Date: August 3, 2011
Source: WCA Waste Corporation
Revenue for the second quarter increased 21.5% over the second quarter of 2010
Positive pricing continues with a 3.5% increase during the quarter
Issued senior secured notes at 7.5% interest rate, replacing 9.25% senior secured notes
Extended WCA's $200 million senior credit facility to 2016
WCA Waste Corporation (Nasdaq:WCAA) announced today financial results for the three and six months ended June 30, 2011.
For the second quarter of 2011:
Revenue was $73.3 million, up 21.5% over $60.3 million in the second quarter of 2010.
Net loss available to common stockholders was $0.13 per share while adjusted net loss available to common stockholders was $0.01 per share. This compares to a net income available to common stockholders of $0.01 per share and adjusted net income available to common stockholders of $0.02 per share for the same quarter in 2010.
During the quarter, we incurred $4.4 million associated with the tender of our 9.25% senior secured notes and the amendment of our credit facility.
For the first six months of 2011:
Revenue was $131.3 million, up 16.6% from $112.6 million in 2010.
Net loss available to common stockholders was $0.22 per share while adjusted net loss available to common stockholders was $0.08 per share. This compares to a net loss available to common stockholders of $0.08 per share and adjusted net loss available to common stockholders of $0.06 per share during the same period of 2010.
Tom Fatjo, Jr., Chairman, CEO, stated, "The second quarter had several important highlights including successfully refinancing our senior secured notes and extending our revolving senior credit facility. Although our year-to-date earnings did not reflect the interest savings from the refinancing activities, we expect a reduction of future interest expense of approximately $1.2 million annually. Excluding the Ohio/Massachusetts region which continued to be impacted by weather during the quarter, we achieved positive year-to-date volume growth. That volume growth, coupled with continuous positive pricing, indicates that WCA volumes are stable."
We are also reaffirming our 2011 revenue and adjusted EBITDA goals of $270 million and $61 million, respectively, despite the impact of extreme weather in some markets, higher fuel costs across all regions and integration costs associated with the Stoughton and Emerald Waste -- Central Florida transactions. Please refer to the attached tables below for components of adjusted EBITDA.
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, 28 transfer stations/material recovery facilities and 29 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 Stock 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," "annualized," "should," "outlook," "project," "intend," "seek," "plan," "believe," "anticipate," "expect," "estimate," "potential," "continue," "goal," 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.
Statements concerning "annualized" revenues are forward-looking statements, are not audited or based on GAAP and are made based on estimations from information provided to us by the acquired companies and from other sources and estimates developed by us. In this press release we provide "annualized" estimates for acquired operations; in other presentations and reports, we may provide "annualized" estimates with respect to us and also separately with respect to one or more acquired businesses. In computing our revenue annualized estimates as of the end of any given period we generally take the average of monthly revenues of the companies that we acquired for a period that we believe to be reasonable as prior to acquisition. Actual revenues may or may not equal the estimated "annualized" number.
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. In addition, we are subject to a number of risks with respect to our acquisition activities generally, including the following: we may be unsuccessful in efficiently integrating the combined operations of our company and the Emerald Waste assets that we acquired or the Stoughton facility we are now operating and cash expenditures and capital commitments associated with our acquisition of Emerald Waste's Central Florida operations may create significant liquidity and cash flow risks for us. Furthermore, we may not be successful in identifying and consummating additional acquisition candidates and any acquisitions we make may not be successful.
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, 2010 and our Form 10-Q for the quarter ended June 30, 2011, to which we refer you for additional information.
WCA --- 2nd Quarter 2011 Earnings
Release Information
WCA Waste Corporation
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
--------------------- ----------------------
2011 2010 2011 2010
---------- --------- ---------- ----------
Revenue $ 73,279 $ 60,295 $ 131,267 $ 112,602
Expenses:
Cost of services 53,858 43,264 97,073 81,403
Depreciation and amortization 8,532 7,771 15,900 15,059
Impairment of goodwill -- -- -- --
Merger and acquisition related
expenses 17 36 437 134
General and administrative 3,410 2,550 6,763 5,684
Gain on sale of assets (31) (880) (58) (889)
---------- --------- ---------- ----------
65,786 52,741 120,115 101,391
---------- --------- ---------- ----------
Operating income 7,493 7,554 11,152 11,211
Other income (expense):
Interest expense, net (5,412) (4,687) (10,376) (9,379)
Write-off of deferred financing
costs (157) (184) (157) (184)
Loss on early extinguishment of
debt (4,075) -- (4,075) --
Impact of interest rate swap -- 68 -- (184)
---------- --------- ---------- ----------
(9,644) (4,803) (14,608) (9,747)
---------- --------- ---------- ----------
Income (loss) before income taxes (2,151) 2,751 (3,456) 1,464
Income tax (provision) benefit 280 (1,429) 1,074 (890)
---------- --------- ---------- ----------
Net income (loss) (1,871) 1,322 (2,382) 574
Accrued payment-in-kind dividend on
preferred stock (1,170) (1,112) (2,331) (2,220)
---------- --------- ---------- ----------
Net income (loss) available to
common stockholders $ (3,041) $ 210 $ (4,713) $ (1,646)
========== ========= ========== ==========
PER SHARE DATA (Basic and diluted):
Net income (loss) available to
common stockholders
-- Basic $ (0.13) $ 0.01 $ (0.22) $ (0.08)
========== ========= ========== ==========
-- Diluted $ (0.13) $ 0.01 $ (0.22) $ (0.08)
========== ========= ========== ==========
WEIGHTED AVERAGE SHARES OUTSTANDING
(Basic) 22,650 19,580 21,750 19,552
---------- --------- ---------- ----------
WEIGHTED AVERAGE SHARES OUTSTANDING
(Diluted) 22,650 19,735 21,750 19,552
---------- --------- ---------- ----------
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),
(gain) loss on early extinguishment of debt, 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 that 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 income (loss) available to common stockholders to our adjusted EBITDA
(in thousands):
Three Months Ended Six Months Ended
June 30, June 30,
---------------------- ----------------------
2011 2010 2011 2010
---------- ---------- ---------- ----------
Net income (loss) available to common stockholders $ (3,041) $ 210 $ (4,713) $ (1,646)
Accrued payment-in-kind dividend on preferred stock 1,170 1,112 2,331 2,220
Depreciation and amortization 8,532 7,771 15,900 15,059
Interest expense, net 5,412 4,687 10,376 9,379
Write-off of deferred financing costs 157 184 157 184
Loss on early extinguishment of debt 4,075 -- 4,075 --
Impact of interest rate swap -- (68) -- 184
Income tax provision (benefit) (280) 1,429 (1,074) 890
Merger and acquisition related expenses 17 36 437 134
---------- ---------- ---------- ----------
Adjusted EBITDA $ 16,042 $ 15,361 $ 27,489 $ 26,404
========== ========== ========== ==========
Adjusted EBITDA as a percentage of revenue 21.9% 25.5% 20.9% 23.4%
The following table presents a reconciliation of net income (loss) available to common stockholders
to adjusted net loss available to common stockholders to exclude write-off of deferred financing
costs, loss on early extinguishment of debt, 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, loss on early
extinguishment of debt,
impact of interest rate swap agreements, merger and Three Months Ended Six Months Ended
acquisition related June 30, June 30,
------------------- ----------------------
expenses, tax impact of vested restricted shares: 2011 2010 2011 2010
---------- ------- ---------- ----------
Net income (loss) available to common stockholders $ (3,041) $ 210 $ (4,713) $ (1,646)
Write-off of deferred financing costs, net of tax 75 99 75 99
Loss on early extinguishment of debt, net of tax 2,649 -- 2,649 --
Impact of interest rate swap, net of tax -- (13) -- 99
Merger and acquisition related expenses, net of tax 78 30 219 75
Tax impact of vested restricted shares 11 (1) -- 131
---------- ------- ---------- ----------
Adjusted net income (loss) available to common
stockholders $ (228) $ 325 $ (1,770) $ (1,242)
========== ======= ========== ==========
PER SHARE DATA (Basic and diluted):
Net income (loss) available to common stockholders $ (0.13) $ 0.01 $ (0.21) $ (0.09)
Write-off of deferred financing costs, net of tax 0.00 0.01 0.00 0.01
Loss on early extinguishment of debt, net of tax 0.12 -- 0.12 --
Impact of interest rate swap, net of tax -- (0.00) -- 0.01
Merger and acquisition related expenses, net of tax 0.00 0.00 0.01 0.00
Tax impact of vested restricted shares 0.00 (0.00) -- 0.01
---------- ------- ---------- ----------
Adjusted net income (loss) available to common
stockholders to exclude write-
off of deferred financing costs, loss on early
extinguishment of debt, impact of
interest rate swap agreements, merger and acquisition
related expenses,
tax impact of vested restricted shares:
-- Basic $ (0.01) $ 0.02 $ (0.08) $ (0.06)
========== ======= ========== ==========
-- Diluted $ (0.01) $ 0.02 $ (0.08) $ (0.06)
========== ======= ========== ==========
WEIGHTED AVERAGE SHARES OUTSTANDING (Basic) 22,650 19,580 21,750 19,552
---------- ------- ---------- ----------
WEIGHTED AVERAGE SHARES OUTSTANDING (Diluted) 22,650 19,735 21,750 19,552
---------- ------- ---------- ----------
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 Three Months
Ended Ended
June 30, 2011 June 30, 2010
---------------- ----------------
Revenue Breakdown:
Collection $ 40.4 47.4% $ 30.8 43.2%
Disposal 27.2 31.9% 27.2 38.2%
Transfer 12.0 14.1% 9.8 13.8%
Other 5.6 6.6% 3.4 4.8%
-------- ------ --- -------- ------
Total 85.2 100.0% 71.2 100.0%
Intercompany
eliminations (11.9) (10.9)
-------- --------
Total reported
revenue $ 73.3 $ 60.3
======== ========
Internalization of
Disposal:
Three months ended June
30, 2011 67.4%
------------------------------------------------------------------------
Six Months Ended Six Months Ended
June 30, 2011 June 30, 2010
---------------- ----------------
Revenue Breakdown:
Collection $ 74.4 48.6% $ 60.5 45.8%
Disposal 48.7 31.8% 48.3 36.5%
Transfer 20.4 13.4% 17.6 13.3%
Other 9.5 6.2% 5.8 4.4%
-------- ------ -------- ------
Total 153.0 100.0% 132.2 100.0%
Intercompany
eliminations (21.7) (19.6)
-------- --------
Total reported
revenue $ 131.3 $ 112.6
======== ========
Internalization of
Disposal:
Six months ended June
30, 2011 68.4%
------------------------------------------------------------------------
Three Months Six Months Ended
Ended
June 30, 2011 June 30, 2011
vs. 2010 vs. 2010
---------------- ----------------
Revenue Growth
(Decline):
Volume $ (1.7) -2.8% (a) $ (2.6) -2.3% (a)
Price 2.1 3.5% (a) 3.8 3.4% (a)
Fuel surcharge 1.1 1.8% (a) 1.8 1.6% (a)
Acquisitions 11.5 19.0% (a) 16.4 14.5% (a)
Sale of Jonesboro
assets -- 0.0% (0.7) -0.6%
-------- ------ (a) -------- ------ (a)
Total revenue growth $ 13.0 $ 18.7
======== 21.5% (a) ======== 16.6% (a)
(a) Percentages are calculated based on dollar amounts rounded in
thousands.
---------------------------------------------------------------------
June 30,
2011
--------
Debt-to-Capitalization:
Long-term debt including current
maturities $ 279.6
Total equity including preferred
stock 176.7
--------
Total capitalization $ 456.3
========
Debt-to-total capitalization 61.3%
Net Debt-to-Capitalization:
Long-term debt including current
maturities $ 279.6
Cash on hand (4.7)
--------
Net debt 274.9
Total equity including preferred
stock 176.7
--------
Total capitalization $ 451.6
========
Net debt-to-total
capitalization 60.9%
The information below summarizes non-recurring costs associated with the debt refinancing activities during the second and third
quarters of 2011:
--------------------------------------------------------------------------------------------------------------------------------
Estimated
Q2 Q3
---------- -----------
Loss on early extinguishment of debt $ 4,075 $ 1,681
Write-off of deferred financing costs associated with credit facility amendment 157 --
Interest expense from carrying untendered senior notes 298(1) 99(1)
Less: reduction of interest expense from paying down revolver (91) (30)
----------(2) -----------(2)
Non-recurring pre-tax costs $ 4,439 $ 1,750
=======================================
(1) $100.969 million of the $150 million senior notes due 2014 were tendered as of June 6, 2011, leaving $49.031 million
untendered. Q2 interest expense for the untendered senior notes is calculated for 24 days from June 7 to June 30, 2011.
Estimated Q3 interest expense is calculated for 8 days from July 1 to July 8, 2011.
(2) Cash temporarily freed up by the $49.031 million untendered senior notes was used to pay down the revolver credit
facility. Q2 reduction of revolver interest expense is calculated for 24 days from June 7 to June 30, 2011. Estimated
Q3 reduction of interest expense is calculated for 8 days from July 1 to July 8, 2011.
For more information, contact:
WCA Waste Corporation (NASDAQ:WCAA)
Houston, Texas
Tommy Fatjo
713-292-2400
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