Casella Waste Systems, Inc. Announces Third Quarter Fiscal Year 2007 Results

RUTLAND, Vt., March 7  /PRNewswire-FirstCall/ -- Casella Waste Systems, Inc. (NASDAQ:CWST), a regional, non-hazardous solid waste services company, today reported financial results for the third quarter and first nine months of its 2007 fiscal year.

Third Quarter Results

For the quarter ended January 31, 2007, the company reported revenues of $133.5 million, up $2.9 million, or 2.2 percent over the same quarter last year. The company's net loss per common share was $0.07, compared to net income of $0.02 per share in the same quarter last year. Operating income for the quarter was $8.8 million, up $1.7 million or 23.9 percent over the same quarter last year after deferred costs are excluded from fiscal year 2006 third quarter results.  Cash provided by operating activities in the quarter was $16.4 million, down $9.4 million, or 36.4 percent compared to the same quarter last year. The company's earnings before interest, taxes, depreciation and amortization (EBITDA) were $26.0 million*, up $2.4 million, or 10.2 percent from the same quarter last year. A reduction of $2.0 million in equity income from the company's GreenFiber joint venture, and the expectation that this reduction will continue into the fourth quarter, increased the company's tax rate. These factors accounted for most of the $0.07 loss per common share.

For the nine months ended January 31, 2007, the company reported revenues of $424.8 million. The company's net loss per common share was $0.05. Operating income for the nine month period was $32.1 million. Cash provided by operating activities for the nine month period was $55.8 million. The company's earnings before interest, taxes, depreciation and amortization (EBITDA) were $86.5 million*.

Highlights of the Quarter

"From an operating perspective, this was a solid quarter," John W. Casella, chairman and chief executive officer, said. "We continue to drive efficiencies into, and costs out of, the business, as well as driving pricing improvement across our solid waste business throughout the quarter.

"Regional economic conditions had an impact on our overall results," Casella said. "While landfill pricing is up, volumes remain a challenge. Our GreenFiber unit was adversely impacted by the general slowdown in the housing market and unseasonably warm weather."

The Company also said it believes its EBITDA* for fiscal year 2007 will be between $110.0 million and $113.0 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 and deferred costs (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 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.

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; Ned Coletta, director of investor relations; or Joseph Fusco, vice president; at [phone], 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 8, 2007 at 10:00 a.m. ET. Individuals interested in participating in the call should dial [[phone]] 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 [phone] [(conference code #3642447)] before 11:59 p.m. ET, Thursday, March 15, 2007, 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," "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: prices for our services fluctuate due to reasons beyond our control; the development of landfills and other disposal facilities is inherently risky and is subject to political, regulatory, and other factors; we may be unable to make acquisitions; we may be unable to reduce costs sufficiently to achieve estimated EBITDA and other targets; anticipated revenue may not materialize; 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 risks and uncertainties include, without limitation, those detailed in Item 1A, "Risk Factors" in our Form 10-K for the year ended April 30, 2006. We do not necessarily intend to update publicly any forward-looking statements whether as a result of new information, future events or otherwise.

               CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES
                  CONSOLIDATED STATEMENTS OF OPERATIONS
                                Unaudited
                 (In thousands, except amounts per share)

                Three Months Ended    Nine Months Ended
                 January   January   January    January
                   31,       31,       31,        31,
                   2006      2007      2006      2007

  Revenues       $130,597  $133,492  $399,392  $424,828

  Operating
   expenses:
  Cost of
   operations      89,034    89,800   262,704   279,717
  General and
   administration  17,946    17,653    53,296    58,578
  Depreciation
   and
   amortization    16,525    17,223    49,572    54,457
  Deferred costs    1,329       -       1,329       -
                  124,834   124,676   366,901   392,752

  Operating
   income           5,763     8,816    32,491    32,076

  Other
   expense/(income),
   net:
  Interest
   expense, net     8,188    10,010    23,359    29,324
  Income from
   equity method
   investments     (3,319)     (988)   (4,762)   (1,978)
  Other income     (1,541)      (50)   (1,664)     (351)
                    3,328     8,972    16,933    26,995

  Income (loss)
   before income
   taxes            2,435      (156)   15,558     5,081
  Provision for
   income taxes     1,148       689     7,005     3,590

  Net income
   (loss)           1,287      (845)    8,553     1,491

  Preferred
   stock
   dividend           859       902     2,563     2,674

  Net (loss)
   income
   available to
   common
   stockholders      $428   $(1,747)   $5,990   $(1,183)

  Common stock
   and common
   stock
   equivalent
   shares
   outstanding,
   assuming full
    dilution       25,413    25,273    25,296    25,257

  Net (loss)
   income per
   common share     $0.02    $(0.07)    $0.24    $(0.05)


  EBITDA (1)      $23,617   $26,039   $83,392   $86,533




               CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES
                  CONDENSED CONSOLIDATED BALANCE SHEETS
                                Unaudited
                              (In thousands)

                                           April 30   January 31,
                ASSETS                        2006       2007

  CURRENT ASSETS:
  Cash and cash equivalents                 $7,429     $11,929
  Restricted cash                               72          73
  Accounts receivable - trade, net of
   allowance
    for doubtful accounts                   56,269      57,839
  Other current assets                      15,204      23,395

  Total current assets                      78,974      93,236

  Property, plant and equipment, net of
   accumulated depreciation                481,284     506,797
  Goodwill                                 171,258     172,731
  Intangible assets, net                     2,762       2,276
  Restricted cash                           17,887      12,518
  Investments in unconsolidated
   entities                                 44,491      48,811
  Other non-current assets                  14,455      13,242

                                          $811,111    $849,611

     LIABILITIES AND STOCKHOLDERS'
                EQUITY

  CURRENT LIABILITIES:
  Current maturities of long-term debt        $527      $1,132
  Current maturities of capital lease
   obligations                               1,061       1,096
  Accounts payable                          46,364      41,316
  Other accrued liabilities                 46,813      51,834
  Total current liabilities                 94,765      95,378

  Long-term debt, less current
   maturities                              452,720     479,370
  Capital lease obligations, less
   current maturities                        1,747         925
  Other long-term liabilities               41,959      50,468

  Series A redeemable, convertible
   preferred stock                          70,430      73,104

  Stockholders' equity                     149,490     150,366

                                          $811,111    $849,611





               CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES
             CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                Unaudited
                              (In thousands)

                                                    Nine Months Ended
                                              January 31,       January 31,
                                                  2006              2007
   Cash Flows from Operating
    Activities:
   Net income                                     $8,553            $1,491
   Adjustments to reconcile net income
      to net cash provided by operating
       activities -
   Depreciation and amortization                  49,572            54,457
   Depletion of landfill operating
    lease obligations                              4,651             5,543
   Income from equity method
    investments                                   (4,762)           (1,978)
   Deferred costs                                  1,329                 -
   (Gain) loss on sale of equipment                  233              (591)
   Stock-based compensation                            -               511
   Excess tax benefit on the exercise
    of stock options                                   -              (145)
   Deferred income taxes                           4,012               464
   Changes in assets and liabilities,
    net of
        effects of acquisitions and
         divestitures                             (1,145)           (3,949)
                                                  53,890            54,312
   Net Cash Provided by Operating
    Activities                                    62,443            55,803
   Cash Flows from Investing
    Activities:
   Acquisitions, net of cash acquired            (19,226)           (2,087)
   Additions to property, plant and
    equipment - growth                           (36,552)          (25,757)
    - maintenance                                (51,608)          (52,592)
   Payments on landfill operating lease
    contracts                                     (8,450)           (4,500)
   Restricted cash from revenue bond
    issuance                                           -             5,535
   Other                                          (1,463)             (110)
   Net Cash Used In Investing
    Activities                                  (117,299)          (79,511)
   Cash Flows from Financing
    Activities:
   Proceeds from long-term borrowings            159,733           239,950
   Principal payments on long-term debt         (104,581)         (213,459)
   Proceeds from exercise of stock
    options                                        1,151             1,572
   Excess tax benefit on the exercise
    of stock options                                   -               145
   Net Cash Provided by Financing
    Activities                                    56,303            28,208
   Net increase in cash and cash
    equivalents                                    1,447             4,500
   Cash and cash equivalents, beginning
    of period                                      8,578             7,429
   Cash and cash equivalents, end of
    period                                       $10,025           $11,929




                 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 and 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 net 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 Net Cash Provided by
      Operating Activities:

                                       Three Months Ended  Nine Months Ended
                                         January  January  January  January
                                           31,      31,      31,      31,
                                          2006     2007     2006     2007

  Net Cash Provided by Operating
   Activities                            $25,839  $16,403  $62,443  $55,803

  Changes in assets and liabilities, net
   of effects
  of acquisitions and divestitures        (8,128)      89    1,145    3,949
  Deferred income taxes                      (19)     613   (4,012)    (464)
  Stock-based compensation                     -     (190)       -     (511)
  Excess tax benefit on the exercise of
   stock options                               -        4        -      145
  Provision for income taxes               1,148      689    7,005    3,590
  Interest expense, net                    8,188   10,010   23,359   29,324
  Depletion of landfill operating lease
   obligations                            (1,678)  (1,681)  (4,651)  (5,543)
  Gain (loss) on sale of equipment          (192)     152     (233)     591
  Other income                            (1,541)     (50)  (1,664)    (351)
  EBITDA                                 $23,617  $26,039  $83,392  $86,533



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

                                       Three Months Ended  Nine Months Ended
                                         January  January  January  January
                                           31,      31,      31,      31,
                                          2006     2007     2006     2007


  EBITDA                                 $23,617  $26,039  $83,392  $86,533
   Add (deduct):        Cash interest     (3,557)  (5,069) (16,379) (21,696)
                        Capital
                         expenditures    (23,261) (18,094) (88,160) (78,349)
                        Cash taxes          (240)    (648)  (1,299)  (2,241)
                        Depletion of
                         landfill
                         operating
                         lease
                         obligations       1,677    1,682    4,651    5,543
                        Change in
                         working
                         capital,
                         adjusted for
                         non-cash
                         items             2,934   (5,879)  (7,969) (11,513)

  FREE CASH FLOW                           1,170   (1,969) (25,764) (21,723)

  Add (deduct):        Capital
                        expenditures      23,261   18,094   88,160   78,349
                       Other               1,408      278       47     (823)
  Net Cash Provided by Operating
   Activities                            $25,839  $16,403  $62,443  $55,803




                 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  Nine Months Ended
                                        January 31,         January 31,
                                       2006      2007      2006      2007
      Collection                      $61,310   $62,478  $192,729  $199,748
      Landfill / disposal facilities   24,167    24,183    73,928    82,590
      Transfer                         10,713     9,255    34,275    33,200
      Recycling                        34,407    37,576    98,460   109,290
      Total revenues                 $130,597  $133,492  $399,392  $424,828



     Components of revenue growth for the three months ended January 31,
     2007 compared to the three months ended January 31, 2006:

                                                                 Percentage
     Solid
      Waste
      Operations (1)
               Price                                                   3.3%
               Volume                                                 -4.8%
               Solid waste commodity
                price and volume                                       0.3%
     Total growth - Solid Waste
      Operations                                                      -1.2%

     FCR
      Operations (1)
               Price                                                   0.1%
               Volume                                                  5.2%
     Total growth - FCR Operations                                     5.3%

     Rollover effect of acquisitions
      (as a percentage of total
      revenues)                                                        1.2%

     Divestitures (as a percentage of
      total revenues)                                                  0.0%

     Total revenue growth                                              2.2%

     (1) -- Calculated as a percentage of segment revenues.



       Solid Waste Internalization Rates by Region:

                                      Three Months Ended  Nine Months Ended
                                         January 31,         January 31,
                                        2006     2007      2006      2007
       North Eastern region              56.8%    52.8%     57.5%     56.1%
       South Eastern region              39.6%    45.3%     40.9%     42.2%
       Central region                    79.7%    77.1%     79.0%     77.4%
       Western region                    44.1%    46.8%     42.4%     48.8%
       Solid Waste Operations            57.0%    57.1%     56.0%     57.8%



       US GreenFiber (50% owned)
        Financial Statistics:

                                      Three Months Ended   Nine Months Ended
                                         January 31,          January 31,
                                          2006     2007      2006      2007
       Revenues                        $57,484  $48,999  $132,022  $145,525
       Net income                        6,632    2,634     9,524     5,418
       Cash flow from operations         1,980    3,833    11,945    13,076
       Net working capital changes      (6,544)  (1,439)   (2,948)      (58)
       EBITDA                           $8,524   $5,272   $14,893   $13,134

       As a percentage of revenue:

       Net income                        11.5%     5.4%      7.2%      3.7%
       EBITDA                            14.8%    10.8%     11.3%      9.0%



      Components of Growth versus Maintenance Capital Expenditures (1):

                                       Three Months Ended  Nine Months Ended
                                           January 31,       January 31,
                                          2006     2007     2006     2007
      Growth Capital Expenditures:
      Landfill Development                $8,733   $3,282  $27,334  $14,765
      Boston MRF Building                      -        -    5,998        -
      MRF Equipment Upgrades                   -    2,982        -    6,239
      Other                                1,940    1,273    3,220    4,753
      Total Growth Capital Expenditures   10,673    7,537   36,552   25,757

      Maintenance Capital Expenditures:
      Vehicles, Machinery / Equipment
       and Containers                      2,119    2,266   23,620   21,632
      Landfill Construction & Equipment    8,728    7,300   22,769   26,851
      Facilities                           1,209      900    4,260    2,921
      Other                                  532       91      959    1,188
      Total Maintenance Capital
       Expenditures                       12,588   10,557   51,608   52,592

      Total Capital Expenditures         $23,261  $18,094  $88,160  $78,349



(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. 

DATASOURCE: Casella Waste Systems, Inc.



CONTACT:  Richard Norris, chief financial officer, or Ned Coletta,

director of investor relations, or Joseph Fusco, vice president, all of

Casella Waste Systems, Inc., [phone]



Web site:  http://www.casella.com/

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