EX-99 3 a4499685ex991.txt EXHIBIT 99.1 PRESS RELEASE Exhibit 99.1 Waste Connections Reports Third Quarter 2003 Results FOLSOM, Calif.--(BUSINESS WIRE)--Oct. 22, 2003--Waste Connections, Inc. (NYSE:WCN) -- Acquires approximately $43 million annualized revenues -- Reports $0.56 earnings per share and 16.3% free cash flow margin -- Refinances senior credit facility Waste Connections, Inc. (NYSE:WCN) today announced third quarter earnings of $0.56 per share on 33.0 million diluted shares, an increase of 9.8% over diluted earnings per share of $0.51 in the third quarter of 2002. Revenue for the third quarter of 2003 was $146.2 million, a 9.5% increase over revenue of $133.5 million in the third quarter of 2002. Operating income for the third quarter of 2003 was $37.8 million, an 8.2% increase over operating income of $34.9 million in the third quarter of 2002. For the nine months ended September 30, 2003, revenue was $413.5 million, a 12.6% increase over revenue of $367.3 million in the year ago period. Operating income for the nine months ended September 30, 2003 was $107.9 million, a 10.9% increase over operating income of $97.3 million for the same period in 2002. Income before a gain resulting from the cumulative effect of adopting SFAS No. 143 for the nine months ended September 30, 2003 was $48.0 million, a 15.1% increase over net income of $41.7 million for the same period in 2002. Diluted earnings per share before the gain on accounting change for the nine months ended September 30, 2003 was $1.60, an increase of 11.9% over diluted earnings per share of $1.43 in the year ago period. Ronald J. Mittelstaedt, Chairman and Chief Executive Officer, said, "We had a number of positives since the second quarter that provide important building blocks going forward. First, we closed acquisitions in the third quarter with total annualized revenues of approximately $43 million. These transactions increase the amount of annualized revenue acquired through the third quarter to more than $50 million, and we remain comfortable with our target of acquiring $60 million of annualized revenue for the year. Second, we expanded our landfill network by four sites and were able to increase our internalization rate to almost 68% in September, including the impact from acquisitions completed in the quarter. The increased margins from this higher internalization rate will help offset a portion of the dilutive impact that the recently completed acquisitions will have on average corporate margins. Finally, we launched and completed the refinancing of our $435 million senior credit facility with a new $575 million facility. This financing provides additional capacity to fund our growth strategy and the flexibility to address our outstanding $150 million convertible subordinated notes due 2006. We were especially pleased to receive credit rating upgrades from both Moody's and Standard & Poor's in conjunction with the refinancing." Waste Connections will be hosting a conference call related to second quarter earnings on October 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 residential, commercial and industrial 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. 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 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 NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2003 (Unaudited) (in thousands, except share and per share amounts) Three months ended Nine months ended September 30, September 30, ----------------------------------------------- 2002 2003 2002 2003 ----------- ----------- ----------- ----------- Revenues $133,487 $146,178 $367,320 $413,515 Operating expenses: Cost of operations 75,467 82,407 206,956 231,655 Selling, general and administrative 12,613 13,702 34,468 39,762 Depreciation and amortization 10,483 12,293 28,596 34,155 ----------- ----------- ----------- ----------- Operating income 34,924 37,776 97,300 107,943 Interest expense (7,861) (8,002) (22,999) (23,838) Minority interests (2,585) (2,932) (6,821) (7,807) Other income (expense), net (162) 12 (743) (155) ----------- ----------- ----------- ----------- Income before income tax provision and cumulative effect of change in accounting principle 24,316 26,854 66,737 76,143 Income tax provision (9,123) (9,882) (25,031) (28,119) ----------- ----------- ----------- ----------- Income before cumulative effect of change in accounting principle 15,193 16,972 41,706 48,024 Cumulative effect of change in accounting principle, net of tax expense of $166 - - - 282 ----------- ----------- ----------- ----------- Net income $ 15,193 $ 16,972 $ 41,706 $ 48,306 =========== =========== =========== =========== Basic earnings per common share: Income before cumulative effect of change in accounting principle $ 0.55 $ 0.60 $ 1.51 $ 1.70 Cumulative effect of change in accounting principle - - - .01 ----------- ----------- ----------- ----------- Net income per common share $ 0.55 $ 0.60 $ 1.51 $ 1.71 =========== =========== =========== =========== Diluted earnings per common share(a): Income before cumulative effect of change in accounting principle $ 0.51 $ 0.56 $ 1.43 $ 1.60 Cumulative effect of change in accounting principle - - - .01 ----------- ----------- ----------- ----------- Net income per common share $ 0.51 $ 0.56 $ 1.43 $ 1.61 =========== =========== =========== =========== Shares used in the per share calculations: Basic 27,864,359 28,418,430 27,687,252 28,256,251 =========== =========== =========== =========== Diluted 32,410,607 32,950,955 32,224,692 32,804,077 =========== =========== =========== =========== Supplemental information: Operating income before depreciation and amortization(b) $ 45,407 $ 50,069 $125,896 $142,098 (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 September 30, 2002 and 2003 was $1,459 and $1,476, respectively, and for the nine months ended September 30, 2002 and 2003 was $4,380 and $4,427, 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) Dec. 31, Sept. 30, 2002 2003 ----------- ----------- ASSETS Current assets: Cash and equivalents $ 4,067 $ 7,027 Accounts receivable, less allowance for doubtful accounts of $2,509 and $2,564 at December 31, 2002 and September 30, 2003, respectively 63,488 72,034 Prepaid expenses and other current assets 8,652 9,904 ----------- ----------- Total current assets 76,207 88,965 Property and equipment, net 578,040 602,056 Goodwill, net 548,975 587,277 Intangible assets, net 33,498 63,271 Other assets, net 25,162 34,036 ----------- ----------- $1,261,882 $1,375,605 ----------- ----------- LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 30,688 $ 33,802 Accrued liabilities 45,905 47,601 Deferred revenue 19,016 23,057 Current portion of long-term debt and notes payable 3,646 8,118 ----------- ----------- Total current liabilities 99,255 112,578 Long-term debt and notes payable 578,481 613,632 Other long-term liabilities 14,813 6,304 Deferred income taxes 94,543 108,603 ----------- ----------- Total liabilities 787,092 841,117 Commitments and contingencies Minority interests 23,078 22,947 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 28,442,326 shares issued and outstanding at December 31, 2002 and September 30, 2003, respectively 280 284 Additional paid-in capital 332,705 340,890 Deferred stock compensation (775) (516) Retained earnings 123,498 171,804 Unrealized loss on market value of interest rate swaps (3,996) (921) ----------- ----------- Total stockholders' equity 451,712 511,541 ----------- ----------- $1,261,882 $1,375,605 ----------- ----------- WASTE CONNECTIONS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2003 (Unaudited) (Dollars in thousands) Nine months ended September 30, ------------------- 2002 2003 --------- --------- Cash flows from operating activities: Net income $ 41,706 $ 48,306 Adjustments to reconcile net income to net cash provided by operating activities: Loss (gain) on disposal of assets (63) 276 Depreciation 27,547 33,034 Amortization of intangibles 1,049 1,120 Deferred income taxes 10,859 14,060 Minority interests 6,821 7,807 Cumulative effect of change in accounting principle - (448) Amortization of debt issuance costs 1,606 1,786 Stock-based compensation 763 151 Interest income on restricted cash (507) (230) Net change in operating assets and liabilities, net of acquisitions 12,101 8,781 --------- --------- Net cash provided by operating activities 101,882 114,643 --------- --------- Cash flows from investing activities: Proceeds from disposal of assets 1,893 907 Payments for acquisitions, net of cash acquired (107,076) (78,035) Capital expenditures for property and equipment (41,495) (44,972) Net change in other assets (1,134) (6,283) --------- --------- Net cash used in investing activities (147,812) (128,383) --------- --------- Cash flows from financing activities: Proceeds from long-term debt 313,000 88,940 Principal payments on notes payable and long- term debt (264,997) (72,350) Distributions to minority interest holders (5,145) (7,938) Proceeds from option and warrant exercises 7,874 8,124 Debt issuance costs (6,443) (76) --------- --------- Net cash provided by financing activities 44,289 16,700 --------- --------- Net increase (decrease) in cash and equivalents (1,641) 2,960 Cash and equivalents at beginning of period 7,279 4,067 --------- --------- Cash and equivalents at end of period $ 5,638 $ 7,027 --------- --------- ADDITIONAL STATISTICS THREE MONTHS ENDED SEPTEMBER 30, 2003 (Dollars in thousands) Internal Growth The following table reflects revenue growth for operations owned for at least 12 months: Price 2.2% Volume (2.1%) Recycling (0.5%) --------- Total (0.4%) Adjusted internal growth: adjusted for revenue from an unusual project associated with a forest fire in Oregon in 2002 and the loss of revenue from Waste Management, Inc.'s volume at the Wichita transfer station: Price 2.2% Volume (0.6%) Recycling (0.5%) --------- Total 1.1% Uneliminated Revenue Breakdown: Collection $110,148 65.1% Disposal and Transfer 53,584 31.7% Recycling and Other 5,513 3.2% -------- -------- Total $169,245 100.0% Inter-company elimination $23,067 Days Sales Outstanding: 44.4 (unadjusted for transactions closed in the quarter) Internalization: 66.1% Other Cash Flow Items: Cash Interest Paid: $5,416 Cash Taxes Paid: $3,486 Debt to Capitalization: 54.9% Total Debt divided by Total Debt plus Total Stockholders' Equity: ($613,632 + $8,118) / ($613,632 + $8,118 + $511,541) = 54.9% NON-GAAP RECONCILIATION SCHEDULE THREE MONTHS ENDED SEPTEMBER 30, 2003 (Dollars in thousands) 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 $37,776 Depreciation and amortization 12,293 ----------- Operating income before depreciation and amortization $50,069 ----------- Operating income before depreciation and amortization as % Revenues 34.3% Free cash flow reconciliation: Net cash provided by operating activities $40,908 Plus proceeds from disposal of assets 381 Less: Capital expenditures (14,200) Less: Distributions to minority interest holders (3,332) ----------- Free cash flow $23,757 ----------- Free cash flow as % Revenues 16.3% CONTACT: Waste Connections, Inc. Worthing Jackman, 916-608-8266 worthingj@wasteconnections.com