Date: March 5, 2007
Source: WCA Waste Corporation
* Revenue Increased 31% to $149.5 million * Operating Income Increased 37% to $23.4 million * Internal Growth of 11.6%
WCA Waste Corporation (Nasdaq:WCAA) announced today financial results for the fourth quarter and the fiscal year ended December 31, 2006. For the twelve months ended December 31, 2006, revenue increased 31.0% to $149.5 million over the $114.1 million for the same period last year. Operating income increased 37.0% to $23.4 million over the $17.1 million for the twelve months ended December 31, 2005. Net income available to common stockholders for the twelve months ended December 31, 2006 was $1.4 million, or $0.09 per share, compared to $3.5 million, or $0.22 per share, for the same period in 2005. Excluding the write-off of deferred financing costs and debt discount, and gains (losses) on interest rate swap agreements, net income available to common stockholders would be $3.1 million, or $0.19 per share, for the twelve months ended December 31, 2006.
For the fourth quarter of 2006, revenue increased 14.3% to $37.4 million over the $32.7 million that was reported for the same period last year. Operating income increased 19.1% to $5.2 million over the $4.4 million that was reported for the quarter ended December 31, 2005. The Company reported net income available to common stockholders for the quarter of $0.4 million, or $0.02 per share, compared to net income of $0.6 million, or $0.03 per share, for the fourth quarter last year.
Tom Fatjo, Chairman of WCA Waste Corporation, stated, "During 2006 our management devoted a substantial amount of time completing a capital plan which provided $225 million of capital available for expansion. During the first two months of 2007 we have successfully invested approximately $45 million on completed acquisitions. This has increased our 'run-rate' revenue by more than 10%. At the time of WCA's IPO in June of 2004 we stated our 3-4 year goals were to increase revenue from $60 million to $200 million, EBITDA from $18 million to $60 million and landfills owned from 13 to 25. We are clearly on schedule to achieve these goals by the end of 2007."
"At the beginning of 2006 we provided guidance for the year, and achieved these goals:
* Revenue to exceed $140 million, a 23% increase over 2005, actual
$149.5 million, a 31% increase over 2005;
* Operating income to exceed $21 million, a 24% increase over 2005,
actual $23.4 million, a 37% increase over 2005; and
* EBITDA to exceed $40 million, a 25% increase over 2005, actual
$42.7 million, a 32.6% increase over 2005."
"The new 2006 capital plan was a long-term strategic decision. Although we anticipate strong increases in revenue and EBITDA in 2007, prior to acquisitions there will be a short-term decrease in EPS because of the higher average interest rate on our new borrowings and a 5% payment-in-kind preferred dividend. With a consistent capital structure in place during 2007, expected increases in revenue and EBITDA in 2008 should produce a corresponding increase in EPS in 2008."
"WCA's new capital structure provides the opportunity to focus on longer-term goals. We think that a 3-4 year forecast is more appropriate than a one year forecast for a growth company."
"During the 3-4 years following 2007 we expect to accomplish the following goals:
* Revenue to increase from approximately $200 million to $400
million;
* EBITDA to increase from approximately $60 million to $120 million;
and
* Company owned landfills to increase to 35."
"As stated earlier, the Company has invested approximately $45 million on acquisitions during the first two months of 2007. We expect to selectively invest at least $100 million on acquisitions during 2007."
WCA Waste Corporation is an integrated company engaged in the transportation, processing and disposal of non-hazardous solid waste. The Company's operations consists of 23 landfills, 24 transfer stations/material recovery facilities and 29 collection operations located throughout Alabama, Arkansas, Colorado, Florida, Kansas, Missouri, New Mexico, North Carolina, Oklahoma, South Carolina, Tennessee and Texas. The Company's common stock is traded on the NASDAQ Global Market System under the symbol "WCAA."
WCA Waste Corporation
Condensed Consolidated Statement of Operations
(Unaudited)
Three Months Ended Fiscal Year Ended
December 31, December 31,
-------------------- --------------------
2006 2005 2006 2005
--------- --------- --------- ---------
(In thousands, except per share amounts)
Revenue $ 37,384 $ 32,708 $ 149,497 $ 114,143
Expenses:
Cost of services 24,345 21,337 95,991 73,933
Depreciation and
amortization 4,835 4,498 19,070 14,795
General and
administrative:
Stock-based
compensation charge 299 189 1,118 509
Other general and
administrative 2,664 2,282 9,892 7,802
--------- --------- --------- ---------
32,143 28,306 126,071 97,039
--------- --------- --------- ---------
Operating income 5,241 4,402 23,426 17,104
Other income (expense):
Interest expense, net (3,459) (3,753) (15,632) (10,366)
Write-off of deferred
financing costs and
debt discount -- -- (3,240) (1,308)
Net gain on terminated
interest rate swap -- -- 3,980 --
Unrealized gain (loss)
on interest rate swap 418 -- (3,393) --
Other 88 259 192 286
--------- --------- --------- ---------
(2,953) (3,494) (18,093) (11,388)
--------- --------- --------- ---------
Income before income
taxes 2,288 908 5,333 5,716
Income tax provision (999) (355) (2,313) (2,248)
--------- --------- --------- ---------
Net income 1,289 553 3,020 3,468
Accrued payment-in-kind
dividend on preferred
stock (938) -- (1,603) --
--------- --------- --------- ---------
Net income available to
common stockholders $ 351 $ 553 $ 1,417 $ 3,468
========= ========= ========= =========
PER SHARE DATA
(Basic and diluted):
Net income available to
common stockholders $ 0.02 $ 0.03 $ 0.09 $ 0.22
========= ========= ========= =========
WEIGHTED AVERAGE SHARES
OUTSTANDING (Basic) 16,381 16,279 16,360 15,579
--------- --------- --------- ---------
WEIGHTED AVERAGE SHARES
OUTSTANDING (Diluted) 16,423 16,324 16,385 15,641
--------- --------- --------- ---------
Non-GAAP Financial Measures
------------------------------------------------------------------------
Our management evaluates our performance based on non-GAAP measures,of
which the primary performance measure is EBITDA. EBITDA consists of
earnings (net income or loss) available to common stockholders before
preferred stock dividend, interest expense (including gains (losses) on
interest rate swap agreements as well as write-off of deferred financing
costs and debt discount), income tax expense, depreciation and
amortization. We also use these same measures when evaluating potential
acquisition candidates.
We believe EBITDA is useful to an investor in evaluating our operating
performance because:
* it is widely used by investors in our industry to measure a
company's operating performance without regard to items such as
interest expense, depreciation and amortization, which can vary
substantially from company to company depending upon accounting
methods and book value of assets, financing methods, capital
structure and the method by which assets were acquired;
* it helps investors more meaningfully evaluate and compare the
results of our operations from period to period by removing the
impact of our capital structure (primarily interest charges from
our outstanding debt and the impact of our interest rate swap
agreements and payment-in-kind dividend) and asset base
(primarily depreciation and amortization of our landfills and
vehicles) from our operating results; and
* it helps investors identify items that are within our operational
control. Depreciation charges, while a component of operating
income, are fixed at the time of the asset purchase in accordance
with the depreciable lives of the related asset and as such are
not a directly controllable period operating charge.
Our management uses EBITDA:
* as a measure of operating performance because it assists us in
comparing our performance on a consistent basis as it removes the
impact of our capital structure and asset base from our operating
results;
* as one method we use to estimate a purchase price (often
expressed as a multiple of EBITDA) for solid waste companies we
intend to acquire. The appropriate EBITDA multiple will vary from
acquisition to acquisition depending on factors such as the size
of the operation, the type of operation, the anticipated growth
in the market, the strategic location of the operation in its
market as well as other considerations;
* in presentations to our board of directors to enable them to have
the same consistent measurement basis of operating performance
used by management;
* as a measure for planning and forecasting overall expectations
and for evaluating actual results against such expectations;
* in evaluations of field operations since it represents
operational performance and takes into account financial measures
within the control of the field operating units;
* as a component of incentive cash bonuses paid to our executive
officers and other employees;
* to assess compliance with financial ratios and covenants included
in our credit agreements; and
* in communications with investors, lenders, and others concerning
our financial performance.
The following presents a reconciliation of net income available to
common stockholders to our total EBITDA (in thousands)
Three Months Ended Fiscal Year Ended
December 31, December 31,
------------------- -------------------
2006 2005 2006 2005
-------- -------- -------- --------
Net income available
to common stockholders $ 351 $ 553 $ 1,417 $ 3,468
Accrued payment-in-kind
dividend on preferred
stock 938 -- 1,603 --
Depreciation and
amortization 4,835 4,498 19,070 14,795
Interest expense, net 3,459 3,753 15,632 10,366
Write-off of deferred
financing costs and
debt discount -- -- 3,240 1,308
Net gain on terminated
interest rate swap -- -- (3,980) --
Unrealized (gain)
loss on interest
rate swap (418) -- 3,393 --
Income tax
provision 999 355 2,313 2,248
-------- -------- -------- --------
Total EBITDA $ 10,164 $ 9,159 $ 42,688 $ 32,185
======== ======== ======== ========
As a percentage
of revenue 27.2% 28.0% 28.6% 28.2%
The following table presents a reconciliation of net income available
to common stockholders to adjusted net income available to common
stockholders to exclude write-off of deferred financing costs and debt
discount, (gains) losses on interest rate swap agreements (in thousands).
Management believes that this non-GAAP measure is useful to an investor
because the excluded items are not representative of our on-going
operational performance. Per share information of the adjusted net
income available to common stockholders is also shown below:
Adjusted net income available to common
stockholders to exclude write-off of deferred
financing costs and debt discount, gains
(losses) on interest rate swap agreements:
Three Months Ended Fiscal Year Ended
December 31, December 31,
--------------------- -------------------
2006 2005 2006 2005
-------- -------- -------- --------
Net income available
to common stockholders $ 351 $ 553 $ 1,417 $ 3,468
Write-off of deferred
financing costs and
debt discount, net of
tax -- -- 2,033 850
Net gain on terminated
interest rate swap,
net of tax -- -- (2,500) --
Unrealized (gain) loss
on interest rate swap,
net of tax (253) -- 2,143 --
-------- -------- -------- --------
Adjusted net income
available to common
stockholders $ 98 $ 553 $ 3,093 $ 4,318
======== ======== ======== ========
PER SHARE DATA
(Basic and diluted):
Adjusted net income
available to common
stockholders to exclude
write-off of deferred
financing costs and
debt discount, gains
(losses) on interest
rate swap agreements:
-- Basic $ 0.01 $ 0.03 $ 0.19 $ 0.28
======== ======== ======== ========
-- Diluted $ 0.01 $ 0.03 $ 0.19 $ 0.28
======== ======== ======== ========
WEIGHTED AVERAGE SHARES
OUTSTANDING (Basic) 16,381 16,279 16,360 15,579
-------- -------- -------- --------
WEIGHTED AVERAGE SHARES
OUTSTANDING (Diluted) 16,423 16,324 16,399 15,641
-------- -------- -------- --------
These non-GAAP measures may not be comparable to similarly titled
measures employed by other companies and are not measures of
performance calculated in accordance with GAAP. They should not be
considered in isolation or as substitutes for operating income, net
income or loss, cash flows provided by operating, investing and
financing activities, or other income or cash flow statement data
prepared in accordance with GAAP.
Supplemental Disclosures
----------------------------------------------------------------------
(Dollars in millions)
Fiscal Year Ended
December 31, 2006
------------------
Revenue Breakdown:
Collection $ 85.8 46.5%
Disposal 60.8 33.0%
Transfer 29.4 15.9%
Other 8.4 4.6%
------- -------
Total 184.4 100.0%
Intercompany eliminations (34.9)
-------
Total reported revenue $ 149.5
=======
Internalization of Disposal:
Fiscal year ended December 31, 2006 76.1%
Debt-to-Capitalization:
Long-term debt including current maturities $ 167.3
Total equity 167.8
-------
Total capitalization $ 335.1
=======
Debt-to-total capitalization 49.9%
----------------------------------------------------------------------
Net Debt-to-Capitalization:
Long-term debt including current maturities $ 167.3
Cash on hand and restricted cash (a) (53.5)
-------
Net debt 113.8
Total equity 167.8
-------
Total capitalization $ 281.6
=======
Net debt-to-total capitalization 40.4%
(a) Total restricted cash of $1.3 million relates to long-term
tax-exempt bonds.
For more information, contact:
Tommy Fatjo
WCA Waste Corporation
713-292-2400
www.wcawaste.com.
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