IESI-BFC Ltd Announces Strong Results for the First Quarter

Management Commentary

Reported revenues increased $158.8 million or 60.1% from $264.0 million in the first quarter of 2010 to $422.9 million in the first quarter of 2011 due in large part to our acquisition of Waste Services, Inc. (“WSI”).

Organic gross revenue, which includes intercompany revenues, grew 3.9% on a consolidated basis and is comprised of total price and volume growth of 3.3% and 0.6%, respectively. Total price and volume improvements in Canada were 4.2% and 0.7%, respectively, and 2.6% and 0.5% in the U.S. Each revenue growth component has been prepared on a comparable basis, as if WSI’s operations were combined with ours in the current and previously comparable quarter, and has assumed a foreign currency exchange (“FX”) rate of parity when prepared on a consolidated basis.

Strong revenue growth translated into strong adjusted EBITDA(A) and operating income growth. Adjusted EBITDA(A) was $123.1 million, or 62.1% higher, in the first quarter of 2011 versus $75.9 million in the same quarter a year ago. Our first quarter adjusted EBITDA(A) margin was 29.1% compared to 28.8% in the first quarter of 2010. Adjusted operating income(A) was $61.7 million, or 69.1% higher, in the quarter versus $36.5 million in the comparative period last year.

We also generated higher adjusted net income(A) quarter over quarter. Adjusted net income(A) for the first quarter of 2011 was $28.1 million, or $0.23 per weighted average diluted share (“diluted share”), compared to $18.7 million, or $0.20 per diluted share in the comparative period.

Free cash flow(B) for the quarter totaled $70.6 million and was 68.6% higher than $41.9 million achieved in the comparative period last year. Our free cash flow(B) margin was 16.7% in the quarter compared to 15.9% in the first quarter of 2010. Free cash flow(B) growth was the result of strong operating income, partially offset by higher interest expense and higher capital and landfill purchases. The increase in each of these measures is largely attributable to our acquisition of WSI.

“Our first-quarter results were in line with expectations and we believe we are on track to achieve the outlook we provided for our 2011 financial performance,” said Keith Carrigan, Vice Chairman and Chief Executive Officer of IESI-BFC Ltd. “We overcame a number of headwinds in the quarter to achieve revenue growth of 60.1% and consolidated organic gross revenue growth of 3.9%. Our revenue improvement, combined with lower SG&A expenses as a percentage of revenue, translated into adjusted EBITDA(A) margin expansion of 30 basis points and free cash flow(B) margin expansion of 80 basis points, compared with the same period a year ago. We are pleased with these results, particularly given the challenges that we faced in the quarter due to harsher comparative weather conditions in certain parts of the United States and Canada.”

Mr. Carrigan continued, “In Canada, we delivered solid pricing growth, but harsher weather conditions in the quarter, and most notably in March, resulted in us receiving lower municipal solid and special waste volumes at our landfills. However, our outlook for the year anticipates that we will fully recoup these volumes as the spring seasonal cycle and our organic sales activities take effect, which will result in a stronger comparative volume performance over the balance of the year. Like Canada, the U.S. northeast segment experienced harsher weather conditions as well. However, special and municipal solid waste volumes and higher pricing drove landfill revenue growth, while acquisitions boosted the industrial service line. In the U.S. south segment, we achieved volume growth in almost all service lines.”

“With our anticipated revenue and adjusted EBITDA(A) growth through the balance of the year, we reaffirm our free cash flow(B) guidance of approximately $270 million in 2011,” Mr. Carrigan added. “We will continue to deploy these proceeds strategically in order to deliver the optimal return to our shareholders. Even following an active year of acquisitions, we have a robust pipeline and there are attractive opportunities.

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