Casella Waste Systems, Inc. Announces Second Quarter Fiscal Year 2008 Results
RUTLAND, VT, Dec 05, 2007 (MARKET WIRE via COMTEX News Network) -- Casella Waste Systems, Inc. (NASDAQ: CWST), a regional solid waste, recycling, and resource management services company, today reported financial results for the second quarter of its 2008 fiscal year.
Second Quarter Financial Results
For the quarter ended October 31, 2007, the company reported revenues of $151.4 million, up $8.9 million, or 6.2 percent over the same quarter last year. The company's net income available to common shareholders was $2.8 million, or $0.11 per common share, compared to net income of $1.5 million, or $0.06 per share in the same quarter last year. Operating income for the quarter was $15.3 million, up $0.7 million over the same quarter last year. Cash provided by operating activities in the quarter was $15.8 million, down $5.4 million compared to the same quarter last year. The company's earnings before interest, taxes, depreciation and amortization (EBITDA)* was $35.5 million, up $1.8 million, or 5.3 percent from the same quarter last year.
The after-tax loss from discontinued operations of $0.3 million includes the divestiture of the Buffalo, NY transfer station, hauling operation and related equipment in the second quarter of fiscal 2008 and the divestiture of the Holliston transfer station in the fourth quarter of fiscal 2007. The after-tax loss on the disposal of discontinued operations for the divestiture of the Buffalo operations was $0.4 million. Excluding these non-recurring charges, the net income for the quarter amounted to $3.5 million, or $0.14 per common share.
The company said its GreenFiber unit continues to be severely impacted by the slowdown in the housing market. GreenFiber's net income was down $4.2 million compared to the same quarter last year, resulting in an after tax impact for the company's 50% ownership of negative $0.05 per share.
The second quarter of fiscal 2007 included the final accounting for the completion of the Brockton landfill closure project. The adjustments included the reversing of deferred revenues at Brockton adding $2.1 million of revenue, partially offset by capping and closure accruals, resulting in operating income of $0.7 million and EBITDA of $1.7 million. Excluding this one-time gain in the second quarter last year, EBITDA was up $3.5 million or 10.9 percent over the same quarter last year.
Six Months Financial Results
For the six months ended October 31, 2007, the Company reported revenues of $301.4 million. The Company's net income per common share was $0.18. Operating income for the six month period was $29.1 million. Cash provided by operating activities for the period was $35.7 million. The Company's EBITDA was $69.3 million for the six month period.
Highlights of the Quarter
"During the second quarter we made great progress towards the development, operations, and divestiture goals that we outlined early this fiscal year," John W. Casella, chairman and chief executive officer, said. "Our people are committed to achieving this plan, which focuses on cost reductions and profitable revenue growth, to increase shareholder returns and generate free cash flow to repay debt."
"The most notable achievements during the quarter were the 151,200 ton per year permit expansion at the Hakes landfill; the 305,700 ton per year permit expansion at the Ontario landfill; and the substantial completion of our divestiture program with the sale of the non-strategic Buffalo operations," Casella said. "With the annual permit expansions at the Hakes and Ontario landfills, we have achieved roughly one-half of our targeted goal to increase annual landfill capacity."
"The economy remains quite soft in the northeastern U.S.," Casella said. "Our pricing programs and robust commodity pricing, along with our efforts to reduce costs through increased productivity, realigning markets, and more efficient purchasing, have helped to offset much of the economic drag."
Company's Chief Financial Officer to Retire in January 2008
The Company announced today that Richard A. Norris, the company's senior vice president, chief financial officer & treasurer, has advised the company that he plans to retire in January of 2008. Mr. Norris will continue to work with the company on a consulting basis to ensure a successful transition.
"Over the past seven and a half years Richard has built a first-class financial organization and his contributions will continue long after his retirement," Casella said. "Richard's intelligence, ethics, and commitment to our people and our shareholders symbolize our company's culture and will endure with the talented finance team at Casella."
*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 (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 at (802) 775-0325, or visit the Company's website at http://www.casella.com.
The Company will host a conference call to discuss these results on Thursday, December 6, 2007 at 10:00 a.m. ET. Individuals interested in participating in the call should dial (888) 349-9587 at least 10 minutes before start time. The call will also be webcast; to listen, participants should visit Casella Waste Systems' website at http://www.casella.com and follow the appropriate link to the webcast. A replay of the call will be available on the company's website, or by calling (719) 457-0820 or (888) 203-1112 (conference code #2977424), until 11:59 p.m. ET on Thursday, December 13, 2007.
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 the Company "believes," "expects," "anticipates," "plans," "may," "will," "would," "intends," "estimates" 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 or expectations 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: we may be unable to reduce costs sufficiently to achieve estimated EBITDA and other targets; anticipated revenue may not materialize; landfill operations and permit status may be affected by factors outside our control, continuing weakness in general economic conditions and poor weather conditions may affect our revenues; we may be required to incur capital expenditures in excess of our estimates; and 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. 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 risks and uncertainties include, without limitation, those detailed in Item 1A, "Risk Factors" in our Form 10-K for the year ended April 30, 2007. We do not necessarily intend 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
CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited
(In thousands, except amounts per share)
Three Months Ended Six Months Ended
-------------------- --------------------
October October October October
31, 31, 31, 31,
2006 2007 2006 2007
--------- --------- --------- ---------
Revenues $ 142,505 $ 151,395 $ 280,798 $ 301,440
Operating expenses:
Cost of operations (1) (2) 89,890 96,928 181,199 195,075
General and administration (1) 18,944 18,996 39,361 37,110
Depreciation and amortization 19,048 20,174 36,743 40,123
--------- --------- --------- ---------
127,882 136,098 257,303 272,308
--------- --------- --------- ---------
Operating income 14,623 15,297 23,495 29,132
Other expense/(income), net:
Interest expense, net (3) 9,276 10,872 18,267 21,571
Loss (income) from equity
method investments (867) 1,487 (990) 3,638
Other income (2) (248) 35 (302) (2,361)
--------- --------- --------- ---------
8,161 12,394 16,975 22,848
--------- --------- --------- ---------
Income from continuing
operations before income taxes
and discontinued operations 6,462 2,903 6,520 6,284
Provision (benefit) for income
taxes 3,726 (638) 3,394 464
--------- --------- --------- ---------
Income from continuing
operations before discontinued
operations 2,736 3,541 3,126 5,820
Discontinued Operations:
Loss from discontinued
operations, net of income
taxes (4) (5) (346) (274) (790) (811)
Loss on disposal of
discontinued operations, net
of income taxes (5) - (437) - (437)
--------- --------- --------- ---------
Net income 2,390 2,830 2,336 4,572
Preferred stock dividend 892 - 1,772 -
--------- --------- --------- ---------
Net income available to common
stockholders $ 1,498 $ 2,830 $ 564 $ 4,572
========= ========= ========= =========
Common stock and common stock
equivalent shares outstanding,
assuming full dilution 25,510 25,652 25,667 25,592
========= ========= ========= =========
Net income per common share $ 0.06 $ 0.11 $ 0.02 $ 0.18
========= ========= ========= =========
--------- --------- --------- ---------
EBITDA (6) $ 33,671 $ 35,471 $ 60,238 $ 69,255
========= ========= ========= =========
CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
Unaudited
(In thousands)
April 30, October 31,
ASSETS 2007 2007
----------- -----------
CURRENT ASSETS:
Cash and cash equivalents $ 12,366 $ 2,168
Restricted cash 73 94
Accounts receivable - trade, net of allowance for
doubtful accounts 61,246 65,879
Other current assets 21,115 30,486
----------- -----------
Total current assets 94,800 98,627
Property, plant and equipment, net of accumulated
depreciation 483,277 487,034
Goodwill 171,735 171,336
Intangible assets, net 2,217 1,923
Restricted cash 12,734 13,078
Investments in unconsolidated entities 49,969 46,533
Other non-current assets 19,361 13,515
----------- -----------
Total assets $ 834,093 $ 832,046
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $ 1,215 $ 2,067
Current maturities of capital lease obligations 1,104 827
Series A redeemable, convertible preferred stock
(2) 74,018 -
Accounts payable 51,440 48,396
Other accrued liabilities 60,375 58,316
----------- -----------
Total current liabilities 188,152 109,606
Long-term debt, less current maturities 476,225 547,751
Capital lease obligations, less current maturities 650 379
Other long-term liabilities 39,570 38,516
Stockholders' equity 129,496 135,794
----------- -----------
Total liabilities and stockholders' equity $ 834,093 $ 832,046
=========== ===========
CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited
(In thousands)
Six Months Ended
----------------------
October October
31, 31,
2006 2007
---------- ----------
Cash Flows from Operating Activities:
Net income $ 2,336 $ 4,572
Loss from discontinued operations, net 790 811
Loss on disposal of discontinued operations, net - 437
Adjustments to reconcile net income (loss)
to net cash provided by operating activities -
Depreciation and amortization 36,743 40,123
Depletion of landfill operating lease obligations 3,861 3,348
Income from assets under contractual obligation(2) - (1,367)
Preferred stock dividend - 1,038
Maine Energy settlement - (2,142)
Loss (income) from equity method investments (990) 3,638
Gain on sale of equipment (439) (418)
Stock-based compensation 321 505
Excess tax benefit on the exercise of stock
options (141) (16)
Deferred income taxes 1,077 691
Changes in assets and liabilities, net of
effects of acquisitions and divestitures (3,269) (15,582)
---------- ----------
37,163 29,818
---------- ----------
Net Cash Provided by Operating Activities 40,289 35,638
---------- ----------
Cash Flows from Investing Activities:
Acquisitions, net of cash acquired (1,034) (93)
Additions to property, plant and equipment
- growth (18,220) (7,965)
- maintenance (41,183) (35,025)
Payments on landfill operating lease contracts (2,033) (2,413)
Restricted cash from revenue bond issuance 5,535 -
Other 858 2,554
---------- ----------
Net Cash Used In Investing Activities (56,077) (42,942)
---------- ----------
Cash Flows from Financing Activities:
Proceeds from long-term borrowings 188,900 221,605
Principal payments on long-term debt (171,097) (149,775)
Redemption of Series A redeemable, convertible
preferred stock - (75,057)
Proceeds from exercise of stock options 900 286
Excess tax benefit on the exercise of stock
options 141 16
---------- ----------
Net Cash (Used in) Provided by Financing
Activities 18,844 (2,925)
---------- ----------
Cash Provided by (Used in) Discontinued Operations (1,741) 31
---------- ----------
Net increase in cash and cash equivalents 1,315 (10,198)
Cash and cash equivalents, beginning of period 7,429 12,366
---------- ----------
Cash and cash equivalents, end of period $ 8,744 $ 2,168
========== ==========
CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES
Unaudited
(In thousands)
Note 1: The Company has made reclassifications in the Company's
Statements of Operations to conform prior year information with the
Company's current period presentation. During the fourth quarter of fiscal
year 2007, the Company began recording personnel costs associated with
engineering and permitting activities as a cost of operations where
previously these costs had been recorded as general and administration.
This resulted in costs reclassified amounting to $458 and $924 for the
three months and six months ended October 31, 2006, respectively.
Note 2: The Company has made reclassifications in the Company's
Consolidated Statements of Operations and Consolidated Statements of Cash
Flows to conform information for six months ended October 31, 2007 to the
Company's current period presentation. During the quarter ended October
31, 2007, the Company began classifying income from assets under
contractual obligation as a component of operating income where previously
this income had been recorded as other income. This resulted in income
reclassified amounting to $738 for the six months ended October 31, 2007.
Note 3: The Company's Series A redeemable, convertible preferred stock
("Series A preferred) contained a mandatory redemption provision effective
August 11, 2007. As the Company did not anticipate that the Series A
preferred would be converted to Class A Common Stock by the redemption
date, the Company reflected the redemption value of the Series A preferred
as a current liability at April 30, 2007. Consistent with this
presentation, the Company has recorded the Series A preferred dividend as
interest expense in the three and six months ended October 31, 2007.
The Series A preferred was redeemed effective August 11, 2007 at an
aggregate redemption price of $75,057.
Note 4: The company divested the assets of the Holliston Transfer Station
("Holliston Transfer") during the quarter ended April 30, 2007. The
transaction required discontinued operations treatment under SFAS No.
144, therefore the operating results of Holliston Transfer have been
reclassified from continuing to discontinued operations for the three
and six months ended October 31, 2006.
Note 5: The company divested its Buffalo, N.Y. transfer station, hauling
operation and related equipment during the quarter ended October 31, 2007.
The transaction required discontinued operations treatment under SFAS No.
144, therefore the operating results of these operations have been
reclassified from continuing to discontinued operations for the three
and six months ended October 31, 2006 and 2007.
Note 6: 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 and depreciation and amortization)
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 Six Months Ended
------------------ ------------------
October October October October
31, 31, 31, 31,
2006 2007 2006 2007
-------- -------- -------- --------
Net Cash Provided by Operating
Activities $ 21,168 $ 15,771 $ 40,289 $ 35,638
Changes in assets and liabilities,
net of effects of acquisitions and
divestitures 3,847 10,337 3,269 15,582
Deferred income taxes (2,212) 165 (1,077) (691)
Stock-based compensation (187) (289) (321) (505)
Excess tax benefit on the exercise
of stock options - 16 141 16
Provision (benefit) for income
taxes 3,726 (638) 3,394 464
Interest expense, net 9,276 10,872 18,267 21,571
Preferred stock dividend - (113) - (1,038)
Depletion of landfill operating
lease obligations (1,937) (1,491) (3,861) (3,348)
Income from assets under
contractual obligations - 629 - 1,367
Gain on sale of equipment 183 177 439 418
Other income (193) 35 (302) (219)
-------- -------- -------- --------
EBITDA $ 33,671 $ 35,471 $ 60,238 $ 69,255
======== ======== ======== ========
CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES
Unaudited
(In thousands)
Following is a reconciliation of Free Cash Flow to Net Cash Provided by
Operating Activities:
Three Months Ended Six Months Ended
------------------ ------------------
October October October October
31, 31, 31, 31,
2006 2007 2006 2007
-------- -------- -------- --------
EBITDA $ 33,671 $ 35,471 $ 60,238 $ 69,255
Add (deduct): Cash interest (12,460) (14,558) (15,579) (19,326)
Capital expenditures (27,389) (20,642) (59,403) (42,990)
Cash taxes (936) (1,459) (1,592) (1,770)
Depletion of landfill
operating lease
obligations 1,937 1,491 3,861 3,348
Change in working
capital, adjusted
for non-cash items (1,164) (1,936) (5,145) (9,881)
-------- -------- -------- --------
FREE CASH FLOW (6,341) (1,633) (17,620) (1,364)
Add (deduct): Capital expenditures 27,389 20,642 59,403 42,990
Other 120 (3,238) (1,494) (5,988)
-------- -------- -------- --------
Net Cash Provided by Operating
Activities $ 21,168 $ 15,771 $ 40,289 $ 35,638
======== ======== ======== ========
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 Six Months Ended
October 31, October 31,
------------------- -------------------
2006 2007 2006 2007
--------- --------- --------- ---------
Collection $ 68,539 $ 69,178 $ 136,852 $ 138,331
Landfill / disposal facilities 30,031 28,966 58,407 58,169
Transfer 6,559 7,691 13,826 15,038
Recycling 37,376 45,560 71,713 89,902
--------- --------- --------- ---------
Total revenues $ 142,505 $ 151,395 $ 280,798 $ 301,440
========= ========= ========= =========
Components of revenue growth for the three months ended October 31, 2007
compared to the three months ended October 31, 2006:
Percentage
----------
Solid Waste Operations (1) Price 0.1%
Volume -0.9%
Solid waste commodity price
and volume 0.4%
----------
Total growth - Solid Waste Operations -0.4%
==========
FCR Operations (1) Price 26.2%
Volume 2.6%
----------
Total growth - FCR Operations 28.8%
==========
Rollover effect of acquisitions (as a percentage of total
revenues) 0.4%
Total revenue growth 6.2%
(1) - Calculated as a percentage of segment revenues.
Solid Waste Internalization Rates by Region:
Three Months
Ended Six Months Ended
October 31, October 31,
---------------- ----------------
2006 (1) 2007 2006 (1) 2007
------- ------- ------- -------
North Eastern region 57.8% 61.6% 57.6% 59.0%
South Eastern region 29.7% 29.8% 28.4% 28.0%
Central region 76.2% 82.8% 77.6% 79.0%
Western region 57.1% 60.0% 57.4% 60.5%
Solid Waste internalization 58.5% 62.1% 58.6% 60.2%
(1) Internalization rates for the three and six months ended October 31,
2006 have been revised to exclude the activity associated with the
Holliston Transfer Station as well as Buffalo Hauling and Buffalo Transfer.
The Company divested the assets of the Holliston Transfer Station during
the quarter ended April 30, 2007. The Company divested the Buffalo
operations during the quarter ended October 31, 2007.
US GreenFiber (50% owned) Financial Statistics:
Three Months Ended Six Months Ended
October 31, October 31,
------------------ ------------------
2006 2007 2006 2007
-------- -------- -------- --------
Revenues $ 52,094 $ 41,995 $ 96,490 $ 75,494
Net Income 2,370 (1,816) 2,784 (5,409)
Cash flow from operations 1,619 3,580 9,798 3,580
Net working capital changes (3,544) 2,481 1,936 3,231
EBITDA $ 5,163 $ 1,099 $ 7,862 $ 349
As a percentage of revenue:
Net income 4.5% -4.3% 2.9% -7.2%
EBITDA 9.9% 2.6% 8.1% 0.5%
Components of Growth versus Maintenance Capital Expenditures (1):
Three Months Six Months Ended
Ended October 31, October 31,
----------------- -----------------
2006 2007 2006 2007
-------- -------- -------- --------
Growth Capital Expenditures:
Landfill Development $ 5,461 $ - $ 11,483 $ 5,123
MRF Equipment Upgrades 2,412 194 3,257 329
Other 1,859 1,141 3,480 2,513
-------- -------- -------- --------
Total Growth Capital Expenditures 9,732 1,335 18,220 7,965
Maintenance Capital Expenditures:
Vehicles, Machinery / Equipment and
Containers 4,941 3,484 18,514 8,151
Landfill Construction & Equipment 11,474 11,366 19,551 20,722
Facilities 982 3,940 2,021 5,253
Other 260 517 1,097 899
-------- -------- -------- --------
Total Maintenance Capital Expenditures 17,657 19,307 41,183 35,025
-------- -------- -------- --------
Total Capital Expenditures $ 27,389 $ 20,642 $ 59,403 $ 42,990
======== ======== ======== ========
(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 further information, contact: Richard Norris Chief Financial Officer Ned Coletta Director of Investor Relations (802) 775-0325 http://www.casella.com
SOURCE: Casella Waste Systems, Inc.
http://www.casella.com
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