Date: March 5, 2008
Source: Casella Waste Systems, Inc.
Casella Waste Systems, Inc. (
Third Quarter Financial Results
For the quarter ended January 31, 2008, the company reported revenues of $141.4 million, up $12.6 million, or 9.8 percent over the same quarter last year. The company's net loss applicable to common shareholders was ($4.6) million, or ($0.18) per common share, compared to a net loss of ($1.7) million, or ($0.07) per share in the same quarter last year, driven mainly by non-recurring management reorganization charges and losses from equity method investments.
General and administration costs for the quarter include a $1.2 million non-recurring charge incurred as the result of the company's management reorganization. This reorganization charge resulted in an after tax impact of negative $0.03 per share.
Including this one-time charge, operating income for the quarter was $7.3 million, down $1.8 million over the same quarter last year. The company's EBITDA was $26.3 million, up $0.2 million from the same quarter last year. Excluding the one-time management reorganization charge, EBITDA was $27.5 million, up $1.4 million, or 5.4 percent over the same quarter last year.
Cash provided by operating activities in the quarter was $16.0 million, compared to $16.2 million for the same quarter last year.
The company said its GreenFiber unit continues to be severely impacted by the slowdown in the housing market. The company's income from equity method investments was down $1.9 million compared to the same quarter last year, with the company's share of GreenFiber's net income down $1.6 million during this period. The year-over-year losses from equity method investments resulted in an after tax impact of negative $0.05 per share.
Year-to-Date Financial Results
For the nine months ended January 31, 2008, the company reported revenues of $442.8 million, up 8.1 percent over the same period last year. Including the $1.2 million non-recurring management reorganization charge in the third quarter, the company's net income per common share for the nine month period was ($0.00), compared to a net loss per common share of ($0.05) in the same period last year. Operating income for the nine month period was $36.4 million, up $3.8 million or 11.7 percent over the same period last year. Cash provided by operating activities for the nine month period was $51.7 million, down $4.7 million compared to the same period last year. EBITDA was $95.6 million for the nine months ended January 31, 2008, up $9.3 million or 10.8% from the same period last year.
Fiscal 2008 Outlook
For fiscal year 2008, the company has updated its estimated EBITDA results to between $118.0 million and $122.0 million, from the original estimated range of between $114.0 million and $118.0 million.
Highlights of the Quarter
"In early January we made changes to our management team with the goal of improving our operating performance and reinforcing our resource optimization business strategy," John W. Casella, chairman and chief executive officer, said. "These changes are enabling us to enhance management attention on operational efficiency, while at the same time enabling the continued development of business opportunities beyond the traditional consumption model that meet the environmental sustainability needs of our customers today and tomorrow."
The company indicated that the soft economy in the northeastern U.S. continued to adversely impact solid waste volumes during the third quarter. Robust commodity pricing and cost control programs helped to offset most of the economic drag.
*Non-GAAP Financial Measures
In addition to disclosing financial results prepared in accordance with Generally Accepted Accounting Principles (GAAP), we also disclose free cash flow and earnings before interest, taxes, depreciation and amortization (EBITDA), which are non-GAAP measures.
These measures are provided because we understand that certain investors use this information when analyzing the financial position of companies in the solid waste industry, including us. Historically, these measures have been key in comparing operating efficiency of publicly traded companies in the solid waste industry, and assist investors in measuring our ability to meet capital expenditure and working capital requirements. For these reasons we utilize these non-GAAP metrics to measure our performance at all levels. These measures do not represent, and should not be considered as alternatives to cash provided by operating activities as determined in accordance with GAAP. Moreover, these measures do not necessarily indicate whether cash flow will be sufficient for such items as working capital or capital expenditures, or to react to changes in our industry or to the economy generally. Because these measures are not calculated by all companies in the same fashion, they may not be comparable to similarly titled measures reported by other companies.
Casella Waste Systems, Inc., headquartered in Rutland, Vermont, provides solid waste management services consisting of collection, transfer, disposal, and recycling services primarily in the eastern United States.
For further information, contact Ned Coletta, director of investor relations at (802) 775-0325, or visit the Company's website at www.casella.com.
The Company will host a conference call to discuss these results on Thursday, March 6, 2008 at 10:00 a.m. ET. Individuals interested in participating in the call should dial (877) 419-6590 at least 10 minutes before start time. The call will also be webcast; to listen, participants should visit Casella Waste Systems' website at www.casella.com and follow the appropriate link to the webcast. A replay of the call will be available on the company's website, or by calling (719) 457-0820 or (888) 203-1112 (conference code #4733396), until 11:59 p.m. ET on Thursday, March 13, 2008.
Safe Harbor Statement
Certain matters discussed in this press release 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 be identified as such by the context of the statements, including words such as the company "believes," "expects," "anticipates," "plans," "may," "will," "would," "intends," "estimates" and other similar expressions, whether in the negative or affirmative. These forward-looking statements are based on current expectations, estimates, forecasts and projections about the industry and markets in which we operate and management's beliefs and assumptions. We cannot guarantee that we actually will achieve the plans, intentions or expectations disclosed in the forward-looking statements made. Such forward-looking statements, and all phases of our operations, involve a number of risks and uncertainties, any one or more of which could cause actual results to differ materially from those described in our forward-looking statements. Such risks and uncertainties include or relate to, among other things: we may be unable to reduce costs or increase revenues sufficiently to achieve estimated EBITDA and other targets; landfill operations and permit status may be affected by factors outside our control, continuing weakness in general economic conditions and poor weather conditions may affect our revenues; we may be required to incur capital expenditures in excess of our estimates; and fluctuations in the commodity pricing of our recyclables may make it more difficult for us to predict our results of operations or meet our estimates. There are a number of other important risks and uncertainties that could cause our actual results to differ materially from those indicated by such forward-looking statements. These risks and uncertainties include, without limitation, those detailed in Item 1A, "Risk Factors" in our Form 10-K for the year ended April 30, 2007. We do not necessarily intend to update publicly any forward-looking statements whether as a result of new information, future events or otherwise, except as required by law.
CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited
(In thousands, except amounts per share)
Three Months Ended Nine Months Ended
-------------------- --------------------
January January January January
31, 31, 31, 31,
2007 2008 2007 2008
--------- --------- --------- ---------
Revenues $ 128,839 $ 141,359 $ 409,637 $ 442,799
Operating expenses:
Cost of operations (1) 85,879 96,663 267,078 291,738
General and administration (1) 16,862 18,362 56,223 55,472
Depreciation and amortization 16,960 19,055 53,702 59,178
--------- --------- --------- ---------
119,701 134,080 377,003 406,388
--------- --------- --------- ---------
Operating income 9,138 7,279 32,634 36,411
Other expense/(income), net:
Interest expense, net (2) 9,455 10,536 27,722 32,107
Loss (income) from equity
method investments (988) 907 (1,978) 4,545
Other income (49) (56) (350) (2,417)
--------- --------- --------- ---------
8,418 11,387 25,394 34,235
--------- --------- --------- ---------
Income (loss) from continuing
operations before income taxes
and discontinued operations 720 (4,108) 7,240 2,176
Provision for income taxes 1,026 496 4,420 960
--------- --------- --------- ---------
Income (loss) from continuing
operations before discontinued
operations (306) (4,604) 2,820 1,216
Discontinued Operations:
Loss from discontinued
operations, net of income
taxes (3) (4) (539) - (1,329) (811)
Loss on disposal of
discontinued operations, net
of income taxes (4) - - - (437)
--------- --------- --------- ---------
Net (loss) income (845) (4,604) 1,491 (32)
Preferred stock dividend 902 - 2,674 -
--------- --------- --------- ---------
Net loss applicable to common
stockholders $ (1,747) $ (4,604) $ (1,183) $ (32)
========= ========= ========= =========
Common stock and common stock
equivalent shares outstanding,
assuming full dilution 25,273 25,415 25,257 25,362
========= ========= ========= =========
Net loss per common share $ (0.07) $ (0.18) $ (0.05) $ -
========= ========= ========= =========
EBITDA (5) $ 26,098 $ 26,334 $ 86,336 $ 95,589
========= ========= ========= =========
CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
Unaudited
(In thousands)
April 30, Jan 31,
ASSETS 2007 2008
--------- ---------
CURRENT ASSETS:
Cash and cash equivalents $ 12,366 $ 2,898
Restricted cash 73 95
Accounts receivable - trade, net of allowance for
doubtful accounts 61,246 61,652
Other current assets 21,115 29,443
--------- ---------
Total current assets 94,800 94,088
Property, plant and equipment, net of accumulated
depreciation 483,277 488,845
Goodwill 171,735 171,385
Intangible assets, net 2,217 2,778
Restricted cash 12,734 13,587
Investments in unconsolidated entities 49,969 46,060
Other non-current assets 19,361 13,398
--------- ---------
Total assets $ 834,093 $ 830,141
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $ 1,215 $ 2,156
Current maturities of capital lease obligations 1,104 633
Series A redeemable, convertible preferred stock (2) 74,018 -
Accounts payable 51,440 43,783
Other accrued liabilities 60,375 60,060
--------- ---------
Total current liabilities 188,152 106,632
Long-term debt, less current maturities 476,225 546,188
Capital lease obligations, less current maturities 650 4,789
Other long-term liabilities 39,570 41,459
Stockholders' equity 129,496 131,073
--------- ---------
Total liabilities and stockholders' equity $ 834,093 $ 830,141
========= =========
CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited
(In thousands)
Nine Months Ended
------------------
January January
31, 31,
2007 2008
-------- --------
Cash Flows from Operating Activities:
Net (loss) income $ 1,491 $ (32)
Loss from discontinued operations, net 1,329 811
Loss on disposal of discontinued operations, net - 437
Adjustments to reconcile net (loss) income
to net cash provided by operating activities -
Depreciation and amortization 53,702 59,178
Depletion of landfill operating lease obligations 5,543 4,815
Income from assets under contractual obligation - (1,463)
Preferred stock dividend - 1,038
Maine Energy settlement - (2,142)
Loss (income) from equity method investments (1,978) 4,545
Gain on sale of equipment (591) (54)
Stock-based compensation 511 1,022
Excess tax benefit on the exercise of stock options (145) (111)
Deferred income taxes 464 (1,311)
Changes in assets and liabilities, net of
effects of acquisitions and divestitures (3,878) (15,055)
-------- --------
53,628 50,462
-------- --------
Net Cash Provided by Operating Activities 56,448 51,678
-------- --------
Cash Flows from Investing Activities:
Acquisitions, net of cash acquired (2,087) (745)
Additions to property, plant and equipment - growth (25,757) (14,281)
- maintenance (50,939) (44,834)
Payments on landfill operating lease contracts (4,500) (6,735)
Proceeds from divestitures - 2,154
Restricted cash from revenue bond issuance 5,535 -
Other (110) 3,343
-------- --------
Net Cash Used In Investing Activities (77,858) (61,098)
-------- --------
Cash Flows from Financing Activities:
Proceeds from long-term borrowings 239,950 260,700
Principal payments on long-term debt (213,459) (187,049)
Redemption of Series A redeemable, convertible
preferred stock - (75,057)
Proceeds from exercise of stock options 1,572 1,216
Excess tax benefit on the exercise of stock options 145 111
-------- --------
Net Cash (Used in) Provided by Financing Activities 28,208 (79)
-------- --------
Cash Provided by (Used in) Discontinued Operations (2,298) 31
-------- --------
Net (decrease) increase in cash and cash equivalents 4,500 (9,468)
Cash and cash equivalents, beginning of period 7,429 12,366
-------- --------
Cash and cash equivalents, end of period $ 11,929 $ 2,898
======== ========
CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES
Unaudited
(In thousands)
Note 1: The Company has made reclassifications in the Company’s Statements
of Operations to conform prior year information with the Company’s current
period presentation. During the fourth quarter of fiscal year 2007, the
Company began recording personnel costs associated with engineering and
permitting activities as a cost of operations where previously these costs
had been recorded as general and administration. This resulted in costs
reclassified amounting to $460 and $1,385 for the three months and nine
months ended January 31, 2007, respectively.
Note 2: The Company's Series A redeemable, convertible preferred stock
("Series A preferred") contained a mandatory redemption provision effective
August 11, 2007. As the Company did not anticipate that the Series A
preferred would be converted to Class A Common Stock by the redemption
date, the Company reflected the redemption value of the Series A preferred
as a current liability at April 30, 2007. Consistent with this
presentation, the Company has recorded the Series A preferred dividend as
interest expense in the nine months ended January 31, 2008. The Series A
preferred was redeemed effective August 11, 2007 at an aggregate
redemption price of $75,057.
Note 3: The company divested the assets of the Holliston Transfer Station
("Holliston Transfer") during the quarter ended April 30, 2007. The
transaction required discontinued operations treatment under SFAS No. 144,
Accounting for Impairment or Disposal of Long-Lived Assets ("SFAS No.144"),
therefore the operating results of Holliston Transfer have been
reclassified from continuing to discontinued operations for the three and
nine months ended January 31, 2007.
Note 4: The company divested its Buffalo, N.Y. transfer station, hauling
operation and related equipment during the quarter ended October 31, 2007.
The transaction required discontinued operations treatment under SFAS No.
144, therefore the operating results of these operations have been
reclassified from continuing to discontinued operations for the three and
nine months ended January 31, 2007.
Note 5: Non - GAAP Financial Measures
In addition to disclosing financial results prepared in accordance
with Generally Accepted Accounting Principles (GAAP), we also disclose
earnings before interest, taxes and depreciation and amortization (EBITDA)
and Free Cash Flow, which are non-GAAP measures.
These measures are provided because we understand that certain
investors use this information when analyzing the financial position of
the solid waste industry, including us. Historically, these measures have
been key in comparing operating efficiency of publicly traded companies
within the industry, and assist investors in measuring our ability to meet
capital expenditure and working capital requirements. For these reasons,
we utilize these non-GAAP metrics to measure our performance at all
levels. These measures do not represent, and should not be considered as
alternatives to net cash provided by operating activities as determined in
accordance with GAAP. Moreover, these measures do not necessarily
indicate whether cash flow will be sufficient for such items as working
capital or capital expenditures, or to react to changes in our industry or
to the economy generally. Because these measures are not calculated by all
companies in the same fashion, they may not be comparable to similarly
titled measures reported by other companies.
Following is a reconciliation of EBITDA to Net Cash Provided by
Operating Activities:
Three Months Ended Nine Months Ended
------------------ ------------------
January January January January
31, 31, 31, 31,
2007 2008 2007 2008
-------- -------- -------- --------
Net Cash Provided by Operating
Activities $ 16,159 $ 16,040 $ 56,448 $ 51,678
Changes in assets and liabilities,
net of effects
of acquisitions and divestitures 610 (527) 3,878 15,055
Deferred income taxes 613 2,002 (464) 1,311
Stock-based compensation (190) (517) (511) (1,022)
Excess tax benefit on the exercise
of stock options 4 95 145 111
Provision for income taxes 1,026 496 4,420 960
Interest expense, net 9,455 10,536 27,722 32,107
Preferred stock dividend - - - (1,038)
Depletion of landfill operating
lease obligations (1,682) (1,467) (5,543) (4,815)
Income from assets under
contractual obligation - 96 - 1,463
Gain (loss) on sale of equipment 152 (364) 591 54
Other income (49) (56) (350) (275)
-------- -------- -------- --------
EBITDA $ 26,098 $ 26,334 $ 86,336 $ 95,589
======== ======== ======== ========
CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES
Unaudited
(In thousands)
Following is a reconciliation of Free Cash Flow to Net Cash Provided by
Operating Activities:
Three Months Ended Nine Months Ended
------------------ ------------------
January January January January
31, 31, 31, 31,
2007 2008 2007 2008
-------- -------- -------- --------
EBITDA $ 26,098 $ 26,334 $ 86,336 $ 95,589
Add (deduct):
Cash interest (4,515) (7,803) (20,094) (27,129)
Capital expenditures (17,294) (16,125) (76,696) (59,115)
Cash taxes (648) (81) (2,241) (1,851)
Depletion of landfill
operating lease
obligations 1,682 1,467 5,543 4,815
Change in working
capital, adjusted for
non-cash items (6,348) (3,631) (11,493) (13,513)
-------- -------- -------- --------
FREE CASH FLOW (1,025) 161 (18,645) (1,204)
Add (deduct):
Capital expenditures 17,294 16,125 76,696 59,115
Other (110) (246) (1,603) (6,233)
-------- -------- -------- --------
Net Cash Provided by Operating
Activities $ 16,159 $ 16,040 $ 56,448 $ 51,678
======== ======== ======== ========
CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES
SUPPLEMENTAL DATA TABLES
(Unaudited)
(In thousands)
Amounts of the Company's total revenues attributable to services provided
are as follows:
Three Months Ended Nine Months Ended
January 31, January 31,
------------------- -------------------
2007 (1) 2008 2007 (1) 2008
--------- --------- --------- ---------
Collection $ 62,132 $ 64,649 $ 198,983 $ 202,981
Landfill / disposal facilities 24,183 23,979 82,590 82,147
Transfer 4,948 5,606 18,774 20,644
Recycling 37,576 47,125 109,290 137,027
--------- --------- --------- ---------
Total revenues $ 128,839 $ 141,359 $ 409,637 $ 442,799
========= ========= ========= =========
(1) Revenue attributable to services provided for the three and nine
months ended January 31, 2007 has been revised to conform with the
classification of revenue attributable to services provided in the current
fiscal year.
Components of revenue growth for the three months ended January 31, 2008
compared to the three months ended January 31, 2007:
Percentage
----------
Solid Waste Operations (1) Price 0.7%
Volume 0.4%
Solid waste commodity price and
volume 0.7%
----------
Total growth - Solid Waste Operations 1.8%
==========
FCR Operations (1) Price 26.9%
Volume 5.2%
----------
Total growth - FCR Operations 32.1%
==========
Rollover effect of acquisitions (as a percentage of total
revenues) 0.7%
Total revenue growth 9.7%
(1) - Calculated as a percentage of segment revenues.
Solid Waste Internalization Rates by Region:
Three Months Nine Months
Ended January Ended January
31, 31,
---------------- ----------------
2007 2008 2007 2008
------- ------- ------- -------
North Eastern region 52.8% 61.4% 56.1% 59.8%
South Eastern region 30.4% 29.0% 29.0% 28.3%
Central region 77.1% 80.1% 77.4% 79.3%
Western region 54.4% 62.2% 56.5% 61.0%
Solid Waste internalization 57.5% 61.7% 58.2% 60.6%
(1) Internalization rates for the three and nine months ended January 31,
2007 have been revised to exclude the activity associated with the
Holliston Transfer Station as well as Buffalo Hauling and Buffalo Transfer.
The Company divested the assets of the Holliston Transfer Station during
the quarter ended April 30, 2007. The Company divested the Buffalo
operations during the quarter ended October 31, 2007.
CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES
SUPPLEMENTAL DATA TABLES
(Unaudited)
(In thousands)
US GreenFiber (50% owned) Financial Statistics:
Three Months Ended Nine Months Ended
January 31, January 31,
-------------------- --------------------
2007 2008 2007 2008
--------- --------- --------- ---------
Revenues $ 48,999 $ 44,432 $ 145,525 $ 119,926
Net (loss) income 2,634 (618) 5,418 (6,027)
Cash flow from operations 3,833 1,615 13,076 7,344
Net working capital changes (1,439) (810) (58) 4,570
EBITDA $ 5,272 $ 2,425 $ 13,134 $ 2,774
As a percentage of revenue:
Net (loss) income 5.4% -1.4% 3.7% -5.0%
EBITDA 10.8% 5.5% 9.0% 2.3%
Components of Growth versus Maintenance Capital Expenditures (1):
Three Months Nine Months Ended
Ended January 31, January 31,
----------------- -----------------
2007 2008 2007 2008
-------- -------- -------- --------
Growth Capital Expenditures:
Landfill Development $ 3,282 $ 5,502 $ 14,765 $ 10,625
MRF Equipment Upgrades 2,982 443 6,239 771
Other 1,273 371 4,753 2,885
-------- -------- -------- --------
Total Growth Capital Expenditures 7,537 6,316 25,757 14,281
Maintenance Capital Expenditures:
Vehicles, Machinery / Equipment and
Containers 1,466 1,366 19,979 9,517
Landfill Construction & Equipment 7,300 5,019 26,851 25,741
Facilities 900 3,044 2,921 8,297
Other 91 380 1,188 1,279
-------- -------- -------- --------
Total Maintenance Capital Expenditures 9,757 9,809 50,939 44,834
-------- -------- -------- --------
Total Capital Expenditures $ 17,294 $ 16,125 $ 76,696 $ 59,115
======== ======== ======== ========
(1) The Company’s capital expenditures are broadly defined as pertaining to
either growth or maintenance activities. Growth capital expenditures are
defined as costs related to development of new airspace, permit expansions,
new recycling contracts along with incremental costs of equipment and
infrastructure added to further such activities. Growth capital
expenditures include the cost of equipment added directly as a result of
new business as well as expenditures associated with increasing
infrastructure to increase throughput at transfer stations and recycling
facilities. Growth capital expenditures also include those outlays
associated with acquiring landfill operating leases, which do not meet the
operating lease payment definition, but which were included as a commitment
in the successful bid. Maintenance capital expenditures are defined as
landfill cell construction costs not related to expansion airspace, costs
for normal permit renewals and replacement costs for equipment due to age
or obsolescence.
For more information, contact:
Ned Coletta
Director of Investor Relations
(802) 775-0325
www.casella.com.
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