Casella Waste Systems, Inc. Announces First Quarter Fiscal Year 2009 Results

Casella provides integrated solid waste, recycling, and resource management services in the northeastern United States.

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Casella Waste Systems, Inc. Announces First Quarter Fiscal Year 2009 Results

September 3, 2008

RUTLAND, VT, Sep 03, 2008 (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 first quarter of its 2009 fiscal year.

"The first quarter was a solid operational quarter, with our efforts to improve asset performance offsetting the negative headwinds from a sluggish Northeast economy and rapid increase in diesel fuel prices," John W. Casella, chairman and CEO of Casella Waste Systems, said. "We continued to execute well against our strategy, with our return on net assets up 20 basis points and our operating income up over 12 percent year-over-year for the quarter."

First Quarter Financial Results

For the quarter ended July 31, 2008, the company reported revenues of $157.9 million, up $9.4 million, or 6.3 percent over the same quarter last year. The company's net income available to common shareholders was $2.2 million or $0.08 per common share compared with net income of $1.7 million or $0.07 per common share in the same quarter last year.

Operating income for the quarter was $15.6 million, up $1.7 million or 12.3 percent over the same quarter last year. Net cash provided by operating activities in the quarter was $19.8 million, compared to $20.2 million in the same quarter last year. The company's earnings before interest, taxes, depreciation and amortization (EBITDA*) were $35.0 million, up $1.3 million or 3.8 percent over the same quarter last year.

As part of the new extension agreement with the Town of Southbridge, in June 2008 the company received $2.2 million of cash related to previously paid closure and post closure funds resulting in a net benefit of $0.8 million to EBITDA during the quarter.

The company said its GreenFiber joint venture continues to be negatively impacted by the overall slowdown in the housing market and higher fiber prices. Partially offsetting construction weakness, GreenFiber's retail sales and retrofit sales are up significantly versus the prior year reflecting increased market demand for home insulation with heightened oil and energy prices.

Highlights of the Quarter

"Our solid waste group, led by the collection operations, has done an outstanding job managing operating costs to help offset continued volume weakness," John W. Casella, said. "We continue to expand our successful operating initiatives from fiscal year 2008, and we are rethinking every aspect of our operations to improve customer service and drive higher efficiencies through the remainder of fiscal year 2009."

*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 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. Free cash flow and EBITDA 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 capital expenditures, payments on landfill operating lease contracts, or working capital, 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, 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 http://www.casella.com.

The Company will host a conference call to discuss these results on Thursday, September 4, 2008 at 10:00 a.m. ET. Individuals interested in participating in the call should dial (877) 548-7907 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 #7564770), until 11:59 p.m. ET on Thursday, September 11, 2008.

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 or increase revenues sufficiently to achieve estimated EBITDA and other targets; 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 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, 2008. 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
                                                      --------------------
                                                       July 31,   July 31,
                                                         2007       2008
                                                      ---------  ---------
Revenues                                              $ 148,526  $ 157,904
Operating expenses:
  Cost of operations (1)                                 96,903    104,442
  General and administration                             17,869     18,440
  Depreciation and amortization                          19,908     19,470
                                                      ---------  ---------
                                                        134,680    142,352
                                                      ---------  ---------
Operating income                                         13,846     15,552
Other expense/(income), net:
  Interest expense, net (2)                              10,615      9,973
  Loss from equity method investments                     2,151      1,129
  Other income (1)                                       (2,397)       (88)
                                                      ---------  ---------
                                                         10,369     11,014
                                                      ---------  ---------
Income from continuing operations before income taxes
 and discontinued operations                              3,477      4,538
Provision for income taxes                                1,130      2,317
                                                      ---------  ---------
Income from continuing operations before discontinued
 operations                                               2,347      2,221
Discontinued Operations:
  Loss from discontinued operations, net of income
   taxes (3) (4) (5)                                       (604)       (11)
  Loss on disposal of discontinued operations, net of
   income taxes (5)                                           -        (34)
                                                      ---------  ---------
Net income available to common stockholders           $   1,743  $   2,176
                                                      =========  =========
Common stock and common stock equivalent shares
 outstanding, assuming full dilution                     25,442     25,683
                                                      =========  =========
Net income per common share                           $    0.07  $    0.08
                                                      =========  =========
                                                      ---------  ---------
EBITDA (6)                                            $  33,754  $  35,022
                                                      =========  =========
               CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES
                  CONDENSED CONSOLIDATED BALANCE SHEETS
                                Unaudited
                              (In thousands)
                                                        April 30,  July 31,
                         ASSETS                            2008      2008
                                                        --------- ---------
CURRENT ASSETS:
  Cash and cash equivalents                             $   2,814 $   2,785
  Restricted cash                                              95        95
  Accounts receivable - trade, net of allowance for
   doubtful accounts                                       62,233    70,848
  Other current assets                                     30,343    36,234
                                                        --------- ---------
Total current assets                                       95,485   109,962
Property, plant and equipment, net of accumulated
 depreciation                                             488,028   494,255
Goodwill                                                  179,716   179,734
Intangible assets, net                                      2,608     2,509
Restricted cash                                            13,563    13,608
Investments in unconsolidated entities                     44,617    43,868
Other non-current assets                                   12,070    11,453
                                                        --------- ---------
Total assets                                            $ 836,087 $ 855,389
                                                        ========= =========
           LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
  Current maturities of long-term debt                  $   2,758 $   1,777
  Accounts payable                                         51,731    54,858
  Other accrued liabilities                                58,335    56,446
                                                        --------- ---------
Total current liabilities                                 112,824   113,081
Long-term debt, less current maturities                   559,227   561,787
Financing lease obligations                                     -     3,963
Other long-term liabilities                                39,354    47,659
Stockholders' equity                                      124,682   128,899
                                                        --------- ---------
Total liabilities and stockholders' equity              $ 836,087 $ 855,389
                                                        ========= =========
               CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES
              CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                Unaudited
                              (In thousands)
                                                        Three Months Ended
                                                        ------------------
                                                        July 31,  July 31,
                                                          2007      2008
                                                        --------  --------
Cash Flows from Operating Activities:
Net income                                              $  1,743  $  2,176
Loss from discontinued operations, net                       604        11
Loss on disposal of discontinued operations, net               -        34
Adjustments to reconcile net income to net cash
 provided by operating activities -
  Gain on sale of equipment                                 (241)     (284)
  Depreciation and amortization                           19,908    19,470
  Depletion of landfill operating lease obligations        1,857     1,723
  Income from assets under contractual obligation           (738)      (89)
  Preferred stock dividend                                   925         -
  Amortization of premium on senior notes                   (151)     (164)
  Maine Energy settlement                                 (2,142)        -
  Loss from equity method investments                      2,151     1,129
  Stock-based compensation                                   216       389
  Excess tax benefit on the exercise of stock options          -       (31)
  Deferred income taxes                                      856     2,435
  Changes in assets and liabilities, net of
   effects of acquisitions and divestitures               (4,756)   (7,012)
                                                        --------  --------
                                                          17,885    17,566
                                                        --------  --------
    Net Cash Provided by Operating Activities             20,232    19,787
                                                        --------  --------
Cash Flows from Investing Activities:
  Acquisitions, net of cash acquired                         (10)      (70)
  Additions to property, plant and
   equipment - growth                                     (6,630)   (4,723)
             - maintenance                               (15,718)  (17,705)
  Payments on landfill operating lease contracts            (474)     (452)
  Proceeds from divestitures                                   -       670
  Other                                                    1,534       637
                                                        --------  --------
    Net Cash Used In Investing Activities                (21,298)  (21,643)
                                                        --------  --------
Cash Flows from Financing Activities:
  Proceeds from long-term borrowings                     112,075    22,700
  Principal payments on long-term debt                  (118,321)  (21,447)
  Proceeds from exercise of stock options                    165       496
  Excess tax benefit on the exercise of stock options          -        31
                                                        --------  --------
    Net Cash Provided by (Used in) Financing Activities   (6,081)    1,780
                                                        --------  --------
Cash Provided by (Used in) Discontinued Operations          (838)       47
                                                        --------  --------
Net decrease in cash and cash equivalents                 (7,985)      (29)
Cash and cash equivalents, beginning of period            12,363     2,814
                                                        --------  --------
Cash and cash equivalents, end of period                $  4,378  $  2,785
                                                        ========  ========
               CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                Unaudited
                              (In thousands)
Note 1:     During the second quarter of fiscal year 2008, the Company
began recording income from assets under contractual obligations as a
component of cost of operations where previously this income had been
recorded as other income.  This resulted in income reclassified amounting
to $738 for the three months ended July 31, 2007.
Note 2:      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 July 31, 2007.  Consistent with this
presentation, the Company recorded the Series A preferred dividend as
interest expense in the three months ended July 31, 2007.  The Series A
preferred was redeemed effective August 11, 2007 at an aggregate redemption
price of $75,057.
Note 3:     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
months ended July 31, 2007.  For the three months ended July 31, 2007, the
Company recorded a loss from discontinued operations (net of tax) of
($538).
Note 4:     The Company terminated its operation of MTS Environmental, a
soils processing operation in the quarter ended April 30, 2008.  The
transaction required discontinued operations treatment under SFAS No. 144,
therefore the operating results of this operation have been reclassified
from continuing to discontinued operations for the three months ended July
31, 2007.  For the three months ended July 31, 2007, the Company recorded a
loss from discontinued operations (net of tax) of ($171).
Note 5:     The Company divested its FCR Greenville operation in the
quarter ended July 31, 2008.  The transaction required discontinued
operations treatment under SFAS No. 144, therefore the operating results of
this operation have been reclassified from continuing to discontinued
operations for the three months ended July 31, 2007.  For the three months
ended July 31, 2007 and 2008, the Company recorded a gain /(loss) from
discontinued operations (net of tax) of $105 and ($11), respectively.  For
the three months ended July 31, 2008, the company recorded a loss on
disposal of discontinued operations (net of tax) of ($34).
Note 6:    Return on Net Assets, (RONA), is defined as twelve months of
operating income (excluding all unusual or non-recurring items) divided by
the average for the five quarter-ends, commencing on the day preceding such
twelve-month period, of the sum of working capital (net of cash) plus the
net book value of property, plant and equipment plus goodwill and net
intangible assets.
Note 7:     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 (EBITDA), 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 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. 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 EBITDA to Net Cash Provided by Operating
Activities:
                                                        Three Months Ended
                                                        ------------------
                                                        July 31,  July 31,
                                                          2007      2008
                                                        --------  --------
Net Cash Provided by Operating Activities               $ 20,232  $ 19,787
Changes in assets and liabilities, net of effects
 of acquisitions and divestitures                          4,756     7,012
Deferred income taxes                                       (856)   (2,435)
Stock-based compensation                                    (216)     (389)
Excess tax benefit on the exercise of stock options            -        31
Provision for income taxes                                 1,130     2,317
Interest expense, net                                     10,615     9,973
Preferred stock dividend                                    (925)        -
Amortization of premium on senior notes                      151       164
Depletion of landfill operating lease obligations         (1,857)   (1,723)
Income from assets under contractual obligation              738        89
Gain on sale of equipment                                    241       284
Other income, net                                           (255)      (88)
                                                        --------  --------
EBITDA                                                  $ 33,754  $ 35,022
                                                        ========  ========
               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
                                                        ------------------
                                                        July 31,  July 31,
                                                          2007      2008
                                                        --------  --------
EBITDA                                                  $ 33,754  $ 35,022
Add (deduct):         Cash interest                       (4,683)   (5,845)
                      Capital expenditures               (22,348)  (22,428)
                      Cash taxes                            (311)     (245)
                      Depletion of landfill operating
                       lease obligations                   1,857     1,723
                      Change in working capital,
                       adjusted for non-cash items        (7,433)   (9,977)
                                                        --------  --------
FREE CASH FLOW                                               836    (1,750)
Add (deduct):        Capital expenditures                 22,348    22,428
                     Other                                (2,952)     (891)
                                                        --------  --------
Net Cash Provided by Operating Activities               $ 20,232  $ 19,787
                                                        ========  ========
               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
                                                             July 31,
                                                        -------------------
                                                          2007      2008
                                                        --------- ---------
Collection                                              $  69,155 $  71,327
Landfill / disposal facilities                             29,202    29,044
Transfer                                                    7,346     9,203
Recycling                                                  42,823    48,330
                                                        --------- ---------
Total revenues                                          $ 148,526 $ 157,904
                                                        ========= =========
Components of revenue growth for the three months ended July 31, 2008
compared to the three months ended July 31, 2007:
                                                               Percentage
                                                               -----------
Solid Waste Operations (1) Price                                       2.8%
                           Volume                                     -1.5%
                           Commodity price and volume                  0.9%
                                                               -----------
Total growth - Solid Waste Operations                                  2.2%
                                                               ===========
FCR Operations (1)         Price                                      12.0%
                           Volume                                      8.3%
                                                               -----------
Total growth - FCR Operations                                         20.3%
                                                               ===========
Rollover effect of acquisitions (2)                                    0.7%
Total revenue growth (2)                                               6.3%
(1) - Calculated as a percentage of segment revenues.
(2) - Calculated as a percentage of total revenues.
Solid Waste Internalization Rates by Region:
                                               Three Months Ended July 31,
                                               --------------------------
                                               2007 (1)            2008
                                               --------          --------
North Eastern region                             55.8%             64.3%
South Eastern region                             20.3%             34.5%
Central region                                   75.2%             80.4%
Western region                                   61.0%             61.8%
Solid Waste internalization                      55.6%             61.9%
(1) Internalization rates for the three months ended July 31, 2007 have
been revised to exclude the activity associated with Buffalo Hauling and
Transfer as well as MTS Environmental. The Company divested the Buffalo
operations during the quarter ended October 31, 2007. The Company
terminated operations at MTS Environmental during the quarter ended April
30, 2008. The South Eastern region prior year amounts have also been
revised.
               CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES
                         SUPPLEMENTAL DATA TABLES
                                (Unaudited)
                              (In thousands)
US GreenFiber Financial Statistics (as reported):
                                                        Three Months Ended
                                                             July 31,
                                                        ------------------
                                                          2007      2008
                                                        --------  --------
Revenues                                                $ 33,499  $ 30,233
Net loss                                                  (3,593)   (2,258)
Cash flow from operations                                  2,149     2,678
Net working capital changes                                2,898     2,002
EBITDA                                                  $   (749) $    676
As a percentage of revenue:
Net loss                                                   -10.7%     -7.5%
EBITDA                                                      -2.2%      2.2%
Components of Growth versus Maintenance Capital Expenditures (1):
                                                         Three Months Ended
                                                               July 31,
                                                          -----------------
                                                            2007     2008
                                                          -------- --------
Growth Capital Expenditures:
 Landfill Development                                     $  5,124 $  3,819
 MRF Equipment Upgrades                                        134      454
 Other                                                       1,372      450
                                                          -------- --------
Total Growth Capital Expenditures                            6,630    4,723
Maintenance Capital Expenditures:
 Vehicles, Machinery / Equipment and Containers              4,666    5,307
 Landfill Construction & Equipment                           9,356   11,453
 Facilities                                                  1,313      754
 Other                                                         383      191
                                                          -------- --------
Total Maintenance Capital Expenditures                      15,718   17,705
                                                          -------- --------
                                                          -------- --------
Total Capital Expenditures                                $ 22,348 $ 22,428
                                                          ======== ========
(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.
               CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES
                         SUPPLEMENTAL DATA TABLES
                                (Unaudited)
                (In thousands, except for per share data)
The Company is providing below the quarterly Consolidated Statements of
Operations for fiscal year 2008 reflecting reclassified amounts associated
with income from assets under contractual obligations as well as
discontinued operations (see Notes to Consolidated Financial Statements).
                                           Three Months Ended
                              --------------------------------------------
                               July 31,  October 31, January 31,  April 30,
                                 2007       2007        2008       2008
                              ---------  ----------  ----------  ---------
Revenues                      $ 148,526  $  150,483  $  140,879  $ 139,628
Operating expenses:
 Cost of operations              96,903      95,621      96,156     94,329
 General and administration      17,869      18,898      18,285     19,132
 Depreciation and
  amortization                   19,908      20,136      19,026     18,699
 Hardwick impairment and
  closing charge                      -           -           -      1,400
 Development project charges          -           -           -        534
                              ---------  ----------  ----------  ---------
                                134,680     134,655     133,467    134,094
                              ---------  ----------  ----------  ---------
Operating income                 13,846      15,828       7,412      5,534
Other expense/(income), net:
Interest expense, net            10,615      10,785      10,448      9,658
Loss from equity method
 investments                      2,151       1,487         907      1,532
Other (income) loss              (2,397)         35         (56)      (273)
                              ---------  ----------  ----------  ---------
                                 10,369      12,307      11,299     10,917
                              ---------  ----------  ----------  ---------
(Loss) income from continuing
 operations before income
 taxes and discontinued
 operations                       3,477       3,521      (3,887)    (5,383)
Provision (benefit) for
 income taxes                     1,130        (416)        576        456
                              ---------  ----------  ----------  ---------
(Loss) income from continuing
 operations before
 discontinued operations          2,347       3,937      (4,463)    (5,839)
Discontinued Operations:
  Loss from discontinued
   operations, net of income
    taxes                          (604)       (670)       (141)      (289)
  Loss on disposal of
   discontinued operations,
   net of income taxes                -        (437)          -     (1,675)
                              ---------  ----------  ----------  ---------
Net (loss) income available
 to common stockholders       $   1,743  $    2,830  $   (4,604) $  (7,803)
                              =========  ==========  ==========  =========
Common stock and common stock
 equivalent shares outstanding,
 assuming full dilution          25,442      25,652      25,415     25,443
                              =========  ==========  ==========  =========
Net (loss) income per common
 share                        $    0.07  $     0.11  $    (0.18) $   (0.31)
                              =========  ==========  ==========  =========
                              ---------  ----------  ----------  ---------
EBITDA                        $  33,754  $   35,964  $   26,438  $  26,167
                              =========  ==========  ==========  =========

Contact:
Ned Coletta
director of investor relations
(802) 772-2239


SOURCE: Casella Waste Systems, Inc.



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