Good day ladies and gentlemen, and welcome to the Second Quarter 2008, Waste Connections Earnings Call. My name is Choresa and I will be your coordinator for today. At this time, all participants are in a listen-only mode. We will be facilitating a question-and-answer session towards the end of this conference. [Operator Instructions]. I would now like to turn the presentation over to your host for today's call Mr. Ron Mittelstaedt. Please Proceed.

Okay. Thank you operator and good morning. I like to welcome everyone to our conference call to discuss second quarter results and provide our detailed outlook for Q3. We'll also review recent financing that position us with about $500 million of available capital with access to more if necessary for a potential pickup in acquisition activity expected later in the year. As I'll comment on in the call, this expected acquisition growth is driven by private company opportunities, potential divestitures from public mergers is an addition to these private opportunities. I'm joined this morning by Steve Bouck, our President; Worthing Jackman, our CFO and several other members of our senior management team. As stated in our earnings release, we remain extremely pleased with our performance in 2008. Although a weakening economy and rapid escalation in fuel costs have impacted us, we would note the following. Revenue has met our expectations. Strong pricing and operating improvements have helped us to get a jump on spiraling fuel costs. Although we expect recovering such a spike to get more difficult in the second half of the year until franchise market prices reset early next year. And finally, free cash flow is up more than 50% year-over-year and has exceeded our expectation. At the risk of sounding like a broken record, we believe spiraling fuel cost continues to math the underlying strength of our core business. Diesel prices in Q2 jumped on average about 55% per gallon over last year and increased as a percent of revenue by about 285 basis points. Acquisitions completed since the year ago period accounted for about another 15 basis points of margin dilution in the quarter. With reported margins in the quarter down only 100 basis points, we overcame 200 basis points of this 300 basis point increase in cost. This recovery is almost a 50 basis point sequential improvement over Q1 '08, where we were able to recover about 150 basis points of the 215 basis point impact of similar items in that period. Before we get into additional details, let me turn the call over to Worthing for our forward-looking disclaimer and other housekeeping items.

Thank you, Ron and good morning. We must inform everyone listening that certain matters discussed in this conference call 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 are subject to various risks and uncertainties, which could cause actual results to differ materially from those currently anticipated. These risks and uncertainties are set forth in the company's periodic filings with the Securities and Exchange Commission. Shareholders, potential investors and other participants are urged to consider these factors carefully in evaluating the forward-looking statements, and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements made herein are made only as of the date of this conference call and the company undertakes no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances. On the call, we refer to operating income before depreciation and amortization and free cash flow, each a non-GAAP measure. Management uses these non-GAAP measures as to the principal measures to evaluate and monitor the ongoing financial performance of our operations. We define operating income before depreciation and amortization to exclude any gain or loss on disposal of assets. Free cash flow is defined as net cash provided by operating activities, plus or minus any changes in book overdraft, plus proceeds from the disposal of assets and excess tax benefits associated with equity-based compensation, plus capital expenditures and distributions to minority interest holders. Where appropriate, we will highlight particular items in certain periods to improve comparability. Finally, we note that, other companies may calculate these non-GAAP measures differently. Now, I'll turn the call back over to Ron.

Okay. Thank you, Worthing. As previously stated, we remain extremely pleased with our results in the quarter. Revenue was $260 million, up 10.8% over the prior year period and consistent with our outlook for the quarter. Organic growth was 4.6%, was broken down as follows, 5.4% price and negative 1.5% volume and a positive 0.7% for recycling, intermodal and other services. Pricing in the quarter increased 10 basis points sequentially from Q1. Core pricing was about 3.7% which although is down about 40 basis points from Q1, it's virtually flat on a dollar basis from Q1. This decline on a percentage basis is simply due to a higher denominator revenue base pumped in the quarter, since Q2 '07 revenue was about 10% higher than Q1 '07. Surcharges in selected markets due spikes in certain costs such as fuel, increased sequentially from 1.1% in Q1 to about 1.7% in Q2, due primarily to spiraling fuel cost. We expect pricing to increase slightly in Q3, to and all end 5.5%. Diesel fuel prices have made two runs so far this year. One increase of about $0.70 per gallon between January and April, and then a second more rapid move of another $0.70 per gallon from mid-April to late May. Just as we had caught up on the first increase, the rapid escalation in May created a steeper [inaudible] decline. To assess how much of the spike in fuel and related costs, we've been able to recover considering our market model, we looked at the expected amount of core pricing and surcharges above budgeted levels relative to expected fuel costs, above budget. What we found was not surprising as it looks like we're recovering up to 65% of the increase within calendar '08 at current market prices. The rate of escalation in diesel…

Thanks, Ron. In the second quarter revenue increased 10.8% to $267 million, 4.6% from internal growth and the remainder from acquisition activity. Operating income before depreciation and amortization for the quarter was $80.1 million or 30% of revenue, which compares to $74.7 million or 31% of revenue in the year-ago period. Similar to Q1, only one line item in the second quarter, fuel, increased a notable amount year-over-year as a percentage of revenue. Fuel expense increased about 285 basis points to about 8.85% of revenue. Our outlook for Q2 at about $0.20 per gallon cushion, above market prices in April and had assumed fuel increase 235 basis points to 8.35% of revenue. Unfortunately the approximate $0.70 run after April conference call pushed fuel costs about $1.3 million above our outlook. For the fourth quarter, we average about $4.30 per gallon, which was about $1.55 per gallon or little more than 55% above the prior year period. This 285 basis point margin hit from fuel was reduced by the following improvements. Third-party transfer disposal, intermodal drayage and pass-through revenue expense declined about 70 basis points, given a shift in revenue mix and strong core price increases. Insurance cost declined about 55 basis points due to improvements in incident frequency rates and reduction in severity, partially offset by increased medical cost. Maintenance and repair declined 50 basis points, primarily given the price for an organic growth. And finally, SG&A declined 15 basis points. Acquisitions closed since year-ago period accounted for almost 15 basis points, a reported year-over-year margin dilution in the current year period. Depreciation and amortization expenses increased about $3.1 million year-over-year to about 9% of revenue in the current quarter, up almost 35 basis points from the prior-year due to an approximate 25 basis point increase as a percentage of…

Okay. Thank you, Worthing. In closing, again we are extremely pleased with our results in Q2, and for the first half of 2008. Although the strength of our performance has been masked by aspiring fuel costs, free cash flow of more than 50% so far, year-over-year, speaks to the continuing underlying strength of our business. With fuel prices stabilizing or potential declining, private company acquisition activity is expected to increase later this year and pricing is expected to remain strong into 2009 to recover recent cost spikes, we believe the next year is setting up well. Additionally, any potential divestitures from the proposed Waste Management acquisition of our public services, or the announced public services Allied Waste merger could provide potential upside. We've said all year, 2008 is a tough year and reminds us of 2006, but we believe 2009 is setting up to be an outstanding year. We appreciate your time today. And at this time, I will turn the call over to the operator to open up the lines for your questions. Operator? Question and Answer

[Operator Instructions]. And your first question comes from the line of Scott Levine of JPMorgan. Please proceed. Scott Levine - JPMorgan Chase & Co.: Good morning, guys.

Hi, good morning Scott. Scott Levine - JPMorgan Chase & Co.: On special waste, did you quantify the basis point impact of volumes in the quarter and anecdotally is that more project driven in your view or more cyclical?

Yes. We did quantify the impact to the volume decrease. It was about 70 basis points...

70% of the 1.5%, so it's about 1% negative volume.

70%. And your second question is that more project related, I mean it's cyclical in its standpoint that it's more seasonal, I'd really say than cyclical Scott, but it is cyclical and that it is typically contaminated soil clean up of sites for speculative real estate. So, to the extent of that is up or down, it's cyclical in that way. Scott Levine - JPMorgan Chase & Co.: So, if you focus exclusively on the portion of the... the volume growth associated with the base business, how is the outlook and relative to your expectations. And the competitive versus franchise market impact there?

Relative to our expectations laid out at the inception of the year, it was just slightly down Scott that would tell you that it was down about 0.5% on the core business. And that, that breaks down... its actually probably down a little more in the exclusive market than the competitive and that the West Coast, which is the most of the exclusive market is obviously seeing more of a real estate effect and decline and ripple effect from that than the central portion of the country, for example. And obviously, we take a 100% of the volume increase or decline in the exclusive market. So, down a little bit more in the exclusive than the competitive and up a little bit from our initial expectations from a volume standpoint. Scott Levine - JPMorgan Chase & Co.: Okay. One last one, then on cash flow. I believe you updated the guidance for the year, but clearly you're running ahead of our expectations there, any thoughts on whether we could see upside to the guidance on cash flow for the full year versus really more of a timing spend or timing issue. The first half of the year relative to what you're expecting the spend maybe on CapEx in the back half for any other issues that might be impacting the full-year outlook there?

Yes, we had... I think, guided to around a $130 million of free cash flow for the year. Right now we're trading to at least $140 million. I wouldn't want to give the impression, you can double the $80 million and say a $160 million. But, clearly around that $140 million range before any impact of potential higher-risk resolution. Scott Levine - JPMorgan Chase & Co.: And any details on the impact of bonus depreciation there as well?

Year-to-date, so through six months we've had about $3.2 million benefit in decreased cash taxes from bonus depreciation. Scott Levine - JPMorgan Chase & Co.: Great. Thank you. William Fisher - Raymond James & Associates: Your next question comes from the line of Bill Fisher of Raymond James. Please proceed. William Fisher - Raymond James & Associates: Hi, good morning.

Good morning, Bill. William Fisher - Raymond James & Associates: Just following up on the special waste in kind of West Coast transit [ph]. Is that mostly ensure up on the volume side or just, if you have a lower mix of, on the landfill side of third-party waste in the West Coast where the dip fees are higher and maybe a higher mix in the Midwest. Does that impact pricing quarter-to-quarter at all?

No. It doesn't, it doesn't impact pricing, it's more of a volume issue Bill. William Fisher - Raymond James & Associates: Just a volume?

And what I'll say is while landfill volumes were essentially flat year-over-year on a same-store basis, where we had some dips... we had some dips as you pointed out on the higher 50 markets on the West Coast and some of those volumes were replaced elsewhere in markets with lower dip fees and so that kind of net change in price would impact volume. William Fisher - Raymond James & Associates: All right, it impacts volume. Okay, and then I apologize if you touched on this. But, if... hypothetically if a private company wanted to close by year end in order to have a definitive agreement and get the local approvals somewhat now. When would they have to have kind of a definitive agreement to close by the end of December?

Well, Bill first off it would depend on the size of the transaction because it requires or if it's an investment more than... around $55 million, it's going to have a Hart-Scott-Rodino filing. So, you're going to have a minimum of 30 days to 60 days back up from that depending on the complexity of the transaction and generally the local consensus would take usually a minimum of, I’d say 60, almost 90 days. So, I would tell you that once you get beyond, probably mid to late August, maybe early September, you’re starting to push the edge of being a little more difficult to guarantee closing in this year. William Fisher - Raymond James & Associates: Okay, great. Thank you.

Your next question comes from the line of Jonathan Ellis of Merrill Lynch. Please proceed.

Thanks. And good morning, guys.

Good morning.

Good morning.

Just following up on acquisitions, first off, can you characterize whether most of the potential acquisitions in the pipeline are larger asset basis or more of a clustering of smaller private companies. Just trying to get a feel for relative sizes in the acquisitions in the pipeline?

John, it's a mix of both obviously. I mean, if it was just tuck-in acquisitions we probably wouldn't need to increase the financing in the way that we have. But, that we're seeing some sort of mid-size to larger size, both exclusive market and competitive market deals that we are putting offers in on and then of course our normal pipeline of tuck-in acquisitions building out around markets that we are already in. It's really a combination of both, but obviously there are some acquisitions a little bit larger side. Again, I would remind you as well as everyone I mean, larger in our model remember are $10 million to $30 million type revenues companies individually.

And are for most of those potential acquisition targets on the West Coast or are you seeing more activity potentially in the southeast?

It's a combination of both, but I again I would remind you that about two-thirds almost of our, what is available for acquisition within over footprint that we’ve identified over time is the companies on the West Coast, just statistically, and I would also tell you that that's where the larger companies within the entire industry tend to be.

Okay, great. Just turning our attention to pricing during the quarter. Can you talk a little bit in more detail of pricing in the commercial roll-off in residential businesses in your non-franchise markets?

In our non-franchise markets?

Yes.

Sure. Pricing has continued to hold up really in all business lines, fairly well. I'm looking for a little bit of a data here. Residentially and commercially there was virtually no change in price, Q1 to Q2 or projected into Q3 that has been fairly stable. Roll-off there was... actually pricing was up in the quarter in the southeast and the Midwest, the competitive portions of our model. But volumes were down in terms of roll-off pulls. They were down a little more in the southeast then they were in the central portion of the country. So… but again price was up at an amount greater than the decline in roll-off pull not only for the company, but in also each of those geographic regions.

Okay, great. And then just finally, the length of volumes, I know and you mentioned they were flat this quarter on a same-store basis, last quarter, I believe, if I have the data correct, they were up 6% on a same-store basis. Just to be clear that sequential deceleration is that entirely a function of the special waste activity that you cited earlier?

It's a function of two things John. It's a function of roll-off volumes that are internalized and third party roll-off being lower, quarter-to-quarter on a volume basis, we were knocked down [ph] 4.5% in volume in roll-off last quarter and we are this quarter and 70% of that goes to our site as well as we would estimate that third party is off by that, and then it's also that plus the special waste.

Okay. And then just one final question from me. In terms of volume weakness, are you starting to see incremental deterioration in your residential and commercial markets. Obviously you did provide... you did quantify the slowdown in the roll-off side, but wondering if you give a little more color on residential and commercial volumes?

We're really are. I mean it's... those have remained very stable, we have taken a hard look at service increases in commercial volumes, service decreases in commercial volumes, business closures in commercial volumes, bankruptcies in commercial volumes and we have compared that to the last three years in the same six-month period and there actually is virtually no change.

Okay. Thanks guys.

Your next question comes from the line of Corey Greendale of First Analysis. Please proceed.

Good morning [inaudible]. A couple of question. First of all, on the lines you were just talking about Ron, can you just talk about the sequential pattern as you go month by month in roll-off volumes and if you saw increase seasonally as you defector [ph] often seems to be less than the seasonal increase?

Well, it’s a twofold answer Corey, let me say this, on a volume basis, roll-off, pretty much in all geographies has come down February through June, month to month to month stabilizing a little in the sort of the April... March to April timeframe and then stepping down some more. Now, it is up June over May, May over April, April over March because that would be the expected seasonal pattern, whether it is still down on a year-over-year basis in each of those month sort of at an accelerating rate in those months throughout the end of Q1 and into Q2.

Corey if you look at the three months, May was the worst month of the three and June was better than May.

Okay. Second question, I realize that looking at acquisition of potential divestitures is going to be very dependent on what shakes loose from many of those acquisitions, but do you foresee a scenario where you might start getting into some geographies beyond your historic footprint?

No. Not due to private company acquisitions we are looking at today. If some of the potential public to public mergers occur, it's hard to say what divestitures may or may not happen there and certainly we would take a look at those that might be outside our current geography. If it made sense and met our strategy, but there's nothing in our pipeline that we're looking at that is outside our current geography.

Okay. And do you see a scenario where the needle on the percent of revenue from exclusive markets moves either up or down as a result of the acquisitions?

I don't see it moving down.

Okay. And then last question. You talked about balancing price increases with volumes and customer push back. Can you just elaborate on that a bit, are you… have you some customer loss and some volume loss that you would attribute to, to pricing or are you saying it’s more anecdotal that in discussions with customers they more suggest, that we’ve had enough and you've been responsive to that.

Well, I mean it's a combination of things Corey. If you look at it and this isn't just... first off there is about as you saw in the current quarter and in the guidance of our year... for the balance of the year, we are projecting to recover about two-thirds of the increase in fuel. Now… so on a current period basis and all of it over a full-year period, if you look at that, that sort of implies that... maybe a third of so of the customers were not getting some sort of surcharge or not getting a surcharge in the current quarter. And, that's actually not that different from the other public companies on a percentage of customer basis, we've taken a hard look at this. While we clearly have more customers due to our model that are not getting a surcharge or not getting a timely surcharge. As I look at the indices posted on the websites of the other companies, it's pretty easy to back into, somewhere between 20% and 30% of their customers are also not getting [ph] the surcharge. And it's pretty basic math, if fuel was 3.5% of revenue and it's now 9% that would imply a 5% to 6% surcharge on a customer who would cover fuel. If you assume revenue is 100% and surcharges in many markets for all companies are substantially north of that, if you look at the indexes. That math implies that it's obviously not a dollar-to-dollar tradeoff. So, I mean, it’s a long way around the bond [ph] to say that I think in all company models whether they be exclusive or they be a competitor, there is a number of customers either that contractually or due to competitive dynamics are not paying its fuel surcharge or not paying a full fuel surcharge. And that is being offset throughout the balance of the mix. So, we have seen municipal customers that there's been a lot of push back on, we've seen individual customers, there is a lot of push back on. Again, we’re seeing a number of the public companies price new customers with no fuel surcharge and guaranteeing no fuel surcharge for protracted periods of time. To our comment in our… to our comment in our earlier statements today that you often replace loss volume at lower margin. And that is what we are seeing in many competitive markets by the large national companies. So, the fuel surcharge is clearly more than art than a science.

Okay. Thanks guys.

Your next question comes from the line of Anton Kawasaki of KN Capital [ph]. Please proceed.

Hey guys.

Hi, Good morning.

I guess I’m just, I’m trying to understand a little bit… a little bit more of the fuel surcharge. So, if you… I mean, are you saying that if you try to put the fuel surcharge they say, no, we’re not going to take it and you turn it away they can go and get a cheaper contract from somebody else?

Yes.

Yes. Every time you price increase someone at a competitive market, that increases the odds of them calling you and trying to renegotiate price or trying to call the competitors, see if they can get a lower price.

So then, I mean, would it seem that the industry maybe has lost its discipline a little bit?

No. I wouldn’t say that at all. I say this is a commodity and commodity is good at lowest price. So, if there was only three players in every market and they could collude if they have always upward moving pricing, but that's not what you have, you have a very competitive dynamic amongst the public companies and the private independence within each marketplace. And remember a public company is tend to operate at a higher operating margin than most independent companies. So, if you're already operating at a 20% margin in a market, on a customer and you move that 5% and an independent company is willing to operate at 10% to 15% margin, there is a deep in spread there on price per customer.

So, then as your, I guess as the fuel cost go higher, and if you’re not able to pass that on then your ROICs are obviously going a little bit lower, are there any customers which just want to be ROIC profitable to keep?

No. And remember, don't mistake margin for return on investment capital, margin can go down, even if you are recovering a 100% because revenue was climbing, it's just math, revenue was climbing, you are recovering your cost and margin is going down. That has no impact on ROIC, your EBITDA is still flat if you are recovering all of it and your invested capital basis is growing. So, no, I wouldn't say that's necessarily the truth.

And that's because ROIC also has denominated component, which is capital, and obviously with the free cash flow 55% this year and CapEx down you’re also controlling the capital base as well?

Okay, thanks.

Your next question comes from the line of Leone Young of Citigroup. Please proceed.

Good morning.

Hi, Good morning.

Hi, Leone.

First of all, when you look at and hopefully an expected surge in acquisitions in the private sector or private companies. Is there any one single factor that seems to be driving us or is it a combination of couple of these guys you've looked at finally selling for personal reasons and a variety of reasons, I'm just trying to look at what's the driver here?

Well, Leone around here we call it the Obama factor. And in all seriousness, that is the issue. The issue is a spear of a political regime change with a bias towards substantially higher capital gains taxes. As we all know, Canada and Obama has been very forth riders [ph] his intention to try and move capital gain taxes upwards between 5% and 13%... percentage points not percent, virtually a doubling in some cases and that is a big fear, that is a huge fear amongst... so many private that might have thought of selling a year, two, three years from now have said, how am I going to get 10% to 15% more for my business in an environment when costs have been rising fairly quickly due to fuel and other inflationary factors. So, if I'm going to do it, I might as well do it this year. And that's really we've seen a pretty large consensus amongst the potential sellers we've talked to you. Virtually, I think nine out of ten comes back to the fear of capital gains, changing in January, I mean… I don't know whether that means our industry is a predictor of the outcome of November, but that's what they're betting against.

Hope its [ph] playing out, like you expected. Also recognizing you're not economist, but given that there is a fair amount of economic pain out there. Are you little surprised that your service durables haven't changed and as you talk to your customers what are they saying, is it just a matter of time?

Yes, Leone. I mean, I guess we are a little bit surprised, but I think really it’s set back spell to how this economic downturn is different than the '01 to '03 or maybe some of the others we've been seen before that back '90 to '92. And that this is very realistic driven which means it is, fairly market centric to the West Coast, in our model the West Coast, where there was a much more rapid run-up in real estate in the early 2000 and therefore there has been a much more rapid decline. So, most of the volume loss is in roll-off. It is in our West Coast markets and the Denver market where there was also a rapid run-up in real estate and that rapid run-up in real estate led to greater roll-up activity for everything that ripples from that and that has come down. It hasn't really affected the core small container account or the residential in those markets in that way. So, it's not a broad-based economic decline as we've seen before where it hits industry, it hits commercial and... it just weakens across the board. It's pretty stratified and so it's come out of roll-off in those markets and then that has come out of our landfill. So, that's I think why we're not seeing it in the residential and the commercial and we're not seeing it nearly as much in the Midwest and the upper southeast as we are in the West Coast.

Terrific. That's very helpful. And lastly, just housekeeping question, if I missed it. Did you say what you were expecting for your average diesel price per gallon in Q3?

Yes. The average works out to about 470.

Thank you.

[Operator Instructions]. And your next question comes from the line of Brian Butler of FBR. Please proceed.

Good morning guys. Thanks.

Hi, Good morning Brian.

Question just on the acquisition side of this. Can you update kind of where you see the pipeline right now and size and if not that at least what you... what is in your available market area? And then second question is, can you remind everyone what was the most Waste Connections ever acquired in its fiscal year?

Okay, answering the last first. The most we have acquired on a revenue basis in a year was $124 million. That was the most. Obviously, our years have sort of averaged between 60 and 80 with a low end of about 50. But, the most we ever did was $124 million. And what I could tell you Brian is that, with regard we've said that in our 23 state footprint we are in today there is about a billion private company revenue we've identified that fits our strategy, about 1.1 billion to 1.2 billion is in the six West Coast states that are exclusive in our model. I can tell you that our historical active discussion pipeline usually runs between sort of, I'd say, a low-end of about 90 million at any time to a high-end of maybe a 180 to 200 over time and I would tell you that we are above our high-end of our range in terms of what we would call active discussion.

So doing better than that $124 million is pretty realistic?

I didn't say that. But, I said... I said our best year was $124 million and that we would be disappointed if this year wasn't about $40 million.

I think, we spent [inaudible] set aside. You would be right, that we would be above the $125 million.

Well, you added the capacity for a reason?

Yes.

Well, I had to ask. Thank you very much guys.

Yes, we added capacity for a reason. Thank you Brian.

And there are no further questions. At this time, I’d like to turn the call back over to management for closing remarks.

Okay. Well, if there are no further questions on behalf of our entire management team, we appreciate your listening and interest in the call today. Worthing, Steve and I will be in the office for the remainder of the day. If there are any direct questions, we did not cover, that we are allowed to answer under Regulation FD and Regulation G, we will be happy to do so. We thank you and we look forward to speaking with you on our next call.

Thank you for your participation in today's conference. This concludes the presentation, you may now disconnect. Good day.