go to WasteConnections.com


Waste Connections Reports First Quarter 2006 Results

- Revenue rises 15.6% to $190.2 million - Reports internal growth of 8.1% - Repurchases over $80 million of common stock

PRNewswire-FirstCall
FOLSOM, Calif.
Apr 24, 2006

Waste Connections, Inc. today announced its results for the first quarter 2006. Revenue totaled $190.2 million, a 15.6% increase over revenue of $164.4 million in the year ago period. Operating income was $39.2 million versus operating income of $38.7 million in the first quarter of 2005.

Net income in the quarter was $15.7 million, or $0.33 per share on a diluted basis of 47.6 million shares. Net income and earnings per share were $18.4 million and $0.39, respectively, each a non-GAAP measure, excluding a $4.2 million non-cash, pre-tax expense ($2.6 million net of taxes) for the write-off of unamortized debt issuance costs associated with convertible notes that have been called for redemption. Stock-based compensation costs in the quarter were $0.6 million ($0.4 million net of taxes), or approximately $0.01 per share. In the year ago period, the Company reported income from continuing operations of $19.6 million and diluted earnings per share from continuing operations of $0.40.

Ronald J. Mittelstaedt, Chairman and Chief Executive Officer, said, "We are very pleased with our performance in the quarter. Pricing growth accelerated to 4.8% and volume growth increased to 3.8%, each above the high end of our expectations for the full year. Operating income as a percentage of revenue was 20.6%, consistent with our guidance for the quarter. As we have previously communicated, operating margins for the year reflect increased fuel costs resulting from the expiration of our fixed-price fuel supply contract at the end of 2005, increased equity compensation costs, and lower margin acquisitions completed since the year ago period. During the quarter, we repurchased more than $80 million of common stock, putting us well on our way to repurchasing at least $100 million during the year."

Waste Connections will be hosting a conference call related to first quarter earnings and second quarter outlook on April 25th at 8:30 A.M. Eastern Time. The call will be broadcast live over the Internet at www.streetevents.com and through a link on the Company's web site at www.wasteconnections.com. A playback of the call will be available at both of these sites.

For non-GAAP measures, see accompanying Non-GAAP Reconciliation Schedule.

In the second quarter of 2005, Waste Connections classified as discontinued operations the results of certain operations in Utah and California that were exited during that quarter. Results for the first quarter of 2005 have been reclassified to present the results for these operations as discontinued operations.

In accordance with the Company's adoption of SFAS 123R at the beginning of the first quarter of 2006, excess tax benefits on the exercise of stock options, which totaled $3.4 million in the first quarter of 2006, are now classified as a cash flow from financing activities, rather than as a cash flow from operating activities as classified in prior year periods. This requirement will reduce the amounts recorded as net cash provided by operating activities, and will increase the amount recorded as net cash provided by financing activities. In order to improve comparability to prior periods, the Company's definition of free cash flow, a non-GAAP financial measure, has been expanded to include the excess tax benefits on the exercise of stock options. Total cash flow will remain unchanged from what would have been reported under prior accounting rules.

Waste Connections, Inc. is an integrated solid waste services company that provides solid waste collection, transfer, disposal and recycling services in mostly secondary markets in the Western and Southern U.S. The Company serves more than one million residential, commercial and industrial customers from a network of operations in 23 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.

For more information, visit the Waste Connections web site at www.wasteconnections.com. Copies of financial literature, including this release, are available on the Waste Connections web site or through contacting us directly at (916) 608-8200.

Certain statements contained in this press release are forward-looking in nature. These statements can be identified by the use of forward-looking terminology such as "believes," "expects," "may," "will," "should," "anticipates," or the negative thereof or comparable terminology, or by discussions of strategy. Waste Connections' 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) Waste Connections may be unable to compete effectively with larger and better capitalized companies and governmental service providers; (2) increases in the price of fuel may adversely affect Waste Connections' business and reduce its operating margins; (3) increases in labor and disposal and related transportation costs could impact Waste Connections' financial results; (4) efforts by labor unions could divert management attention and adversely affect operating results; (5) increases in insurance costs and the amount that Waste Connections self-insures for various risks could reduce its operating margins and reported earnings; (6) Waste Connections may lose contracts through competitive bidding, early termination or governmental action; (7) the geographic concentration of Waste Connections' business makes its results vulnerable to economic and seasonal factors affecting the regions in which it operates; (8) competition for acquisition candidates, consolidation within the waste industry and economic and market conditions may limit Waste Connections' ability to grow through acquisitions; (9) Waste Connections' growth and future financial performance depend significantly on its ability to integrate acquired businesses into its organization and operations; (10) Waste Connections' acquisitions may not be successful, resulting in changes in strategy, operating losses or a loss on sale of the business acquired; (11) because Waste Connections depends on railroads for its intermodal operations, its operating results and financial condition are likely to be adversely affected by any reduction or deterioration in rail service; (12) Waste Connections' intermodal business could be adversely affected by steamship lines diverting business to ports other than those Waste Connections services, or by heightened security measures or actual or threatened terrorist attacks; (13) Waste Connections depends significantly on the services of the members of its senior and district management team, and the departure of any of those persons could cause its operating results to suffer; (14) Waste Connections' decentralized decision-making structure could allow local managers to make decisions that adversely affect Waste Connections' operating results; (15) Waste Connections' financial results are based upon estimates and assumptions that may differ from actual results; (16) Waste Connections may incur additional charges related to capitalized expenditures, which would decrease its earnings; (17) each business that Waste Connections acquires or has acquired may have liabilities that Waste Connections fails or is unable to discover, including environmental liabilities; and (18) the adoption of new accounting standards or interpretations could adversely impact Waste Connections' financial results. These risks and uncertainties, as well as others, are discussed in greater detail in Waste Connections' filings with the Securities and Exchange Commission, including its most recent Annual Report on Form 10-K. There may be additional risks of which Waste Connections is not presently aware or that it currently believes are immaterial which could have an adverse impact on its business. Waste Connections makes no commitment to revise or update any forward-looking statements in order to reflect events or circumstances that may change.

                      - financial tables attached -


                         WASTE CONNECTIONS, INC.
                    CONSOLIDATED STATEMENTS OF INCOME
                THREE MONTHS ENDED MARCH 31, 2005 AND 2006
                               (Unaudited)
            (in thousands, except share and per share amounts)

                                                         Three months ended
                                                              March 31,
                                                          2005       2006

  Revenues                                             $164,444    $190,169
  Operating expenses:
    Cost of operations                                   94,150     113,063
    Selling, general and administrative                  17,140      19,801
    Depreciation and amortization                        14,612      18,232
    Gain on disposal of assets                             (121)        (82)
  Operating income                                       38,663      39,155

  Interest expense                                       (4,934)     (7,494)
  Minority interests                                     (2,687)     (2,711)
  Other income (expense), net                               105      (3,993)
  Income from continuing operations before income taxes  31,147      24,957

  Income tax provision                                  (11,587)     (9,234)
  Income from continuing operations                      19,560      15,723
  Loss from discontinued operations, net of tax            (201)         --

  Net income                                            $19,359     $15,723

  Basic earnings per common share:
    Continuing operations                                 $0.41       $0.34
    Discontinued operations                                  --          --
    Net income per common share                           $0.41       $0.34

  Diluted earnings per common share:
    Continuing operations                                 $0.40       $0.33
    Discontinued operations                                  --          --
    Net income per common share                           $0.40       $0.33

  Shares used in the per share calculations:
    Basic                                            47,486,402  45,669,545
    Diluted                                          48,878,703  47,590,476


                         WASTE CONNECTIONS, INC.
                  CONDENSED CONSOLIDATED BALANCE SHEETS
                               (Unaudited)
            (in thousands, except share and per share amounts)

                                                   December 31,    March 31,
                                                       2005          2006
  ASSETS
  Current assets:
    Cash and equivalents                                $7,514       $7,847
    Accounts receivable, net of allowance for
     doubtful accounts of $2,826 and $2,395 at
     December 31, 2005 and March 31, 2006,
     respectively                                       94,438       89,313
    Deferred tax assets                                  5,145        4,064
    Prepaid expenses and other current assets           17,279       18,062
      Total current assets                             124,376      119,286

  Property and equipment, net                          700,508      705,367
  Goodwill                                             723,120      725,139
  Intangible assets, net                                87,651       86,935
  Restricted assets                                     13,888       14,305
  Other assets, net                                     26,764       27,516
                                                    $1,676,307   $1,678,548

  LIABILITIES AND STOCKHOLDERS' EQUITY
  Current liabilities:
    Accounts payable                                   $54,795      $44,783
    Book overdraft                                       8,869        7,186
    Accrued liabilities                                 44,522       45,647
    Deferred revenue                                    30,957       30,947
    Current portion of long-term debt and notes
     payable                                            10,858        8,619
      Total current liabilities                        150,001      137,182

  Long-term debt and notes payable                     586,104      644,049
  Other long-term liabilities                           20,478       14,919
  Deferred tax liabilities                             175,167      178,995
      Total liabilities                                931,750      975,145

  Commitments and contingencies
  Minority interests                                    26,357       27,010

  Stockholders' equity:
  Preferred stock: $0.01 par value; 7,500,000
   shares authorized; none issued and outstanding           --           --
  Common stock: $0.01 par value; 100,000,000
   shares authorized; 45,924,686 and 44,455,746
   shares issued and outstanding at December 31,
   2005 and March 31, 2006, respectively                   459          445
  Additional paid-in capital                           373,382      307,864
  Deferred stock compensation                           (2,234)          --
  Treasury stock at cost, 106,600 shares outstanding
   at December 31, 2005                                 (3,672)          --
  Retained earnings                                    345,308      361,031
  Accumulated other comprehensive income                 4,957        7,053
    Total stockholders' equity                         718,200      676,393
                                                    $1,676,307   $1,678,548


                         WASTE CONNECTIONS, INC.
             CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                THREE MONTHS ENDED MARCH 31, 2005 AND 2006
                               (Unaudited)
                          (Dollars in thousands)

                                                         Three months ended
                                                              March 31,
                                                           2005      2006

  Cash flows from operating activities:
  Net income                                              $19,359   $15,723
  Adjustments to reconcile net income to net cash
   provided by operating activities:
    Gain on disposal of assets                               (121)      (82)
    Depreciation                                           14,129    17,248
    Amortization of intangibles                               640       984
    Deferred income taxes, net of acquisitions             (3,018)    3,679
    Minority interests                                      2,687     2,711
    Amortization of debt issuance costs                       296     4,763
    Stock-based compensation                                  255       618
    Interest income on restricted assets                      (70)     (141)
    Closure and post-closure accretion                        167       149
    Tax benefit on the exercise of stock options            2,358        --
    Excess tax benefit on the exercise of stock options        --    (3,353)
    Net change in operating assets and liabilities, net
     of acquisitions                                       16,184    (4,443)
    Net cash provided by operating activities              52,866    37,856

  Cash flows from investing activities:
    Payments for acquisitions, net of cash acquired        (6,719)   (3,755)
    Capital expenditures for property and equipment       (14,315)  (19,966)
    Proceeds from disposal of assets                          647       171
    Decrease (increase) in restricted cash, net of
     interest income                                        1,353      (276)
    Decrease (increase) in other assets                      (264)     (392)
  Net cash used in investing activities                   (19,298)  (24,218)

  Cash flows from financing activities:
    Proceeds from long-term debt                           37,032   229,964
    Principal payments on notes payable and long-term
     debt                                                 (26,485) (173,349)
    Change in book overdraft                               (5,916)   (1,683)
    Proceeds from option and warrant exercises              9,285    17,361
    Excess tax benefit on the exercise of stock options        --     3,353
    Distributions to minority interest holders             (2,401)   (2,058)
    Payments for repurchase of common stock               (44,941)  (80,586)
    Debt issuance costs                                       (31)   (6,307)
  Net cash used in financing activities                   (33,457)  (13,305)

  Net increase in cash and equivalents                        111       333
  Cash and equivalents at beginning of period               3,610     7,514
  Cash and equivalents at end of period                    $3,721    $7,847


                          ADDITIONAL STATISTICS
                    THREE MONTHS ENDED MARCH 31, 2006
                          (Dollars in thousands)


Internal Growth: The following table reflects revenue growth for operations owned for at least 12 months:

                                Three Months Ended
                                   March 31, 2006

  Price                                  4.8%
  Volume                                 3.8%
  Intermodal, Recycling and Other       (0.5%)
  Total                                  8.1%


  Uneliminated Revenue Breakdown:

                                    Three Months Ended
                                       March 31, 2006
  Collection                         $140,280   64.7%
  Disposal and Transfer                58,427   26.9%
  Intermodal, Recycling and Other      18,132    8.4%
  Total                              $216,839   100.0%

  Inter-company elimination           $26,670


Days Sales Outstanding for the three months ended March 31, 2006: 42 (28 net of deferred revenue)

  Internalization for the three months ended March 31, 2006:  69%

  Other Cash Flow Items for the three months ended March 31, 2006:
    Cash Interest Paid:     $7,507
    Cash Taxes Paid:          $594

  Debt to Capitalization:  49.1%
    Total Debt divided by Total Debt plus Total Stockholders' Equity:
    ($644,049 + $8,619) / ($644,049 + $8,619 + $676,393) = 49.1%

  Share Information for the three months ended March 31, 2006:

    Basic shares outstanding                  45,669,545
    Dilutive effect of options and warrants    1,254,379
    Dilutive effect of convertible notes         615,313
    Dilutive effect of restricted stock           51,239
    Diluted shares outstanding                47,590,476

    Shares repurchased                         2,138,500


                     NON-GAAP RECONCILIATION SCHEDULE
                              (in thousands)

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 cash proceeds from disposal of assets and excess tax benefit on the exercise of stock options, plus or minus change in book overdraft, less capital expenditures and distributions to minority interest holders. This measure is not a substitute for, and should be used in conjunction with, GAAP financial measures. Management uses free cash flow as one of the principal measures to evaluate and monitor the ongoing financial performance of our operations. Other companies may calculate free cash flow differently.

  Free cash flow reconciliation:

                                     Three Months Ended   Three Months Ended
                                        March 31, 2005      March 31, 2006

  Net cash provided by operating
   activities                              $52,866              $37,856
  Change in book overdraft                  (5,916)              (1,683)
  Plus: Cash proceeds from disposal of
   assets                                      647                  171
  Plus: Excess tax benefit on the exercise
   of stock options                             --                3,353
  Less: Capital expenditures for property
   and equipment                           (14,315)             (19,966)
  Less: Distributions to minority interest
   holders                                  (2,401)              (2,058)
  Free cash flow                           $30,881              $17,673

  Free cash flow as % of revenues            18.8%                 9.3%


Net income and EPS adjusted to exclude the write-off of unamortized debt issuance costs associated with convertible notes called for redemption are provided as a measure of our operating performance on a more comparable basis to historical periods. The item excluded is financing related and may not occur in every reporting period. Therefore, management evaluates net income and EPS performance excluding this item to evaluate and monitor the ongoing financial performance of our operations. These measures should be used in conjunction with GAAP net income and EPS.

  Net income and EPS reconciliation:

                                                          Three Months Ended
                                                             March 31, 2006

  Net income                                                     $15,723
  After-tax cost for write-off of unamortized debt costs           2,637
  Net income excluding write-off of unamortized debt costs       $18,360

  Diluted shares used in the per share calculation:           47,590,476

  Diluted EPS excluding cost for early retirement of debt:         $0.39

SOURCE: Waste Connections, Inc.

CONTACT: Worthing Jackman of Waste Connections, Inc., +1-916-608-8266 or
worthingj@wasteconnections.com