Waste Services Announces Strong Fourth Quarter and 2008 Fiscal Year Results

Monday, February 23, 2009 7:32 AM

- Adjusted EBITDA of $24.3 million for the quarter and $107.1 million for the year.

- Adjusted EBITDA margin of 23.7% for the quarter and 22.6% for the year as compared to 22.1% and 22.3% in 2007.

- Adjusted earnings per share(1) from continuing operations of $0.07 for the quarter ended December 31, 2008 and $0.34 for the full year as compared to $0.04 and $0.06 in 2007.

- Total debt reduced by $72.4 million during the year to $372.1 million at December 31, 2008.

BURLINGTON, Ontario, Feb. 23 /PRNewswire-FirstCall/ -- Waste Services, Inc. (Nasdaq: WSII) today announced financial results for the fourth quarter and for the year ended December 31, 2008. On an adjusted basis, fully diluted earnings per share were $0.07 for the quarter as compared to $0.04 in the fourth quarter of 2007. Revenue for the quarter was $102.4 million compared to $123.3 million for the same quarter in 2007. The financial results for the quarter have been impacted by several non-operational items. As a result, reported net loss for the quarter was $14.8 million as compared to a loss in the comparative period of $0.8 million. The results for the quarter are highlighted by:

--  For the current quarter adjusted income from operations, excluding one
    time charges, was $13.5 million and Adjusted EBITDA was $24.3 million
    with margins of 13.2% and 23.7%, respectively.
--  Excluding recycled commodity sales, internal revenue growth from price
    was 3.7%.  With commodity sales, internal revenue growth was 2.3% from
    price and 0.4% from fuel surcharge.
--  Internal revenue growth from volume declined by 5.4%.
--  Foreign currency translation accounted for $12.8 million (10.3%) of
the
    revenue reduction and the net expiration of municipal contracts
    accounted for a $4.2 million (3.4%)

For the full year 2008, the Company reported revenue of $473.0 million as compared to $461.4 million for 2007. Adjusted earnings per share for the year were $0.34 as compared to $0.06 for 2007. The results for the year ended December 31, 2008 are highlighted by:

--  For the year adjusted income from operations, excluding one time
    charges, was $59.0 million and Adjusted EBITDA was $107.1 million with
    margins of 12.5 % and 22.6 %, respectively.
--  Revenue growth of 2.5% to $473.0 million compared to $461.4 million in
    2007.
--  Internal revenue growth was 1.9%, made up of 3.9% from price, 2.3%
from
    fuel and environmental surcharge and (4.3%) volume.
--  Acquisitions net of divestitures added $18.6 million of revenue or
    4.0%, while the net expiration of municipal contracts accounted for a
    $16.1 million reduction or 3.5%.

(1) Adjusted EPS is defined as earnings per share as adjusted to
    reflect the average statutory income tax rate estimated at 36%.

David Sutherland-Yoest, Waste Services President and Chief Executive Officer, stated, "We are pleased to report our results for the fourth quarter and the 2008 fiscal year. We achieved our previously provided guidance for adjusted EBITDA and earnings per share for 2008 and we have taken several steps that we feel will protect the company from further economic headwinds of today's business environment. On October 8th, we completed the refinancing of our bank facilities, pushing maturities out five years and greatly reducing the credit risk profile of the company. In December, we announced the successful completion of our restructuring, eliminating $6.6 million in annual overhead costs. When the commodity markets dropped precipitously in November and December, we implemented a commodity surcharge to our recycling customers to partially offset the price declines going forward.

Looking forward, capital expenditures will be below $40 million in 2009 and we expect to generate free cash flow of between $25 and $35 million. We expect internal revenue growth from price in our core collection and landfill businesses to be in the 3-5% range. Or continued confidence in pricing, margin expansion and free cash flow generation stems from our disposal capacity and vertical integration in Florida and in Canada."


Reconciliation of Non-GAAP Measures:

The following table reconciles the differences between loss from continuing operations, as determined under US GAAP, and EBITDA from continuing operations, a non-GAAP financial measure (in thousands) (unaudited):

                                  For The Three Months    For The Year
                                   Ended December 31,  Ended December 31,
                                    2008     2007       2008       2007
Loss from continuing operations   $(14,785)   $(843)   $(1,956)  $(14,303)
Income tax provision (benefit)        (744)   3,819      6,183     14,437
Interest expense                    11,661    9,860     37,432     40,679
Depreciation, depletion and
 amortization                       10,522   14,045     45,348     54,891
EBITDA from continuing
 operations (1)                     $6,654  $26,881    $87,007    $95,704

The following table reconciles the differences between EBITDA from continuing operations and Adjusted EBITDA from continuing operations for the three months and year ended December 31, 2008 and 2007 (in thousands) (unaudited). The credit agreement governing our senior secured credit facilities provides for an adjustment to EBITDA from continuing operations for restructuring charges of up to $5.0 million, however, we have incurred $7.1 million of charges relative to our restructuring and cost reduction initiatives in 2008.

                                  For The Three Months    For The Year
                                   Ended December 31,  Ended December 31,
                                    2008     2007       2008       2007
EBITDA from continuing
 operations (1)                     $6,654  $26,881    $87,007    $95,704
Adjustments to EBITDA from
 continuing operations (as
 defined per credit agreement):
    Non-cash items (2)              10,532      418     13,005      3,143
    Other excludable expenses (3)    7,092     (130)     7,092      4,347
Adjusted EBITDA from continuing
 operations (1)                    $24,278  $27,169   $107,104   $103,194

(1) EBITDA from continuing operations and Adjusted EBITDA from continuing
    operations ("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.

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