Casella Waste Systems (NASDAQ:CWST)
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RUTLAND, Vt., Sept. 7 /PRNewswire-FirstCall/ -- Casella Waste Systems, Inc. (NASDAQ:CWST), a regional, non-hazardous solid waste services company, today reported financial results for the first quarter of its 2006 fiscal year.
First Quarter Results
For the quarter ended July 31, 2005, the company reported revenues of $132.0 million. The company's net income per common share was $0.09. Operating income for the quarter was $13.1 million. Cash provided by operating activities in the quarter was $22.6 million. The company's earnings before interest, taxes, depreciation and amortization (EBITDA) was $29.2 million*. As of July 31, 2005, the company had cash on hand of $6.8 million, and had an outstanding total debt level of $386.5 million.
Highlights of the Quarter
"Our most significant accomplishment in the first quarter was the 14-0 vote of the Chemung County Legislature to enter into an operating agreement with the company for the operation of the county's Subtitle D landfill," John W. Casella, chairman and chief executive officer, said. "Once again, we've been able to apply our unique public/private partnership model to the successful development of disposal capacity, one of our highest ongoing strategic priorities.
"Our EBITDA* numbers were impacted in the areas of fuel and third-party transportation as volumes increased at our disposal facilities," Casella said.
"Our Central region saw its tonnages impacted by the disruption of business resulting from a fire at our Glens Falls-area transfer station, which was not able to accept any waste for several weeks while it underwent repairs," Casella said. "We were also impacted by expenses surrounding the successful effort to defend our permit at our Wellsboro, Penn. transfer station. The impact from these two events was approximately $825,000, or 2 cents per share."
We also saw increased costs from Sarbannes-Oxley requirements on a year- over-year basis," Casella said.
"On the positive side, we saw healthy price and volume growth both in our solid waste and recycling operations, and realized a nearly one hundred basis point reduction in labor costs as a percent of revenue, the result of our successful efforts in continuous improvement," Casella said.
Company Reaffirms Fiscal Year 2006 Guidance
The company reaffirmed that it believes its results for fiscal year 2006 will be in the following ranges:
-- Revenues between $500.0 million and $520.0 million;
-- EBITDA between $112.0 million and $116.0 million;
-- Non-growth maintenance capital expenditures between $57.0 million and
$61.0 million; facility capital expenditures of $6.0 million; and
landfill development capital expenditures of $32.0 million (in
conjunction with the addition of 52 million tons of total company-wide
disposal capacity since year-end 2003), for a total of expected
capital expenditures between $95.0 million and $99.0 million; and
-- Free cash flow between $(13.0) million and $(9.0) 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, September 8, 2005 at 10:00 a.m. ET. Individuals interested in participating in the call should dial (913) 981-5571 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 #9089324) before 11:59 p.m. ET, Thursday, September 15, 2005, 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
July 31, July 31,
2004 2005
Revenues $123,672 $132,000
Operating expenses:
Cost of operations 78,277 85,587
General and administration 15,515 17,218
Depreciation and amortization 17,223 16,134
111,015 118,939
Operating income 12,657 13,061
Other expense/(income), net:
Interest expense, net 7,088 7,350
Loss from equity method investments 68 70
Other expense 530 51
7,686 7,471
Income from continuing operations
before income taxes and discontinued
operations 4,971 5,590
Provision for income taxes 2,209 2,483
Income from continuing operations
before discontinued operations 2,762 3,107
Income from discontinued operations,
net of income taxes (1) 81 --
Net income 2,843 3,107
Preferred stock dividend 838 850
Net income available to common
stockholders $2,005 $2,257
Common stock and common stock
equivalent shares outstanding,
assuming full dilution 25,092 25,218
Net income per common share before
discontinued operations $0.08 $0.09
Net income per common share $0.08 $0.09
EBITDA (2) $29,880 $29,195
CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
Unaudited
(In thousands)
April 30, July 31,
ASSETS 2005 2005
CURRENT ASSETS:
Cash and cash equivalents $8,578 $6,773
Restricted cash 70 71
Accounts receivable -- trade, net of
allowance for doubtful accounts 51,726 56,642
Other current assets 9,009 8,447
Total current assets 69,383 71,933
Property, plant and equipment, net of
accumulated depreciation 412,753 431,515
Goodwill 157,492 158,264
Intangible assets, net 2,711 2,436
Restricted cash 12,124 12,175
Investments in unconsolidated
entities 37,699 36,928
Other non-current assets 20,292 16,605
$712,454 $729,856
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $281 $315
Current maturities of capital lease
obligations 632 643
Accounts payable 46,107 48,104
Other accrued liabilities 45,734 45,427
Total current liabilities 92,754 94,489
Long-term debt, less current
maturities 378,436 389,580
Capital lease obligations, less
current maturities 1,475 1,310
Other long-term liabilities 33,043 34,508
Series A redeemable, convertible
preferred stock 67,964 68,814
Stockholders' equity 138,782 141,155
$712,454 $729,856
CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited
(In thousands)
Three Months Ended
July 31, July 31,
2004 2005
Cash Flows from Operating
Activities:
Net income $2,843 $3,107
Adjustments to reconcile net income
to net cash provided by operating
activities --
Depreciation and amortization 17,223 16,134
Depletion of landfill operating
lease obligations 1,347 1,428
Loss from equity method investment 68 70
Loss on sale of equipment 276 99
Deferred income taxes 1,755 1,721
Changes in assets and liabilities, net of
effects of acquisitions and divestitures (3,799) 62
16,870 19,514
Net Cash Provided by Operating Activities 19,713 22,621
Cash Flows from Investing Activities:
Acquisitions, net of cash acquired (3,582) (1,044)
Additions to property, plant and
equipment
-- Growth (5,309) (14,941)
-- Maintenance (17,599) (19,675)
Payments on landfill operating lease
contracts (9,363) (428)
Other 767 638
Net Cash Used In Investing Activities (35,086) (35,450)
Cash Flows from Financing Activities:
Proceeds from long-term borrowings 44,850 35,955
Principal payments on long-term debt (34,306) (24,931)
Proceeds from exercise of stock options 240 --
Net Cash Provided by Financing Activities 10,784 11,024
Net decrease in cash and cash
equivalents (4,589) (1,805)
Cash and cash equivalents, beginning of
period 8,007 8,578
Cash and cash equivalents, end of period $3,418 $6,773
CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES
Unaudited
(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 quarter ended July 31, 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 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
July 31, July 31,
2004 2005
Cash Provided by Operating Activities $19,713 $22,621
Changes in assets and liabilities,
net of effects of acquisitions and
divestitures 3,799 (62)
Deferred income taxes (1,755) (1,721)
Provision for income taxes 2,209 2,483
Interest expense, net 7,088 7,350
Depletion of landfill operating lease
obligations (1,347) (1,428)
Other income (expense), net 173 (48)
EBITDA $29,880 $29,195
Following is a reconciliation of Free Cash Flow to Cash Provided by
Operating Activities:
Twelve
Months Ended
April 30,
2005
EBITDA $29,195
Add (deduct): Cash interest (276)
Capital expenditures (34,616)
Cash taxes (528)
Depletion of landfill operating lease
obligations 1,428
Change in working capital, adjusted for
non-cash items (6,795)
FREE CASH FLOW $(11,592)
Add (deduct): Capital expenditures 34,616
Other (403)
Cash Provided by Operating Activities $22,621
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
July 31,
2004 2005
Collection $61,690 $65,267
Landfill / disposal facilities 20,434 23,263
Transfer 11,596 11,649
Recycling 29,952 31,821
Total revenues $123,672 $132,000
Components of revenue growth for the three months ended July 31,
2005 compared to the three months ended July 31, 2004:
Percentage
Solid Waste Operations (1) Price 4.4%
Volume 1.0%
Solid waste commodity price
and volume -0.2%
Total growth -- Solid Waste Operations 5.2%
FCR Operations (1) Price 1.4%
Volume 3.2%
Total growth -- Recycling Operations 4.6%
Rollover effect of acquisitions (as a percentage of total
revenue) 1.5%
Total revenue growth 6.7%
(1) -- Calculated as a percentage of segment revenues.
Solid Waste Internalization Rates by Region:
Three Months Ended
July 31,
2004 2005
North Eastern region 59.4% 60.5%
South Eastern region 51.8% 51.9%
Central region 80.6% 78.2%
Western region 35.0% 41.2%
Solid waste operations 54.7% 56.9%
US GreenFiber Financial Statistics:
Three Months Ended
July 31,
2004 2005
Revenue $28,236 $31,599
Net loss (137) (140)
Cash flow from operations 1,420 (1,867)
Net working capital changes 182 (3,483)
EBITDA $1,238 $1,616
As a percentage of revenue:
Net income -0.5% -0.4%
EBITDA 4.4% 5.1%
DATASOURCE: Casella Waste Systems, Inc.
CONTACT: Joseph Fusco, Vice President of Casella Waste Systems, Inc.,
+1-802-775-0325
Web site: http://www.casella.com/