Waste Industries Usa 8-K WASTE INDUSTRIES USA, INC. Reports Third Quarter 2003 Results

EXHIBIT 99.1

WASTE INDUSTRIES USA, INC. Reports Third Quarter 2003 Results

Raleigh, NC, Tuesday, October 28, 2003 — Waste Industries USA, Inc. (NASDAQ: WWIN), a regional, non-hazardous solid waste services company, today reported financial results for the third quarter ended September 30, 2003.

For the quarter ended September 30, 2003, the Company reported revenue of $70.8 million compared to $65.0 million for the quarter ended September 30, 2002. Operating income was $7.1 million compared to $7.8 million for the comparable period last year. Net income was $3.1 million, or $0.23 per share, compared to $3.2 million, or $0.24 per share for both quarters ended September 30, 2003 and 2002, respectively.

For the nine months ended September 30, 2003, the Company reported revenue of $199.5 million compared to $188.6 million for the nine months ended September 30, 2002. Operating income was $19.5 million compared to $21.2 million for the comparable period last year. Income before a cumulative effect of a change in accounting principle for SFAS 143 was $8.0 million, or $0.59 per share and $8.2 million, or $0.61 per share for the nine months ended September 30, 2003 and 2002, respectively. Net income was $6.9 million, or $0.51 per share for the nine months ended September 30, 2003 (including the $0.08 per share dilutive impact for the cumulative effect of the adoption of SFAS 143) compared to $8.2 million, or $0.61 per share for the nine months ended September 30, 2002. The cumulative effect of the change in accounting principle was related to the Company’s adoption, effective January 1, 2003, of Statement of Financial Accounting Standards No. 143,Accounting for Asset Retirement Obligations(“SFAS 143”), and is presented as a non-cash charge in the statement of cash flows.

Commenting on the Company’s performance, Jim W. Perry, President and CEO of Waste Industries USA said, “We are pleased with our balanced revenue growth and are confident that current initiatives will improve our operating margin. We successfully dealt with several major events in this quarter which included completing our largest acquisition to date, the completion of amending our revolving credit facility, the issuance of a revenue bond for landfill construction and dealing with the impact of Hurricane Isabel on eight of our operations in eastern North Carolina and Virginia.”

The Company will host a conference call to discuss its second quarter results on Wednesday, October 29, 2003 at 2:00 PM (EST). The call number is (800) 946-0786 and the confirmation number is 610835. The conference call will also be broadcast live over the Internet athttp://www.waste-ind.com under the “Investor Relations” tab.

Waste Industries USA, Inc. is a vertically integrated solid waste services company that provides collection, transfer, disposal and recycling services to commercial, industrial and residential customer locations in the states of North Carolina, South Carolina, Virginia, Tennessee, Mississippi, Georgia and Florida.

The tables attached to this press release contain references to EBITDA and free cash flow, which are considered non-GAAP financial measures. Tables reconciling EBITDA and free cash flow to the appropriate GAAP measures for each period presented are included in the attached supplemental data. The Company defines EBITDA as income before income taxes plus interest expense (net of interest income), depreciation and amortization and cumulative effect of change in accounting principle. The Company defines free cash flow as cash flows from operating activities less capital expenditures and plus proceeds from the sale of fixed assets. EBITDA and free cash flow do not represent, and should not be considered as, an alternative to net income or cash flows from operating, investing and financing activities, each as determined in accordance with GAAP. Our definitions of EBITDA and free cash flow might not be comparable to similarly titled measures reported by other companies. The Company has included information concerning EBITDA and free cash flow because it believes that EBITDA and free cash flow provide additional information for determining its ability to meet debt service requirements and that they are two indicators upon which the Company, its lenders and certain investors assess its financial performance and its capacity to service debt. The Company therefore interprets the trends that EBITDA and free cash flow depict as measures of its liquidity.

This press release contains forward-looking statements under the Private Securities Litigation Reform Act of 1995. These forward-looking statements can generally be identified as such because the statement will include words such as the Company “believes,” “anticipates,” “expects” or words of similar import. Similarly, statements that describe the Company’s future plans, objectives or goals are also forward-looking statements. Forward-looking statements are subject to risks and uncertainties, such as economic trends, risks in the development and operation of landfills, managing growth and weather conditions that could cause actual results to differ materially from those currently anticipated. Consider these factors carefully in evaluating the forward-looking statements. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained from time to time in the Company’s SEC filings. The forward-looking statements made herein are only made as of the date of this press release and the Company undertakes no obligation to publicly update such forward-looking statements.

WASTE INDUSTRIES USA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In Thousands, Except Per Share Data)

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2002			2003			2002			2003
Revenues:
Service	$	64,656		$	70,574		$	187,618		$	198,559
Equipment		371			227			1,026			960
Total revenues		65,027			70,801			188,644			199,519
Operating cost and expenses:
Operations		41,549			46,650			120,654			129,071
Equipment sales		162			254			475			895
Selling, general and administrative		8,512			9,476			25,608			27,544
Depreciation and amortization		7,031			7,891			20,725			23,099
Gain on sale of collection and hauling operations		—			(620	)		—			(620	)
Impairment of fixed assets		—			23			—			23
Total operating costs and expenses		57,254			63,674			167,462			180,012
Operating income		7,773			7,127			21,182			19,507
Interest expense (net)		2,783			2,307			8,344			6,993
Other income		(12	)		(21	)		(65	)		(57	)
Total other expense (income) net		2,771			2,286			8,279			6,936
Income before income taxes and cumulative effect of a change in accounting principle		5,002			4,841			12,903			12,571
Income tax expense		1,826			1,767			4,710			4,589
Income before cumulative effect of a change in accounting principle		3,176			3,074			8,193			7,982
Cumulative effect of a change in accounting principle net of tax benefit of $614		—			—			—			(1,067	)
Net Income	$	3,176		$	3,074		$	8,193		$	6,915
Earnings per share
Basic and Diluted:
Before cumulative effect of a change in accounting principle	$	0.24		$	0.23		$	0.61		$	0.59
Cumulative effect of a change in accounting principle, net of tax		—			—			—			(0.08	)
Net Income	$	0.24		$	0.23		$	0.61		$	0.51
Weighted-Average Number Of Shares Outstanding:
Basic		13,336			13,442			13,335			13,429
Diluted		13,347			13,540			13,348			13,485
EBITDA	$	14,816		$	15,039		$	41,972		$	42,663

WASTE INDUSTRIES USA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In Thousands, Except Share Data)

(Unaudited)

	December 31, 2002			September 30, 2003
ASSETS
Current assets:
Cash and cash equivalents	$	1,734		$	209
Accounts receivable—trade, less allowance for uncollectible accounts (2002—$2,237; 2003—$2,337)		28,200			32,151
Accounts receivable—other		1,395			1,175
Income taxes receivable		919			—
Inventories		1,552			1,396
Prepaid expenses and other current assets		3,860			4,481
Deferred income taxes		759			753
Total current assets		38,419			40,165
Property and equipment, net		188,897			190,117
Intangible assets, net		68,338			91,056
Restricted cash—bonds		—			3,426
Deferred financing costs		1,662			3,008
Other noncurrent assets		1,192			2,163
Total assets	$	298,508		$	329,935
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current maturities of long-term debt	$	11,710		$	11,098
Current maturities of capital lease obligations		599			250
Accounts payable—trade		10,501			13,294
Income taxes payable		—			3,002
Accrued expenses and other liabilities		10,369			11,271
Acquisition liabilities		305			2,089
Closure/postclosure liabilities		410			608
Deferred revenue		1,997			1,544
Total current liabilities		35,891			43,156
Long-term debt, net of current maturities		140,875			157,657
Deferred income taxes		18,941			18,180
Closure/postclosure liabilities		3,612			4,363
Derivative liabilities		2,219			1,919
Shareholders’ equity:
Common stock, no par value, shares authorized— 80,000,000 shares issued and outstanding: 2002—13,338,005; 2003—13,445,784		38,116			38,700
Paid-in capital		7,245			7,245
Retained earnings		54,623			61,538
Accumulated other comprehensive loss		(1,366	)		(1,175	)
Shareholders’ loans and other receivables		(1,648	)		(1,648	)
Total shareholders’ equity		96,970			104,660
Total liabilities and shareholders’ equity	$	298,508		$	329,935

WASTE INDUSTRIES USA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands)

(Unaudited)

	Nine Months Ended September 30,
	2002			2003
Operating Activities:
Net income	$	8,193		$	6,915
Adjustments to reconcile net income to net cash provided by operating activities:			��
Depreciation and amortization		20,725			23,099
Cumulative asset impairment		—			23
(Gain)/loss on sale of property and equipment		(240	)		321
Cumulative effect of accounting change		—			1,067
Gain of sale of collection and hauling operations		—			(620	)
Benefit for deferred income taxes		(192	)		(864	)
Changes in assets and liabilities, net of effects from acquistion and disposition of related businesses		(233	)		(1,926	)
Net cash provided by operating activities		28,253			28,015
Investing Activities:
Acquisitions of related business, net of cash acquired		(3,349	)		(38,410	)
Acquisition liabilities		(150	)		1,784
Proceeds from sale of property and equipment		994			2,088
Purchases of property and equipment		(13,541	)		(23,143	)
Proceeds from collection and hauling operations		—			15,693
Net cash used in investing activities		(16,046	)		(41,988	)
Financing Activities:
Proceeds from issuance of long term debt		3,799			34,750
Principal payments of long-term debt		(12,154	)		(22,005	)
Principal payments of capital lease obligations		(552	)		(349	)
Increase in shareholder loans and receivables, net		(266	)		—
Net proceeds from common stock issuance		18			18
Net proceeds from exercised options		—			34
Net cash (used in) provided by financing activities		(9,155	)		12,448
Increase (decrease) in cash and cash equivalents		3,052			(1,525	)
Cash and cash equivalents, beginning of period		1,887			1,734
Cash and cash equivalents, end of period	$	4,939		$	209
Non-Cash Investing Activity—Restricted Cash—Bonds		—			3,426
Supplemental disclosures of cash flow information:
Cash paid for interest	$	5,216		$	7,021
Cash paid for taxes	$	3,017		$	962

EARNINGS RELEASE—SUPPLEMENTAL DATA

REVENUE MARGINS	3Q 02			3Q 03
Cost of Operations		63.9	%		65.9	%
S G & A		13.1	%		13.4	%
Depreciation and Amortization		10.8	%		11.1	%
Interest Expense, (Net)		4.3	%		3.3	%
Income Before Income Tax		7.7	%		6.8	%
Income Tax Expense		2.8	%		2.5	%
Historical Net Income		4.9	%		4.3	%
EBITDA		22.8	%		21.2	%
EBITDA CALCULATION	3Q 02 YTD			3Q 03 YTD
Net Income	$	8,193		$	6,915
Add back:
Income tax expense		4,710			4,589
Interest expense (net)		8,344			6,993
Depreciation and amortization		20,725			23,099
Cumulative effect of a change in accounting principle		—			1,067
	$	41,972		$	42,663
RECONCILIATION OF EBITDA
EBITDA	$	41,972		$	42,663
Income tax expense		(4,710	)		(4,589	)
Interest expense (net)		(8,344	)		(6,993	)
Adjustments to reconcile net income to net coash provided by operating activities (other than depreciation and amortization)
(Gain) loss on sale of PP&E		(240	)		321
Cumulative asset impairment		—			23
Gain on sale of operations		—			(620	)
Benefit for deferred income taxes		(192	)		(864	)
Changes in operating assets and liabilities		(233	)		(1,926	)
Net cash provided by operating activities	$	28,253		$	28,015
FREE CASH FLOW AND RECONCILIATION OF FREE CASH FLOW TO NET CASH PROVIDED BY OPERATING AND INVESTING ACTIVITIES
Net cash provided by operating activities	$	28,253		$	28,015
Capital Expenditures		(13,541	)		(23,143	)
Proceeds from sale of PP&E		994			2,088
Free cash flow		15,706			6,960
Acquisitions of business		(3,349	)		(38,410	)
Acquisition liabilities		(150	)		1,784
Proceeds from disposal of operations		—			15,693
Net cash provided by operating activities and investing activities	$	12,207		$	(13,973	)
CAPITAL EXPENDITURES DETAIL	3Q 02 YTD			3Q 03 YTD
Collection & Transportation	$	10,565		$	12,730
Landfill Development		2,976			10,413
Total Capital Expenditures	$	13,541		$	23,143
	AS OF
	12/31/02			9/30/03
TOTAL DEBT & CAPITAL LEASES	$153,184			$169,005
TOTAL EQUITY	$96,970			$104,660
DEBT TO TOTAL CAPITAL	61.2%			61.8%
TOTAL LIABILITIES TO EQUITY	2.1			2.2
WORKING CAPITAL	$2,528			$(2,991)
DAYS SALES OUTSTANDING	37			39
CASH	$1,734			$209
SERVICE REVENUE GROWTH				3Q 03
Price					0.8	%
Volume					2.4	%
Fuel Surcharge					0..8	%
Total Internal Growth					4.0	%
Commodities					-1.0	%
Acquisitions					6.2	%
Total Service Revenue Growth					9.2	%
SERVICE REVENUE MIX				3Q 03
Collection					78.3	%
Disposal and Transfer					16.1	%
Recycling and Other					5.6	%
					100.0	%