Exhibit 99.1
Waste Connections Reports Third Quarter 2004 Results
FOLSOM, Calif.--(BUSINESS WIRE)--Oct. 20, 2004--Waste Connections, Inc.
(NYSE:WCN)
-- Reports earnings per share of $0.46, up 24.3%
-- Third quarter revenue and net income increased 13.2% and 32.3%,
respectively
-- Reports internal growth of 2.8% price and 1.6% volume
-- Signs agreements to acquire $30 million annualized revenue
Waste Connections, Inc. (NYSE:WCN) today announced third quarter earnings
of $0.46 per share on a diluted basis of 49.0 million shares, a 24.3% increase
over diluted earnings per share of $0.37 in the third quarter of 2003. Revenue
for the third quarter of 2004 was $165.4 million, a 13.2% increase over revenue
of $146.2 million in the third quarter of 2003. Operating income for the third
quarter of 2004 was $42.8 million, a 13.3% increase over operating income of
$37.8 million in the third quarter of 2003. Net income in the quarter was $22.5
million, a 32.3% increase over the year ago period.
For the nine months ended September 30, 2004, revenue was $475.3 million, a
14.9% increase over revenue of $413.5 million in the year ago period. Operating
income for the nine months ended September 30, 2004, was $118.3 million, a 9.6%
increase over operating income of $107.9 million for the same period in 2003.
Net income excluding a charge for early retirement of convertible notes, a
non-GAAP measure, for the nine months ended September 30, 2004, was $58.9
million, a 22.7% increase over net income of $48.0 million before a gain
resulting from the cumulative effect of adopting SFAS No. 143 in the prior year
period. Including the cost for early retirement of convertible notes, diluted
earnings per share for the nine months ended September 30, 2004 was $1.20.
Excluding the charge for early retirement of debt, a non-GAAP measure, in the
nine month period ended September 30, 2004, diluted earnings per share was
$1.22, an increase of 15.1% over diluted earnings per share of $1.06 before the
gain on accounting change in the year ago period.
Ronald J. Mittelstaedt, Chairman and Chief Executive Officer, said, "Our
execution at the local level and differentiated market strategy have been the
primary drivers to our strong performance this year. Internal growth continues
to track above initial expectations for the year with margins in the quarter
beginning to demonstrate the year-over-year improvements we had expected. More
importantly, we made significant progress in the quarter on new landfill
development projects in Kansas, Kentucky and Colorado that should begin
contributing in 2005. On the acquisition front, we completed the previously
announced sale of a non-integrated collection operation in Washington and
entered into a long-term disposal contract with the buyer. Additionally, we
agreed to acquire Northwest Container Services, an inter-modal transfer services
company with six locations in the Pacific Northwest Region, including Seattle,
Tacoma and Portland. This strategic acquisition is expected to significantly
improve our ability to compete for waste disposal contracts in a region that is
highly dependent on rail haul services, attracting incrementally new volumes to
our existing landfill network. We also signed or closed an additional three
tuck-in transactions in South Dakota and Texas. These acquisitions bring the
total amount of acquired annualized revenue either signed or closed this year to
approximately $36 million."
Waste Connections will be hosting a conference call related to third
quarter earnings on October 21st 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 and Southern U.S. The Company serves
more than one million commercial, residential and industrial customers from a
network of operations in 23 states. 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.
For non-GAAP measures, see accompanying Non-GAAP Reconciliation Schedule.
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
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) difficulties in making acquisitions,
acquiring exclusive contracts and generating internal growth may cause Waste
Connections' growth to be slower than expected; (2) Waste Connections' growth
and future financial performance depend significantly on its ability to
integrate acquired businesses into its organization and operations; (3) Waste
Connections' acquisitions may not be successful, resulting in changes in
strategy, operating losses or a loss on sale of the business acquired; (4) Waste
Connections competes for acquisition candidates with other purchasers, some of
which have greater financial resources than it does, and these other purchasers
may be able to offer more favorable acquisition terms, thus limiting Waste
Connections' ability to grow through acquisition; (5) timing of acquisitions may
cause fluctuations in Waste Connections' quarterly results, which may cause its
stock price to decline; (6) rapid growth may strain Waste Connections'
management, operational, financial and other resources; (7) Waste Connections
may be unable to compete effectively with governmental service providers and
larger and better capitalized companies, which may result in reduced revenues
and lower profits; (8) Waste Connections may lose contracts through competitive
bidding, early termination or governmental action, which would cause its
revenues to decline; (9) increases in the costs of labor, disposal, fuel or
energy could reduce operating margins; and (10) increases in insurance costs and
the amount that we self-insure for various risks could reduce our operating
margins and reported earnings. 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 and subsequent Quarterly Report on Form 10-Q. 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 after the date any such
statement is made.
WASTE CONNECTIONS, INC.
CONSOLIDATED STATEMENTS OF INCOME
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2004
(Unaudited)
(in thousands, except share and per share amounts)
Three months ended Nine months ended
September 30, September 30,
----------------------- -----------------------
2003 2004 2003 2004
----------- ----------- ----------- -----------
Revenues $146,178 $165,444 $413,515 $475,263
Operating expenses:
Cost of operations 82,407 92,006 231,655 267,958
Selling, general
and administrative 13,702 16,104 39,762 47,143
Depreciation and
amortization 12,293 14,551 34,155 41,846
----------- ----------- ----------- -----------
Operating income 37,776 42,783 107,943 118,316
Interest expense (8,002) (4,928) (23,838) (16,925)
Minority interests (2,932) (3,309) (7,807) (8,995)
Other income (expense),
net 12 184 (155) (1,312)
----------- ----------- ----------- -----------
Income before income
tax provision and
cumulative effect
of change in accounting
principle 26,854 34,730 76,143 91,084
Income tax provision (9,882) (12,279) (28,119) (33,260)
----------- ----------- ----------- -----------
Income before cumulative
effect of change in
accounting principle 16,972 22,451 48,024 57,824
Cumulative effect of
change in accounting
principle, net of
tax expense of $166 - - 282 -
----------- ----------- ----------- -----------
Net income $16,972 $22,451 $48,306 $57,824
=========== =========== =========== ===========
Basic earnings per
common share:
Income before
cumulative effect
of change in
accounting principle $0.40 $0.47 $1.13 $1.25
Cumulative effect of
change in accounting
principle - - .01 -
----------- ----------- ----------- -----------
Net income per
common share $0.40 $0.47 $1.14 $1.25
=========== =========== =========== ===========
Diluted earnings per
common share(a):
Income before
cumulative effect
of change in
accounting
principle $0.37 $0.46 $1.06 $1.20
Cumulative effect
of change in
accounting
principle - - .01 -
----------- ----------- ----------- -----------
Net income per
common share $0.37 $0.46 $1.07 $1.20
=========== =========== =========== ===========
Shares used in the per
share calculations:
Basic 42,627,645 47,725,447 42,384,377 46,152,184
=========== =========== =========== ===========
Diluted 49,426,433 48,966,181 49,206,116 49,538,370
=========== =========== =========== ===========
Supplemental information:
Operating income
before depreciation
and amortization (b) $50,069 $57,334 $142,098 $160,162
(a) Diluted earnings per share assumes conversion of the 5.5%
Convertible Subordinated Notes due 2006 prior to its redemption on
April 15, 2004. The interest expense related to these notes, net
of tax effects, for the three months ended September 30, 2003 was
$1,476, and for the nine months ended September 30, 2003 and 2004
was $4,427 and $1,707, 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 September
31, 30,
2003 2004
----------- -----------
ASSETS
Current assets:
Cash and equivalents $5,276 $4,977
Accounts receivable, less allowance for
doubtful accounts of $2,570 and $2,434
at December 31, 2003 and September 30,
2004, respectively 72,474 77,898
Prepaid expenses and other current assets 11,270 11,551
----------- -----------
Total current assets 89,020 94,426
Property and equipment, net 613,225 635,999
Goodwill, net 590,054 603,489
Intangible assets, net 64,784 68,440
Restricted cash 17,734 13,777
Other assets, net 21,135 21,066
----------- -----------
$1,395,952 $1,437,197
----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $38,682 $40,729
Accrued liabilities 31,920 35,863
Deferred revenue 23,738 25,966
Current portion of long-term debt and
notes payable 9,740 10,105
----------- -----------
Total current liabilities 104,080 112,663
Long-term debt and notes payable 601,891 452,483
Other long-term liabilities 8,400 8,247
Deferred income taxes 120,162 135,582
----------- -----------
Total liabilities 834,533 708,975
Commitments and contingencies
Minority interests 23,925 24,052
Stockholders' equity:
Common stock: $0.01 par value; 50,000,000 and
100,000,000 shares authorized at December 31,
2003 and September 30, 2004, respectively;
43,000,182 and 47,861,766 shares issued
and outstanding at December 31, 2003 and
September 30, 2004, respectively 430 479
Additional paid-in capital 348,003 456,950
Deferred stock compensation (436) (1,902)
Retained earnings 189,094 246,918
Accumulated other comprehensive income 403 1,725
----------- -----------
Total stockholders' equity 537,494 704,170
----------- -----------
$1,395,952 $1,437,197
----------- -----------
WASTE CONNECTIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2004
(Unaudited)
(Dollars in thousands)
Nine months
ended
September 30,
-------------------
2003 2004
--------- ---------
Cash flows from operating activities:
Net income $48,306 $57,824
Adjustments to reconcile net income to
net cash provided by operating activities:
Loss on disposal of assets 276 119
Depreciation 33,034 39,979
Amortization of intangibles 1,120 1,867
Deferred income taxes 14,060 15,420
Minority interests 7,807 8,995
Cumulative effect of change in accounting
principle (448) --
Amortization of debt issuance costs 1,786 1,740
Stock-based compensation 151 736
Interest income on restricted cash (230) (206)
Closure and post-closure accretion 324 308
Net change in operating assets and liabilities,
net of acquisitions 8,457 9,699
--------- ---------
Net cash provided by operating activities 114,643 136,481
--------- ---------
Cash flows from investing activities:
Payments for acquisitions, net of cash
acquired (78,035) (13,737)
Capital expenditures for property and
equipment (44,972) (56,201)
Proceeds from disposal of assets 907 718
Net change in other assets (6,283) 4,174
--------- ---------
Net cash used in investing activities (128,383) (65,046)
--------- ---------
Cash flows from financing activities:
Proceeds from long-term debt 88,940 127,000
Principal payments on notes payable and long-
term debt (72,350) (167,962)
Distributions to minority interest holders (7,938) (8,869)
Proceeds from option and warrant exercises 8,124 29,760
Payments for repurchase of common stock -- (51,206)
Debt issuance costs (76) (457)
--------- ---------
Net cash used in financing activities 16,700 (71,734)
--------- ---------
Net increase (decrease) in cash and equivalents 2,960 (299)
Cash and equivalents at beginning of period 4,067 5,276
--------- ---------
Cash and equivalents at end of period $7,027 $4,977
--------- ---------
ADDITIONAL STATISTICS
THREE MONTHS ENDED SEPTEMBER 30, 2004
(Dollars in thousands)
Internal Growth
The following table reflects revenue growth for operations owned
for at least 12 months:
Price 2.8%
Volume 1.6%
Recycling 0.8%
----------------
Total 5.2%
Uneliminated Revenue Breakdown:
Collection $123,526 64.9%
Disposal and Transfer 58,425 30.7%
Recycling and Other 8,298 4.4%
----------------------
Total $190,249 100.0%
Inter-company
elimination $24,805
Days Sales Outstanding: 43
Internalization: 68%
Other Cash Flow Items:
Cash Interest Paid: $4,568
Cash Taxes Paid: $ 408
Debt to Capitalization: 39.6%
Total Debt divided by Total Debt plus Total Stockholders' Equity:
($452,483 + $10,105) / ($452,483 + $10,105 + $704,170) = 39.6%
NON-GAAP RECONCILIATION SCHEDULE
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2004
(in thousands, except share and per share amounts)
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 as valuation,
liquidity 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:
Three Months Nine Months
Ended Ended
September 30, September 30,
2004 2004
----------------------------
Operating income $42,783 $118,316
Depreciation and amortization 14,551 41,846
----------------------------
Operating income before depreciation and
amortization $57,334 $160,162
----------------------------
Operating income before depreciation and
amortizationas % revenues 34.7% 33.7%
Free cash flow reconciliation:
Three Months Nine Months
Ended Ended
September 30, September 30,
2004 2004
-------------------------------
Net cash provided by operating
activities $51,929 $136,481
Plus cash proceeds from disposal of
assets 371 718
Less: Capital expenditures (22,306) (56,201)
Less: Distributions to minority
interest holders (2,940) (8,869)
-------------------------------
Free cash flow $27,054 $72,129
-------------------------------
Free cash flow as % revenues 16.4% 15.2%
Net income and EPS adjusted to exclude the cost for early
extinguishment of debt are provided as a measure of our operating
performance on a more comparable basis to historical periods. The item
excluded is financing related and may not occur in every reporting
period. Therefore, management evaluates net income and EPS performance
excluding this item to evaluate and monitor the ongoing financial
performance of our operations. These measures should be used in
conjunction with GAAP net income and EPS.
Net income and EPS reconciliation:
Three Months Nine Months
Ended Ended
September 30, September 30,
2004 2004
--------------------------------
Income before cumulative effect of
change in accounting principle $22,451 $57,824
After-tax loss from early retirement
of debt -- 1,125
--------------------------------
Net income excluding loss from early
retirement of debt $22,451 $58,949
--------------------------------
Diluted shares used in the per share
calculation: 48,966,181 49,538,370
Diluted EPS excluding loss from early
retirement of debt: $0.46 $1.22
Diluted earnings per share assumes conversion of the 5.5%
Convertible Subordinated Notes due 2006 prior to their redemption on
April 15, 2004. The interest expense related to these notes, net of
tax effects, for the three and nine months ended September 30, 2004
was $0 and $1,707, respectively.
CONTACT: Waste Connections, Inc.
Worthing Jackman, 916-608-8266
worthingj@wasteconnections.com