Waste Industries Usa 8-K WASTE INDUSTRIES USA, INC. Reports Second Quarter 2004 Results

Exhibit 99.1

WASTE INDUSTRIES USA, INC. Reports Second Quarter 2004 Results

Raleigh, NC, Tuesday, July 20, 2004 — Waste Industries USA, Inc. (NASDAQ: WWIN), a regional, non-hazardous solid waste services company, today reported unaudited financial results for the second quarter ended June 30, 2004.

For the quarter ended June 30, 2004, revenue increased 13.1% to $74.4 million, compared to $65.8 million for the quarter ended June 30, 2003. Operating income for the second quarter 2004 increased 9.9% to $7.2 million, compared to operating income of $6.5 million in the second quarter of 2003. Net income for the second quarter 2004 was $3.1 million, or $0.22 per diluted share, a 12.5% increase over net income of $2.7 million or $0.20 per share for the second quarter 2003.

For the six months ended June 30, 2004, revenue increased 11.6% to $143.6 million compared to $128.7 million, for the same period in 2003. Operating income increased 13.8% to $14.1 million, compared to $12.4 million for the six months ended June 30, 2003. Net income for the six months ended June 30, 2004 was $5.9 million, or $0.43 per diluted share, a 19.9% increase over net income of $4.9 million, or $0.36 per diluted share before a cumulative effect of a change in accounting principle as a result of the adoption of Statement of Financial Accounting Standards No. 143, Accounting for Asset Retirement Obligations, (SFAS 143) in the first quarter of 2003.

Commenting on the Company’s performance, Jim W. Perry, President and CEO of Waste Industries USA, said, “We are pleased with our strong revenue growth for the quarter and our performance highlights initiatives taken over the past year to streamline our operations while pursuing a very selective growth strategy.”

The Company will host a conference call to discuss its second quarter results on Wednesday, July 21, 2004 at 2:00 PM (EST). The call number is (888) 202-2422 and the confirmation number is 712559. The conference call will also be broadcast live over the Internet athttp://www.waste-ind.com under the “Investor Relations” tab. A replay of the call will be available through August 4, 2004 at (888) 203-1112 with a confirmation number of 712559.

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 operating income before depreciation and amortization and free cash flow, which are considered non-GAAP financial measures. Tables reconciling operating income before depreciation and amortization and free cash flow to the appropriate GAAP measures for each period presented are included in the attached supplemental data. The Company defines free cash flow as cash flows from operating activities less capital expenditures plus proceeds from the sale of fixed assets. Operating income before depreciation and amortization 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 operating income before depreciation and amortization and free cash flow might not be comparable to similarly titled measures reported by other companies. The Company has included information concerning operating income before depreciation and free cash flow because it believes that operating income before depreciation and amortization 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 some investors assess its financial performance and its capacity to service debt. The Company therefore interprets the trends that operating income before depreciation and amortization 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 weather conditions, managing growth, economic trends and risks in the development and operation of landfills 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 June 30,						Six Months Ended June 30,
	2003			2004			2003			2004
Revenues:
Service	$	65,499		$	74,209		$	127,985		$	143,230
Equipment		286			181			733			400
Total revenues		65,785			74,390			128,718			143,630
Operating cost and expenses:
Operations		42,210			50,169			82,422			95,720
Equipment sales		170			112			463			239
Selling, general and administrative		9,000			9,254			18,068			18,667
Depreciation and amortization		7,707			7,644			15,208			14,983
Loss (gain) on sale of property and equipment		188			(133	)		177			(250	)
Impairment of fixed assets		—			188			—			188
Total operating costs and expenses		59,275			67,234			116,338			129,547
Operating income		6,510			7,156			12,380			14,083
Interest expense		2,280			2,382			4,807			4,946
Interest income		(52	)		(28	)		(121	)		(50	)
Other income		(21	)		(16	)		(36	)		(81	)
Total other expense (income) net		2,205			2,338			4,650			4,815
Income before income taxes and cumulative effect of a change in accounting principle		4,303			4,818			7,730			9,268
Income tax expense		1,582			1,758			2,822			3,383
Income before cumulative effect of a change in accounting principle		2,721			3,060			4,908			5,885
Cumulative effect of a change in accounting principle net of tax benefit of $614		—			—			(1,067	)		—
Net Income	$	2,721		$	3,060		$	3,841		$	5,885
Earnings per share:
Basic:
Before cumulative effect of a change in accounting principle	$	0.20		$	0.23		$	0.37		$	0.44
Cumulative effect of a change in accounting principle, net of tax		—			—			(0.08	)		—
Net Income	$	0.20		$	0.23		$	0.29		$	0.44
Diluted:
Before cumulative effect of a change in accounting principle	$	0.20		$	0.22		$	0.36		$	0.43
Cumulative effect of a change in accounting principle, net of tax		—			—			(0.08	)		—
Net Income	$	0.20		$	0.22		$	0.28		$	0.43
Weighted-Average Number Of Shares Outstanding:
Basic		13,440			13,502			13,423			13,498
Diluted		13,465			13,667			13,447			13,619

WASTE INDUSTRIES USA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In Thousands, Except Share Data)

(Unaudited)

	December 31, 2003			June 30, 2004
ASSETS
Current assets:
Cash and cash equivalents	$	4,127		$	2,427
Accounts receivable - trade, less allowance for uncollectible accounts (2003 - $2,608; 2004 - $2,836)		31,235			29,892
Accounts receivable - other		1,182			1,109
Inventories		1,427			1,626
Prepaid expenses and other current assets		2,438			3,152
Deferred income taxes		1,350			1,073
Total current assets		41,759			39,279
Property and equipment, net		190,871			187,313
Intangible assets, net		90,122			90,634
Restricted cash - bonds		822			585
Deferred financing costs		2,834			2,503
Derivative assets		—			931
Other noncurrent assets		4,120			4,493
Total assets	$	330,528		$	325,738
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current maturities of long-term debt	$	10,723		$	10,733
Current maturities of capital lease obligations		160			45
Accounts payable - trade		13,299			13,893
Income taxes payable		841			372
Accrued expenses and other liabilities		10,643			12,521
Acquisition liabilities		1,949			1,813
Closure/post-closure liabilities		816			4,818
Derivative liabilities		1,212			455
Deferred revenue		2,421			2,835
Total current liabilities		42,064			47,485
Long-term debt, net of current maturities		157,657			144,930
Deferred income taxes		18,240			18,501
Closure/post-closure liabilities		5,348			1,496
Derivative liabilities		260			475
Commitments and contingencies		—			—
Shareholders’ equity:
Common stock, no par value, shares authorized - 80,000,000 shares issued and outstanding: 2003 - 13,492,402; 2004 - 13,507,734		39,139			39,242
Paid-in capital		7,342			7,392
Retained earnings		61,369			66,173
Accumulated other comprehensive (loss) gain		(891	)		44
Total shareholders’ equity		106,959			112,851
Total liabilities and shareholders’ equity	$	330,528		$	325,738

WASTE INDUSTRIES USA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands)

(Unaudited)

	Six Months Ended June 30,
	2003			2004
Operating Activities:
Net income	$	3,841		$	5,885
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		15,208			14,983
Impairment of fixed assets		—			188
Loss (gain) on sale of property and equipment		177			(250	)
Cumulative effect of accounting change and accounting principle		1,067			—
Stock compensation expense		12			63
Provision for deferred income taxes		336			—
Changes in assets and liabilities, net of effects from acquisition and disposition of related businesses		(240	)		2,103
Net cash provided by operating activities		20,401			22,972
Investing Activities:
Acquisitions of related business, net of cash acquired		(4,988	)		(749	)
Acquisition liabilities		(554	)		(136	)
Proceeds from sale of property and equipment		1,435			1,059
Purchases of property and equipment		(14,984	)		(11,021	)
Net cash used in investing activities		(19,091	)		(10,847	)
Financing Activities:
Proceeds from issuance of long term debt		9,141			9,000
Principal payments of long-term debt		(11,947	)		(21,717	)
Principal payments of capital lease obligations		(243	)		(115	)
Financing costs		—			(3	)
Dividends paid		—			(1,080	)
Net proceeds from exercise of stock options		5			90
Net cash used in financing activities		(3,044	)		(13,825	)
Decrease in cash and cash equivalents		(1,734	)		(1,699	)
Cash and cash equivalents, beginning of period		1,734			4,127
Cash and cash equivalents, end of period	$	—		$	2,427
Supplemental disclosures of cash flow information:
Cash paid for interest	$	5,025		$	4,557
Cash paid for income taxes	$	297		$	3,826

EARNINGS RELEASE - SUPPLEMENTAL DATA (dollars in thousands)

	2 Q 03			2 Q 04
REVENUE MARGINS
Cost of operations		64.4	%		67.6	%
S G & A		13.7	%		12.4	%
Depreciation and amortization		11.7	%		10.3	%
Interest expense, (net)		3.4	%		3.2	%
Income before income tax		6.5	%		6.5	%
Income tax expense		2.4	%		2.4	%
Net income before cumulative effect		4.1	%		4.1	%
OPERATING INCOME BEFORE DEPRECIATION AND AMORTIZATION
Operating income	$	6,510		$	7,156
Depreciation and amortization		7,707			7,644
Operating income before depreciation and amortization	$	14,217		$	14,800
	YTD 03			YTD 04
CAPITAL EXPENDITURES DETAIL
Collection & Transportation	$	8,846		$	9,996
Landfill Development		6,138			1,025
Total capital expenditures	$	14,984		$	11,021
FREE CASH FLOW RECONCILIATION
Net cash provided by operating activities	$	20,401		$	22,972
Less: Capital expenditures		(14,984	)		(11,021	)
Plus: Proceeds from disposal of assets		1,435			1,059
Free cash flow	$	6,852		$	13,010
	12/31/03			6/30/04
TOTAL DEBT & CAPITAL LEASES	$	168,540		$	155,708
DEBT TO TOTAL CAPITAL		61.2	%		58.0	%
TOTAL LIABILITIES TO EQUITY		2.1			1.9
DAYS SALES OUTSTANDING		38			37
SERVICE REVENUE MIX
Collection					79.1	%
Disposal and Transfer					16.2	%
Recycling and Other					4.7	%
					100.0	%
SERVICE REVENUE GROWTH
Price					1.1	%
Volume					6.0	%
Energy surcharge					0.3	%
Total internal growth					7.4	%
Recycling commodities					0.2	%
Acquisitions					5.7	%
Total service revenue growth					13.3	%