Exhibit 99.1
Waste Connections Reports First Quarter 2005 Results
FOLSOM, Calif.--(BUSINESS WIRE)--April 20, 2005--Waste
Connections, Inc. (NYSE:WCN)
-- Reports Earnings Per Share of $0.40 and Free Cash Flow of
$30.9 Million, or 18.7% of Revenue
-- Revenue and Net Income Increased 13.4% and 19.2%, Respectively
-- Reports 3% Internal Price Growth
-- Awarded First Long-Term Rail-Haul and Disposal Contract
-- Repurchases Approximately $45 Million of Common Stock
Waste Connections, Inc. (NYSE:WCN) today announced first quarter
earnings of $0.40 per share on a diluted basis of 48.9 million shares,
an increase of 14.3% over diluted earnings per share from continuing
operations of $0.35 in the year ago period. Revenue for the first
quarter of 2005 was $165.5 million, a 13.4% increase over revenue of
$146 million in the first quarter of 2004. Operating income for the
first quarter of 2005 was $38.3 million, an 8.8% increase over
operating income of $35.3 million in the first quarter of 2004. Net
income in the quarter was $19.4 million, a 19.2% increase over net
income from continuing operations in the year ago period.
Ronald J. Mittelstaedt, Chairman and Chief Executive Officer,
said, "We are very pleased with our first quarter performance as it
sets us up well for the remainder of 2005. Pricing growth was strong
in the quarter and should remain around this level for the full year.
Volume growth, which was impacted in the quarter by our termination of
certain unprofitable contracts, should continue to increase during the
year, especially if anticipated increases in special waste activity
materialize. Our record free cash flow and strong operating results
enabled us to fund acquisitions and almost $45 million in stock
repurchases, ahead of where we thought we would be at this time, yet
maintaining our leverage ratio. In the quarter, we acquired an MSW
landfill in San Benito County, California, which has allowed us to
internalize a portion of our disposal volumes in the San Jose market.
We also signed an agreement to acquire a collection operation in South
Dakota that longer-term should be internalized into one of our
landfills in Nebraska. Combined with a smaller tuck-in completed in
California, these acquisitions represent almost $10 million of
acquired annualized revenue. Finally, we were awarded our first
long-term rail-haul and disposal contract in the Pacific Northwest
since entering the intermodal services business last November.
Operations under this contract should commence in the fourth quarter
of 2006, with total revenue estimated at more than $100 million over
the contract's 20-year term."
Waste Connections will be hosting a conference call related to
first quarter earnings and second quarter outlook on April 21st 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 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 residential,
commercial and industrial customers from a network of operations in 22
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.
For non-GAAP measures, see accompanying Non-GAAP Reconciliation
Schedule.
In the fourth quarter of 2004, Waste Connections classified as
discontinued operations the results of its Georgia operations that
were swapped with Waste Industries. Results for the first quarter of
2004 have been restated to present the results for these operations as
discontinued operations, as well as the results of certain operations
in Eastern Washington sold in August 2004.
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) Waste Connections
may be unable to compete effectively with larger and better
capitalized companies and governmental service providers, which may
result in reduced volume and revenues and lower profits; (2) increases
in Waste Connections' insurance costs and the amount that it
self-insures for various risks could reduce its operating margins and
reported earnings; (3) further increases in the price of fuel may
adversely affect Waste Connections' business and earnings; (4)
increases in labor and disposal and related transportation costs could
reduce Waste Connections' operating margins; (5) Waste Connections may
lose contracts through competitive bidding, early termination or
governmental action, which would cause its volumes and revenues to
decline; (6) Waste Connections' intermodal business could be adversely
affected by steamship lines diverting business to ports other than
those it services, or by heightened security measures or actual or
threatened terrorist attacks, which could cause its intermodal
revenues to decline; (7) Waste Connections' growth and future
financial performance depend significantly on its ability to integrate
acquired businesses into its organization and operations; (8) Waste
Connections' acquisitions may not be successful, resulting in changes
in strategy, operating losses or a loss on sale of the business
acquired; (9) 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; (10) Waste Connections' decentralized decision-making
structure could allow local managers to make decisions that adversely
affect its pricing growth and operating results; (11) the geographic
concentration of Waste Connections' business makes its pricing growth
and operating results vulnerable to economic and seasonal factors
affecting the regions in which it operates; (12) Waste Connections
volume growth may be limited by the inability to renew landfill
operating permits, obtain new landfills and expand existing ones; (13)
extensive and evolving environmental laws and regulations may restrict
Waste Connections' operations and growth and increase its costs; and
(14) 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. 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
after the date any such statement is made.
WASTE CONNECTIONS, INC.
CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED MARCH 31, 2004 AND 2005
(Unaudited)
(in thousands, except share and per share amounts)
Three months ended
March 31,
------------------------
2004 2005
----------- -----------
Revenues $ 145,964 $ 165,517
Operating expenses:
Cost of operations 82,593 95,285
Selling, general and administrative 15,130 17,242
Depreciation and amortization 13,035 14,769
Gain on sale of assets (50) (121)
----------- -----------
Operating income 35,256 38,342
Interest expense (6,823) (4,934)
Minority interests (2,631) (2,687)
Other income, net 34 105
----------- -----------
Income from continuing operations before
income tax 25,836 30,826
Income tax provision (9,598) (11,467)
----------- -----------
Income from continuing operations 16,238 19,359
Loss from discontinued operations, net of tax (36) -
----------- -----------
Net income $ 16,202 $ 19,359
=========== ===========
Basic earnings per common share:
Continuing operations $ 0.38 $ 0.41
Discontinued operations (0.01) -
----------- -----------
Net income per common share $ 0.37 $ 0.41
=========== ===========
Diluted earnings per common share(a):
Continuing operations $ 0.35 $ 0.40
Discontinued operations - -
----------- -----------
Net income per common share $ 0.35 $ 0.40
=========== ===========
Shares used in the per share calculations:
Basic 43,285,119 47,486,402
=========== ===========
Diluted 50,184,702 48,878,703
=========== ===========
(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 March 31, 2004 was
$1,476.
WASTE CONNECTIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands, except share and per share amounts)
December March
31, 2004 31, 2005
---------- ----------
ASSETS
Current assets:
Cash and equivalents $ 3,610 $ 3,721
Accounts receivable, less allowance for
doubtful accounts of $2,414 and $2,420 at
December 31,2004 and March 31, 2005,
respectively 80,864 78,856
Deferred tax assets - 2,071
Prepaid expenses and other current assets 17,008 11,523
---------- ----------
Total current assets 101,482 96,171
Property and equipment, net 640,730 648,772
Goodwill 642,773 641,973
Intangible assets, net 68,741 68,139
Restricted cash 14,159 12,876
Other assets, net 23,598 34,229
---------- ----------
$1,491,483 $1,502,160
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 34,280 $ 34,635
Book overdraft 8,661 2,745
Accrued liabilities 38,780 44,398
Deferred revenue 24,155 25,379
Current portion of long-term debt and notes
payable 9,266 8,248
---------- ----------
Total current liabilities 115,142 115,405
Long-term debt and notes payable 489,343 500,757
Other long-term liabilities 9,020 17,753
Deferred tax liabilities 146,035 148,516
---------- ----------
Total liabilities 759,540 782,431
Commitments and contingencies
Minority interests 24,421 24,707
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; 47,605,791 and 46,804,755
shares issued and outstanding at December 31,
2004 and March 31, 2005, respectively 476 468
Additional paid-in capital 444,404 411,121
Deferred stock compensation (1,598) (1,667)
Retained earnings 261,365 280,724
Accumulated other comprehensive income 2,875 4,376
---------- ----------
Total stockholders' equity 707,522 695,022
---------- ----------
$1,491,483 $1,502,160
========== ==========
WASTE CONNECTIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 2004 AND 2005
(Unaudited)
(Dollars in thousands)
Three months
ended March 31,
------------------
2004 2005
-------- --------
Cash flows from operating activities:
Net income $ 16,202 $ 19,359
Adjustments to reconcile net income to
net cash provided by operating activities:
Gain on disposal of assets (38) (121)
Depreciation 12,828 14,129
Amortization of intangibles 615 640
Deferred income taxes, net of acquisitions 5,495 (3,018)
Minority interests 2,631 2,687
Amortization of debt issuance costs 625 296
Stock-based compensation 200 255
Interest income on restricted cash (70) (70)
Closure and post-closure accretion 103 167
Tax benefit on the exercise of stock options 1,859 2,358
Net change in operating assets and liabilities,
net of acquisitions 8,097 16,184
-------- --------
Net cash provided by operating activities 48,547 52,866
-------- --------
Cash flows from investing activities:
Payments for acquisitions, net of cash acquired (6,081) (6,719)
Capital expenditures for property and equipment (15,628) (14,315)
Proceeds from disposal of assets 184 647
Net change in other assets 1,326 1,089
-------- --------
Net cash used in investing activities (20,199) (19,298)
-------- --------
Cash flows from financing activities:
Proceeds from long-term debt 21,500 37,032
Principal payments on notes payable and long-term
debt (56,963) (26,485)
Book overdraft (658) (5,916)
Proceeds from option and warrant exercises 10,585 9,285
Distributions to minority interest holders (2,940) (2,401)
Payments for repurchase of common stock - (44,941)
Debt issuance costs (237) (31)
-------- --------
Net cash provided by (used in) financing activities 28,713 (33,457)
-------- --------
Net increase (decrease) in cash and equivalents (365) 111
Cash and equivalents at beginning of period 5,276 3,610
-------- --------
Cash and equivalents at end of period $ 4,911 $ 3,721
======== ========
ADDITIONAL STATISTICS
THREE MONTHS ENDED MARCH 31, 2005
(Dollars in thousands)
Internal Growth: The following table reflects revenue growth for
operations owned for at least 12 months:
Price 3.0%
Volume 0.2%
Recycling 0.2%
------------------
Total 3.4%
Uneliminated Revenue Breakdown:
Collection $119,939 63.6%
Disposal and Transfer 50,096 26.6%
Intermodal 10,035 5.3%
Recycling and Other 8,471 4.5%
--------- --------
Total $188,541 100.0%
Inter-company elimination $ 23,024
Days Sales Outstanding: 43
Internalization: 71%
Other Cash Flow Items:
Cash Interest Paid: $4,483
Cash Taxes Paid: $ 85
Debt to Capitalization: 43.3%
Total Debt divided by Total Debt plus Total Stockholders' Equity:
($500,757 + $8,248) / ($500,757 + $8,248 + $695,022) = 42.3%
Share Information for the three months ended March 31, 2005:
Basic shares outstanding 47,486,402
Dilutive effect of options and warrants 1,174,792
Dilutive effect of convertible notes 178,502
Dilutive effect of restricted stock 39,007
--------------
Diluted shares outstanding 48,878,703
Shares repurchased 1,294,800
NON-GAAP RECONCILIATION SCHEDULE
THREE MONTHS ENDED MARCH 31, 2005
(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 cash proceeds from disposal of assets, plus or minus change in
book overdraft, less capital expenditures 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
March 31, 2005
--------------------
Net cash provided by operating activities $52,866
Less: Change in book overdraft (5,916)
Plus: Cash proceeds from disposal of assets 647
Less: Capital expenditures for property and
equipment (14,315)
Less: Distributions to minority interest
holders (2,401)
--------------------
Free cash flow $30,881
--------------------
Free cash flow as % of revenues 18.7%
CONTACT: Waste Connections, Inc.
Worthing Jackman, 916-608-8266
worthingj@wasteconnections.com