Date: October 28, 2010
Source: WCA Waste Corp.
Revenues increased 19.6% compared to the third quarter of 2009, boosted by acquisitions
Completed four tuck-in acquisitions
Interest rate swap expires on November 1, 2010, which will improve annual cash flow by $6.7 million
WCA Waste Corporation (Nasdaq:WCAA) announced today financial results for the three and nine months ended September 30, 2010.
For the third quarter of 2010:
Revenue was $59.3 million, up 19.6% from $49.5 million in the third quarter of 2009.
Operating income was $6.7 million compared to $7.0 million in the same quarter last year.
Net loss available to common stockholders was $0.02 per share while adjusted net loss available to common stockholders was $0.01 per share.
For the first nine months of 2010:
Revenue was $171.9 million, up 16.2% from $147.9 million in the nine months ended September 30, 2009.
Operating income was $17.9 million compared to $20.3 million in the prior year period.
Net loss available to common stockholders was $0.10 per share while adjusted net loss available to common stockholders was $0.08 per share.
WCA completed four tuck-in acquisitions (three around Houston, Texas and one in Oklahoma) with approximately $7 million in total annualized revenue. Two of the four acquisitions were closed on October 1, 2010. Our interest rate swap will expire on November 1, 2010, which will improve annual cash flow by approximately $6.7 million. Our operating cash flow was $22.9 million and our capital spending (excluding acquisition capital) was $20.4 million during the nine months ended September 30, 2010.
Tom Fatjo, Chairman and CEO, stated, "We are very pleased by the strength of core solid waste pricing in the small container and MSW landfill markets. Our focus remains on driving growth in our Houston and Ohio markets and maximizing the operating leverage of these assets while creating value for shareholders."
President and COO Jerry Kruszka noted that "The successful completion of four tuck-in acquisitions clearly demonstrates the operating leverage we have in our core markets of Houston and the Midwest."
Tom Fatjo added that "Acquisitions are a core component of WCA's growth, and as such we are placing emphasis on increasing the total volume and internalization of waste into our Sunny Farms Landfill in Ohio and our Fort Bend County Landfill near Houston, Texas."
WCA Waste Corporation is an integrated company engaged in the transportation, processing and disposal of non-hazardous solid waste. The Company's operations currently consist of 25 landfills, 24 transfer stations/material recovery facilities and 26 collection operations located throughout Alabama, Arkansas, Colorado, Florida, Kansas, Massachusetts, Missouri, New Mexico, North Carolina, Ohio, Oklahoma, South Carolina, Tennessee and Texas. The Company's common stock is traded on the NASDAQ Global Market under the symbol "WCAA."
RISK FACTORS AND CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING STATEMENTS
This press release and other communications, such as conference calls, presentations, statements in public filings, other press releases, include forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities and Exchange Act of 1934. Forward-looking statements generally include discussions and descriptions other than historical information. These forward-looking statements can generally be identified as such because the context of the statement will include words such as "may," "should," "outlook," "project," "intend," "seek," "plan," "believe," "anticipate," "expect," "estimate," "potential," "continue," or "opportunity," the negatives of these words, or similar words or expressions. The forward-looking statements made herein are only made as of the date of this press release and we undertake no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.
Our results will be subject to a number of operational and other risks, including the following: general economic conditions have impacted and may continue to impact our business; we may not be successful in expanding the permitted capacity of our current or future landfills; our business is capital intensive, requiring ongoing cash outlays that may strain or consume our available capital; increases in the costs of disposal, labor and fuel could reduce operating margins; increases in costs of insurance or failure to maintain full coverage could reduce operating income; we may be unable to obtain financial assurances necessary for our operations; we are subject to environmental and safety laws, which restrict our operations and increase our costs, and may impose significant unforeseen liabilities; we are subject to a broad range of risks with respect to our acquisition activities and may be unable to successfully integrate acquired businesses or execute on our acquisition plans; we compete with large companies and municipalities with greater financial and operational resources and we also compete with alternatives to landfill disposal; covenants in our credit facilities and the instruments governing our other indebtedness may limit our ability to grow our business and make capital expenditures; changes in interest rates may affect our results of operations; a downturn in U.S. economic conditions or the economic conditions in our markets may have an adverse impact on our business and results of operations; and our success depends on key members of our senior management, the loss of any of whom could disrupt our customer and business relationships and our operations.
We describe these and other risks in greater detail in the sections entitled "Risk Factors" and "--Cautionary Statement about Forward-Looking Statements" included in our Form 10-K for the year ended December 31, 2009, to which we refer you for additional information.
WCA -- 3rd Quarter 2010 Earnings Release Information
WCA Waste Corporation
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- ----------------------
2010 2009 2010 2009
--------- --------- ---------- ----------
Revenue $ 59,279 $ 49,546 $ 171,881 $ 147,910
Expenses:
Cost of services 42,055 32,786 123,458 97,907
Depreciation and amortization 7,623 6,714 22,682 20,087
Merger and acquisition related
expenses 38 -- 172 259
General and administrative 2,887 3,060 8,571 9,455
Gain on sale of assets (7) (46) (896) (91)
--------- --------- ---------- ----------
52,596 42,514 153,987 127,617
--------- --------- ---------- ----------
Operating income 6,683 7,032 17,894 20,293
Other income (expense):
Interest expense, net (4,811) (4,511) (14,190) (13,525)
Write-off of deferred financing
costs -- -- (184) --
Impact of interest rate swap (47) (905) (231) (1,748)
--------- --------- ---------- ----------
(4,858) (5,416) (14,605) (15,273)
--------- --------- ---------- ----------
Income before income taxes 1,825 1,616 3,289 5,020
Income tax provision (1,042) (790) (1,932) (2,797)
--------- --------- ---------- ----------
Net income 783 826 1,357 2,223
Accrued payment-in-kind dividend
on preferred stock (1,138) (1,076) (3,358) (3,192)
--------- --------- ---------- ----------
Net loss available to common
stockholders $ (355) $ (250) $ (2,001) $ (969)
========= ========= ========== ==========
PER SHARE DATA (Basic and
diluted):
Net loss available to common
stockholders
-- Basic $ (0.02) $ (0.02) $ (0.10) $ (0.06)
========= ========= ========== ==========
-- Diluted $ (0.02) $ (0.02) $ (0.10) $ (0.06)
========= ========= ========== ==========
WEIGHTED AVERAGE SHARES
OUTSTANDING (Basic) 19,635 15,850 19,580 15,801
--------- --------- ---------- ----------
WEIGHTED AVERAGE SHARES
OUTSTANDING (Diluted) 19,635 15,850 19,580 15,801
--------- --------- ---------- ----------
Non-GAAP Financial Measures
Our management evaluates our performance based on non-GAAP measures, of which the primary performance measure is adjusted EBITDA. EBITDA, as commonly defined, refers to earnings before interest, taxes, depreciation and amortization. Our adjusted EBITDA consists of earnings (net income or loss) available to common stockholders before preferred stock dividend, interest expense (including write-off of deferred financing costs and debt discount), impact of interest rate swap agreements, income tax expense, depreciation and amortization, impairment of goodwill, net (gain) loss on early disposition of notes receivable/payable, and merger and acquisition related expenses. We also use these same measures when evaluating potential acquisition candidates.
We believe adjusted 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 adjusted 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 to estimate a purchase price (often expressed as a
multiple of EBITDA or adjusted EBITDA) for solid waste companies we
intend to acquire. The appropriate EBITDA or adjusted 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 and stock 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 loss available to common stockholders to our adjusted EBITDA (in thousands):
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------- ----------------------
2010 2009 2010 2009
---------- ---------- ---------- ----------
Net loss available to common stockholders $ (355) $ (250) $ (2,001) $ (969)
Accrued payment-in-kind dividend on
preferred stock 1,138 1,076 3,358 3,192
Depreciation and amortization 7,623 6,714 22,682 20,087
Interest expense, net 4,811 4,511 14,190 13,525
Write-off of deferred financing costs -- -- 184 --
Impact of interest rate swap 47 905 231 1,748
Income tax provision 1,042 790 1,932 2,797
Merger and acquisition related expenses 38 -- 172 259
---------- ---------- ---------- ----------
Adjusted EBITDA $ 14,344 $ 13,746 $ 40,748 $ 40,639
========== ========== ========== ==========
Adjusted EBITDA as a percentage of revenue 24.2% 27.7% 23.7% 27.5%
The following table presents a reconciliation of net loss available to common stockholders to adjusted net income (loss) available to common stockholders to exclude write-off of deferred financing costs, impact of interest rate swap agreements, merger and acquisition related expenses, and tax impact of vested restricted shares (in thousands, except per share amounts). 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 (loss) available to common stockholders is also shown below:
Adjusted net income (loss) available to common
stockholders to exclude
write-off of deferred financing costs, impact of
interest rate swap agreements,
merger and acquisition related expenses, tax impact of Three Months Ended Nine Months Ended
vested restricted shares: September 30, September 30,
-------------------- ---------------------
2010 2009 2010 2009
--------- --------- ---------- ---------
Net loss available to common stockholders $ (355) $ (250) $ (2,001) $ (969)
Write-off of deferred financing costs, net of tax -- -- 99 --
Impact of interest rate swap, net of tax 41 596 140 1,100
Merger and acquisition related expenses, net of tax 44 -- 119 157
Tax impact of vested restricted shares 1 9 132 479
--------- --------- ---------- ---------
Adjusted net income (loss) available to common
stockholders $ (269) $ 355 $ (1,511) $ 767
========= ========= ========== =========
PER SHARE DATA (Basic and diluted):
Net loss available to common stockholders $ (0.02) $ (0.02) $ (0.10) $ (0.06)
Write-off of deferred financing costs, net of tax -- -- 0.00 --
Impact of interest rate swap, net of tax 0.00 0.04 0.01 0.07
Merger and acquisition related expenses, net of tax 0.01 -- 0.00 0.01
Tax impact of vested restricted shares 0.00 0.00 0.01 0.03
--------- --------- ---------- ---------
Adjusted net income (loss) available to common
stockholders to exclude write-off
of deferred financing costs, impact of interest rate
swap agreements, merger and
acquisition related expenses, tax impact of vested
restricted shares:
-- Basic $ (0.01) $ 0.02 $ (0.08) $ 0.05
========= ========= ========== =========
-- Diluted $ (0.01) $ 0.02 $ (0.08) $ 0.05
========= ========= ========== =========
WEIGHTED AVERAGE SHARES OUTSTANDING (Basic) 19,635 15,850 19,580 15,801
--------- --------- ---------- ---------
WEIGHTED AVERAGE SHARES OUTSTANDING (Diluted) 19,635 16,036 19,580 15,897
--------- --------- ---------- ---------
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 unless
otherwise indicated)
Three Months Ended Three Months Ended
September 30, 2010 September 30, 2009
------------------- -------------------
Revenue Breakdown:
Collection $ 31.4 44.9% $ 31.9 54.2%
Disposal 25.9 37.0% 17.6 30.0%
Transfer 9.2 13.1% 6.9 11.7%
Other 3.5 5.0% 2.4 4.1%
--------- -------- --------- --------
Total 70.0 100.0% 58.8 100.0%
Intercompany eliminations (10.7) (9.3)
--------- ---------
Total reported revenue $ 59.3 $ 49.5
========= =========
Internalization of
Disposal:
Three months ended
September 30, 2010 73.2%
---------------------------------------------------------------------
Nine Months Ended Nine Months Ended
September 30, 2010 September 30, 2009
------------------- -------------------
Revenue Breakdown:
Collection $ 91.9 45.4% $ 95.3 54.2%
Disposal 74.2 36.7% 53.2 30.3%
Transfer 26.8 13.3% 20.5 11.6%
Other 9.3 4.6% 6.8 3.9%
--------- -------- --------- --------
Total 202.2 100.0% 175.8 100.0%
Intercompany eliminations (30.3) (27.9)
--------- ---------
Total reported revenue $ 171.9 $ 147.9
========= =========
Internalization of
Disposal:
Nine months ended September
30, 2010 71.7%
---------------------------------------------------------------------
Three Months Ended Nine Months Ended
September 30, September 30,
2010 vs. 2009 2010 vs. 2009
------------------- -------------------
Revenue Growth (Decline):
Volume $ (1.7) -3.5%(a) $ (3.6) -2.4%(a)
Price 0.5 1.1%(a) (2.0) -1.3%(a)
Fuel surcharge 0.6 1.3%(a) 0.8 0.5%(a)
Acquisitions 11.0 22.1%(a) 30.1 20.3%(a)
Sale of Jonesboro assets (0.7) -1.4%(a) (1.3) -0.9%(a)
--------- -------- --------- --------
Total revenue growth
(decline) $ 9.7 $ 24.0
========= 19.6%(a) ========= 16.2%(a)
(a) Percentages are calculated based on dollar
amounts rounded in thousands.
---------------------------------------------------------------------
September 30, 2010
-------------------
Debt-to-Capitalization:
Long-term debt including
current maturities $ 219.6
Total equity including
preferred stock 162.7
---------
Total capitalization $ 382.3
=========
Debt-to-total
capitalization 57.4%
Net Debt-to-Capitalization:
Long-term debt including
current maturities $ 219.6
Cash on hand (4.1)
---------
Net debt 215.5
Total equity including
preferred stock 162.7
---------
Total capitalization $ 378.2
=========
Net debt-to-total
capitalization 57.0%
For more information, contact:
CA Waste Corporation Houston, Texas
Tommy Fatjo
713-292-2400
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