News Releases
FOLSOM, CA, Jul 21, 2009 (MARKETWIRE via COMTEX) -- Waste Connections, Inc. (NYSE: WCN) today announced its results for the second quarter of 2009. Revenue totaled $302.8 million, a 13.4% increase over revenue of $267.0 million in the year ago period. Operating income was $59.4 million versus $55.6 million in the second quarter of 2008. Net income attributable to Waste Connections in the quarter was $30.4 million, or $0.38 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 $25.6 million, or $0.38 on a diluted basis of 67.8 million shares. The year-over-year increase in diluted share count is due to an equity offering completed since the year ago period.
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 $6.8 million ($4.3 million net of taxes, or approximately $0.05 per share) in the quarter compared to $4.4 million ($2.7 million net of taxes, or approximately $0.04 per share) in the year ago period.
SG&A in the current period included approximately $2.4 million ($1.5 million net of taxes) of expenses primarily related to the acquisition of divested assets from Republic Services, Inc., and, to a lesser extent, an additional loss on the Company's prior corporate office lease. Management also noted that current period results benefited approximately $3.0 million ($2.3 million net of taxes) from both a gain on the sale of certain assets and a 270 basis point decrease in the Company's effective tax rate primarily due to a reduction in deferred tax liabilities. In addition, the Company received written approval from the IRS in May to change its calculation of landfill depreciation for tax purposes.
"Stabilizing volumes, contribution from recently completed acquisitions, and aggressive expense management enabled us to exceed our expectations for the second quarter. In response to the precipitous drop in the economy in late 2008, we reduced our headcount by about 10%, including a company-wide reduction in force in April, and instituted a number of wage and cost controls. The relative stability we experienced in the recent quarter, together with our low financial leverage and strong free cash flow, provided us the comfort to resume our share repurchase program while retaining flexibility to fund our future growth strategy," said Ronald J. Mittelstaedt, Chairman and Chief Executive Officer.
Mr. Mittelstaedt added, "We completed the previously announced acquisitions of certain divested assets from Republic Services during the second quarter. In late June, we entered into an agreement to acquire Sanipac, Inc., the largest privately-owned solid waste services provider in Oregon. Closing of the Sanipac transaction, which remains subject to satisfaction of closing conditions, is expected to occur in the third quarter of 2009. With this transaction and others already completed, acquisition activity in the year totals approximately $165 million of annualized revenue."
* A non-GAAP measure; see accompanying Non-GAAP Reconciliation Schedule.
For the six months ended June 30, 2009, revenue was $565.5 million, a 9.3% increase over revenue of $517.3 million in the year ago period. Operating income was $107.1 million versus $106.4 million for the same period in 2008. Net income attributable to Waste Connections for the six months ended June 30, 2009, was $52.4 million, or $0.65 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 $48.0 million, or $0.71 on a diluted basis of 68.0 million shares.
For the six months ended June 30, 2009, 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 $12.6 million ($7.8 million net of taxes, or approximately $0.10 per share) in the quarter compared to $9.0 million ($5.5 million net of taxes, or approximately $0.08 per share) in the year ago period.
SG&A for the six months ended June 30, 2009, included approximately $4.9 million ($3.0 million net of taxes) from previously discussed acquisition-related costs and a loss on the Company's prior corporate office lease due to the relocation of its corporate offices. Results during the current six month period also include an approximate $2.4 million ($2.0 million net of taxes) benefit from a gain on the sale of certain assets and a decrease in the Company's deferred tax liabilities.
Waste Connections will be hosting a conference call related to second quarter earnings and third quarter outlook on July 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.
On January 1, 2009, Waste Connections adopted SFAS No. 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 two million residential, commercial and industrial customers from a network of operations in 26 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.
Cautionary Statement Regarding Forward-Looking Statements
Certain statements contained in this press release are forward-looking in nature, including statements related to our share repurchase program and our ability to fund our future growth, and statements related to the closing of the Sanipac acquisition. 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.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
THREE AND SIX MONTHS ENDED JUNE 30, 2008 AND 2009
(Unaudited)
(in thousands, except share and per share amounts)
Three months ended Six months ended
June 30, June 30,
---------------------- ----------------------
2008 2009 2008 2009
---------- ---------- ---------- ----------
Revenues $ 267,033 $ 302,830 $ 517,333 $ 565,506
Operating expenses:
Cost of operations 159,862 175,687 308,994 330,391
Selling, general and
administrative 27,065 36,142 54,155 68,658
Depreciation 22,646 30,061 44,474 54,900
Amortization of
intangibles 1,419 3,205 2,814 5,681
Loss (gain) on disposal
of assets 451 (1,683) 508 (1,176)
---------- ---------- ---------- ----------
Operating income 55,590 59,418 106,388 107,052
Interest expense (10,128) (12,307) (20,740) (24,557)
Interest income 138 116 362 1,141
Other income, net 345 171 333 177
---------- ---------- ---------- ----------
Income before income taxes 45,945 47,398 86,343 83,813
Income tax provision (16,568) (16,716) (31,138) (30,819)
---------- ---------- ---------- ----------
Net income $ 29,377 $ 30,682 $ 55,205 $ 52,994
Less: net income
attributable
to noncontrolling interests (3,806) (244) (7,179) (578)
---------- ---------- ---------- ----------
Net income attributable to
Waste Connections $ 25,571 $ 30,438 $ 48,026 $ 52,416
========== ========== ========== ==========
Earnings per common share
attributable to Waste
Connections' common
stockholders:
Basic $ 0.38 $ 0.38 $ 0.72 $ 0.66
========== ========== ========== ==========
Diluted $ 0.38 $ 0.38 $ 0.71 $ 0.65
========== ========== ========== ==========
Shares used in the per
share calculations:
Basic 66,468,457 80,066,643 66,628,927 80,015,325
========== ========== ========== ==========
Diluted 67,842,845 80,833,350 67,982,399 80,796,431
========== ========== ========== ==========
WASTE CONNECTIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands, except share and per share amounts)
December 31, June 30,
2008 2009
----------- -----------
ASSETS
Current assets:
Cash and equivalents $ 265,264 $ 16,999
Accounts receivable, net of allowance for
doubtful accounts of $3,846 and $3,176 at
December 31, 2008 and June 30, 2009,
respectively 118,456 140,838
Deferred income taxes 22,347 20,423
Prepaid expenses and other current assets 23,144 23,063
----------- -----------
Total current assets 429,211 201,323
Property and equipment, net 984,124 1,272,851
Goodwill 836,930 877,518
Intangible assets, net 306,444 353,066
Restricted assets 23,009 25,271
Other assets, net 20,639 19,463
----------- -----------
$ 2,600,357 $ 2,749,492
=========== ===========
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable $ 65,537 $ 77,544
Book overdraft 4,315 6,551
Accrued liabilities 95,220 93,835
Deferred revenue 45,694 48,976
Current portion of long-term debt and notes
payable 4,698 3,634
----------- -----------
Total current liabilities 215,464 230,540
Long-term debt and notes payable 819,828 860,229
Other long-term liabilities 47,509 47,795
Deferred income taxes 255,559 282,429
----------- -----------
Total liabilities 1,338,360 1,420,993
Commitments and contingencies
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 80,074,924 shares
issued and outstanding at December 31, 2008 and
June 30, 2009, respectively 798 801
Additional paid-in capital 661,555 665,496
Retained earnings 622,913 675,329
Accumulated other comprehensive loss (23,937) (14,373)
----------- -----------
Total Waste Connections' equity 1,261,329 1,327,253
Noncontrolling interests 668 1,246
----------- -----------
Total equity 1,261,997 1,328,499
----------- -----------
$ 2,600,357 $ 2,749,492
=========== ===========
WASTE CONNECTIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 2008 AND 2009
(Unaudited)
(in thousands)
Six months ended
June 30,
------------------
2008 2009
-------- --------
Cash flows from operating activities:
Net income $ 55,205 $ 52,994
Adjustments to reconcile net income to net cash
provided by operating activities:
Loss (gain) on disposal of assets 508 (1,176)
Depreciation 44,474 54,900
Amortization of intangibles 2,814 5,681
Deferred income taxes, net of acquisitions 12,956 22,858
Amortization of debt issuance costs 907 970
Amortization of debt discount 2,202 2,342
Stock-based compensation 3,956 4,624
Interest income on restricted assets (287) (241)
Closure and post-closure accretion 729 912
Excess tax benefit associated with equity-based
compensation (1,928) (97)
Net change in operating assets and liabilities,
net of acquisitions 8,391 7,179
-------- --------
Net cash provided by operating activities 129,927 150,946
-------- --------
Cash flows from investing activities:
Payments for acquisitions, net of cash acquired (33,437) (387,106)
Capital expenditures for property and equipment (48,323) (52,693)
Proceeds from disposal of assets 1,366 4,129
Increase in restricted assets, net of interest income (900) (2,021)
Decrease in other assets 112 268
-------- --------
Net cash used in investing activities (81,182) (437,423)
-------- --------
Cash flows from financing activities:
Proceeds from long-term debt 90,500 142,000
Principal payments on notes payable and
long-term debt (111,046) (107,787)
Change in book overdraft 322 2,237
Proceeds from option and warrant exercises 7,543 1,707
Excess tax benefit associated with equity-based
compensation 1,928 97
Distributions to noncontrolling interests (6,027) -
Payments for repurchase of common stock (31,527) -
Debt issuance costs (91) (42)
-------- --------
Net cash (used in) provided by financing activities (48,398) 38,212
-------- --------
Net increase (decrease) in cash and equivalents 347 (248,265)
Cash and equivalents at beginning of period 10,298 265,264
-------- --------
Cash and equivalents at end of period $ 10,645 $ 16,999
======== ========
ADDITIONAL STATISTICS
THREE MONTHS ENDED JUNE 30, 2009
(Dollars in thousands)
Internal Growth: The following table reflects revenue growth for
operations owned for at least 12 months:
Three Months Ended
June 30, 2009
-------------------
Core Price 5.1%
Surcharges (2.4%)
Volume (7.2%)
Intermodal, Recycling and Other (3.9%)
-------------------
Total (8.4%)
Uneliminated Revenue Breakdown:
Three Months Ended
June 30, 2009
-------------------
Collection $226,513 65.2%
Disposal and Transfer 105,316 30.3%
Intermodal, Recycling and Other 15,783 4.5%
-------- -----
Total before inter-company elimination $347,612 100.0%
Inter-company elimination $ 44,782
--------
Reported Revenue $302,830
--------
Days Sales Outstanding for the three months ended June 30, 2009: 42
(28 net of deferred revenue)
Internalization for the three months ended June 30, 2009: 62%
Other Cash Flow Items:
Three Months Ended
June 30, 2009
-------------------
Cash Interest Paid $ 15,136
Cash Taxes Paid $ 5,482
Debt to Book Capitalization: 39%
Share Information for the three months ended June 30, 2009:
Basic shares outstanding 80,066,643
Dilutive effect of options and warrants 706,018
Dilutive effect of restricted stock 60,689
-------------------
Diluted shares outstanding 80,833,350
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, plus or minus change in book overdraft, plus or minus excess tax benefit associated with equity-based compensation, 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 the Company's operations. Other companies may calculate free cash flow differently.
Three Months Three Months
Ended June Ended June
30, 2008 30, 2009
------------ ------------
Net cash provided by operating activities $ 65,334 $ 80,397
Plus/less: Change in book overdraft 3,918 (1,879)
Plus: Proceeds from disposal of assets 1,065 3,968
Plus/less: Excess tax benefit associated with
equity-based compensation 827 (18)
Less: Capital expenditures for property and
equipment (24,215) (23,281)
Less: Distributions to noncontrolling interests (3,185) -
------------ ------------
Free cash flow $ 43,744 $ 59,187
------------ ------------
As % of revenues 16.4% 19.5%
Six Months Six Months
Ended June Ended June
30, 2008 30, 2009
------------ ------------
Net cash provided by operating activities $ 129,927 $ 150,946
Plus/less: Change in book overdraft 322 2,237
Plus: Proceeds from disposal of assets 1,366 4,129
Plus: Excess tax benefit associated with
equity-based compensation 1,928 97
Less: Capital expenditures for property and
equipment (48,323) (52,693)
Less: Distributions to noncontrolling interests (6,027) -
------------ ------------
Free cash flow $ 79,193 $ 104,716
------------ ------------
As % of revenues 15.3% 18.5%
NON-GAAP RECONCILIATION SCHEDULE (continued)
(in thousands)
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 June Ended June
30, 2008 30, 2009
----------- -----------
Operating income $ 55,590 $ 59,418
Plus: Depreciation and amortization 24,065 33,266
Plus: Closure and post-closure accretion 396 560
Plus/less: Loss (gain) on disposal of assets 451 (1,683)
Adjustments:
Plus: Acquisition-related transaction costs (a) - 2,019
Plus: Loss on prior corporate office lease (b) - 373
----------- -----------
Adjusted operating income before depreciation and
amortization $ 80,502 $ 93,953
----------- -----------
As % of revenues 30.1% 31.0%
Six Months Six Months
Ended June Ended June
30, 2008 30, 2009
----------- -----------
Operating income $ 106,388 $ 107,052
Plus: Depreciation and amortization 47,288 60,581
Plus: Closure and post-closure accretion 729 912
Plus/less: Loss (gain) on disposal of assets 508 (1,176)
Adjustments:
Plus: Acquisition-related transaction costs (a) - 3,282
Plus: Loss on prior corporate office lease (b) - 1,621
----------- -----------
Adjusted operating income before depreciation and
amortization $ 154,913 $ 172,272
----------- -----------
As % of revenues 29.9% 30.5%
(a) Reflects the addback of transaction costs primarily associated with the
acquisition of divested assets from Republic Services, Inc.
(b) Reflects the addback of a loss on the Company's prior corporate office
lease due to the relocation of the Company's corporate offices.
NON-GAAP RECONCILIATION SCHEDULE (continued)
(in thousands, except per share amounts)
Reconciliation of Net Income to Adjusted Net Income and Adjusted Net Income per diluted share:
The Company provides adjusted earnings to exclude the effects of items management believes impact the comparability of operating results between periods. Adjusted earnings has limitations due to the fact that it may exclude items that have an impact on the Company's financial condition and results of operations. The Company compensates for this limitation by using adjusted earnings in conjunction with, and not as a substitute for, GAAP financial measures.
Three months ended Six months ended
June 30, June 30,
------------------ ------------------
2008 2009 2008 2009
--------- -------- --------- --------
As reported net income attributable
to Waste Connections $ 25,571 $ 30,438 $ 48,026 $ 52,416
Adjustments:
Acquisition-related transaction
costs, net of taxes (a) - 1,256 - 2,041
Loss on prior corporate office
lease, net of taxes (b) - 232 - 1,008
Loss (gain) on disposal of assets,
net of taxes (c) 276 (1,047) 311 (731)
Impact of deferred tax
adjustment (d) - (1,270) - (1,270)
--------- -------- --------- --------
Adjusted net income attributable to
Waste Connections $ 25,847 $ 29,609 $ 48,337 $ 53,464
========= ======== ========= ========
Diluted earnings per common share
attributable to Waste Connections
common stockholders:
As reported net income $ 0.38 $ 0.38 $ 0.71 $ 0.65
========= ======== ========= ========
As adjusted net income $ 0.38 $ 0.37 $ 0.71 $ 0.66
========= ======== ========= ========
(a) Reflects the elimination of transaction costs primarily associated with
the acquisition of divested assets from Republic Services, Inc.
(b) Reflects the elimination of a loss on the Company's prior corporate
office lease due to the relocation of the Company's corporate offices.
(c) Reflects the elimination of a gain on disposal of assets primarily
related to the sale of certain routes.
(d) Reflects the elimination of a benefit to the income tax provision
primarily from a reduction in the Company's deferred tax liabilities.
CONTACT:
Worthing Jackman
(916) 608-8266
Email Contact
SOURCE: Waste Connections, Inc.