Date: July 31, 2007
Source: Waste Industries USA, Inc.
-- Reports revenue of $86.1 million and earnings per share from continuing operations of $0.43
-- Operating income increases 29.6%
Waste Industries USA, Inc. (Nasdaq: WWIN), a regional, non-hazardous solid waste services company, today reported preliminary financial results for the second quarter ended June 30, 2007.
For the quarter ended June 30, 2007, revenue increased 4.3% to $86.1 million, compared to $82.6 million for the quarter ended June 30, 2006. Operating income for the second quarter 2007 increased 29.6% to $12.5 million, compared to $9.6 million for the same period in 2006. Income from continuing operations for the second quarter 2007 was $6.1 million, or $0.43 per diluted share, a 34.8% increase from income from continuing operations of $4.5 million, or $0.32 per diluted share, for the second quarter of 2006. The Company had no income from discontinued operations (net of income taxes) for the second quarter of 2007, compared to $2.3 million, or $0.16 per diluted share, for the same period in 2006, primarily due to a gain on sale of our Jacksonville, Florida landfill operation. Net income was $6.1 million, or $0.43 per diluted share, for the quarter ended June 30, 2007, compared to $6.8 million, or $0.48 per diluted share, for the same period in 2006.
For the six months ended June 30, 2007, revenue increased 3.5% to $167.4 million, compared to $161.7 million for the same period in 2006. Operating income increased 37.5% to $23.9 million, compared to $17.4 million for the six months ended June 30, 2006. Income from continuing operations was $11.5 million, or $0.81 per diluted share, a 46.2% increase from income from continuing operations of $7.9 million, or $0.56 per diluted share, for the six months ended June 30, 2006. Income from discontinued operations (net of income taxes) was $0.1 million, or $.01 per share, for the six months ended June 30, 2007, compared to $2.3 million, or $0.17 per share, for the same period in 2006, primarily due to a gain on sale of our Jacksonville, Florida landfill operation. Net income was $11.7 million, or $0.82 per diluted share, for the six months ended June 30, 2007, compared to $10.2 million, or $0.73 per diluted share, for the same period in 2006.
Jim W. Perry, President and CEO of the Company, stated, "We are very pleased with our operating and financial results for the 2nd quarter and year- to-date 2007. These results reflect our continued emphasis on strengthening routes in desired markets and our ability to reduce our disposal costs by internalizing more of our waste stream into our landfills. One of our current objectives is to leverage or reduce our existing overhead costs. Our network of collection operations, transfer stations and disposal facilities are well positioned to benefit from population and economic growth that are projected to take place in the states in which we operate."
The Company will host a conference call to discuss its second quarter results on August 1, 2007 at 2:00 PM (Eastern Time). The call number is (800) 475-3716 and the confirmation number is 8720654. The conference call will also be broadcast live over the Internet at www.wasteindustries.com under the "Investor Relations" tab. A replay of the call will be available through August 16, 2007 and may be accessed by calling (888) 203-1112 and using confirmation number 8720654.
Waste Industries USA, Inc. is a vertically integrated solid waste services company that provides collection, transfer, disposal and recycling services to commercial, industrial and residential customer locations in the states of North Carolina, South Carolina, Virginia, Tennessee, Mississippi and Georgia.
This press release contains forward-looking statements under the Private Securities Litigation Reform Act of 1995. These forward-looking statements can generally be identified as such because the statement will include words such as the Company "believes," "anticipates," "expects" or words of similar import. Similarly, statements that describe the Company's future performance plans, objectives or goals are also forward-looking statements. Forward- looking statements are subject to risks and uncertainties, such as fuel prices, risks in the development and operation of landfills, managing growth, economic trends and weather that could cause actual results to differ materially from those currently anticipated. Consider these factors carefully in evaluating the forward-looking statements. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained from time to time in the Company's SEC filings.
WASTE INDUSTRIES USA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Data)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2006 2007 2006 2007
Revenues:
Service revenues $82,340 $85,876 $161,300 $166,987
Equipment sales 259 262 446 438
Total revenues 82,599 86,138 161,746 167,425
Operating costs and expenses:
Operating (exclusive of
depreciation and
amortization shown below) 54,651 54,369 106,242 104,210
Cost of equipment sales 157 145 286 236
Selling, general and
administrative 10,552 11,638 22,226 23,433
Depreciation and
amortization 7,949 8,251 15,998 16,388
Gain on sale of property
and equipment and other
assets (336) (761) (386) (759)
Impairment of property and
equipment and other assets - 16 - 16
Total operating costs
and expenses 72,973 73,658 144,366 143,524
Operating income 9,626 12,480 17,380 23,901
Interest expense 2,360 2,428 4,908 4,847
Interest income (49) (29) (95) (56)
Other (62) (60) (150) (152)
Total other expense, net 2,249 2,339 4,663 4,639
Income from continuing
operations before income
taxes 7,377 10,141 12,717 19,262
Income tax expense 2,865 4,061 4,844 7,748
Income from continuing
operations 4,512 6,080 7,873 11,514
Discontinued operations:
Income from discontinued
operations, net of income
taxes 2,250 - 2,279 147
Net income $6,762 $6,080 $10,152 $11,661
Earnings per share:
Basic:
Income from continuing
operations $0.33 $0.43 $0.57 $0.82
Income from discontinued
operations 0.16 - 0.17 0.01
Net income $0.49 $0.43 $0.74 $0.83
Diluted:
Income from continuing
operations $0.32 $0.43 $0.56 $0.81
Income from discontinued
operations 0.16 - 0.17 0.01
Net income $0.48 $0.43 $0.73 $0.82
Weighted-Average Number Of
Shares Outstanding:
Basic 13,857 14,073 13,809 14,036
Diluted 14,029 14,182 13,951 14,156
WASTE INDUSTRIES USA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
(Unaudited)
December 31, June 30,
2006 2007
ASSETS
Current assets:
Cash and cash equivalents $1,656 $124
Receivables, net 36,408 39,697
Other 5,013 8,710
Total current assets 43,077 48,531
Property and equipment, net 218,039 225,743
Intangible assets, net 104,952 114,606
Investment in real estate 455 456
Other noncurrent assets 3,756 4,053
Total assets $370,279 $393,389
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt 7,143 12,527
Accounts payable - trade 13,318 15,642
Other accrued liabilities
and deferred revenues 22,725 27,190
Total current liabilities 43,186 55,359
Long-term debt, net of
current maturities 150,069 147,426
Deferred taxes and related
contingencies 23,513 26,511
Other long-term liabilities 7,640 10,281
Total liabilities 224,408 239,577
Shareholders' equity: 145,871 153,812
Total liabilities and
shareholders' equity $370,279 $393,389
WASTE INDUSTRIES USA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
Six Months Ended
June 30,
2006 2007
Operating Activities:
Net income $10,152 $11,661
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 16,124 16,388
Landfill accretion expense 538 271
Amortization of debt issuance costs 309 204
Impairment of property, equipment and
other assets - 16
Gain on sale of property,
equipment and other assets (386) (759)
Gain on sale of discontinued
collection and disposal operations (2,270) -
Stock compensation expense 290 407
Provision for deferred income taxes (457) 309
Change in fair value of commodity hedges 914 681
Provision for doubtful accounts 755 1,131
Changes in assets and liabilities,
net of effects from acquisition and
disposition of operations (4,070) 2,295
Net cash provided by operating
activities 21,899 32,604
Investing Activities:
Acquisitions of operations, net of
cash acquired (5,033) (18,351)
Purchases of property and equipment (21,143) (13,837)
Proceeds from sale of discontinued
collection and disposal operations 16,352 -
Proceeds from sale of property,
equipment and other assets 1,032 1,201
Other (26) (214)
Net cash used in investing activities (8,818) (31,201)
Financing Activities:
Proceeds from issuance of long-term debt 16,000 34,500
Principal payments of long-term debt (28,443) (35,778)
Payment of dividends (2,493) (3,377)
Principal payments of capital lease
obligations (361) (126)
Debt issuance costs (582) -
Excess tax benefit from stock
option exercises 142 274
Net proceeds from exercise of stock options 1,187 1,572
Net cash used in financing activities (14,550) (2,935)
Decrease in cash and cash equivalents (1,469) (1,532)
Cash and cash equivalents, beginning
of period 1,575 1,656
Cash and cash equivalents, end of period $106 $124
Supplemental disclosures of cash flow information:
Cash paid for interest $5,246 $5,219
Cash paid for taxes $8,150 $7,305
EARNINGS RELEASE - SUPPLEMENTAL DATA (dollars in thousands)
QUARTER ENDED
REVENUE MARGINS 6/30/06 6/30/07
Operating expenses including
cost of equipment sales 66.4% 63.3%
SG&A 12.8% 13.5%
Depreciation and amortization 9.6% 9.6%
Interest expense, (net) 2.8% 2.8%
Income from continuing operations (pre-tax) 8.9% 11.8%
Income tax expense 3.5% 4.7%
Income from continuing operations 5.5% 7.1%
SERVICE REVENUE MIX
Collection:
Industrial $22,984 $22,883
Commercial 22,995 23,813
Residential 18,121 19,532
Disposal and transfer 11,984 12,816
Recycling service 1,200 1,109
Recycled commodity sales 922 1,831
Other 4,134 3,892
Total Service Revenue $82,340 $85,876
OPERATING INCOME BEFORE DEPRECIATION,
AMORTIZATION AND ACCRETION*
Operating income $9,626 $12,480
Accretion 122 141
Depreciation and amortization 7,949 8,251
Operating income before depreciation,
amortization and accretion $17,697 $20,872
CAPITAL EXPENDITURES DETAIL YTD 06 YTD 07
Collection & Transportation $14,982 $12,033
Landfill Development 6,161 1,804
Total capital expenditures $21,143 $13,837
FREE CASH FLOW RECONCILIATION *
Net cash provided by operating activities $21,899 $32,604
Less: Capital expenditures (21,143) (13,837)
Plus: Proceeds from disposal of assets 1,032 1,201
Free cash flow $1,788 $19,968
DEBT TO TOTAL CAPITAL 12/31/06 6/30/07
(includes capital leases) 51.9% 51.0%
TOTAL LIABILITIES TO EQUITY 1.5 1.6
DAYS SALES OUTSTANDING 34 33
SERVICE REVENUE GROWTH Q2 2007
Price 3.5%
Volume -2.7%
Energy surcharge -0.2%
Total internal growth 0.6%
Recycling commodities 1.0%
Acquisitions 2.7%
Total service revenue growth 4.3%
* Operating income before depreciation, amortization and accretion and
free cash flow are considered non-GAAP financial measures. The Company
defines free cash flow as cash flows from operating activities less
capital expenditures plus proceeds from the sale of property and
equipment and other assets. Operating income before depreciation,
amortization and accretion and free cash flow do not represent, and
should not be considered as, an alternative to net income or cash flows
from operating, investing and financing activities, each as determined
in accordance with GAAP. The Company's definitions of operating income
before depreciation, amortization and accretion and free cash flow
might not be comparable to similarly titled measures reported by other
companies. The Company believes that the presentation of operating
income before depreciation, amortization and accretion is useful to
investors because it provides important information of the Company's
operating performance exclusive of certain non-cash costs. The Company
has included information concerning free cash flow because it believes
it provides additional information for determining its ability to meet
debt service requirements and that this measure is an indicator upon
which the Company, its lenders and some investors assess its financial
performance and its capacity to service debt. The Company therefore
interprets free cash flow trends as a measure of its liquidity.
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