WASTE CONNECTIONS REPORTS SECOND QUARTER 2007 RESULTS
- Reports revenue of $241.1 million and earnings per share of $0.36
- Revenue and operating income increase 16.5% and 31.8%, respectively
- Reports combined price and volume growth of 10.0%
- Repurchases approximately $51.9 million YTD of common stock
- Reports YTD free cash flow of $51.4 million, or 11.2% of revenue
FOLSOM, Calif., July 23 /PRNewswire-FirstCall/ -- Waste Connections, Inc.
(NYSE: WCN) today announced its results for the second quarter 2007. Revenue
totaled $241.1 million, a 16.5% increase over revenue of $207.0 million in the
year ago period. Operating income was $53.8 million, a 31.8% increase over
operating income of $40.8 million in the second quarter of 2006. Net income in
the quarter was $25.3 million, or $0.36 per share on a diluted basis of 70.6
million shares. In the year ago period, the Company reported net income of $19.2
million and diluted earnings per share of $0.27. Net income in the prior year
period included additional development costs for insurance claims from prior
years of $3.8 million ($2.4 million net of taxes, or approximately $0.03 per
share).
"We continue to be extremely pleased with our results. Core pricing and
commodity prices remain strong. Volume growth accelerated in the quarter due to
typical seasonality, ramping of new contracts, and a notable increase in
disposal volumes" said Ronald J. Mittelstaedt, Chairman and Chief Executive
Officer. "We expect these trends to continue into the third quarter, putting us
on track to exceed the upper end of our original outlook for the year."
For the six months ended June 30, 2007, revenue was $460.0 million, a
15.8% increase over revenue of $397.1 million in the year ago period. Operating
income was $100.2 million, a 25.3% increase over operating income of $80.0
million for the same period in 2006. Net income for the six months ended June
30, 2007, was $47.6 million, or $0.67 per share on a diluted basis of 70.6
million shares. In the year ago period, the Company reported net income of $34.9
million, or $0.49 per share on a diluted basis of 70.9 million shares.
Waste Connections will be hosting a conference call related to second
quarter earnings and third quarter outlook on July 24th at 8:30 A.M. Eastern
Time. The call will be broadcast live over the Internet at www.streetevents.com
and through a link on the Company's web site at www.wasteconnections.com. A
playback of the call will be available at both of these sites. For non-GAAP
measures, see accompanying Non-GAAP Reconciliation Schedule.
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
more than one million residential, commercial and industrial customers from a
network of operations in 23 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. These statements can be identified by the use of forward-looking
terminology such as "believes," "expects," "may," "will," "should,"
"anticipates," or the negative thereof or comparable terminology, or by
discussions of strategy. Waste Connections' 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) Waste Connections may be unable to
compete effectively with larger and better capitalized companies and
governmental service providers; (2) increases in the price of fuel may adversely
affect Waste Connections' business and reduce its operating margins; (3)
increases in labor and disposal and related transportation costs could impact
Waste Connections' financial results; (4) increases in insurance costs and the
amount that Waste Connections self- insures for various risks could reduce its
operating margins and reported earnings; (5) Waste Connections' financial
results are based upon estimates and assumptions that may differ from actual
results; (6) efforts by labor unions could divert management attention and
adversely affect operating results; (7) Waste Connections may lose contracts
through competitive bidding, early termination or governmental action; (8) Waste
Connections' results are vulnerable to economic conditions and seasonal factors
affecting the regions in which it operates; (9) Waste Connections may be subject
in the normal course of business to judicial and administrative proceedings that
could interrupt its operations, require expensive remediation and create
negative publicity; (10) competition for acquisition candidates, consolidation
within the waste industry and economic and market conditions may limit Waste
Connections' ability to grow through acquisitions; (11) Waste Connections'
growth and future financial performance depend significantly on its ability to
integrate acquired businesses into its organization and operations; (12) Waste
Connections' acquisitions may not be successful, resulting in changes in
strategy, operating losses or a loss on sale of the business acquired; (13)
because Waste Connections depends on railroads for its intermodal operations,
its operating results and financial condition are likely to be adversely
affected by any reduction or deterioration in rail service; (14) Waste
Connections' intermodal business could be adversely affected by steamship lines
diverting business to ports other than those Waste Connections services, or by
heightened security measures or actual or threatened terrorist attacks; (15)
Waste Connections depends significantly on the services of the members of its
senior and district management team, and the departure of any of those persons
could cause its operating results to suffer; (16) Waste Connections'
decentralized decision-making structure could allow local managers to make
decisions that adversely affect Waste Connections' operating results; (17) Waste
Connections may incur additional charges related to capitalized expenditures,
which would decrease its earnings; (18) the outcome of audits by the Internal
Revenue Service may adversely affect Waste Connections; (19) each business that
Waste Connections acquires or has acquired may have liabilities that Waste
Connections fails or is unable to discover, including environmental liabilities;
(20) liabilities for environmental damage may adversely affect Waste
Connections' business and earnings; and (21) the adoption of new accounting
standards or interpretations could adversely impact Waste Connections' financial
results. These risks and uncertainties, as well as others, are discussed in
greater detail in Waste Connections' filings with the Securities and Exchange
Commission, including its most recent Annual Report on Form 10-K. There may be
additional risks of which Waste Connections is not presently aware or that it
currently believes are immaterial which could have an adverse impact on its
business. Waste Connections makes no commitment to revise or update any
forward-looking statements in order to reflect events or circumstances that may
change.
- financial tables attached -
CONTACT:
Worthing Jackman / (916) 608-8266
worthingj@wasteconnections.comWaste Connections, Inc.
WASTE CONNECTIONS, INC.
CONSOLIDATED STATEMENTS OF INCOME
THREE AND SIX MONTHS ENDED JUNE 30, 2006 AND 2007
(Unaudited)
(in thousands, except share and per share amounts)
Three months ended Six months ended
June 30, June 30,
2006 2007 2006 2007
Revenues $ 206,970 $ 241,084 $ 397,139 $ 460,035
Operating expenses:
Cost of operations 126,574 141,574 239,637 270,443
Selling, general and
administrative 20,621 24,790 40,422 48,700
Depreciation and
amortization 18,736 20,930 36,968 40,520
Loss on disposal of
assets 236 32 154 192
Operating income 40,803 53,758 79,958 100,180
Interest expense (6,619) (8,295) (14,113) (16,113)
Minority interests (3,317) (4,130) (6,028) (6,970)
Other income (expense),
net 11 365 (3,982) 417
Income before income
taxes 30,878 41,698 55,835 77,514
Income tax provision (11,678) (16,432) (20,912) (29,868)
Net income $ 19,200 $ 25,266 $ 34,923 $ 47,646
Basic earnings per
common share $ 0.28 $ 0.37 $ 0.51 $ 0.70
Diluted earnings per
common share $ 0.27 $ 0.36 $ 0.49 $ 0.67
Shares used in the per share calculations:
Basic 67,761,623 68,592,474 68,130,920 68,529,546
Diluted 70,327,836 70,625,086 70,854,725 70,606,846
WASTE CONNECTIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands, except share and per share amounts)
December 31, June 30,
2006 2007
ASSETS
Current assets:
Cash and equivalents $ 34,949 $ 9,971
Accounts receivable, net of allowance
for doubtful accounts of $3,489 and
$3,811 at December 31, 2006 and
June 30, 2007, respectively 100,269 113,442
Deferred income taxes 9,373 11,203
Prepaid expenses and other current assets 15,642 16,275
Total current assets 160,233 150,891
Property and equipment, net 736,428 791,117
Goodwill 750,397 765,557
Intangible assets, net 86,098 85,529
Restricted assets 15,917 16,928
Other assets, net 24,818 23,215
$1,773,891 $1,833,237
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 53,010 $ 54,412
Book overdraft -- 5,838
Accrued liabilities 57,810 59,339
Deferred revenue 32,161 38,312
Current portion of long-term debt
and notes payable 6,884 6,657
Total current liabilities 149,865 164,558
Long-term debt and notes payable 637,308 635,852
Other long-term liabilities 16,712 29,303
Deferred income taxes 205,532 208,425
Total liabilities 1,009,417 1,038,138
Commitments and contingencies
Minority interests 27,992 28,690
Stockholders' equity:
Preferred stock: $0.01 par value; 7,500,000
shares authorized; none issued and outstanding -- --
Common stock: $0.01 par value; 100,000,000
shares authorized; 68,266,038 and 68,037,249
shares issued and outstanding at
December 31, 2006 and June 30, 2007,
respectively 455 680
Additional paid-in capital 310,229 289,713
Retained earnings 422,731 473,046
Accumulated other comprehensive income 3,067 2,970
Total stockholders' equity 736,482 766,409
$1,773,891 $1,833,237
WASTE CONNECTIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 2006 AND 2007
(Unaudited)
(Dollars in thousands)
Six months ended
June 30,
2006 2007
Cash flows from operating activities:
Net income $ 34,923 $ 47,646
Adjustments to reconcile net income to
net cash provided by operating activities:
Loss on disposal of assets 154 192
Depreciation 34,946 38,459
Amortization of intangibles 2,022 2,061
Deferred income taxes, net of acquisitions 6,026 3,741
Minority interests 6,028 6,970
Amortization of debt issuance costs 5,271 961
Stock-based compensation 1,576 3,134
Interest income on restricted assets (288) (261)
Closure and post-closure accretion 300 522
Excess tax benefit associated with
equity-based compensation (5,501) (8,534)
Net change in operating assets and
liabilities, net of acquisitions 10,539 12,387
Net cash provided by operating activities 95,996 107,278
Cash flows from investing activities:
Payments for acquisitions, net of cash
acquired (34,838) (40,591)
Capital expenditures for property
and equipment (49,038) (64,509)
Proceeds from disposal of assets 313 559
Increase in restricted assets, net of
interest income (617) (750)
Increase in other assets (236) (485)
Net cash used in investing activities (84,416) (105,776)
Cash flows from financing activities:
Proceeds from long-term debt 631,997 42,000
Principal payments on notes payable and
long-term debt (569,619) (45,668)
Change in book overdraft (5,333) 5,838
Proceeds from option and warrant exercises 24,916 21,082
Excess tax benefit associated with
equity-based compensation 5,501 8,534
Distributions to minority interest holders (4,900) (6,272)
Payments for repurchase of common stock (87,744) (51,894)
Debt issuance costs (6,185) (100)
Net cash used in financing activities (11,367) (26,480)
Net increase (decrease) in cash and equivalents 213 (24,978)
Cash and equivalents at beginning of period 7,514 34,949
Cash and equivalents at end of period $ 7,727 $ 9,971
ADDITIONAL STATISTICS
THREE MONTHS ENDED JUNE 30, 2007
(Dollars in thousands)
Internal Growth: The following table reflects revenue growth for operations
owned for at least 12 months:
Three Months Ended
June 30, 2007
Price 4.7%
Volume 5.3%
Intermodal, Recycling and Other 1.4%
Total 11.4%
Uneliminated Revenue Breakdown:
Three Months Ended
June 30, 2007
Collection $172,401 62.9%
Disposal and Transfer 78,569 28.7%
Intermodal, Recycling and Other 22,936 8.4%
Total $273,906 100.0%
Inter-company elimination $32,822
Days Sales Outstanding for the three months ended June 30, 2007: 43 (28 net of
deferred revenue)
Internalization for the three months ended June 30, 2007: 67%
Other Cash Flow Items for the three months ended June 30, 2007:
Cash Interest Paid: $10,114
Cash Taxes Paid: $14,265
Debt to Capitalization: 45.6%
Share Information for the three months ended June 30, 2007:
Basic shares outstanding 68,592,474
Dilutive effect of options and warrants 1,687,348
Dilutive effect of restricted stock 345,264
Diluted shares outstanding 70,625,086
Shares repurchased 1,502,890
NON-GAAP RECONCILIATION SCHEDULE
(in thousands)
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 minority interest holders. This measure is
not a substitute for, and should be used in conjunction with, GAAP 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.
Free cash flow reconciliation:
Three Months Ended Six Months Ended
June 30, 2007 June 30, 2007
Net cash provided by operating
activities $ 46,364 $ 107,278
Plus: Change in book overdraft 5,838 5,838
Plus: Proceeds from disposal
of assets 344 559
Plus: Excess tax benefit associated
with equity-based compensation 6,274 8,534
Less: Capital expenditures for
property and equipment (28,362) (64,509)
Less: Distributions to minority
interest holders (3,920) (6,272)
Free cash flow $ 26,538 $ 51,428
Free cash flow as % of revenues 11.0% 11.2%