Date: October 21, 2008
Source: Waste Services, Inc.
Record third quarter EBITDA.
Record third quarter EBITDA margins.
Record pre-tax income and net income from continuing operations.
EPS from continuing operations of $0.08, normalized EPS from continuing operations of $0.12(1).
Free cash-flow positive for the third quarter and year-to-date.
Waste Services, Inc. (Nasdaq: WSII) today announced financial results for the three months ended September 30, 2008. The quarter was highlighted by:
Revenue growth of 1.6% to $125.7 million compared to $123.8 million in 2007.
Internal revenue growth was 4.3%, made up of 4.4% price, 3.5% fuel and environmental surcharge, (3.6)% volume.
The net expiration of municipal contracts accounted for a $3.6 million reduction or 3.0%.
Operating income and Adjusted EBITDA expanded to $16.5 million and $29.0 million with margins of 13.1% and 23.0%, respectively.
The nine-month results for the period ended September 30, 2008 support our previous guidance. The year-to-date results are highlighted by:
Revenue growth of 9.6% to $370.6 million compared to $338.2 million in 2007.
Internal revenue growth was 3.4%, made up of 4.2% price, 3.1% fuel and environmental surcharge, (3.9)% volume.
Acquisitions net of divestitures added $18.6 million of revenue or 5.5%, while the net expiration of municipal contracts accounted for a $11.3 million reduction or 3.4%.
Operating income and Adjusted EBITDA expanded to $45.5 million and $82.8 million with margins of 12.3 % and 22.3 %, respectively.
(1) Normalized EPS is defined as earnings per share as adjusted to reflect the average statutory income tax rate estimated at 36%.
Additionally, Waste Services, Inc. announced that Michael G. DeGroote, 75, has been appointed Chairman of the company effective October 21, 2008. He is the father of Michael H. DeGroote and Gary W. DeGroote, both directors of the company. Collectively, the DeGroote family owns approximately 28.5% of our outstanding shares.
David Sutherland-Yoest, Waste Services President and Chief Executive Officer, stated, "I was delighted when Mike DeGroote accepted my invitation to replace me as Chairman of the Board, an appointment that was confirmed earlier today. Mike's exceptional history of successfully developing waste companies, with his well known focus on overheads, will be of great benefit in assisting with our cost containment efforts and strategic development. With our refinancing behind us, we have commenced a restructuring to reduce our overheads and intend to complete this in the fourth quarter. Mike will be of great assistance to us in pursuing our goal of reducing our corporate overhead on an annualized basis by $4-5 million, up to 20 % of our current costs, resulting in an increase in our earnings per share of 4 to 5 cents per share."
2008 Outlook
Waste Services revises previously issued guidance for 2008:
Revenue in the range of $470 million to $490 million.
Organic revenue growth continues to range from 3% to 4%.
EBITDA in the range of $100 million to $105 million.
Adjusted EBITDA in the range of $105 million to $110 million.
Operating income to remain as previously guided in the range of $55 million to $65 million.
Pre-tax income(1) to remain as previously guided in the range of $20 million to $25 million.
Normalized EPS(1) from continuing operations to remain as previously guided in the range of $0.30 to $0.35 per share.
Capital spending continues to be in the range of $55 million to $60 million.
This guidance assumes no further significant deterioration in economic conditions in Florida or Canada, and no further significant change in exchange rates. Guidance will be adjusted upon announcement of any unusual or non-recurring items as the year progresses.
Normalized EPS is defined as earnings per share as adjusted to reflect the average statutory income tax rate estimated at 36%, and excludes write-off of finance cost on prior credit facility and other expected one-time charges relating to restructuring.
Reconciliation of Non-GAAP Measures:
The following table reconciles the differences between net income (loss), as determined under US GAAP, and EBITDA from continuing operations, a non-GAAP financial measure (in thousands) (unaudited):
For The Three Months For The Nine Months
Ended September 30, Ended September 30,
---------------- -----------------
2008 2007 2008 2007
---- ---- ---- ----
Net income (loss) from
continuing operations $3,469 $(5,897) $12,865 $(13,460)
Income tax provision 5,322 4,474 6,892 10,618
Interest expense 7,730 10,243 25,770 30,818
Depreciation, depletion
and amortization 11,503 15,370 34,826 40,845
------ ------ ------ ------
EBITDA from continuing
operations (1) $28,024 $24,190 $80,353 $68,821
======= ======= ======= =======
The following table reconciles the differences between EBITDA and Adjusted EBITDA, as defined in our credit agreement, for the three and nine months ended September 30, 2008 and 2007 (in thousands) (unaudited):
For The Three Months For The Nine Months
Ended September 30, Ended September 30,
---------------- ----------------
2008 2007 2008 2007
---- ---- ---- ----
EBITDA from continuing
operations (1) $28,024 $24,190 $80,353 $68,821
Adjustments to EBITDA
from continuing operations
(as defined per credit
agreement):
Non-cash items (2) 930 1,961 2,473 2,725
Other excludable
expenses (3) - 3,252 - 4,477
----- ----- ----- -----
Adjusted EBITDA from
continuing
operations (1) $28,954 $29,403 $82,826 $76,023
======= ======= ======= =======
(1) EBITDA from continuing operations and EBITDA from continuing operations as defined in our credit agreement ("Adjusted EBITDA from continuing operations") are non-GAAP measures used by management to measure performance. We also believe that EBITDA from continuing operations and Adjusted EBITDA from continuing operations may be used by certain investors to analyze and compare our operating performance between accounting periods and against the operating results of other companies that have different financing and capital structures or tax rates and to measure our ability to service our debt. In addition, management uses EBITDA from continuing operations, among other things, as an internal performance measure. Our lenders also use Adjusted EBITDA from continuing operations to measure our ability to service and/or incur additional indebtedness under our credit facilities. However, EBITDA from continuing operations and Adjusted EBITDA from continuing operations should not be considered in isolation or as a substitute for net income, cash flows or other financial statement data prepared in accordance with US GAAP or as a measure of our performance, profitability or liquidity. EBITDA from continuing operations and Adjusted EBITDA from continuing operations are not calculated under US GAAP and therefore are not necessarily comparable to similarly titled measures of other companies.
(2) Non-cash adjustments primarily include stock-based compensation expense and gains and losses on foreign exchange and asset sales.
(3) Other excludable expenses adjustments include professional fees for certain litigation, severance and other non-recurring costs.
We will host an investor and analyst conference call on Wednesday, October 22, 2008 at 10:00 a.m. (ET) to discuss the results of today's earnings announcement. If you wish to participate in this call, please phone 866-831-6272 (US and Canada) or 617-213-8859 (International) and enter passcode number 57390411. To hear a web cast of the call over the Internet, access the home page of our website at www.wasteservicesinc.com. A post-view of the call will be available until November 5, 2008 by phoning 888-286-8010 (US and Canada) or 617-801-6888 (International) and entering passcode number 26235097. The web cast will also be available on our website.
Safe Harbor for Forward-Looking Statements
Certain matters discussed in this press release are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements describe the company's future plans, objectives and goals. These forward-looking statements involve risks and uncertainties which could cause actual results to differ materially from the plans, objectives and goals set forth in this press release. Factors which could materially affect such forward-looking statements can be found in the company's periodic reports filed with the Securities and Exchange Commission, including risk factors detailed in the company's Form 10-K for the year ended December 31, 2007. Shareholders, potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements.
The forward-looking statements made in this press release are only made as of the date hereof and Waste Services undertakes no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.
This release does not constitute an offer to sell or the solicitation of any offer to buy any securities. The company's securities may not be offered or sold in the United States absent a registration or applicable exemption from registration requirements under applicable state and federal securities laws.
Waste Services, Inc., a Delaware corporation, is a multi-regional, integrated solid waste services company that provides collection, transfer, disposal and recycling services in the United States and Canada. The company's website is www.wasteservicesinc.com. Information on the company's website does not form part of this press release.
For information contact:
Edwin D. Johnson J. Todd Atenhan
Executive Vice President and Chief Investor Relations
Financial Officer 888-917-5105
Waste Services, Inc.
561-237-3400
WASTE SERVICES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
2008 2007 2008 2007
---- ---- ---- ----
Revenue $125,745 $123,774 $370,635 $338,194
Operating and other expenses:
Cost of operations
(exclusive of
depreciation,
depletion and
amortization) 82,512 80,729 242,661 221,995
Selling, general and
administrative expense
(exclusive of
depreciation, depletion
and amortization) 15,074 18,205 47,943 47,315
Depreciation, depletion and
amortization 11,503 15,370 34,826 40,845
Foreign exchange loss
(gain) and other 135 650 (322) 63
--- --- ---- --
Income from operations 16,521 8,820 45,527 27,976
Interest expense 7,730 10,243 25,770 30,818
----- ------ ------ ------
Income (loss) from continuing
operations before income
taxes 8,791 (1,423) 19,757 (2,842)
Income tax provision 5,322 4,474 6,892 10,618
----- ----- ----- ------
Net income (loss) from
continuing operations 3,469 (5,897) 12,865 (13,460)
Net income from discontinued
operations, net of income
tax provision of $301 for the
nine months ended
September 30, 2008
and nil for all other periods - 1,071 374 1,810
Gain (loss) on sale of
discontinued
operations, net of income tax
provision of $4,485 for the
nine months ended
September 30, 2008
and nil for all other periods - (198) 6,869 (11,452)
---- ---- ----- -------
Net income (loss) $3,469 $(5,024) $20,108 $(23,102)
====== ======= ======= ========
Basic and diluted earnings (loss)
per share:
Earnings (loss) per share
- continuing operations $0.08 $(0.13) $0.28 $(0.29)
Earnings (loss) per share
- discontinued operations - 0.02 0.16 (0.21)
---- ---- ---- -----
Basic and diluted earnings
(loss) per share $0.08 $(0.11) $0.44 $(0.50)
===== ====== ===== ======
Weighted average common
shares outstanding
Basic 46,079 46,007 46,076 45,984
Diluted 46,088 46,007 46,085 45,984
WASTE SERVICES, INC.
SUPPLEMENTAL UNAUDITED BALANCE SHEET AND CASH FLOW DATA
(In thousands)
Balance Sheet Data: September 30, December 31,
2008 2007
---- ----
Cash $40,995 $20,706
Current assets $110,651 $99,406
Total assets $900,483 $938,488
Current liabilities $94,696 $95,375
Debt:
Senior secured credit
facilities:
Revolver $- $-
Term loan 231,410 273,910
Senior subordinated notes 160,000 160,000
Other notes 9,606 10,530
----- ------
Total debt $401,016 $444,440
Shareholders' equity $358,242 $350,595
Cash Flow Data:
Nine Months Ended September 30,
2008 2007
---- ----
Cash flows provided by
continuing operations $48,923 $40,700
Cash flows provided by (used
in) investing activities for
continuing operations $14,619 $(69,578)
Cash flows provided by (used
in) financing activities of
continuing operations $(43,537) $33,961
Capital expenditures from
continuing operations $39,220 $45,301
WASTE SERVICES, INC.
SUPPLEMENTAL UNAUDITED GROWTH RATES AND COUNTRY DATA
(In thousands)
Waste Services, Inc.
Revenue Growth
For The Three Months Ended
September 30, 2008
(in thousands)
Total Revenue, September 30, 2007 $123,774
Impact on revenue from changes in:
Price 9,854 8.0%
Volume (4,487) -3.6%
Acquisition / Disposition (652) -0.5%
Gain / Loss of Contracts (3,650) -3.0%
Other (197) -0.2%
Foreign currency impact 1,103 0.9%
Total Revenue, September 30, 2008 $125,745
========
Waste Services, Inc.
Revenue Growth
For The Nine Months Ended
September 30, 2008
(in thousands)
Total Revenue, September 30, 2007 $338,194
Impact on revenue from changes in:
Price 24,598 7.3%
Volume (13,179) -3.9%
Acquisition / Disposition 18,562 5.5%
Gain / Loss of Contracts (11,334) -3.4%
Other (1,291) -0.4%
Foreign currency impact 15,085 4.5%
Total Revenue, September 30, 2008 $370,635
========
COUNTRY DATA
(In thousands)
Three Months Ended September 30, 2008
-------------------------------------
US Canada Total
-- ------ -----
Revenue $58,468 100.0% $67,277 100.0% $125,745 100.0%
Operating expenses:
Cost of operations 38,114 65.2% 44,398 66.0% 82,512 65.6%
Selling, general
and administrative
expense 7,647 13.1% 7,427 11.0% 15,074 12.0%
Depreciation,
depletion and
amortization 6,509 11.1% 4,994 7.4% 11,503 9.1%
Foreign exchange
gain and other 20 0.0% 115 0.2% 135 0.2%
-- --- ---
Income from
continuing
operations $6,178 10.6% $10,343 15.4% $16,521 13.1%
====== ======= =======
Three Months Ended September 30, 2007
-------------------------------------
US Canada Total
-- ------ -----
Revenue $63,785 100.0% $59,989 100.0% $123,774 100.0%
Operating expenses:
Cost of operations 41,084 64.4% 39,645 66.1% 80,729 65.2%
Selling, general
and administrative
expense 7,338 11.5% 6,872 11.5% 14,210 11.5%
Severance and
related
costs 3,995 6.3% - 0.0% 3,995 3.2%
Depreciation,
depletion and
amortization 10,231 16.0% 5,139 8.6% 15,370 12.4%
Foreign exchange
gain and other 684 1.1% (34) -0.1% 650 0.6%
--- --- ---
Income from
continuing
operations $453 0.7% $8,367 13.9% $8,820 7.1%
==== ====== ======
WASTE SERVICES, INC.
UNAUDITED COUNTRY DATA- (Continued)
(In thousands)
Nine Months Ended September 30, 2008
------------------------------------
US Canada Total
-- ------ -----
Revenue $179,331 100.0% $191,304 100.0% $370,635 100.0%
Operating expenses:
Cost of operations 116,497 65.0% 126,164 65.9% 242,661 65.5%
Selling, general
and administrative
expense 24,055 13.4% 23,888 12.5% 47,943 12.9%
Depreciation,
depletion
and amortization 19,903 11.1% 14,923 7.8% 34,826 9.4%
Foreign exchange
(gain)
loss and other (463) -0.3% 141 0.1% (322) -0.1%
---- --- ----
Income from
continuing operations $19,339 10.8% $26,188 13.7% $45,527 12.3%
======= ======= =======
Nine Months Ended September 30, 2007
------------------------------------
US Canada Total
-- ------ -----
Revenue $177,546 100.0% $160,648 100.0% $338,194 100.0%
Operating expenses:
Cost of operations 114,921 64.7% 107,074 66.7% 221,995 65.6%
Selling, general
and administrative
expense 23,516 13.2% 19,804 12.3% 43,320 12.8%
Severance and
related costs 3,995 2.3% - 0.0% 3,995 1.2%
Depreciation,
depletion
and amortization 26,769 15.1% 14,076 8.8% 40,845 12.1%
Foreign exchange
gain and other 350 0.2% (287) -0.2% 63 0.0%
--- ---- --
Income from
continuing operations $7,995 4.5% $19,981 12.4% $27,976 8.3%
====== ======= =======
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