Date: December 2, 2009
Source: Casella Waste Systems, Inc.
Casella Waste Systems, Inc. (NASDAQ: CWST), a regional solid waste, recycling and resource management services company, today reported financial results for the second quarter of its 2010 fiscal year.
Highlights of the quarter include:
"With the solid waste group generating stable cash flows and the recycling group rebounding with strengthening commodity prices, our business continues to exhibit resiliency through the economic downturn," John W. Casella, chairman and CEO of Casella Waste Systems, said.
"Our successful solid waste operating efficiency initiatives are helping to offset continued weakness in economically sensitive volumes, with solid waste Adjusted EBITDA margins up over the same period last year," Casella said. "Roll-off pulls and construction and demolition waste were down against tough first half year-over-year comparisons. These volumes have generally stabilized, and are following the typical seasonal trends through the first half of the fiscal year."
"Our recycling group's performance improved again sequentially in the second quarter as a result of higher commodity prices and cost efficiencies gained through best practice initiatives," Casella said. "On average, commodity prices are up 16 percent from the first quarter of our fiscal year 2010, but are still down 41 percent from the second quarter of our fiscal year 2009 when commodity prices were at multi-year highs. Our successful risk programs continue to mitigate recycling cash flow volatility with floating revenue shares, variable tipping fees, index purchases, financial hedges, floor prices, and fixed price contracts."
Second Quarter Financial Results
For the quarter ended October 31, 2009, the Company reported revenues of $133.7 million, down $23.8 million or 15.1 percent from the same quarter last year.
Solid waste revenues were down $15.7 million or 13.4 percent over the same quarter last year with price up 1.5 percent, fuel and oil recovery fees down 2.7 percent, volume down 9.5 percent, and commodity price and volume down 3.0 percent. Solid waste collection price was up 4.3 percent as a percentage of collection revenues over the same quarter last year. The decline in solid waste volumes was the result of a 4.5 percent decline in collection volumes, a 3.2 percent decline in disposal volumes, a 0.3 percent decline in power generation, and a 1.5 percent decline in processing and recycling volumes. FCR revenues were down $9.0 million or 28.3 percent over the same quarter last year with price down 22.1 percent and volume down 6.2 percent.
The Company's net loss applicable to common shareholders was ($1.6) million, or ($0.06) per common share in the quarter, compared to net income of $2.1 million, or $0.08 per share for the same quarter last year. Operating income was $13.9 million for the quarter, down $2.1 million from the same quarter last year.
Net cash provided by operating activities in the quarter was $15.9 million, down $3.5 million from the same quarter last year. The Company's Adjusted EBITDA* was $34.7 million for the quarter, down $3.4 million from the same quarter last year. Adjusted EBITDA margin was 25.9 percent for the quarter up 170 basis points from the same quarter last year. The Company's free cash flow* in the quarter was ($1.5) million, up $3.7 million from the same quarter last year.
Six Months Financial Results
For the six months ended October 31, 2009, the company reported revenues of $266.8 million, down 15.4 percent from the same period last year. The Company's net loss applicable to common shareholders was ($4.3) million, or ($0.17) per common share for the six month period, compared to net income of $4.2 million, or $0.16 per share for the same period last year.
Net cash provided by operating activities for the six month period was $40.6 million, up $1.4 million compared to the same period last year. Adjusted EBITDA was $66.1 million for the six month period, down $9.6 million from the same period last year. The company's free cash flow for six months period was $3.6 million, up $16.3 million from the same period last year.
Fiscal 2010 Outlook
The Company reconfirms its June 15, 2009 estimated fiscal year guidance ranges for revenues, free cash flow, and capital expenditures; and reconfirms its September 2, 2009 estimated fiscal year guidance range for Adjusted EBITDA.
*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, depreciation and amortization (EBITDA), adjusted for accretion, depletion of landfill operating lease obligations, severance and reorganization charges, goodwill impairment, environmental remediation charge, and development project charges (Adjusted EBITDA) and free cash flow, which are non-GAAP measures. In the future we may modify items considered in defining free cash flow and adjusted EBITDA if we believe it will help the understanding of our financial performance.
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 the operating efficiency of publicly traded companies in the solid waste industry, and assist investors in measuring our ability to meet capital expenditures, payments on landfill operating lease contracts, and working capital requirements. For these reasons we utilize these non-GAAP metrics to measure our performance at all levels. Free cash flow, EBITDA and Adjusted EBITDA are not intended to replace "Net Cash Provided by Operating Activities," which is the most comparable GAAP financial measure. Moreover, these measures do not necessarily indicate whether cash flow will be sufficient for such items as capital expenditures, payments on landfill operating lease contracts, or working capital, 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.
For further information, contact Ned Coletta, director of finance and investor relations at (802) 772-2239, or visit the Company's website at www.casella.com.
The Company will host a conference call to discuss these results on Thursday, December 3, 2009 at 10:00 a.m. ET. Individuals interested in participating in the call should dial (877) 397-0297 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 #5472791), until 11:59 p.m. ET on Thursday, December 10, 2009.
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 Adjusted EBITDA and other targets; landfill operations and permit status may be affected by factors outside our control; we may be required to incur capital expenditures in excess of our estimates; 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; and we may incur environmental charges or asset impairments in the future. 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 additional risks and uncertainties include, without limitation, those detailed in Item 1A, "Risk Factors" in our Annual Report on Form 10-K/A for the year ended April 30, 2009. We undertake no obligation 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 Six Months Ended
------------------------ ------------------------
October 31, October 31, October 31, October 31,
2008 2009 2008 2009
----------- ----------- ----------- -----------
Revenues $ 157,538 $ 133,733 $ 315,442 $ 266,833
Operating expenses:
Cost of operations 103,728 86,674 208,170 174,560
General and
administration 18,299 14,818 36,739 31,106
Depreciation and
amortization 19,505 18,347 38,975 37,876
----------- ----------- ----------- -----------
141,532 119,839 283,884 243,542
----------- ----------- ----------- -----------
Operating income 16,006 13,894 31,558 23,291
Other expense/(income),
net:
Interest expense, net 10,253 14,978 20,227 24,790
Loss on debt
modification - - - 511
Loss from equity
method investments 1,045 159 2,173 1,378
Other income (64) (247) (152) (291)
----------- ----------- ----------- -----------
11,234 14,890 22,248 26,388
----------- ----------- ----------- -----------
(Loss) income from
continuing operations
before income taxes
and discontinued
operations 4,772 (996) 9,310 (3,097)
Provision for income
taxes 2,706 555 5,023 1,232
----------- ----------- ----------- -----------
(Loss) income from
continuing operations
before discontinued
operations 2,066 (1,551) 4,287 (4,329)
Discontinued
Operations:
Loss from discontinued
operations, net of
income taxes (1) - - (11) -
Loss on disposal of
discontinued
operations, net of
income taxes (1) - - (34) -
----------- ----------- ----------- -----------
Net (loss) income
available to common
stockholders $ 2,066 $ (1,551) $ 4,242 $ (4,329)
=========== =========== =========== ===========
Common stock and common
stock equivalent
shares outstanding,
assuming full dilution 25,745 25,733 25,720 25,711
=========== =========== =========== ===========
Net (loss) income per
common share $ 0.08 $ (0.06) $ 0.17 $ (0.17)
=========== =========== =========== ===========
Adjusted EBITDA (2) $ 38,140 $ 34,665 $ 75,663 $ 66,070
=========== =========== =========== ===========
CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
Unaudited
(In thousands)
April 30, October 31,
ASSETS 2009 2009
----------- -----------
CURRENT ASSETS:
Cash and cash equivalents $ 1,838 $ 2,004
Restricted cash 508 76
Accounts receivable - trade, net of allowance for
doubtful accounts 51,296 56,179
Other current assets 23,093 20,645
----------- -----------
Total current assets 76,735 78,904
Property, plant and equipment, net of accumulated
depreciation 490,360 487,003
Goodwill 125,709 125,709
Intangible assets, net 2,635 2,377
Restricted cash 127 211
Investments in unconsolidated entities 41,798 41,472
Other non-current assets 13,598 22,472
----------- -----------
Total assets $ 750,962 $ 758,148
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt and capital
leases $ 1,718 $ 1,827
Current maturities of financing lease obligations 1,344 1,418
Accounts payable 34,623 34,270
Other accrued liabilities 39,350 39,904
----------- -----------
Total current liabilities 77,035 77,419
Long-term debt and capital leases, less current
maturities 547,145 555,743
Financing lease obligations, less current
maturities 12,281 11,570
Other long-term liabilities 48,191 53,324
Stockholders' equity 66,310 60,362
----------- -----------
Total liabilities and stockholders' equity $ 750,962 $ 758,418
=========== ===========
CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited
(In thousands)
Six Months Ended
------------------------
October 31, October 31,
2008 2009
----------- -----------
Cash Flows from Operating Activities:
Net (loss) income $ 4,242 $ (4,329)
Loss from discontinued operations, net 11 -
Loss on disposal of discontinued operations, net 34 -
Adjustments to reconcile net (loss) income
to net cash provided by operating activities -
Gain on sale of equipment (577) (916)
Depreciation and amortization 38,975 37,876
Depletion of landfill operating lease
obligations 3,520 3,165
Interest accretion on landfill and
environmental remediation liabilities 1,603 1,738
Income from assets under contractual obligation (114) (150)
Amortization of premium on senior notes (331) (356)
Amortization of discount on term loan and
second lien notes - 626
Loss from equity method investments 2,173 1,378
Loss on debt modification - 511
Stock-based compensation 954 1,040
Excess tax benefit on the exercise of stock
options (157) -
Deferred income taxes 4,647 1,088
Changes in assets and liabilities, net of
effects of acquisitions and divestitures (15,763) (1,119)
----------- -----------
34,930 44,881
----------- -----------
Net Cash Provided by Operating Activities 39,217 40,552
----------- -----------
Cash Flows from Investing Activities:
Acquisitions, net of cash acquired (458) -
Additions to property, plant and equipment
- growth (8,232) (2,643)
- maintenance (29,964) (29,757)
Payments on landfill operating lease
obligations (1,825) (4,538)
Proceeds from divestitures 670 -
Other (1,501) 2,647
----------- -----------
Net Cash Used In Investing Activities (41,310) (34,291)
----------- -----------
Cash Flows from Financing Activities:
Proceeds from long-term borrowings 60,000 413,144
Principal payments on long-term debt (59,104) (405,344)
Payment of financing costs - (13,980)
Proceeds from exercise of stock options 1,289 85
Excess tax benefit on the exercise of stock
options 157 -
----------- -----------
Net Cash (Used in) Provided by Financing
Activities 2,342 (6,095)
----------- -----------
Cash Provided by Discontinued Operations 47 -
----------- -----------
Net increase in cash and cash equivalents 296 166
Cash and cash equivalents, beginning of period 2,814 1,838
----------- -----------
Cash and cash equivalents, end of period $ 3,110 $ 2,004
=========== ===========
Supplemental Disclosures:
Cash interest $ 20,463 $ 17,212
Cash income taxes, net of refunds $ 258 $ 550
CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Unaudited
(In thousands)
Note 1: The Company completed the divestiture of its FCR Greenville
operation in the three months ended July 31, 2008 for cash proceeds of
$670. The company recorded a loss on disposal of discontinued operations
(net of tax) of $34. The operating results of this operation for the six
months ended October 31, 2008 have been reclassified from continuing to
discontinued operations in the accompanying consolidated financial
statements. Revenues and loss attributable to discontinued operations for
the six months ended October 31, 2008 were $282 and $11 (net of tax),
respectively.
Note 2: 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, depreciation and amortization (EBITDA),
adjusted for accretion, depletion of landfill operating lease obligations,
severance and reorganization charges, goodwill impairment charge,
environmental remediation charge as well as development project charges
(Adjusted 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 expenditures, payments on landfill operating lease
contracts and working capital requirements. For these reasons, we utilize
these non-GAAP metrics to measure our performance at all levels. EBITDA,
Adjusted EBITDA and Free Cash Flow are not intended to replace "Net Cash
Provided by Operating Activities", which is the most comparable GAAP
financial measure. Moreover, these measures do not necessarily indicate
whether cash flow will be sufficient for such items as working capital,
payments on landfill operating lease contracts 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 Adjusted EBITDA and EBITDA to Net Cash
Provided by Operating Activities:
Three Months Ended Six Months Ended
------------------------ ------------------------
October 31, October 31, October 31, October 31,
2008 2009 2008 2009
----------- ----------- ----------- -----------
Net Cash Provided by
Operating Activities $ 19,430 $ 15,851 $ 39,217 $ 40,552
Changes in assets and
liabilities, net of
effects of
acquisitions and
divestitures 7,973 4,260 15,763 1,119
Stock-based
compensation, net of
excess tax benefit on
exercise of options (439) (510) (797) (1,040)
Provision for income
taxes, net of deferred
taxes 494 87 376 144
Net interest expense
plus amortization of
premium/discount 10,421 14,652 20,558 24,520
Severance and
reorganization charges 7 - 7 -
Gain on sale of
equipment and other 254 325 539 775
----------- ----------- ----------- -----------
Adjusted EBITDA (2) 38,140 34,665 75,663 66,070
Interest accretion on
landfill and
environmental
remediation
liabilities (825) (779) (1,603) (1,738)
Depletion of landfill
operating lease
obligations (1,797) (1,645) (3,520) (3,165)
Severance and
reorganization charges (7) - (7) -
----------- ----------- ----------- -----------
EBITDA (2) $ 35,511 $ 32,241 $ 70,533 $ 61,167
=========== =========== =========== ===========
Following is a reconciliation of Free Cash Flow to Net Cash Provided by
Operating Activities:
Three Months Ended Six Months Ended
------------------------ ------------------------
October 31, October 31, October 31, October 31,
2008 2009 2008 2009
----------- ----------- ----------- -----------
Net Cash Provided by
Operating Activities $ 19,430 $ 15,851 $ 39,217 $ 40,552
Capital expenditures (15,768) (14,154) (38,196) (32,400)
Payments on landfill
operating leases (1,373) (3,211) (1,825) (4,538)
Assets acquired through
financing leases (7,487) - (11,940) -
----------- ----------- ----------- -----------
Free Cash Flow $ (5,198) $ (1,514) $ (12,744) $ 3,614
=========== =========== =========== ===========
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 Six Months Ended
October 31, October 31,
-------------------- --------------------
2008 2009 2008 2009
--------- --------- --------- ---------
Collection $ 57,356 $ 52,319 $ 115,698 $ 104,407
Disposal 33,691 28,633 66,051 58,375
Power/LFGTE 7,230 7,159 14,100 13,528
Processing and
recycling 18,536 13,033 38,709 25,830
--------- --------- --------- ---------
Solid waste operations 116,813 101,144 234,558 202,140
Major accounts 8,807 9,695 17,619 19,487
FCR recycling 31,918 22,894 63,265 45,206
--------- --------- --------- ---------
Total revenues $ 157,538 $ 133,733 $ 315,442 $ 266,833
========= ========= ========= =========
Components of revenue growth for the three months ended October 31, 2009
compared to the three months ended October 31, 2008:
Solid waste operations (1) Core price 1.5%
Fuel recovery fee -2.7%
Volume -9.5%
Commodity price and
volume -3.0%
--------
Total growth - Solid waste operations -13.7%
=========
FCR operations (1) Price -22.1%
Volume -6.2%
---------
Total growth - FCR operations -28.3%
=========
Acquisitions 0.3%
Total revenue growth (2) -15.1%
(1) - Calculated as a percentage of segment revenues.
(2) - Calculated as a percentage of total revenues.
Solid Waste Internalization Rates by Region (1):
Three Months Ended Six Months Ended
October 31, October 31,
-------------------- --------------------
2008 2009 2008 2009
--------- --------- --------- ---------
Eastern region 59.6% 56.6% 59.0% 50.5%
Central region 83.0% 80.2% 80.0% 78.4%
Western region 62.9% 64.6% 65.6% 68.0%
Solid waste
internalization 68.1% 65.6% 63.9% 64.8%
(1) In the quarter ended July 31, 2009, the Company revised its
internalization rate calulation to include third party waste
received at its transfer facilities and disposed at its own landfills.
The prior year internalization rates have been revised accordingly.
CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES
SUPPLEMENTAL DATA TABLES
(Unaudited)
(In thousands)
GreenFiber Financial Statistics - as reported (1):
Three Months Ended Six Months Ended
October 31, October 31,
------------------ ------------------
2008 2009 2008 2009
-------- -------- -------- --------
Revenues $ 35,496 $ 28,897 $ 65,729 $ 50,016
Net loss (2,090) (318) (4,347) (2,756)
Cash flow from
operations (1,472) 3,095 (4,150) 5,991
Net working capital
changes (2,345) 566 (5,698) 2,628
Adjusted EBITDA $ 873 $ 2,529 $ 1,548 $ 3,363
As a percentage of
revenue:
Net loss -5.9% -1.1% -6.6% -5.5%
Adjusted EBITDA 2.5% 8.8% 2.4% 6.7%
(1) The Company holds 50% interest in US Green Fiber, LLC ("GreenFiber"),
a joint venture that manufactures, markets and sells cellulose insulation
made from recycled fiber.
Components of Growth and Maintenance Capital Expenditures (1):
Three Months Ended Six Months Ended
October 31, October 31,
------------------ -------------------
2008 2009 2008 2009
-------- -------- -------- ----------
Growth Capital Expenditures:
Landfill Development $ 2,823 $ 801 $ 6,642 $ 1,026
MRF Equipment Upgrades - - 455 -
Other 685 1,001 1,135 1,617
-------- -------- -------- ----------
Total Growth Capital
Expenditures 3,508 1,802 8,232 2,643
-------- -------- -------- ----------
Maintenance Capital
Expenditures:
Vehicles, Machinery
/ Equipment and Containers 3,750 3,035 9,057 8,434
Landfill Construction &
Equipment 6,753 7,886 18,206 18,951
Facilities 900 1,170 1,654 1,899
Other 856 261 1,047 473
-------- -------- -------- ----------
Total Maintenance Capital
Expenditures 12,259 12,352 29,964 29,757
-------- -------- -------- ----------
Total Capital Expenditures $ 15,767 $ 14,154 $ 38,196 $ 32,400
======== ======== ======== ==========
(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 further information, contact:
Ned Coletta
Director of Finance and Investor Relations
(802) 772-2239
www.casella.com.
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