Casella Waste Systems, Inc. Announces First Quarter Fiscal Year 2013 Results
Highlights for the quarter included:
- Pricing growth of 1.0 percent in the collection line-of-business; 13 consecutive quarters of positive collection pricing growth.
- Robust volume growth of 4.4 percent in the recycling line-of-business driven by continued adoption of Zero-Sort® Recycling.
For the quarter ended
The company's net loss attributable to common shareholders was
Operating income was
"During our first quarter recycling commodity prices weakened and we continued to experience declines in special waste volumes at our western
- "As announced on
August 10 , we took a number of steps to realign our operations to streamline support functions and to eliminate approximately$6.5 million of annualized costs. We expect these permanent cost savings to partially offset the cyclical revenue declines from lower recycling commodity pricing and lower landfill special waste volumes. Further, these steps position us well to leverage a lower cost structure as cyclical revenues return in the future. - "In early August we signed a purchase and sale agreement to sell our waste-to-energy facility to the
City of Biddeford, ME . We are expecting to complete the sale byDecember 2012 . - "Despite a stagnant economy, we have grown our residential and commercial customer counts year-over year, 6 percent and 1 percent, respectively, and have delivered positive pricing gains in each segment. We attribute this to our strategy of offering differentiated resource solutions that allow us to stand out in our markets as a service provider that creates value for our customers.
"Weakness in the roll-off collection line-of-business offset much of gains we had in the residential and commercial lines-of-business," Casella said. "The roll-off line-of-business was down in the quarter due to: pull forward of work into our fourth quarter with the early spring in the northeast, continued pressure on roll-off work because of depressed construction activity, and a tough comparison to the first quarter last year when we saw increased demand from flooding activity."
"Nevertheless, we've reduced costs and realigned the way we operate, making us more efficient and more customer service-oriented, and putting us in a great position to prosper when economic conditions improve," Casella said.
The company reaffirms guidance issued on
- Revenues between
$475.0 million and $485.0 million ; - Adjusted EBITDA* between
$101.0 million and $105.0 million ;
The above guidance does not include the financial impacts from the potential sale of Maine Energy or the potential refinancing of the 11.0 percent
*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: 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 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; we may incur environmental
charges or asset impairments in the future; and we may be unable to sell our waste-to-energy facility and shift waste volumes to other landfill sites. 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.
CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except amounts per share)
Three Months Ended
--------------------------
July 31, July 31,
2012 2011
------------ ------------
Revenues $ 121,195 $ 127,193
Operating expenses:
Cost of operations 84,811 85,224
General and administration 15,324 16,207
Depreciation and amortization 14,756 14,506
Expense from divestiture and financing costs 553 -
Legal settlement - 1,000
------------ ------------
115,444 116,937
------------ ------------
Operating income 5,751 10,256
Other expense/(income), net:
Interest expense, net 11,844 11,151
Loss from equity method investment 1,766 2,257
Other income (130) (105)
------------ ------------
13,480 13,303
------------ ------------
Loss from continuing operations before income
taxes and discontinued operations (7,729) (3,047)
Provision for income taxes 650 661
------------ ------------
Loss from continuing operations before
discontinued operations (8,379) (3,708)
Discontinued operations:
Gain on disposal of discontinued operations,
net of income taxes (1) - 646
------------ ------------
Net loss (8,379) (3,062)
------------ ------------
Less: Net loss attributable to noncontrolling
interest (8) -
------------ ------------
Net loss attributable to common stockholders $ (8,371) $ (3,062)
============ ============
Common stock and common stock equivalent shares
outstanding, assuming full dilution 26,992 26,564
============ ============
Net loss per common share $ (0.31) $ (0.12)
============ ============
Adjusted EBITDA (2) $ 24,315 $ 28,661
============ ============
CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
July 31, April 30,
ASSETS 2012 2012
------------- -------------
CURRENT ASSETS:
Cash and cash equivalents $ 3,505 $ 4,534
Restricted cash 76 76
Accounts receivable - trade, net of allowance
for doubtful accounts 53,432 47,472
Other current assets 15,539 15,274
------------- -------------
Total current assets 72,552 67,356
Property, plant and equipment, net of
accumulated depreciation 422,096 416,717
Goodwill 102,516 101,706
Intangible assets, net 3,487 2,970
Restricted assets 419 424
Notes receivable - related party/employee 723 722
Investments in unconsolidated entities 21,234 22,781
Other non-current assets 20,247 21,067
------------- -------------
Total assets $ 643,274 $ 633,743
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt and
capital leases $ 1,232 $ 1,228
Current maturities of financing lease
obligations 344 338
Accounts payable 48,729 46,709
Other accrued liabilities 39,987 40,060
------------- -------------
Total current liabilities 90,292 88,335
Long-term debt and capital leases, less current
maturities 487,501 473,381
Financing lease obligations, less current
maturities 1,729 1,818
Other long-term liabilities 54,196 51,978
Total stockholders' equity 9,556 18,231
------------- -------------
Total liabilities and stockholders' equity $ 643,274 $ 633,743
============= =============
CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
Three Months Ended
--------------------------
July 31, July 31,
2012 2011
------------ ------------
Cash Flows from Operating Activities:
Net loss $ (8,379) $ (3,062)
Gain on disposal of discontinued operations, net - (646)
Adjustments to reconcile net loss to net cash
provided by operating activities -
Gain on sale of equipment (46) (192)
Depreciation and amortization 14,756 14,506
Depletion of landfill operating lease
obligations 2,288 2,030
Interest accretion on landfill and
environmental remediation liabilities 933 869
Amortization of discount on second lien notes 259 230
Loss from equity method investment 1,766 2,257
Stock-based compensation 675 649
Excess tax benefit on the vesting of share
based awards (205) (246)
Deferred income taxes 565 939
Changes in assets and liabilities, net of
effects of acquisitions and divestitures (5,091) (3,394)
------------ ------------
Net Cash Provided by Operating Activities 7,521 13,940
------------ ------------
Cash Flows from Investing Activities:
Acquisitions, net of cash acquired (3,150) (715)
Additions to property, plant and equipment
- acquisitions (288) -
- growth (2,002) (1,143)
- maintenance (14,394) (13,725)
Payment for capital related to divestiture (618) -
Payments on landfill operating lease contracts (1,814) (1,858)
Proceeds from sale of property and equipment 265 199
Investments in unconsolidated entities (1,000) (650)
------------ ------------
Net Cash Used In Investing Activities (23,001) (17,892)
------------ ------------
Cash Flows from Financing Activities:
Proceeds from long-term borrowings 62,310 48,500
Principal payments on long-term debt (48,689) (44,439)
Payment of financing costs (96) (90)
Proceeds from exercise of share based awards - 176
Excess tax benefit on the vesting of
restricted stock 205 246
Contributions from noncontrolling interest
holder 721 -
------------ ------------
Net Cash Provided By Financing Activities 14,451 4,393
------------ ------------
Net Cash Provided By Discontinued Operations - 646
------------ ------------
Net (decrease) increase in cash and cash
equivalents (1,029) 1,087
Cash and cash equivalents, beginning of period 4,534 1,817
------------ ------------
Cash and cash equivalents, end of period $ 3,505 $ 2,904
============ ============
Supplemental Disclosures:
Cash interest $ 11,391 $ 11,189
Cash income taxes, net of refunds $ (26) $ 2,159
CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(In thousands)
Note 1: Discontinued Operations
On
We completed the transaction on
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
--------------------------
July 31, July 31,
2012 2011
------------ ------------
Net Loss $ (8,379) $ (3,062)
Gain on disposal of discontinued operations,
net - (646)
Provision for income taxes 650 661
Other expense, net 1,636 2,152
Interest expense, net 11,844 11,151
Legal settlement - 1,000
Expense from divestiture and financing costs 553 -
Depreciation and amortization 14,756 14,506
Severance and reorganization charges 34 -
Depletion of landfill operating lease
obligations 2,288 2,030
Interest accretion on landfill and
environmental remediation liabilities 933 869
------------ ------------
Adjusted EBITDA (2) $ 24,315 $ 28,661
Depreciation and amortization (14,756) (14,506)
Depletion of landfill operating lease
obligations (2,288) (2,030)
Interest accretion on landfill and
environmental remediation liabilities (933) (869)
------------ ------------
Adjusted Operating Income (2) $ 6,338 $ 11,256
============ ============
Following is a reconciliation of Free Cash Flow
to Net Cash Provided by Operating Activities:
Three Months Ended
--------------------------
July 31, July 31,
2012 2011
------------ ------------
Net Cash Provided by Operating Activities $ 7,521 $ 13,940
Capital expenditures - growth and maintenance (16,396) (14,868)
Payments on landfill operating lease contracts (1,814) (1,858)
Proceeds from sale of property and equipment 265 199
Contributions from noncontrolling interest
holder 721 -
------------ ------------
Free Cash Flow (2) $ (9,703) $ (2,587)
============ ============
CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES
SUPPLEMENTAL DATA TABLES
(Unaudited)
(In thousands)
Amounts of our total revenues attributable to services provided for the
three months ended July 31, 2012 and 2011 are as follows:
Three Months Ended July 31,
------------------------------------------
% of % of
Total Total
2012 Revenue 2011 Revenue
---------- --------- ---------- ---------
Collection $ 53,043 43.8% $ 53,626 42.2%
Disposal 30,967 25.5% 32,173 25.3%
Power generation 2,663 2.2% 3,042 2.4%
Processing and organics 14,633 12.1% 14,738 11.6%
---------- --------- ---------- ---------
Solid waste operations 101,306 83.6% 103,579 81.5%
Major accounts 9,524 7.9% 10,711 8.4%
Recycling 10,365 8.5% 12,903 10.1%
---------- --------- ---------- ---------
Total revenues $ 121,195 100.0% $ 127,193 100.0%
========== ========= ========== =========
Components of revenue growth for the three months ended July 31, 2012
compared to the three months ended July 31, 2011 are as follows:
% of % of Solid % of
Related Waste Total
Amount Business Operations Company
--------- --------- ---------- ---------
Solid Waste Operations:
Collection $ 541 1.0% 0.5% 0.4%
Disposal (375) -1.2% -0.3% -0.3%
--------- ---------- ---------
Solid Waste Yield 166 0.2% 0.1%
Collection (1,799) -1.7% -1.4%
Disposal (890) -0.9% -0.7%
Processing and organics 37 0.0% 0.0%
--------- ---------- ---------
Solid Waste Volume (2,652) -2.6% -2.1%
Fuel surcharge (174) -0.2% -0.1%
Commodity price & volume (693) -0.7% -0.5%
Acquisitions 1,096 1.1% 0.8%
Closed landfill (16) 0.0% 0.0%
--------- ---------- ---------
Total Solid Waste (2,273) -2.2% -1.8%
--------- ========== =========
Major Accounts (1,187) -0.9%
--------- =========
Recycling Operations: % of
Recycling
Operations
----------
Commodity price (3,101) -24.0% -2.4%
Commodity volume 563 4.4% 0.4%
--------- ---------- ---------
Total Recycling (2,538) -19.6% -2.0%
--------- ========== =========
Total Company $ (5,998) -4.7%
========= =========
Solid Waste Internalization
Rates by Region:
Three Months Ended
July 31,
--------------------
2012 2011
--------- ---------
Eastern region 53.8% 54.1%
Western region 72.5% 76.1%
Solid waste internalization 63.9% 65.6%
CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES
SUPPLEMENTAL DATA TABLES
(Unaudited)
(In thousands)
GreenFiber Financial Statistics (1):
Three Months Ended
July 31,
--------------------------
2012 2011
------------ ------------
Revenues $ 13,101 $ 16,016
Net loss (3,569) (4,515)
Cash flow provided by (used in) operations 225 (1,278)
Net working capital changes 1,935 906
Adjusted EBITDA $ (1,710) $ (2,184)
As a percentage of revenues:
Net loss -27.2% -28.2%
Adjusted EBITDA -13.1% -13.6%
(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 Ended
July 31,
--------------------------
2012 2011
------------ ------------
Growth capital expenditures:
Landfill development $ 332 $ 41
Water treatment facility 760 -
Landfill gas-to-energy project - 367
MRF equipment upgrades - 509
Other 910 226
------------ ------------
Total Growth Capital Expenditures 2,002 1,143
------------ ------------
Maintenance capital expenditures:
Vehicles, machinery / equipment and containers $ 3,053 $ 6,440
Landfill construction & equipment 10,922 6,997
Facilities 279 175
Other 140 113
------------ ------------
Total Maintenance Capital Expenditures 14,394 13,725
------------ ------------
Total Growth and Maintenance Capital
Expenditures $ 16,396 $ 14,868
============ ============
(1) Our capital expenditures are broadly defined as pertaining to either
growth, maintenance or acquisition activities. Growth capital expenditures
are defined as costs related to development of new airspace, permit
expansions, and 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 organic business growth 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. Acquisition capital expenditures are defined as costs of
equipment added directly as a result of new business growth related to an
acquisition.
Investors:Ned Coletta Vice President of Finance and Investor Relations (802) 772-2239 Media:Joseph Fusco Vice President (802) 772-2247 http://www.casella.com
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