Date: July 24, 2007
Source: Waste Services, Inc.
- Record Revenue and EBITDA.
- Positive Pre-tax Profit.
- Record EBITDA margins (excluding foreign exchange gains and losses).
- Internal revenue growth from price and volume for the quarter of 5.0%.
- Reaffirm Guidance for 2007.
Waste Services, Inc. today announced financial results for the three months ended June 30, 2007. The quarter was highlighted by strong top line growth and continued margin expansion:
- Revenue from continuing operations was up 25.6% to $126.2 million
compared to $100.5 million in 2006.
- Internal revenue growth was 5.0%, made up of 4.7% price, 0.3% volume.
- Acquisitions net of divestitures added $21.0 million of revenue or
20.9%, while the expiration of low margin municipal contracts net of new
higher margin municipal contracts accounted for a $1.0 million reduction
or 1.0%.
- Operating income and EBITDA expanded to $13.1 million and $28.2 million
with margins improving to 10.4% and 22.4%, respectively.
- In the quarter the company completed the acquisition of USA Recycling
and announced the exchange transaction with Waste Corp of America
(Nasdaq-WCAA) for additional Florida assets.
David Sutherland-Yoest, Waste Services Chairman and Chief Executive Officer, stated, "We are very pleased to report record results for the quarter and that the company has achieved pre-tax profitability. Using a normalized effective tax rate of 38%, the company earned $0.03 in net income per share from continuing operations. Our record EBITDA and EBITDA margins show that our Florida business is maturing on schedule and the contribution from our Canadian operations continues to grow. We expect the EBITDA margins to increase further in coming quarters and remain on track to hit our previous guidance of $110.0 million to $115.0 million in EBITDA for the year."
The six-month results for the period ended June 30, 2007 support our previous guidance. The year-to-date results are highlighted by:
- Revenue growth of 21.1% to $227.6 million compared to $188.0 million in
2006.
- Internal revenue growth was 5.7%, made up of 5.1% price, 0.5% fuel and
0.1% volume.
- Acquisitions net of divestitures added $29.4 million of revenue or
15.6%, while the expiration of low margin municipal contracts net of new
higher margin municipal contracts accounted for a $1.6 million reduction
or 0.9%.
- Operating income and EBITDA expanded to $21.0 million and $48.1 million
with margins improving to 9.2% and 21.1%, respectively.
Mr. Sutherland-Yoest noted, "Second half operating results are typically better than the first half with both the Canadian and Florida operations seasonally the strongest in the third quarter. We look forward to the company producing quarterly and full year free cash flow in the second half as the operating leverage of the Florida business continues to build momentum."
2007 Outlook
For fiscal 2007 Waste Services is providing the following guidance:
- Revenue of approximately $500 million.
- EBITDA in a range of $110 million to $115 million.
- Internal revenue growth of about 6%.
- Capital spending of $65 million to $70 million, including two unbudgeted
business opportunities.
- Positive free cash flow in second half and full year 2007.
This outlook assumes: (i) no additional acquisitions, other than the completion of transactions previously announced, and (ii) no significant deterioration in economic conditions in Florida or Canada. The company's guidance is forward looking and actual results may vary, perhaps materially.
Reconciliation of Non-GAAP Measures:
The following table reconciles the differences between net loss, as determined under US GAAP, and EBITDA from continuing operations, a non-GAAP financial measure (in thousands) (unaudited):
For The Three Months For The Six Months
Ended June 30, Ended June 30,
2007 2006 2007 2006
Net loss from continuing
operations $(2,126) $(11,109) $(5,694) $(29,004)
Income tax provision 4,407 3,368 6,144 4,340
Preferred stock dividends and
amortization of issue costs - 4,841 - 10,537
Interest expense 10,830 7,825 20,575 14,880
Depreciation, depletion and
amortization 15,122 9,746 27,091 19,092
EBITDA from continuing
operations (1) $28,233 $14,671 $48,116 $19,845
The following table reconciles the differences between EBITDA and Adjusted EBITDA, as defined in our credit agreement, for the three and six months ended June 30, 2007 and 2006 (in thousands) (unaudited):
For The Three Months For The Six Months
Ended June 30, Ended June 30,
2007 2006 2007 2006
EBITDA from continuing
operations (1) $28,233 $14,671 $48,116 $19,845
Adjustments to EBITDA from
continuing operations
(as defined per credit agreement):
Non-cash items (2) 439 2,686 764 9,264
Other excludable expenses (3) - 1,729 1,225 3,330
Adjusted EBITDA from continuing
operations (1) $28,672 $19,086 $50,105 $32,439
(1) EBITDA from continuing operations and EBITDA from continuing
operations as defined in our credit agreement ("Adjusted EBITDA from
continuing operations") are non-GAAP measures used by management to
measure performance. We also believe that EBITDA from continuing
operations and Adjusted EBITDA from continuing operations 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 from continuing operations, among other things,
as an internal performance measure. Our lenders also use Adjusted
EBITDA from continuing operations to measure our ability to service
and/or incur additional indebtedness under our credit facilities.
However, EBITDA from continuing operations and Adjusted EBITDA from
continuing operations 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 from continuing
operations and Adjusted EBITDA from continuing operations are not
calculated under US GAAP and therefore are not necessarily comparable
to similarly titled measures of other companies.
(2) Non-cash adjustments primarily include impairment of deferred
acquisition costs, stock-based compensation expense and gains and
losses on foreign exchange and asset sales.
(3) Other excludable expenses adjustments include professional fees for
certain litigation, severance and other non-recurring costs.
We will host an investor and analyst conference call on Wednesday, July 25, 2007 at 8:30 a.m. (EDT) to discuss the results of today's earnings announcement. If you wish to participate in this call, please phone 888-680- 0878 (US and Canada) or 617-213-4855 (International) and enter passcode number 72382647. 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 August 8, 2007 by phoning 888-286-8010 (US and Canada) or 617-801-6888 (International) and entering passcode number 56075559. The web cast will also be available on our website.
Safe Harbor for Forward-Looking Statements
Certain matters discussed in this press release are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements describe the company's future plans, objectives and goals. These forward- looking statements involve risks and uncertainties which could cause actual results to differ materially from the plans, objectives and goals set forth in this press release. Factors which could materially affect such forward- looking statements can be found in the company's periodic reports filed with the Securities and Exchange Commission, including risk factors detailed in the company's Form 10-K for the year ended December 31, 2006. Shareholders, potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements.
The forward-looking statements made in this press release are only made as of the date hereof and Waste Services undertakes no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.
This release does not constitute an offer to sell or the solicitation of any offer to buy any securities. The company's securities may not be offered or sold in the United States absent a registration or applicable exemption from registration requirements under applicable state and federal securities laws.
Waste Services, Inc., a Delaware corporation, 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 http://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, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
2007 2006 2007 2006
Revenue $126,239 $100,480 $227,553 $187,964
Operating and other expenses:
Cost of operations
(exclusive of
depreciation,
depletion and
amortization) 83,077 69,346 150,132 131,061
Selling, general and
administrative expense
(exclusive of depreciation,
depletion and
amortization 15,094 14,216 29,892 29,330
Deferred acquisition
costs - - - 5,612
Depreciation, depletion
and amortization 15,122 9,746 27,091 19,092
Foreign exchange loss
(gain) and other (165) 2,247 (587) 2,116
Income from continuing
operations 13,111 4,925 21,025 753
Interest expense 10,830 7,825 20,575 14,880
Cumulative mandatorily
redeemable preferred stock
dividends and amortization
of issue costs - 4,841 - 10,537
Income (loss) from continuing
operations before income
taxes 2,281 (7,741) 450 (24,664)
Income tax provision 4,407 3,368 6,144 4,340
Net loss from continuing
operations (2,126) (11,109) (5,694) (29,004)
Net income (loss) from
discontinued operations, net
of tax of $0 (87) 35 (1,130) (835)
Loss on sale of discontinued
operations, net of tax of $0 (12,192) - (11,254) -
Net loss $(14,405) $(11,074) $(18,078) $(29,839)
Basic and diluted loss per
share:
Loss per share -
continuing operations $(0.05) $(0.33) $(0.12) $(0.86)
Loss per share -
discontinued operations (0.27) - (0.27) (0.02)
Basic and diluted loss per
share $(0.32) $(0.33) $(0.39) $(0.88)
Weighted average common
shares outstanding
- basic and diluted 45,973 34,130 45,973 33,756
WASTE SERVICES, INC.
SUPPLEMENTAL UNAUDITED BALANCE SHEET AND CASH FLOW DATA
(In thousands)
Balance Sheet Data: June 30, December 31,
2007 2006
Cash $16,045 $8,532
Current assets $92,190 $71,119
Total assets $911,987 $865,063
Current liabilities $87,878 $86,358
Debt:
Senior secured
credit facilities:
Revolver $- $-
Term loan 273,910 245,260
Senior
subordinated notes 160,000 160,000
Other notes 11,067 4,828
Total debt $444,977 $410,088
Shareholders' equity $338,360 $339,357
Cash Flow Data:
Period Ended June 30,
2007 2006
Cash flows provided by
continuing operations $23,247 $14,804
Cash flows used in
investing activities for
continuing operations $(49,492) $(49,594)
Cash flows from financing
activities of continuing
operations $33,638 $29,107
Capital expenditures from
continuing operations $24,167 $24,252
WASTE SERVICES, INC.
SUPPLEMENTAL UNAUDITED INTERNAL GROWTH RATES AND COUNTRY DATA
(In thousands)
Waste Services, Inc.
Internal Revenue Growth
For The Quarter Ended June 30, 2007
(in thousands)
Total Revenue, June 30, 2006 $100,480
Impact on revenue from changes in:
Price 4,738 4.7%
Volume 315 0.3%
Acquisition / Disposition 21,023 20.9%
Gain / Loss of Contracts (1,025) -1.0%
Other (237) -0.2%
Foreign currency impact 945 0.9%
Total Revenue, June 30, 2007 $126,239
Waste Services, Inc.
Internal Revenue Growth
For The Six Months Ended June 30, 2007
(in thousands)
Total Revenue, June 30, 2006 $187,964
Impact on revenue from changes in:
Price 10,528 5.6%
Volume 145 0.1%
Acquisition / Disposition 29,367 15.6%
Gain / Loss of Contracts (1,601) -0.9%
Other 887 0.6%
Foreign currency impact 263 0.1%
Total Revenue, June 30, 2007 $227,553
COUNTRY DATA
(In thousands)
Three Months Ended June 30, 2007
US Canada Total
Revenue $70,381 100.0% $55,858 100.0% $126,239 100.0%
Operating expenses:
Cost of operations 46,479 66.0% 36,598 65.5% 83,077 65.8%
Selling, general and
administrative
expense 8,465 12.0% 6,629 11.9% 15,094 12.0%
Deferred acquisition
costs - 0.0% - 0.0% - 0.0%
Depreciation,
depletion and
amortization 10,154 14.4% 4,968 8.9% 15,122 12.0%
Foreign exchange gain
and other (121) -0.2% (44) -0.1% (165) -0.1%
Income from continuing
operations $5,404 7.7% $7,707 13.8% $13,111 10.4%
Three Months Ended June 30, 2006
US Canada Total
Revenue $52,637 100.0% $47,843 100.0% $100,480 100.0%
Operating expenses:
Cost of operations 36,580 69.5% 32,766 68.5% 69,346 69.0%
Selling, general and
administrative
expense 8,487 16.1% 5,729 12.0% 14,216 14.1%
Depreciation,
depletion and
amortization 5,592 10.6% 4,154 8.7% 9,746 9.7%
Foreign exchange loss
and other 85 0.2% 2,162 4.5% 2,247 2.2%
Income from continuing
operations $1,893 3.6% $3,032 6.3% $4,925 4.9%
Six Months Ended June 30, 2007
US Canada Total
Revenue $126,893 100.0% $100,660 100.0% $227,553 100.0%
Operating expenses:
Cost of operations 82,703 65.2% 67,429 67.0% 150,132 66.0%
Selling, general
and administrative
expense 16,961 13.4% 12,931 12.8% 29,892 13.1%
Depreciation,
depletion and
amortization 18,155 14.3% 8,936 8.9% 27,091 11.9%
Foreign exchange
gain and other (332) -0.3% (255) -0.3% (587) -0.3%
Income from
continuing
operations $9,406 7.4% $11,619 11.5% $21,025 9.2%
Six Months Ended June 30, 2006
US Canada Total
Revenue $101,030 100.0% $86,934 100.0% $187,964 100.0%
Operating expenses:
Cost of operations 71,071 70.3% 59,990 69.0% 131,061 69.7%
Selling, general and
administrative
expense 17,529 17.4% 11,801 13.6% 29,330 15.6%
Deferred acquisition
costs 439 0.4% 5,173 6.0% 5,612 3.0%
Depreciation,
depletion and
amortization 10,875 10.8% 8,217 9.4% 19,092 10.2%
Foreign exchange
loss and other 90 0.1% 2,026 2.3% 2,116 1.1%
Income (loss) from
continuing
operations $1,026 1.0% $(273) -0.3% $753 0.4%
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