Casella Waste Systems, Inc. Announces First Quarter Fiscal Year 2009 Results
RUTLAND, VT, Sep 03, 2008 (MARKET WIRE via COMTEX News Network) -- Casella Waste Systems, Inc. (NASDAQ: CWST), a regional solid waste, recycling and resource management services company, today reported financial results for the first quarter of its 2009 fiscal year.
"The first quarter was a solid operational quarter, with our efforts to improve asset performance offsetting the negative headwinds from a sluggish Northeast economy and rapid increase in diesel fuel prices," John W. Casella, chairman and CEO of Casella Waste Systems, said. "We continued to execute well against our strategy, with our return on net assets up 20 basis points and our operating income up over 12 percent year-over-year for the quarter."
First Quarter Financial Results
For the quarter ended July 31, 2008, the company reported revenues of $157.9 million, up $9.4 million, or 6.3 percent over the same quarter last year. The company's net income available to common shareholders was $2.2 million or $0.08 per common share compared with net income of $1.7 million or $0.07 per common share in the same quarter last year.
Operating income for the quarter was $15.6 million, up $1.7 million or 12.3 percent over the same quarter last year. Net cash provided by operating activities in the quarter was $19.8 million, compared to $20.2 million in the same quarter last year. The company's earnings before interest, taxes, depreciation and amortization (EBITDA*) were $35.0 million, up $1.3 million or 3.8 percent over the same quarter last year.
As part of the new extension agreement with the Town of Southbridge, in June 2008 the company received $2.2 million of cash related to previously paid closure and post closure funds resulting in a net benefit of $0.8 million to EBITDA during the quarter.
The company said its GreenFiber joint venture continues to be negatively impacted by the overall slowdown in the housing market and higher fiber prices. Partially offsetting construction weakness, GreenFiber's retail sales and retrofit sales are up significantly versus the prior year reflecting increased market demand for home insulation with heightened oil and energy prices.
Highlights of the Quarter
"Our solid waste group, led by the collection operations, has done an outstanding job managing operating costs to help offset continued volume weakness," John W. Casella, said. "We continue to expand our successful operating initiatives from fiscal year 2008, and we are rethinking every aspect of our operations to improve customer service and drive higher efficiencies through the remainder of fiscal year 2009."
*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, September 4, 2008 at 10:00 a.m. ET. Individuals interested in participating in the call should dial (877) 548-7907 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 #7564770), until 11:59 p.m. ET on Thursday, September 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 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
--------------------
July 31, July 31,
2007 2008
--------- ---------
Revenues $ 148,526 $ 157,904
Operating expenses:
Cost of operations (1) 96,903 104,442
General and administration 17,869 18,440
Depreciation and amortization 19,908 19,470
--------- ---------
134,680 142,352
--------- ---------
Operating income 13,846 15,552
Other expense/(income), net:
Interest expense, net (2) 10,615 9,973
Loss from equity method investments 2,151 1,129
Other income (1) (2,397) (88)
--------- ---------
10,369 11,014
--------- ---------
Income from continuing operations before income taxes
and discontinued operations 3,477 4,538
Provision for income taxes 1,130 2,317
--------- ---------
Income from continuing operations before discontinued
operations 2,347 2,221
Discontinued Operations:
Loss from discontinued operations, net of income
taxes (3) (4) (5) (604) (11)
Loss on disposal of discontinued operations, net of
income taxes (5) - (34)
--------- ---------
Net income available to common stockholders $ 1,743 $ 2,176
========= =========
Common stock and common stock equivalent shares
outstanding, assuming full dilution 25,442 25,683
========= =========
Net income per common share $ 0.07 $ 0.08
========= =========
--------- ---------
EBITDA (6) $ 33,754 $ 35,022
========= =========
CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
Unaudited
(In thousands)
April 30, July 31,
ASSETS 2008 2008
--------- ---------
CURRENT ASSETS:
Cash and cash equivalents $ 2,814 $ 2,785
Restricted cash 95 95
Accounts receivable - trade, net of allowance for
doubtful accounts 62,233 70,848
Other current assets 30,343 36,234
--------- ---------
Total current assets 95,485 109,962
Property, plant and equipment, net of accumulated
depreciation 488,028 494,255
Goodwill 179,716 179,734
Intangible assets, net 2,608 2,509
Restricted cash 13,563 13,608
Investments in unconsolidated entities 44,617 43,868
Other non-current assets 12,070 11,453
--------- ---------
Total assets $ 836,087 $ 855,389
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $ 2,758 $ 1,777
Accounts payable 51,731 54,858
Other accrued liabilities 58,335 56,446
--------- ---------
Total current liabilities 112,824 113,081
Long-term debt, less current maturities 559,227 561,787
Financing lease obligations - 3,963
Other long-term liabilities 39,354 47,659
Stockholders' equity 124,682 128,899
--------- ---------
Total liabilities and stockholders' equity $ 836,087 $ 855,389
========= =========
CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited
(In thousands)
Three Months Ended
------------------
July 31, July 31,
2007 2008
-------- --------
Cash Flows from Operating Activities:
Net income $ 1,743 $ 2,176
Loss from discontinued operations, net 604 11
Loss on disposal of discontinued operations, net - 34
Adjustments to reconcile net income to net cash
provided by operating activities -
Gain on sale of equipment (241) (284)
Depreciation and amortization 19,908 19,470
Depletion of landfill operating lease obligations 1,857 1,723
Income from assets under contractual obligation (738) (89)
Preferred stock dividend 925 -
Amortization of premium on senior notes (151) (164)
Maine Energy settlement (2,142) -
Loss from equity method investments 2,151 1,129
Stock-based compensation 216 389
Excess tax benefit on the exercise of stock options - (31)
Deferred income taxes 856 2,435
Changes in assets and liabilities, net of
effects of acquisitions and divestitures (4,756) (7,012)
-------- --------
17,885 17,566
-------- --------
Net Cash Provided by Operating Activities 20,232 19,787
-------- --------
Cash Flows from Investing Activities:
Acquisitions, net of cash acquired (10) (70)
Additions to property, plant and
equipment - growth (6,630) (4,723)
- maintenance (15,718) (17,705)
Payments on landfill operating lease contracts (474) (452)
Proceeds from divestitures - 670
Other 1,534 637
-------- --------
Net Cash Used In Investing Activities (21,298) (21,643)
-------- --------
Cash Flows from Financing Activities:
Proceeds from long-term borrowings 112,075 22,700
Principal payments on long-term debt (118,321) (21,447)
Proceeds from exercise of stock options 165 496
Excess tax benefit on the exercise of stock options - 31
-------- --------
Net Cash Provided by (Used in) Financing Activities (6,081) 1,780
-------- --------
Cash Provided by (Used in) Discontinued Operations (838) 47
-------- --------
Net decrease in cash and cash equivalents (7,985) (29)
Cash and cash equivalents, beginning of period 12,363 2,814
-------- --------
Cash and cash equivalents, end of period $ 4,378 $ 2,785
======== ========
CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Unaudited
(In thousands)
Note 1: During the second quarter of fiscal year 2008, the Company
began recording income from assets under contractual obligations as a
component of cost of operations where previously this income had been
recorded as other income. This resulted in income reclassified amounting
to $738 for the three months ended July 31, 2007.
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 July 31, 2007. Consistent with this
presentation, the Company recorded the Series A preferred dividend as
interest expense in the three months ended July 31, 2007. The Series A
preferred was redeemed effective August 11, 2007 at an aggregate redemption
price of $75,057.
Note 3: 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
months ended July 31, 2007. For the three months ended July 31, 2007, the
Company recorded a loss from discontinued operations (net of tax) of
($538).
Note 4: 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 months ended July
31, 2007. For the three months ended July 31, 2007, the Company recorded a
loss from discontinued operations (net of tax) of ($171).
Note 5: 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 months ended July 31, 2007. For the three months
ended July 31, 2007 and 2008, the Company recorded a gain /(loss) from
discontinued operations (net of tax) of $105 and ($11), respectively. For
the three months ended July 31, 2008, the company recorded a loss on
disposal of discontinued operations (net of tax) of ($34).
Note 6: 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 7: 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
------------------
July 31, July 31,
2007 2008
-------- --------
Net Cash Provided by Operating Activities $ 20,232 $ 19,787
Changes in assets and liabilities, net of effects
of acquisitions and divestitures 4,756 7,012
Deferred income taxes (856) (2,435)
Stock-based compensation (216) (389)
Excess tax benefit on the exercise of stock options - 31
Provision for income taxes 1,130 2,317
Interest expense, net 10,615 9,973
Preferred stock dividend (925) -
Amortization of premium on senior notes 151 164
Depletion of landfill operating lease obligations (1,857) (1,723)
Income from assets under contractual obligation 738 89
Gain on sale of equipment 241 284
Other income, net (255) (88)
-------- --------
EBITDA $ 33,754 $ 35,022
======== ========
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
------------------
July 31, July 31,
2007 2008
-------- --------
EBITDA $ 33,754 $ 35,022
Add (deduct): Cash interest (4,683) (5,845)
Capital expenditures (22,348) (22,428)
Cash taxes (311) (245)
Depletion of landfill operating
lease obligations 1,857 1,723
Change in working capital,
adjusted for non-cash items (7,433) (9,977)
-------- --------
FREE CASH FLOW 836 (1,750)
Add (deduct): Capital expenditures 22,348 22,428
Other (2,952) (891)
-------- --------
Net Cash Provided by Operating Activities $ 20,232 $ 19,787
======== ========
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
July 31,
-------------------
2007 2008
--------- ---------
Collection $ 69,155 $ 71,327
Landfill / disposal facilities 29,202 29,044
Transfer 7,346 9,203
Recycling 42,823 48,330
--------- ---------
Total revenues $ 148,526 $ 157,904
========= =========
Components of revenue growth for the three months ended July 31, 2008
compared to the three months ended July 31, 2007:
Percentage
-----------
Solid Waste Operations (1) Price 2.8%
Volume -1.5%
Commodity price and volume 0.9%
-----------
Total growth - Solid Waste Operations 2.2%
===========
FCR Operations (1) Price 12.0%
Volume 8.3%
-----------
Total growth - FCR Operations 20.3%
===========
Rollover effect of acquisitions (2) 0.7%
Total revenue growth (2) 6.3%
(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 July 31,
--------------------------
2007 (1) 2008
-------- --------
North Eastern region 55.8% 64.3%
South Eastern region 20.3% 34.5%
Central region 75.2% 80.4%
Western region 61.0% 61.8%
Solid Waste internalization 55.6% 61.9%
(1) Internalization rates for the three months ended July 31, 2007 have
been revised to exclude the activity associated with Buffalo Hauling and
Transfer as well as MTS Environmental. The Company divested the Buffalo
operations during the quarter ended October 31, 2007. 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
July 31,
------------------
2007 2008
-------- --------
Revenues $ 33,499 $ 30,233
Net loss (3,593) (2,258)
Cash flow from operations 2,149 2,678
Net working capital changes 2,898 2,002
EBITDA $ (749) $ 676
As a percentage of revenue:
Net loss -10.7% -7.5%
EBITDA -2.2% 2.2%
Components of Growth versus Maintenance Capital Expenditures (1):
Three Months Ended
July 31,
-----------------
2007 2008
-------- --------
Growth Capital Expenditures:
Landfill Development $ 5,124 $ 3,819
MRF Equipment Upgrades 134 454
Other 1,372 450
-------- --------
Total Growth Capital Expenditures 6,630 4,723
Maintenance Capital Expenditures:
Vehicles, Machinery / Equipment and Containers 4,666 5,307
Landfill Construction & Equipment 9,356 11,453
Facilities 1,313 754
Other 383 191
-------- --------
Total Maintenance Capital Expenditures 15,718 17,705
-------- --------
-------- --------
Total Capital Expenditures $ 22,348 $ 22,428
======== ========
(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.
CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES
SUPPLEMENTAL DATA TABLES
(Unaudited)
(In thousands, except for per share data)
The Company is providing below the quarterly Consolidated Statements of
Operations for fiscal year 2008 reflecting reclassified amounts associated
with income from assets under contractual obligations as well as
discontinued operations (see Notes to Consolidated Financial Statements).
Three Months Ended
--------------------------------------------
July 31, October 31, January 31, April 30,
2007 2007 2008 2008
--------- ---------- ---------- ---------
Revenues $ 148,526 $ 150,483 $ 140,879 $ 139,628
Operating expenses:
Cost of operations 96,903 95,621 96,156 94,329
General and administration 17,869 18,898 18,285 19,132
Depreciation and
amortization 19,908 20,136 19,026 18,699
Hardwick impairment and
closing charge - - - 1,400
Development project charges - - - 534
--------- ---------- ---------- ---------
134,680 134,655 133,467 134,094
--------- ---------- ---------- ---------
Operating income 13,846 15,828 7,412 5,534
Other expense/(income), net:
Interest expense, net 10,615 10,785 10,448 9,658
Loss from equity method
investments 2,151 1,487 907 1,532
Other (income) loss (2,397) 35 (56) (273)
--------- ---------- ---------- ---------
10,369 12,307 11,299 10,917
--------- ---------- ---------- ---------
(Loss) income from continuing
operations before income
taxes and discontinued
operations 3,477 3,521 (3,887) (5,383)
Provision (benefit) for
income taxes 1,130 (416) 576 456
--------- ---------- ---------- ---------
(Loss) income from continuing
operations before
discontinued operations 2,347 3,937 (4,463) (5,839)
Discontinued Operations:
Loss from discontinued
operations, net of income
taxes (604) (670) (141) (289)
Loss on disposal of
discontinued operations,
net of income taxes - (437) - (1,675)
--------- ---------- ---------- ---------
Net (loss) income available
to common stockholders $ 1,743 $ 2,830 $ (4,604) $ (7,803)
========= ========== ========== =========
Common stock and common stock
equivalent shares outstanding,
assuming full dilution 25,442 25,652 25,415 25,443
========= ========== ========== =========
Net (loss) income per common
share $ 0.07 $ 0.11 $ (0.18) $ (0.31)
========= ========== ========== =========
--------- ---------- ---------- ---------
EBITDA $ 33,754 $ 35,964 $ 26,438 $ 26,167
========= ========== ========== =========
Contact: Ned Coletta director of investor relations (802) 772-2239
SOURCE: Casella Waste Systems, Inc.
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