Date: March 7, 2007
Source: Casella Waste Systems, Inc.
Casella Waste Systems, Inc. (Nasdaq: CWST), a regional, non-hazardous solid waste services company, today reported financial results for the third quarter and first nine months of its 2007 fiscal year.
Third Quarter Results
For the quarter ended January 31, 2007, the company reported revenues of $133.5 million, up $2.9 million, or 2.2 percent over the same quarter last year. The company's net loss per common share was $0.07, compared to net income of $0.02 per share in the same quarter last year. Operating income for the quarter was $8.8 million, up $1.7 million or 23.9 percent over the same quarter last year after deferred costs are excluded from fiscal year 2006 third quarter results. Cash provided by operating activities in the quarter was $16.4 million, down $9.4 million, or 36.4 percent compared to the same quarter last year. The company's earnings before interest, taxes, depreciation and amortization (EBITDA) were $26.0 million*, up $2.4 million, or 10.2 percent from the same quarter last year. A reduction of $2.0 million in equity income from the company's GreenFiber joint venture, and the expectation that this reduction will continue into the fourth quarter, increased the company's tax rate. These factors accounted for most of the $0.07 loss per common share.
For the nine months ended January 31, 2007, the company reported revenues of $424.8 million. The company's net loss per common share was $0.05. Operating income for the nine month period was $32.1 million. Cash provided by operating activities for the nine month period was $55.8 million. The company's earnings before interest, taxes, depreciation and amortization (EBITDA) were $86.5 million*.
Highlights of the Quarter
"From an operating perspective, this was a solid quarter," John W. Casella, chairman and chief executive officer, said. "We continue to drive efficiencies into, and costs out of, the business, as well as driving pricing improvement across our solid waste business throughout the quarter.
"Regional economic conditions had an impact on our overall results," Casella said. "While landfill pricing is up, volumes remain a challenge. Our GreenFiber unit was adversely impacted by the general slowdown in the housing market and unseasonably warm weather."
The Company also said it believes its EBITDA* for fiscal year 2007 will be between $110.0 million and $113.0 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 and deferred costs (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 expenditure and working capital requirements. For these reasons we utilize these non- GAAP metrics to measure our performance at all levels. These measures do not represent, and should not be considered as alternatives to cash provided by operating activities as determined in accordance with GAAP. Moreover, these measures do not necessarily indicate whether cash flow will be sufficient for such items as working capital 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.
Casella Waste Systems, 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 Richard Norris, chief financial officer; Ned Coletta, director of investor relations; or Joseph Fusco, vice president; at (802) 775-0325, or visit the company's website at www.casella.com.
The company will host a conference call to discuss these results on Thursday, March 8, 2007 at 10:00 a.m. ET. Individuals interested in participating in the call should dial [(719) 457-2692] at least 10 minutes before start time. The call will also be webcast; to listen, participants should visit Casella Waste Systems' website at www.casella.com and follow the appropriate link to the webcast. A replay of the call will be available by calling (719) 457-0820 [(conference code #3642447)] before 11:59 p.m. ET, Thursday, March 15, 2007, or by visiting the company's website.
CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited
(In thousands, except amounts per share)
Three Months Ended Nine Months Ended
January January January January
31, 31, 31, 31,
2006 2007 2006 2007
Revenues $130,597 $133,492 $399,392 $424,828
Operating
expenses:
Cost of
operations 89,034 89,800 262,704 279,717
General and
administration 17,946 17,653 53,296 58,578
Depreciation
and
amortization 16,525 17,223 49,572 54,457
Deferred costs 1,329 - 1,329 -
124,834 124,676 366,901 392,752
Operating
income 5,763 8,816 32,491 32,076
Other
expense/(income),
net:
Interest
expense, net 8,188 10,010 23,359 29,324
Income from
equity method
investments (3,319) (988) (4,762) (1,978)
Other income (1,541) (50) (1,664) (351)
3,328 8,972 16,933 26,995
Income (loss)
before income
taxes 2,435 (156) 15,558 5,081
Provision for
income taxes 1,148 689 7,005 3,590
Net income
(loss) 1,287 (845) 8,553 1,491
Preferred
stock
dividend 859 902 2,563 2,674
Net (loss)
income
available to
common
stockholders $428 $(1,747) $5,990 $(1,183)
Common stock
and common
stock
equivalent
shares
outstanding,
assuming full
dilution 25,413 25,273 25,296 25,257
Net (loss)
income per
common share $0.02 $(0.07) $0.24 $(0.05)
EBITDA (1) $23,617 $26,039 $83,392 $86,533
CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
Unaudited
(In thousands)
April 30 January 31,
ASSETS 2006 2007
CURRENT ASSETS:
Cash and cash equivalents $7,429 $11,929
Restricted cash 72 73
Accounts receivable - trade, net of
allowance
for doubtful accounts 56,269 57,839
Other current assets 15,204 23,395
Total current assets 78,974 93,236
Property, plant and equipment, net of
accumulated depreciation 481,284 506,797
Goodwill 171,258 172,731
Intangible assets, net 2,762 2,276
Restricted cash 17,887 12,518
Investments in unconsolidated
entities 44,491 48,811
Other non-current assets 14,455 13,242
$811,111 $849,611
LIABILITIES AND STOCKHOLDERS'
EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $527 $1,132
Current maturities of capital lease
obligations 1,061 1,096
Accounts payable 46,364 41,316
Other accrued liabilities 46,813 51,834
Total current liabilities 94,765 95,378
Long-term debt, less current
maturities 452,720 479,370
Capital lease obligations, less
current maturities 1,747 925
Other long-term liabilities 41,959 50,468
Series A redeemable, convertible
preferred stock 70,430 73,104
Stockholders' equity 149,490 150,366
$811,111 $849,611
CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited
(In thousands)
Nine Months Ended
January 31, January 31,
2006 2007
Cash Flows from Operating
Activities:
Net income $8,553 $1,491
Adjustments to reconcile net income
to net cash provided by operating
activities -
Depreciation and amortization 49,572 54,457
Depletion of landfill operating
lease obligations 4,651 5,543
Income from equity method
investments (4,762) (1,978)
Deferred costs 1,329 -
(Gain) loss on sale of equipment 233 (591)
Stock-based compensation - 511
Excess tax benefit on the exercise
of stock options - (145)
Deferred income taxes 4,012 464
Changes in assets and liabilities,
net of
effects of acquisitions and
divestitures (1,145) (3,949)
53,890 54,312
Net Cash Provided by Operating
Activities 62,443 55,803
Cash Flows from Investing
Activities:
Acquisitions, net of cash acquired (19,226) (2,087)
Additions to property, plant and
equipment - growth (36,552) (25,757)
- maintenance (51,608) (52,592)
Payments on landfill operating lease
contracts (8,450) (4,500)
Restricted cash from revenue bond
issuance - 5,535
Other (1,463) (110)
Net Cash Used In Investing
Activities (117,299) (79,511)
Cash Flows from Financing
Activities:
Proceeds from long-term borrowings 159,733 239,950
Principal payments on long-term debt (104,581) (213,459)
Proceeds from exercise of stock
options 1,151 1,572
Excess tax benefit on the exercise
of stock options - 145
Net Cash Provided by Financing
Activities 56,303 28,208
Net increase in cash and cash
equivalents 1,447 4,500
Cash and cash equivalents, beginning
of period 8,578 7,429
Cash and cash equivalents, end of
period $10,025 $11,929
Note 1: Non - GAAP Financial Measures
In addition to disclosing financial results prepared in accordance with Generally Accepted Accounting Principles (GAAP), we also disclose EBITDA (earnings before interest, taxes, depreciation and amortization and deferred costs) 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 expenditure and working capital requirements. For these reasons, we utilize these non-GAAP metrics to measure our performance at all levels. These measures do not represent, and should not be considered as alternatives to net cash provided by operating activities as determined in accordance with GAAP. Moreover, these measures do not necessarily indicate whether cash flow will be sufficient for such items as working capital 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 Nine Months Ended
January January January January
31, 31, 31, 31,
2006 2007 2006 2007
Net Cash Provided by Operating
Activities $25,839 $16,403 $62,443 $55,803
Changes in assets and liabilities, net
of effects
of acquisitions and divestitures (8,128) 89 1,145 3,949
Deferred income taxes (19) 613 (4,012) (464)
Stock-based compensation - (190) - (511)
Excess tax benefit on the exercise of
stock options - 4 - 145
Provision for income taxes 1,148 689 7,005 3,590
Interest expense, net 8,188 10,010 23,359 29,324
Depletion of landfill operating lease
obligations (1,678) (1,681) (4,651) (5,543)
Gain (loss) on sale of equipment (192) 152 (233) 591
Other income (1,541) (50) (1,664) (351)
EBITDA $23,617 $26,039 $83,392 $86,533
Following is a reconciliation of
Free Cash Flow to Net Cash
Provided by Operating Activities:
Three Months Ended Nine Months Ended
January January January January
31, 31, 31, 31,
2006 2007 2006 2007
EBITDA $23,617 $26,039 $83,392 $86,533
Add (deduct): Cash interest (3,557) (5,069) (16,379) (21,696)
Capital
expenditures (23,261) (18,094) (88,160) (78,349)
Cash taxes (240) (648) (1,299) (2,241)
Depletion of
landfill
operating
lease
obligations 1,677 1,682 4,651 5,543
Change in
working
capital,
adjusted for
non-cash
items 2,934 (5,879) (7,969) (11,513)
FREE CASH FLOW 1,170 (1,969) (25,764) (21,723)
Add (deduct): Capital
expenditures 23,261 18,094 88,160 78,349
Other 1,408 278 47 (823)
Net Cash Provided by Operating
Activities $25,839 $16,403 $62,443 $55,803
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 Nine Months Ended
January 31, January 31,
2006 2007 2006 2007
Collection $61,310 $62,478 $192,729 $199,748
Landfill / disposal facilities 24,167 24,183 73,928 82,590
Transfer 10,713 9,255 34,275 33,200
Recycling 34,407 37,576 98,460 109,290
Total revenues $130,597 $133,492 $399,392 $424,828
Components of revenue growth for the three months ended January 31,
2007 compared to the three months ended January 31, 2006:
Percentage
Solid
Waste
Operations (1)
Price 3.3%
Volume -4.8%
Solid waste commodity
price and volume 0.3%
Total growth - Solid Waste
Operations -1.2%
FCR
Operations (1)
Price 0.1%
Volume 5.2%
Total growth - FCR Operations 5.3%
Rollover effect of acquisitions
(as a percentage of total
revenues) 1.2%
Divestitures (as a percentage of
total revenues) 0.0%
Total revenue growth 2.2%
(1) -- Calculated as a percentage of segment revenues.
Solid Waste Internalization Rates by Region:
Three Months Ended Nine Months Ended
January 31, January 31,
2006 2007 2006 2007
North Eastern region 56.8% 52.8% 57.5% 56.1%
South Eastern region 39.6% 45.3% 40.9% 42.2%
Central region 79.7% 77.1% 79.0% 77.4%
Western region 44.1% 46.8% 42.4% 48.8%
Solid Waste Operations 57.0% 57.1% 56.0% 57.8%
US GreenFiber (50% owned)
Financial Statistics:
Three Months Ended Nine Months Ended
January 31, January 31,
2006 2007 2006 2007
Revenues $57,484 $48,999 $132,022 $145,525
Net income 6,632 2,634 9,524 5,418
Cash flow from operations 1,980 3,833 11,945 13,076
Net working capital changes (6,544) (1,439) (2,948) (58)
EBITDA $8,524 $5,272 $14,893 $13,134
As a percentage of revenue:
Net income 11.5% 5.4% 7.2% 3.7%
EBITDA 14.8% 10.8% 11.3% 9.0%
Components of Growth versus Maintenance Capital Expenditures (1):
Three Months Ended Nine Months Ended
January 31, January 31,
2006 2007 2006 2007
Growth Capital Expenditures:
Landfill Development $8,733 $3,282 $27,334 $14,765
Boston MRF Building - - 5,998 -
MRF Equipment Upgrades - 2,982 - 6,239
Other 1,940 1,273 3,220 4,753
Total Growth Capital Expenditures 10,673 7,537 36,552 25,757
Maintenance Capital Expenditures:
Vehicles, Machinery / Equipment
and Containers 2,119 2,266 23,620 21,632
Landfill Construction & Equipment 8,728 7,300 22,769 26,851
Facilities 1,209 900 4,260 2,921
Other 532 91 959 1,188
Total Maintenance Capital
Expenditures 12,588 10,557 51,608 52,592
Total Capital Expenditures $23,261 $18,094 $88,160 $78,349
(1) The Company's capital expenditures are broadly defined as pertaining to either growth or maintenance activities. Growth capital expenditures are defined as costs related to development of new airspace, permit expansions, new recycling contracts along with incremental costs of equipment and infrastructure added to further such activities. Growth capital expenditures include the cost of equipment added directly as a result of new business as well as expenditures associated with increasing infrastructure to increase throughput at transfer stations and recycling facilities. Growth capital expenditures also include those outlays associated with acquiring landfill operating leases, which do not meet the operating lease payment definition, but which were included as a commitment in the successful bid. Maintenance capital expenditures are defined as landfill cell construction costs not related to expansion airspace, costs for normal permit renewals and replacement costs for equipment due to age or obsolescence.
For more information, contact:
Richard Norris
Chief Financial Officer
or Ned Coletta
Director of Investor Relations
or Joseph Fusco
Vice President
Casella Waste Systems, Inc.
802-775-0325
www.casella.com.
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