SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                    FORM 10-Q

                Quarterly Report Pursuant to Section 13 or 15(d)
                     of the Securities Exchange Act of 1934

                  For the Quarterly Period Ended March 31, 1998

                         Commission File Number 0-22417

                             Waste Industries, Inc.
             (Exact name of Registrant as specified in its charter)

         North Carolina                                       56-0954929
(State or other jurisdiction of                            (I.R.S. Employer
incorporation or organization)                          Identification Number)



                               3949 Browning Place
                             Raleigh, North Carolina
                    (Address of principal executive offices)


                                      27609
                                   (Zip Code)


                                 (919) 782-0095
              (Registrant's telephone number, including area code)


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

                                             YES   _X_         NO ___


Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date.

  Common Stock, No Par Value                           11,881,604 shares
           (Class)                             (Outstanding at April  30, 1998)


<PAGE>


PART 1 - Financial Information
Item 1. Financial Statements

                             WASTE INDUSTRIES, INC.
                            CONDENSED BALANCE SHEETS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                        December 31,      March 31,
                                                           1997             1998
                                                       -------------    -------------
<S>                                                    <C>              <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents                              $     837,491    $          --
Accounts receivable - trade, less allowance for
    uncollectible accounts (1997 - $907,900; 1998 -
    $785,000)                                             13,351,355       17,852,672
Inventories                                                  677,053          695,449
Current deferred income taxes                                597,835          597,835
Prepaid expenses and other current assets                    615,750          850,645
                                                       -------------    -------------
        Total current assets                              16,079,484       19,996,601
                                                       -------------    -------------

PROPERTY AND EQUIPMENT, net                               63,145,661       69,800,798
INTANGIBLE ASSETS                                         29,977,579       30,623,020
OTHER NONCURRENT ASSETS                                    1,274,862        1,242,489
                                                       =============    =============
TOTAL ASSETS                                           $ 110,477,586    $ 121,662,908
                                                       =============    =============

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Bank overdraft                                         $          --    $     573,045
Current maturities of long-term debt                       1,428,149        1,330,858
Accounts payable - trade                                   8,287,125       11,280,032
Federal and state income taxes payable                       445,100        1,754,790
Accrued expenses and other liabilities                     3,715,247        3,588,783
Deferred revenue                                           1,023,883        1,280,027
                                                       -------------    -------------
    Total current liabilities                             14,899,504       19,807,535
                                                       -------------    -------------

LONG-TERM DEBT, NET OF CURRENT MATURITIES                 50,187,067       54,941,557
NONCURRENT DEFERRED INCOME TAXES                           5,702,000        5,702,000
SHAREHOLDERS' EQUITY:
Preferred stock, undesignated, shares authorized -
    10,000,000, shares issued and outstanding - none              --               --
Common stock, no par value, shares authorized -
    80,000,000, shares issued and outstanding:
    1997 - 11,881,604; 1998 - 11,881,604                  27,112,567       27,112,567
Additional capital                                         8,500,000        8,500,000
Retained earnings                                          4,338,051        5,864,085
Shareholders' loans                                         (261,603)        (264,836)
                                                       -------------    -------------
        Total shareholders' equity                        39,689,015       41,211,816
                                                       -------------    -------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY             $ 110,477,586    $ 121,662,908
                                                       =============    =============
See Notes to Unaudited Condensed Financial Statements.

</TABLE>


                                       2
<PAGE>

                             WASTE INDUSTRIES, INC.
                       CONDENSED STATEMENTS OF OPERATIONS
                                   (Unaudited)

                                                    Three Months Ended March 31,
                                                   -----------------------------
                                                       1997            1998
                                                   ------------    ------------
REVENUES:
    Service revenues                               $ 25,837,462    $ 37,870,365
    Equipment sales                                     355,223         351,058
                                                   ------------    ------------
        Total revenues                               26,192,685      38,221,423
                                                   ------------    ------------

OPERATING COSTS AND EXPENSES:
  Cost of service operations                         15,743,822      23,545,972
  Cost of equipment sales                               269,811         193,575
                                                   ------------    ------------
        Total cost of operations                     16,013,633      23,739,547
                                                   ------------    ------------

  Selling, general and administrative                 5,172,739       6,723,811
  Depreciation and amortization                       2,430,439       3,557,254
                                                   ------------    ------------
        Total operating costs and expenses           23,616,811      34,020,612
                                                   ------------    ------------

OPERATING INCOME                                      2,575,874       4,200,811

OTHER EXPENSE (INCOME):
  Interest expense                                      639,513         929,884
  Other expense (income)                                 28,910        (136,032)
                                                   ------------    ------------
        Total other expense, net                        668,423         793,852
                                                   ------------    ------------

INCOME BEFORE INCOME TAXES                            1,907,451       3,406,959

INCOME TAX EXPENSE                                            -       1,298,690
                                                   ============    ============
NET INCOME (LOSS) - HISTORICAL BASIS               $  1,907,451    $  2,108,269
                                                   ============    ============

PRO FORMA INCOME BEFORE
  INCOME TAXES                                     $  1,907,451    $  3,406,959

PRO FORMA INCOME TAXES                                  763,000       1,298,690
                                                   ------------    ------------

PRO FORMA NET INCOME                               $  1,144,451    $  2,108,269
                                                   ============    ============

PRO FORMA EARNINGS PER SHARE:
BASIC                                              $       0.12    $       0.18
                                                   ============    ============
DILUTED                                            $       0.11    $       0.17
                                                   ============    ============

WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING:
BASIC                                                 9,890,270      11,881,604
                                                   ============    ============
DILUTED                                              10,217,585      12,267,584
                                                   ============    ============

See Notes to Unaudited Condensed Financial Statements.


                                       3
<PAGE>

                             WASTE INDUSTRIES, INC.
                  UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                         Three Months Ended March 31,
                                                         ----------------------------
                                                             1997            1998
                                                         ------------    ------------
<S>                                                      <C>             <C>
OPERATING ACTIVITIES:
Net income - historical basis                            $  1,907,451    $  2,108,269
Adjustments to reconcile net income to net
  cash provided by operating activities:
  Depreciation and amortization                             2,430,692       3,557,254
    Gain on sale of property and equipment                    (50,416)         (6,725)
Changes in assets and liabilities, net of effects from
  acquisitions of related businesses:
  Accounts receivable - trade                                 353,931      (4,298,996)
  Inventories                                                 849,130         (18,396)
  Prepaid and other current assets                            (69,619)       (236,995)
  Accounts payable - trade                                   (668,452)      2,992,907
  Income taxes payable                                             --       1,309,690
  Accrued expenses and other liabilities                     (502,456)       (126,464)
  Deferred revenue                                             36,187         214,695
                                                         ------------    ------------
        Net cash provided by operating activities           4,286,448       5,495,239
                                                         ------------    ------------

INVESTING ACTIVITIES:
  Proceeds from sale of property and equipment                178,129          28,695
  Purchases of property and equipment                      (5,583,103)     (7,867,694)
  Acquisitions of related business                           (781,680)     (2,629,582)
  Other noncurrent assets                                     (50,940)        (14,155)
                                                         ------------    ------------
        Net cash used by investing activities              (6,237,594)    (10,482,736)
                                                         ------------    ------------

FINANCING ACTIVITIES:
  Bank overdraft                                                   --         573,045
  Proceeds from issuance of long-term debt                  1,802,113      16,723,406
  Principal payments on long-term debt                       (238,489)    (12,561,207)
  Shareholder loans                                            (5,982)         (3,233)
  Cash distributions to shareholders                         (847,005)       (582,005)
                                                         ------------    ------------
Net cash provided by financing activities                     710,637       4,150,006
                                                         ------------    ------------


NET DECREASE IN CASH                                       (1,240,509)       (837,491)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD              1,951,520         837,491
                                                         ------------    ------------
CASH AND CASH EQUIVALENTS, END OF PERIOD                 $    711,011    $         --
                                                         ============    ============
</TABLE>



See Notes to Unaudited Condensed Financial Statements.

                                       4
<PAGE>

                             WASTE INDUSTRIES, INC.
                NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION AND RECENT DEVELOPMENTS

Basis of Presentation

The condensed  financial  statements  included  herein have been prepared by the
Company  without audit,  pursuant to the rules and regulations of the Securities
and  Exchange  Commission.   As  applicable  under  such  regulations,   certain
information and footnote  disclosures  normally included in financial statements
prepared in accordance with generally accepted  accounting  principles have been
condensed  or  omitted.   The  Company  believes  that  the   presentations  and
disclosures in the financial statements included herein are adequate to make the
information  not  misleading  and  that  the financial statements reflect normal
adjustments  which  are  necessary  for  a fair statement of the results for the
interim  periods  presented.  Operating  results  for  interim  periods  are not
necessarily  indicative  of the results for full years or other interim periods.
It  is  suggested  that  the condensed  financial  statements included herein be
read in conjunction with the Company's  Annual  Report on Form 10-K for the year
ended  December 31, 1997 and the related notes thereto , and the Company's  Form
S-1  Registration  Statement (No. 333-25631).

Recent Developments

During the three months ended March 31, 1998, the Company  distributed  $582,005
and  exchanged  290,113  shares of its  common  stock for all of the  issued and
outstanding  shares of common stock of ECO Services,  Inc. ("ECO") and Air Cargo
Services,  Inc. ("ACS").  Certain of the Company's executive officers,  whom are
also Company shareholders,  owned  substantially all of the common stock of ECO
and  ACS.   Accordingly,  the  assets  and  liabilities  transferred  have  been
accounted for at historical  cost  in  a  manner  similar  to that of pooling of
interests  accounting  pursuant  to the  provisions  of  AIN #39 of APB  Opinion
No 16.  The  Company's  financial  statements  have been restated to include the
accounts and operations for all periods presented.

Also  during the three  months  ended  March 31,  1998,  the  Company  purchased
equipment  and  customer   contracts  related  to  commercial,   industrial  and
residential solid waste collection of three businesses, located in Durham, North
Carolina,  Dalton,  Georgia, and Lilburn,  Georgia. The total cash consideration
paid was approximately $2,630,000.

2.  CHANGE IN TAX STATUS AND INCOME TAXES

From  1986  until May 9,  1997,  the  Company  was  subject  to  taxation  under
Subchapter S of the Internal Revenue Code of 1986, as amended (the "Code"). As a
result,  during that time the net income of the Company, for federal and certain
state income tax purposes, was reported by and taxable directly to the Company's
shareholders,  rather than to the Company.  Primarily  to provide  funds for tax
obligations  payable by its  shareholders on account of the Company's  income in
1995 and 1996, the Company made cash distributions of approximately $3.1 million
and $1.8 million during 1996 and 1997,  respectively,  to its  shareholders.  In
connection with its conversion from S Corporation to C Corporation  status,  the
Company  effected an S Corporation  distribution  (consisting  of  approximately
$1.48 million in cash payments) to the Company's S Corporation  shareholders  in
June 1997. The remaining S Corporation  retained earnings of approximately  $8.5
million have been reclassified to additional capital.

The  Company's  S  Corporation  status  was  terminated  on  May  9,  1997  and,
accordingly,  the Company became fully subject to federal and state income taxes
on that date.  Pro forma net income and  earnings  per share  amounts  have been
computed  as if the Company  was  subject to federal  and all  applicable  state
corporate income taxes for each period presented.

3. PRO FORMA PRIMARY EARNINGS PER SHARE

Pro forma basic and diluted  earnings  per share  computations  are based on the
weighted-average  common stock  outstanding  and include the dilutive  effect of
stock options using the treasury stock method (using the initial  offering price
of $13.50 per share for periods prior to the initial  public  offering).  Common
stock outstanding used to compute the weighted-average  shares was retroactively
adjusted for the 1996 exchange of shares resulting from the merger of affiliated
companies,  for the 1997  conversion of nonvoting to voting stock,  for the 1997
1-for-2.5  reverse stock split, and for the acquisition of entities under common
control  during the  quarter  ending  March 31,  1998.  See Note 6 to  Company's
Financial  Statements for the year ended December 31, 1997 and the related notes
thereto included in the Form 10 K.


                                       5
<PAGE>


4. CONTINGENCIES

Certain claims and lawsuits arising in the ordinary course of business have been
filed or are pending against the Company. In the opinion of management, all such
matters have been adequately  provided for, are adequately covered by insurance,
or are of such kind that if disposed of  unfavorably,  would not have a material
adverse effect on the Company's financial position or results of operations.


                                       6
<PAGE>


ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS

THE  FOLLOWING  DISCUSSION  SHOULD  BE READ IN  CONJUNCTION  WITH THE  COMPANY'S
FINANCIAL  STATEMENTS AND NOTES THERETO  INCLUDED IN THE COMPANY'S ANNUAL REPORT
ON FORM 10-K FOR THE YEAR  ENDED  DECEMBER  31,  1997. CERTAIN MATTERS DISCUSSED
IN THIS MANAGEMENT'S  DISCUSSION  AND  ANALYSIS ARE "FORWARD-LOOKING STATEMENTS"
INTENDED TO QUALIFY  FOR THE SAFE  HARBORS  FROM  LIABILITY  ESTABLISHED  BY THE
PRIVATE  SECURITIES   LITIGATION  REFORM  ACT  OF  1995.  THESE  FORWARD-LOOKING
STATEMENTS  CAN  GENERALLY  BY  IDENTIFIED  AS SUCH  BECAUSE  THE CONTEXT OF THE
STATEMENT  WILL  INCLUDE  WORDS SUCH AS THE COMPANY  "BELIEVES,"  "ANTICIPATES,"
"EXPECTS" OR WORDS OF SIMILAR  IMPORT.  SIMILARLY,  STATEMENTS THAT DESCRIBE THE
COMPANY'S FUTURE PLANS, OBJECTIVES OR GOALS ARE ALSO FORWARD-LOOKING STATEMENTS.
SUCH  FORWARD-LOOKING  STATEMENTS ARE SUBJECT TO CERTAIN RISKS AND UNCERTAINTIES
WHICH COULD  CAUSE  ACTUAL  RESULTS TO DIFFER  MATERIALLY  FROM THOSE  CURRENTLY
ANTICIPATED.  SUCH RISKS AND UNCERTAINTIES  INCLUDE THOSE RELATED TO THE ABILITY
TO MANAGE GROWTH,  THE  AVAILABILITY  AND  INTEGRATION  OF ACQUISITION  TARGETS,
COMPETITION,  GEOGRAPHIC  CONCENTRATION,  GOVERNMENT  REGULATION  AND OTHERS SET
FORTH IN THE COMPANY'S  REGISTRATION STATEMENT ON FORM S-1 (FILE NO. 333-25631).
SHAREHOLDERS,  POTENTIAL INVESTORS AND OTHER READERS ARE URGED TO CONSIDER THESE
FACTORS CAREFULLY IN EVALUATING THE  FORWARD-LOOKING  STATEMENTS AND ARE CAUTION
NOT  TO  PLACE  UNDUE   RELIANCE  ON  SUCH   FORWARD-LOOKING   STATEMENTS.   THE
FORWARD-LOOKING  STATEMENTS  MADE  HEREIN  ARE ONLY  MADE AS OF THE DATE OF THIS
REPORT  AND THE  COMPANY  UNDERTAKES  NO  OBLIGATION  TO  PUBLICLY  UPDATE  SUCH
FORWARD-LOOKING STATEMENTS TO REFLECT SUBSEQUENT EVENTS OR CIRCUMSTANCES.

OVERVIEW

Waste Industries was founded by members of the current senior management team in
1970.  The  Company  provides  solid  waste  collection,   transfer,  recycling,
processing  and disposal  services to customers  primarily in North Carolina and
South Carolina, Tennessee and Virginia.

The Company has acquired 28 solid waste collection operations since 1990. All of
these  acquisitions  were  accounted for as purchases (except for two which have
been accounted  for at historical cost in a manner similar to that of pooling of
interests accounting due to common control).  Accordingly, the results of
operations  of these  purchased businesses  have been  included in the Company's
financial  statements  only from the respective  dates of  acquisition  and have
affected  period-to-period  comparisons of the Company's operating results.  The
Company  anticipates that a substantial part of its future growth will come from
acquiring  additional solid waste collection,  transfer and disposal  businesses
and,  therefore,  it is expected that additional  acquisitions could continue to
affect period-to-period comparisons of the Company's operating results.

 From 1986  until May 9,  1997,  the  Company  was  subject  to  taxation  under
Subchapter S of the Internal Revenue Code of 1986, as amended (the "Code"). As a
result,  during that time the net income of the Company, for federal and certain
state income tax purposes, was reported by and taxable directly to the Company's
shareholders,  rather than to the Company.  Primarily  to provide  funds for tax
obligations  payable by its  shareholders on account of the Company's  income in
1995 and, the Company made cash  distributions of approximately $3.1 million and
$1.8  million  during  1996 and  1997,  respectively,  to its  shareholders.  In
connection with its conversion from S Corporation to C Corporation  status,  the
Company  effected an S Corporation  distribution  (consisting  of  approximately
$1.48 million in cash payments) to the Company's S Corporation  shareholders  in
June 1997. The remaining S Corporation  retained earnings of approximately  $8.5
million  have  been  reclassified  to  additional   capital.   The  Company's  S
Corporation status was terminated on May 9, 1997 and,  accordingly,  the Company
became fully subject to federal and state income taxes on that date.


                                       7
<PAGE>

RESULTS OF OPERATIONS

GENERAL

The Company's branch waste  collection  operations  generate  revenues from fees
collected from  commercial,  industrial and residential  collection and transfer
station customers.  The Company derives a substantial  portion of its collection
revenues from  commercial  and  industrial  services  which are performed  under
one-year to five-year service agreements.  The Company's residential  collection
services  are  performed   either  on  a  subscription   basis  with  individual
households, or under contracts with municipalities, apartment owners, homeowners
associations  or  mobile  home  park  operators.   Residential  customers  on  a
subscription  basis are billed quarterly in advance and provide the Company with
a stable  source of revenues.  A liability  for future  service is recorded upon
billing and revenues are  recognized at the end of each month in which  services
are actually provided. Municipal contracts in the Company's existing markets are
typically awarded, at least initially, on a competitive bid basis and thereafter
on a bid or  negotiated  basis and usually  range in  duration  from one to five
years.  Municipal  contracts provide consistent cash flow during the term of the
contracts.

The Company's  prices for its solid waste  services are typically  determined by
the collection frequency and level of service, route density, volume, weight and
type of  waste  collected,  type of  equipment  and  containers  furnished,  the
distance  to the  disposal  or  processing  facility,  the cost of  disposal  or
processing,  and  prices  charged  in  its  markets  for  similar  services. The
Company's   ability  to  pass  on  price  increases is sometimes  limited by the
terms of its contracts.  Long-term solid waste  collection  contracts  typically
contain a formula, generally based on a predetermined published price index, for
automatic  adjustment of fees to cover increases in some, but not all, operating
costs.

The  Company  currently  operates  approximately  100  convenience  sites  under
contract with 15 counties in order to  consolidate  waste in rural areas.  These
contracts,  which are usually  competitively bid, generally have terms of one to
five years and  provide  consistent  cash flow  during the term of the  contract
since the Company is paid  regularly by the local  government.  The Company also
operates four  recycling  processing  facilities as part of its  collection  and
transfer  operations  where it collects,  processes,  sorts and  recycles  paper
products, aluminum and steel cans, pallets, certain plastics, glass, and certain
other items.  The  Company's  recycling  facilities  generate  revenues from the
collection, processing and resale of recycled commodities, particularly recycled
wastepaper.   Through  a  centralized   effort,  the  Company  resells  recycled
commodities  using  commercially   reasonable  practices  and  seeks  to  manage
commodity  pricing risk by spreading the risk among its  customers.  The Company
also operates  curbside  residential  recycling  programs in connection with its
residential collection operations in most of the communities it serves.

Operating expenses for the Company's collection  operations include labor, fuel,
equipment  maintenance  and  tipping  fees  paid  to  landfills.   The   Company
operates 18 transfer stations which reduce the Company's costs by improving  its
utilization  of  collection  personnel  and  equipment and by consolidating  the
waste  stream  to  gain  more  favorable  disposal  rates.  The Company does not
currently  own  or  operate  any  solid  waste  landfills. In the event that the
Company  develops  or  acquires landfills, operating expenses for such  landfill
operations  may  include labor, equipment,  legal  and  administrative,  ongoing
environmental  compliance,  royalties  to  former  owners,  host community fees,
site  maintenance and accruals for closure and post-closure maintenance. Cost of
equipment sales primarily consists of the Company's cost to purchase the
equipment that it resells.

The Company capitalizes certain  expenditures related to pending acquisitions or
development  projects.  Indirect acquisition and project development costs, such
as executive  and  corporate  overhead,  public  relations  and other  corporate
services,  are expensed as incurred.  The Company's  policy is to charge against
net income any  unamortized  capitalized  expenditures  and advances (net of any
portion thereof that the Company  estimates to be  recoverable,  through sale or
otherwise)  relating to any operation that is permanently shut down, any pending
acquisition that is not consummated and any landfill development project that is
not  expected to be  successfully  completed.  Engineering,  legal,  permitting,
construction  and  other  costs  directly  associated  with the  acquisition  or
development of a landfill,  together with associated interest,  are capitalized.
At March 31, 1998, the Company had recorded no such capitalized  costs. At March
31, 1998, the Company had recorded $85,510 of capitalized land acquisition costs
in  connection   with  the   development  of  a  new  Land  Clearing  and  Inner
Debris("LCID")  landfill  and $0  relating to pending  acquisitions.  Because it
currently does not own any landfills,  the Company does not accrue for estimated
landfill closure and post-closure maintenance costs.

Selling,   general  and  administrative  ("SG&A")  expenses  include  management
salaries,  clerical and administrative  overhead,  professional services,  costs
associated with the Company's  marketing and sales force and community relations
expense.

Property and  equipment is  depreciated  over the  estimated  useful life of the
assets using the straight-line method.


                                       8
<PAGE>

Other income and expense,  which is comprised  primarily of interest  income and
gains and losses on sales of equipment,  has not  historically  been material to
the Company's results of operations.

To date, inflation has not had a significant impact on the Company's operations.

The  following  table sets forth for the periods  indicated  the  percentage  of
revenues  represented  by the individual  line items  reflected in the Company's
Unaudited Condensed Statements of Operations:

                                            Three Months Ended March 31,
                                       ----------------------------------------
                                             1997                   1998
                                       ------------------     -----------------

Total revenues                                     100.0%                100.0%
Service revenues                                    98.6                  99.1
Equipment sales                                      1.4                   0.9
                                       ------------------     -----------------
Total cost of operations                            61.1                  62.1
Selling, general and administrative                 19.7                  17.6
Depreciation and amortization                        9.3                   9.3
                                       ------------------     -----------------
Operating income                                     9.8                  11.0
Interest expense                                     2.4                   2.4
Other expense (income)                               0.1                  (0.4)
                                       ------------------     -----------------
Income before income taxes                           7.3                   8.9
Pro forma income taxes (1)                           2.9                   3.4
                                       ------------------     -----------------
Pro forma net income (1)                            4.4%                  5.5%
                                       ==================     =================

-----------------------
(1) For the three months ended March 31, 1997,  the Company was an S Corporation
and, accordingly,  was not subject to federal and certain state corporate income
taxes.  The pro forma  information  has been  computed  as if the  Company  were
subject to federal and all applicable state corporate income taxes for the three
month ended March 31, 1997 assuming the tax rate that would have applied had the
Company been taxed as a C Corporation. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations - Overview".

THREE MONTHS ENDED MARCH 31, 1998 VS. THREE MONTHS ENDED MARCH 31, 1997

REVENUES.  Total revenues increased approximately $12.0 million, or 45.9%, for
the three-month  period ended March 31, 1998 as compared with the same period in
1997.  This increase was  attributable  primarily  to the following  factors:
(i) increased  collection  volumes  resulting  from  new municipal  and
commercial contracts and residential subscriptions; and (ii) the effect of seven
businesses  acquired  during the year ended December 31, 1997 and five
businesses acquired during the three months ended March 31, 1998.

COST OF OPERATIONS.  Total cost of operations increased approximately $7.7
million, or 48.2%, for the  three-month  period  ended  March 31,  1998
compared to the same period in 1997.  The  principal  reason for the increase
was the addition of new customers  and  contracts,   including  those  from  the
acquisitions  of  new businesses,  since March 31, 1997.  Total cost of
operations as a percentage of revenues  increased to 62.1% in the first  quarter
of 1998 compared to 61.1 % in the  first  quarter  of  1997.  This  percentage
increase  was  the  result  of acquisition-related costs and lower than
projected revenues.

SG&A. SG&A increased  approximately  $1.6 million, or 30.0%, for the three-month
period ended March 31, 1998  compared to the same period in 1997, primarily due
to the increase in labor costs associated with  acquisitions and internal growth
since March 1997.  As a percentage of revenues,  SG&A  decreased to 17.6% in the
first quarter of 1998 compared to 19.7% in the first quarter of 1997.
The decrease from 1997 is primarily due to synergies achieved through
acquisitions.

DEPRECIATION  AND   AMORTIZATION.   Depreciation   and  amortization   increased
approximately $1.1 million, or 46.4%, for the three-month period ended March 31,
1998 compared  to the same  period  in 1997.  The  principal  reason  for this
increase was depreciation of additional  property and equipment acquired and put
into service due to higher collection volumes and depreciation of the additional
assets  of  businesses   acquired  during  1997  and  1998.   Depreciation   and
amortization, as a percentage of revenues, remained  stable  at 9.3% for each of
the three month periods ended March 31, 1998 and 1997.

                                       9
<PAGE>

INTEREST EXPENSE.  Interest expense increased  approximately $290,000, or 45.4%,
for the three-month period ended March 31, 1998  compared to the same period in
1997.  The  increase  was  primarily  due to the  higher  level  of the  average
outstanding  indebtedness  related  to the  Company's  purchases  of  assets  of
businesses  acquired  and an  increase  in the  interest  rates  on  outstanding
borrowings.

LIQUIDITY AND CAPITAL RESOURCES

The  Company's  working  capital at March 31,  1998 was  approximately  $189,000
compared  to $1.2  million at  December  31,  1997.  The  Company's  strategy in
managing  its  working  capital  has been to apply the cash  generated  from its
operations  which remains  available  after  satisfying its working  capital and
capital  expenditure  requirements  to reduce  its  indebtedness  under its bank
revolving  credit  facility  and to  minimize  its cash  balances.  The  Company
finances its working capital  requirements  from internally  generated funds and
bank borrowings.  In addition to internally  generated funds, the Company has in
place  financing  arrangements  to satisfy  its  currently  anticipated  working
capital needs in 1998. The Company has a  revolving  credit  facility with  BB&T
allowing the Company to borrow up  to $50  million for  acquisitions and capital
expenditures  and $10 million  for working  capital.  In  addition,  the Company
has  established two $25 million term loan  facilities with Prudential Insurance
Company of America  ("Prudential").  As of March 31,1998,  the Company had fully
drawn  down  one of these facilities,  leaving the  Company  with an uncommitted
shelf  facility  of  $25  million.   Both  of the BB&T and the Prudential credit
facilities require  the  Company  to  maintain certain financial ratios, such as
current debt to total  capitalization,  debt  to  earnings  and fixed charges to
earnings,  and satisfy  other  predetermined  requirements,  such as minimum net
worth, net income and deposit balances. Interest on the BB&T facility is payable
monthly  based  on  an adjusting spread to LIBOR. The  12-month weighted average
interest rate on  outstanding  borrowings  under the BB&T facility was 7.05%  at
March 31, 1998.  Interest  on the  Prudential facility  is paid quarterly, based
on  a fixed rate of 7.28%. Of the Company's $50 million in committed facilities,
$5 million mature on April 1, 1999, with the remainder maturing on April 1,
2006,  subject to  renewal.  The  Company  has a compensating  balance
arrangement with the bank for $370,000.

Net  cash  provided  by  operating  activities  totaled  $5.5  million  for  the
three months ended March 31, 1998, compared to $4.3 million for the three months
ended March 31, 1997.  This increase was caused  principally by the increases in
depreciation and amortization, trade accounts payable and income taxes payable,
partially offset by an increase in trade accounts receivable.

Net cash used in investing activities totaled $10.5 million for the three months
ended March 31, 1998,  compared to $6.2 million for the three months ended March
31, 1997.  This increase was caused  principally  by the  acquisition of certain
assets employed or arising in connection with a residential  collection business
for  approximately  $2.6  million  and an increase  in capital  expenditures  of
approximately $2.3 million.

Capital  expenditures for 1998 are currently expected to be approximately  $23.8
million, compared to $22.5 million in 1997. In 1998, approximately $17.9 million
is expected to be utilized for vehicle and equipment additions and replacements,
approximately  $0.5  million for  expansion  of transfer  station  services  and
approximately  $5.4 million for facilities,  additions   and  improvements.  The
Company  intends  to fund its  planned  1998  capital  expenditures  principally
through  internally   generated  funds  and  borrowings  under  existing  credit
facilities. In addition, the Company anticipates that it may require substantial
additional  capital  expenditures to facilitate its growth strategy of acquiring
solid waste collection and disposal businesses.  If the Company is successful in
acquiring landfill disposal facilities, the Company may also be required to make
significant  expenditures to bring any such newly acquired  disposal  facilities
into compliance with applicable regulatory requirements,  obtain permits for any
such  newly  acquired  disposal  facilities  or expand  the  available  disposal
capacity at any such newly  acquired  disposal  facilities.  The amount of these
expenditures  cannot be  currently  determined,  since  they will  depend on the
nature and extent of any acquired landfill disposal facilities, the condition of
any facilities acquired and the permitting status of any acquired sites.

Net  cash  provided  by  financing  activities  totaled  $4.1  million  for  the
three months  ended March 31, 1998,  compared to approximately  $711,000 for the
three months  ended March 31,  1997.  This  increase was caused  principally  by
proceeds from issuances of long-term debt, net of principal repayments. Each
period included distributions to shareholders: in 1997 while the Company was
subject to taxation under Subchapter S of the Code (see "Management's
Discussion and Analysis of Financial Condition and Results of Operations--
Overview"); and in 1998 in connection with the acquisitions of ECO and ACS from
certain Company shareholders (see Note 1 to Unaudited Condensed Financial
Statements).

At March 31, 1998, the Company had approximately  $56.3 million of long-term and
short-term  borrowings  outstanding  and  approximately  $621,000  in letters of
credit.  At March 31, 1998,  the ratio of the Company's  long-term debt to total
capitalization was 57.1% compared to 55.8% at December 31, 1997.


                                       10
<PAGE>

SEASONALITY

The Company's  results of  operations  tend to vary  seasonally,  with the first
quarter  typically  generating the least amount of revenues,  higher revenues in
the  second  and third  quarters,  and a decline  in the  fourth  quarter.  This
seasonality  reflects  the lower  volume  of waste  during  the fall and  winter
months.  Also,  certain  operating  and fixed costs remain  relatively  constant
throughout the calendar year,  which when offset by these revenues  results in a
similar seasonality of operating income.


                                       11
<PAGE>

                                     PART II


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

             (a)  Exhibits:

                  Exhibits  filed with this Form 10-Q  report  are  incorporated
                  herein by reference  to the Exhibit  Index  accompanying  this
                  report.

             (b)  No current  reports on Form 8-K were filed  during the quarter
                  ended March 31, 1998.

                                    SIGNATURE

        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 thereunto duly authorized.

Dated: May 15, 1998            Waste Industries, Inc.
                               (Registrant)

                               By:         /s/   Robert H. Hall
                                     ---------------------------------------
                                     Robert H. Hall
                                     Vice President, Chief Financial Officer
                                     (Principal Financial and Accounting
                                         Officer)



                                       12
<PAGE>


                             WASTE INDUSTRIES, INC.
                                  EXHIBIT INDEX
                               First Quarter 1998


Exhibit Number         Exhibit Description

      11               Computations of Earnings Per Share
      27               Financial Data Schedule*





*THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
 CONDENSED FINANCIAL  STATEMENTS OF WASTE  INDUSTRIES,  INC. AS OF AND FOR THE
 THREE MONTHS ENDED MARCH 31, 1998 AND IS  QUALIFIED  IN ITS  ENTIRETY  BY
 REFERENCE  TO SUCH FINANCIAL STATEMENTS.



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