RUTLAND, VT -- (Marketwire) -- 12/03/08 -- 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 2009 fiscal
year.
Highlights of the quarter include:
Free cash flow* for the quarter was up $8.2 million over the same
period last year;
Operating income for the quarter was up 1.3 percent over same period
last year; and
Solid waste operations continue to perform well through the economic
slowdown, while the recycling group faces pressures from volatile commodity
pricing.
"Since the northeastern U.S. economy first began to slow in July 2006, we
have taken steps to better position our business to perform well in this
uncertain economic environment," John W. Casella, chairman and CEO of
Casella Waste Systems, said. "We continue to execute well against factors
that we can control by combining our successful cost reduction initiatives
from the past 18 months with operating programs that enhance productivity
and asset utilization."
"These efforts are currently offsetting economic pressures in our solid
waste group, with performance in the quarter driven by increases in
landfill volumes, improved operating performance of the hauling operations,
and roll over impacts from the successful divestiture program of
under-performing assets," Casella said.
"While it is difficult to fully assess the potential economic impacts from
the financial market turmoil, the recession-resistant qualities of our
integrated solid waste group will help our business maintain stability,"
Casella said.
"The global slowdown is negatively impacting recycling commodity pricing,"
Casella said. "However, our commodity risk mitigation programs are
dampening pricing exposure through the use of hedging agreements, floor
price contracts, and long-term supply contracts with customers."
Second Quarter Financial Results
For the quarter ended October 31, 2008, the company reported revenues of
$157.5 million, up $7.0 million, or 4.7 percent over the same quarter last
year. The company's net income available to common shareholders was $2.1
million or $0.08 per common share compared with net income of $2.8 million
or $0.11 per common share in the same quarter last year.
Operating income for the quarter was $16.0 million, up $0.2 million or 1.3
percent over the same quarter last year. Net cash provided by operating
activities in the quarter was $19.4 million, compared to $15.1 million in
the same quarter last year. The company's earnings before interest, taxes,
depreciation and amortization (EBITDA*) were $35.5 million, down $0.5
million or 1.4 percent over the same quarter last year. The company's free
cash flow for the quarter was $6.2 million, up $8.2 million over the same
period last year.
In early August 2008, the company ceased accepting waste at the Colebrook,
NH landfill closure project, creating a negative $1.1 million EBITDA
variance for the second quarter of fiscal year 2009 over the same period
last year. Excluding the negative year-over-year impact of closing
Colebrook, EBITDA for the quarter was up $0.6 million or 1.7 percent over
the same quarter last year.
Six Months Financial Results
For the six months ended October 31, 2008, the company reported revenues of
$315.4 million, up 5.5 percent over the same period last year. The
company's net income per common share for the six month period was $0.17,
compared to a net income per common share of $0.18 in the same period last
year.
Operating income for the six month period was $31.6 million, up $1.9
million or 6.4 percent over the same period last year. Net cash provided by
operating activities for the six month period was $39.2 million, up $3.9
million compared to the same period last year. EBITDA was $70.5 million for
the six month period, up $0.8 million or 1.1% from the same period last
year. The company's free cash flow for six months period was $4.4 million,
up $5.5 million over the same period last year.
Fiscal 2009 Outlook
The company said that its solid waste group continues to maintain a stable
level of performance, while the recycling group faces pressures from softer
commodity pricing. As expected in late October, commodity pricing
continued to weaken during November and the company forecasts average
commodity pricing to be down approximately 55 percent from our first
quarter of fiscal year 2009 through the remainder of our fiscal year. The
updated fiscal year 2009 guidance reflects continued weakness in commodity
pricing and softening of economic conditions through the remainder of the
fiscal year.
The company has updated its guidance for fiscal year 2009 to the following
ranges:
Revenues between $580.0 million and $600.0 million;
Free cash flow remaining constant at the original range of $8.0 million
to $14.0 million;
EBITDA between $120.0 million and $124.0 million; and
Capital expenditures between $65.0 million and $69.0 million.
*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 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
and 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.
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) 772-2239, or visit the Company's website at
http://www.casella.com.
The Company will host a conference call to discuss these results on
Thursday, December 4, 2008 at 10:00 a.m. ET. Individuals interested in
participating in the call should dial (877) 675-4751 at least 10 minutes
before start time. The call will also be webcast; to listen, participants
should visit Casella Waste Systems' website at http://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 #4859748), until 11:59 p.m. ET on Thursday,
December 11, 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 in the
commodities markets 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 additional risks and uncertainties
include, without limitation, those detailed in Item 1A, "Risk Factors" in
our Form 10-K for the year ended April 30, 2008. 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 Six Months Ended
------------------------ ------------------------
October 31, October 31, October 31, October 31,
2007 2008 2007 2008
----------- ----------- ----------- -----------
Revenues $ 150,483 $ 157,538 $ 299,009 $ 315,442
Operating expenses:
Cost of operations 95,621 103,728 192,525 208,170
General and
administration 18,898 18,299 36,766 36,739
Depreciation and
amortization 20,136 19,505 40,044 38,975
----------- ----------- ----------- -----------
134,655 141,532 269,335 283,884
----------- ----------- ----------- -----------
Operating income 15,828 16,006 29,674 31,558
Other expense/(income),
net:
Interest expense, net
(1) 10,785 10,253 21,399 20,227
Loss from equity
method investments 1,487 1,045 3,638 2,173
Other (income) expense 35 (64) (2,360) (152)
----------- ----------- ----------- -----------
12,307 11,234 22,677 22,248
----------- ----------- ----------- -----------
Income from continuing
operations before
income taxes
and discontinued
operations 3,521 4,772 6,997 9,310
Provision (benefit) for
income taxes (416) 2,706 714 5,023
----------- ----------- ----------- -----------
Income from continuing
operations before
discontinued
operations 3,937 2,066 6,283 4,287
Discontinued Operations:
Loss from discontinued
operations, net of
income taxes (2) (3)
(4) (670) - (1,274) (11)
Loss on disposal of
discontinued
operations, net of
income taxes (2) (4) (437) - (437) (34)
----------- ----------- ----------- -----------
Net income available to
common stockholders $ 2,830 $ 2,066 $ 4,572 $ 4,242
=========== =========== =========== ===========
Common stock and common
stock equivalent
shares outstanding,
assuming full dilution 25,652 25,745 25,592 25,720
=========== =========== =========== ===========
Net income per common
share $ 0.11 $ 0.08 $ 0.18 $ 0.17
=========== =========== =========== ===========
----------- ----------- ----------- -----------
EBITDA (6) $ 35,964 $ 35,511 $ 69,718 $ 70,533
=========== =========== =========== ===========
CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
Unaudited
(In thousands)
April 30, October 31,
ASSETS 2008 2008
----------- -----------
CURRENT ASSETS:
Cash and cash equivalents $ 2,814 $ 3,110
Restricted cash 95 96
Accounts receivable - trade, net of allowance for
doubtful accounts 62,233 66,222
Other current assets 30,343 32,206
----------- -----------
Total current assets 95,485 101,634
Property, plant and equipment, net of accumulated
depreciation 488,028 501,263
Goodwill 179,716 179,930
Intangible assets, net 2,608 2,680
Restricted cash 13,563 13,602
Investments in unconsolidated entities 44,617 41,832
Other non-current assets 12,070 15,515
----------- -----------
Total assets $ 836,087 $ 856,456
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $ 2,758 $ 2,002
Accounts payable 51,731 47,340
Other accrued liabilities 58,335 47,512
----------- -----------
Total current liabilities 112,824 96,854
Long-term debt, less current maturities 559,227 562,280
Financing lease obligations - 11,674
Other long-term liabilities 39,354 48,406
Stockholders' equity 124,682 137,242
----------- -----------
Total liabilities and stockholders' equity $ 836,087 $ 856,456
=========== ===========
CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited
(In thousands)
Six Months Ended
------------------------
October 31, October 31,
2007 2008
----------- -----------
Cash Flows from Operating Activities:
Net income $ 4,572 $ 4,242
Loss from discontinued operations, net 1,274 11
Loss on disposal of discontinued operations, net 437 34
Adjustments to reconcile net income
to net cash provided by operating activities -
Gain on sale of equipment (418) (577)
Depreciation and amortization 40,045 38,975
Depletion of landfill operating lease
obligations 3,348 3,520
Income from assets under contractual obligation (1,367) (114)
Preferred stock dividend 1,038 -
Amortization of premium on senior notes (307) (331)
Maine Energy settlement (2,142) -
Loss from equity method investments 3,638 2,173
Stock-based compensation 505 954
Excess tax benefit on the exercise of stock
options (16) (157)
Deferred income taxes 691 4,647
Changes in assets and liabilities, net of
effects of acquisitions and divestitures (15,988) (14,160)
----------- -----------
29,027 34,930
----------- -----------
Net Cash Provided by Operating Activities 35,310 39,217
----------- -----------
Cash Flows from Investing Activities:
Acquisitions, net of cash acquired (93) (458)
Additions to property, plant and equipment
- growth (7,965) (8,232)
- maintenance (35,025) (29,964)
Payments on landfill operating lease contracts (2,413) (1,825)
Proceeds from divestitures - 670
Other 2,554 (1,501)
----------- -----------
Net Cash Used In Investing Activities (42,942) (41,310)
----------- -----------
Cash Flows from Financing Activities:
Proceeds from long-term borrowings 221,605 60,000
Principal payments on long-term debt (149,468) (59,104)
Redemption of Series A redeemable, convertible
preferred stock (75,056) -
Proceeds from exercise of stock options 286 1,289
Excess tax benefit on the exercise of stock
options 16 157
----------- -----------
Net Cash Provided by (Used in) Financing
Activities (2,617) 2,342
----------- -----------
Cash Provided by Discontinued Operations 51 47
----------- -----------
Net increase (decrease) in cash and cash
equivalents (10,198) 296
Cash and cash equivalents, beginning of period 12,366 2,814
----------- -----------
Cash and cash equivalents, end of period $ 2,168 $ 3,110
=========== ===========
CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Unaudited
(In thousands)
Note 1: 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. Consistent with this presentation, the Company
recorded the Series A preferred dividend as interest expense in the three
and six months ended October 31, 2007. The Series A preferred was redeemed
effective August 11, 2007 at an aggregate redemption price of $75,057.
Note 2: 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
six months ended October 31, 2007. For the three and six months ended
October 31, 2007, the Company recorded a loss from discontinued operations
(net of tax) of ($273) and ($810), respectively. For the three and six
months ended October 31, 2007, the Company recorded a loss on disposal of
discontinued operations (net of tax) of ($437).
Note 3: The Company terminated its operation of MTS Environmental, a soils
processing operation in the quarter ended April 30, 2008. The transaction
required discontinued operations treatment under SFAS No. 144, therefore
the operating results of this operation have been reclassified from
continuing to discontinued operations for the three and six months ended
October 31, 2007. For the three and six months ended October 31, 2007, the
Company recorded a loss from discontinued operations (net of tax) of ($478)
and ($650), respectively.
Note 4: The Company divested its FCR Greenville operation in the quarter
ended July 31, 2008. The transaction required discontinued operations
treatment under SFAS No. 144, therefore the operating results of this
operation have been reclassified from continuing to discontinued operations
for the three and six months ended October 31, 2007. For the three and six
months ended October 31, 2007 and 2008, the Company recorded a gain /(loss)
from discontinued operations (net of tax) of $81, $0, $186 and ($11),
respectively. For the six months ended October 31, 2008, the Company
recorded a loss on disposal of discontinued operations (net of tax) of
($34).
Note 5: Return on Net Assets, (RONA), is defined as twelve months of
operating income (excluding all unusual or non-recurring items) divided by
the average for the five quarter-ends, commencing on the day preceding such
twelve-month period, of the sum of working capital (net of cash) plus the
net book value of property, plant and equipment plus goodwill and net
intangible assets.
Note 6: 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) 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 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 EBITDA to Net Cash Provided by
Operating Activities:
Three Months Ended Six Months Ended
------------------ ------------------
October October October October
31, 31, 31, 31,
2007 2008 2007 2008
-------- -------- -------- --------
Net Cash Provided by Operating
Activities $ 15,078 $ 19,430 $ 35,310 $ 39,217
Changes in assets and liabilities,
net of effects of acquisitions
and divestitures 11,232 7,149 15,988 14,160
Deferred income taxes 165 (2,212) (691) (4,647)
Stock-based compensation (289) (565) (505) (954)
Excess tax benefit on the exercise
of stock options 16 126 16 157
Provision (benefit) for income
taxes (416) 2,706 714 5,023
Interest expense, net 10,785 10,253 21,399 20,227
Preferred stock dividend (113) - (1,038) -
Amortization of premium on senior
notes 156 167 307 331
Depletion of landfill operating
lease obligations (1,491) (1,797) (3,348) (3,520)
Income from assets under
contractual obligation 629 25 1,367 114
Gain on sale of equipment 177 293 418 577
Other (income) expense, net 35 (64) (219) (152)
-------- -------- -------- --------
EBITDA $ 35,964 $ 35,511 $ 69,718 $ 70,533
======== ======== ======== ========
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 Six Months Ended
------------------ ------------------
October October October October
31, 31, 31, 31,
2007 2008 2007 2008
-------- -------- -------- --------
EBITDA $ 35,964 $ 35,511 $ 69,718 $ 70,533
Add (deduct):
Cash interest (14,471) (14,618) (19,154) (20,463)
Capital expenditures (20,642) (15,767) (42,990) (38,196)
Cash taxes (1,459) (13) (1,770) (258)
Depletion of landfill operating
lease obligations 1,491 1,797 3,348 3,520
Change in working capital,
adjusted for non-cash items (2,886) (743) (10,303) (10,778)
-------- -------- -------- --------
FREE CASH FLOW (2,003) 6,167 (1,151) 4,358
Add (deduct):
Capital expenditures 20,642 15,767 42,990 38,196
Other (3,561) (2,504) (6,529) (3,337)
-------- -------- -------- --------
Net Cash Provided by Operating
Activities $ 15,078 $ 19,430 $ 35,310 $ 39,217
======== ======== ======== ========
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,
------------------- -------------------
2007 2008 2007 2008
--------- --------- --------- ---------
Collection $ 69,178 $ 70,094 $ 138,331 $ 141,422
Landfill / disposal facilities 28,966 30,866 58,169 59,909
Transfer 7,691 8,717 15,038 17,920
Recycling 44,648 47,861 87,471 96,191
--------- --------- --------- ---------
Total revenues $ 150,483 $ 157,538 $ 299,009 $ 315,442
========= ========= ========= =========
Components of revenue growth for the three months ended October 31, 2008
compared to the three months ended October 31, 2007:
Percentage
----------
Solid Waste Operations (1) Price 3.4%
Volume -2.2%
Commodity price and volume 0.2%
----------
Total growth - Solid Waste Operations 1.4%
==========
FCR Operations (1) Price 13.0%
Volume 1.2%
----------
Total growth - FCR Operations 14.2%
==========
Rollover effect of acquisitions (2) 0.7%
Total revenue growth (2) 4.7%
(1) - Calculated as a percentage of segment revenues.
(2) - Calculated as a percentage of total revenues.
Solid Waste Internalization Rates by Region:
Three Months Ended Six Months Ended
October 31, October 31,
------------------ ------------------
2007 (1) 2008 2007 (1) 2008
-------- -------- -------- --------
North Eastern region 61.6% 66.6% 59.0% 65.4%
South Eastern region 33.6% 34.2% 29.9% 34.4%
Central region 82.8% 79.5% 79.0% 77.7%
Western region 60.0% 66.3% 60.5% 65.6%
Solid Waste internalization 62.8% 65.1% 60.5% 63.9%
(1) Internalization rates for the three and six months ended October
31, 2007 have been revised to exclude the activity associated with MTS
Environmental. The Company terminated operations at MTS Environmental
during the quarter ended April 30, 2008. The South Eastern region
prior year amounts have also been revised.
CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES
SUPPLEMENTAL DATA TABLES
(Unaudited)
(In thousands)
US GreenFiber Financial Statistics (as reported):
Three Months Ended Six Months Ended
October 31, October 31,
------------------ ------------------
2007 2008 2007 2008
-------- -------- -------- --------
Revenues $ 41,995 $ 35,496 $ 75,494 $ 65,729
Net loss (1,816) (2,090) (5,409) (4,347)
Cash flow from
operations 3,580 (1,472) 3,580 (4,150)
Net working capital
changes 2,481 (2,345) 3,231 (5,698)
EBITDA $ 1,099 $ 873 $ 349 $ 1,548
As a percentage of
revenue:
Net loss -4.3% -5.9% -7.2% -6.6%
EBITDA 2.6% 2.5% 0.5% 2.4%
Components of Growth versus Maintenance Capital Expenditures (1):
Three Months Ended Six Months Ended
October 31, October 31,
------------------ ------------------
2007 2008 2007 2008
-------- -------- -------- --------
Growth Capital
Expenditures:
Landfill Development $ - $ 2,823 $ 5,123 $ 6,642
MRF Equipment Upgrades 194 - 329 455
Other 1,141 685 2,513 1,135
-------- -------- -------- --------
Total Growth Capital
Expenditures 1,335 3,508 7,965 8,232
Maintenance Capital
Expenditures:
Vehicles, Machinery /
Equipment and
Containers 3,484 3,750 8,151 9,057
Landfill Construction
& Equipment 11,366 6,753 20,722 18,206
Facilities 3,940 900 5,253 1,654
Other 517 856 899 1,047
-------- -------- -------- --------
Total Maintenance Capital
Expenditures 19,307 12,259 35,025 29,964
-------- -------- -------- --------
-------- -------- -------- --------
Total Capital
Expenditures $ 20,642 $ 15,767 $ 42,990 $ 38,196
======== ======== ======== =========
(1) The Companys 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.
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