Waste Connections comments on recycled commodity prices

Waste Connections, Inc. commented on the recent weakness in recycled commodity prices.

“The precipitous drop in recycled commodity values over the past few weeks is unprecedented,” said Ronald J. Mittelstaedt, chairman and chief executive officer. “Many of these commodities generated on the West Coast are shipped to Asia, where demand has dried up. In certain of our markets, recycled commodities that had a strong value only a few weeks ago now have no buyers. Until demand from Asia re-emerges, a commodity that historically has had a value could remain a cost.”

Primarily as a result of this change in the recycling market, Waste Connections now estimates its fourth quarter 2008 revenue to be between $264 million and $267 million based upon current market conditions and assuming no recovery in recycled commodity prices.

Operating income before depreciation and amortization expense in the quarter is estimated to be between 28.0 percent and 28.5 percent of revenue, depreciation and amortization expense is estimated to be approximately 9.5 percent of revenue, and operating income is estimated to be between 18.5 percent and 19 percent of revenue. These margin estimates exclude the previously announced expected one-time, pre-tax charge of approximately $2 million related to transaction costs associated with the completed LeMay acquisition.

Waste Connections also announced the acquisition of two companies within exclusive markets on the West Coast with combined annualized revenue of approximately $15 million. In Washington, the company acquired Yakima Waste Systems, Inc., a provider of solid waste collection, recycling and transfer services in Yakima County under two exclusive G Certificates.

In Oregon, Waste Connections acquired the residential collection assets of Trashco Services, Inc., which are used to provide solid waste collection services under an exclusive residential franchise agreement contiguous with the company’s existing operations in Portland.