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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant x Filed by a Party other than the Registrant ¨
Check the appropriate box:
| ¨ | Preliminary Proxy Statement | |
| ¨ | Confidential, For Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
| ¨ | Definitive Proxy Statement | |
| ¨ | Definitive Additional Materials | |
| x | Soliciting Material Pursuant to §240.14a-12 | |
CASELLA WASTE SYSTEMS, INC.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Copies to:
| Jeffrey A. Stein Wilmer Cutler Pickering Hale and Dorr LLP 60 State Street Boston, Massachusetts 02109 (617) 526-6000 |
Keith E. Gottfried, Esq. Morgan, Lewis & Bockius LLP 1111 Pennsylvania Avenue, N.W. Washington, DC 20004-2541 (202) 739-5947 |
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Casella Waste Systems, Inc., a Delaware corporation (“Casella” or the “Company”), is filing materials contained in this Schedule 14A with the U.S. Securities and Exchange Commission (“SEC”) in connection with the solicitation of proxies from its stockholders in connection with its 2015 Annual Meeting of Stockholders to be held on Friday, November 6, 2015 and at any and all adjournments or postponements thereof (the “2015 Annual Meeting”). Casella has not yet filed a preliminary or definitive proxy statement with the SEC in connection with its solicitation of proxies to be used at the 2015 Annual Meeting.
Slide Presentation First Used On August 11, 2015
Attached hereto as Exhibit 1 is a copy of the slide presentation to be presented and distributed by Casella in connection with investor meetings and presentations at the Jefferies 2015 Industrials Conference to be held on Tuesday, August 11, 2015 at the Grand Hyatt hotel in New York, New York. This slide presentation may also be used from time to time after August 11, 2015 in presentations or meetings with current and potential investors. This presentation is being filed herewith because it may be deemed to be solicitation material in respect of the potential solicitation of proxies to be used at the 2015 Annual Meeting.
Important Additional Information And Where To Find It
Casella, its directors and certain of its executive officers are deemed to be participants in the solicitation of proxies from the Company’s stockholders in connection with the matters to be considered at the Company’s 2015 Annual Meeting of Stockholders. Information regarding the names of the Company’s directors and executive officers and their respective interests in the Company by security holdings or otherwise can be found in the Company’s Form 10-KT/A for the transition period from May 1, 2014 to December 31, 2014, filed with the SEC on April 30, 2015. To the extent holdings of the Company’s securities have changed since the amounts set forth in the Company’s Form 10-KT/A for the transition period from May 1, 2014 to December 31, 2014, such changes have been reflected on Initial Statements of Beneficial Ownership on Form 3 or Statements of Change in Ownership on Form 4 filed with the SEC. These documents are available free of charge at the SEC’s website at www.sec.gov. Casella intends to file a proxy statement and accompanying WHITE proxy card with the SEC in connection with the solicitation of proxies from Casella stockholders in connection with the matters to be considered at the Company’s 2015 Annual Meeting of Stockholders. Additional information regarding the identity of participants, and their direct or indirect interests, by security holdings or otherwise, will be set forth in the Company’s proxy statement for its 2015 Annual Meeting, including the schedules and appendices thereto. INVESTORS AND STOCKHOLDERS ARE STRONGLY ENCOURAGED TO READ ANY SUCH PROXY STATEMENT AND THE ACCOMPANYING PROXY CARD AND OTHER DOCUMENTS FILED BY CASELLA WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE AS THEY WILL CONTAIN IMPORTANT INFORMATION. Stockholders will be able to obtain the Proxy Statement, any amendments or supplements to the Proxy Statement, the accompanying WHITE proxy card, and other documents filed by Casella with the SEC for no charge at the SEC’s website at www.sec.gov. Copies will also be available at no charge at the Investor Relations section of the Company’s corporate website at www.casella.com, by writing to the Company’s Corporate Secretary at Casella Waste Systems, Inc., 25 Greens Hill Lane, Rutland, VT 05701, or by calling the Company’s Corporate Secretary at (802) 772-2257.
 Casella
Waste Systems, Inc. Investor Presentation
August 2015 Exhibit 1 |
 2 2 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; actions of activist investors and the cost and disruption of responding to those actions; 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-KT for the transition period ended
December 31, 2014 and in our Form 10-Q for the quarterly period ended
June 30, 2015.
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 the federal securities laws.
Safe harbor statement
Certain matters discussed in this presentation 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,” “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 |
 Casella Waste Systems 3 Casella Waste Systems - Overview Casella provides integrated solid waste, recycling and resource services. • $535.8 mm of revenues for LTM ended 6/30/15. • Integrated operations located in six northeast states. Focused on providing customers with waste and resource solutions. • Waste and resource assets are well positioned in the northeast. • Robust transfer network allows us to effectively move waste and recyclables to our disposal & processing facilities. • Provide customers with value-added resource solutions through our Recycling, Organics, and Customer Solutions operations. |
 4 35 Collection Operations 18 Recycling Facilities 10 Disposal Facilities (1) 4 Landfill Gas-to-Energy 44 Transfer Stations Casella Service Area Note: Total disposal capacity includes permitted and permittable airspace estimates at each site as of December 31, 2014.
(1) Includes nine Subtitle D landfills and one landfill permitted to accept construction and demolition materials.
(2) Annual capacity does not reflect the 1.5 million tons per year rail permit at McKean LF.
Hakes LF 462k tons/yr 4.0mm tons capacity Chemung LF 200.5k tons/yr 6.8mm tons capacity Hyland LF 312k tons/yr 14.6mm tons capacity Clinton LF 175k tons/yr 15.7mm tons capacity WasteUSA LF 600k tons/yr 14.4mm tons capacity NCES LF No annual cap 1.8mm tons capacity Juniper Ridge LF No annual cap 23.8mm tons capacity Southbridge LF 405k tons/yr 7.0mm tons capacity Ontario LF 918k tons/yr 12.8mm tons capacity McKean LF (2) 312k tons/yr 2.1mm tons capacity Company Overview Casella Waste Systems |
 Casella Waste Systems 5 Strong execution of key strategies since Dec 2012 (1) Excludes low priced soils at the Worcester landfill closure project. Strategic Focus since Dec 2012 Results #1 - Executing leadership changes • New President/COO and CFO in Dec 2012 #2 - Sourcing incremental
landfill volumes • Annual Landfill volumes up +716k tons since FY 2013 (1) • Annual Disposal AEBITDA up +$15.8mm since FY 2013 (1) #3 - Driving additional profitability of collection operations • Pricing programs continue to drive value; with Residential & Commercial pricing up +4.3% in Q2 2015 • Focused on operational efficiency programs #4 - Executing Eastern Region strategy • AEBITDA margins up from 15.0% LTM 10/31/12 to over 22% LTM 6/30/15 • Repositioned assets and improved operations #5 - Reducing business risk • Sold non-core, non-performing operations (Maine Energy, BioFuels, GreenFiber, CARES assets) • Changed fiscal year end to better match business cycle • Refinanced Revolver in Feb 2015 (new maturity 2020) New municipal contracts; MSW permit at Juniper Ridge LF; expanded Southbridge LF; sold BioFuels; acquired BBI; sold Maine Energy |
 Casella Waste Systems Results since FY 2013: • Revenue growth +$80.5mm (or +17.7%) mainly driven by Disposal (+$39.7mm) (2) , Collection (+$23.6mm), and Customer Solutions (+$18.2mm). • Adj. EBITDA up +$12.5mm (or +14.2%) mainly driven by higher landfill volumes and strategic execution. • Landfill tons up +716k annually (or +20.1%), while increasing pricing by +2.5%. (3) • Residential and Commercial collection price increases accelerating (up +4.3% in Q2 2015). 6 Results up significantly on strategic execution (1) Please refer to the appendix for a reconciliation of Adjusted EBITDA and Adjusted EBITDA Margin to the comparable GAAP numbers. (2) Disposal Revenue includes Worcester landfill. (3) Excludes low-priced soils at the Worcester landfill closure project. (4) CY 2015 Guidance as
updated/reaffirmed on 7/29/15. Revenue ($mm)
Adj. EBITDA ($mm) & Margin
(1) $535 to $525 $107 to $103 (4) (4) 2015 Guidance FYE 4/30/13 FYE 4/30/14 CYE 12/31/14 LTM 6/30/15 |
 Casella Waste Systems Collection 43.3% Disposal 27.6% Energy & Processing 2.8% Recycling 8.9% Organics 7.4% Customer Solutions 10.0% ~74% revenues in Solid Waste. • Solid Waste consists of integrated collection, transfer, landfill, energy, and processing. • Margin improvement driven by higher landfill tons, pricing, cost efficiencies, and asset repositioning. • Target Adj. EBITDA margins > 27% in 2018. ~26% revenues in Resource Solutions. (1) • Resource Solutions consists of recycling, organics, and Customer Solutions operations. • Recycling margins down on lower commodity pricing; working to improve with SRA Fee, contract resets, and operating efficiencies. • Organics margins flat; low margin, high return business. • Customer Solution margins up on Industrials growth and higher G&A leverage. 7 Solid Waste operations driving improving margins (1) Resource Solutions includes revenues derived from the Recycling, Organics, and Customer Solutions business units.
LTM 6/30/15 – Revenue Splits (1) Solid Waste Adjusted EBITDA Margins FYE 4/30/13 FYE 4/30/14 CYE 12/31/14 LTM 6/30/15 |
 Casella Waste Systems Strategic plan expected to drive significant shareholder value 8 Management focused in key areas to increase free cash flow and to reduce debt leverage: Creating incremental value through Resource Solutions 3 1 Increasing landfill returns 2 Driving additional profitability in collection operations Improving balance sheet and reducing risk 4 |
 Casella Waste Systems Strategic plan expected to drive significant shareholder value Plan focused on improving Free Cash Flow and reducing debt leverage: CY 2015 Guidance Range (1) CY 2018 Financial Targets Revenues $525mm to $535mm CAGR 1.7% to 2.6% Adjusted EBITDA (2) $103mm to $107mm $122mm to $132mm Free Cash Flow (2) $15mm to $19mm $30mm to $40mm Total Debt-to-EBITDA (3) N/A 3.25x to 3.75x Capital Expenditures $45mm to $48mm (8.6% to 9.0% of revenues) 8.7% to 9.5% of revenues ____________________ (1) CY 2015 Guidance as updated/reaffirmed on 7/29/15. (2) Adjusted EBITDA and Free Cash Flow as defined in the appendix reconciliation.
(3) Total Debt-to-EBITDA as defined as “Consolidated Leverage Ratio” in the Company’s Loan & Security Agreement dated as of 2/27/15 (“ABL Revolver”). 9 |
 Casella Waste Systems Adjusted EBITDA Bridge ($mm) 10 Strategic initiatives expected to drive profitable growth $132 to $122 $87.8 $95.1 FYE 4/30/13 FYE 4/30/14 2015 Guidance 2018 Target • Eastern LF price (+350bps/yr in excess of CPI) • Western LF volumes (+200k to +400k tons/yr) • Focus on operating efficiencies • Improve margins by +80 to +120bps/yr • Focus on pricing, operating efficiencies and selling/swapping under-performing routes • Recycling focus on driving returns (SRA fee, increased 3 party tipping fees, and efficiencies) • Customer Solutions focus on industrial services growth • Unidentified downsides to projections +$10 to +$18 +$11 to +$15 +$6 to +$7 ($10) to ($13) #1 - Landfills #2 - Collection #3 - Resource Solutions Other $107 to $103 Upsides not included in plan: • McKean landfill rail infrastructure • Recovery of commodity pricing (recycling or energy) • Additional landfill volumes in East rd |
 Casella Waste Systems Landfill Highlights: • Casella controls 10 landfills in strategic locations across the Northeast. • Total disposal capacity ~103 mm tons. (2) • Total annual landfill volumes up +716k tons (or +20.1%) since FY 2013. • Roughly 0.5mm tons of excess annual permitted capacity at 6/30/15. • Average price per ton up +4.9% in Q2 2015, with strong pricing in Eastern Region (+6.2%). 11 Annual Landfill Volumes (mm Tons) and Average Price per Ton (1) (1) Annual Landfill Disposal Volumes includes amortizable and non-amortizable tons, excludes low-priced soils at the Worcester
landfill closure project. (2)
Includes both permitted and permittable
airspace at landfills.
3.6 3.9 4.2 /ton 1 Increasing landfill returns 1.5 2.8 4.3 |
 Casella Waste Systems 12 Strategy capitalizes on improving market and asset positioning to further improve landfill returns. • Eastern Region – focus on pricing; capacity constraints provide tailwind. Goal to increase
pricing +350bps/yr in excess of inflation.
• Western Region – focus on maximizing capacity utilization; high margin incremental tons.
Goal to increase annual tons by +200k to +400k tons/yr.
Market dynamics are improving across our footprint area.
• Disposal site closures (and expected closures) are creating a supply-demand imbalance.
• Within our footprint, roughly 1.5mm tons/yr of disposal capacity has closed since Dec 2012,
and an additional 1.3mm tons/yr is expected to permanently close in the next
couple years, offset by 0.4mm tons/yr of new disposal capacity (=
net closure of 2.4mm tons/yr). •
NYC Dept of Sanitation contracts expected to shift roughly +1.0mm tons/yr of
additional waste to competitor landfills in upstate NY (reducing
excess capacity in market). •
Tullytown closure in Eastern PA expected to remove over 2.5mm tons/yr of landfill capacity.
1 Increasing landfill returns - continued |
 2 3 4 1 Fall River LF 376k tons/yr, Closed 2014 Disposal market dynamics are shifting 13 Hyland LF 312k tons/yr 14.6mm tons capacity Clinton LF 175k tons/yr 15.7mm tons capacity WasteUSA LF 600k tons/yr 14.4mm tons capacity NCES LF No annual cap 1.8mm tons capacity Juniper Ridge LF No annual cap 23.8mm tons capacity Southbridge LF 405k tons/yr 7.0mm tons capacity Ontario LF 918k tons/yr 12.8mm tons capacity McKean LF (1) 312k tons/yr 2.1mm tons capacity Moretown LF 286k tons/yr, Closed 2013 Claremont WTE 73k tons/yr, Closed 2013 MERC WTE 300k tons/yr, Closed 2012 PERC WTE 300k tons/yr PPA expires 2017 Granby LF - 235k tons/yr, Closed 2014 S. Hadley LF –
156k tons/yr, Closed 2014
Barre LF - 94k tons/yr, Closing 2015 Northampton LF
– 50k tons/yr, Closed 2013 Chicopee LF - 365k tons/yr, Closing 2018 2 1 3 4 5 5 Albany LF 275k tons/yr Closing 2016 Rockland 45k tons/yr, Closing 2015 Dunn LF ~300k tons/yr New 2015 Finch LF 130k tons/yr New 2014 Disposal market in Northeast is contracting… Chemung LF 200.5k tons/yr 6.8mm tons capacity Hakes LF 462k tons/yr 4.0mm tons capacity Wallingford WTE 130k tons/yr Closed 2015 Taunton LF 120k tons/yr Closing 2018 Note: Total disposal capacity includes permitted and permittable airspace estimates at each site as of December 31,
2014. (1)
Annual capacity does not reflect the 1.5mm tons per year rail permit at McKean
LF. NYC Dept of Sanitation
• 10k – 12k tons per day. • Building 4 marine transfer stations to transload waste to rail (1 operational in early 2015). • Expect an additional 1.0m tons/yr to be disposed in NY. 18 Recycling Facilities 10 Disposal Facilities 35 Collection Operations Other disposal sites (closed) Expected NYC waste flows 10 Disposal Facilities 4 Landfill Gas-to-Energy Facilities 2 New Disposal Facilities online Tullytown LF 2.5mm tons/yr, Closing 2017 Other disposal sites (potential to close)
Allegany LF 55k tons/yr Closing 2016 Casella Waste Systems |
 Casella Waste Systems (0.4) 5.0 5.3 5.4 1.3 0.3 2012 2015 2018 Excess Tons Disposed Shortfall Massachusetts 6.3 5.6 Disposal Capacity (tons in mm) 5.0 (0.2) 3.7 4.2 4.4 0.7 0.3 2012 2015 2018 Excess Tons Disposed Shortfall New York 4.4 4.5 Disposal Capacity (tons in mm) 4.2 Vermont, New Hampshire & Maine 16.5 16.6 16.6 Service Area 10 Landfills 4 Landfill Gas-to-Energy Disposal Capacity (tons in mm) 14 Note: Data collected from active landfill and waste to energy facilities from State Annual Facility Reports in October 2014
…creating a supply-demand imbalance
13.6 14.6 15.4 2.9 2.0 1.2 2012 2015 2018 Excess Tons Disposed |
 Casella Waste Systems FYE 4/30/13 FYE 4/30/14 CYE 12/31/14 LTM 6/30/15 Strategies to improve Collection margins by +80 to 120bps/yr: 1) Pricing over inflation; 2) Operating efficiencies; and 3) Selling or swapping under-performing routes or operations. 15 Collection Adjusted EBITDA Margins (1) (1) Collection Adjusted EBITDA margins on a last 12 months basis. Driving additional profitability in collection operations 2 |
 Casella Waste Systems FYE 4/30/13 FYE 4/30/14 CYE 12/31/14 LTM 6/30/15 (1) Focus on pricing discipline. • Residential and commercial pricing up +4.3% YOY in Q2 2015. • Decentralized sales model focused on pricing and quality of revenues. • Launched an SRA fee in Q2 2015 to offset lower recycling commodity values. • The roll-off market has shown early signs of rebounding, with growth in select markets. 16 Collection Price Driving additional profitability in collection operations - continued 2 Residential & Commercial Price Collection Price |
 Casella Waste Systems 17 2 Driving additional profitability in collection operations – continued Collection Cost of Operations as % of Revenues (1) FYE 4/30/13 FYE 4/30/14 CYE 12/31/14 LTM 6/30/15 (2) Focus on operating efficiencies. • Cost of Operations as a % of revenues down -350bps YOY in Q2 2015. • Route profitability – improving routing efficiency with new routing tools, marketing improving density, equipment choice. • Fleet optimization - implementing fleet plan to standardize fleet selection, reduce maintenance costs, reduce spare ratios, and solve lingering fleet issues. • Reducing volatility by locking in roughly 45% of fuel at fixed forward prices. (3) Focus on selling or swapping under-performing routes. • Sold low-margin hauling routes for $0.9mm in total proceeds during Q2 2015. • Completing review for additional opportunities. (1) Collection Cost of Operations as a % of Collection Revenues on a last 12 months basis.
-180bps |
 Casella Waste Systems Zero-Sort ® Recycling • Casella operates 6 Zero-Sort MRFs in our integrated footprint. • Mature facilities operating at ~95% of capacity; new Lewiston, ME MRF online in Q2 2015.
• Recycling volumes up +10.8% YOY for LTM ended 6/30/15. (1) • Reshaping business to reduce commodity risk and improve returns through: higher tipping
fees, SRA fee (+$4.9mm when fully implemented in Q1 2016), operating
efficiencies, and contract resets (expect to complete ~50% in
next 12 months). Customer Solutions
• Resource solutions for Industrial, Municipal, Institutional, and multi-location Retail customers.
• Growth opportunities in the Industrial segment (lower margins with high FCF).
• CS revenues up +16.3% YOY for LTM ended 6/30/15. Casella Organics • Business model is primarily focused on transforming Biosolids into renewable products
for fertilization and landscaping.
• Working with partners to transform source separated organics into energy or compost.
18 3 Creating incremental value through Resource Solutions (1) Shipped tons from MRFs on a “same store basis” . |
 Casella Waste Systems Focused over last 2 ½ years on reducing risk, improving the balance sheet, and increasing cash flows: • Dec 2012 – sold Maine Energy for $6.7mm; eliminated negative cash flow operation. (1) • July 2013 – sold BioFuels for $2.0mm; eliminated negative cash flow operation. • Dec 2013 – sold 50% stake in US GreenFiber resulting in $3.4mm net cash proceeds; eliminated non-integrated, negative cash flow operation. (2) • Dec 2014 – completed environmental remediation and closure at three sites. • Feb 2015 – refinanced Senior Secured Revolver with new ABL Revolver (LIBOR +225bps);
moved out maturities 5-yrs and increased financial
flexibility. •
Mar 2015 –
sold CARES assets and wholly-owned assets/real estate for $3.1mm net cash
proceeds; eliminated non-integrated, negative cash flow
operation. •
Jun 2015 –
sold low-margin hauling routes for $0.9mm in total proceeds.
19 (1) Maine Energy sold for $6.7mm to the City of Biddeford, ME, with the purchase price to be paid in equal annual payments over 20 years. As
part of the transaction, Casella dismantled the facility and
remediated the site. (2)
US GreenFiber sold for $18.0mm gross proceeds, with $3.4mm net proceeds for
Casella’s 50% equity interest. Improving balance
sheet and reducing risk 4
|
 Casella Waste Systems Focused on improving Free Cash Flow: • Free Cash Flow +$10.8mm YTD 6/30/15. • Strategic actions taken since Dec 2012 have reduced risk and improved cash flows. • Plan to use excess cash to repay high cost debt and for select tuck-in acquisitions/investments. • Driving higher FCF through operating cash flows, lower interest costs, and maintaining strict capital discipline. • Capital Expenditures at 9.0% of revenues for CY 2015 guidance, roughly industry average. • Tax loss carryforwards will help to accelerate delevering (as of 12/31/14, $89.5mm of Federal NOLs and tax credits). (3) 20 Strategic execution driving higher Free Cash Flows Free Cash Flow ($mm) Capital Expenditures ($mm, as % of revenues) $48 to $45 Growth CapEx (2) ____________________ (1) CY 2015 Guidance as updated/reaffirmed on 7/29/15. (2) Growth capital expenditures as defined in the Appendix. (3) Total tax carryforwards include $83.1mm of Federal NOLs and $6.4mm of Federal tax credits; total
excludes $100.4mm of State NOLs.
(1) (1) $15 to $19 +$10.8mm YTD 6/30/15 |
 Casella Waste Systems Paid down $18.7mm of debt and reduced debt leverage by -0.35x in Q2 2015. (1) • Borrowing Availability $58.8mm on 6/30/15. (3) • Plan to further pay down debt and reduce leverage through the remainder of 2015. Next major debt maturity is the 7.75% Senior Sub Notes due Feb 2019. • New $190mm ABL Revolver (due Feb 2020) creates additional financial flexibility. • ABL Revolver allows prepayment of Senior Sub Notes with excess cash (enabling repayment of our highest cost debt, 7.75% interest rate). • Continue to add tax-exempt SW Disposal Revenue bonds to capital structure to reduce cost of long- term debt (17% of debt after new FAME bonds). (2) 21 Capital structure provides runway and flexibility to execute strategy
Total Debt ($mm) Total Debt-to-EBITDA (1) ____________________ (1) Total Debt-to-EBITDA as defined as “Consolidated Leverage Ratio” in the Company’s Loan & Security Agreement dated as of 2/27/15 (“ABL Revolver”); as reconciled in the Appendix.
(2) As of 6/30/15, $77.0mm of SW Disposal Revenue bonds; expect to close $15.0mm FAME bond on 8/27/15.
(3) As of 6/30/15, our Borrowing Availability under the ABL Facility was calculated as a borrowing base of
$150.4mm, less revolver borrowings of $64.7mm, less outstanding irrevocable
letters of credit totaling $27.0mm, at which date no amount had
been drawn. 4/30/13
4/30/14 12/31/14 6/30/15 4/30/13 4/30/14 12/31/14 6/30/15 87% Fixed Rate Debt |
 Casella Waste Systems 22 Casella’s value drivers… Valuable integrated solid waste assets in disposal limited Northeast markets. Management focused on increasing Free Cash Flow and reducing debt leverage. Results demonstrate strong execution of plan. Near term focus of team: Improving landfill returns; Driving profitability of collection operations; Creating value through Resource Solutions; Improving balance sheet & reducing risk. |
 Casella Waste Systems This presentation may be deemed to be soliciting material in respect of the solicitation of proxies from stockholders in connection with Casella Waste Systems, Inc.’s 2015 Annual Meeting of Stockholders. Casella, its directors and certain of its executive officers are deemed to be participants in the solicitation of proxies from the Company’s stockholders in connection with the matters to be considered at the Company’s 2015 Annual Meeting of Stockholders. Information regarding the names of the Company’s directors and executive officers and their respective interests in the Company by security holdings or otherwise can be found in the Company’s Form 10-KT/A for the transition period from May 1, 2014 to December 31, 2014, filed with the SEC on April 30, 2015. To the extent holdings of the Company’s securities have changed since the amounts set forth in the Company’s Form 10-KT/A for the transition period from May 1, 2014 to December 31, 2014, such changes have been reflected on Initial Statements of Beneficial Ownership on Form 3 or Statements of Change in Ownership on Form 4 filed with the SEC. These documents are available free of charge at the SEC’s website at www.sec.gov. Casella intends to file a proxy statement and accompanying WHITE proxy card with the SEC in connection with the solicitation of proxies from Casella stockholders in connection with the matters to be considered at the Company’s 2015 Annual Meeting of Stockholders. Additional information regarding the identity of participants, and their direct or indirect interests, by security holdings or otherwise, will be set forth in the Company’s proxy statement for its 2015 Annual Meeting, including the schedules and appendices thereto. INVESTORS AND STOCKHOLDERS ARE STRONGLY ENCOURAGED TO READ ANY SUCH PROXY STATEMENT AND THE ACCOMPANYING PROXY CARD AND OTHER DOCUMENTS FILED BY CASELLA WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE AS THEY WILL CONTAIN IMPORTANT INFORMATION. Stockholders will be able to obtain the Proxy Statement, any amendments or supplements to the Proxy Statement, the accompanying WHITE proxy card, and other documents filed by Casella with the SEC for no charge at the SEC’s website at www.sec.gov. Copies will also be available at no charge at the Investor Relations section of the Company’s corporate website at www.casella.com, by writing to the Company’s Corporate Secretary at Casella Waste Systems, Inc., 25 Greens Hill Lane, Rutland, VT 05701, or by calling the Company’s Corporate Secretary at (802) 772-2257. 23 Additional Information |
 Casella Waste Systems Appendix 24 |
 Casella Waste Systems 25 Reconciliation of Adjusted EBITDA Non-GAAP Reconciliation of Adjusted EBITDA to Net Loss ($ in thousands) 2013 2014 Revenue 455,335 $ 497,633 $ 525,938 $ 535,754 $ 260,292 $ Net loss (54,463) $
(27,404) $
(29,136) $
(12,169) $
(7,021) $
Loss on disposal of discontinued operations, net
- 378
- -
- Loss (income) from discontinued operations,
net 4,480
(284)
-
- -
(Benefit) provision for income taxes (2,526) 1,799 1,340 1,423 914 Other expense (income), net
23,501 (436) 1,849 2,348 510 Interest expense, net
41,429 37,863 38,082 39,148 20,065 Gain on settlement of acquisition related contingent consideration
- (1,058)
(1,058)
-
- Loss (gain) from divestiture, acquisition and
financing costs 1,410
144
(529) (553) - Severance and reorganization costs
3,709 586 426
(4)
- Environmental remediation charge
- 400
950
950
- Development project charge
- 1,394
1,394
-
- Divestiture transactions
- 7,455
7,455
(5,611)
(5,611)
Depreciation and amortization
56,576 60,339 61,206 60,421 29,990 Fiscal year-end transition costs
- -
538 538
- Proxy contest costs
- -
- 284
284
Tax settlement
costs 679
- -
- -
Depletion of landfill operating lease obligations 9,372 9,948 10,725 10,046 4,359 Interest accretion on landfill and environmental remediation
liabilities 3,675
3,985
3,606
3,484
1,704
Adjusted EBITDA
87,842 $
95,108 $
96,848 $
100,305 $ 45,194 $ Adjusted EBITDA Margin (%) 19.3% 19.1% 18.4% 18.7% 17.4% 12 months ended Dec. 31, 2014 12 months ended June 30, 2015 Fiscal Year ended April 30, 6 months ended June 30, 2015 |
 Casella Waste Systems 26 Reconciliation of Free Cash Flow and Capital Expenditure detail Non-GAAP Reconciliation of Free Cash Flow ($ in thousands) 2013 2014 Net Cash Provided By Operating Activities 43,906 $
49,642 $
62,158 $
63,601 $
23,889 $ Capital expenditures (53,281) (43,326) (67,252) (60,258) (16,311) Payments on landfill operating lease contracts
(6,261) (6,505) (5,440) (5,339) (1,425) Proceeds from divestiture transactions
- -
- 5,335
5,335
Proceeds from sale of property and
equipment 883
1,524 815 626
259
Proceeds from
property insurance settlement -
- -
546 546
Contributions from
(distribution to) noncontrolling interest holders
2,531 - -
(1,495) (1,495) Free Cash Flow (12,222) $ 1,335 $
(9,719) $
3,016 $
10,798 $ Fiscal Year ended April 30, 12 months ended Dec. 31, 2014 12 months ended Jun 30, 2015 6 months ended Jun 30, 2015 Capital Expenditure Detail ($ in thousands) 2013 2014 Total Growth Capital Expenditures 12,192 $
4,664 $
13,789 $
11,553 $
2,449 $
Replacement Capital Expenditures:
Landfill construction & equipment
29,617 24,019 23,216 19,506 5,618 Vehicles, machinery / equipment and containers
8,552 10,465 25,102 23,719 6,707 Facilities 2,254 3,170 3,605 3,318 503 Other
666 1,008
1,540
2,161
1,034
Total Replacement Capital
Expenditures 41,089
38,662
53,463
48,704
13,862
Total Capital Expenditures
53,281 $
43,326 $
67,252 $
60,257 $
16,311 $
Fiscal Year ended
April 30, 12 months ended Dec. 31, 2014 12 months ended June 30, 2015 6 months ended June 30, 2015 |
 Casella Waste Systems 27 Reconciliation of Consolidated Leverage Ratio Reconciliation of Consolidated EBITDA (as defined by ABL Revolver) to Net cash provided by operating activities
($ in millions) 2013 2014 Net cash provided by operating activities 43.9 $
49.6 $
62.2 $
63.6 $
Changes in assets and liabilities, net of effects of acquisitions and
divestitures (0.6)
9.2 (2.2) (1.4) Divestiture transactions - (7.5) (6.9) 6.2 Gain on sale of property and equipment 0.4 0.8 0.5 0.2 Gain (loss) on sale of equity method investment - 0.6 (0.2) - Loss on debt extinguishment (15.6) - - (0.5) Stock based compensation and related severance expense, net of excess tax benefit
(2.4) (2.4) (2.3) (2.5) Development project charge - (1.4) (1.4) - Impairment of investment - - (2.3) (2.3) Loss on derivative instruments (4.5) (0.3) (0.6) (0.3) Interest expense, less discount on long-term debt 40.9 37.9 38.2 39.2 Provision for income taxes, net of deferred taxes 1.0 0.2 0.2 0.6 Gain on settlement of acquisition related contigent consideration - 1.1 1.1 - EBITDA adjustment as allowed by the ABL Facility agreement 2.8 9.3 7.5 (2.9) Other adjustments as allowed by the ABL Facility agreement 27.1 4.0 5.3 4.5 Minimum consolidated EBITDA $ 93.0
$
101.1
$
99.1
$
104.4 Total Debt
500.0 $
509.5 $
537.0 $
529.9 $
Consolidated Leverage Ratio (Total Debt-to-EBITDA)
5.37 5.04 5.42 5.08 Fiscal Year ended April 30, 12 months ended 12 months ended Dec. 31, 2014 June 30, 2015 |