Date: October 30, 2007
Source: Waste Industries USA, Inc.
Waste Industries USA, Inc. (Nasdaq: WWIN), a regional, non-hazardous solid waste services company, today reported preliminary financial results for the third quarter ended September 30, 2007.
For the quarter ended September 30, 2007, revenue increased 4.6% to $88.6 million, compared to $84.7 million for the quarter ended September 30, 2006. Operating income for the third quarter 2007 increased 21.5% to $13.4 million, compared to $11.1 million for the same period in 2006. Income from continuing operations for the third quarter 2007 was $6.9 million, or $0.49 per share, a 77.9% increase from income from continuing operations of $3.9 million, or $0.28 per share, for the third quarter of 2006. The Company had no income from discontinued operations (net of income taxes) for the third quarter of 2007, compared to a loss of $0.1 million, or $0.01 per share, for the same period in 2006. Net income was $6.9 million, or $0.49 per share, for the quarter ended September 30, 2007, compared to $3.8 million, or $0.27 per share, for the same period in 2006. The third quarter of 2007 was positively impacted $1.2 million, or $.05 per diluted share, net of tax, as a result of the annual accounting adjustment for landfill capping, closure and post closure costs in accordance with Statement of Financial Accounting Standards No. 143. Results for the third quarter of 2006 were impacted by a higher effective tax rate of 55.8% due to an adjustment to accrued deferred tax liabilities of $1.2 million, or $.09 per diluted share.
For the nine months ended September 30, 2007, revenue increased 3.9% to $256.0 million, compared to $246.4 million for the same period in 2006. Operating income increased 31.3% to $37.3 million, compared to $28.4 million for the nine months ended September 30, 2006. Income from continuing operations was $18.4 million, or $1.30 per diluted share, a 56.7% increase from income from continuing operations of $11.8 million, or $0.84 per diluted share, for the nine months ended September 30, 2006. Income from discontinued operations (net of income taxes) was $0.1 million, or $.01 per share, for the nine months ended September 30, 2007, compared to $2.1 million, or $0.15 per share, for the same period in 2006, primarily due to a gain on sale of our Jacksonville, Florida landfill operation in April 2006. Net income was $18.6 million, or $1.31 per diluted share, for the nine months ended September 30, 2007, compared to $13.9 million, or $0.99 per diluted share, for the same period in 2006.
Jim W. Perry, President and CEO of the Company, stated, "Our performance for the third quarter and year-to-date reflects our ability to internalize more of the waste we collect into our landfills. In addition, the acquisitions we've made within the markets we serve have helped to improve our route density and asset optimization."
The Company will host a conference call to discuss its third quarter results on October 31, 2007 at 2:00 PM (Eastern Time). The call number is (877) 723-9522 and the confirmation number is 7994002. 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 November 14, 2007 and may be accessed by calling (888) 203-1112 and using confirmation number 7994002.
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 risks in the development and operation of landfills, fuel prices, 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 Nine Months Ended
September 30, September 30,
2006 2007 2006 2007
Revenues:
Service revenues $84,387 $88,215 $245,687 $255,202
Equipment sales 294 371 740 809
Total revenues 84,681 88,586 246,427 256,011
Operating costs and expenses:
Operating (exclusive of
depreciation and
amortization shown below) 55,670 56,709 161,909 160,919
Cost of equipment sales 145 252 432 488
Selling, general and
administrative 10,228 11,315 32,455 34,748
Depreciation and
amortization 7,862 7,027 23,860 23,415
Gain on sale of property
and equipment and other
assets (303) (158) (688) (917)
Impairment of property and
equipment and other assets 15 - 15 16
Total operating costs
and expenses 73,617 75,145 217,983 218,669
Operating income 11,064 13,441 28,444 37,342
Interest expense 2,379 2,571 7,287 7,418
Interest income (36) (27) (131) (83)
Other (76) (38) (226) (190)
Total other expense, net 2,267 2,506 6,930 7,145
Income from continuing
operations before income
taxes 8,797 10,935 21,514 30,197
Income tax expense 4,910 4,021 9,754 11,769
Income from continuing
operations 3,887 6,914 11,760 18,428
Discontinued operations:
Income (loss) from
discontinued operations, net
of income taxes (134) - 2,145 147
Net income $3,753 $6,914 $13,905 $18,575
Earnings per share:
Basic:
Income from continuing
operations $0.28 $0.49 $0.85 $1.31
Income (loss) from
discontinued operations (0.01) - 0.15 0.01
Net income $0.27 $0.49 $1.00 $1.32
Diluted:
Income from continuing
operations $0.28 $0.49 $0.84 $1.30
Income (loss) from
discontinued operations (0.01) - 0.15 0.01
Net income $0.27 $0.49 $0.99 $1.31
Weighted-Average Number Of
Shares Outstanding:
Basic 13,910 14,121 13,844 14,065
Diluted 14,072 14,216 14,025 14,179
WASTE INDUSTRIES USA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands)
(Unaudited)
December 31, September 30,
2006 2007
ASSETS
Current assets:
Cash and cash equivalents $1,656 $173
Receivables, net 36,408 37,133
Other 5,013 7,888
Total current assets 43,077 45,194
Property and equipment, net 218,039 231,220
Intangible assets, net 104,950 115,574
Other noncurrent assets 4,213 4,190
Total assets $370,279 $396,178
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current maturities of
long-term debt $7,143 $7,873
Accounts payable - trade 13,318 16,231
Other accrued liabilities
and deferred revenues 22,725 27,053
Total current liabilities 43,186 51,157
Long-term debt, net of
current maturities 150,069 148,926
Deferred taxes and related
contingencies 23,513 27,369
Other long-term liabilities 7,640 9,047
Total liabilities 224,408 236,499
Shareholders' equity: 145,871 159,679
Total liabilities and
shareholders' equity $370,279 $396,178
WASTE INDUSTRIES USA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
Nine Months Ended
September 30,
2006 2007
Operating Activities:
Net income $13,905 $18,575
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 24,026 23,415
Landfill accretion expense 688 612
Amortization of debt issuance costs 411 303
Impairment of property,
equipment and other assets 15 16
Gain on sale of property,
equipment and other assets (688) (917)
Gain on sale of discontinued
collection and disposal operations (2,135) -
Stock compensation expense 452 637
Deferred income taxes 548 189
Change in fair value of
commodity hedges 932 767
Provision for doubtful accounts 1,139 1,661
Changes in assets and liabilities,
net of effects from acquisition and
disposition of operations (6,717) 5,372
Net cash provided by operating
activities 32,576 50,630
Investing Activities:
Acquisitions of operations (5,763) (19,911)
Purchases of property and equipment (33,871) (26,258)
Proceeds from sale of discontinued
collection and disposal operations 16,352 -
Proceeds from sale of property,
equipment and other assets 1,645 1,730
Other (335) (296)
Net cash used in investing activities (21,972) (44,735)
Financing Activities:
Proceeds from issuance of long-term
debt 30,023 45,000
Principal payments of long-term debt (37,542) (49,343)
Payment of dividends (3,887) (5,073)
Principal payments of capital lease
obligations (395) (168)
Financing costs (582) -
Excess tax benefit from stock
option exercises 263 275
Net proceeds from exercise of stock
options 1,709 1,931
Net cash used in financing activities (10,411) (7,378)
Decrease in cash and cash equivalents 193 (1,483)
Cash and cash equivalents, beginning
of period 1,575 1,656
Cash and cash equivalents, end
of period $1,768 $173
Supplemental disclosures of cash flow
information:
Cash paid for interest $7,592 $7,992
Cash paid for income taxes $14,888 $9,789
EARNINGS RELEASE - SUPPLEMENTAL DATA (dollars in thousands)
QUARTER ENDED
REVENUE MARGINS 9/30/06 9/30/07
Operating expenses including cost of
equipment sales 65.9% 64.3%
S G & A 12.1% 12.8%
Depreciation and amortization 9.3% 7.9%
Interest expense, (net) 2.8% 2.9%
Income from continuing operations (pre-tax) 10.4% 12.3%
Income tax expense 5.8% 4.5%
Income from continuing operations 4.6% 7.8%
SERVICE REVENUE MIX
Collection:
Industrial $22,983 $23,004
Commercial 23,178 24,518
Residential 19,376 21,014
Disposal and transfer 12,209 12,743
Recycling service 1,161 1,101
Recycled commodity sales 1,421 1,440
Other 4,059 4,395
Total Service Revenue $84,387 $88,215
OPERATING INCOME BEFORE DEPRECIATION,
AMORTIZATION AND ACCRETION*
Operating income $11,064 $13,441
Accretion 150 341
Depreciation and amortization 7,862 7,027
Operating income before depreciation,
amortization and accretion $19,076 $20,809
CAPITAL EXPENDITURES DETAIL YTD 06 YTD 07
Collection & Transportation $25,347 $20,386
Landfill Development 8,524 5,872
Total capital expenditures $33,871 $26,258
FREE CASH FLOW RECONCILIATION *
Net cash provided by operating activities $32,576 $50,630
Less: Capital expenditures (33,871) (26,258)
Plus: Proceeds from disposal of assets 1,645 1,730
Free cash flow $350 $26,102
DEBT TO TOTAL CAPITAL 12/31/06 9/30/07
(includes capital leases) 51.9% 49.6%
TOTAL LIABILITIES TO EQUITY 1.5 1.5
DAYS SALES OUTSTANDING 34 32
SERVICE REVENUE GROWTH Q3 2007
Price 1.3%
Volume 0.0%
Energy surcharge 0.0%
Total internal growth 1.3%
Recycling commodities 0.0%
Acquisitions 3.2%
Total service revenue growth 4.5%
* 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.
Sign up to receive our free Weekly News Bulletin