70.2 million, a 12.5% increase over operating income of $62.4 million for the same period in 2002. Income before a gain resulting from the cumulative effect of adopting SFAS No. 143 for the six months ended June 30, 2003 was $31.1 million, a 17.1% increase over net income of $26.5 million for the same period in 2002. Diluted earnings per share before the gain on accounting change for the six months ended June 30, 2003 was $1.04, an increase of 14.3% over diluted earnings per share of $0.91 in the year ago period. Ronald J. Mittelstaedt, Chairman and Chief Executive Officer, said, "We are proud of our second quarter of 2003 results given the lack of improvement in economic conditions, continuing weakness in special waste and temporary roll-off volumes, little contribution from acquisitions closed in the quarter and tough comparisons with the second quarter of 2002. We believe our operating income before depreciation and amortization and free cash flow margins remain the highest in the industry, with operating income before depreciation and amortization at 34.8% of revenue and free cash flow at 12.0% of revenue for the quarter. Regarding the three previously announced signed transactions, the acquisition in Oregon closed in the quarter, and we expect the two California acquisitions to close late in the third quarter. In addition to this approximately $32 million of annualized revenue in predominately franchised markets, we have either signed or closed an additional seven acquisitions in the second quarter with annual revenue totaling approximately $7 million. Together this represents approximately $39 million, or 65%, of our original target of $60 million of acquired annualized revenue for the year with half of the year still ahead of us. We remain comfortable with our acquisition target for the year." Waste Connections will be hosting a conference call related to second quarter earnings on July 23rd at 8:30 A.M. Eastern Time. We will be broadcasting our quarterly conference call live over the Internet at www.streetevents.com and through a link on our web site at www.wasteconnections.com. A playback of the call will be available at both of these sites. 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, Midwestern, Southwestern and Southeastern U.S. The Company serves more than one million commercial, industrial and residential customers. 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. Based upon recent SEC guidance regarding non-GAAP financial measures, Waste Connections will no longer use the acronym previously referred to as "EBITDA" and instead will now use the phrase "operating income before depreciation and amortization." This is a change in name only. The Company has not changed the method it uses to calculate this financial measure. Operating income before depreciation and amortization and free cash flow, each a non-GAAP financial measure, are provided supplementally in the accompanying Non-GAAP Reconciliation Schedule because they are widely used by investors for valuation and financial performance measures in the solid waste industry. These measures should be used in conjunction with GAAP financial measures. Management uses operating income before depreciation and amortization and free cash flow as two of the principal measures to evaluate and monitor the ongoing financial performance of our operations. Other companies may calculate operating income before depreciation and amortization and free cash flow differently. Copies of financial literature, including this release, are available on the Waste Connections web site at www.wasteconnections.com 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 materially differ 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) competition or unfavorable industry conditions could lead to a decrease in demand for the Company's services and to a decline in prices realized by the Company for its services, (2) the Company depends in part on acquisitions for growth, it may be required to pay increased prices for acquisitions, and it may experience difficulty in integrating and deriving synergies from acquisitions, or finding acquisition targets suitable to its growth strategy. (3) the Company may not always have access to the additional capital that it may require for its growth strategy or its cost of capital may increase, (4) governmental regulations may require increased capital expenditures or otherwise affect the Company's business, (5) companies that Waste Connections acquires could have undiscovered liabilities, (6) large, long-term collection contracts on which the Company depends may not be replaced when they expire or are terminated, and (7) the Company is highly dependent on the services of senior management, who would be difficult or impossible to replace. These risks and uncertainties, as well as others, are discussed in greater detail in the Company's filings with the Securities and Exchange Commission, including its most recent Annual Report on Form 10-K and its subsequent Quarterly Reports on Form 10-Q. There may be additional risks that the Company does not presently know or that it currently believes are immaterial which could have an adverse impact on its business. The Company makes no commitment to revise or update any forward-looking statements in order to reflect events or circumstances after the date any such statement is made. WASTE CONNECTIONS, INC. CONSOLIDATED STATEMENTS OF INCOME THREE AND SIX MONTHS ENDED JUNE 30, 2002 AND 2003 (Unaudited) (in thousands, except share and per share amounts) Three months ended Six months ended June 30, June 30, ----------------------------------------------- 2002 2003 2002 2003 ----------- ----------- ----------- ----------- Revenues $128,091 $138,883 $233,833 $267,337 Operating expenses: Cost of operations 72,174 77,427 131,489 149,248 Selling, general and administrative 12,465 13,179 21,855 26,060 Depreciation and amortization 10,085 11,282 18,113 21,862 ----------- ----------- ----------- ----------- Operating income 33,367 36,995 62,376 70,167 Interest expense (7,769) (7,786) (15,138) (15,836) Minority interests (2,470) (2,593) (4,236) (4,875) Other income (expense), net (181) (205) (581) (167) ----------- ----------- ----------- ----------- Income before income tax provision and cumulative effect of change in accounting principle 22,947 26,411 42,421 49,289 Income tax provision (8,605) (9,772) (15,908) (18,237) ----------- ----------- ----------- ----------- Income before cumulative effect of change in accounting principle 14,342 16,639 26,513 31,052 Cumulative effect of change in accounting principle, net of tax expense of $166 -- -- -- 282 ----------- ----------- ----------- ----------- Net income $ 14,342 $ 16,639 $ 26,513 $ 31,334 =========== =========== =========== =========== Basic earnings per common share: Income before cumulative effect of change in accounting principle $ 0.52 $ 0.59 $ 0.96 $ 1.10 Cumulative effect of change in accounting principle -- -- -- .01 ----------- ----------- ----------- ----------- Net income per common share $ 0.52 $ 0.59 $ 0.96 $ 1.11 =========== =========== =========== =========== Diluted earnings per common share(a): Income before cumulative effect of change in accounting principle $ 0.49 $ 0.55 $ 0.91 $ 1.04 Cumulative effect of change in accounting principle -- -- -- .01 ----------- ----------- ----------- ----------- Net income per common share $ 0.49 $ 0.55 $ 0.91 $ 1.05 =========== =========== =========== =========== Shares used in the per share calculations: Basic 27,723,136 28,265,001 27,676,913 28,173,817 =========== =========== =========== =========== Diluted 32,347,458 32,799,715 32,214,488 32,729,293 =========== =========== =========== =========== Supplemental information: Operating income before depreciation and amortization(b) $ 43,452 $ 48,277 $ 80,489 $ 92,029 (a). Diluted earnings per share assumes conversion of the 5.5% Convertible Subordinated Notes due 2006. The interest expense related to these notes, net of tax effects, for the three months ended June 30, 2002 and 2003 was $1,462 and $1,476, respectively, and for the six months ended June 30, 2002 and 2003 was $2,921 and $2,951, respectively. (b). A non-GAAP measure; see accompanying Non-GAAP Reconciliation Schedule. WASTE CONNECTIONS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (in thousands, except share and per share amounts) December 31, June 30, 2002 2003 ----------- ----------- ASSETS Current assets: Cash and equivalents $ 4,067 $ 6,000 Accounts receivable, less allowance for doubtful accounts of $2,509 and $2,419 at December 31, 2002 and June 30, 2003, respectively 63,488 65,961 Prepaid expenses and other current assets 8,652 9,662 ----------- ----------- Total current assets 76,207 81,623 Property and equipment, net 578,040 579,550 Goodwill, net 548,975 555,931 Intangible assets, net 33,498 39,019 Other assets, net 25,162 25,942 ----------- ----------- $1,261,882 $1,282,065 ----------- ----------- LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 30,688 $ 33,982 Accrued liabilities 45,905 39,095 Deferred revenue 19,016 21,757 Current portion of long-term debt and notes payable 3,646 5,309 ----------- ----------- Total current liabilities 99,255 100,143 Long-term debt and notes payable 578,481 557,165 Other long-term liabilities 14,813 6,485 Deferred income taxes 94,543 103,661 ----------- ----------- Total liabilities 787,092 767,454 Commitments and contingencies Minority interests 23,078 23,347 Stockholders' equity: Preferred stock: $0.01 par value; 7,500,000 shares authorized; none issued and outstanding -- -- Common stock: $0.01 par value; 50,000,000 shares authorized; 28,046,535 and 28,392,522 shares issued and outstanding at December 31, 2002 and June 30, 2003, respectively 280 284 Additional paid-in capital 332,705 339,637 Deferred stock compensation (775) (605) Retained earnings 123,498 154,832 Unrealized loss on market value of interest rate swaps (3,996) (2,884) ----------- ----------- Total stockholders' equity 451,712 491,264 ----------- ----------- $1,261,882 $1,282,065 ----------- ----------- WASTE CONNECTIONS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS SIX MONTHS ENDED JUNE 30, 2002 AND 2003 (Unaudited) (Dollars in thousands) Six months ended June 30, ------------------ 2002 2003 -------- -------- Cash flows from operating activities: Net income $26,513 $31,334 Adjustments to reconcile net income to net cash provided by operating activities: Loss (gain) on disposal of assets (45) 219 Depreciation 17,317 21,198 Amortization of intangibles 796 664 Deferred income taxes -- 9,118 Minority interests 4,236 4,875 Cumulative effect of change in accounting principle -- (448) Amortization of debt issuance costs 1,031 1,182 Stock-based compensation 679 55 Interest income on restricted cash (361) (189) Net change in operating assets and liabilities, net of acquisitions 10,141 5,726 -------- -------- Net cash provided by operating activities 60,307 73,734 -------- -------- Cash flows from investing activities: Proceeds from disposal of assets 1,875 526 Payments for acquisitions, net of cash acquired (100,511) (21,074) Capital expenditures for property and equipment (24,929) (30,772) Decrease in other assets (750) (1,719) -------- -------- Net cash used in investing activities (124,315) (53,039) -------- -------- Cash flows from financing activities: Proceeds from long-term debt 300,000 27,000 Principal payments on notes payable and long- term debt (233,181) (48,153) Distributions to minority interest holders (4,165) (4,606) Proceeds from option and warrant exercises 5,604 7,050 Debt issuance costs (6,378) (53) -------- -------- Net cash provided by (used in) financing activities 61,880 (18,762) -------- -------- Net increase (decrease) in cash and equivalents (2,128) 1,933 Cash and equivalents at beginning of period 7,279 4,067 -------- -------- Cash and equivalents at end of period $ 5,151 $ 6,000 -------- -------- ADDITIONAL STATISTICS THREE MONTHS ENDED JUNE 30, 2003 (Dollars in thousands) Internal Growth The following table reflects revenue growth for operations owned for at least 12 months: Price 2.0% Volume (2.2%) Recycling 0.4% --------- Total 0.2% Adjusted internal growth: adjusted for the loss of revenue from Waste Management, Inc.'s volume at the Wichita transfer station: Price 2.0% Volume (1.2%) Recycling 0.4% --------- Total 1.2% Tonnage Growth The following table reflects the change in disposal tonnage that the Company received at all of its landfills either owned or operated for at least 12 months: % change in tonnage ---------- MSW 0.5% C&D 9.2% Special waste (38.4%) Uneliminated Revenue Breakdown: Collection $105,002 65.3% Disposal and Transfer 50,092 31.2% Recycling and Other 5,668 3.5% -------------------- Total $160,762 100.0% Inter-company elimination $ 21,879 Days Sales Outstanding: 42.7 Internalization: 62.3% Other Cash Flow Items: Cash Interest Paid: $9,127 Cash Taxes Paid: $4,590 Debt to Capitalization: 53.4% Total Debt divided by Total Debt plus Total Stockholders' Equity: (557,165 + 5,309) / (557,165 + 5,309 + 491,264) = 53.4% NON-GAAP RECONCILIATION SCHEDULE THREE MONTHS ENDED JUNE 30, 2003 (Dollars in thousands) Based upon recent SEC guidance regarding non-GAAP financial measures, Waste Connections will no longer use the acronym previously referred to as "EBITDA" and instead will now use the phrase "operating income before depreciation and amortization." This is a change in name only. The Company has not changed the method it uses to calculate this financial measure. Operating income before depreciation and amortization and free cash flow, each a non-GAAP financial measure, are provided supplementally because they are widely used by investors for valuation and financial performance measures in the solid waste industry. These measures should be used in conjunction with GAAP financial measures. Management uses operating income before depreciation and amortization and free cash flow as two of the principal measures to evaluate and monitor the ongoing financial performance of our operations. Other companies may calculate operating income before depreciation and amortization and free cash flow differently. Operating income before depreciation and amortization reconciliation: Operating income $36,995 Depreciation and amortization 11,282 ----------- Operating income before depreciation and amortization $48,277 ----------- Operating income before depreciation and amortization as % Revenues 34.8% Free cash flow reconciliation: Net cash provided by operating activities $37,565 Plus proceeds from disposal of assets 437 Less: Capital expenditures (18,931) Less: Distributions to minority interest holders (2,450) ----------- Free cash flow $16,621 ----------- Free cash flow as % Revenues 12.0% CONTACT: Waste Connections, Inc. Worthing Jackman, 916/608-8266 worthingj@wasteconnections.com