RUTLAND, Vt., June 19 /PRNewswire-FirstCall/ -- Casella Waste Systems, Inc. , a regional, non-hazardous solid waste services company, today reported financial results for the fourth quarter and its 2006 fiscal year, and gave guidance on its expected performance for its 2007 fiscal year.
Fourth Quarter Results
For the quarter ended April 30, 2006, the company reported revenues of $126.5 million, up $10.7 million or 9.2 percent over the same quarter last year. The company's earnings per common share were $0.07, versus a net loss per share of $0.05 in the same quarter last year. The earnings per share (EPS) result reflects a decrease in the company's tax rate versus the prior quarter, mainly due to a reversal of valuation allowances. The favorable impact to EPS of this change was $0.05 per share. Operating income for the quarter was $9.6 million, versus $8.5 million in the fourth quarter last year, an increase of 12.9 percent. Cash provided by operating activities in the quarter was $12.6 million. The company's earnings before interest, taxes, depreciation and amortization (EBITDA*) were $24.6 million, a seven percent increase over the same quarter last year.
Fiscal 2006 Results
For the fiscal year ended April 30, 2006, the company reported revenues of $525.9 million, up $44.0 million or 9.1 percent over fiscal year 2005. The fiscal year earnings per common share were $0.30 versus $0.16 in the previous fiscal year. Operating income for the year was $42.3 million versus $41.4 million for fiscal year 2005. The company's earnings before interest, taxes, depreciation and amortization (EBITDA) for the twelve-month period were $108.3 million.
The company also announced that cash provided by operating activities for fiscal year 2006 was $75.1 million, and that the company's free cash flow* for fiscal year 2006 was ($40.3) million; as of April 30, 2006, the company had cash on hand of $7.5 million, and had an outstanding total debt level of $451.1 million.
"We continue to make progress on our short- and long-term strategic development and operational goals," John W. Casella, chairman and CEO of Casella Waste Systems, said. "All areas of our business are benefiting from a strong focus on continuous improvement, innovation and operational excellence."
"Our pricing environment is strong," Casella said. "While volumes have reflected a traditional seasonal uptick, however, they are not as strong as we would have expected."
Comparison of Fiscal 2006 and 2005
Revenues from acquired businesses accounted for $18.8 million of the $44.0 million increase year over year; primarily, the revenue increase came from the acquisition of Chemung County landfill; Blue Mountain Recycling; the Worcester, Mass. landfill project; and the Colebrook landfill project, offset by a $1.2 million reduction attributable to the transfer of a Canadian recycling operation. Solid waste revenues increased $24.3 million. Recycling revenues were up $2.1 million, mainly from increased volumes.
Cost of operations increased $37.6 million to $348.5 million in fiscal year 2006 from $310.9 million in fiscal year 2005. Cost of operations as a percentage of revenues increased to 66.3 percent for the fiscal year 2006, from 64.5 percent in the prior year. The percent increase in cost of operations expense for fiscal year 2006 is primarily due to higher fuel and transportation costs, and the higher than expected costs associated with the wood chip obligation at the Juniper Ridge Landfill (West Old Town).
General and administration expenses increased $5.4 million to $69.1 million in fiscal year 2006 from $63.7 million in fiscal year 2005. General and administration expenses as a percentage of revenues remained unchanged in fiscal year 2006 compared to fiscal year 2005.
*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.
2006 Highlights
"Our continued progress in developing disposal capacity was certainly a highlight of the year once again," Casella said. "We did face some headwinds, however; specifically, the timing of our Colebrook, N.H. and Worcester, Mass. landfill projects. Colebrook is now operating at full capacity, and Worcester is ramping up.
"Looking at fiscal year 2006 overall:
* "our internalization rate rose 210 basis points year-over-year to 56.6
percent;
* "total company-wide permitted and permittable disposal capacity is now
at 86.7 million tons, up from 29.6 million tons at the end of fiscal
2003;
* "company-wide annual disposal in our landfills was 2.9 million tons in
fiscal 2006, up from just 1.8 million tons in fiscal 2004;
* "we acquired 15 solid waste collection and recycling companies in fiscal
2006; and
* "EBITDA* at our Greenfiber joint venture grew 64.9 percent. Greenfiber's
cash flow from operations grew 93.3 percent, due to a strong pricing
environment, higher margin products, and our acquisition program."
Fiscal 2007 Outlook
The company also announced its guidance for its fiscal year 2007, which began May 1, 2006.
For the fiscal year 2007, the company believes that its results will be approximately in the following ranges:
* Revenues between $530.0 million and $560.0 million;
* EBITDA* between $115.0 million and $119.0 million;
* Capital expenditures between $108.0 million and $112.0 million; and
* Free cash flow between $(30.0) million and $(22.0) million.
The company said the following assumptions are built into its fiscal year 2007 outlook:
* No material change in the health of the regional economy;
* In the solid waste business, price growth of 3.0 percent; FCR pricing is
projected to decline 2.6 percent; and
* No major acquisitions.
The EBITDA forecast is based on estimated projections of cash provided by operating activities of $80.0 million to $84.0 million, interest expense of approximately $39.5 million, depletion of landfill operating leases of $8.0 million, cash taxes of $2.5 million, and positive changes in other assets and liabilities of $6.0 million. Free cash flow of $(30.0) million to $(22.0) million is based on cash provided by operating activities of $80.0 million to $84.0 million, less estimated maintenance capital expenditures of $64.0 million, growth capital expenditures of $44.0 to $48.0 million, and other balance sheet changes.
Casella Waste Systems, headquartered in Rutland, Vermont, provides solid waste management services consisting of collection, transfer, disposal and recycling services primarily in the eastern United States.
For further information, contact Richard Norris, chief financial officer; 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 Tuesday, June 20, 2006 at 10:00 a.m. ET. Individuals interested in participating in the call should dial (719) 457-2629 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 #4579213) before 11:59 p.m. ET, Tuesday, June 27, 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; 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 and in our form 10-Q for the fiscal quarter ended January 31, 2006.
(tables follow)
CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited
(In thousands, except amounts per share)
Three Months Ended Twelve Months Ended
April 30, April 30, April 30, April 30,
2005 2006 2005 2006
Revenues $115,831 $126,536 $481,964 $525,928
Operating
expenses:
Cost of
operations 76,523 86,049 310,921 348,520
General and
administration 16,290 15,848 63,678 69,144
Depreciation and
amortization 14,568 15,017 65,637 64,589
Deferred costs - - 295 1,329
107,381 116,914 440,531 483,582
Operating income 8,450 9,622 41,433 42,346
Other
expense/(income)
net:
Interest
expense, net 7,814 8,654 29,391 32,014
Income from
equity method
investment (400) (980) (2,883) (5,742)
Loss on debt
extinguishment 1,716 - 1,716 -
Other
(income)/expense
164 (554) 273 (1,985)
9,294 7,120 28,497 24,287
Income (loss)
from continuing
operations
before income
taxes and
discontinued
operations (844) 2,502 12,936 18,059
Provision
(benefit) for
income taxes (411) (50) 5,725 6,955
Income (loss)
from continuing
operations
before
discontinued
operations (433) 2,552 7,211 11,104
Discontinued
Operations:
Income from
discontinued
operations, net
of income taxes - - 140 -
(Loss) income on
disposal of
discontinued
operations, net
of income taxes 69 - (82) -
Net income
(loss) (364) 2,552 7,269 11,104
Preferred stock
dividend 839 870 3,338 3,432
Net income
(loss)
available to
common
stockholders $(1,203) $1,682 $3,931 $7,672
Common stock and
common stock
equivalent
shares
outstanding,
assuming full
dilution 25,408 25,681 25,193 25,368
Net income
(loss) per
common share
before
discontinued
operations $(0.05) $0.07 $0.15 $0.30
Net income
(loss) per
common share $(0.05) $0.07 $0.16 $0.30
EBITDA (1) $23,018 $24,639 $107,365 $108,264
CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
Unaudited
(In thousands)
April 30, April 30,
ASSETS 2005 2006
CURRENT ASSETS:
Cash and cash equivalents $8,578 $7,429
Restricted cash 70 72
Accounts receivable -- trade,
net of allowance
for doubtful accounts 51,726 56,269
Other current assets 9,009 15,204
Total current assets 69,383 78,974
Property, plant and
equipment, net of
accumulated depreciation 412,753 481,284
Goodwill 157,492 171,258
Intangible assets, net 2,711 2,762
Restricted cash 12,124 17,887
Investments in
unconsolidated entities 37,699 44,491
Other non-current assets 20,292 14,455
$712,454 $811,111
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-
term debt $281 $527
Current maturities of
capital lease obligations 632 1,061
Accounts payable 46,107 46,364
Other accrued liabilities 45,734 46,813
Total current liabilities 92,754 94,765
Long-term debt, less current
maturities 378,436 452,720
Capital lease obligations,
less current maturities 1,475 1,747
Other long-term liabilities 33,043 41,959
Series A redeemable,
convertible preferred stock 67,964 70,430
Stockholders' equity 138,782 149,490
$712,454 $811,111
CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited
(In thousands)
Twelve Months Ended
April 30, April 30,
2005 2006
Cash Flows from Operating Activities:
Net income $7,269 $11,104
Adjustments to reconcile
net income to net cash
provided by operating
activities --
Depreciation and
amortization 65,637 64,589
Depletion of landfill
operating lease
obligations 4,785 6,284
Loss on disposal of
discontinued operations,
net 82 -
Income from equity method
investment (2,883) (5,742)
Dividend from equity method
investment 2,000 -
Deferred costs 295 1,329
Loss on debt extinguishment 1,716 -
(Gain) loss on sale of
equipment 372 (105)
Deferred income taxes 5,132 4,984
Changes in assets and
liabilities, net of
effects of acquisitions and
divestitures (1,371) (7,379)
75,765 63,960
Net Cash Provided by
Operating Activities 83,034 75,064
Cash Flows from Investing
Activities:
Acquisitions, net of cash
acquired (9,513) (19,691)
Additions to property,
plant and equipment --
growth (24,723) (47,474)
-- maintenance (55,341) (66,537)
Payments on landfill
operating lease contracts (20,276) (10,539)
Proceeds from divestitures 3,050 -
Other 3,048 (5,977)
Net Cash Used In Investing
Activities (103,755) (150,218)
Cash Flows from Financing
Activities:
Proceeds from long-term
borrowings 318,900 208,997
Principal payments on long-
term debt (296,210) (136,424)
Proceeds from exercise of
stock options (1,398) 1,432
Net Cash Provided by
Financing Activities 21,292 74,005
Net (decrease) increase in
cash and cash equivalents 571 (1,149)
Cash and cash equivalents,
beginning of period 8,007 8,578
Cash and cash equivalents,
end of period $8,578 $7,429
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 Twelve Months Ended
April 30, April 30, April 30, April 30,
2005 2006 2005 2006
Cash Provided by Operating
Activities $20,966 $12,621 $83,034 $75,064
Changes in assets and
liabilities, net of effects
of acquisitions and
divestitures (3,709) 6,234 1,371 7,379
Deferred income taxes (372) (972) (5,132) (4,984)
Provision (benefit) for
income taxes (411) (50) 5,725 6,955
Interest expense, net 7,814 8,654 29,391 32,014
Depletion of landfill
operating lease obligations (1,056) (1,633) (4,785) (6,284)
Dividend from equity method
investments - - (2,000) -
Other expense, net (214) (215) (239) (1,880)
EBITDA $23,018 $24,639 $107,365 $108,264
Following is a reconciliation of Free Cash Flow to Cash Provided by Operating Activities:
Three Months Ended Twelve Months Ended
April 30, April 30,
2006 2006
EBITDA $24,639 $108,264
Add (deduct): Cash interest (13,911) (30,290)
Capital expenditures (25,851) (114,011)
Cash taxes 13 (1,286)
Depletion of landfill
operating lease obligations 1,633 6,284
Change in working capital,
adjusted for non-cash items (1,328) (9,289)
FREE CASH FLOW (14,805) (40,328)
Add (deduct): Capital expenditures 25,851 114,011
Other 1,575 1,381
Cash Provided by Operating Activities $12,621 $75,064
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 Twelve Months Ended
April 30, April 30,
2005 2006 2005 2006
Collection $57,452 $60,552 $237,877 $253,282
Landfill / disposal facilities 18,828 23,874 80,132 97,801
Transfer 9,176 10,119 41,862 44,394
Recycling 30,375 31,991 122,093 130,451
Total revenues $115,831 $126,536 $481,964 $525,928
Components of revenue growth for the three months ended April 30, 2006 compared to the three months ended April 30, 2005:
Percentage
Solid Waste Operations (1) Price 4.3%
Volume 0.4%
Solid waste commodity price and volume -0.2%
Total growth -- Solid Waste
Operations 4.5%
FCR Operations (1) Price -3.5%
Volume 0.1%
Total growth -- Recycling Operations -3.4%
Rollover effect of acquisitions
(as a percentage of total revenue) 5.9%
Divestitures (as a percentage of total revenue) -0.3%
Total revenue growth 9.2%
(1) - Calculated as a percentage of segment revenues.
Solid Waste Internalization Rates by Region:
Three Months Ended Twelve Months
April 30, Ended April 30,
2005 (1) 2006 2005 (1) 2006
North Eastern region 57.2% 59.2% 57.9% 57.8%
South Eastern region 44.4% 38.6% 40.2% 40.4%
Central region 79.6% 79.8% 80.0% 79.2%
Western region 43.5% 50.7% 40.8% 44.2%
Solid waste operations 55.8% 58.8% 54.5% 56.6%
(1) Internalization rates for the Company's South Eastern region
have been revised and restated for the three and twelve months ended
April 30, 2005.
US GreenFiber (50% owned) Financial Statistics:
Three Months Ended Twelve Months Ended
April 30, April 30,
2005 2006 2005 2006
Revenue $32,513 $46,722 $136,409 $178,744
Net Income 800 2,079 5,767 11,714
Cash flow from operations 5,876 16,579 15,101 29,190
Net working capital changes 3,437 12,301 3,478 10,027
EBITDA $2,439 $4,278 $11,623 $19,163
As a percentage of revenue:
Net income 2.5% 4.4% 4.2% 6.6%
EBITDA 7.5% 9.2% 8.5% 10.7%
Breakdown of Growth versus Maintenance Capital Expenditures (1):
Three Months Ended Twelve Months Ended
April 30, 2006 April 30, 2006
Growth Capital Expenditures:
Landfill Development $5,868 $33,202
Boston MRF Building - 5,998
MRF Equipment Upgrades 3,290 3,290
Other 1,764 4,984
Total Growth Capital Expenditures 10,922 47,474
Maintenance Capital Expenditures:
Vehicles, Machinery / Equipment
and Containers 2,776 26,396
Landfill Construction & Equipment 9,043 31,812
Facilities 2,220 6,480
Other 890 1,849
Total Maintenance Capital
Expenditures 14,929 66,537
Total Capital Expenditures $25,851 $114,011
(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
