PRESS RELEASE
For Immediate Release
WASTE SERVICES REPORTS SECOND QUARTER RESULTS
BURLINGTON, Ontario, August 16, 2004 /PRNewswire-FirstCall/
- - Waste Services, Inc. (Nasdaq: WSII) today reported
financial results for the three months ended June 30, 2004.
Revenue for the quarter increased by $41.3 million, or 132%,
to $72.6 million in 2004 compared to $31.3 million in 2003.
The increase is primarily attributable to new business
acquisitions in the United States, since the company
initiated a disposal-based growth strategy to enter the U.S.
solid waste market in 2003. In the second quarter Waste
Services completed its acquisitions of Florida Recycling
Services and the Jacksonville, Florida operations of Allied
Waste. Operating income before depreciation, depletion and
amortization* was $8.7 million for the second quarter of
2004, compared to $3.5 million for the same period last
year. Net loss attributable to Common Shareholders for the
three months ended June 30, 2004, was $18.6 million, or
$(0.21) per share, versus a loss of $16.0 million, or
$(0.42) per share, for the comparable period last year.
For the six months ended June 30, 2004, revenue increased to
$122.9 million from $56.6 million for the comparable period
in 2003, an increase of $66.3 million, or 117%. Operating
income before depreciation, depletion and amortization* was
$14.4 million for the first six months of 2004, compared to
$7.8 million for the same period last year. Net loss
attributable to Common Shareholders was $29.3 million for
the six months ended June 30, 2004, or $(0.37) per share,
compared to a net loss attributable to Common Shareholders
of $24.3 million, or $(0.67) per share for the comparable
period last year.
As announced on August 2, the Company completed its
corporate migration on July 31, pursuant to which Waste
Services, Inc., a Delaware corporation, became the ultimate
parent company and Capital Environmental Resource, Inc., an
Ontario corporation and the former parent company, became a
subsidiary. As part of this transaction, the company has
changed its name to Waste Services, Inc. and changed its
ticker symbol to "WSII".
In the second quarter, the company received permission to
expand the service area of the JED Landfill, located in
Osceola County Florida, to include 13 additional counties
adjacent to the original service area. This service area
expansion significantly broadens the waste shed from which
the landfill can draw volume.
While most of the company's businesses have performed at or
near management's second quarter expectations, the expected
profit contribution from the JED Landfill in Florida and the
performance of the operations acquired as part of the
Florida Recycling Services acquisition have performed below
expectations. Development delays related to the planned
transfer station network and lower than expected volumes
from third parties were the primary factors during the
second quarter that resulted in lower than anticipated
performance at the JED Landfill. As a result, the company
failed to meet certain financial covenants contained in its
senior credit agreement. The company is in discussions with
its senior lenders concerning a temporary waiver regarding
non-compliance with these covenants and expects to receive a
waiver in the near-term.
Based on second quarter results and management's outlook for
the balance of the year, the company has revised its
internal expectations for the second half of 2004:
The company's Canadian operations and its operations in
Florida acquired from Allied Waste are expected to perform
within the range of previous expectations;
In the Phoenix market area, the company opened its Southeast
Regional Landfill (formerly known as the Cactus Waste
Landfill) and two transfer stations in July and expects the
performance of its collection, transfer and disposal
operations in Arizona to be in the range of previous
expectations;
The company expects that its Fort Bend Regional Landfill,
located outside of Houston, Texas, will be open by the end
of August 2004. Management is currently addressing
permitting issues which may delay the expected opening of
the previously announced transfer station in the southwest
Houston area that could deliver up to 850 tons per day of
solid waste to the landfill. The transfer station was
previously expected to open in the fourth quarter of 2004;
Management had previously expected that the JED Landfill
would be receiving 3,000 to 4,000 tons per day by the end of
2004. This increase in volume was driven, in part, by the
expectation of the opening of three transfer stations
associated with the acquisition of Florida Recycling
Services, which were all expected to be operating by the
fourth quarter of 2004, enabling the company to internalize
significant volume collected by its own operations into the
JED Landfill. Due to development delays at each of the
three transfer stations, the company now expects two of the
transfer stations to open in the second quarter of 2005 and
one transfer station to open in the third quarter of 2005.
As a result, management now expects contribution from the
JED Landfill in the third, fourth and first quarters will be
below previous expectations;
The Company acquired Florida Recycling Services on April 30,
2004. The performance of the operations of Florida
Recycling has been below our expectations and we are in the
process of conducting a thorough review of all aspects of
Florida Recycling's business in an effort to identify the
factors contributing to this current level of performance;
Management has detailed action plans for each of its
geographic markets targeting performance improvement driven
by components such as landfill volume increases, operating
expense reduction, improving working capital turnover, and
rationalizing general and administrative expenses. In
addition, the Company is currently undertaking a
comprehensive review of its corporate, general and
administrative expenses and expects to take steps to reduce
these expenses in future periods. These action plans are
expected to result in improvements to both profit margins
and cash flow in each of the Company's geographic markets
over the next several quarters;
The Chairman and Chief Executive Officer of the company,
David Sutherland-Yoest, stated "While we are disappointed
with the delay in getting the volumes into the JED Landfill
and the performance of FRS, we remain confident in our
market position and asset base in Florida. The balance of
the company's businesses are performing as anticipated and
we are working on increasing the contribution of the Florida
business by taking aggressive steps to reduce costs and
improve performance in all of our markets in the near-term.
We are pleased to report there has not been any reported
damage or disruption to the Company's operations in Florida
as a result of Hurricane Charley over this past weekend.
The Company is in the process of working together with its
customers, government authorities and regulatory officials
to proactively respond to their immediate increased needs
for service."
*Reconciliation of Non-GAAP Measures for the Three and Six
Months Ended June 30, 2004 and 2003
The following table reconciles the differences between
income (loss) from operations, as determined under U.S. GAAP,
and operating income before depreciation, depletion and
amortization, a non-GAAP financial measure (in thousands of
U.S. dollars) (unaudited):
For the Three Months Ended For the Six Months Ended
June 30, June 30,
2004 2003 2004 2003
____________ ___________ __________ ___________
Operating income before depreciation, depletion and
amortization (1)................................ $ 8,680 $ 3,548 $ 14,357 $ 7,837
Depreciation, depletion and amortization........... 7,809 3,566 13,281 6,791
____________ ___________ __________ ___________
Income (loss) from operations...................... $ 871 $ (18) $ 1,076 $ 1,046
============ =========== ========== ===========
(1) Operating income before depreciation, depletion and
amortization is presented because the Company believes that
it may be used by certain investors to analyze and compare
the Company's operating performance between accounting
periods and against the operating results of other companies
that have different financing and capital structures or tax
rates. In addition, management uses operating income before
depreciation, depletion and amortization, among other
things, as an internal performance measure. The Company's
lenders also use operating income before depreciation,
depletion and amortization to measure the Company's ability
to service and/or incur additional indebtedness under its
credit facility. However, operating income before
depreciation, depletion and amortization should not be
considered in isolation or as a substitute for net income,
cash flows or other financial statement data
prepared in accordance with U.S. GAAP or as a measure of a
company's performance, profitability or liquidity.
Operating income before depreciation, depletion and
amortization is not calculated under U.S. GAAP and therefore
is not necessarily comparable to similarly titled measures
of other companies.
The company will host an investor and analyst conference
call on Tuesday, August 17, 2004 at 8:30 a.m. (EDT) to
discuss the results of today's earnings announcement. If
you wish to participate in this call, please contact the
conference call operator at (866) 546-6145. For those
unable to listen to the live call, a telephonic replay of
the call will be available until August 31. 2004 by phoning
(800) 408-3053 or (416) 695-5800 and entering the
reservation number 3090002.
Safe Harbor for Forward-Looking Statements
Certain matters discussed in this press release are "forward-
looking statements" within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. These statements describe the
company's future plans, objectives and goals. These forward-
looking statements involve risks and uncertainties which
could cause actual results to differ materially from the
plans, objectives and goals set forth in this press release.
Factors which could materially affect such forward- looking
statements can be found in the Company's periodic reports
filed with the Securities and Exchange Commission, including
risk factors detailed in the Company's Form 10-K for the
year ended December 31, 2003. Shareholders, potential
investors and other readers are urged to consider these
factors carefully in evaluating the forward-looking
statements and are cautioned not to place undue reliance on
such forward-looking statements.
The forward-looking statements made in this press release
are only made as of the date hereof and Waste Services
undertakes no obligation to publicly update such forward-
looking statements to reflect subsequent events or
circumstances.
Waste Services, Inc. is a multi-regional integrated solid
waste services company that provides collection, transfer,
disposal and recycling services in the United States and
Canada. The company's web site is www.wasteservicesinc.com.
Information on the Company's web site does not form part of
this press release.
For information contact:
Mark A. Pytosh, Executive Vice President
905-319-6054
WASTE SERVICES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands of US dollars; except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
___________________ __________________
2004 2003 2004 2003
_________ ________ ________ ________
Revenue................................................................. $ 72,626 $ 31,282 $122,943 $ 56,562
Operating and other expenses:
Cost of operations................................................... 49,913 20,430 84,084 37,024
Selling, general and administrative expense
exclusive of stock-based compensation.............................. 13,959 6,792 25,909 11,521
Stock-based compensation expense (benefit)........................... 357 120 (1,034) (177)
Depreciation, depletion and amortization............................. 7,809 3,566 13,281 6,791
Foreign exchange gain and other...................................... (283) 392 (373) 357
__________ _________ _________ _________
Income (loss) from operations........................................... 871 (18) 1,076 1,046
Interest expense........................................................ 12,266 1,667 18,582 2,987
Changes in fair value of warrants pending registration.................. 421 - 421 -
Cumulative mandatorily redeemable preferred stock dividends and
amortization of issue costs.......................................... 4,290 2,198 8,309 2,198
__________ _________ _________ _________
Loss before income taxes................................................ (16,106) (3,883) (26,236) (4,139)
Income tax provision (benefit).......................................... 2,509 (377) 3,338 (334)
__________ _________ _________ _________
Loss before cumulative effect of change in accounting principle......... (18,615) (3,506) (29,574) (3,805)
Cumulative effect of change in accounting principle, net of provision
for income taxes of $134 and $256 for the six months ended
June 30, 2004 and 2003, respectively................................. - - 225 518
__________ _________ _________ _________
Net loss................................................................ (18,615) (3,506) (29,349) (3,287)
Deemed dividend on Series 1 Preferred Shares............................ - (12,489) - (21,021)
__________ _________ _________ _________
Net loss attributable to Common ShareholderS........................... $(18,615) $(15,995) $(29,349) $(24,308)
========== ========= ========= =========
Basic and diluted loss per share:
Basic and diluted loss per share attributable to Common Shareholders
before cumulative effect of change in accounting principle........ $ (0.21) $ (0.42) $ (0.37) $ (0.68)
Cumulative effect of change in accounting principlE................. - - - 0.01
__________ _________ _________ _________
Loss per share - basic and diluted..................................... $ (0.21) $ (0.42) $ (0.37) $ (0.67)
========== ========= ========= =========
Weighted average Common Shares outstanding - basic and diluted......... 88,855 37,865 79,736 36,537
========== ========= ========= =========