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Waste Connections Reports Third Quarter 2006 Results and Announces Increase in Stock Repurchase Program

- Revenue increases 14.7% to $216.5 million with stronger than expected margins - Reports internal growth of 5.3% price and 2.6% volume - Repurchases approximately $100.2 million YTD of common stock - Increases stock repurchase program to $500 million

PRNewswire-FirstCall
FOLSOM, Calif.
Oct 23, 2006

Waste Connections, Inc. today announced its results for the third quarter 2006. Revenue totaled $216.5 million, a 14.7% increase over revenue of $188.7 million in the year ago period. Operating income was $47.5 million versus $46.5 million in the third quarter of 2005. Net income was $21.9 million, or $0.47 per share on a diluted basis of 46.6 million shares. In the year ago period, the Company reported net income of $24.5 million and diluted earnings per share of $0.51. The current period results were affected by a higher than anticipated effective tax rate of 39.9%, compared to 34.5% in the year-ago period. This increase was due to an adjustment of $2.6 million, or approximately $0.06 per share, to accrued deferred tax liabilities resulting from an increase in the Company's estimated deferred tax rate.

"We are extremely pleased with our operating results in the quarter, which exceeded the upper end of our outlook. We expect continuing pricing strength to result in sequentially more favorable year-over-year margin comparisons in the fourth quarter, providing a springboard for further improvements in 2007," said Ronald J. Mittelstaedt, Chairman and Chief Executive Officer. "Our strong free cash flow has enabled us already to meet our goal of repurchasing at least $100 million of stock during the year while maintaining our strong credit profile. We believe our improving financial outlook and free cash flow will continue to enable us to both execute our growth strategy and repurchase approximately 6% of outstanding shares per year without a material impact to our capital structure."

The Company also announced that its Board of Directors has authorized a $200 million increase to its ongoing common stock repurchase program, increasing the total authorized amount to $500 million, and an extension of the program's term through December 31, 2008. Stock repurchases may be made in the open market or in privately negotiated transactions from time to time at management's discretion. The timing and amounts of any repurchases will depend on many factors, including the Company's capital structure, the market price of the common stock and overall market conditions.

For the nine months ended September 30, 2006, revenue was $613.7 million, a 15.0% increase over revenue of $533.5 million in the year ago period. Operating income was $127.5 million versus $128.8 million for the same period in 2005. Net income for the nine months ended September 30, 2006, was $56.8 million, or $1.21 per share on a diluted basis of 46.9 million shares. In the year ago period, the Company reported income from continuing operations of $65.8 million and diluted earnings per share from continuing operations of $1.36.

The Company noted the following items 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 2006 in the
     amount of $4.2 million ($2.6 million net of taxes), or a decrease of
     approximately $0.06 per share;
  -- additional development costs in the second quarter of 2006 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 $2.6 million ($1.6 million net of
     taxes), or a decrease of approximately $0.03 per share;
  -- reduced interest expense in the second quarter of 2006 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; and
  -- an increase in the estimated effective state tax rate which resulted in
     a $2.6 million adjustment to accrued deferred tax liabilities in the
     third quarter, increasing the effective tax rate for the nine months
     ended September 30, 2006, to 38.4% from 36.2% in the year ago period.

Waste Connections will be hosting a conference call related to third quarter earnings and fourth quarter outlook on October 24th 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 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 $5.7 million for the nine months ended September 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) Waste Connections' Amended and Restated Revolving Credit and Term Loan Agreement and other factors and considerations may limit the number of shares repurchased under Waste Connections' stock repurchase program; (12) 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; (13) 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; (14) 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; (15) Waste Connections' decentralized decision-making structure could allow local managers to make decisions that adversely affect Waste Connections' operating results; (16) Waste Connections' financial results are based upon estimates and assumptions that may differ from actual results; (17) Waste Connections may incur additional charges related to capitalized expenditures, which would decrease its earnings; (18) 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 (19) 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 AND NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2006
                               (Unaudited)
            (in thousands, except share and per share amounts)


                              Three months ended         Nine months ended
                                 September 30,             September 30,
                               2005         2006         2005         2006

  Revenues                 $188,745     $216,547     $533,454     $613,686
  Operating expenses:
    Cost of operations      108,049      128,709      305,815      368,346
    Selling, general
     and administrative      17,686       21,424       51,924       61,846
    Depreciation and
     amortization            16,728       19,072       47,278       56,040
    Gain on sale of assets     (198)        (189)        (332)         (35)
  Operating income           46,480       47,531      128,769      127,489

  Interest expense           (6,033)      (7,572)     (16,543)     (21,685)
  Minority interests         (3,158)      (3,719)      (9,272)      (9,748)
  Other income
   (expense), net                55          141          226       (3,840)
  Income from continuing
   operations before
   income tax                37,344       36,381      103,180       92,216

  Income tax provision      (12,869)     (14,508)     (37,360)     (35,420)
  Income from continuing
   operations                24,475       21,873       65,820       56,796
  Loss from discontinued
   operations, net of tax        --           --         (579)          --

  Net income                $24,475      $21,873      $65,241      $56,796

  Basic earnings per
   common share:
    Continuing operations     $0.53        $0.48        $1.40        $1.25
    Discontinued operations      --           --        (0.01)          --
    Net income per
     common share             $0.53        $0.48        $1.39        $1.25

  Diluted earnings per
   common share:
    Continuing operations     $0.51        $0.47        $1.36        $1.21
    Discontinued operations      --           --        (0.02)          --
    Net income per
     common share             $0.51        $0.47        $1.34        $1.21

  Shares used in the per
   share calculations:
    Basic                46,523,711   45,490,632   46,904,412   45,444,208
    Diluted              48,122,605   46,597,157   48,511,858   46,936,291


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


                                               December 31,    September 30,
                                                    2005             2006
  ASSETS
  Current assets:
    Cash and equivalents                            $7,514          $10,527
    Accounts receivable, net of allowance
     for doubtful accounts of $2,826 and
     $3,198 at December 31, 2005 and
     September 30, 2006, respectively               94,438          102,155
    Deferred tax assets                              5,145            7,296
    Prepaid expenses and other current assets       17,279           16,930
      Total current assets                         124,376          136,908

  Property and equipment, net                      700,508          730,741
  Goodwill                                         723,120          748,686
  Intangible assets, net                            87,651           86,977
  Restricted assets                                 13,888           15,142
  Other assets, net                                 26,764           23,972
                                                $1,676,307       $1,742,426

  LIABILITIES AND STOCKHOLDERS' EQUITY
  Current liabilities:
    Accounts payable                               $54,795          $57,446
    Book overdraft                                   8,869            2,726
    Accrued liabilities                             44,522           64,407
    Deferred revenue                                30,957           32,404
    Current portion of long-term debt
     and notes payable                              10,858            7,078
      Total current liabilities                    150,001          164,061

  Long-term debt and notes payable                 586,104          638,042
  Other long-term liabilities                       20,478           16,061
  Deferred tax liabilities                         175,167          188,666
      Total liabilities                            931,750        1,006,830

  Commitments and contingencies
  Minority interests                                26,357           28,265

  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 45,260,160 shares
   issued and outstanding at
   December 31, 2005 and
   September 30, 2006, respectively                    459              453
  Additional paid-in capital                       373,382          301,135
  Deferred stock compensation                       (2,234)              --
  Treasury stock at cost,
   106,600 shares outstanding
   at December 31, 2005                             (3,672)              --
  Retained earnings                                345,308          402,104
  Accumulated other comprehensive income             4,957            3,639
      Total stockholders' equity                   718,200          707,331
                                                $1,676,307       $1,742,426


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


                                                       Nine months ended
                                                         September 30,
                                                      2005           2006
  Cash flows from operating activities:
  Net income                                       $65,241        $56,796
  Adjustments to reconcile net income to
   net cash provided by operating activities:
    Gain on disposal of assets                        (529)           (35)
    Depreciation                                    45,450         52,990
    Amortization of intangibles                      2,077          3,050
    Deferred income taxes, net of acquisitions      (4,814)        11,524
    Minority interests                               9,272          9,748
    Amortization of debt issuance costs              1,430          5,758
    Stock-based compensation                           940          2,562
    Interest income on restricted assets              (272)          (462)
    Closure and post-closure accretion                 509            476
    Tax benefit on the exercise of stock options     6,987             --
    Excess tax benefit on the exercise of
     stock options                                      --         (5,660)
    Net change in operating assets and
     liabilities, net of acquisitions               23,505         15,593
  Net cash provided by operating activities        149,796        152,340

  Cash flows from investing activities:
    Payments for acquisitions, net of
     cash acquired                                 (73,548)       (35,948)
    Capital expenditures for property
     and equipment                                 (61,418)       (73,482)
    Proceeds from disposal of assets                 4,420          1,950
    Decrease (increase) in restricted cash,
     net of interest income                          1,111           (792)
    Increase in other assets                          (612)          (321)
  Net cash used in investing activities           (130,047)      (108,593)

  Cash flows from financing activities:
    Proceeds from long-term debt                   195,098        655,996
    Principal payments on notes payable
     and long-term debt                           (132,939)      (608,141)
    Change in book overdraft                        (3,514)        (6,143)
    Proceeds from option and warrant exercises      25,216         26,048
    Excess tax benefit on the exercise
     of stock options                                   --          5,660
    Distributions to minority interest holders      (8,526)        (7,840)
    Payments for repurchase of common stock        (91,917)      (100,245)
    Debt issuance costs                                (43)        (6,069)
  Net cash used in financing activities            (16,625)       (40,734)

  Net increase in cash and equivalents               3,124          3,013
  Cash and equivalents at beginning of period        3,610          7,514
  Cash and equivalents at end of period             $6,734        $10,527


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


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

                                               Three Months Ended
                                               September 30, 2006
    Price                                             5.3%
    Volume                                            2.6%
    Intermodal, Recycling and Other                  (0.6%)
      Total                                           7.3%


  Uneliminated Revenue Breakdown:


                                                     Three Months Ended
                                                     September 30, 2006
    Collection                                    $157,891          64.0%
    Disposal and Transfer                           69,016          28.0%
    Intermodal, Recycling and Other                 19,758           8.0%
      Total                                       $246,665         100.0%

    Inter-company elimination                      $30,118


Days Sales Outstanding for the three months ended September 30, 2006: 43 (30 net of deferred revenue)

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


  Other Cash Flow Items for the three months ended September 30, 2006:
    Cash Interest Paid:       $  5,744
    Cash Taxes Paid:          $  7,024


  Debt to Capitalization:  47.7%


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


    Basic shares outstanding                      45,490,632
    Dilutive effect of options and warrants        1,014,774
    Dilutive effect of restricted stock               91,751
    Diluted shares outstanding                    46,597,157

    Shares repurchased                               347,900


                     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 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   Nine Months Ended
                                           September 30,       September 30,
                                                   2006                2006
  Net cash provided by operating activities     $56,344            $152,340
  Change in book overdraft                         (809)             (6,143)
  Plus: Proceeds from disposal of assets          1,637               1,950
  Plus: Excess tax benefit on the exercise
   of stock options                                 158               5,660
  Less: Capital expenditures for property
   and equipment                                (24,443)            (73,482)
  Less: Distributions to minority
   interest holders                              (2,940)             (7,840)
  Free cash flow                                $29,947             $72,485

  Free cash flow as % of revenues                  13.8%               11.8%

SOURCE: Waste Connections, Inc.

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