Date: February 28, 2007
Source: Waste Services, Inc.
Waste Services, Inc. (Nasdaq: WSII) today reported financial results for the three months ended December 31, 2005. Revenue for the quarter was $96.3 million, an increase of $3.1 million, or 3.3% over the same period last year. The increase in revenue was primarily driven by pricing increases of $5.6 million, of which $1.7 million related to fuel surcharges, increased volumes at our landfill sites of $1.2 million, and increased collection and transfer station volumes of $4.0 million. Offsetting these increases were decreases related to the expiration or assignment of certain residential contracts and divestitures of previously acquired operations totaling $9.3 million. The favorable effects of foreign exchange rate movements increased revenue by $1.6 million. EBITDA* was $15.4 million for the quarter ended December 31, 2005, compared to $12.0 million for the same period last year. Adjusted EBITDA* (as defined in our credit agreement) was $16.2 million for the quarter ended December 31, 2005. Net loss for the quarter ended December 31, 2005 was $12.1 million, or $0.12 per share, versus a loss of $13.1 million, or $0.14 per share, for the comparable period last year.
For the year ended December 31, 2005, revenue was $382.4 million, an increase of $71.6 million, or 23.1% over the comparable period last year. EBITDA was $54.0 million and adjusted EBITDA was $55.9 million for the year ended December 31, 2005. Net loss was $50.3 million for the year ended December 31, 2005, or $0.51 per share, compared to a net loss of $48.2 million, or $0.55 per share for the comparable period last year.
David Sutherland-Yoest, Chairman and Chief Executive Officer, stated "We continue to focus on improving the profitability of our collection operations and increasing disposal volumes at our three municipal solid waste landfills in the United States. For 2006, we expect to report adjusted EBITDA in the range of $70.0 million to $75.0 million. The year-over-year increase is expected to be primarily driven by significant improvements in the U.S. operations, as well as continued growth in our Canadian operations. For the first quarter, we expect the normal seasonal decline in our Canadian business, so adjusted EBITDA is expected to be lower in the first quarter versus the fourth quarter. These expectations do not include the impact of acquisitions or divestitures."
On February 6, 2006, the company announced its intended acquisition of Liberty Waste and Sun Country Materials in the Tampa, Florida market. This business consists of a collection company, two transfer stations and a construction & demolition landfill, and will significantly strengthen the company's presence in the Tampa market while allowing the company to vertically integrate its construction & demolition line of business. On February 24, 2006, the landfill received approval from an administrative judge for the state approved 17 million cubic yard expansion. The company has begun the preparation for the construction of the expansion, which it expects to be completed and operational by the fourth quarter of 2006. Initially, the company expects the acquisition to contribute approximately $4.0 million of annualized adjusted EBITDA (as defined in the company's credit agreement). When the new airspace is constructed and the landfill is receiving waste at its expanded capacity, the company expects the acquisition to contribute $6.0 million to $7.0 million of annualized EBITDA, with upside in the future. In connection with the acquisition, the company intends to seek approval from its bank lenders as required under its senior credit facility. The acquisition is expected to close on March 31, 2006.
*Reconciliation of Non-GAAP Measures:
The following table reconciles the differences between net loss, as determined under US GAAP, and EBITDA, a non-GAAP financial measure (in thousands of US dollars) (unaudited):
For The Three Months For The Year
Ended December 31, Ended December 31,
2005 2004 2005 2004
Net loss $(12,098) $(13,086) $(50,290) $(48,154)
Cumulative effect of change
in accounting principle - - - (225)
Income tax provision 3,554 2,554 12,136 7,587
Preferred stock dividends and
amortization of issue costs 5,637 4,738 20,984 17,582
Change in fair value of
warrants - - - (111)
Interest expense 6,923 6,575 28,196 30,838
Depreciation, depletion and
amortization 11,406 11,211 42,954 34,204
EBITDA (1) $15,422 $11,992 $53,980 $41,721
The following table reconciles the differences between EBITDA and Adjusted EBITDA, as defined in our credit agreement, for the three and twelve months ended December 31, 2005 (in thousands of US dollars) (unaudited):
For The Three For The
Months Ended Year Ended
December 31, 2005 December 31, 2005
EBITDA (1) $15,422 $53,980
Adjustments to EBITDA (as defined per
credit agreement):
Non-cash gains (2) (947) (3,009)
Other excludable expenses (3) 1,702 4,953
Adjusted EBITDA (1) $16,177 $55,924
(1) EBITDA and EBITDA as defined in our credit agreement ("Adjusted
EBITDA") are non-GAAP measures used by management to measure
performance. We also believe that EBITDA and Adjusted EBITDA may be
used by certain investors to analyze and compare our operating
performance between accounting periods and against the operating
results of other companies that have different financing and capital
structures or tax rates and to measure our ability to service our
debt. In addition, management uses EBITDA, among other things, as an
internal performance measure. Our lenders also use Adjusted EBITDA
to measure our ability to service and/or incur additional
indebtedness under our credit facilities. However, EBITDA and
Adjusted EBITDA should not be considered in isolation or as a
substitute for net income, cash flows or other financial statement
data prepared in accordance with US GAAP or as a measure of our
performance, profitability or liquidity. EBITDA and Adjusted EBITDA
are not calculated under US GAAP and therefore are not necessarily
comparable to similarly titled measures of other companies.
(2) Non-cash charges primarily include stock-based compensation expense
and gains and losses on foreign exchange and asset sales.
(3) Other excludable expenses include professional fees for certain
litigation, severance and other non-recurring costs.
We will host an investor and analyst conference call on Friday, March 10, 2006 at 8:30 a.m. (EST) to discuss the results of today's earnings announcement. If you wish to participate in this call, please phone 800-561-2601 (US and Canada) or 617-614-3518 (International) and enter passcode number 15864627. To hear a web cast of the call over the Internet, access the Home page of our website at www.wasteservicesinc.com. A post-view of the call will be available until Friday March 24, 2006 by phoning 888-286-8010 (US and Canada) or 617-801-6888 (International) and entering passcode number 84802118. The web cast will also be available on our website.
About Waste Services, Inc.
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 website is located at www.wasteservicesinc.com. Information on the company's website does not form part of this press release.
WASTE SERVICES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands of US dollars, except per share data)
Three Months Ended Year Ended
December 31, December 31,
2005 2004 2005 2004
Revenue $96,326 $93,227 $382,446 $310,785
Operating and other expenses:
Cost of operations (exclusive of
depreciation, depletion and
amortization) 68,240 66,857 276,329 223,397
Selling, general and
administrative expense (exclusive
of depreciation, depletion and
amortization) 13,499 14,403 56,485 54,679
Settlement with sellers of
Florida Recycling - - (4,120) (8,635)
Depreciation, depletion and
amortization 11,406 11,211 42,954 34,204
Foreign exchange gain and other (835) (25) (228) (377)
Income from operations 4,016 781 11,026 7,517
Interest expense 6,923 6,575 28,196 30,838
Changes in fair value of warrants - - - (111)
Cumulative mandatorily redeemable
preferred stock dividends and
amortization of issue costs 5,637 4,738 20,984 17,582
Loss before income taxes (8,544) (10,532) (38,154) (40,792)
Income tax provision 3,554 2,554 12,136 7,587
Loss before cumulative effect of
change in accounting principle (12,098) (13,086) (50,290) (48,379)
Cumulative effect of change in
accounting principle, net of
provision for income taxes of
$132 for the year ended
December 31, 2004 - - - 225
Net loss $(12,098) $(13,086) $(50,290) $(48,154)
Basic and diluted loss per
share:
Basic and diluted loss per
share before cumulative effect
of change in accounting
principle $(0.12) $(0.14) $(0.51) $(0.55)
Cumulative effect of change
in accounting principle - - - -
Loss per share - basic
and diluted $(0.12) $(0.14) $(0.51) $(0.55)
Weighted average common shares
outstanding - basic and diluted 99,516 96,418 98,640 88,232
WASTE SERVICES, INC.
SUPPLEMENTAL BALANCE SHEET AND CASH FLOW DATA
(In thousands of US dollars)
Balance Sheet Data: December 31, December 31,
2005 2004
Cash $8,887 $8,507
Current assets $69,582 $67,303
Total assets $728,389 $720,583
Current Liabilities $68,217 $69,648
Debt:
Senior secured credit facilities:
Revolver $- $15,000
Term loan 123,250 99,250
Senior subordinated notes 160,000 160,000
Other notes 2,965 3,130
Total debt $286,215 $277,380
Redeemable preferred stock $84,971 $64,971
Shareholders' equity $264,491 $298,776
Cash Flow Data: Year Ended December 31,
2005 2004
Cash flows from operating activities $24,623 $24,697
Cash flows from investing activities $(39,511) $(198,208)
Cash flows from financing activities $14,947 $160,683
Capital expenditures $(33,573) $(46,209)
For more information, contact:
Mark A. Pytosh
Executive Vice President and Chief Financial Officer
Waste Services, Inc.
561-237-3420
www.wasteservicesinc.com.
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