News Releases
FOLSOM, CA, Apr 21, 2009 (MARKET WIRE via COMTEX) -- Waste Connections, Inc. (NYSE: WCN) today announced its results for the first quarter 2009. Revenue totaled $262.7 million, a 4.9% increase over revenue of $250.3 million in the year ago period. Operating income was $47.6 million versus $50.8 million in the first quarter of 2008. Net income attributable to Waste Connections in the quarter was $22.0 million, or $0.27 per share on a diluted basis of 80.8 million shares. In the year ago period, the Company reported net income attributable to Waste Connections of $22.5 million, or $0.33 on a diluted basis of 68.1 million shares. The 18.6% year-over-year increase in diluted share count is due to an equity offering completed since the year ago period.
Management noted that current period results included approximately $3.0 million ($1.8 million net of taxes, or approximately $0.02 per share) of costs associated with the expensing of acquisition-related costs due to the adoption of SFAS 141(R) effective January 1, 2009, a non-cash loss on the Company's prior corporate office lease due to the relocation of its corporate offices during the quarter, and a non-cash loss on disposition of certain assets.
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 FSP No. APB 14-1 on January 1, 2009, were $5.8 million ($3.5 million net of taxes, or approximately $0.04 per share) in the quarter compared to $4.6 million ($2.8 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 and are off to a good start for the year. A weakened economy has impacted revenue, but operational improvements and cost controls have enabled us to exceed our outlook for operating income before depreciation and amortization* in the quarter and increase free cash flow* more than 28% year-over-year. More encouraging though, is that the pace of volume deceleration appears to be slowing such that we may be close to finding bottom," said Ronald J. Mittelstaedt, Chairman and Chief Executive Officer.
Mr. Mittelstaedt added, "The announced acquisitions of certain divested assets from Republic Services have already produced a record amount of acquired revenue this year and finally deployed the excess capital raised last year. With three quarters of the year ahead of us, still one of the strongest balance sheets in our sector, and a broader strategic footprint, we remain well positioned to pursue additional growth opportunities and further increase our potential upside once the economy begins to improve."
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 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.
On January 1, 2009, Waste Connections adopted SFAS 160, "Noncontrolling Interests in Consolidated Financial Statements -- an amendment of ARB No. 51," the provisions of which, among others, require for all periods presented that (1) minority interests be renamed noncontrolling interests, (2) that a company present amounts of consolidated net income attributable to the parent and to the noncontrolling interests, and (3) that a company present such noncontrolling interests as equity. Financial statements for the current and prior year periods reflect the adoption of SFAS 160 related to such noncontrolling interests.
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 1.8 million residential, commercial and industrial customers from a network of operations in 25 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, including statements regarding our expected 2009 outlook and our expectations with respect to volume growth. 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) a portion of our growth and future financial performance depends on our ability to integrate acquired businesses into our organization and operations; (2) our acquisitions may not be successful, resulting in changes in strategy, operating losses or a loss on sale of the business acquired; (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 unable to compete effectively with larger and better capitalized companies and governmental service providers; (6) we may lose contracts through competitive bidding, early termination or governmental action; (7) price increases may not be adequate to offset the impact of increased costs or may cause us to lose volume; (8) increases in the price of fuel may adversely affect our business and reduce our operating margins; (9) increases in labor and disposal and related transportation costs could impact our financial results; (10) we could face significant withdrawal liability if we withdraw from participation in one or more multiemployer pension plans in which we participate; (11) efforts by labor unions could divert management attention and adversely affect operating results; (12) increases in insurance costs and the amount that we self-insure for various risks could reduce our operating margins and reported earnings; (13) competition for acquisition candidates, consolidation within the waste industry and economic and market conditions may limit our ability to grow through acquisitions; (14) our indebtedness could adversely affect our financial condition; we may incur substantially more debt in the future; (15) each business that we acquire or have acquired may have liabilities that we fail or are unable to discover, including environmental liabilities; (16) liabilities for environmental damage may adversely affect our financial condition, business and earnings; (17) our accruals for our landfill site closure and post-closure costs may be inadequate; (18) we may be subject in the normal course of business to judicial, administrative or other third party proceedings that could interrupt our operations, require expensive remediation, result in adverse judgments, settlements or fines and create negative publicity; (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 regulating the flow of solid waste in interstate commerce could adversely affect our operating results; (28) fluctuations in prices for recycled commodities that we sell and rebates we offer to customers may cause our revenues and operating results to decline; (29) extensive and evolving environmental and health and safety laws and regulations may restrict our operations and growth and increase our costs; (30) we may not be able to obtain satisfactory regulatory approvals to operate acquired assets or consummate the acquisition of assets we seek to acquire; (31) extensive regulations that govern the design, operation and closure of landfills may restrict our landfill operations or increase our costs of operating landfills; and (32) 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 -
WASTE CONNECTIONS, INC.
CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED MARCH 31, 2008 And 2009
(Unaudited)
(in thousands, except share and per share amounts)
Three months ended
March 31,
----------------------
2008 2009
---------- ----------
Revenues $ 250,300 $ 262,675
Operating expenses:
Cost of operations 149,132 154,703
Selling, general and administrative 27,090 32,515
Depreciation 21,827 24,840
Amortization of intangibles 1,396 2,476
Loss on disposal of assets 57 507
---------- ----------
Operating income 50,798 47,634
Interest expense (10,612) (12,249)
Interest income 224 1,024
Other income (expense), net (12) 6
---------- ----------
Income before income taxes 40,398 36,415
Income tax provision (14,570) (14,103)
---------- ----------
Net income 25,828 22,312
Less: net income attributable to the noncontrolling
interests (3,373) (334)
---------- ----------
Net income attributable to Waste Connections $ 22,455 $ 21,978
========== ==========
Earnings per common share attributable to Waste
Connections' common stockholders:
Basic $ 0.34 $ 0.27
========== ==========
Diluted $ 0.33 $ 0.27
========== ==========
Shares used in the per share calculations:
Basic 66,789,398 79,963,438
========== ==========
Diluted 68,121,953 80,758,941
========== ==========
WASTE CONNECTIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands, except share and per share amounts)
December 31, March 31,
2008 2009
----------- -----------
ASSETS
Current assets:
Cash and equivalents $ 265,264 $ 335,758
Accounts receivable, net of allowance for
doubtful accounts of $3,846 and $3,309 at
December 31, 2008 and March 31, 2009,
respectively 118,456 116,543
Deferred income taxes 22,347 21,066
Prepaid expenses and other current assets 23,144 17,097
----------- -----------
Total current assets 429,211 490,464
Property and equipment, net 984,124 991,098
Goodwill 836,930 839,203
Intangible assets, net 306,444 303,822
Restricted assets 23,009 24,647
Other assets, net 20,639 19,930
----------- -----------
$ 2,600,357 $ 2,669,164
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 65,537 $ 60,634
Book overdraft 4,315 8,430
Accrued liabilities 95,220 99,984
Deferred revenue 45,694 44,296
Current portion of long-term debt and notes
payable 4,698 3,901
----------- -----------
Total current liabilities 215,464 217,245
Long-term debt and notes payable 819,828 855,205
Other long-term liabilities 47,509 54,893
Deferred income taxes 255,559 259,885
----------- -----------
Total liabilities 1,338,360 1,387,228
Commitments and contingencies
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; 79,842,239 and 80,049,077 shares
issued and outstanding at December 31, 2008 and
March 31, 2009, respectively 798 800
Additional paid-in capital 661,555 662,512
Retained earnings 622,913 644,891
Accumulated other comprehensive loss (23,937) (27,269)
----------- -----------
Total Waste Connections stockholders' equity 1,261,329 1,280,934
Noncontrolling interest in subsidiaries 668 1,002
----------- -----------
Total stockholders' equity 1,261,997 1,281,936
----------- -----------
$ 2,600,357 $ 2,669,164
=========== ===========
WASTE CONNECTIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 2008 AND 2009
(Unaudited)
(Dollars in thousands)
Three months ended
March 31,
--------------------
2008 2009
--------- ---------
Cash flows from operating activities:
Net income attributable to Waste Connections $ 22,455 $ 21,978
Adjustments to reconcile net income attributable to
Waste Connections to net cash provided by operating
activities:
Loss on disposal of assets 57 507
Depreciation 21,827 24,840
Amortization of intangibles 1,396 2,476
Deferred income taxes, net of acquisitions 7,582 7,649
Noncontrolling interests in subsidiaries 3,373 334
Amortization of debt issuance costs 454 484
Amortization of debt discount 1,101 1,171
Stock-based compensation 2,065 2,162
Interest income on restricted assets (170) (132)
Closure and post-closure accretion 333 352
Excess tax benefit associated with equity-based
compensation (1,101) (115)
Net change in operating assets and liabilities, net
of acquisitions 5,221 8,843
--------- ---------
Net cash provided by operating activities 64,593 70,549
--------- ---------
Cash flows from investing activities:
Payments for acquisitions, net of cash acquired (32,327) (5,298)
Capital expenditures for property and equipment (24,108) (29,412)
Proceeds from disposal of assets 301 161
Increase in restricted assets, net of interest
income (621) (1,506)
Decrease in other assets 96 166
--------- ---------
Net cash used in investing activities (56,659) (35,889)
--------- ---------
Cash flows from financing activities:
Proceeds from long-term debt 80,500 75,000
Principal payments on notes payable and long-term
debt (57,487) (44,372)
Change in book overdraft (3,596) 4,115
Proceeds from option and warrant exercises 5,124 1,018
Excess tax benefit associated with equity-based
compensation 1,101 115
Distributions to noncontrolling interests (2,842) -
Payments for repurchase of common stock (31,527) -
Debt issuance costs - (42)
--------- ---------
Net cash provided by (used in) financing activities (8,727) 35,834
--------- ---------
Net increase (decrease) in cash and equivalents (793) 70,494
Cash and equivalents at beginning of period 10,298 265,264
--------- ---------
Cash and equivalents at end of period $ 9,505 $ 335,758
========= =========
ADDITIONAL STATISTICS
THREE MONTHS ENDED MARCH 31, 2009
(Dollars in thousands)
Internal Growth: The following table reflects revenue growth for
operations owned for at least 12 months:
Three Months Ended
March 31, 2009
------------------
Core Price 5.8%
Surcharges (1.7%)
Volume (5.8%)
Intermodal, Recycling and
Other (4.0%)
------------------
Total (5.7%)
Uneliminated Revenue Breakdown:
Three Months Ended
March 31, 2009
------------------
Collection $ 209,782 69.9%
Disposal and Transfer 76,267 25.4%
Intermodal, Recycling and
Other 13,923 4.7%
--------- --------
Total before inter-company
elimination $ 299,972 100.0%
Inter-company elimination $ 37,297
---------
Reported Revenue $ 262,675
---------
Days Sales Outstanding for the three
months ended March 31, 2009: 40 (25 net of deferred revenue)
Internalization for the three months ended March 31, 2009: 64%
Other Cash Flow Items:
Three Months Ended
March 31, 2009
-------------------
Cash Interest Paid $ 6,565
Cash Taxes Paid $ 121
Debt to Book Capitalization: 40%
Share Information for the three months ended March 31, 2009:
Basic shares outstanding 79,963,438
Basic shares outstanding 79,963,438
Dilutive effect of options and
warrants 721,776
Dilutive effect of restricted
stock 73,727
-------------------
Diluted shares outstanding 80,758,941
NON-GAAP RECONCILIATION SCHEDULE
(in thousands)
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 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 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 our operations. Other companies may calculate free cash flow differently.
Three Months Three Months
Ended Ended
March 31, March 31,
2008 2009
----------- -----------
Net cash provided by operating activities $ 64,593 $ 70,549
Plus/less: Change in book overdraft (3,596) 4,115
Plus: Proceeds from disposal of assets 301 161
Plus: Excess tax benefit associated with
equity-based compensation 1,101 115
Less: Capital expenditures for property and
equipment (24,108) (29,412)
Less: Distributions to noncontrolling interests (2,842) -
----------- -----------
Free cash flow $ 35,449 $ 45,528
----------- -----------
As % of revenues 14.2% 17.3%
Reconciliation of Operating Income before Depreciation and Amortization:
Operating income before depreciation and amortization, a non-GAAP financial measure, is provided supplementally because it is widely used by investors as a valuation measure in the solid waste industry. Waste Connections defines 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 provides adjustments to this calculation to exclude the effects of items management believes impact the comparability of operating results between periods. This measure is not a substitute for, and should be used in conjunction with, GAAP financial measures. Management uses operating income before depreciation and amortization as one 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 differently.
Three Months Three Months
Ended Ended
March 31, March 31,
2008 2009
----------- -----------
Operating income $ 50,798 $ 47,634
Plus: Depreciation and amortization 23,223 27,316
Plus: Closure and post-closure accretion 333 352
Plus: Loss on disposal of assets 57 507
Adjustments:
Plus: Acquisition-related transaction costs (a) - 1,263
Plus: Non-cash loss on prior corporate office
lease (b) - 1,248
----------- -----------
Adjusted operating income before depreciation and
amortization $ 74,411 $ 78,320
----------- -----------
As % of revenues 29.7% 29.8%
(a) Reflects the addback of transaction costs primarily associated with the
acquisition of divested assets from Republic Services, Inc., due to the
implementation of SFAS 141(R) effective January 1, 2009.
(b) Reflects the addback of a one-time non-cash loss on the Company's prior
corporate office lease due to the relocation of the Company's corporate
offices in February 2009.
NON-GAAP RECONCILIATION SCHEDULE (continued)
(in thousands, except per share amounts)
Reconciliation of Net Income to Adjusted Net Income and Adjusted Cash Earnings per diluted share:
The Company provides adjusted cash earnings to show the impact of equity-based compensation, amortization of intangibles and amortization of debt discount, net of taxes, which are non-cash. The Company also provides adjusted cash earnings to exclude the effects of items management believes impact the comparability of operating results between periods. The Company does consider the dilutive impact to its stockholders when awarding equity-based compensation and values such awards accordingly. These measures are not a substitute for, and should be used in conjunction with, GAAP financial measures. Other companies may calculate cash earnings and adjusted cash earnings per share differently.
Adjusted cash earnings has limitations due to the fact that it does not include all expenses primarily related to the Company's workforce. More specifically, if the Company did not pay out a portion of its compensation in the form of equity-based compensation, the Company's cash salary expense would be higher. The Company compensates for this limitation by providing supplemental information about outstanding equity-based awards in the footnotes to the Company's financial statements. Equity-based compensation programs are an important element of the Company's compensation structure, and all forms of equity-based awards are valued and included as appropriate in results of operations.
Adjusted cash earnings has additional limitations due to the fact that it may exclude items that have a cash impact on the Company's financial condition and results of operations, including the exclusion of acquisition-related transaction costs. The Company compensates for this limitation by using adjusted cash earnings in conjunction with, and not as a substitute for, GAAP financial measures.
Three months ended
March 31,
-----------------
2008 2009
-------- --------
As reported net income attributable to Waste
Connections $ 22,455 $ 21,978
Adjustments:
Acquisition-related transaction costs, net of taxes (a) - 769
Loss on prior corporate office lease, net of taxes (b) - 760
Loss on disposal of assets, net of taxes (c) - 309
-------- --------
Adjusted net income attributable to Waste Connections 22,455 23,816
Non-cash amortization of intangibles, net of taxes 847 1,508
Non-cash equity-based compensation costs, net of
taxes 1,253 1,317
Non-cash amortization of debt discount, net of
taxes (d) 663 713
-------- --------
Adjusted cash earnings attributable to Waste
Connections $ 25,218 $ 27,354
======== ========
Diluted earnings per common share attributable to Waste
Connections common stockholders:
As reported net income $ 0.33 $ 0.27
======== ========
As adjusted net income $ 0.33 $ 0.29
======== ========
As adjusted cash earnings $ 0.37 $ 0.34
======== ========
(a) Reflects the elimination of transaction costs primarily associated
with the acquisition of divested assets from Republic Services, Inc.
SFAS 141(R), which the Company was required to adopt in the first
quarter of 2009, requires that such costs be expensed as incurred
rather than included as an element of the acquisition price.
(b) Reflects the elimination of a one-time non-cash loss on the Company's
prior corporate office lease due to the relocation of the Company's
corporate offices in February 2009.
(c) Reflects the elimination of non-cash losses on disposal of assets
primarily related to the sale of certain routes.
(d) Reflects the elimination of non-cash amortization of debt discount
related to the Company's convertible senior notes due 2026 as a result
of its adoption of FSP No. APB 14-1, effective January 1, 2009.
FSP No. APB 14-1 requires the Company to determine and record non-cash
interest equal to the difference between the cash coupon of its
convertible debt and the estimated non-convertible borrowing rate.
CONTACT:
Worthing Jackman
(916) 608-8266
Email Contact
WASTE CONNECTIONS, INC.
SOURCE: Waste Connections, Inc.