Attached files
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8-K - FORM 8-K - WCA WASTE CORP | h82528e8vk.htm |
EX-99.1 - EX-99.1 - WCA WASTE CORP | h82528exv99w1.htm |
EX-99.2 - EX-99.2 - WCA WASTE CORP | h82528exv99w2.htm |
Recent
Acquisitions
On February 28, 2011, we closed the acquisition of certain
assets relating to the Central Florida markets of
Waste Recyclers Holdings, LLC and its subsidiaries (such assets
are collectively referred to herein as Emerald). Our
reported EBITDA for the year ended December 31, 2010 does
not reflect any results from the acquired Emerald assets.
For the nine months ended September 30, 2010, on a pro
forma basis giving effect to the Emerald acquisition, our
revenues and EBITDA would have been $196.4 million and
$45.9 million. We do not have externally reviewed financial
statements for Emerald for any period after September 30,
2010. However, based on Emeralds financial statements for
the nine months ended September 30, 2010, its annualized
revenues and EBITDA for the year ended December 31, 2010,
would have been $32.7 million and $7.3 million,
respectively. The calculation of these annualized financial
measures is based on the assumption that Emerald generated
revenue and EBITDA for the three months ended December 31,
2010 that would be equal to its average quarterly revenue and
EBITDA for the nine months ended September 30, 2010.
However, Emeralds actual revenue and EBITDA for the three
months ended December 31, 2010 may differ from such average
amounts, and consequently its revenues and EBITDA for the year
ended December 31, 2010, may differ from the annualized
figures presented above.
We have also consummated a number of other small acquisitions
during 2010 and the first three months of 2011. During the first
quarter of 2011, we completed two acquisitions for aggregate
consideration of $4.9 million and approximately
400,000 shares of our common stock. During 2010, we
completed four acquisitions for $9.9 million of cash and
approximately 20,000 shares of common stock. None of these
acquisitions were material, and we have not prepared pro forma
financial information reflecting such acquisitions.
SUMMARY
HISTORICAL CONSOLIDATED FINANCIAL DATA
The following summary historical consolidated financial
information as of December 31, 2009 and 2010 and for each
of the years ended December 31, 2008, 2009 and 2010 has
been derived from our audited consolidated financial statements. The summary
financial data as of and for the three months ended
March 31, 2010 and 2011 has been derived from our unaudited
consolidated financial statements. The summary financial data for the twelve
months ended March 31, 2011 has been calculated by
subtracting the data for the three months ended March 31,
2010 from the data for the year ended December 31, 2010,
and then adding the appropriate data for the three months ended
March 31, 2011. This information is only a summary. Our historical
results included below
are not necessarily indicative of our future performance.
Our historical financial results for the years ended
December 31, 2008, 2009 and 2010 and for the three months
ended March 31, 2010 do not reflect our acquisition of
Emerald in February 2011 or other recent immaterial acquisitions
prior to their date of acquisition.
For the |
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Twelve |
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For the Three Months |
Months |
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Ended |
Ended |
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For the Years Ended December 31, | March 31, | March 31, | ||||||||||||||||||||||
2008 | 2009 | 2010 | 2010 | 2011 | 2011 | |||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||||||||||||
Consolidated Statements of Operations Data:
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Revenue:
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Collection
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$ | 129,796 | $ | 125,931 | $ | 123,070 | $ | 29,710 | $ | 33,954 | $ | 127,314 | ||||||||||||
Disposal, net
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45,929 | 43,722 | 70,503 | 14,942 | 14,935 | 70,496 | ||||||||||||||||||
Transfer and other, net
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32,284 | 24,485 | 35,911 | 7,655 | 9,099 | 37,355 | ||||||||||||||||||
Total revenue
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$ | 208,009 | $ | 194,138 | $ | 229,484 | $ | 52,307 | $ | 57,988 | $ | 235,165 | ||||||||||||
Cost of services
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142,129 | 130,287 | 165,110 | 38,139 | 43,215 | 170,186 | ||||||||||||||||||
Depreciation and amortization
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27,151 | 26,357 | 30,058 | 7,288 | 7,368 | 30,138 | ||||||||||||||||||
Impairment of goodwill
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41,725 | | | | | | ||||||||||||||||||
General and administrative
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12,335 | 13,496 | 11,999 | 3,232 | 3,773 | 12,540 | ||||||||||||||||||
Gain on sale of assets
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(178 | ) | (86 | ) | (938 | ) | (9 | ) | (27 | ) | (956 | ) | ||||||||||||
Operating income (loss)
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$ | (15,153 | ) | $ | 24,084 | $ | 23,255 | $ | 3,657 | $ | 3,659 | $ | 23,257 | |||||||||||
Interest expense, net
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18,560 | 18,052 | 19,028 | 4,692 | 4,964 | 19,300 | ||||||||||||||||||
Write-off of deferred financing costs
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| | 184 | | | 184 | ||||||||||||||||||
Impact of interest rate swap
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7,547 | 2,063 | 236 | 252 | | (16 | ) | |||||||||||||||||
Other expense, net
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240 | 3 | 3 | | | 3 | ||||||||||||||||||
Income (loss) before income taxes
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$ | (41,500 | ) | $ | 3,966 | $ | 3,804 | $ | (1,287 | ) | $ | (1,305 | ) | $ | 3,786 | |||||||||
Income tax provision (benefit)
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(13,737 | ) | 2,958 | 1,915 | (539 | ) | (794 | ) | 1,660 | |||||||||||||||
Net income (loss)
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$ | (27,763 | ) | $ | 1,008 | $ | 1,889 | $ | (748 | ) | $ | (511 | ) | $ | 2,126 | |||||||||
Accrued
payment-in-kind
dividend on preferred stock
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4,076 | 4,278 | 4,501 | 1,108 | 1,161 | 4,554 | ||||||||||||||||||
Net loss available to common stockholders
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$ | (31,839 | ) | $ | (3,270 | ) | $ | (2,612 | ) | $ | (1,856 | ) | $ | (1,672 | ) | $ | (2,428 | ) | ||||||
Other Consolidated Financial Data:
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EBITDA(1)
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$ | 11,758 | $ | 50,438 | $ | 53,310 | $ | 10,945 | $ | 11,027 | $ | 53,392 | ||||||||||||
Adjusted EBITDA(2)
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56,589 | 53,833 | 56,425 | 11,737 | 12,212 | 56,900 | ||||||||||||||||||
Adjusted EBITDA margin(3)
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27.2 | % | 27.7 | % | 24.6 | % | 22.4 | % | 21.1 | % | 24.2 | % | ||||||||||||
Cash interest expense
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17,797 | 16,914 | 17,577 | 873 | 1,064 | 17,768 | ||||||||||||||||||
Capital expenditures
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29,805 | 23,827 | 31,282 | 3,080 | 3,034 | 31,236 | ||||||||||||||||||
Cash paid for acquisitions of businesses, net
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8,144 | 23,375 | 9,922 | | 37,985 | 47,907 | ||||||||||||||||||
Fixed charges(4)
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19,594 | 18,794 | 20,383 | 5,021 | 5,283 | 20,645 | ||||||||||||||||||
Ratio of net debt to Adjusted EBITDA(5)
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3.5 | x | 4.0 | x | 4.1 | x | | | | |||||||||||||||
Ratio of Adjusted EBITDA to interest expense
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3.0 | x | 3.0 | x | 3.0 | x | | | |
As of March 31, 2011 | ||||||||
Pro Forma |
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Actual | Adjusted(6) | |||||||
(Dollars in thousands) | ||||||||
Consolidated Balance Sheet Data:
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Cash and cash equivalents
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$ | 3,820 | $ | 3,820 | ||||
Property and equipment, net
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331,093 | 331,100 | ||||||
Goodwill and other intangible assets, net
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101,329 | 101,300 | ||||||
Total assets
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494,105 | 494,100 | ||||||
Total long-term debt (including current portion)(7)
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268,575 | 279,475 | ||||||
Total stockholders equity
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178,050 | 173,800 |
(1) | EBITDA is defined as earnings before interest, taxes, depreciation and amortization. See footnote (2) below for a reconciliation of EBITDA to net loss available to common stockholders. | |
(2) | Our management evaluates our performance based on non-GAAP measures, of which the primary performance measure is Adjusted EBITDA. Our Adjusted EBITDA consists of earnings (net income or loss) available to common stockholders before preferred stock dividend, interest expense (including write-off of deferred financing costs and debt discount), impact of interest rate swap agreements, income tax expense, depreciation and amortization, impairment of goodwill, net loss on early disposition of notes receivable/payable, merger and acquisition related expenses, accretion expense for closure and post-closure obligations and stock-based compensation. We also use these same measures when evaluating potential acquisition candidates. Our definition and presentation of Adjusted EBITDA in this Exhibit 99.3 is modified as compared to our definition and presentation of Adjusted EBITDA in our filings with the SEC under the Exchange Act and under the caption Managements Discussion and Analysis of Financial Condition and Results of Operations. We believe our modified definition and presentation of Adjusted EBITDA provides a more meaningful measure of the cash generated by our business, because it includes accretion expense for closure and post-closure obligations and stock-based compensation, which are additional non-cash items that we have not traditionally included in our presentations of Adjusted EBITDA in our SEC filings. In addition, we believe this modified definition of Adjusted EBITDA is appropriate because including additional adjustments for these non-cash expenses and charges is consistent with the calculation of similar financial measures in our secured credit facility. | |
Our Adjusted EBITDA, as we define it, may not be comparable to similarly titled measures employed by other companies and is not a measure of performance calculated in accordance with GAAP. Adjusted EBITDA should not be considered in isolation or as substitutes for operating income, net income or loss, cash flows provided by operating, investing and financing activities, or other income or cash flow statement data prepared in accordance with GAAP. However, our management believes that Adjusted EBITDA is useful to an investor in evaluating our operating performance because: | ||
it is widely used by investors in our industry to
measure a companys operating performance without regard to
items such as interest expense, depreciation and amortization,
which can vary substantially from company to company depending
upon accounting methods and book value of assets, financing
methods, capital structure and the method by which assets were
acquired;
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it helps investors more meaningfully evaluate and
compare the results of our operations from period to period by
removing the impact of our capital structure (primarily interest
charges from our outstanding debt and the impact of our interest
rate swap agreements and
payment-in-kind
(PIK) dividend) and asset base (primarily depreciation and
amortization of our landfills and vehicles) from our operating
results; and
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it helps investors identify items that are within
our operational control. Depreciation charges, while a component
of operating income, are fixed at the time of the asset purchase
in accordance with the depreciable lives of the related asset
and as such are not a directly controllable period operating
charge.
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Our management uses Adjusted EBITDA: | ||
as a measure of operating performance because it
assists us in comparing our performance on a consistent basis,
as it removes the impact of our capital structure and asset base
from our operating results;
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as one method to estimate a purchase price (often
expressed as a multiple of EBITDA or Adjusted EBITDA) for solid
waste companies that we intend to acquire. The appropriate
EBITDA or Adjusted EBITDA multiple will vary from acquisition to
acquisition depending on factors such as the size of the
operation, the type of operation, the anticipated growth in the
market, the strategic location of the operation in its market as
well as other considerations;
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in presentations to our board of directors to enable
them to have the same consistent measurement basis of operating
performance used by management;
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as a measure for planning and forecasting overall
expectations and for evaluating actual results against such
expectations;
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in evaluations of field operations since it
represents operational performance and takes into account
financial measures within the control of the field operating
units;
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as a component of incentive cash and stock bonuses
paid to our executive officers and other employees;
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to assess compliance with financial ratios and
covenants included in our credit agreement; and
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in communications with investors, lenders, and
others concerning our financial performance.
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There are significant limitations to using Adjusted EBITDA as a measure of performance, including the inability to analyze the effect of certain items that materially affect our net income or loss, and the lack of comparability of results of operations of different companies. The following table reconciles our net loss available to common stockholders, the most directly comparable GAAP financial measure, to our EBITDA and Adjusted EBITDA: |
Reconciliation
of Net Loss Available to Common Stockholders to EBITDA and
Adjusted EBITDA
Twelve |
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Months |
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Three Months Ended |
Ended |
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Year Ended December 31, | March 31, | March 31, | ||||||||||||||||||||||
2008 | 2009 | 2010 | 2010 | 2011 | 2011 | |||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Net loss available to common stockholders
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$ | (31,839 | ) | $ | (3,270 | ) | $ | (2,612 | ) | $ | (1,856 | ) | $ | (1,672 | ) | $ | (2,428 | ) | ||||||
Accrued
payment-in-kind
dividend on preferred stock
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4,076 | 4,278 | 4,501 | 1,108 | 1,161 | 4,554 | ||||||||||||||||||
Net income (loss)
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$ | (27,763 | ) | $ | 1,008 | $ | 1,889 | $ | (748 | ) | $ | (511 | ) | $ | 2,126 | |||||||||
Depreciation and amortization
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27,151 | 26,357 | 30,058 | 7,288 | 7,368 | 30,138 | ||||||||||||||||||
Interest expense, net
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18,560 | 18,052 | 19,028 | 4,692 | 4,964 | 19,300 | ||||||||||||||||||
Write-off of deferred financing costs
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| | 184 | | | 184 | ||||||||||||||||||
Impact of interest rate swap
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7,547 | 2,063 | 236 | 252 | | (16 | ) | |||||||||||||||||
Income tax provision (benefit)
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(13,737 | ) | 2,958 | 1,915 | (539 | ) | (794 | ) | 1,660 | |||||||||||||||
EBITDA
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$ | 11,758 | $ | 50,438 | $ | 53,310 | $ | 10,945 | $ | 11,027 | $ | 53,392 |
Twelve |
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Months |
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Three Months Ended |
Ended |
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Year Ended December 31, | March 31, | March 31, | ||||||||||||||||||||||
2008 | 2009 | 2010 | 2010 | 2011 | 2011 | |||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||
Merger and acquisition related expenses
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115 | 1,030 | 457 | 98 | 420 | 779 | ||||||||||||||||||
Net loss on early disposition of notes receivable/payable
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221 | | | | | | ||||||||||||||||||
Accretion expense for closure and post-closure obligations
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558 | 628 | 1,094 | 297 | 247 | 1,044 | ||||||||||||||||||
Stock-based compensation
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2,212 | 1,737 | 1,564 | 397 | 518 | 1,685 | ||||||||||||||||||
Impairment of goodwill
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41,725 | | | | | | ||||||||||||||||||
Adjusted EBITDA
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$ | 56,589 | $ | 53,833 | $ | 56,425 | $ | 11,737 | $ | 12,212 | $ | 56,900 | ||||||||||||
(3) | Adjusted EBITDA margin is defined as Adjusted EBITDA divided by total revenue. | |
(4) | Fixed charges consist of interest expense on all indebtedness (whether expensed or capitalized), amortization of deferred financing costs and debt discount and the interest portion of lease payments. | |
(5) | Net debt is defined as total long-term debt less cash and cash equivalents. | |
(6) | The Pro Forma Adjusted consolidated balance sheet data reflects the balance sheet data as of March 31, 2011, adjusted for the Transactions (assuming each holder of our 2014 Notes validly tenders all of its 2014 Notes prior to the consent date and receives the consent payment as set forth in connection with our previously disclosed tender offer) as if the Transactions were consummated on March 31, 2011 and pro forma for the acquisition of Emerald. | |
(7) | Total long-term debt, pro forma as adjusted, includes the $175.0 million of notes offered in connection with our previously disclosed notes offering, which are presented at their face amount net of any original issue discount, if any. |