RUTLAND, Vt., March 8 /PRNewswire-FirstCall/ -- Casella Waste Systems, Inc. , a regional, non-hazardous solid waste services company, today reported financial results for the third quarter and first nine months of its 2006 fiscal year.
Third Quarter Results
For the quarter ended January 31, 2006, the company reported revenues of $130.6 million, up $14.5 million, or 12.5 percent over the same quarter last year. The company's net income per common share was $0.02, level with the same quarter last year. Operating income for the quarter was $5.9 million; the company's three-month results include $1.3 million write off of deferred costs related to expenses associated with the Templeton, Mass. landfill contract; the company wrote off these costs because it now believes a significant amount of time will lapse before the project is restarted. Cash provided by operating activities in the quarter was $25.8 million, down $0.4 million compared to the same quarter last year. The company's earnings before interest, taxes, depreciation and amortization (EBITDA) were $23.8 million*, essentially unchanged from the same quarter last year.
Also included in the quarter's results under "other (income)/expense" is a gain of $1.2 million from the sale of Sterling Construction, Inc. (formerly Oakhurst) warrants.
For the nine months ended January 31, 2006, the company reported revenues of $399.4 million. The company's net income per common share was $0.24. Operating income for the nine month period was $32.7 million. Cash provided by operating activities for the period was $62.4 million. The company's earnings before interest, taxes, depreciation and amortization (EBITDA) were $83.6 million*.
Highlights of the Quarter
"We continue to make significant, focused investments in building a financially and environmentally exceptional company -- investing in areas such as our people and our long-term disposal and processing capabilities," John W. Casella, chairman and chief executive officer, said.
"Our internal growth remains strong, and our internalization rate continues to climb as a result of added disposal capacity," Casella said.
"Our results are essentially level with last year's third quarter, due to a later than expected startup of significant closure projects at Colebrook, N.H. and Worcester, Mass.," Casella said. "These closure projects were assumed to offset the loss of income from the Brockton, Mass. closure project as it reached the end of its useful life. The combined impact on operating income of these three projects -- Colebrook, Worcester, and Brockton -- in the quarter was $0.9 million against budget," Casella said. "Colebrook and Worcester are now operational and are beginning to ramp up.
"While Colebrook's and Worcester's late start resulted in an adverse impact, during the quarter we were able to develop additional disposal capacity at both of these sites," Casella said.
The company said that the combined impact on operating income from the Colebrook, Worcester, and Brockton projects for the nine months ended January 31, 2006 was $2.2 million against budget.
"Higher transportation costs also affected our efforts at margin improvement," Casella said.
The company said it also believes its EBITDA* for fiscal year 2006 will be between $108 million and $110 million.
*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.
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, March 9, 2006 at 10:00 a.m. ET. Individuals interested in participating in the call should dial 719-457-2680 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 #1321654) before 11:59 p.m. ET, Thursday, March 16, 2006, 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; increasing fuel costs may affect our cost of operations; 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, 2005.
(tables follow)
CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited
(In thousands, except amounts per share)
Three Months Ended Nine Months Ended
January 31,January 31, January 31, January 31,
2005 2006 2005 2006
Revenues $116,080 $130,597 $366,133 $399,392
Operating expenses:
Cost of operations 76,736 88,841 234,399 262,471
General and
administration 15,503 17,946 47,389 53,296
Depreciation and
amortization 16,271 16,525 51,068 49,572
Deferred costs - 1,329 295 1,329
108,510 124,641 333,151 366,668
Operating income 7,570 5,956 32,982 32,724
Other expense/(income), net:
Interest expense, net 7,249 8,188 21,577 23,359
Income from equity
method investment (1,556) (3,319) (2,483) (4,762)
Other (income)/expense (642) (1,348) 109 (1,431)
5,051 3,521 19,203 17,166
Income from continuing
operations before income
taxes and
discontinued operations 2,519 2,435 13,779 15,558
Provision for income
taxes 1,122 1,148 6,136 7,005
Income from continuing
operations before
discontinued operations 1,397 1,287 7,643 8,553
Discontinued Operations:
Income from discontinued
operations,
net of income taxes - - 140 -
Loss on disposal
of discontinued operations,
net of income taxes - - (150) -
Net income 1,397 1,287 7,633 8,553
Preferred stock dividend 829 859 2,499 2,563
Net income available
to common stockholders $568 $428 $5,134 $5,990
Common stock and common
stock equivalent shares
outstanding,
assuming full dilution 25,380 25,413 25,125 25,296
Net income per common
share before
discontinued operations $0.02 $0.02 $0.20 $0.24
Net income per
common share $0.02 $0.02 $0.20 $0.24
EBITDA (1) $23,841 $23,810 $84,345 $83,625
CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
Unaudited
(In thousands)
April 30, January 31,
ASSETS 2005 2006
CURRENT ASSETS:
Cash and cash equivalents $8,578 $10,025
Restricted cash 70 71
Accounts receivable -- trade, net of allowance
for doubtful accounts 51,726 53,105
Other current assets 9,009 14,835
Total current assets 69,383 78,036
Property, plant and equipment,
net of accumulated depreciation 412,753 469,730
Goodwill 157,492 171,127
Intangible assets, net 2,711 3,095
Restricted cash 12,124 21,354
Investments in unconsolidated entities 37,699 43,702
Other non-current assets 20,292 15,371
$712,454 $802,415
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $281 $521
Current maturities of capital lease obligations 632 1,052
Accounts payable 46,107 44,023
Other accrued liabilities 45,734 50,215
Total current liabilities 92,754 95,811
Long-term debt, less current maturities 378,436 443,768
Capital lease obligations, less current maturities 1,475 2,007
Other long-term liabilities 33,043 44,145
Series A redeemable, convertible preferred stock 67,964 69,561
Stockholders' equity 138,782 147,123
$712,454 $802,415
CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited
(In thousands)
Nine Months Ended
January 31, January 31,
2005 2006
Cash Flows from Operating Activities:
Net income $7,633 $8,553
Adjustments to reconcile net income
to net cash provided by operating activities --
Depreciation and amortization 51,068 49,572
Depletion of landfill operating lease
obligations 3,729 4,651
Loss on disposal of discontinued operations, net 150 -
Income from equity method investment (2,483) (4,762)
Dividend from equity method investment 2,000 -
Deferred costs 295 1,329
Loss (gain) on sale of equipment (4) 233
Deferred income taxes 4,760 4,012
Changes in assets and liabilities, net of
effects of acquisitions and divestitures (5,080) (1,145)
54,435 53,890
Net Cash Provided by Operating Activities 62,068 62,443
Cash Flows from Investing Activities:
Acquisitions, net of cash acquired (6,486) (19,226)
Additions to property, plant and equipment
-- growth (12,935) (36,552)
-- maintenance (43,219) (51,608)
Payments on landfill operating lease
contracts (19,790) (8,450)
Proceeds from divestitures 3,050 -
Other 1,839 (1,463)
Net Cash Used In Investing Activities (77,541) (117,299)
Cash Flows from Financing Activities:
Proceeds from long-term borrowings 120,350 159,733
Principal payments on long-term debt (107,145) (104,581)
Proceeds from exercise of stock options 1,622 1,151
Net Cash Provided by Financing Activities 14,827 56,303
Net increase (decrease) in cash and cash
equivalents (646) 1,447
Cash and cash equivalents, beginning of period 8,007 8,578
Cash and cash equivalents, end of period $7,361 $10,025
CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES
Unaudited
(In thousands)
Note 1: Non -- GAAP Financial Measures
In addition to disclosing financial results prepared in accordance with Generally Accepted Accounting Principles (GAAP), we also disclose EBITDA (earnings before interest, taxes, depreciation and amortization, deferred costs and impairment charge) 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 Nine Months Ended
January 31, January 31, January 31, January 31,
2005 2006 2005 2006
Cash Provided by Operating
Activities $26,222 $25,839 $62,068 $62,443
Changes in assets and
liabilities, net of effects
of acquisitions and
divestitures (6,028) (8,128) 5,080 1,145
Deferred income taxes (1,059) (19) (4,760) (4,012)
Income from discontinued
operations - - (140) -
Provision for income taxes 1,122 1,148 6,136 7,005
Interest expense, net 7,249 8,188 21,577 23,359
Depletion of landfill
operating lease obligations (1,140) (1,677) (3,729) (4,651)
Dividend from equity method
investments (2,000) - (2,000)
Other (expense) income, net (525) (1,541) 113 (1,664)
EBITDA $23,841 $23,810 $84,345 $83,625
Following is a reconciliation of Free Cash Flow to Cash Provided by
Operating Activities:
Three Months EndedNine Months Ended
January 31, 2006 January 31, 2006
EBITDA $23,810 $83,625
Add (deduct): Cash interest (3,557) (16,379)
Capital expenditures (23,261) (88,160)
Cash taxes (240) (1,299)
Depletion of landfill
operating lease obligations 1,677 4,651
Change in working capital, adjusted
for non-cash items 2,933 (7,961)
FREE CASH FLOW 1,362 (25,523)
Add (deduct): Capital expenditures 23,261 88,160
Other 1,216 (194)
Cash Provided by Operating
Activities $25,839 $62,443
CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES
SUPPLEMENTAL DATA TABLES
(Unaudited)
(In thousands)
Amounts of the Company's total revenue attributable to services
provided are as follows:
Three Months Ended Nine Months Ended
January 31, January 31,
2005 2006 2005 2006
Collection $56,578 $61,310 $180,424 $192,729
Landfill / disposal facilities 18,779 24,167 61,304 73,928
Transfer 9,570 10,713 32,686 34,275
Recycling 31,153 34,407 91,719 98,460
Total revenues $116,080 $130,597 $366,133 $399,392
Components of revenue growth for the three months ended January 31,
2006 compared to the three months ended January 31, 2005:
Percentage
Solid Waste Operations (1) Price 5.5%
Volume 2.3%
Solid waste commodity price and
volume -0.1%
Total growth -- Solid Waste Operations 7.7%
FCR Operations (1) Price -0.7%
Volume 4.5%
Total growth -- Recycling Operations 3.8%
Rollover effect of acquisitions (as a
percentage of total revenue) 5.2%
Divestitures (as a percentage of total revenue) -0.3%
Total revenue growth 12.5%
(1) -- Calculated as a percentage of segment revenues.
Solid Waste Internalization Rates by Region:
Three Months Ended Nine Months Ended
January 31, January 31,
2005 (1) 2006 2005 (1) 2006
North Eastern region 55.9% 56.8% 58.1% 57.5%
South Eastern region 36.1% 39.6% 38.9% 40.9%
Central region 79.8% 79.7% 80.1% 79.0%
Western region 44.4% 44.1% 40.0% 42.4%
Solid waste operations 54.6% 57.0% 54.2% 56.0%
(1) Internalization rates for the Company's South Eastern region have
been revised and restated for the three and nine months ended
January 31, 2005.
US GreenFiber (50% owned) Financial Statistics:
Three Months Ended Nine Months Ended
January 31, January 31,
2005 2006 2005 2006
Revenue $40,023 $57,484 $103,896 $132,022
Net Income 3,112 6,638 4,966 9,524
Cash flow from operations 2,956 1,980 9,225 11,945
Net working capital changes (1,618) (6,544) 46 (2,948)
EBITDA $4,574 $8,524 $9,179 $14,893
As a percentage of revenue:
Net income 7.8% 11.5% 4.8% 7.2%
EBITDA 11.4% 14.8% 8.8% 11.3%
Breakdown of Growth versus Maintenance Capital Expenditures (1):
Three Months Ended Nine Months Ended
January 31, 2006 January 31, 2006
Growth Capital Expenditures:
Landfill Development $8,733 $27,334
Boston MRF Building - 5,998
Other 1,940 3,220
Total Growth Capital
Expenditures 10,673 36,552
Maintenance Capital
Expenditures:
Vehicles, Machinery / Equipment
and Containers 2,119 23,620
Landfill Construction &
Equipment 8,728 22,769
Facilities 1,209 4,260
Other 532 959
Total Maintenance Capital
Expenditures 12,588 51,608
Total Capital Expenditures $23,261 $88,160
(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
