Casella Waste Systems, Inc. Announces First Quarter Transition Period 2014 Results
Highlights for the quarter included:
-
Revenue growth for the current quarter was
$12.8 million , or 10.0 percent, from the same quarter last year. - Overall solid waste pricing growth for the current quarter was 0.8 percent, primarily driven by positive collection pricing growth of 1.6 percent as a percentage of collection revenues.
-
Adjusted EBITDA* was
$29.9 million for the current quarter, up$1.2 million from the same quarter last year. - The company reaffirms its Revenue and Adjusted EBITDA guidance ranges for its transition period 2014, and updates its estimate of Capital Expenditures for the same period.
"We had a solid first quarter, with positive results primarily driven by management's continued execution of our four key strategies - sourcing incremental landfill volumes; improving collection route profitability; furthering our long-term Eastern region strategy to improve our business positioning and margins; and driving revenue growth through our customer solutions offerings," said
"In particular, we had a strong quarter at our landfills, where we added 134,000 more tons than we did in the prior year period as the result of continued execution of our focused landfill sales strategy and improving market conditions," Casella said. "Over the past 15 months, we have driven strong financial results by sourcing an additional 480,000 tons per year of volumes to our landfills.
"We are on track with the plan that we announced in late-June to drive additional free cash flow in calendar year 2015 through further asset repositioning, the performance of final clean-up and closure activities at three sites, and investing in key infrastructure to enable further growth and cost reductions during the transition period 2014," Casella said. "While we're happy with our progress, we still have quite a bit of work to do as a team to drive higher cash flows and returns for our investors. An area of increased focus is on improving our operating efficiencies and cost of service in the hauling line-of-business through fleet upgrades, improved routing, and on-route selling."
For the quarter ended
Operating income was
The company's net loss attributable to common stockholders was
Outlook for the Transition Period 2014
After a solid start and better visibility, the company reaffirmed its operating guidance for the 8-month transition period ending
-
Revenues between
$356.0 million and$366.0 million , as compared to$340.1 million for the 8-month period endedDecember 31, 2013 . -
Adjusted EBITDA between
$71.0 million and$75.0 million , as compared to$72.1 million for the 8-month period endedDecember 31, 2013 .
The company updated its Capital Expenditure guidance for its transition period 2014:
-
Capital Expenditures between
$53.0 million and$57.0 million (including between$13.0 million and$17.0 million of capital associated with new contracts and infrastructure development), payments on operating leases of roughly$5.0 million , and capping, closure and environmental remediation payments of roughly$9.0 million .
*Non-GAAP Financial Measures
In addition to disclosing financial results prepared in accordance with Generally Accepted Accounting Principles in
The company presents Adjusted EBITDA, Adjusted Operating Income, and Free Cash Flow because it considers them important supplemental measures of its performance and believes they are frequently used by securities analysts, investors and other interested parties in the evaluation of the company's results. Management uses these non-GAAP measures to further understand the company's "core operating performance." The company believes its "core operating performance" represents its on-going performance in the ordinary course of operations. The company believes that providing Adjusted EBITDA, Adjusted Operating Income and Free Cash Flow to investors, in addition to corresponding income statement and cash flow statement measures, affords investors the benefit of viewing its performance using the same financial metrics that the management team uses in making many key decisions and understanding how the core business and its results of operations may look in the future. The company further believes that providing this information allows its investors greater transparency and a better understanding of its core financial performance. In addition, the instruments governing the company's indebtedness use EBITDA (with additional adjustments) to measure its compliance with covenants such as interest coverage, leverage and debt incurrence.
Non-GAAP financial measures are not in accordance with or an alternative for GAAP. Adjusted EBITDA, Adjusted Operating Income, and Free Cash Flow should not be considered in isolation from or as a substitute for financial information presented in accordance with GAAP, and may be different from Adjusted EBITDA, Adjusted Operating Income, or Free Cash Flow presented by other companies.
About
Conference call to discuss quarter
The Company will host a conference call to discuss these results on
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 "believe," "expect," "anticipate," "plan," "may," "will," "would," "intend," "estimate," "guidance" 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, expectations or guidance 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: adverse weather conditions that have negatively impacted and may continue to negatively impact our revenues and our operating margin; current economic conditions that have adversely affected and may continue to adversely affect our revenues and our operating margin; we may be unable to increase volumes at our landfills or improve our route profitability; our need to service our indebtedness may limit our ability to invest in our business; we may be unable to reduce costs or increase pricing or volumes 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 energy pricing or 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 Form 10-K for the year ended
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.
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| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||
| (Unaudited) | ||
| (In thousands, except amounts per share) | ||
| Three Months Ended | ||
|
2014 |
2013 |
|
| Revenues | $ 141,387 | $ 128,558 |
| Operating expenses: | ||
| Cost of operations | 98,766 | 88,419 |
| General and administration | 16,840 | 15,078 |
| Depreciation and amortization | 16,368 | 15,197 |
| Environmental remediation charge | 75 | -- |
| Severance and reorganization costs | -- | 107 |
| Expense from divestiture, acquisition and financing costs | -- | 20 |
| 132,049 | 118,821 | |
| Operating income | 9,338 | 9,737 |
| Other expense/(income), net: | ||
| Interest expense, net | 9,463 | 9,347 |
| Loss from equity method investments | -- | 977 |
| Gain on derivative instruments | (69) | (654) |
| Other income | (192) | (138) |
| Other expense, net | 9,202 | 9,532 |
| Income from continuing operations before income taxes and discontinued operations | 136 | 205 |
| Provision for income taxes | 290 | 319 |
| Loss from continuing operations before discontinued operations | (154) | (114) |
| Discontinued operations: | ||
| Income from discontinued operations, net of income taxes (1) | -- | 329 |
| Loss on disposal of discontinued operations, net of income taxes (1) | -- | (378) |
| Net loss | (154) | (163) |
| Less: Net income attributable to noncontrolling interests | 136 | 28 |
| Net loss attributable to common stockholders | $ (290) | $ (191) |
| Weighted average common shares outstanding | 40,123 | 39,662 |
| Net loss per common share | $ (0.01) | $ (0.00) |
| Adjusted EBITDA (2) | $ 29,942 | $ 28,734 |
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| CONDENSED CONSOLIDATED BALANCE SHEETS | ||
| (In thousands) | ||
|
ASSETS |
2014 |
2014 |
| (Unaudited) | ||
| CURRENT ASSETS: | ||
| Cash and cash equivalents | $ 2,595 | $ 2,464 |
| Restricted cash | 76 | 76 |
| Accounts receivable - trade, net of allowance for doubtful accounts | 59,212 | 52,603 |
| Other current assets | 17,022 | 15,662 |
| Total current assets | 78,905 | 70,805 |
| Property, plant and equipment, net of accumulated depreciation and amortization | 403,306 | 403,424 |
| Goodwill | 119,139 | 119,139 |
| Intangible assets, net | 12,733 | 13,420 |
| Restricted assets | 703 | 681 |
| Investments in unconsolidated entities | 16,752 | 16,752 |
| Other non-current assets | 25,064 | 25,676 |
| Total assets | $ 656,602 | $ 649,897 |
| LIABILITIES AND STOCKHOLDERS' DEFICIT | ||
| CURRENT LIABILITIES: | ||
| Current maturities of long-term debt and capital leases | $ 877 | $ 885 |
| Accounts payable | 47,372 | 51,788 |
| Other accrued liabilities | 42,226 | 37,073 |
| Total current liabilities | 90,475 | 89,746 |
| Long-term debt and capital leases, less current maturities | 511,192 | 507,134 |
| Other long-term liabilities | 62,551 | 61,554 |
| Total stockholders' deficit | (7,616) | (8,537) |
| Total liabilities and stockholders' deficit | $ 656,602 | $ 649,897 |
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| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||
| (Unaudited) | ||
| (In thousands) | ||
| Three Months Ended | ||
|
2014 |
2013 |
|
| Cash Flows from Operating Activities: | ||
| Net loss | $ (154) | $ (163) |
| Income from discontinued operations, net | -- | (329) |
| Loss on disposal of discontinued operations, net | -- | 378 |
| Adjustments to reconcile net loss to net cash provided by operating activities -- | ||
| Gain on sale of property and equipment | (25) | (164) |
| Depreciation and amortization | 16,368 | 15,197 |
| Depletion of landfill operating lease obligations | 3,134 | 2,627 |
| Interest accretion on landfill and environmental remediation liabilities | 832 | 1,046 |
| Amortization of discount on senior subordinated notes | 64 | 59 |
| Loss from equity method investments | -- | 977 |
| Gain on derivative instruments | (69) | (654) |
| Stock-based compensation expense | 562 | 631 |
| Excess tax benefit on the vesting of share based awards | (59) | 63 |
| Deferred income taxes | 224 | 260 |
| Changes in assets and liabilities, net of effects of acquisitions and divestitures | (7,296) | (402) |
| Net Cash Provided by Operating Activities | 13,581 | 19,526 |
| Cash Flows from Investing Activities: | ||
| Acquisitions, net of cash acquired | -- | (29) |
| Acquisition related additions to property, plant and equipment | (45) | (1,072) |
| Additions to property, plant and equipment | (16,881) | (13,407) |
| Payments on landfill operating lease contracts | (962) | (1,982) |
| Payments related to investments | -- | (2,148) |
| Proceeds from sale of property and equipment | 163 | 284 |
| Net Cash Used In Investing Activities | (17,725) | (18,354) |
| Cash Flows from Financing Activities: | ||
| Proceeds from long-term borrowings | 38,300 | 29,890 |
| Principal payments on long-term debt | (34,314) | (29,310) |
| Payments of financing costs | (1) | (359) |
| Proceeds from the exercise of share based awards | 143 | -- |
| Excess tax benefit on the vesting of share based awards | 59 | (63) |
| Net Cash Provided By Financing Activities | 4,187 | 158 |
| Net Cash Provided By (Used In) Discontinued Operations | 88 | (166) |
| Net increase in cash and cash equivalents | 131 | 1,164 |
| Cash and cash equivalents, beginning of period | 2,464 | 1,755 |
| Cash and cash equivalents, end of period | $ 2,595 | $ 2,919 |
| Supplemental Disclosures: | ||
| Cash interest | $ 1,868 | $ 1,902 |
| Cash income taxes, net of refunds | $ 61 | $ 720 |
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| NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS | ||
| (Unaudited) | ||
| (In thousands) | ||
| Note 1: Discontinued Operations | ||
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In fiscal year 2013, we initiated a plan to dispose of |
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The operating results of these operations, including those related to prior years, have been reclassified from continuing to discontinued operations in the accompanying consolidated financial statements. Revenues and income before income taxes attributable to discontinued operations for the three months ended |
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Three Months Ended |
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| 2014 | 2013 | |
| Revenues | $ -- | $ 3,312 |
| Income before income taxes | $ -- | $ 329 |
| Note 2: Non - GAAP Financial Measures | ||
|
In addition to disclosing financial results prepared in accordance with Generally Accepted Accounting Principles in |
||
| We present Adjusted EBITDA, Adjusted Operating Income, and Free Cash Flow because we consider them important supplemental measures of our performance and believe they are frequently used by securities analysts, investors and other interested parties in the evaluation of our results. We use these non-GAAP measures to further understand our "core operating performance." We believe our "core operating performance" represents our on-going performance in the ordinary course of operations. We believe that providing Adjusted EBITDA, Adjusted Operating Income, and Free Cash Flow to investors, in addition to corresponding income statement and cash flow statement measures, affords investors the benefit of viewing our performance using the same financial metrics that our management team uses in making many key decisions and understanding how the core business and our results of operations may look in the future. We further believe that providing this information allows our investors greater transparency and a better understanding of our core financial performance. In addition, the instruments governing our indebtedness use EBITDA (with additional adjustments) to measure our compliance with covenants such as interest coverage, leverage and debt incurrence. | ||
| Non-GAAP financial measures are not in accordance with or an alternative for GAAP. Adjusted EBITDA, Adjusted Operating Income, and Free Cash Flow should not be considered in isolation from or as a substitute for financial information presented in accordance with GAAP, and may be different from Adjusted EBITDA, Adjusted Operating Income, or Free Cash Flow presented by other companies. |
| Following is a reconciliation of Adjusted EBITDA and Adjusted Operating Income to Net Loss: | ||
| Three Months Ended | ||
|
2014 |
2013 |
|
| Net Loss | $ (154) | $ (163) |
| Income from discontinued operations, net | -- | (329) |
| Loss on disposal of discontinued operations, net | -- | 378 |
| Provision for income taxes | 290 | 319 |
| Other (income) expense, net | (261) | 185 |
| Interest expense, net | 9,463 | 9,347 |
| Expense from divestiture, acquisition and financing costs | -- | 20 |
| Severance and reorganization costs | -- | 107 |
| Environmental remediation charge | 75 | -- |
| Depreciation and amortization | 16,368 | 15,197 |
| Fiscal year-end transition costs | 195 | -- |
| Depletion of landfill operating lease obligations | 3,134 | 2,627 |
| Interest accretion on landfill and environmental remediation liabilities | 832 | 1,046 |
| Adjusted EBITDA (2) | $ 29,942 | $ 28,734 |
| Depreciation and amortization | (16,368) | (15,197) |
| Depletion of landfill operating lease obligations | (3,134) | (2,627) |
| Interest accretion on landfill and environmental remediation liabilities | (832) | (1,046) |
| Adjusted Operating Income (2) | $ 9,608 | $ 9,864 |
| Following is a reconciliation of Free Cash Flow to Net Cash Provided by Operating Activities: | ||
| Three Months Ended | ||
|
2014 |
2013 |
|
| Net Cash Provided by Operating Activities | $ 13,581 | $ 19,526 |
| Capital expenditures | (16,881) | (13,407) |
| Payments on landfill operating lease contracts | (962) | (1,982) |
| Proceeds from sale of property and equipment | 163 | 284 |
| Free Cash Flow (2) | $ (4,099) | $ 4,421 |
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| SUPPLEMENTAL DATA TABLES | ||||
| (Unaudited) | ||||
| (In thousands) | ||||
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Amounts of our total revenues attributable to services provided for the three months ended |
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Three Months Ended |
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|
2014 |
% of Total Revenue |
2013 |
% of Total Revenue |
|
| Collection | $ 60,011 | 42.4% | $ 58,213 | 45.3% |
| Disposal | 40,092 | 28.4% | 35,123 | 27.3% |
| Power generation | 1,940 | 1.4% | 2,041 | 1.6% |
| Processing | 2,859 | 2.1% | 2,951 | 2.3% |
| Solid waste operations | 104,902 | 74.3% | 98,328 | 76.5% |
| Organics | 10,662 | 7.5% | 9,877 | 7.7% |
| Customer solutions | 13,351 | 9.4% | 9,169 | 7.1% |
| Recycling | 12,472 | 8.8% | 11,184 | 8.7% |
| Total revenues | $ 141,387 | 100.0% | $ 128,558 | 100.0% |
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Components of revenue growth for the three months ended |
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|
Amount |
% of Related Business |
% of Solid Waste Operations |
% of Total Company |
|
| Solid Waste Operations: | ||||
| Collection | $ 924 | 1.6% | 0.9% | 0.7% |
| Disposal | (145) | -0.4% | -0.1% | -0.1% |
| Solid Waste Yield | 779 | 0.8% | 0.6% | |
| Collection | 247 | 0.3% | 0.2% | |
| Disposal | 4,970 | 5.1% | 3.8% | |
| Processing | (16) | -0.1% | 0.0% | |
| Solid Waste Volume | 5,201 | 5.3% | 4.0% | |
| Fuel surcharge | 82 | 0.1% | 0.1% | |
| Commodity price & volume | (174) | -0.2% | -0.1% | |
| Acquisitions, net divestitures | 1,614 | 1.6% | 1.2% | |
| Closed landfill | (928) | -0.9% | -0.7% | |
| Total Solid Waste | 6,574 | 6.7% | 5.1% | |
| Organics | 785 | 0.6% | ||
| Customer Solutions | 4,182 | 3.3% | ||
| Recycling Operations: |
% of Recycling Operations |
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| Commodity price | 623 | 5.6% | 0.5% | |
| Commodity volume | 150 | 1.3% | 0.1% | |
| Commodity acquisition | 515 | 4.6% | 0.4% | |
|
|
1,288 | 11.5% | 1.0% | |
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$ 12,829 | 10.0% | ||
| Solid Waste Internalization Rates by Region: | ||||
|
Three Months Ended |
||||
| 2014 | 2013 | |||
| Eastern region | 53.4% | 58.7% | ||
| Western region | 79.8% | 74.5% | ||
| Solid waste internalization | 66.5% | 66.5% | ||
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| SUPPLEMENTAL DATA TABLES | ||||
| (Unaudited) | ||||
| (In thousands) | ||||
| Components of Capital Expenditures (1): | ||||
|
Three Months Ended |
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| 2014 | 2013 | |||
| Landfill development | $ 6,786 | $ 6,628 | ||
| Vehicles, machinery, equipment and containers | 9,241 | 5,034 | ||
| Facilities | 603 | 1,482 | ||
| Other | 251 | 263 | ||
| Total Capital Expenditures | 16,881 | 13,407 | ||
| (1) Does not include acquisition related capital expenditures, which are defined as costs of equipment added directly as a result of new business growth related to an acquisition. | ||||
CONTACT: Investors:
Ned Coletta
Chief Financial Officer
(802) 772-2239
Media:
Joseph Fusco
Vice President
(802) 772-2247
http://www.casella.com
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