Waste Business Journal - Industry News

- Reports revenue of $81.3 million and earnings per share from continuing operations of $0.39

Waste Industries USA, Inc. (Nasdaq: WWIN), a regional, non-hazardous solid waste services company, today reported preliminary financial results for the first quarter ended March 31, 2007.

Revenue increased 2.7% to $81.3 million, compared to $79.1 million for the quarter ended March 31, 2006. Operating income for the quarter increased 47.3% to $11.4 million, compared to $7.8 million for the same period in 2006. Operating income as a percentage of revenue increased to 14.0% for the first quarter 2007 from 9.8% for the same period in 2006.

Income from continuing operations for the quarter was $5.4 million, or $0.39 per diluted share, a 61.7% increase from income from continuing operations of $3.4 million, or $0.24 per diluted share, for the first quarter of 2006. Net income for the quarter was $5.6 million, or $0.40 per diluted share, a 64.6% increase from net income of $3.4 million, or $0.24 per diluted share, for the first quarter of 2006.

Jim W. Perry, President and CEO of the Company, stated, "Our results for the first quarter reflect our on-going initiatives to improve operating efficiencies, internalize more of our waste volume and achieve reasonable pricing for the services we provide to our customers. We are continuing to look for ways to improve our service delivery cost by achieving productivity gains and by leveraging our existing overhead structure."

The Company will host a conference call to discuss its first quarter results on May 2, 2007 at 2:00 PM (Eastern Time). The call number is (866) 550-6338 and the confirmation number is 6184173. 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 May 16, 2007 and may be accessed by calling (888) 203-1112 and using confirmation number 6184173.

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 fuel prices, risks in the development and operation of landfills, 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
                                                            March 31,
                                                    2006                2007
     Revenues:
        Service revenues                          $78,959             $81,110
        Equipment sales                               188                 176
            Total revenues                         79,147              81,286
     Operating costs and expenses:
        Operating (exclusive of
         depreciation and amortization
         shown below)                              51,590              49,841
        Cost of equipment sales                       129                  91
        Selling, general and administrative        11,675              11,795
        Depreciation and amortization               8,049               8,137
        (Gain) loss on sale of property
         and equipment and other assets               (50)                  2
            Total operating costs and
             expenses                              71,393              69,866
     Operating income                               7,754              11,420
        Interest expense                            2,548               2,419
        Interest income                               (46)                (28)
        Other                                         (88)                (92)
            Total other expense, net                2,414               2,299

     Income from continuing operations
      before income taxes                           5,340               9,121
        Income tax expense                          1,979               3,687

     Income from continuing operations              3,361               5,434

     Discontinued operations:
     Income from discontinued operations,
      net of income taxes                              29                 147

     Net income                                    $3,390              $5,581

     Earnings per share:

     Basic:
     Income from continuing operations              $0.25               $0.39
     Income from discontinued operations              -                  0.01
     Net income                                     $0.25               $0.40

     Diluted:
     Income from continuing operations              $0.24               $0.39
     Income from discontinued operations              -                  0.01
     Net income                                     $0.24               $0.40

     Weighted-Average Number Of Shares
      Outstanding:
        Basic                                      13,761              13,999
        Diluted                                    13,911              14,123



                 WASTE INDUSTRIES USA, INC. AND SUBSIDIARIES
                    CONDENSED CONSOLIDATED BALANCE SHEETS
                                (In Thousands)
                                 (Unaudited)


                                                  December 31,       March 31,
                                                     2006              2007
    ASSETS
    Current assets:
       Cash and cash equivalents                    $1,656            $1,366
       Receivables, net                             36,408            35,590
       Other                                         5,013             9,064
           Total current assets                     43,077            46,020
    Property and equipment, net                    218,039           218,526
    Intangible assets, net                         104,950           106,042
    Other noncurrent assets                          4,213             4,357
           Total assets                           $370,279          $374,945

    LIABILITIES AND SHAREHOLDERS' EQUITY
    Current liabilities:
       Current maturities of long-term debt          7,143            10,021
       Accounts payable - trade                     13,318            13,137
       Other accrued liabilities and
        deferred revenues                           22,725            28,322
           Total current liabilities                43,186            51,480
    Long-term debt, net of current
     maturities                                    150,069           139,498
    Deferred taxes and related
     contingencies                                  23,513            26,349
    Other liabilities                                7,640             9,254
           Total liabilities                       224,408           226,581

    Shareholders' equity:                          145,871           148,364
          Total liabilities and
           shareholders' equity                   $370,279          $374,945



                 WASTE INDUSTRIES USA, INC. AND SUBSIDIARIES
               CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (In Thousands)
                                 (Unaudited)

                                                        Three Months Ended
                                                             March 31,
                                                    2006                2007
    Operating Activities:
      Net income                                   $3,390              $5,581
      Adjustments to reconcile net income
       to net cash provided by operating
       activities:
         Depreciation and amortization              8,187               8,137
         Landfill accretion expense                   416                 130
         Amortization of debt issuance costs          204                 102
         (Gain) loss on sale of property
          and equipment and other assets              (50)                  2
         Stock compensation expense                    95                 158
         Provision for deferred income taxes           25                 253
         Change in fair value of
          commodity hedges                            696               1,070
         Provision for doubtful accounts              574                 412
      Changes in assets and liabilities,
       net of effects from acquisition and
       disposition of related businesses           (2,103)              4,766
           Net cash provided by
            operating activities                   11,434              20,611

    Investing Activities:
      Acquisitions of related business,
       net of cash acquired                        (2,397)             (5,746)
      Purchases of property and equipment          (9,914)             (4,538)
      Proceeds from sale of property and
       equipment and other assets                     252                 417
      Other                                          (252)               (173)
        Net cash used in investing activities     (12,311)            (10,040)

    Financing Activities:
      Proceeds from issuance of long-term debt     10,000               8,000
      Principal payments of long-term debt        (10,571)            (19,674)
      Principal payments of capital lease
       obligations                                   (327)                (85)
      Debt issuance costs                            (491)                -
      Excess tax benefit from stock option
       exercises                                       36                  91
      Net proceeds from exercise of stock
       options                                        720                 807
         Net cash used in financing activities       (633)            (10,861)
      Decrease in cash and cash equivalents        (1,510)               (290)
      Cash and cash equivalents,
       beginning of period                          1,575               1,656
      Cash and cash equivalents, end of period        $65              $1,366


    Supplemental disclosures of cash flow information:
    Cash paid for interest                         $2,648              $2,846
    Cash paid for taxes                            $4,234                $154



    EARNINGS RELEASE - SUPPLEMENTAL DATA (dollars in thousands)

                                                         QUARTER ENDED

    REVENUE MARGINS                              3/31/06          3/31/07
    Operating expenses including cost of
      equipment sales                               65.3 %           61.4 %
    S G & A                                         14.8 %           14.5 %
    Depreciation and amortization                   10.2 %           10.0 %
    Interest expense, (net)                          3.2 %            2.9 %
    Income from continuing operations (pre-tax)      6.7 %           11.2 %
    Income tax expense                               2.5 %            4.5 %
    Income from continuing operations                4.2 %            6.7 %

    SERVICE REVENUE MIX
     Collection:
       Industrial                                  $22,136          $21,824
       Commercial                                   22,290           23,159
       Residential                                  18,450           19,803
     Disposal and transfer                          11,043           11,549
     Recycling service                               1,234            1,102
     Recycled commodity sales                          307              318
     Convenience sites                               1,599            1,652
     Other                                           1,900            1,703
         Total Service Revenue                     $78,959          $81,110


    OPERATING INCOME BEFORE DEPRECIATION,
    AMORTIZATION AND ACCRETION*
      Operating income                              $7,754          $11,420
      Accretion                                        416              130
      Depreciation and amortization                  8,049            8,137
        Operating income before depreciation,
         amortization and accretion                $16,219          $19,687

    CAPITAL EXPENDITURES DETAIL
      Collection & Transportation                   $8,232           $3,732
      Landfill Development                           1,682              806
         Total capital expenditures                 $9,914           $4,538

    FREE CASH FLOW RECONCILIATION*
      Net cash provided by operating activities    $11,434          $20,611
      Less:  Capital expenditures                   (9,914)          (4,538)
      Plus:  Proceeds from disposal of assets          252              417
         Free cash flow                             $1,772          $16,490


    DEBT TO TOTAL CAPITAL                         12/31/06          3/31/07
    (includes capital leases)                       51.9 %           50.2 %

    TOTAL LIABILITIES TO EQUITY                        1.5              1.5

    DAYS SALES OUTSTANDING                              34               33

    SERVICE REVENUE GROWTH                                          Q1 2007
      Price                                                           3.7 %
      Volume                                                         -3.2 %
      Energy surcharge                                               -0.1 %
      Total internal growth                                           0.4 %
      Recycling commodities                                           0.0 %
      Acquisitions                                                    2.3 %
        Total service revenue growth                                  2.7 %

* 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.

Waste Industries USA, Inc. Reports First Quarter 2007 Financial Results