FOLSOM, CA — (Marketwire) — 10/18/11 — Waste Connections, Inc. (NYSE: WCN)
Waste Connections, Inc. (NYSE: WCN) today announced its results for the third quarter of 2011. Revenue totaled $404.0 million, a 16.8% increase over revenue of $345.8 million in the year ago period. Operating income was $89.3 million, or 22.1% of revenue, up 18.0% over operating income of $75.7 million in the third quarter of 2010. Net income attributable to Waste Connections in the quarter was $46.3 million, or $0.41 per share on a diluted basis of 113.2 million shares. In the year ago period, the Company reported net income attributable to Waste Connections of $41.0 million, or $0.35 per share on a diluted basis of 116.8 million shares.
Adjusted net income attributable to Waste Connections in the quarter was $47.1 million*, or $0.42 per share*, adjusting for a loss on disposal of assets and acquisition-related costs expensed during the period. Adjusted net income attributable to Waste Connections in the prior year period was $41.4 million*, or $0.35 per share*, adjusting primarily for acquisition-related costs.
Non-cash costs for equity-based compensation and amortization of acquisition-related intangibles were $8.1 million ($5.0 million net of taxes, or approximately $0.04 per share) in the quarter compared to $6.5 million ($4.0 million net of taxes, or approximately $0.03 per share) in the year ago period.
“We once again exceeded the upper end of our revenue and margin expectations due primarily to continuing strength in pricing, special waste activity and recycling commodity values. The percentage year-over-year increase in adjusted operating income before depreciation and amortization* again surpassed revenue growth in the third quarter despite an approximate 35% increase in fuel expense, and adjusted EPS* increased 20% over the prior year period,” said Ronald J. Mittelstaedt, Chairman and Chief Executive Officer. “Our strong operating performance, free cash flow generation and capital position enabled us to increase our dividend 20%, while retaining ample flexibility to fund our growth strategy and continuing share repurchases.”
Mr. Mittelstaedt added, “Our recently announced agreement to acquire Alaska Waste and the completion of the Town of Colonie landfill privatization during the third quarter bring the total annualized revenue from signed or completed transactions year-to-date to approximately $200 million, with about $80 million expected to contribute to rollover growth in 2012. The combination of this rollover growth plus expected core pricing growth at least equal to what we achieved this year, should position us well in the upcoming year.”
For the nine months ended September 30, 2011, revenue was $1.13 billion, a 14.4% increase over revenue of $983.8 million in the year ago period. Operating income was $242.7 million, versus $204.6 million for the same period in 2010. Net income attributable to Waste Connections for the nine months ended September 30, 2011, was $127.3 million, or $1.12 per share on a diluted basis of 114.0 million shares. In the year ago period, the Company reported net income attributable to Waste Connections of $99.0 million, or $0.84 per share on a diluted basis of 117.4 million shares. Adjusted net income attributable to Waste Connections for the nine months ended September 30, 2011, was $128.8 million*, or $1.13 per share*, up 18.9% and 22.8%, respectively, compared to $108.3 million*, or $0.92 per share* in the year ago period.
For the nine months ended September 30, 2011, non-cash costs for equity-based compensation, amortization of acquisition-related intangibles, loss on the early redemption of the 2026 Notes (net of make-whole payment), and amortization of debt discount related to convertible debt instruments were $23.7 million ($14.7 million net of taxes, or approximately $0.13 per share), compared to $22.8 million ($14.1 million net of taxes, or approximately $0.12 per share) in the year ago period.
Waste Connections, Inc. is an integrated solid waste services company that provides solid waste collection, transfer, disposal and recycling services in mostly exclusive and secondary markets. The Company serves more than two million residential, commercial and industrial customers from a network of operations in 29 states. The Company also provides intermodal services for the movement of containers in the Pacific Northwest. Waste Connections, Inc. was founded in September 1997 and is headquartered in Folsom, California.
Waste Connections will be hosting a conference call related to third quarter earnings and fourth quarter outlook on October 19th at 8:30 A.M. Eastern Time. The call will be broadcast live over the Internet at or through a link on our website at . A playback of the call will be available at both of these websites.
For more information, visit the Waste Connections web site at . Copies of financial literature, including this release, are available on the Waste Connections website or through contacting us directly at (916) 608-8200.
* A non-GAAP measure; see accompanying Non-GAAP Reconciliation Schedule.
Information Regarding Forward-Looking Statements
Certain statements contained in this release are forward-looking in nature, including statements related to expected performance of our base business, expected share repurchases and dividend payments, expected contribution from signed and closed acquisitions, including the Colonie landfill privatization, which privatization is the subject of a pending litigation, future acquisition activity and future growth and growth strategy, including rollover growth and pricing growth. These statements can be identified by the use of forward-looking terminology such as “believes,” “expects,” “may,” “will,” “should,” or “anticipates,” or the negative thereof or comparable terminology, or by discussions of strategy. Our business and operations are subject to a variety of risks and uncertainties and, consequently, actual results may differ materially from those projected by any forward-looking statements. Factors that could cause actual results to differ from those projected include, but are not limited to, the following: (1) our acquisitions may not be successful, resulting in changes in strategy, operating losses or a loss on sale of the business acquired; (2) a portion of our growth and future financial performance depends on our ability to integrate acquired businesses into our organization and operations; (3) downturns in the worldwide economy adversely affect operating results; (4) our results are vulnerable to economic conditions and seasonal factors affecting the regions in which we operate; (5) we may be subject in the normal course of business to judicial, administrative or other third party proceedings that could interrupt or limit our operations, require expensive remediation, result in adverse judgments, settlements or fines and create negative publicity; (6) we may be unable to compete effectively with larger and better capitalized companies and governmental service providers; (7) we may lose contracts through competitive bidding, early termination or governmental action; (8) price increases may not be adequate to offset the impact of increased costs or may cause us to lose volume; (9) increases in the price of fuel may adversely affect our business and reduce our operating margins; (10) increases in labor and disposal and related transportation costs could impact our financial results; (11) efforts by labor unions could divert management attention and adversely affect operating results; (12) we could face significant withdrawal liability if we withdraw from participation in one or more underfunded multiemployer pension plans in which we participate; (13) increases in insurance costs and the amount that we self-insure for various risks could reduce our operating margins and reported earnings; (14) competition for acquisition candidates, consolidation within the waste industry and economic and market conditions may limit our ability to grow through acquisitions; (15) our indebtedness could adversely affect our financial condition; we may incur substantially more debt in the future; (16) each business that we acquire or have acquired may have liabilities or risks that we fail or are unable to discover, including environmental liabilities; (17) liabilities for environmental damage may adversely affect our financial condition, business and earnings; (18) our accruals for our landfill site closure and post-closure costs may be inadequate; (19) the financial soundness of our customers could affect our business and operating results; (20) we depend significantly on the services of the members of our senior, regional and district management team, and the departure of any of those persons could cause our operating results to suffer; (21) our decentralized decision-making structure could allow local managers to make decisions that adversely affect our operating results; (22) we may incur charges related to capitalized expenditures of landfill development projects, which would decrease our earnings; (23) because we depend on railroads for our intermodal operations, our operating results and financial condition are likely to be adversely affected by any reduction or deterioration in rail service; (24) our financial results are based upon estimates and assumptions that may differ from actual results; (25) the adoption of new accounting standards or interpretations could adversely affect our financial results; (26) our financial and operating performance may be affected by the inability to renew landfill operating permits, obtain new landfills and expand existing ones; (27) future changes in laws or renewed enforcement of laws regulating the flow of solid waste in interstate commerce could adversely affect our operating results; (28) fluctuations in prices for recycled commodities that we sell and rebates we offer to customers may cause our revenues and operating results to decline; (29) extensive and evolving environmental, health, safety and employment laws and regulations may restrict our operations and growth and increase our costs; (30) climate change regulations may adversely affect operating results; (31) extensive regulations that govern the design, operation and closure of landfills may restrict our landfill operations or increase our costs of operating landfills; (32) alternatives to landfill disposal may cause our revenues and operating results to decline; and (33) unusually adverse weather conditions may interfere with our operations, harming our operating results. These risks and uncertainties, as well as others, are discussed in greater detail in our filings with the Securities and Exchange Commission, including our most recent Annual Report on Form 10-K. There may be additional risks of which we are not presently aware or that we currently believe are immaterial which could have an adverse impact on our business. We make no commitment to revise or update any forward-looking statements in order to reflect events or circumstances that may change.
– financial tables attached –
The following table reflects revenue growth for operations owned for at least 12 months:
42 (28 net of deferred revenue)
60%
46%
Reconciliation of Adjusted Operating Income before Depreciation and Amortization:
Adjusted operating income before depreciation and amortization, a non-GAAP financial measure, is provided supplementally because it is widely used by investors as a performance and valuation measure in the solid waste industry. Waste Connections defines adjusted operating income before depreciation and amortization as operating income, plus depreciation and amortization expense, plus closure and post-closure accretion expense, plus or minus any gain or loss on disposal of assets. The Company further adjusts this calculation to exclude the effects of items management believes impact the ability to assess the operating performance of our business. This measure is not a substitute for, and should be used in conjunction with, GAAP financial measures. Management uses adjusted operating income before depreciation and amortization as one of the principal measures to evaluate and monitor the ongoing financial performance of the Company–s operations. Other companies may calculate adjusted operating income before depreciation and amortization differently.
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Reconciliation of Net Income to Adjusted Net Income and Adjusted Net Income per diluted share:
Adjusted net income and adjusted net income per diluted share, both non-GAAP financial measures, are provided supplementally because they are widely used by investors as a valuation measure in the solid waste industry. The Company provides adjusted net income to exclude the effects of items management believes impact the comparability of operating results between periods. Adjusted net income has limitations due to the fact that it may exclude items that have an impact on the Company–s financial condition and results of operations. Adjusted net income and adjusted net income per diluted share are not a substitute for, and should be used in conjunction with, GAAP financial measures. Management uses adjusted net income and adjusted net income per diluted share as one of the principal measures to evaluate and monitor the ongoing financial performance of the Company–s operations. Other companies may calculate adjusted net income and adjusted net income per diluted share differently.
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Reconciliation of Free Cash Flow:
Free cash flow, a non-GAAP financial measure, is provided supplementally because it is widely used by investors as a valuation and liquidity measure in the solid waste industry. Waste Connections defines free cash flow as net cash provided by operating activities, plus proceeds from disposal of assets, plus or minus change in book overdraft, plus excess tax benefit associated with equity-based compensation, less capital expenditures for property and equipment and distributions to noncontrolling interests. This measure is not a substitute for, and should be used in conjunction with, GAAP liquidity or financial measures. Management uses free cash flow as one of the principal measures to evaluate and monitor the ongoing financial performance of the Company–s operations. Other companies may calculate free cash flow differently.
CONTACT:
Worthing Jackman
(916) 608-8266