UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 21, 2010
WASTE CONNECTIONS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE | 1-31507 | 94-3283464 | ||
(State or other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
2295 Iron Point Road, Suite 200, Folsom, CA |
95630 | |
(Address of Principal Executive Offices) | (Zip Code) |
Registrants telephone number, including area code: (916) 608-8200
(Former name or former address if changed since last report.) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 7.01 Regulation FD Disclosure.
During our earnings conference call on April 21, 2010, we highlighted the following outlook for the second quarter 2010.
(Dollar amounts are approximations)
For the second quarter of the year, we estimate our revenue to be approximately $323 million to $325 million. We estimate organic growth to be approximately 3%, with the components as follows: core pricing growth of approximately positive 2.8%; surcharges growth to be approximately 0.2%; volume growth to be between negative 2% to 2.5%; and recycling, intermodal and other growth to be between positive 2% and 2.5%. Operating income before depreciation, amortization and accretion expense is estimated to be between $103 million and $104 million, reflecting a margin of almost 32%. Depreciation and amortization expense is estimated to be approximately 11.3% of revenue. Operating income is estimated to be approximately 20.5% of revenue. We expect interest expense to be approximately $9.1 million. We expect our effective tax rate to be about 38.6%. Noncontrolling interests expense is estimated to be $350,000. We expect our fully diluted share count to be approximately 78.6 million shares, excluding the impact of any stock option exercise activity or any stock repurchase activity during the remainder of the quarter.
These estimates exclude the impact of any acquisitions that may close during the quarter, the expensing of any acquisition-related costs, and a one-time charge of approximately $9.7 million, or $6 million net of taxes, associated with the early redemption of our 3.75% Convertible Senior Notes due 2026 on April 1, 2010. The early redemption charge accounts for the make-whole redemption premium, the write-off of unamortized financing fees, and the write-off of unamortized debt discount.
Operating income before depreciation, amortization and accretion is considered a non-GAAP financial measure, and is provided supplementally because it is widely used by investors as a performance and valuation measure in the solid waste industry. We define operating income before depreciation, amortization and accretion as operating income, plus depreciation and amortization expense, plus closure and post-closure accretion expense, plus or minus any gain or loss on disposal of assets. This measure is not a substitute for, and should be used in conjunction with, GAAP financial measures. Management uses operating income before depreciation, amortization and accretion as one of the principal measures to evaluate and monitor the ongoing financial performance of our operations. Other companies may calculate this measure differently.
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. We define free cash flow as net cash provided by operating activities, plus proceeds from disposal of assets, plus or minus change in book overdraft, plus excess tax benefit associated with equity-based compensation, less capital expenditures for property and equipment and distributions to noncontrolling interests. This measure is not a substitute for, and should be used in conjunction with, GAAP liquidity or 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.
Safe Harbor for Forward-Looking Statements
Certain statements contained in this report are forward-looking in nature, including statements related to our
2010 outlook. These statements can be identified by the use of forward-looking terminology such as
believes, expects, may, will, should, or anticipates, or the negative thereof or comparable
terminology, or by discussions of strategy. Our 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) our acquisitions may not be successful, resulting in changes in
strategy, operating losses or a loss on sale of the business acquired; (2) a portion of our growth and future
financial performance depends on our ability to integrate acquired businesses into our organization and
operations; (3) downturns in the worldwide economy adversely affect operating results; (4) our results are
vulnerable to economic conditions and seasonal factors affecting the regions in which we operate; (5) we may
be subject in the normal course of business to judicial, administrative or other third party proceedings that
could interrupt or limit our operations, require expensive remediation, result in adverse judgments,
settlements or fines and create negative publicity; (6) we may be unable to compete effectively with larger
and better capitalized companies and governmental service providers; (7) we may lose contracts through
competitive bidding, early termination or governmental action; (8) price increases may not be adequate to
offset the impact of increased costs or may cause us to lose volume; (9) increases in the price of fuel may
adversely affect our business and reduce our operating margins; (10) increases in labor and disposal and
related transportation costs could impact our financial results; (11) efforts by labor unions could divert
management attention and adversely affect operating results; (12) we could face significant withdrawal
liability if we withdraw from participation in one or more multiemployer pension plans in which we
participate; (13) increases in insurance costs and the amount that we self-insure for various risks could
reduce our operating margins and reported earnings; (14) competition for acquisition candidates, consolidation
within the waste industry and economic and market conditions may limit our ability to grow through
acquisitions; (15) our indebtedness could adversely affect our financial condition; we may incur substantially
more debt in the future; (16) each business that we acquire or have acquired may have liabilities or risks
that we fail or are unable to discover, including environmental liabilities; (17) liabilities for
environmental damage may adversely affect our financial condition, business and earnings; (18) our accruals
for our landfill site closure and post-closure costs may be inadequate; (19) the financial soundness of our
customers could affect our business and operating results; (20) we depend significantly on the services of the
members of our senior, regional and district management team, and the departure of any of those persons could
cause our operating results to suffer; (21) our decentralized decision-making structure could allow local
managers to make decisions that adversely affect our operating results; (22) because we depend on railroads
for our intermodal operations, our operating results and financial condition are likely to be adversely
affected by any reduction or deterioration in rail service; (23) we may incur additional charges related to
capitalized expenditures, which would decrease our earnings; (24) our financial results are based upon
estimates and assumptions that may differ from actual results; (25) the adoption of new accounting standards
or interpretations could adversely affect our financial results; (26) our financial and operating performance
may be affected by the inability to renew landfill operating permits, obtain new landfills and expand existing
ones; (27) future changes in laws or renewed enforcement of laws regulating the flow of solid waste in
interstate commerce could adversely affect our operating results; (28) extensive and evolving environmental
and health and safety laws and regulations may restrict our operations and growth and increase our costs;
(29) climate change regulations may adversely affect operating results; (30) extensive regulations that govern
the design, operation and closure of landfills may restrict our landfill operations or increase our costs of
operating landfills; (31) alternatives to landfill disposal may cause our revenues and operating results to
decline; (32) fluctuations in prices for recycled commodities that we sell and rebates we offer to customers
may cause our revenues and operating results to decline; and (33) unusually adverse weather conditions may
interfere with our operations, harming our operating results. These risks and uncertainties, as well as
others, are discussed in greater detail in our filings with the Securities and Exchange Commission, including
our most recent Annual Report on Form 10-K. There may be additional risks of which we are not presently aware
or that we currently believe are immaterial which could have an adverse impact on our business. We make no
commitment to revise or update any forward-looking statements in order to reflect events or circumstances that
may change.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
WASTE CONNECTIONS, INC.
Date: April 21, 2010
BY: /s/ Worthing F. Jackman
Worthing F. Jackman,
Executive Vice President and Chief Financial Officer