SECURITIES AND EXCHANGE COMMISSION

WASHINGTON D.C. 20549

 


 

FORM 8-K

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

Date of Report (Date of earliest event reported): December 8, 2004

 

Casella Waste Systems, Inc.

(Exact Name of Registrant as Specified in Charter)

 

Delaware

 

000-23211

 

03-0338873

(State or Other Jurisdiction of Incorporation)

 

(Commission File Number)

 

(I.R.S. Employer Identification No.)

 

 

 

 

 

25 Greens Hill Lane
Rutland, Vermont

 

05701

(Address of Principal Executive Offices)

 

(Zip Code)

 

Registrant’s telephone number, including area code: (802) 775-0325

 

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

     o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

     o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

     o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

     o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 



 

 

Item 2.02.  Results of Operations and Financial Condition.

 

On December 8, 2004, Casella Waste Systems, Inc. announced its financial results for the second quarter of fiscal 2005, ended October 31, 2004.  The full text of the press release issued in connection with the announcement is attached as Exhibit 99.1 to this Current Report on Form 8-K.

 

The information in this Form 8-K and the Exhibit attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such a filing.

 

Item 9.01.  Financial Statements and Exhibits

 

                (c)           Exhibits

 

                                The following exhibit relating to Item 2.02 shall be deemed to be furnished, and not filed:

 

                                99.1         Press release dated December 8, 2004.

 

 

1



 

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

Date: December 8, 2004.

CASELLA WASTE SYSTEMS, INC.

 

 

 

By:

/s/ Richard A. Norris

 

 

Richard A. Norris

 

 

Chief Financial Officer

 

 

2



 

Exhibit Index

 

Exhibit No.

 

Description

99.1

 

Press release dated December 8, 2004.

 


 

Exhibit 99.1

 

FOR IMMEDIATE RELEASE

 

CASELLA WASTE SYSTEMS, INC. ANNOUNCES SECOND QUARTER FISCAL YEAR 2005 RESULTS

 

RUTLAND, VERMONT (December 8, 2004)—Casella Waste Systems, Inc. (NASDAQ: CWST), a regional, non-hazardous solid waste services company, today reported financial results for the second quarter of its 2005 fiscal year.

 

Second Quarter Results

 

For the quarter ended October 31, 2004, the company reported revenues of $126.4 million. The company’s net income per common share after discontinued operations was $0.10. Operating income for the quarter was $12.8 million. Cash provided by operating activities in the quarter was $16.1 million. The company’s earnings before interest, taxes, depreciation and amortization (EBITDA) was $30.6 million*. As of October 31, 2004, the company had cash on hand of $4.8 million, and had an outstanding total debt level of $379.0 million.

 

For the six months ended October 31, 2004, the company reported revenues of $250.1 million. The company’s net income per common share was $0.18. Operating income for the period was $25.4 million. The company’s earnings before interest, taxes, depreciation and amortization (EBITDA), was $60.5 million*, and cash provided by operating activities was $35.8 million.

 

“Throughout the first half of this fiscal year, all of the components of our strategic focus have worked extremely well and in concert with one another,” John W. Casella, chairman and chief executive officer, said. “Our performance this quarter is a reflection of the sustained benefits of our increased disposal capacity and the continuous improvement of all of our assets and operations.

 

“Our EBITDA margin on a quarter-over-quarter basis rose to 24.2 percent from 22.5 percent in the second quarter of fiscal 2004,” Casella said. “And, due to our landfill activity, our internalization rate improved to 55.0 percent from 52.9 percent a year ago.

 

“In fact, most facets of our business continue to deliver improved performance,” Casella said.

 

“Volumes continue to improve in our core markets,” Casella said, “giving us growing confidence in the overall health of our economy.”

 

*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 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.

 

More detailed financial results are contained in the tables accompanying this release.

 

The company said that its financial results for the quarter ended October 31, 2004 include both income from a discontinued document destruction operation and a loss on the sale of that discontinued operation. Results also include the write-off of deferred costs of about $295,000, resulting from the company’s expectation that its effort to lease the McKean County, Penn. landfill will not be successful, as the county has entered negotiation with another bidder.

 

The company also announced that it filed a shelf registration statement with the Securities and Exchange Commission on December 8, 2004. The company has no current plans to issue securities under that registration statement.

 

Casella Waste Systems, headquartered in Rutland, Vermont, provides collection, transfer, disposal and recycling services primarily in the northeastern United States.

 

For further information, contact Richard Norris, chief financial officer; or Joseph Fusco, vice president; 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 9, 2004 at 10:00 a.m. EST. Individuals interested in participating in the call should dial (719) 457-2653 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 by calling 719-457-0820 (conference code #305666) before 11:59 p.m. ET, Thursday, December 16, 2004, or by visiting the company’s website.

 

 



 

 

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,” “anticipates,” “expects” or words of similar import. Similarly, statements that describe the Company’s future plans, objectives or goals are forward-looking statements. 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 make acquisitions and otherwise develop additional disposal capacity; continuing weakness in general economic 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. Other factors which could materially affect such forward-looking statements can be found in our periodic reports filed with the Securities and Exchange Commission, including certain factors which could affect future operating results detailed in the Management’s Discussion and Analysis section in our Form 10-K for the fiscal year ended April 30, 2004.

 



 

CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

Unaudited

(In thousands, except amounts per share)

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

October 31,

 

October 31,

 

October 31,

 

October 31,

 

 

 

2003

 

2004

 

2003

 

2004

 

Revenues

 

$111,548

 

$126,381

 

$224,996

 

$250,053

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Cost of operations

 

71,641

 

79,385

 

145,647

 

157,663

 

General and administration

 

14,786

 

16,370

 

29,157

 

31,885

 

Depreciation and amortization

 

14,952

 

17,575

 

29,704

 

34,798

 

Deferred costs

 

 

295

 

 

295

 

 

 

101,379

 

113,625

 

204,508

 

224,641

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

10,169

 

12,756

 

20,488

 

25,412

 

 

 

 

 

 

 

 

 

 

 

Other expense/(income), net:

 

 

 

 

 

 

 

 

 

Interest expense, net

 

5,933

 

7,240

 

12,119

 

14,327

 

Income from equity method investments

 

(863

)

(994

)

(898

)

(927

)

Other expense/(income)

 

(221

)

220

 

(380

)

751

 

 

 

 

 

 

 

 

 

 

 

 

 

4,849

 

6,466

 

10,841

 

14,151

 

Income from continuing operations before income taxes, discontinued operations and cumulative effect of change in accounting principle

 

5,320

 

6,290

 

9,647

 

11,261

 

Provision (benefit) for income taxes

 

(384

)

2,805

 

478

 

5,014

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations before discontinued operations and cumulative effect of change in accounting principle

 

5,704

 

3,485

 

9,169

 

6,247

 

 

 

 

 

 

 

 

 

 

 

Discontinued Operations:

 

 

 

 

 

 

 

 

 

Income (loss) from discontinued operations, net of income taxes (1)

 

(10

)

59

 

(4

)

140

 

Loss on disposal of discontinued operations, net of income taxes (1)

 

 

(150

)

 

(150

)

Cumulative effect of change in accounting principle, net of income taxes

 

 

 

2,723

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

5,694

 

3,394

 

11,888

 

6,237

 

 

 

 

 

 

 

 

 

 

 

Preferred stock dividend

 

808

 

832

 

1,606

 

1,670

 

 

 

 

 

 

 

 

 

 

 

Net income available to common stockholders

 

$4,886

 

$2,562

 

$10,282

 

$4,567

 

 

 

 

 

 

 

 

 

 

 

Common stock and common stock equivalent shares outstanding, assuming full dilution

 

29,159

 

25,003

 

24,252

 

25,040

 

 

 

 

 

 

 

 

 

 

 

Net income per common share before discontinued operations and cumulative effect of change in accounting principle

 

$0.20

 

$0.11

 

$0.31

 

$0.18

 

 

 

 

 

 

 

 

 

 

 

Net income per common share

 

$0.20

 

$0.10

 

$0.42

 

$0.18

 

 

 

 

 

 

 

 

 

 

 

EBITDA (2)

 

$25,121

 

$30,626

 

$50,192

 

$60,505

 

 

 



 

 

CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Unaudited
(In thousands)

 

 

 

Six Months Ended

 

 

 

October 31,

 

October 31,

 

 

 

2003

 

2004

 

Cash Flows from Operating Activities:

 

 

 

 

 

Net income

 

$11,888

 

$6,237

 

Adjustments to reconcile net income to net cash provided by operating activities —

 

 

 

 

 

Depreciation and amortization

 

29,704

 

34,798

 

Depletion of landfill operating lease obligations

 

 

2,588

 

Loss on disposal of discontinued operations, net

 

 

150

 

Cumulative effect of change in accounting principle, net

 

(2,723

)

 

Income from equity method investments

 

(898

)

(927

)

Deferred costs

 

 

295

 

Loss (gain) on sale of equipment

 

(189

)

113

 

Deferred income taxes

 

296

 

3,701

 

Changes in assets and liabilities, net of effects of acquisitions and divestitures

 

(15,058

)

(11,109

)

 

 

11,132

 

29,609

 

Net Cash Provided by Operating Activities

 

23,020

 

35,846

 

Cash Flows from Investing Activities:

 

 

 

 

 

Acquisitions, net of cash acquired

 

(6,098

)

(5,040

)

Additions to property, plant and equipment

 

(28,683

)

(42,433

)

Payments on landfill operating lease contracts

 

 

(17,326

)

Proceeds from divestitures

 

 

3,050

 

Advances to unconsolidated entities

 

(1,348

)

 

Other

 

633

 

1,546

 

Net Cash Used In Investing Activities

 

(35,496

)

(60,203

)

Cash Flows from Financing Activities:

 

 

 

 

 

Proceeds from long-term borrowings

 

60,950

 

83,950

 

Principal payments on long-term debt

 

(62,569

)

(63,052

)

Proceeds from exercise of stock options

 

2,037

 

224

 

Net Cash Provided by Financing Activities

 

418

 

21,122

 

Net decrease in cash and cash equivalents

 

(12,058

)

(3,235

)

Cash and cash equivalents, beginning of period

 

15,652

 

8,007

 

Cash and cash equivalents, end of period

 

$3,594

 

$4,772

 

 

 



 

CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES

(In thousands)

 

Note 1:   The company divested the assets of Data Destruction Services, Inc. (Data Destruction) during the quarter ended October 31, 2004.  The transaction required discontinued operations treatment under SFAS No. 144, therefore the operating results of Data Destruction have been reclassified from continuing to discontinued operations for the three and six months ended October 31, 2003 and 2004.

 

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 (EBITDA) and before deferred costs 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 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 Cash Provided by Operating Activities:

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

October 31,

 

October 31,

 

October 31,

 

October 31,

 

 

 

2003

 

2004

 

2003

 

2004

 

Cash Provided by Operating Activities

 

$8,032

 

$16,133

 

$23,020

 

$35,846

 

 

 

 

 

 

 

 

 

 

 

Changes in assets and liabilities, net of effects of acquisitions and divestitures

 

10,561

 

7,310

 

15,058

 

11,109

 

Deferred income taxes

 

1,055

 

(1,946

)

(296

)

(3,701

)

(Income) loss from discontinued operations

 

10

 

(59

)

4

 

(140

)

Provision (benefit) for income taxes

 

(384

)

2,805

 

478

 

5,014

 

Interest expense, net

 

5,933

 

7,240

 

12,119

 

14,327

 

Depletion of landfill operating lease obligations

 

-

 

(1,241

)

-

 

(2,588

)

Other expense/(income), net

 

(86

)

384

 

(191

)

638

 

EBITDA

 

$25,121

 

$30,626

 

$50,192

 

$60,505

 

 

Following is a reconciliation of Free Cash Flow to Cash Provided by Operating Activities:

 

 

 

Three Months Ended

October 31, 2004

 

Six Months Ended

October 31, 2004

 

FREE CASH FLOW:

 

 

 

 

 

EBITDA

 

$30,626

 

$60,505

 

Add (deduct):

 

(11,405

)

(13,940

)

Cash interest

 

 

 

 

 

Net closure / post-closure

 

(3,661

)

(5,117

)

Capital expenditures

 

(19,525

)

(42,433

)

Cash taxes

 

(592

)

(709

)

Depletion of landfill operating lease obligations

 

1,242

 

2,588

 

Change in working capital, adjusted for non-cash items

 

1,132

 

(6,237

)

 

 

 

 

 

 

FREE CASH FLOW

 

$(2,183

)

$(5,343

)

 

 

 

 

 

 

Add (deduct):

 

 

 

 

 

Capital expenditures

 

19,525

 

42,433

 

Other

 

(1,209

)

(1,244

)

Cash Provided by Operating Activities

 

$16,133

 

$35,846