Date: March 4, 2008
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 fourth quarter and full year ended December 31, 2007.
For the quarter ended December 31, 2007, revenue increased 4.4% to $84.7 million, compared to $81.1 million for the quarter ended December 31, 2006. The quarterly operating results were negatively impacted by costs related to the Company's proposed going private transaction. Operating income for the fourth quarter 2007 decreased 16.1% to $10.0 million, compared to $12.0 million for the same period in 2006. Income from continuing operations for the fourth quarter 2007 was $5.1 million, or $0.36 per diluted share, a 2.5% decrease from income from continuing operations of $5.2 million, or $0.37 per diluted share, for the fourth quarter of 2006. Net income was $5.1 million, or $0.36 per diluted share, for the quarter ended December 31, 2007, compared to $5.4 million, or $0.38 per diluted share, for the same period in 2006.
The current period results were affected by the following:
- Professional fees were $1.7 million higher related to the proposed going private transaction ($1.2 million, net of income taxes, or $0.08 per diluted share); and
- A more favorable income tax rate of 33.2% for the current quarter due to FASB Interpretation No. 48 ("FIN 48") and deferred tax adjustments compared to 47.1% for the prior year period, which was impacted by deferred tax adjustments.
For the year ended December 31, 2007, revenue increased 4.0% to $340.7 million, compared to $327.5 million for the same period in 2006. The 2007 operating results were negatively impacted by costs related to the Company's proposed going private transaction. Operating income increased 17.2% to $47.4 million, compared to $40.4 million for the year ended December 31, 2006. Income from continuing operations was $23.5 million, or $1.66 per diluted share, a 38.5% increase from income from continuing operations of $17.0 million, or $1.21 per diluted share, for the year ended December 31, 2006. Income from discontinued operations (net of income taxes) was $0.2 million, or $0.01 per share, for the year ended December 31, 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 the Company's Jacksonville, Florida landfill operation in April 2006. Net income was $23.7 million, or $1.67 per diluted share, for the year ended December 31, 2007, compared to $19.3 million, or $1.37 per diluted share, for the same period in 2006.
The total year results were affected by the following:
- Professional fees were $1.9 million higher related to the proposed going private transaction ($1.2 million, net of income taxes, or $0.08 per diluted share); and
- A more favorable income tax rate of 37.8% for 2007 due to FIN 48 and deferred tax adjustments compared to 45.9% for 2006 which was impacted by deferred tax adjustments.
Jim W. Perry, President and CEO of the Company, stated, "Our performance for the fourth quarter and 2007 was in line with our expectations. Going into 2008, we believe our operating fundamentals are well established which should help us deal with the current sluggish economy and our strong balance sheet should enable us to take advantage of any strategic growth opportunities."
The Company will host a conference call to discuss its fourth quarter results on March 5, 2008 at 2:00 PM (Eastern Time). The call number is (877) 723-9519 and the confirmation number is 9954580. 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 March 19, 2008 and may be accessed by calling (888) 203-1112 and using confirmation number 9954580.
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 Twelve Months Ended December 31, December 31, 2006 2007 2006 2007 Revenues: Service revenues $80,761 $84,398 $326,447 $339,599 Equipment sales 358 260 1,098 1,069 Total revenues 81,119 84,658 327,545 340,668 Operating costs and expenses: Operating (exclusive of depreciation and amortization shown below) 50,261 54,087 212,171 215,006 Cost of equipment sales 234 141 666 629 Selling, general and administrative 10,712 12,761 43,167 47,509 Depreciation and amortization 8,233 8,336 32,093 31,751 Gain on sale of property and equipment and other assets (500) (707) (1,189) (1,624) Impairment of property and equipment and other assets 208 - 223 16 Total operating costs and expenses 69,148 74,618 287,131 293,287 Operating income 11,971 10,040 40,414 47,381 Interest expense 2,321 2,453 9,608 9,871 Interest income (49) (42) (181) (126) Other (192) (3) (418) (193) Total other expense, net 2,080 2,408 9,009 9,552 Income from continuing operations before income taxes 9,891 7,632 31,405 37,829 Income tax expense 4,662 2,532 14,416 14,301 Income from continuing operations 5,229 5,100 16,989 23,528 Discontinued operations: Income from discontinued operations, net of income taxes 147 6 2,292 153 Net income $5,376 $5,106 $19,281 $23,681 Earnings per share: Basic: Income from continuing operations $0.38 $0.36 $1.22 $1.67 Income from discontinued operations 0.01 - 0.17 0.01 Net income $0.39 $0.36 $1.39 $1.68 Diluted: Income from continuing operations $0.37 $0.36 $1.21 $1.66 Income from discontinued operations 0.01 - 0.16 0.01 Net income $0.38 $0.36 $1.37 $1.67 Weighted-Average Number Of Shares Outstanding: Basic 13,951 14,158 13,871 14,088 Diluted 14,145 14,244 14,043 14,196 WASTE INDUSTRIES USA, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In Thousands) (Unaudited) December 31, December 31, 2006 2007 ASSETS Current assets: Cash and cash equivalents $1,656 $4,361 Receivables, net 36,408 35,129 Other 5,013 12,332 Total current assets 43,077 51,822 Property and equipment, net 218,039 234,034 Intangible assets, net 104,950 118,766 Other noncurrent assets 4,213 4,411 Total assets $370,279 $409,033 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current maturities of long-term debt $7,143 $7,143 Accounts payable - trade 13,318 15,703 Other accrued liabilities and deferred revenues 22,725 28,165 Total current liabilities 43,186 51,011 Long-term debt, net of current maturities 150,069 157,926 Deferred taxes and related contingencies 23,513 27,121 Other long-term liabilities 7,640 9,586 Total liabilities 224,408 245,644 Shareholders' equity: 145,871 163,389 Total liabilities and shareholders' equity $370,279 $409,033 WASTE INDUSTRIES USA, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands) (Unaudited) Twelve Months Ended December 31, 2006 2007 Operating Activities: Net income $19,281 $23,681 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 32,220 31,751 Landfill accretion expense 824 727 Amortization of debt issuance costs 513 409 Impairment of property, equipment and other assets 223 16 Gain on sale of property, equipment and other assets (1,189) (1,624) Gain on sale of discontinued collection and disposal operations (2,282) (153) Stock compensation expense 612 867 Deferred income taxes 2,381 1,963 Change in fair value of commodity hedges 644 1,224 Provision for doubtful accounts 1,557 2,022 Changes in assets and liabilities, net of effects from acquisition and disposition of operations (9,718) 3,457 Net cash provided by operating activities 45,066 64,340 Investing Activities: Acquisitions of operations (6,190) (24,171) Purchases of property and equipment (41,154) (36,886) Proceeds from sale of discontinued collection and disposal operations 16,354 270 Proceeds from sale of property, equipment and other assets 2,209 2,936 Increase in restricted cash (728) (6,621) Other (179) (109) Net cash used in investing activities (29,688) (64,581) Financing Activities: Proceeds from issuance of long-term debt 44,000 72,000 Principal payments of long-term debt (55,245) (64,143) Payment of dividends (5,283) (7,198) Principal payments of capital lease obligations (441) (213) Financing costs (579) (191) Excess tax benefit from stock option exercises 346 302 Net proceeds from exercise of stock options 1,905 2,389 Net cash provided by (used in) financing activities (15,297) 2,946 Increase in cash and cash equivalents 81 2,705 Cash and cash equivalents, beginning of period 1,575 1,656 Cash and cash equivalents, end of period $1,656 $4,361 Supplemental disclosures of cash flow information: Cash paid for interest, net of capitalized interest $9,042 $10,699 Cash paid for income taxes $18,383 $13,209 EARNINGS RELEASE - SUPPLEMENTAL DATA (dollars in thousands) REVENUE Margins 12/31/06 12/31/07 Operating expenses including cost of equipment sales 65.0% 63.3% S G & A 13.2% 13.9% Depreciation and amortization 9.8% 9.3% Interest expense, net 2.9% 2.9% Income from continuing operations (pre-tax) 9.6% 11.1% Income tax expense 4.4% 4.2% Income from continuing operations 5.2% 6.9% SERVICE REVENUE MIX Collection: Industrial $89,933 $88,241 Commercial 91,555 96,221 Residential 74,933 81,218 Disposal and transfer 46,285 48,375 Recycling service 4,719 4,422 Recycled commodity sales 3,941 4,739 Other 15,081 16,383 Total Service Revenue $326,447 $339,599 OPERATING INCOME BEFORE DEPRECIATION, AMORTIZATION AND ACCRETION* Operating income $40,414 $47,381 Accretion 824 727 Depreciation and amortization 32,093 31,751 Operating income before depreciation, amortization and accretion $73,331 $79,859 CAPITAL EXPENDITURES DETAIL YTD 06 YTD 07 Collection & Transportation $29,432 $22,244 Landfill Development 11,722 14,642 Total capital expenditures $41,154 $36,886 FREE CASH FLOW RECONCILIATION * Net cash provided by operating activities $45,066 $64,340 Less: Capital expenditures (41,154) (36,886) Plus: Proceeds from disposal of assets 2,209 2,936 Free cash flow $6,121 $30,390 DEBT TO TOTAL CAPITAL 12/31/06 12/31/07 (includes capital leases) 51.9% 50.3% TOTAL LIABILITIES TO EQUITY 1.5 1.5 DAYS SALES OUTSTANDING 34 28 SERVICE REVENUE GROWTH Q4 2007 YTD 2007 Price -0.1% 2.2% Volume -0.1% -1.5% Energy surcharge 1.7% 0.3% Total internal growth 1.5% 1.0% Recycling commodities -0.2% 0.2% Acquisitions 3.2% 2.8% Total service revenue growth 4.5% 4.0% * 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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