Exhibit 99.1
Waste Connections Reports Second Quarter
2003 Earnings of $0.55 Per Share
FOLSOM, Calif.--(BUSINESS WIRE)--July 22, 2003--Waste Connections,
Inc. (NYSE: WCN) today announced second quarter earnings of $0.55 per
share on a diluted basis on 32.8 million shares, an increase of 12.2%
over diluted earnings per share of $0.49 in the second quarter of
2002. Revenue for the second quarter of 2003 was $138.9 million, an
8.4% increase over revenue of $128.1 million in the second quarter of
2002. Operating income for the second quarter of 2003 was $37.0
million, a 10.9% increase over operating income of $33.4 million in
the second quarter of 2002.
For the six months ended June 30, 2003, revenue was $267.3
million, a 14.3% increase over revenue of $233.8 million in the year
ago period. Operating income for the six months ended June 30, 2003
was $70.2 million, a 12.5% increase over operating income of $62.4
million for the same period in 2002. Income before a gain resulting
from the cumulative effect of adopting SFAS No. 143 for the six months
ended June 30, 2003 was $31.1 million, a 17.1% increase over net
income of $26.5 million for the same period in 2002. Diluted earnings
per share before the gain on accounting change for the six months
ended June 30, 2003 was $1.04, an increase of 14.3% over diluted
earnings per share of $0.91 in the year ago period.
Ronald J. Mittelstaedt, Chairman and Chief Executive Officer,
said, "We are proud of our second quarter of 2003 results given the
lack of improvement in economic conditions, continuing weakness in
special waste and temporary roll-off volumes, little contribution from
acquisitions closed in the quarter and tough comparisons with the
second quarter of 2002. We believe our operating income before
depreciation and amortization and free cash flow margins remain the
highest in the industry, with operating income before depreciation and
amortization at 34.8% of revenue and free cash flow at 12.0% of
revenue for the quarter. Regarding the three previously announced
signed transactions, the acquisition in Oregon closed in the quarter,
and we expect the two California acquisitions to close late in the
third quarter. In addition to this approximately $32 million of
annualized revenue in predominately franchised markets, we have either
signed or closed an additional seven acquisitions in the second
quarter with annual revenue totaling approximately $7 million.
Together this represents approximately $39 million, or 65%, of our
original target of $60 million of acquired annualized revenue for the
year with half of the year still ahead of us. We remain comfortable
with our acquisition target for the year."
Waste Connections will be hosting a conference call related to
second quarter earnings on July 23rd at 8:30 A.M. Eastern Time. We
will be broadcasting our quarterly conference call live over the
Internet at www.streetevents.com and through a link on our web site at
www.wasteconnections.com. A playback of the call will be available at
both of these sites.
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,
Midwestern, Southwestern and Southeastern U.S. The Company serves more
than one million commercial, industrial and residential customers.
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.
Based upon recent SEC guidance regarding non-GAAP financial
measures, Waste Connections will no longer use the acronym previously
referred to as "EBITDA" and instead will now use the phrase "operating
income before depreciation and amortization." This is a change in name
only. The Company has not changed the method it uses to calculate this
financial measure. Operating income before depreciation and
amortization and free cash flow, each a non-GAAP financial measure,
are provided supplementally in the accompanying Non-GAAP
Reconciliation Schedule because they are widely used by investors for
valuation and financial performance measures in the solid waste
industry. These measures should be used in conjunction with GAAP
financial measures. Management uses operating income before
depreciation and amortization and free cash flow as two 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 and free cash flow
differently. Copies of financial literature, including this release,
are available on the Waste Connections web site at
www.wasteconnections.com 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," or "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 materially
differ 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) competition or
unfavorable industry conditions could lead to a decrease in demand for
the Company's services and to a decline in prices realized by the
Company for its services, (2) the Company depends in part on
acquisitions for growth, it may be required to pay increased prices
for acquisitions, and it may experience difficulty in integrating and
deriving synergies from acquisitions, or finding acquisition targets
suitable to its growth strategy. (3) the Company may not always have
access to the additional capital that it may require for its growth
strategy or its cost of capital may increase, (4) governmental
regulations may require increased capital expenditures or otherwise
affect the Company's business, (5) companies that Waste Connections
acquires could have undiscovered liabilities, (6) large, long-term
collection contracts on which the Company depends may not be replaced
when they expire or are terminated, and (7) the Company is highly
dependent on the services of senior management, who would be difficult
or impossible to replace. These risks and uncertainties, as well as
others, are discussed in greater detail in the Company's filings with
the Securities and Exchange Commission, including its most recent
Annual Report on Form 10-K and its subsequent Quarterly Reports on
Form 10-Q. There may be additional risks that the Company does not
presently know or that it currently believes are immaterial which
could have an adverse impact on its business. The Company makes no
commitment to revise or update any forward-looking statements in order
to reflect events or circumstances after the date any such statement
is made.
WASTE CONNECTIONS, INC.
CONSOLIDATED STATEMENTS OF INCOME
THREE AND SIX MONTHS ENDED JUNE 30, 2002 AND 2003
(Unaudited)
(in thousands, except share and per share amounts)
Three months ended Six months ended
June 30, June 30,
-----------------------------------------------
2002 2003 2002 2003
----------- ----------- ----------- -----------
Revenues $128,091 $138,883 $233,833 $267,337
Operating expenses:
Cost of operations 72,174 77,427 131,489 149,248
Selling, general and
administrative 12,465 13,179 21,855 26,060
Depreciation and
amortization 10,085 11,282 18,113 21,862
----------- ----------- ----------- -----------
Operating income 33,367 36,995 62,376 70,167
Interest expense (7,769) (7,786) (15,138) (15,836)
Minority interests (2,470) (2,593) (4,236) (4,875)
Other income (expense),
net (181) (205) (581) (167)
----------- ----------- ----------- -----------
Income before income
tax provision and
cumulative effect of
change in accounting
principle 22,947 26,411 42,421 49,289
Income tax provision (8,605) (9,772) (15,908) (18,237)
----------- ----------- ----------- -----------
Income before
cumulative effect of
change in accounting
principle 14,342 16,639 26,513 31,052
Cumulative effect of
change in accounting
principle, net of
tax expense of $166 -- -- -- 282
----------- ----------- ----------- -----------
Net income $ 14,342 $ 16,639 $ 26,513 $ 31,334
=========== =========== =========== ===========
Basic earnings per
common share:
Income before
cumulative effect
of change in
accounting
principle $ 0.52 $ 0.59 $ 0.96 $ 1.10
Cumulative effect
of change in
accounting
principle -- -- -- .01
----------- ----------- ----------- -----------
Net income per
common share $ 0.52 $ 0.59 $ 0.96 $ 1.11
=========== =========== =========== ===========
Diluted earnings per
common share(a):
Income before
cumulative effect
of change in
accounting
principle $ 0.49 $ 0.55 $ 0.91 $ 1.04
Cumulative effect
of change in
accounting
principle -- -- -- .01
----------- ----------- ----------- -----------
Net income per
common share $ 0.49 $ 0.55 $ 0.91 $ 1.05
=========== =========== =========== ===========
Shares used in the per
share calculations:
Basic 27,723,136 28,265,001 27,676,913 28,173,817
=========== =========== =========== ===========
Diluted 32,347,458 32,799,715 32,214,488 32,729,293
=========== =========== =========== ===========
Supplemental
information:
Operating income before
depreciation
and amortization(b) $ 43,452 $ 48,277 $ 80,489 $ 92,029
(a). Diluted earnings per share assumes conversion of the 5.5%
Convertible Subordinated Notes due 2006. The interest expense related
to these notes, net of tax effects, for the three months ended June
30, 2002 and 2003 was $1,462 and $1,476, respectively, and for the six
months ended June 30, 2002 and 2003 was $2,921 and $2,951,
respectively.
(b). A non-GAAP measure; see accompanying Non-GAAP Reconciliation
Schedule.
WASTE CONNECTIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands, except share and per share amounts)
December 31, June 30,
2002 2003
----------- -----------
ASSETS
Current assets:
Cash and equivalents $ 4,067 $ 6,000
Accounts receivable, less allowance for
doubtful accounts of $2,509 and $2,419
at December 31, 2002
and June 30, 2003, respectively 63,488 65,961
Prepaid expenses and other current assets 8,652 9,662
----------- -----------
Total current assets 76,207 81,623
Property and equipment, net 578,040 579,550
Goodwill, net 548,975 555,931
Intangible assets, net 33,498 39,019
Other assets, net 25,162 25,942
----------- -----------
$1,261,882 $1,282,065
----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 30,688 $ 33,982
Accrued liabilities 45,905 39,095
Deferred revenue 19,016 21,757
Current portion of long-term debt and
notes payable 3,646 5,309
----------- -----------
Total current liabilities 99,255 100,143
Long-term debt and notes payable 578,481 557,165
Other long-term liabilities 14,813 6,485
Deferred income taxes 94,543 103,661
----------- -----------
Total liabilities 787,092 767,454
Commitments and contingencies
Minority interests 23,078 23,347
Stockholders' equity:
Preferred stock: $0.01 par value; 7,500,000
shares authorized;
none issued and outstanding -- --
Common stock: $0.01 par value; 50,000,000
shares authorized; 28,046,535 and
28,392,522 shares issued and
outstanding at December 31, 2002
and June 30, 2003, respectively 280 284
Additional paid-in capital 332,705 339,637
Deferred stock compensation (775) (605)
Retained earnings 123,498 154,832
Unrealized loss on market value of interest
rate swaps (3,996) (2,884)
----------- -----------
Total stockholders' equity 451,712 491,264
----------- -----------
$1,261,882 $1,282,065
----------- -----------
WASTE CONNECTIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 2002 AND 2003
(Unaudited)
(Dollars in thousands)
Six months ended
June 30,
------------------
2002 2003
-------- --------
Cash flows from operating activities:
Net income $26,513 $31,334
Adjustments to reconcile net income to
net cash provided by operating activities:
Loss (gain) on disposal of assets (45) 219
Depreciation 17,317 21,198
Amortization of intangibles 796 664
Deferred income taxes -- 9,118
Minority interests 4,236 4,875
Cumulative effect of change in accounting
principle -- (448)
Amortization of debt issuance costs 1,031 1,182
Stock-based compensation 679 55
Interest income on restricted cash (361) (189)
Net change in operating assets and liabilities,
net of acquisitions 10,141 5,726
-------- --------
Net cash provided by operating activities 60,307 73,734
-------- --------
Cash flows from investing activities:
Proceeds from disposal of assets 1,875 526
Payments for acquisitions, net of cash acquired (100,511) (21,074)
Capital expenditures for property and equipment (24,929) (30,772)
Decrease in other assets (750) (1,719)
-------- --------
Net cash used in investing activities (124,315) (53,039)
-------- --------
Cash flows from financing activities:
Proceeds from long-term debt 300,000 27,000
Principal payments on notes payable and long-
term debt (233,181) (48,153)
Distributions to minority interest holders (4,165) (4,606)
Proceeds from option and warrant exercises 5,604 7,050
Debt issuance costs (6,378) (53)
-------- --------
Net cash provided by (used in) financing activities 61,880 (18,762)
-------- --------
Net increase (decrease) in cash and equivalents (2,128) 1,933
Cash and equivalents at beginning of period 7,279 4,067
-------- --------
Cash and equivalents at end of period $ 5,151 $ 6,000
-------- --------
ADDITIONAL STATISTICS
THREE MONTHS ENDED JUNE 30, 2003
(Dollars in thousands)
Internal Growth
The following table reflects revenue growth for operations owned
for at least 12 months:
Price 2.0%
Volume (2.2%)
Recycling 0.4%
---------
Total 0.2%
Adjusted internal growth: adjusted for the loss of revenue from
Waste Management, Inc.'s volume at the Wichita transfer station:
Price 2.0%
Volume (1.2%)
Recycling 0.4%
---------
Total 1.2%
Tonnage Growth
The following table reflects the change in disposal tonnage that
the Company received at all of its landfills either owned or operated
for at least 12 months:
% change
in tonnage
----------
MSW 0.5%
C&D 9.2%
Special waste (38.4%)
Uneliminated Revenue Breakdown:
Collection $105,002 65.3%
Disposal and Transfer 50,092 31.2%
Recycling and Other 5,668 3.5%
--------------------
Total $160,762 100.0%
Inter-company
elimination $ 21,879
Days Sales Outstanding: 42.7
Internalization: 62.3%
Other Cash Flow Items:
Cash Interest Paid: $9,127
Cash Taxes Paid: $4,590
Debt to Capitalization: 53.4%
Total Debt divided by Total Debt plus Total Stockholders' Equity:
(557,165 + 5,309) / (557,165 + 5,309 + 491,264) = 53.4%
NON-GAAP RECONCILIATION SCHEDULE
THREE MONTHS ENDED JUNE 30, 2003
(Dollars in thousands)
Based upon recent SEC guidance regarding non-GAAP financial
measures, Waste Connections will no longer use the acronym previously
referred to as "EBITDA" and instead will now use the phrase "operating
income before depreciation and amortization." This is a change in name
only. The Company has not changed the method it uses to calculate this
financial measure. Operating income before depreciation and
amortization and free cash flow, each a non-GAAP financial measure,
are provided supplementally because they are widely used by investors
for valuation and financial performance measures in the solid waste
industry. These measures should be used in conjunction with GAAP
financial measures. Management uses operating income before
depreciation and amortization and free cash flow as two 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 and free cash flow
differently.
Operating income before depreciation and amortization reconciliation:
Operating income $36,995
Depreciation and amortization 11,282
-----------
Operating income before depreciation and
amortization $48,277
-----------
Operating income before depreciation and
amortization as % Revenues 34.8%
Free cash flow reconciliation:
Net cash provided by operating activities $37,565
Plus proceeds from disposal of assets 437
Less: Capital expenditures (18,931)
Less: Distributions to minority interest holders (2,450)
-----------
Free cash flow $16,621
-----------
Free cash flow as % Revenues 12.0%
CONTACT: Waste Connections, Inc.
Worthing Jackman, 916/608-8266
worthingj@wasteconnections.com