Date: December 1, 2010
Source: Casella Waste Systems, Inc.
Casella Waste Systems, Inc. (
For the quarter ended October 31, 2010, revenues were $141.0 million, up $7.9 million or 5.9 percent over the same quarter last year. Operating income was $13.8 million for the quarter, up $0.1 million from the same quarter last year. The company's net loss applicable to common shareholders was ($1.2) million, or ($0.04) per common share for the quarter, compared to ($1.6) million, or ($0.06) per share for the same quarter last year.
Highlights for the quarter included:
The 5.9 percent in revenue growth from the same quarter last year was driven mainly by Solid Waste volume growth and higher recycling commodity prices and volumes.
Operating income was up 0.7 percent from the same quarter last year.
Adjusted EBITDA* for the quarter was $33.5 million, down $0.9 million from same quarter last year.
Net debt reduction was $2.9 million from July 31, 2010.
Company remains on target to achieve Revenue, Adjusted EBITDA, and Free Cash Flow* guidance ranges.
"We're pleased with our operating performance in the second quarter, especially at our landfills where tonnages were up 16 percent and Adjusted EBITDA was up 24 percent from last year," said John W. Casella, chairman and CEO of Casella Waste Systems. "On an annualized basis, our landfills are running at or near their maximum permitted levels, which has allowed us to begin pushing out lower priced tonnages and raising spot prices. Our team is doing a great job sourcing new landfill contracts and streams of materials to offset continued weakness in the regional economy and construction & demolition volumes."
"As expected in the quarter, the lower energy prices at Maine Energy and the final closure of the Pine Tree landfill had a negative $2.8 million year-over-year impact on Adjusted EBITDA," Casella said. "Excluding these negative impacts, Adjusted EBITDA was up year-over-year."
"During the second quarter we made substantial progress with negotiations and due diligence towards the sale of assets in excess of the $75.0 million divestiture target that we established last year, although we have not yet reached definitive agreements," Casella said. "As part of this divestiture work in progress we incurred $0.7 million of transaction costs during the quarter."
Six Months Financial Results
For the six months ended October 31, 2010, revenues were $280.9 million, up $15.3 million or 5.8 percent over the same period last year. Operating income was $28.4 million for the six month period, up $5.6 million from the same period last year, including a $3.5 million gain on divestitures. The company's net loss applicable to common shareholders was ($4.1) million, or ($0.16) per common share for the six month period, compared to ($4.3) million, or ($0.17) per share for the same period last year.
Fiscal 2011 Outlook
The company confirmed its fiscal year guidance in the following categories:
Revenues between $532.0 million and $542.0 million.
Adjusted EBITDA* between $123.0 million and $127.0 million.
Free Cash Flow* between $4.0 million and $11.0 million.
*Non-GAAP Financial Measures
In addition to disclosing financial results prepared in accordance with Generally Accepted Accounting Principles (GAAP), the company also discloses earnings before interest, taxes, depreciation and amortization, adjusted for accretion, depletion of landfill operating lease obligations, severance and reorganization charges, a goodwill impairment charge, an environmental remediation charge as well as development project charges (Adjusted EBITDA) which is a non-GAAP measure. The company also discloses Free Cash Flow, which is defined as net cash provided by operating activities, less capital expenditures, less payments on landfill operating leases, less assets acquired through financing leases, plus proceeds from sales of property and equipment, which is a non-GAAP measure. Adjusted EBITDA and Free Cash Flow are reconciled to Net Cash Provided by Operating Activities in the attached Notes to Consolidated Financial Statements.
These measures are provided because the company understands 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 the company's ability to meet capital expenditures, payments on landfill operating lease contracts and working capital requirements. For these reasons, the company utilizes these non-GAAP metrics to measure our performance at all levels. Adjusted 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 the company's 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.
About Casella Waste Systems, Inc.
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 www.casella.com.
Conference call to discuss second quarter
Casella will host a conference call to discuss these results on Thursday, December 2, 2010 at 10:00 a.m. ET. Individuals interested in participating in the call should dial (877) 548-9590 or (720) 545-0037 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 on the website, or by calling (800) 642-1687 or (706) 645-9291 (passcode 26460243) until 11:59 p.m. ET on Thursday, December 9, 2010.
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: current economic conditions that have adversely affected and may continue to adversely affect our revenues and our operating margin; we may be unable to reduce costs or increase revenues sufficiently to achieve estimated Adjusted EBITDA and other targets; we may be unable to implement our divestiture plan due to market conditions or other factors; 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 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 April 30, 2010.
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.
CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except amounts per share)
Three Months Ended Six Months Ended
---------------------- ----------------------
October 31, October 31, October 31, October 31,
2010 2009 2010 2009
---------- ---------- ---------- ----------
Revenues $ 141,009 $ 133,094 $ 280,850 $ 265,551
Operating expenses:
Cost of operations 92,978 86,379 187,824 174,007
General and
administration 17,406 14,755 34,630 30,980
Depreciation and
amortization 16,791 18,309 33,518 37,801
Gain on divestiture - - (3,502) -
---------- ---------- ---------- ----------
127,175 119,443 252,470 242,788
---------- ---------- ---------- ----------
Operating income 13,834 13,651 28,380 22,763
Other expense/(income), net:
Interest expense, net 14,518 14,978 29,150 24,790
Loss from equity method
investment 506 159 2,638 1,378
Loss on debt modification - - - 511
Other income (317) (247) (412) (291)
---------- ---------- ---------- ----------
14,707 14,890 31,376 26,388
---------- ---------- ---------- ----------
Loss from continuing
operations before income
taxes and discontinued
operations (873) (1,239) (2,996) (3,625)
Provision for income taxes 281 457 1,060 1,019
---------- ---------- ---------- ----------
Loss from continuing
operations before
discontinued operations (1,154) (1,696) (4,056) (4,644)
Discontinued Operations:
Income from discontinued
operations, net of
income taxes (1) - 97 - 226
Income on disposal of
discontinued operations,
net of income taxes (1) - 48 - 89
---------- ---------- ---------- ----------
Net loss available to
common stockholders $ (1,154) $ (1,551) $ (4,056) $ (4,329)
========== ========== ========== ==========
Common stock and common
stock equivalent shares
outstanding,
assuming full dilution 26,058 25,733 25,981 25,711
========== ========== ========== ==========
Net loss per common share $ (0.04) $ (0.06) $ (0.16) $ (0.17)
========== ========== ========== ==========
Adjusted EBITDA (3) $ 33,543 $ 34,384 $ 67,853 $ 65,467
========== ========== ========== ==========
CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
October 31, April 30,
ASSETS 2010 2010
---------- ----------
CURRENT ASSETS:
Cash and cash equivalents $ 4,044 $ 2,035
Restricted cash 76 76
Accounts receivable - trade, net of allowance
for doubtful accounts 65,032 61,722
Other current assets 18,501 18,231
---------- ----------
Total current assets 87,653 82,064
Property, plant and equipment, net of accumulated
depreciation 478,715 480,053
Goodwill 125,792 125,792
Intangible assets, net 2,603 3,085
Restricted assets 311 228
Investments in unconsolidated entities 38,825 40,965
Other non-current assets 18,326 22,627
---------- ----------
Total assets $ 752,225 $ 754,814
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt and capital
leases $ 2,425 $ 2,000
Current maturities of financing lease obligations 1,471 1,449
Accounts payable 43,419 40,139
Other accrued liabilities 45,777 46,492
---------- ----------
Total current liabilities 93,092 90,080
Long-term debt and capital leases, less current
maturities 551,833 556,130
Financing lease obligations, less current maturities 10,066 10,832
Other long-term liabilities 48,805 47,476
Stockholders' equity 48,429 50,296
---------- ----------
Total liabilities and stockholders' equity $ 752,225 $ 754,814
========== ==========
CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
Six Months Ended
----------------------
October 31, October 31,
2010 2009
---------- ----------
Cash Flows from Operating Activities:
Net loss $ (4,056) $ (4,329)
Income from discontinued operations, net - (226)
Income on disposal of discontinued operations, net - (89)
Adjustments to reconcile net loss to net cash
provided by operating activities -
Gain on divestiture (3,502) -
Gain on sale of equipment (310) (916)
Depreciation and amortization 33,518 37,801
Depletion of landfill operating lease obligations 4,299 3,165
Interest accretion on landfill and environmental
remediation liabilities 1,656 1,738
Amortization of premium on senior notes (386) (356)
Amortization of discount on term loan and second
lien notes 1,088 626
Loss from equity method investments 2,638 1,378
Loss on debt modification - 511
Stock-based compensation 1,480 1,040
Excess tax benefit on the vesting of stock
options (117) -
Deferred income taxes 1,185 875
Changes in assets and liabilities, net of
effects of acquisitions and divestitures (1,981) (1,540)
---------- ----------
39,568 44,322
---------- ----------
Net Cash Provided by Operating Activities 35,512 39,678
---------- ----------
Cash Flows from Investing Activities:
Additions to property, plant and equipment
- growth (1,201) (2,643)
- maintenance (31,180) (29,757)
Payments on landfill operating lease contracts (2,250) (4,538)
Proceeds from divestiture 7,533 -
Proceeds from sale of equipment 555 2,497
---------- ----------
Net Cash Used In Investing Activities (26,543) (34,441)
---------- ----------
Cash Flows from Financing Activities:
Proceeds from long-term borrowings 76,900 413,144
Principal payments on long-term debt (84,236) (405,344)
Payment of financing costs (357) (13,980)
Proceeds from exercise of stock options 160 85
Excess tax benefit on the exercise of stock
options 117 -
---------- ----------
Net Cash Used in Financing Activities (7,416) (6,095)
---------- ----------
Cash Provided by Discontinued Operations 456 1,024
---------- ----------
Net increase in cash and cash equivalents 2,009 166
Cash and cash equivalents, beginning of period 2,035 1,838
---------- ----------
Cash and cash equivalents, end of period $ 4,044 $ 2,004
========== ==========
Supplemental Disclosures:
Cash interest $ 26,225 $ 17,512
Cash income taxes, net of refunds $ 117 $ 550
CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(In thousands)
Note 1: Discontinued Operations
We completed the divestiture of our Great Northern Recycling Canadian operation in the third quarter of fiscal year 2010 for $400 in cash. In the fourth quarter of fiscal year 2010, we also completed the divestiture of our domestic brokerage operations for $1,350. We had previously accounted for these transactions as assets under contractual obligation. This resulted in a gain on disposal of discontinued operations (net of tax) amounting to $48 and $89 in the three and six months ended October 31, 2009, respectively.
Our contract for the FCR Recycling Cape May operation expired in the third quarter of fiscal year 2010. Accordingly, this operation has been treated as a discontinued operation. The operating results of these operations for the six months ended October 31, 2009 have been reclassified from continuing to discontinued operations in the accompanying consolidated financial statements. Revenues attributable to discontinued operations for the three and six months ended October 31, 2009 amounted to $639 and $1,283, respectively. Income from discontinued operations (net of tax) for the three and six months ended October 31, 2009 amounted to $97 and $226, respectively.
Note 2: Reclassification
We have made reclassifications in our Consolidated Statements of Operations to conform information for the three and six months ended October 31, 2009 to our current period presentation. The supplementary financial information included in this section has also been updated to reflect these changes.
Note 3: 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, adjusted for accretion, depletion of landfill operating lease obligations, severance and reorganization charges, goodwill impairment charge, environmental remediation charge as well as development project charges (Adjusted EBITDA) and net cash provided by operating activities, less capital expenditures, less payments on landfill operating leases, less assets acquired through financing leases, plus proceeds from sales of property and equipment (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. Adjusted 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 Adjusted EBITDA to Net Cash Provided by
Operating Activities:
Three Months Ended Six Months Ended
---------------------- ----------------------
October 31, October 31, October 31, October 31,
2010 2009 2010 2009
---------- ---------- ---------- ----------
Net Cash Provided by
Operating Activities $ 22,208 $ 15,440 $ 35,512 $ 39,678
Changes in assets and
liabilities, net of
effects of acquisitions
and divestitures (1,742) 4,472 1,981 1,540
Stock-based compensation,
net of excess tax benefit
on exercise of options (733) (510) (1,363) (1,040)
Provision for income taxes,
net of deferred taxes (245) 87 (125) 144
Net interest expense plus
amortization of
premium/discount 14,164 14,652 28,448 24,520
Gain on Divestiture - - 3,502 -
Gain on sale of equipment
and other (109) 243 (102) 625
---------- ---------- ---------- ----------
Adjusted EBITDA (2) $ 33,543 $ 34,384 $ 67,853 $ 65,467
========== ========== ========== ==========
Following is a reconciliation of Free Cash Flow to Net Cash Provided by
Operating Activities:
Three Months Ended Six Months Ended
---------------------- ----------------------
October 31, October 31, October 31, October 31,
2010 2009 2010 2009
---------- ---------- ---------- ----------
Net Cash Provided by
Operating Activities $ 22,208 $ 15,440 $ 35,512 $ 39,678
Capital expenditures (16,561) (14,154) (32,381) (32,400)
Payments on landfill
operating lease contracts (1,461) (3,211) (2,250) (4,538)
Proceeds from divestiture
and sale of property and
equipment 247 1,914 8,088 2,497
---------- ---------- ---------- ----------
Free Cash Flow $ 4,433 $ (11) $ 8,969 $ 5,237
========== ========== ========== ==========
CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES
SUPPLEMENTAL DATA TABLES
(Unaudited)
(In thousands)
Amounts of our total revenues attributable to services provided for the
three and six months ended October 31, 2010 and 2009 are as follows:
Three Months Ended October 31,
--------------------------------------
% of % of
Total Total
2010 Revenue 2009 Revenue
--------- -------- --------- --------
Collection $ 52,241 37.1% $ 53,352 40.1%
Disposal 30,893 21.9% 28,633 21.5%
Power/LFGTE 6,273 4.4% 7,159 5.4%
Processing and recycling 14,662 10.4% 11,999 9.0%
--------- -------- --------- --------
Solid waste operations 104,069 73.8% 101,143 76.0%
Major accounts 10,139 7.2% 9,694 7.3%
FCR recycling 26,801 19.0% 22,257 16.7%
--------- -------- --------- --------
Total revenues $ 141,009 100.0% $ 133,094 100.0%
========= ======== ========= ========
Six Months Ended October 31,
--------------------------------------
% of % of
Total Total
2010 Revenue 2009 Revenue
--------- -------- --------- --------
Collection $ 104,916 37.4% $ 106,460 40.1%
Disposal 60,273 21.4% 58,375 22.0%
Power/LFGTE 11,986 4.3% 13,528 5.1%
Processing and recycling 29,462 10.5% 23,777 9.0%
--------- -------- --------- --------
Solid waste operations 206,637 73.6% 202,140 76.2%
Major accounts 20,541 7.3% 19,486 7.3%
FCR recycling 53,672 19.1% 43,925 16.5%
--------- -------- --------- --------
Total revenues $ 280,850 100.0% $ 265,551 100.0%
========= ======== ========= ========
Components of revenue growth for the three months ended October 31, 2010
compared to the three months ended October 31, 2009:
% of % of Solid % of
Related Waste Total
Amount Business Operations Company
------- -------- ---------- -------
Solid Waste Operations:
Collection $ 277 0.5% 0.3% 0.2%
Disposal (256) -0.9% -0.3% -0.2%
Power/LFGTE (177) -2.5% -0.2% -0.1%
Processing and recycling 4 0.0% 0.0% 0.0%
------- ---------- -------
Solid Waste Yield (152) -0.1% -0.1%
Volume 8,850 8.7% 6.6%
Commodity price & volume (117) -0.1% -0.1%
Fuel surcharges 84 0.1% 0.1%
Acquisitions & divestitures (1,591) -1.6% -1.2%
Closed landfill (4,148) -4.1% -3.1%
------- ---------- -------
Total Solid Waste 2,926 2.9% 2.2%
------- ========== -------
------- -------
Major Accounts 445 0.3%
------- -------
% of FCR
FCR Operations: Operations
----------
Commodity price 3,250 14.6% 2.4%
Commodity volume 1,294 5.8% 1.0%
------- ---------- -------
Total FCR 4,544 20.4% 3.4%
------- ========== -------
------- -------
Total Company $ 7,915 5.9%
======= =======
Solid Waste Internalization Rates by Region:
Three Months Ended Six Months Ended
October 31, October 31,
-------------------- --------------------
2010 2009 2010 2009
--------- --------- --------- ---------
Eastern region 54.9% 56.6% 52.8% 55.5%
Central region 81.8% 80.2% 82.0% 81.6%
Western region 65.4% 64.6% 66.9% 63.6%
Solid waste internalization 66.1% 65.6% 65.1% 65.7%
CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES
SUPPLEMENTAL DATA TABLES
(Unaudited)
(In thousands)
GreenFiber Financial Statistics - as reported (1):
Three Months Ended Six Months Ended
October 31, October 31,
------------------ ------------------
2010 2009 2010 2009
-------- -------- -------- --------
Revenues $ 20,581 $ 28,897 $ 38,018 $ 50,016
Net (loss) income (1,012) (318) (5,276) (2,756)
Cash flow from operations (3,414) 3,095 (3,038) 5,991
Net working capital changes (4,856) 566 (2,692) 2,628
Adjusted EBITDA $ 1,442 $ 2,529 $ (346) $ 3,363
As a percentage of revenue:
Net loss -4.9% -1.1% -13.9% -5.5%
Adjusted EBITDA 7.0% 8.8% -0.9% 6.7%
(1) We hold a 50% interest in US Green Fiber, LLC ("GreenFiber"), a joint
venture that manufactures, markets and sells cellulose insulation made from
recycled fiber.
Components of Growth and Maintenance Capital Expenditures (1):
Three Months Six Months
Ended October 31, Ended October 31,
----------------- -----------------
2010 2009 2010 2009
-------- -------- -------- --------
Growth Capital Expenditures:
Landfill Development $ - $ 801 $ 227 $ 1,026
Other 319 1,001 974 1,617
-------- -------- -------- --------
Total Growth Capital Expenditures 319 1,802 1,201 2,643
-------- -------- -------- --------
Maintenance Capital Expenditures:
Vehicles, Machinery / Equipment and
Containers 4,283 3,035 11,576 8,434
Landfill Construction & Equipment 10,778 7,886 17,830 18,951
Facilities 1,071 1,170 1,316 1,899
Other 110 261 458 473
-------- -------- -------- --------
Total Maintenance Capital Expenditures 16,242 12,352 31,180 29,757
-------- -------- -------- --------
Total Capital Expenditures $ 16,561 $ 14,154 $ 32,381 $ 32,400
======== ======== ======== ========
(1) Our 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. 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:
Ned Coletta
(802) 772-2239
www.casella.com.
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