##### 



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q
 þ
    
    Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934
 For the quarterly period ended September 30, 2005
 or
 o
    
    Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the transition period from ___to ___
 Commission File Number: 000-50808
 
 WCA Waste Corporation
 (Exact name of registrant as specified in its charter)
 Delaware
    
    20-0829917(State or other jurisdiction
    
    (I.R.S. Employerof incorporation or organization)
    
    Identification No.)One Riverway, Suite 1400
    
    77056Houston, Texas 77056
    
    (Zip Code)(Address of principal executive offices)
 (713) 292-2400
(Registrants telephone number, including area code)
 N/A
(Former name, former address and former fiscal year,
if changed since last report)
 
 þ o
 o þ
 o þ




---



##### 



RISK FACTORS AND
CAUTIONARY STATEMENT ABOUT FORWARD-LOOKING STATEMENTS
    
    
    we may be unable to identify, complete or integrate future acquisitions successfully;
    
    we compete for acquisition candidates with other purchasers, some of which have greater
financial resources and may be able to offer more favorable terms;
    
    revenue and other synergies from acquisitions may not be fully realized or may take
longer to realize than expected;
    
    we may not be able to improve internalization rates by directing waste volumes from
acquired businesses to our landfills for regulatory, business or other reasons;
    
    businesses that we acquire may have unknown liabilities and require unforeseen capital
expenditures;
    
    changes or disruptions associated with making acquisitions may make it more difficult
to maintain relationships with customers of the acquired businesses;
    
    in connection with financing acquisitions, we may incur additional indebtedness, or may
issue additional shares of our common stock which would dilute the ownership percentage of
existing stockholders; and
    
    rapid growth may strain our management, operational, financial and other resources.
  
    
    we may not be able to obtain or maintain the permits necessary for operation and
expansion of our existing landfills or landfills that we might acquire or develop;
    
    our costs may increase for, or we may be unable to provide, necessary financial
assurances to governmental agencies under applicable environmental regulations relating to
our landfills;
 1




---



##### 




    
    governmental regulations may require increased capital expenditures or otherwise affect
our business;
    
    our business is capital intensive, requiring ongoing cash outlays that may strain or
consume our available capital and we may not always have access to the additional capital
that we require to execute our growth strategy;
    
    possible changes in our estimates of site remediation requirements, final capping,
closure and post-closure obligations, compliance, regulatory developments and insurance
costs;
    
    the effect of limitations or bans on disposal or transportation of out-of-state waste
or certain categories of waste;
    
    increases in the costs of disposal, labor and fuel could reduce operating margins;
    
    increases in costs of insurance or failure to maintain full coverage could reduce
operating income;
    
    we are subject to environmental and safety laws, which restrict our operations and
increase our costs, and may impose significant unforeseen liabilities;
    
    we compete with large companies and municipalities with greater financial and
operational resources, and we also compete with alternatives to landfill disposal;
    
    covenants in our credit facilities and the instruments governing our other indebtedness
may limit our ability to grow our business and make capital expenditures;
    
    changes in interest rates may affect our results of operations;
    
    a downturn in U.S. economic conditions or the economic conditions in our markets may
have an adverse impact on our business and results of operations;
    
    the effect that weather has on our quarter to quarter results, as well as the effect of
extremely harsh weather or natural disasters on our operations;
    
    failure to achieve and maintain effective internal controls in accordance with Section
404 of the Sarbanes-Oxley Act could have a material adverse effect on our business and
stock price; and
    
    our success depends on key members of our senior management, the loss of any of whom
could disrupt our customer and business relationships and our operations.
   2




---



##### 



PART I FINANCIAL INFORMATION
 ITEM 1. FINANCIAL STATEMENTS.
 WCA WASTE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS  (In thousands)
 September 30,
    
    
    December 31,2005
    
    
    2004(Unaudited)ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    289
    
    
    $
    272Accounts receivable, net of allowance for doubtful accounts of $826
(unaudited) and $575, respectively
    
    
    13,489
    
    
    
    9,039Prepaid expenses and other
    
    
    3,953
    
    
    
    4,808Total current assets
    
    
    17,731
    
    
    
    14,119Property and equipment, net of accumulated depreciation and amortization
of $42,403 (unaudited) and $32,157, respectively
    
    
    147,999
    
    
    
    90,521Goodwill, net
    
    
    52,796
    
    
    
    47,510Intangible assets, net
    
    
    4,038
    
    
    
    3,019Costs incurred on possible acquisitions
    
    
    841
    
    
    
    320Deferred financing costs, net
    
    
    3,431
    
    
    
    2,823Deferred tax assets
    
    
    567
    
    
    
    2,557Other assets
    
    
    1,661
    
    
    
    2,898Total assets
    
    $
    229,064
    
    
    $
    163,767LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITIES:Accounts payable
    
    $
    4,985
    
    
    $
    6,081Accrued liabilities
    
    
    6,110
    
    
    
    5,556Accrued closure and post-closure liabilities
    
    
    448
    
    
    
    443Note payable
    
    
    145
    
    
    
    2,091Current maturities of long-term debt
    
    
    1,543
    
    
    
    1,429Total current liabilities
    
    
    13,231
    
    
    
    15,600Long-term debt, less current maturities and discount
    
    
    130,668
    
    
    
    71,814Accrued closure and post-closure liabilities
    
    
    2,119
    
    
    
    1,780Total liabilities
    
    
    146,018
    
    
    
    89,194COMMITMENTS AND CONTINGENCIESSTOCKHOLDERS EQUITY:Common stock, $0.01 par value per share. Authorized 25,000 shares; issued
and outstanding 15,562 and 14,853 shares, respectively
    
    
    156
    
    
    
    149Additional paid-in capital
    
    
    79,962
    
    
    
    72,849Unearned compensation
    
    
    (1,562
    )
    
    
    Retained earnings
    
    
    4,490
    
    
    
    1,575Total stockholders equity
    
    
    83,046
    
    
    
    74,573Total liabilities and stockholders equity
    
    $
    229,064
    
    
    $
    163,767
  3




---



##### 



WCA WASTE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)  (In thousands, except per share amounts)
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Revenue
    
    $
    29,498
    
    
    $
    19,842
    
    
    $
    81,435
    
    
    $
    52,847Expenses:Cost of services
    
    
    18,870
    
    
    
    13,557
    
    
    
    52,482
    
    
    
    35,484Depreciation and amortization
    
    
    3,846
    
    
    
    2,357
    
    
    
    10,297
    
    
    
    6,368Accretion expense
    
    
    38
    
    
    
    64
    
    
    
    114
    
    
    
    192General and administrative:Stock-based compensation
    
    
    183
    
    
    
    
    
    
    
    320
    
    
    
    11,532Other general and administrative
    
    
    1,629
    
    
    
    1,267
    
    
    
    5,520
    
    
    
    3,63324,566
    
    
    
    17,245
    
    
    
    68,733
    
    
    
    57,209Operating income (loss)
    
    
    4,932
    
    
    
    2,597
    
    
    
    12,702
    
    
    
    (4,362
    )Other income (expense):Interest expense, net
    
    
    (2,734
    )
    
    
    (866
    )
    
    
    (6,613
    )
    
    
    (3,394
    )Write-off of deferred financing costs and
debt discount
    
    
    (14
    )
    
    
    
    
    
    
    (1,308
    )
    
    
    Other
    
    
    14
    
    
    
    169
    
    
    
    27
    
    
    
    267(2,734
    )
    
    
    (697
    )
    
    
    (7,894
    )
    
    
    (3,127
    )Income (loss) before income taxes
    
    
    2,198
    
    
    
    1,900
    
    
    
    4,808
    
    
    
    (7,489
    )Income tax (provision) benefit
    
    
    (873
    )
    
    
    (752
    )
    
    
    (1,893
    )
    
    
    2,433Net income (loss)
    
    $
    1,325
    
    
    $
    1,148
    
    
    $
    2,915
    
    
    $
    (5,056
    )Earnings per share  basic and diluted
    
    $
    0.09
    
    
    $
    0.08
    
    
    $
    0.19
    
    
    $
    (0.48
    )Weighted average shares outstanding :Basic
    
    
    15,362
    
    
    
    14,819
    
    
    
    15,343
    
    
    
    10,506Diluted
    
    
    15,385
    
    
    
    14,819
    
    
    
    15,382
    
    
    
    10,506
  4




---



##### 



WCA WASTE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)  (In thousands)
 Nine Months EndedSeptember 30,2005
    
    
    2004CASH FLOWS FROM OPERATING ACTIVITIES:Net income (loss)
    
    $
    2,915
    
    
    $
    (5,056
    )Adjustments to reconcile net income (loss) to net cash provided by
operating activities:Depreciation and amortization
    
    
    10,297
    
    
    
    6,368Non-cash portion of stock-based compensation charge
    
    
    320
    
    
    
    6,849Amortization of deferred financing costs and debt discount
    
    
    416
    
    
    
    475Write-off of deferred financing costs and debt discount
    
    
    1,308
    
    
    
    Deferred tax provision (benefit)
    
    
    1,893
    
    
    
    (2,209
    )Provision and accretion expense for closure and post-closure obligations
    
    
    114
    
    
    
    192Gain on sale of assets
    
    
    (27
    )
    
    
    (267
    )Interest rate swap
    
    
    
    
    
    
    (10
    )Prepaid disposal usage
    
    
    1,252
    
    
    
    227Costs of terminated acquisitions
    
    
    18
    
    
    
    Change in operating assets and liabilities:Accounts receivable
    
    
    (3,337
    )
    
    
    (2,989
    )Prepaid expenses and other
    
    
    880
    
    
    
    1,909Accounts payable and other liabilities
    
    
    (401
    )
    
    
    1,889Net cash provided by operating activities
    
    
    15,648
    
    
    
    7,378CASH FLOWS FROM INVESTING ACTIVITIES:Acquisitions of businesses, net of cash acquired
    
    
    (54,917
    )
    
    
    (22,309
    )Proceeds from sale of fixed assets
    
    
    34
    
    
    
    282Capital expenditures
    
    
    (13,159
    )
    
    
    (8,835
    )Cost incurred on possible acquisitions
    
    
    (540
    )
    
    
    (51
    )Net cash used in investing activities
    
    
    (68,582
    )
    
    
    (30,913
    )CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds from issuance of long-term debt
    
    
    127,500
    
    
    
    37,233Principal payments on long-term debt
    
    
    (23,219
    )
    
    
    (12,299
    )Principal payments of note payable
    
    
    (2,185
    )
    
    
    (903
    )Net change in revolving line of credit
    
    
    (46,900
    )
    
    
    (33,263
    )Repayment of Waste Management, Inc. note
    
    
    
    
    
    
    (13,343
    )Distribution and transfers to former parent, net
    
    
    
    
    
    
    (7,180
    )Proceeds from issuance of common stock
    
    
    
    
    
    
    55,018Deferred financing costs
    
    
    (2,245
    )
    
    
    (1,575
    )Net cash provided by financing activities
    
    
    52,951
    
    
    
    23,688NET INCREASE IN CASH AND CASH EQUIVALENTS
    
    
    17
    
    
    
    153CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD
    
    
    272
    
    
    
    105CASH AND CASH EQUIVALENTS AT END OF THE PERIOD
    
    $
    289
    
    
    $
    258SUPPLEMENTAL CASH FLOW INFORMATION:Interest paid
    
    $
    5,928
    
    
    $
    2,909Income taxes paid
    
    
    
    
    
    
    
  5




---



##### 



WCA WASTE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(All tables in thousands, except per share data)
 1. BASIS OF PRESENTATION
    2. ACQUISITIONS
   6




---



##### 



Nine Months Ended September 30,2005
    
    
    2004Revenue
    
    $
    83,221
    
    
    $
    57,189Net Income (loss)
    
    $
    3,020
    
    
    $
    (5,037
    )Earnings Per Share:Basic
    
    $
    0.20
    
    
    $
    (0.48
    )Diluted
    
    $
    0.20
    
    
    $
    (0.48
    )
  3. STOCK-BASED COMPENSATION
   7




---



##### 



2005
    
    
    2004Risk-free interest rate
    
    
    3.44
    %
    
    
    2.8
    %Volatility factor of stock price
    
    
    0.35
    
    
    
    0.37Dividends
    
    
    
    
    
    
    Option life
    
    4 years
    
    4 yearsCalculated fair value per share
    
    $
    3.35
    
    
    $
    3.14
  Three Months
    
    
    Nine MonthsEnded September 30,
    
    
    Ended September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Net income (loss), as reported
    
    $
    1,325
    
    
    $
    1,148
    
    
    $
    2,915
    
    
    $
    (5,056
    )Plus: Stock-based
compensation expense included
in reported net income
(loss), net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,496Less: Stock-based
compensation expense pursuant
to SFAS 123 on canceled
options and warrants, net of
tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,551
    )Less: Stock-based
compensation expense on
granted options pursuant to
SFAS 123, net of tax
    
    
    (108
    )
    
    
    (123
    )
    
    
    (321
    )
    
    
    (175
    )Net income (loss), pro forma
    
    $
    1,217
    
    
    $
    1,025
    
    
    $
    2,594
    
    
    $
    (5,286
    )Earnings per share:BasicAs reported
    
    $
    0.09
    
    
    $
    0.08
    
    
    $
    0.19
    
    
    $
    (0.48
    )Pro forma
    
    $
    0.08
    
    
    $
    0.07
    
    
    $
    0.17
    
    
    $
    (0.50
    )DilutedAs reported
    
    $
    0.09
    
    
    $
    0.08
    
    
    $
    0.19
    
    
    $
    (0.48
    )Pro forma
    
    $
    0.08
    
    
    $
    0.07
    
    
    $
    0.17
    
    
    $
    (0.50
    )
 4. EARNINGS PER SHARE
  Three Months
    
    
    Nine MonthsEnded September 30,
    
    
    Ended September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Net income (loss)
    
    $
    1,325
    
    
    $
    1,148
    
    
    $
    2,915
    
    
    $
    (5,056
    )Weighted average basic shares outstanding
    
    
    15,362
    
    
    
    14,819
    
    
    
    15,343
    
    
    
    10,506Dilutive effect of options and warrants
    
    
    23
    
    
    
    
    
    
    
    39
    
    
    
    Weighted average diluted shares outstanding
    
    
    15,385
    
    
    
    14,819
    
    
    
    15,382
    
    
    
    10,506Earnings per share:Basic
    
    $
    0.09
    
    
    $
    0.08
    
    
    $
    0.19
    
    
    $
    (0.48
    )Diluted
    
    $
    0.09
    
    
    $
    0.08
    
    
    $
    0.19
    
    
    $
    (0.48
    )
 8




---



##### 



5. LONG-TERM DEBT
  September 30,
    
    
    December 31,2005
    
    
    2004Term B Loan, principal payable $250,000 per quarter, maturing in April
2011, variable interest rate based on LIBOR plus a margin (6.55% at
September 30, 2005)
    
    $
    99,500
    
    
    $
    Second Lien Credit Agreement, maturing in October 2011, variable
interest rate based on LIBOR plus a margin (9.49% at September 30,
2005)
    
    
    25,000
    
    
    
    Revolving note payable with a financial institution, variable interest rate
based on LIBOR plus a margin
    
    
    
    
    
    
    46,900Environmental Facilities Revenue Bonds, principal payable in varying
quarterly installments, maturing in 2022, variable interest rate (repaid
in June 2005)
    
    
    
    
    
    
    22,500Notes payable to banks and financial institutions, interest ranging
from 5.8% to 9.6%, payable monthly through August 2008
    
    
    267
    
    
    
    486Seller note, with interest rate of 6%, due in May 2006
    
    
    444
    
    
    
    444Seller convertible note, with interest rate of 5%, due in December 2009
    
    
    3,000
    
    
    
    3,000Seller convertible notes, with interest rate of 8%, due in January 2010
    
    
    4,000
    
    
    
    132,211
    
    
    
    73,330Less: Debt discount
    
    
    
    
    
    
    (87
    )Less: Current portion
    
    
    (1,543
    )
    
    
    (1,429
    )$
    130,668
    
    
    $
    71,814
 April 2005 Credit Agreements
   9




---



##### 



Other 2005 Long-term Debt Transactions
   6. LANDFILL ACCOUNTING
 Capitalized Landfill Costs
    10




---



##### 



Closure and Post-Closure Obligations
    Landfill
    
    
    Closure andAssets, net
    
    
    Post-closureLiabilitiesDecember 31, 2004
    
    $
    56,263
    
    
    $
    2,223Capital expenditures
    
    
    7,048
    
    
    
    Acquisition of landfill
    
    
    45,782
    
    
    
    8Amortization expense
    
    
    (4,935
    )
    
    
    Obligations incurred and capitalized
    
    
    222
    
    
    
    222Interest accretion
    
    
    
    
    
    
    114September 30, 2005
    
    $
    104,380
    
    
    $
    2,567
  September 30,
    
    
    December 31,2005
    
    
    2004Recorded amounts:Current portion
    
    $
    448
    
    
    $
    443Noncurrent portion
    
    
    2,119
    
    
    
    1,780Total recorded
    
    $
    2,567
    
    
    $
    2,223
  7. INCOME TAXES
  11




---



##### 



8. STOCKHOLDERS EQUITY
  Common Stock
    
    
    Additional Paid-in
    
    
    Unearned
    
    
    Retained Earnings
    
    
    TotalCapital
    
    
    CompensationDecember 31, 2004
    
    $
    149
    
    
    $
    72,849
    
    
    $
    
    
    
    $
    1,575
    
    
    $
    74,573Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,915
    
    
    
    2,915Issuance of shares to acquiree
    
    
    5
    
    
    
    5,233
    
    
    
    
    
    
    
    
    
    
    
    5,238Issuance of restricted shares to
employees and directors
    
    
    2
    
    
    
    1,880
    
    
    
    (1,882
    )
    
    
    
    
    
    
    Accretion of unearned compensation
    
    
    
    
    
    
    
    
    
    
    320
    
    
    
    
    
    
    
    320September 30, 2005
    
    $
    156
    
    
    $
    79,962
    
    
    $
    (1,562
    )
    
    $
    4,490
    
    
    $
    83,046
 9. SEGMENT INFORMATION
  Three Months
    
    
    Nine MonthsEnded September 30,
    
    
    Ended September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Collection:Residential
    
    $
    4,786
    
    
    $
    3,652
    
    
    $
    13,686
    
    
    $
    8,658Commercial
    
    
    3,596
    
    
    
    2,948
    
    
    
    10,307
    
    
    
    8,872Roll-off
    
    
    9,857
    
    
    
    6,085
    
    
    
    27,077
    
    
    
    15,941Other
    
    
    
    
    
    
    139
    
    
    
    
    
    
    
    327Total Collection
    
    
    18,239
    
    
    
    12,824
    
    
    
    51,070
    
    
    
    33,798Disposal
    
    
    12,687
    
    
    
    8,880
    
    
    
    35,213
    
    
    
    24,458Less: Intercompany
    
    
    (4,867
    )
    
    
    (3,290
    )
    
    
    (13,276
    )
    
    
    (8,732
    )Disposal, net
    
    
    7,820
    
    
    
    5,590
    
    
    
    21,937
    
    
    
    15,726Transfer and other
    
    
    6,226
    
    
    
    3,222
    
    
    
    15,977
    
    
    
    8,484Less: Intercompany
    
    
    (2,787
    )
    
    
    (1,794
    )
    
    
    (7,549
    )
    
    
    (5,161
    )Transfer and other, net
    
    
    3,439
    
    
    
    1,428
    
    
    
    8,428
    
    
    
    3,323Total Revenue
    
    $
    29,498
    
    
    $
    19,842
    
    
    $
    81,435
    
    
    $
    52,847
  12




---



##### 



Kansas/
    
    
    
    
    
    
    
    
    
    
    NorthMissouri
    
    
    Texas
    
    
    Arkansas
    
    
    Carolina
    
    
    Other
    
    
    Corporate
    
    
    TotalThree months
ended September 30,
2005:Revenue
    
    $
    11,704
    
    
    
    6,361
    
    
    
    3,317
    
    
    
    2,929
    
    
    
    5,187
    
    
    
    
    
    
    
    29,498Depreciation and
amortization
    
    
    1,260
    
    
    
    708
    
    
    
    500
    
    
    
    490
    
    
    
    851
    
    
    
    37
    
    
    
    3,846Capital expenditures
    
    
    1,434
    
    
    
    1,559
    
    
    
    409
    
    
    
    313
    
    
    
    1,662
    
    
    
    97
    
    
    
    5,474Capital
expenditures
(Acquisitions)
    
    
    (76
    )
    
    
    
    
    
    
    
    
    
    
    191
    
    
    
    253
    
    
    
    
    
    
    
    368Three months ended
September 30, 2004:Revenue
    
    $
    9,582
    
    
    
    5,769
    
    
    
    2,188
    
    
    
    
    
    
    
    2,303
    
    
    
    
    
    
    
    19,842Depreciation and
amortization
    
    
    899
    
    
    
    651
    
    
    
    268
    
    
    
    
    
    
    
    513
    
    
    
    26
    
    
    
    2,357Capital expenditures
    
    
    481
    
    
    
    816
    
    
    
    339
    
    
    
    
    
    
    
    1,655
    
    
    
    97
    
    
    
    3,388Capital
expenditures
(Acquisitions)
    
    
    89
    
    
    
    1,711
    
    
    
    1,968
    
    
    
    
    
    
    
    8,136
    
    
    
    
    
    
    
    11,904Nine months ended
September 30, 2005:Revenue
    
    $
    33,144
    
    
    
    18,797
    
    
    
    9,300
    
    
    
    5,660
    
    
    
    14,534
    
    
    
    
    
    
    
    81,435Depreciation and
amortization
    
    
    3,493
    
    
    
    2,022
    
    
    
    1,384
    
    
    
    947
    
    
    
    2,353
    
    
    
    98
    
    
    
    10,297Capital expenditures
    
    
    4,309
    
    
    
    2,918
    
    
    
    1,233
    
    
    
    685
    
    
    
    3,771
    
    
    
    243
    
    
    
    13,159Capital
expenditures
(Acquisitions)
    
    
    12,835
    
    
    
    
    
    
    
    
    
    
    
    41,369
    
    
    
    253
    
    
    
    
    
    
    
    54,457Nine months ended
September 30, 2004:Revenue
    
    $
    27,692
    
    
    
    13,699
    
    
    
    6,359
    
    
    
    
    
    
    
    5,097
    
    
    
    
    
    
    
    52,847Depreciation and
amortization
    
    
    2,586
    
    
    
    1,667
    
    
    
    798
    
    
    
    
    
    
    
    1,247
    
    
    
    70
    
    
    
    6,368Capital expenditures
    
    
    2,693
    
    
    
    1,875
    
    
    
    1,546
    
    
    
    
    
    
    
    2,614
    
    
    
    107
    
    
    
    8,835Capital
expenditures
(Acquisitions)
    
    
    89
    
    
    
    1,711
    
    
    
    1,968
    
    
    
    
    
    
    
    8,136
    
    
    
    
    
    
    
    11,904Total assets:September 30, 2005
    
    $
    64,614
    
    
    
    31,056
    
    
    
    27,881
    
    
    
    46,048
    
    
    
    41,046
    
    
    
    18,419
    
    
    
    229,064December 31, 2004
    
    
    47,668
    
    
    
    28,130
    
    
    
    27,696
    
    
    
    
    
    
    
    39,035
    
    
    
    21,238
    
    
    
    163,767
 10. COMMITMENTS AND CONTINGENCIES
 Legal Proceedings
 Waste Corporation of Missouri, Inc. v. Lafarge Corporation and
Lafarge North America, Inc.
   Other Potential Proceedings
  13




---



##### 



14




---



##### 



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
 The following discussion should be read in conjunction with the unaudited condensed
consolidated financial statements and notes thereto included elsewhere in this quarterly report. In
addition, reference should be made to our audited consolidated financial statements and notes
thereto and related Managements Discussion and Analysis of Financial Condition and Results of
Operations included in our annual report on Form 10-K for the year ended December 31, 2004 as
filed with the SEC on March 24, 2005. The discussion below contains forward-looking statements that
involve risks and uncertainties. For additional information regarding some of these risks and
uncertainties please read Risk Factors and Cautionary Statement About Forward-Looking Statements
included elsewhere in this quarterly report. Unless the context requires otherwise, references in
this quarterly report on Form 10-Q to WCA Waste, we, us or our refer to WCA Waste
Corporation and its direct and indirect subsidiaries on a consolidated basis.
 Overview
  Acquisition Strategy
    15




---



##### 



Company
    
    Location
    
    Completion date
    
    OperationsTexas Environmental Waste
    
    Houston, TX
    
    July 13, 2004
    
    CollectionAshley Trash Service
    
    Springfield, MO
    
    August 17, 2004
    
    CollectionPower Waste
    
    Birmingham, AL
    
    August 31, 2004
    
    CollectionBlount Recycling
    
    Birmingham, AL
    
    September 3, 2004
    
    Collection, Landfill & Transfer
StationTranslift, Inc.
    
    Little Rock, AR
    
    September 17,
2004
    
    CollectionRural Disposal, Inc.
    
    Willow Springs, MO
    
    November 12, 2004
    
    CollectionTrash Away, Inc.
    
    Piedmont, SC
    
    November 30, 2004
    
    Collection & Transfer StationGecko Investments (Eagle
Ridge)
    
    St. Louis, MO
    
    January 11, 2005
    
    Collection & LandfillMRR Southern, LLC
    
    High Point/Raleigh,
NC
    
    April 1, 2005
    
    Landfill, Transfer Station & MRFTriangle Environmental
    
    Raleigh, NC
    
    May 16, 2005
    
    CollectionFoster Ferguson
    
    El Dorado Springs, MO
    
    May 16, 2005
    
    CollectionTriad Waste
    
    High Point, NC
    
    May 31, 2005
    
    CollectionProper Disposal
    
    Chanute, KS
    
    May 31, 2005
    
    CollectionFort Meade Landfill
    
    Ft. Meade, FL
    
    October 3, 2005
    
    LandfillMeyer & Gabbert
    
    Sarasota/Arcadia, FL
    
    October 3, 2005
    
    Collection, Landfill & Transfer
StationPendergrass Refuse
    
    Springfield, MO
    
    October 4, 2005
    
    CollectionAndys Hauling
    
    Sarasota, FL
    
    October 21, 2005
    
    Collection
    General Review of Third Quarter Results
  16




---



##### 



Three Months
    
    
    Nine MonthsEnded September 30,
    
    
    Ended September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Collection:Residential
    
    $
    4,786
    
    
    $
    3,652
    
    
    $
    13,686
    
    
    $
    8,658Commercial
    
    
    3,596
    
    
    
    2,948
    
    
    
    10,307
    
    
    
    8,872Roll-off
    
    
    9,857
    
    
    
    6,085
    
    
    
    27,077
    
    
    
    15,941Other
    
    
    
    
    
    
    139
    
    
    
    
    
    
    
    327Total Collection
    
    
    18,239
    
    
    
    12,824
    
    
    
    51,070
    
    
    
    33,798Disposal
    
    
    12,687
    
    
    
    8,880
    
    
    
    35,213
    
    
    
    24,458Less: Intercompany
    
    
    (4,867
    )
    
    
    (3,290
    )
    
    
    (13,276
    )
    
    
    (8,732
    )Disposal, net
    
    
    7,820
    
    
    
    5,590
    
    
    
    21,937
    
    
    
    15,726Transfer and other
    
    
    6,226
    
    
    
    3,222
    
    
    
    15,977
    
    
    
    8,484Less: Intercompany
    
    
    (2,787
    )
    
    
    (1,794
    )
    
    
    (7,549
    )
    
    
    (5,161
    )Transfer and other, net
    
    
    3,439
    
    
    
    1,428
    
    
    
    8,428
    
    
    
    3,323Total Revenue
    
    $
    29,498
    
    
    $
    19,842
    
    
    $
    81,435
    
    
    $
    52,847
      Forward-Looking Statements and Non-GAAP Measures
   17




---



##### 




    
    it is widely used by investors in our industry to measure a companys 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;
    
    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 asset base (primarily depreciation and amortization
of our landfills and vehicles) from our operating results; and
    
    it helps investors identify items that are within 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.
  
    
    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;
    
    as one method we use to estimate a purchase price (often expressed as a multiple of
EBITDA) for solid waste companies we intend to acquire. The appropriate 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;
    
    in presentations to our board of directors to enable them to have the same consistent
measurement basis of operating performance used by management;
    
    as a measure for planning and forecasting overall expectations and for evaluating
actual results against such expectations;
    
    in evaluations of field operations since it represents operational performance and
takes into account financial measures within the control of the field operating units;
    
    as a basis for incentive cash bonuses paid to our executive officers and other
employees;
 18




---



##### 




    
    to assess compliance with financial ratios and covenants included in our credit agreements; and
    
    in communications with investors, lenders, and others, concerning our financial performance.
  Three Months
    
    
    Nine MonthsEnded September 30,
    
    
    Ended September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Total EBITDA for reportable segments
    
    $
    8,792
    
    
    $
    5,123
    
    
    $
    23,026
    
    
    $
    2,273Depreciation and amortization
    
    
    (3,846
    )
    
    
    (2,357
    )
    
    
    (10,297
    )
    
    
    (6,368
    )Interest expense, net
    
    
    (2,734
    )
    
    
    (866
    )
    
    
    (6,613
    )
    
    
    (3,394
    )Write-off of deferred financing
costs and debt discount
    
    
    (14
    )
    
    
    
    
    
    
    (1,308
    )
    
    
    Income tax (provision) benefit
    
    
    (873
    )
    
    
    (752
    )
    
    
    (1,893
    )
    
    
    2,433Net income (loss)
    
    $
    1,325
    
    
    $
    1,148
    
    
    $
    2,915
    
    
    $
    (5,056
    )
  Three Months
    
    
    Nine MonthsEnded September 30,
    
    
    Ended September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Total EBITDA, per above
    
    $
    8,792
    
    
    $
    5,123
    
    
    $
    23,026
    
    
    $
    2,273Stock-based compensation charge
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,532Adjusted EBITDA
    
    $
    8,792
    
    
    $
    5,123
    
    
    $
    23,026
    
    
    $
    13,805
  Results of Operations
 Three Months Ended September 30, 2005 Compared to Three Months Ended September 30, 2004
  Three Months Ended September 30,2005
    
    
    2004Revenue
    
    $
    29,498
    
    
    
    100.0
    %
    
    $
    19,842
    
    
    
    100.0
    %Expenses:Cost of services
    
    
    18,870
    
    
    
    64.0
    
    
    
    13,557
    
    
    
    68.3Depreciation and amortization
    
    
    3,846
    
    
    
    13.1
    
    
    
    2,357
    
    
    
    11.9Accretion expense
    
    
    38
    
    
    
    0.1
    
    
    
    64
    
    
    
    0.3Stock-based compensation
    
    
    183
    
    
    
    0.6
    
    
    
    
    
    
    
    Other general and administrative
    
    
    1,629
    
    
    
    5.5
    
    
    
    1,267
    
    
    
    6.4Operating income
    
    
    4,932
    
    
    
    16.7
    
    
    
    2,597
    
    
    
    13.1
 19




---



##### 



Three Months Ended September 30,2005
    
    
    2004Interest expense, net
    
    
    (2,734
    )
    
    
    (9.3
    )
    
    
    (866
    )
    
    
    (4.4
    )Write-off of deferred financing costs and debt discount
    
    
    (14
    )
    
    
    (0.0
    )
    
    
    
    
    
    
    Other income, net
    
    
    14
    
    
    
    0.0
    
    
    
    169
    
    
    
    0.9Income tax provision
    
    
    (873
    )
    
    
    (2.9
    )
    
    
    (752
    )
    
    
    (3.8
    )Net income
    
    $
    1,325
    
    
    
    4.5
    %
    
    $
    1,148
    
    
    
    5.8
    %
 Revenue.
 Cost of services.
 Depreciation and amortization.
 Stock-based compensation.
 Other general and administrative.
 Interest expense, net.
 Income tax provision.
 Nine Months Ended September 30, 2005 Compared to Nine Months Ended September 30, 2004
  Nine Months Ended September 30,2005
    
    
    2004Revenue
    
    $
    81,435
    
    
    
    100.0
    %
    
    $
    52,847
    
    
    
    100.0
    %Expenses:Cost of services
    
    
    52,482
    
    
    
    64.5
    
    
    
    35,484
    
    
    
    67.1Depreciation and amortization
    
    
    10,297
    
    
    
    12.6
    
    
    
    6,368
    
    
    
    12.1Accretion expense
    
    
    114
    
    
    
    0.1
    
    
    
    192
    
    
    
    0.4Stock-based compensation
    
    
    320
    
    
    
    0.4
    
    
    
    11,532
    
    
    
    21.8
 20




---



##### 



Nine Months Ended September 30,2005
    
    
    2004Other general and administrative
    
    
    5,520
    
    
    
    6.8
    
    
    
    3,633
    
    
    
    6.9Operating income (loss)
    
    
    12,702
    
    
    
    15.6
    
    
    
    (4,362
    )
    
    
    (8.3
    )Interest expense, net
    
    
    (6,613
    )
    
    
    (8.1
    )
    
    
    (3,394
    )
    
    
    (6.4
    )Write-off of deferred financing costs and debt discount
    
    
    (1,308
    )
    
    
    (1.6
    )
    
    
    
    
    
    
    Other income, net
    
    
    27
    
    
    
    0.0
    
    
    
    267
    
    
    
    0.5Income tax (provision) benefit
    
    
    (1,893
    )
    
    
    (2.3
    )
    
    
    2,433
    
    
    
    4.6Net income (loss)
    
    $
    2,915
    
    
    
    3.6
    %
    
    $
    (5,056
    )
    
    
    (9.6)
    %
 Revenue.
 Cost of services.
 Depreciation and amortization.
 Stock-based compensation.
 Other general and administrative.
 Interest expense, net.
 Write-off of deferred financing costs and debt discount.
 21




---



##### 



Income tax (provision) benefit.
 Liquidity and Capital Resources
     Credit Agreements
   22




---



##### 




    
    a $75 million revolving credit facility under the First Lien Credit Agreement,
including subfacilities for:
 °
    
    standby letters of credit in the aggregate principal amount of up to $30.0 million; and°
    
    a swing-line feature for up to $10.0 million for same day advances;
 
    
    a $100 million Term B loan under the First Lien Credit Agreement (the Term B Loan),
reducing by $250,000 per quarter beginning June 30, 2005; and
    
    a $25 million second lien term loan under the Second Lien Credit Agreement (the Second
Lien Term Loan).
           23




---



##### 



24




---



##### 



Other
  Contractual Obligations
   Cash Flows
    Critical Accounting Estimates and Assumptions
   Capitalized Landfill Costs
  25




---



##### 




    
    we believe that the project has fatal flaws;
    
    the land is owned or controlled by us, or under option agreement;
    
    we have committed to the expansion;
    
    financial analysis has been completed, and the results indicate that the expansion
has the prospect of a positive financial and operational impact;
    
    personnel are actively working to obtain land use, local and state approvals for an
expansion of an existing landfill;
    
    we believe the permit is likely to be received; and
    
    we believe that the timeframe to complete the permitting is reasonable.
  Closure and Post-Closure Obligations
   
    
    Landfill closure and post-closure liabilities are calculated by estimating the total
obligation in current dollars. Cost estimates equate the costs of third parties
performing the work. Any portion of the estimates which are based on activities being
performed internally are increased to reflect a profit margin a third party would receive
to perform the same activity. This profit margin will be taken to income once the work is
performed internally.
    
    The total obligation is carried at the net present value of future cash flows, which is
calculated by inflating the obligation based upon the expected date of the expenditure
using an inflation rate and discounting the inflated total to its present value using a
discount rate.
 26




---



##### 



The discount rate represents our credit-adjusted risk-free rate. The
resulting closure and post-closure obligation is recorded as an increase in this liability
as airspace is consumed.
 
    
    Accretion expense is calculated based on the discount rate and is charged to cost of
services and increases the related closure and post-closure obligation. This expense will
generally be less during the early portion of a landfills operating life and increase
thereafter.
  Nine Months Ended
    
    
    Year EndedSeptember 30,
    
    
    December 31,2005
    
    
    2004Number of landfills owned
    
    
    17
    
    
    
    14Landfill depletion and amortization expense (in thousands)
    
    $
    4,935
    
    
    $
    4,290Accretion expense (in thousands)
    
    
    114
    
    
    
    257Closure and post-closure expense (in thousands)
    
    
    
    
    
    
    5,049
    
    
    
    4,547Airspace consumed (in thousands of cubic yards)
    
    
    2,775
    
    
    
    2,623Depletion, amortization, accretion, closure and post-closure
expense per cubic yard of airspace consumed
    
    $
    1.82
    
    
    $
    1.73
  27




---



##### 



ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
   ITEM 4. CONTROLS AND PROCEDURES.
   28




---



##### 



PART II-OTHER INFORMATION
 ITEM 1. LEGAL PROCEEDINGS.
  ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
    ITEM 6. EXHIBITS.
 Exhibit No.
    
    Description*2.1
    
    Agreement and Plan of Merger, dated September 30, 2005, by and
among WCA Waste Corporation, WCA of Central Florida, Inc., WCA
Management Company, L.P., Waste Corporation of America, LLC and
Waste Corporation of Central Florida, Inc. (incorporated by
reference to Exhibit 2.2 to WCA Wastes current report on Form
8-K (File No. 000-50808) filed with the Commission on October 6,
2005).+31.1
    
    Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer.+31.2
    
    Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer.+32.1
    
    Section 1350 Certification of Chief Executive Officer.+32.2
    
    Section 1350 Certification of Chief Financial Officer.
 
 +
    
    Filed herewith.*
    
    Pursuant to Item 601(b)(2) of Regulation S-K, WCA Waste agrees to furnish supplementally a copy
of any omitted schedule to the Commission upon request. 29




---



##### 



SIGNATURES
  WCA WASTE CORPORATIONBy:
    /s/ Charles A. CasalinovaCharles A. CasalinovaSenior Vice President and Chief Financial
Officer (Principal Financial Officer) By:
    /S/ Kevin D. MitchellKevin D. MitchellDate: November 8, 2005
    
    Vice President and Controller
(Principal Accounting Officer)




---



##### 



EXHIBIT INDEX
 Exhibit No.
    
    Description*2.1
    
    Agreement and Plan of Merger, dated September 30, 2005, by and
among WCA Waste Corporation, WCA of Central Florida, Inc., WCA
Management Company, L.P., Waste Corporation of America, LLC and
Waste Corporation of Central Florida, Inc. (incorporated by
reference to Exhibit 2.2 to WCA Wastes current report on Form
8-K (File No. 000-50808) filed with the Commission on October 6,
2005).+31.1
    
    Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer.+31.2
    
    Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer.+32.1
    
    Section 1350 Certification of Chief Executive Officer.+32.2
    
    Section 1350 Certification of Chief Financial Officer.
 
 +
    
    Filed herewith.*
    
    Pursuant to Item 601(b)(2) of Regulation S-K, WCA Waste agrees to furnish supplementally a copy
of any omitted schedule to the Commission upon request.