Casella Waste Systems, Inc. Revenues and Adjusted EBITDA up Year Over Year for Its First Quarter Fiscal Year 2012

Casella provides solid waste management services consisting of collection, transfer, disposal, and recycling services in the northeastern United States.

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Casella Waste Systems, Inc. Revenues and Adjusted EBITDA up Year Over Year for Its First Quarter Fiscal Year 2012

August 29, 2011

RUTLAND, VT -- (MARKET WIRE) -- 08/29/11 -- Casella Waste Systems, Inc. (NASDAQ: CWST), a regional solid waste, recycling and resource management services company, today reported financial results for its first quarter fiscal year 2012, and reaffirmed guidance for its 2012 fiscal year.

Highlights for the quarter included:

  • Revenue growth of 4.3 percent in quarter was driven mainly by higher solid waste pricing and higher recycling commodity prices.
  • Overall solid waste pricing growth of 1.5 percent was primarily driven by strong collection pricing of 2.4 percent as a percentage of collection revenues.
  • Adjusted EBITDA* was $28.7 million for the quarter, up $0.9 million from same quarter last year.
  • Company remains on target to achieve Revenue, Adjusted EBITDA, and Free Cash Flow* guidance ranges for fiscal year 2012.

For the quarter ended July 31, 2011, revenues were $127.2 million, up $5.2 million or 4.3 percent from the same quarter last year. Operating income was $10.3 million for the quarter, down $2.4 million from the same quarter last year. Excluding the non-recurring $1.0 million legal settlement charge in the current quarter and the $3.5 million gain on the sale of assets in the previous quarter, operating income was up $2.1 million or 22.8 percent from the same quarter last year.

The company's net loss available to common shareholders was ($3.1) million, or ($0.12) per common share for the quarter, compared to a net loss of ($2.9) million, or ($0.11) per share for the same quarter last year. Adjusted EBITDA was $28.7 million for the quarter, up $0.9 million from the same quarter last year.

"While much effort was devoted during the last year to divesting the non-core assets and refinancing the balance sheet, we also undertook the challenge of improving how we do business on a daily basis," said John W. Casella, chairman and CEO of Casella Waste Systems. "Two of the most important aspects of this initiative were our efforts to improve our profitability and to break down the internal cultural barriers to pricing and adjusting it when appropriate."

"We have made excellent progress, and our improved collection pricing during the first quarter clearly demonstrates that these efforts are paying off," Casella said. "We have worked to move pricing from an annual event to a core process of our divisional management teams. Our teams are now effectively using our customer profitability tool to better understand the profitability of each individual customer, and more importantly, to intelligently manage yield in their markets. As a result, changes in collection pricing improved from slightly negative in January to positive 2.8 percent in July."

Fiscal 2012 Outlook

The company confirmed its fiscal year guidance in the following categories:

  • Revenues between $475.0 million and $487.0 million.
  • Adjusted EBITDA* between $105.0 million and $110.0 million.
  • Free Cash Flow* between $2.0 million and $7.0 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, gain on sale of assets, as well as legal settlement charge (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 the sales of assets and property and equipment, which is a non-GAAP measure. Adjusted EBITDA is reconciled to net income (loss), while Free Cash Flow is reconciled to Net Cash Provided by Operating Activities.

The company presents Adjusted EBITDA 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 our results. Management uses these non-GAAP measures to further understand our "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 and Free Cash Flow to investors, in addition to corresponding income statement and cash flow statement measures, provides investors with 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 in the U.S. Adjusted EBITDA and Free Cash Flow should not be considered in isolation from or as a substitute for financial information presented in accordance with GAAP in the U.S., and may be different from Adjusted EBITDA or Free Cash Flow presented 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 in the northeastern United States. For further information, contact Ned Coletta, vice president of finance and investor relations at (802) 772-2239, or Ed Johnson, chief financial officer at (802) 772-2241, or visit the company's website at http://www.casella.com.

Conference call to discuss quarter
The company will host a conference call to discuss these results on Tuesday, August 30, 2011 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 http://ir.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 (855) 859-2056 or (404) 537-3406 (Conference ID 90088021) until 11:59 p.m. ET on Tuesday, September 6, 2011.

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: the damage to the regional infrastructure caused by Hurricane Irene may impact our ability to service customers; 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 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, 2011.

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

                  (In thousands, except amounts per share)



                                                       Three Months Ended

                                                     ----------------------

                                                      July 31,    July 31,

                                                        2011        2010

                                                     ----------  ----------



Revenues                                             $  127,193  $  121,992



Operating expenses:

  Cost of operations                                     85,224      81,339

  General and administration                             16,207      15,916

  Depreciation and amortization                          14,506      15,584

  Legal settlement                                        1,000           -

  Gain on sale of assets                                      -      (3,502)

                                                     ----------  ----------

                                                        116,937     109,337

                                                     ----------  ----------



Operating income                                         10,256      12,655



Other expense/(income), net:

  Interest expense, net                                  11,151      11,764

  Loss from equity method investment                      2,257       2,132

  Other income                                             (105)        (94)

                                                     ----------  ----------

                                                         13,303      13,802

                                                     ----------  ----------





Loss from continuing operations before income taxes

 and discontinued operations                             (3,047)     (1,147)

Provision for income taxes                                  661         779

                                                     ----------  ----------



Loss from continuing operations before discontinued

 operations                                              (3,708)     (1,926)



Discontinued operations:

  Loss from discontinued operations, net of income

   taxes (1)                                                  -        (925)

  Gain (loss) on disposal of discontinued

   operations, net of income taxes (1)                      646         (51)

                                                     ----------  ----------



Net loss applicable to common stockholders           $   (3,062) $   (2,902)

                                                     ==========  ==========





Common stock and common stock equivalent shares

 outstanding, assuming full dilution                     26,564      25,905

                                                     ==========  ==========



Net loss per common share                            $    (0.12) $    (0.11)

                                                     ==========  ==========



Adjusted EBITDA (2)                                  $   28,661  $   27,774

                                                     ==========  ==========








                CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES

                    CONDENSED CONSOLIDATED BALANCE SHEETS

                               (In thousands)



                                                       July 31,   April 30,

                       ASSETS                            2011        2011

                                                     ----------- -----------



CURRENT ASSETS:

  Cash and cash equivalents                          $     2,904 $     1,817

  Restricted cash                                             76          76

  Accounts receivable - trade, net of allowance for

   doubtful accounts                                      62,461      54,914

  Other current assets                                    12,584      15,598

                                                     ----------- -----------

Total current assets                                      78,025      72,405



Property, plant and equipment, net of accumulated

 depreciation                                            454,789     453,361

Goodwill                                                 101,329     101,204

Intangible assets, net                                     2,619       2,455

Restricted assets                                            329         334

Investments in unconsolidated entities                    36,478      38,263

Other non-current assets                                  21,303      22,559

                                                     ----------- -----------



Total assets                                         $   694,872 $   690,581

                                                     =========== ===========



        LIABILITIES AND STOCKHOLDERS' EQUITY



CURRENT LIABILITIES:

  Current maturities of long-term debt and capital

   leases                                            $     1,272 $     1,217

  Current maturities of financing lease obligations          321         316

  Accounts payable                                        45,063      42,499

  Other accrued liabilities                               40,057      39,889

                                                     ----------- -----------

Total current liabilities                                 86,713      83,921



Long-term debt and capital leases, less current

 maturities                                              465,731     461,418

Financing lease obligations, less current maturities       2,074       2,156

Other long-term liabilities                               48,542      49,099



Stockholders' equity                                      91,812      93,987

                                                     ----------- -----------



Total liabilities and stockholders' equity           $   694,872 $   690,581

                                                     =========== ===========





                CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES

              CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                               (In thousands)

                                                       Three Months Ended

                                                     ----------------------

                                                      July 31,    July 31,

                                                        2011        2010

                                                     ----------  ----------

Cash Flows from Operating Activities:

Net loss                                             $   (3,062) $   (2,902)

Loss from discontinued operations, net                        -         925

(Gain) loss on disposal of discontinued operations,

 net                                                       (646)         51

Adjustments to reconcile net loss to net cash

 provided by operating activities -

  Gain on sale of assets                                      -      (3,502)

  Gain on sale of equipment                                (192)       (153)

  Depreciation and amortization                          14,506      15,584

  Depletion of landfill operating lease obligations       2,030       2,192

  Interest accretion on landfill and environmental

   remediation liabilities                                  869         845

  Amortization of premium on senior subordinated

   notes                                                      -        (191)

  Amortization of discount on term loan and second

   lien notes                                               230         222

  Loss from equity method investment                      2,257       2,132

  Stock-based compensation                                  649         567

  Excess tax benefit on the vesting of share based

   awards                                                  (246)          -

  Deferred income taxes                                     939         659

  Changes in assets and liabilities, net of effects

   of acquisitions and divestitures                      (3,394)     (5,066)

                                                     ----------  ----------

                                                         17,648      13,289

                                                     ----------  ----------

    Net Cash Provided by Operating Activities            13,940      11,363

                                                     ----------  ----------

Cash Flows from Investing Activities:

  Acquisitions, net of cash acquired                       (715)          -

  Additions to property, plant and equipment

  - growth                                               (1,143)       (882)

  - maintenance                                         (13,725)    (13,985)

Payments on landfill operating lease contracts           (1,858)       (789)

Proceeds from sale of assets                                  -       7,533

Proceeds from sale of equipment                             199         308

Investment in unconsolidated entities                      (650)          -

                                                     ----------  ----------

    Net Cash Used In Investing Activities               (17,892)     (7,815)

                                                     ----------  ----------

Cash Flows from Financing Activities:

  Proceeds from long-term borrowings                     48,500      32,900

  Principal payments on long-term debt                  (44,439)    (37,230)

  Payment of financing costs                                (90)       (215)

  Proceeds from exercise of share based awards              176         160

  Excess tax benefit on the vesting of restricted

   stock                                                    246           -

                                                     ----------  ----------

    Net Cash Provided By (Used In) Financing

     Activities                                           4,393      (4,385)

                                                     ----------  ----------

Cash Provided By Discontinued Operations                    646       1,097

                                                     ----------  ----------

Net increase in cash and cash equivalents                 1,087         260

Cash and cash equivalents, beginning of period            1,817       2,035

                                                     ----------  ----------

Cash and cash equivalents, end of period             $    2,904  $    2,295

                                                     ==========  ==========

Supplemental Disclosures:

Cash interest                                        $   11,189  $   10,923

Cash income taxes, net of refunds                    $    2,159  $       65








                CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES

            NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                               (In thousands)



Note 1: Discontinued Operations

On January 23, 2011, we entered into a purchase and sale agreement and

related agreements to sell non-integrated recycling assets and select

intellectual property assets to a new company formed by Pegasus Capital

Advisors, L.P. and Intersection LLC (the "Purchaser") for $130,400 in gross

proceeds. Pursuant to these agreements, we divested non-integrated recycling

assets located outside our core operating region of New York, Massachusetts,

Vermont, New Hampshire, Maine and northern Pennsylvania, including 17 MRFs,

one transfer station and certain related intellectual property assets.

Following the transaction, we retained four integrated MRFs located in our

core operating regions. As a part of the disposition, we also entered into a

ten year commodities marketing agreement with the Purchaser to market 100%

of the tonnage from three of our remaining integrated MRFs.



We completed the transaction on March 1, 2011 for $134,195 in gross cash

proceeds. This included an estimated $3,795 working capital and other

purchase price adjustment, which was subject to further adjustment, as

defined in the purchase and sale agreement. The final working capital

adjustment, along with additional legal expenses related to the transaction,

of $646 (net of tax) was recorded to gain (loss) on disposal of discontinued

operations in the quarter ended July 31, 2011.



During the third quarter of fiscal year 2011, we also completed the sale of

the assets of the Trilogy Glass business for cash proceeds of $1,840. This

operation has been treated as a discontinued operation.



The operating results of these operations, including those related to prior

years, have been reclassified from continuing to discontinued operations in

the accompanying condensed consolidated financial statements. Revenues and

loss before income tax provision attributable to discontinued operations for

the three months ended July 31, 2011 and 2010 were $0, $17,849, $0 and

($925), respectively.



We allocate interest expense to discontinued operations. We have also

eliminated certain immaterial inter-company activity associated with

discontinued operations.



Note 2: 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, gain on sale

of assets, as well as a legal settlement charge (Adjusted EBITDA) which is a

non-GAAP measure. We also disclose 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 the sales of assets and property and

equipment, which is a non-GAAP measure. Adjusted EBITDA is reconciled to net

income (loss), while Free Cash Flow is reconciled to Net Cash Provided by

Operating Activities.



We present Adjusted EBITDA 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. Management uses 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 and

Free Cash Flow to investors, in addition to corresponding income statement

and cash flow statement measures, provides investors the benefit of viewing

our 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. 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 in the U.S. Adjusted EBITDA and Free Cash Flow should not be

considered in isolation from or as a substitute for financial information

presented in accordance with GAAP in the U.S., and may be different from

Adjusted EBITDA or Free Cash Flow presented by other companies.





Following is a reconciliation of Adjusted EBITDA to Net Loss:



                                                       Three Months Ended

                                                     ----------------------

                                                      July 31,    July 31,

                                                        2011        2010

                                                     ----------  ----------



Net Loss Applicable to Common Stockholders           $   (3,062) $   (2,902)

  Loss from discontinued operations, net                      -         925

  (Gain) loss on disposal of discontinued

   operations, net                                         (646)         51

  Provision for income taxes                                661         779

  Interest expense, net                                  11,151      11,764

  Depreciation and amortization                          14,506      15,584

  Other expense, net                                      2,152       2,038

  Legal settlement                                        1,000           -

  Gain on sale of assets                                      -      (3,502)

  Depletion of landfill operating lease obligations       2,030       2,192

  Interest accretion on landfill and environmental

   remediation liabilities                                  869         845

                                                     ----------  ----------

Adjusted EBITDA (2)                                  $   28,661  $   27,774

                                                     ==========  ==========



Following is a reconciliation of Free Cash Flow to

 Net Cash Provided by Operating Activities:

                                                       Three Months Ended

                                                     ----------------------

                                                      July 31,    July 31,

                                                        2011        2010

                                                     ----------  ----------

Net Cash Provided by Operating Activities            $   13,940  $   11,363

Capital expenditures                                    (14,868)    (14,867)

Payments on landfill operating lease contracts           (1,858)       (789)

Proceeds from sale of assets and property and

 equipment                                                  199       7,841

                                                     ----------  ----------

Free Cash Flow (2)                                   $   (2,587) $    3,548

                                                     ==========  ==========





                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, 2011 and 2010 are as follows:



                                       Three Months Ended July 31,

                             ----------------------------------------------

                                         % of Total              % of Total

                                 2011      Revenue       2010      Revenue

                             ----------- ----------  ----------- ----------

Collection                   $    53,626       42.2% $    52,501       43.0%

Disposal                          29,318       23.1%      29,554       24.3%

Power/LFGTE                        5,897        4.6%       5,714        4.7%

Processing and recycling          14,738       11.6%      13,247       10.9%

                             ----------- ----------  ----------- ----------

Solid waste operations           103,579       81.5%     101,016       82.9%

Major accounts                    10,711        8.4%      10,402        8.4%

Recycling                         12,903       10.1%      10,574        8.7%

                             ----------- ----------  ----------- ----------

Total revenues               $   127,193      100.0% $   121,992      100.0%

                             =========== ==========  =========== ==========



Components of revenue growth for the three months ended July 31, 2011

 compared to the three months ended July 31, 2010 are as follows:



                                            % of     % of Solid

                                           Related      Waste    % of Total

                               Amount     Business   Operations    Company

                             ----------  ----------  ----------  ----------

Solid Waste Operations:

Collection                   $    1,238         2.4%        1.2%        1.0%

Disposal                            119         0.4%        0.1%        0.1%

Power/LFGTE                          59         1.0%        0.1%        0.0%

Processing and recycling            119         0.9%        0.1%        0.1%

                             ----------              ----------  ----------

Solid Waste Yield                 1,535                     1.5%        1.2%



Volume                              203                     0.2%        0.2%

Commodity price & volume            968                     1.0%        0.8%

Acquisitions & divestitures        (166)                   -0.2%       -0.1%

Closed landfill                      23                     0.0%        0.0%

                             ----------              ----------  ----------

Total Solid Waste                 2,563                     2.5%        2.1%

                             ----------              ==========  ==========



Major Accounts                      310                                 0.3%

                             ----------                          ----------



                                                        % of

                                                      Recycling

Recycling Operations:                                Operations

                                                     ----------

Commodity price                   3,586                    33.9%        2.9%

Commodity volume                 (1,257)                  -11.9%       -1.0%

                             ----------              ----------  ----------

Total Recycling                   2,329                    22.0%        1.9%

                             ----------              ==========  ==========



Total Company                $    5,202                                 4.3%

                             ==========                          ==========



Solid Waste Internalization Rates by

 Region:



                              Three Months Ended July 31,

                             ----------------------------

                                  2011           2010

                             -------------  -------------

Eastern region                        54.1%          50.9%

Western region                        76.1%          76.3%

Solid waste internalization           65.6%          64.1%





                CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES

                          SUPPLEMENTAL DATA TABLES

                                (Unaudited)

                               (In thousands)



GreenFiber Financial Statistics - as reported (1):



                                                Three Months Ended July 31,

                                               ----------------------------

                                                    2011           2010

                                               -------------  -------------

Revenues                                       $      16,016  $      17,438

Net loss                                              (4,515)        (4,264)

Cash flow (used in) from operations                   (1,278)           375

Net working capital changes                              906          2,163

Adjusted EBITDA                                $      (2,184) $      (1,788)



As a percentage of revenues:



Net loss                                               -28.2%         -24.5%

Adjusted EBITDA                                        -13.6%         -10.3%



(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,

                                                 ---------------------------

                                                      2011          2010

                                                 ------------- -------------

Growth capital expenditures:

  Landfill development                           $          41 $         227

  Landfill gas to energy project                           367             -

  MRF equipment upgrades                                   509             -

  Other                                                    226           655

                                                 ------------- -------------

Total Growth Capital Expenditures                        1,143           882

                                                 ------------- -------------



Maintenance capital expenditures:

  Vehicles, machinery / equipment and containers         6,440         6,402

  Landfill construction & equipment                      6,997         7,052

  Facilities                                               175           172

  Other                                                    113           359

                                                 ------------- -------------

Total Maintenance Capital Expenditures                  13,725        13,985

                                                 ------------- -------------



Total Capital Expenditures                       $      14,868 $      14,867

                                                 ============= =============



(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, 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

 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.

Contact Information

Ned Coletta

Vice President of Finance and Investor Relations

(802) 772-2239



Ed Johnson

Chief Financial Officer

(802) 772-2241



http://www.casella.com



Source: Casella Waste Systems, Inc.

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