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Waste Connections Reports Second Quarter 2006 Results

- Revenue increases 14.8% to $207.0 million

- Reports internal growth of 5.1% price and 2.8% volume

- Completes approximately $27.5 million YTD of acquired annualized revenue

PRNewswire-FirstCall
FOLSOM, Calif.
Jul 26, 2006

Waste Connections, Inc. today announced its results for the second quarter 2006. Revenue totaled $207.0 million, a 14.8% increase over revenue of $180.3 million in the year ago period. Operating income was $40.8 million versus $43.6 million in the second quarter of 2005. Net income was $19.2 million, or $0.41 per share on a diluted basis of 46.9 million shares. In the year ago period, the Company reported income from continuing operations of $21.8 million and diluted earnings per share from continuing operations of $0.45.

The Company noted three items in the second quarter 2006 results which combined to decrease diluted earnings per share by approximately $0.05:

* additional development costs for insurance claims from prior years of $3.8 million ($2.4 million net of taxes), or a reduction of approximately $0.05 per share;

* stock-based compensation costs of $1.0 million ($0.6 million net of taxes), or a reduction of approximately $0.01 per share; and

* reduced interest expense due to the redemption of convertible notes of $1.0 million ($0.6 million net of taxes), or an increase of approximately $0.01 per share.

"Pricing and volume growth remain above the upper end of our original expectations for the full year, and we expect this trend to continue during the third quarter. This strength has enabled us to offset higher than anticipated current year costs, primarily in fuel and related items. We expect this strong pricing environment to continue into next year and provide for margin expansion in 2007 when year-to-year costs again become more comparable," said Ronald J. Mittelstaedt, Chairman and Chief Executive Officer. "Fuel and related items increased as a percentage of revenue by approximately 265 basis points in the second quarter compared to the year ago period. This increase was due to the more than doubling of current fuel prices relative to prices we paid last year under a fixed-price fuel supply contract that expired at the end of 2005."

Mr. Mittelstaedt continued, "Acquisition activity increased significantly during the second quarter with the closing in early June of the previously announced purchase of El Dorado Disposal Service from Waste Management. El Dorado Disposal Service provides collection, recycling and transfer services in El Dorado County, California, under long-term franchise agreements. This acquisition together with previously announced awarded contracts already positions us for approximately 10% year-over-year reported revenue growth in 2007, excluding the impact of any additional acquisitions."

For the six months ended June 30, 2006, revenue was $397.1 million, a 15.2% increase over revenue of $344.7 million in the year ago period. Operating income was $80.0 million versus $82.3 million for the same period in 2005. Net income for the six months ended June 30, 2006, was $34.9 million, or $0.74 per share on a diluted basis of 47.2 million shares. In the year ago period, the Company reported income from continuing operations of $41.3 million and diluted earnings per share from continuing operations of $0.85.

The Company noted the following items in the current year six-month period which contributed to the year-over-year change in net income and diluted earnings per share:

* write-off of unamortized debt issuance costs associated with convertible notes redeemed during the second quarter of $4.2 million ($2.6 million net of taxes), or a decrease of approximately $0.06 per share;

* additional development costs for insurance claims from prior years of $3.8 million ($2.4 million net of taxes), or a decrease of approximately $0.05 per share;

* stock-based compensation costs of $1.6 million ($1.0 million net of taxes), or a decrease of approximately $0.02 per share; and

* reduced interest expense due to the redemption of convertible notes of $1.0 million ($0.6 million net of taxes), or an increase of approximately $0.01 per share.

Waste Connections will be hosting a conference call related to second quarter earnings and third quarter outlook on July 27th at 10:00 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 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 $5.5 million for the six months ended June 30, 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 22 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.

                         WASTE CONNECTIONS, INC.
                    CONSOLIDATED STATEMENTS OF INCOME
            THREE AND SIX MONTHS ENDED JUNE 30, 2005 AND 2006
                               (Unaudited)
            (in thousands, except share and per share amounts)

                           Three months ended         Six months ended
                                 June 30,                  June 30,
                            2005         2006         2005         2006

  Revenues                $180,265     $206,970     $344,709     $397,139
  Operating expenses:
    Cost of operations     103,616      126,574      197,766      239,637
    Selling, general and
     administrative         17,096       20,621       34,237       40,422
    Depreciation and
     amortization           15,938       18,736       30,549       36,968
    Loss (gain) on sale of
     assets                    (12)         236         (133)         154
  Operating income          43,627       40,803       82,290       79,958

  Interest expense          (5,575)      (6,619)     (10,510)     (14,113)
  Minority interests        (3,426)      (3,317)      (6,114)      (6,028)
  Other income (expense),
   net                          65           11          171       (3,982)
  Income from continuing
   operations before income
   tax                      34,691       30,878       65,837       55,835

  Income tax provision     (12,905)     (11,678)     (24,491)     (20,912)
  Income from continuing
   operations               21,786       19,200       41,346       34,923
  Loss from discontinued
   operations, net of tax     (378)          --         (579)          --

  Net income               $21,408      $19,200      $40,767      $34,923

  Basic earnings per common
   share:
    Continuing operations    $0.47        $0.43        $0.88        $0.77
    Discontinued operations  (0.01)          --        (0.01)          --
    Net income per common
     share                   $0.46        $0.43        $0.87        $0.77

  Diluted earnings per
   common share:
    Continuing operations    $0.45        $0.41        $0.85        $0.74
    Discontinued operations  (0.01)          --        (0.01)          --
    Net income per common
     share                   $0.44        $0.41        $0.84        $0.74

  Shares used in the per
   share calculations:
    Basic               46,727,722   45,174,415   47,097,918   45,420,613
    Diluted             48,558,866   46,885,224   48,709,641   47,236,483


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

                                                    December 31,   June 30,
                                                        2005         2006
  ASSETS
  Current assets:
    Cash and equivalents                               $7,514      $7,727
    Accounts receivable, net of allowance for
     doubtful accounts of $2,826 and $2,820 at
     December 31, 2005 and June 30, 2006, respectively 94,438      99,402
    Deferred tax assets                                 5,145       5,416
    Prepaid expenses and other current assets          17,279      19,053
      Total current assets                            124,376     131,598

  Property and equipment, net                         700,508     727,847
  Goodwill                                            723,120     744,843
  Intangible assets, net                               87,651      87,743
  Restricted assets                                    13,888      14,793
  Other assets, net                                    26,764      28,742
                                                   $1,676,307  $1,735,566

  LIABILITIES AND STOCKHOLDERS' EQUITY
  Current liabilities:
    Accounts payable                                  $54,795     $56,794
    Book overdraft                                      8,869       3,536
    Accrued liabilities                                44,522      55,937
    Deferred revenue                                   30,957      32,484
    Current portion of long-term debt and notes
     payable                                           10,858       7,014
      Total current liabilities                       150,001     155,765

  Long-term debt and notes payable                    586,104     652,587
  Other long-term liabilities                          20,478      15,365
  Deferred tax liabilities                            175,167     183,970
      Total liabilities                               931,750   1,007,687

  Commitments and contingencies
  Minority interests                                   26,357      27,485

  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 45,560,879 shares issued
   and outstanding at December 31, 2005 and
   June 30, 2006, respectively                            459         456
  Additional paid-in capital                          373,382     311,417
  Deferred stock compensation                         (2,234)          --
  Treasury stock at cost, 106,600 shares outstanding
   at December 31, 2005                               (3,672)          --
  Retained earnings                                   345,308     380,231
  Accumulated other comprehensive income                4,957       8,290
      Total stockholders' equity                      718,200     700,394
                                                   $1,676,307  $1,735,566


                         WASTE CONNECTIONS, INC.
             CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                 SIX MONTHS ENDED JUNE 30, 2005 AND 2006
                               (Unaudited)
                          (Dollars in thousands)

                                                         Six months ended
                                                              June 30,
                                                          2005       2006
  Cash flows from operating activities:
  Net income                                            $40,767   $34,923
  Adjustments to reconcile net income to net cash
   provided by operating activities:
      Loss (gain) on disposal of assets                    (330)      154
      Depreciation                                       29,538    34,946
      Amortization of intangibles                         1,261     2,022
      Deferred income taxes, net of acquisitions         (4,097)    6,026
      Minority interests                                  6,114     6,028
      Amortization of debt issuance costs                   861     5,271
      Stock-based compensation                              511     1,576
      Interest income on restricted assets                 (169)     (288)
      Closure and post-closure accretion                    342       300
      Tax benefit on the exercise of stock options        6,443        --
      Excess tax benefit on the exercise of stock
       options                                               --    (5,501)
      Net change in operating assets and
       liabilities, net of acquisitions                  16,243    10,539
  Net cash provided by operating activities              97,484    95,996

  Cash flows from investing activities:
      Payments for acquisitions, net of cash acquired   (12,854)  (34,838)
      Capital expenditures for property and equipment   (34,271)  (49,038)
      Proceeds from disposal of assets                    3,933       313
      Decrease (increase) in restricted cash, net of
       interest income                                      958      (617)
      Increase in other assets                             (156)     (236)
  Net cash used in investing activities                 (42,390)  (84,416)

  Cash flows from financing activities:
      Proceeds from long-term debt                       70,064   631,997
      Principal payments on notes payable and
       long-term debt                                   (61,960) (569,619)
      Change in book overdraft                           (6,742)   (5,333)
      Proceeds from option and warrant exercises         23,813    24,916
      Excess tax benefit on the exercise of stock
       options                                               --     5,501
      Distributions to minority interest holders         (5,341)   (4,900)
      Payments for repurchase of common stock           (71,101)  (87,744)
      Debt issuance costs                                   (40)   (6,185)
  Net cash used in financing activities                 (51,307)  (11,367)

  Net increase in cash and equivalents                    3,787       213
  Cash and equivalents at beginning of period             3,610     7,514
  Cash and equivalents at end of period                  $7,397    $7,727


                          ADDITIONAL STATISTICS
                     THREE MONTHS ENDED JUNE 30, 2006
                          (Dollars in thousands)

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

                              Three Months Ended
                                June 30, 2006
  Price                              5.1%
  Volume                             2.8%
  Intermodal, Recycling and Other   (0.6%)
    Total                            7.3%

  Uneliminated Revenue Breakdown:

                                  Three Months Ended
                                     June 30, 2006
  Collection                      $151,370     63.9%
  Disposal and Transfer             66,165     28.0%
  Intermodal, Recycling and Other   19,192      8.1%
    Total                         $236,727    100.0%

  Inter-company elimination        $29,757

Days Sales Outstanding for the three months ended June 30, 2006: 44 (29 net of deferred revenue)

  Internalization for the three months ended June 30, 2006:  68%

  Other Cash Flow Items for the three months ended June 30, 2006:
      Cash Interest Paid:     $12,752
      Cash Taxes Paid:         $7,937

  Debt to Capitalization:  48.5%
    Total Debt divided by Total Debt plus Total Stockholders' Equity:
    ($652,587 + $7,014) / ($652,587 + $7,014 + $700,394) = 48.5%

  Share Information for the three months ended June 30, 2006:

  Basic shares outstanding                45,174,415
  Dilutive effect of options and warrants  1,190,465
  Dilutive effect of convertible notes       432,755
  Dilutive effect of restricted stock         87,589
  Diluted shares outstanding              46,885,224

  Shares repurchased                         195,600


                     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   Six Months
                                                      Ended         Ended
                                                     June 30,      June 30,
                                                      2006           2006
  Net cash provided by operating activities          $58,140       $95,996
  Change in book overdraft                            (3,650)       (5,333)
  Plus: Cash proceeds from disposal of assets            142           313
  Plus: Excess tax benefit on the exercise of
   stock options                                       2,149         5,501
  Less: Capital expenditures for property and
   equipment                                         (29,073)      (49,038)
  Less: Distributions to minority interest holders    (2,842)       (4,900)
  Free cash flow                                     $24,866       $42,539

  Free cash flow as % of revenues                      12.0%         10.7%

SOURCE: Waste Connections, Inc.

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