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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Casella Waste Systems Inc | NASDAQ:CWST | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
1.37 | 1.52% | 91.55 | 89.69 | 93.66 | 91.72 | 90.1201 | 90.91 | 171,350 | 23:16:30 |
|
|
|
ý
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
|
Delaware
|
03-0338873
|
(State or other jurisdiction of
incorporation or organization)
|
(I.R.S. Employer
Identification No.)
|
25 Greens Hill Lane, Rutland, Vermont
|
05701
|
(Address of principal executive offices)
|
(Zip Code)
|
|
Large accelerated filer
|
¨
|
Accelerated filer
|
ý
|
Non-accelerated filer
|
¨
(Do not check if a smaller reporting company)
|
Smaller reporting company
|
¨
|
Class A common stock, $0.01 par value per share:
|
40,500,202
|
|
Class B common stock, $0.01 par value per share:
|
988,200
|
|
|
ITEM 1.
|
FINANCIAL STATEMENTS
|
|
September 30,
2016 |
|
December 31,
2015 |
||||
|
(Unaudited)
|
|
|
||||
ASSETS
|
|||||||
CURRENT ASSETS:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
3,561
|
|
|
$
|
2,312
|
|
Accounts receivable - trade, net of allowance for doubtful accounts of $1,081 and $988, respectively
|
63,355
|
|
|
60,167
|
|
||
Refundable income taxes
|
716
|
|
|
651
|
|
||
Prepaid expenses
|
9,186
|
|
|
7,670
|
|
||
Inventory
|
4,894
|
|
|
4,282
|
|
||
Other current assets
|
1,372
|
|
|
1,586
|
|
||
Total current assets
|
83,084
|
|
|
76,668
|
|
||
Property, plant and equipment, net of accumulated depreciation and amortization of $823,284 and $789,766, respectively
|
397,491
|
|
|
402,252
|
|
||
Goodwill
|
119,899
|
|
|
118,976
|
|
||
Intangible assets, net
|
8,232
|
|
|
9,252
|
|
||
Restricted assets
|
931
|
|
|
2,251
|
|
||
Cost method investments
|
12,333
|
|
|
12,333
|
|
||
Other non-current assets
|
13,285
|
|
|
11,937
|
|
||
Total assets
|
$
|
635,255
|
|
|
$
|
633,669
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Revenues
|
$
|
151,133
|
|
|
$
|
146,185
|
|
|
$
|
421,236
|
|
|
$
|
406,476
|
|
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
Cost of operations
|
98,803
|
|
|
99,656
|
|
|
284,409
|
|
|
286,225
|
|
||||
General and administration
|
18,777
|
|
|
17,448
|
|
|
55,450
|
|
|
52,324
|
|
||||
Depreciation and amortization
|
16,175
|
|
|
16,385
|
|
|
46,430
|
|
|
46,374
|
|
||||
Divestiture transactions
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,611
|
)
|
||||
|
133,755
|
|
|
133,489
|
|
|
386,289
|
|
|
379,312
|
|
||||
Operating income
|
17,378
|
|
|
12,696
|
|
|
34,947
|
|
|
27,164
|
|
||||
Other expense (income):
|
|
|
|
|
|
|
|
||||||||
Interest income
|
(64
|
)
|
|
(56
|
)
|
|
(229
|
)
|
|
(267
|
)
|
||||
Interest expense
|
9,643
|
|
|
10,087
|
|
|
29,677
|
|
|
30,363
|
|
||||
Loss on debt extinguishment
|
191
|
|
|
345
|
|
|
736
|
|
|
866
|
|
||||
Loss on derivative instruments
|
—
|
|
|
41
|
|
|
—
|
|
|
239
|
|
||||
Other income
|
(192
|
)
|
|
(178
|
)
|
|
(697
|
)
|
|
(387
|
)
|
||||
Other expense, net
|
9,578
|
|
|
10,239
|
|
|
29,487
|
|
|
30,814
|
|
||||
Income (loss) before income taxes
|
7,800
|
|
|
2,457
|
|
|
5,460
|
|
|
(3,650
|
)
|
||||
Provision for income taxes
|
263
|
|
|
198
|
|
|
344
|
|
|
1,112
|
|
||||
Net income (loss)
|
7,537
|
|
|
2,259
|
|
|
5,116
|
|
|
(4,762
|
)
|
||||
Less: Net income (loss) attributable to noncontrolling interests
|
—
|
|
|
(37
|
)
|
|
(9
|
)
|
|
1,189
|
|
||||
Net income (loss) attributable to common stockholders
|
$
|
7,537
|
|
|
$
|
2,296
|
|
|
$
|
5,125
|
|
|
$
|
(5,951
|
)
|
Basic earnings per share attributable to common stockholders:
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares outstanding
|
41,377
|
|
|
40,810
|
|
|
41,169
|
|
|
40,560
|
|
||||
Basic earnings per share
|
$
|
0.18
|
|
|
$
|
0.06
|
|
|
$
|
0.12
|
|
|
$
|
(0.15
|
)
|
Diluted earnings per share attributable to common stockholders:
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares outstanding
|
42,287
|
|
|
41,283
|
|
|
41,896
|
|
|
40,560
|
|
||||
Diluted earnings per share
|
$
|
0.18
|
|
|
$
|
0.06
|
|
|
$
|
0.12
|
|
|
$
|
(0.15
|
)
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Net income (loss)
|
$
|
7,537
|
|
|
$
|
2,259
|
|
|
$
|
5,116
|
|
|
$
|
(4,762
|
)
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
||||||||
Unrealized loss resulting from changes in fair value of marketable securities
|
(10
|
)
|
|
(44
|
)
|
|
(50
|
)
|
|
(75
|
)
|
||||
Other comprehensive loss, net of tax
|
(10
|
)
|
|
(44
|
)
|
|
(50
|
)
|
|
(75
|
)
|
||||
Comprehensive income (loss)
|
7,527
|
|
|
2,215
|
|
|
5,066
|
|
|
(4,837
|
)
|
||||
Less: Comprehensive income (loss) attributable to noncontrolling interests
|
—
|
|
|
(37
|
)
|
|
(9
|
)
|
|
1,189
|
|
||||
Comprehensive income (loss) attributable to common stockholders
|
$
|
7,527
|
|
|
$
|
2,252
|
|
|
$
|
5,075
|
|
|
$
|
(6,026
|
)
|
|
|
|
Casella Waste Systems, Inc. Stockholders' Deficit
|
|
|
||||||||||||||||||||||||||||
|
|
|
Class A
Common Stock
|
|
Class B
Common Stock
|
|
Additional Paid-In Capital
|
|
Accumulated Deficit
|
|
Accumulated Other Comprehensive (Loss) Income
|
|
Noncontrolling Interests
|
||||||||||||||||||||
|
Total
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
|
|
|
||||||||||||||||||||
Balance, December 31, 2015
|
$
|
(21,597
|
)
|
|
40,064
|
|
|
$
|
401
|
|
|
988
|
|
|
$
|
10
|
|
|
$
|
344,518
|
|
|
$
|
(366,459
|
)
|
|
$
|
7
|
|
|
$
|
(74
|
)
|
Net income (loss)
|
5,116
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,125
|
|
|
—
|
|
|
(9
|
)
|
|||||||
Other comprehensive loss
|
(50
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(50
|
)
|
|
—
|
|
|||||||
Issuances of Class A common stock
|
188
|
|
|
436
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
184
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Stock-based compensation
|
2,377
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,377
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Contribution from noncontrolling interest holder
|
59
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
59
|
|
|||||||
Balance, September 30, 2016
|
$
|
(13,907
|
)
|
|
40,500
|
|
|
$
|
405
|
|
|
988
|
|
|
$
|
10
|
|
|
$
|
347,079
|
|
|
$
|
(361,334
|
)
|
|
$
|
(43
|
)
|
|
$
|
(24
|
)
|
|
Nine Months Ended
September 30, |
||||||
|
2016
|
|
2015
|
||||
Cash Flows from Operating Activities:
|
|
|
|
||||
Net income (loss)
|
$
|
5,116
|
|
|
$
|
(4,762
|
)
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
46,430
|
|
|
46,374
|
|
||
Depletion of landfill operating lease obligations
|
7,130
|
|
|
7,019
|
|
||
Interest accretion on landfill and environmental remediation liabilities
|
2,688
|
|
|
2,572
|
|
||
Amortization of debt issuance costs and discount on long-term debt
|
3,106
|
|
|
2,941
|
|
||
Stock-based compensation
|
2,377
|
|
|
2,325
|
|
||
Gain on sale of property and equipment
|
(541
|
)
|
|
(137
|
)
|
||
Divestiture transactions
|
—
|
|
|
(5,611
|
)
|
||
Loss on debt extinguishment
|
736
|
|
|
866
|
|
||
Loss on derivative instruments
|
—
|
|
|
239
|
|
||
Excess tax benefit on the vesting of share based awards
|
—
|
|
|
(179
|
)
|
||
Deferred income taxes
|
528
|
|
|
627
|
|
||
Changes in assets and liabilities, net of effects of acquisitions and divestitures:
|
|
|
|
||||
Accounts receivable
|
(3,188
|
)
|
|
(8,000
|
)
|
||
Accounts payable
|
2,376
|
|
|
1,588
|
|
||
Prepaid expenses, inventories and other assets
|
(3,262
|
)
|
|
1,743
|
|
||
Accrued expenses and other liabilities
|
(7,425
|
)
|
|
(7,075
|
)
|
||
Net cash provided by operating activities
|
56,071
|
|
|
40,530
|
|
||
Cash Flows from Investing Activities:
|
|
|
|
||||
Acquisitions, net of cash acquired
|
(2,439
|
)
|
|
—
|
|
||
Acquisition related additions to property, plant and equipment
|
(38
|
)
|
|
—
|
|
||
Additions to property, plant and equipment
|
(37,435
|
)
|
|
(31,038
|
)
|
||
Payments on landfill operating lease contracts
|
(4,811
|
)
|
|
(2,956
|
)
|
||
Proceeds from divestiture transactions
|
—
|
|
|
5,335
|
|
||
Proceeds from sale of property and equipment
|
1,069
|
|
|
636
|
|
||
Proceeds from property insurance settlement
|
—
|
|
|
546
|
|
||
Net cash used in investing activities
|
(43,654
|
)
|
|
(27,477
|
)
|
||
Cash Flows from Financing Activities:
|
|
|
|
||||
Proceeds from long-term borrowings
|
140,700
|
|
|
296,929
|
|
||
Principal payments on long-term debt
|
(152,123
|
)
|
|
(301,220
|
)
|
||
Payments of debt issuance costs
|
(682
|
)
|
|
(8,991
|
)
|
||
Payments of debt extinguishment costs
|
(410
|
)
|
|
(121
|
)
|
||
Proceeds from the exercise of share based awards
|
—
|
|
|
161
|
|
||
Excess tax benefit on the vesting of share based awards
|
—
|
|
|
179
|
|
||
Change in restricted cash
|
1,347
|
|
|
1,319
|
|
||
Distributions to noncontrolling interest holder
|
—
|
|
|
(1,495
|
)
|
||
Net cash used in financing activities
|
(11,168
|
)
|
|
(13,239
|
)
|
||
Net increase (decrease) in cash and cash equivalents
|
1,249
|
|
|
(186
|
)
|
||
Cash and cash equivalents, beginning of period
|
2,312
|
|
|
2,205
|
|
||
Cash and cash equivalents, end of period
|
$
|
3,561
|
|
|
$
|
2,019
|
|
Supplemental Disclosure of Cash Flow Information:
|
|
|
|
||||
Cash paid during the period for:
|
|
|
|
||||
Interest
|
$
|
33,723
|
|
|
$
|
33,364
|
|
Income taxes, net of refunds
|
$
|
242
|
|
|
$
|
31
|
|
Supplemental Disclosure of Non-Cash Investing and Financing Activities:
|
|
|
|
||||
Non-current assets obtained through long-term obligations
|
$
|
1,841
|
|
|
$
|
—
|
|
1.
|
BASIS OF PRESENTATION
|
2.
|
ACCOUNTING CHANGES
|
3.
|
BUSINESS COMBINATIONS
|
|
Nine Months Ended
September 30, |
||||||
|
2016
|
|
2015
|
||||
Purchase Price:
|
|
|
|
||||
Cash used in acquisitions
|
$
|
2,439
|
|
|
$
|
—
|
|
Holdbacks
|
400
|
|
|
—
|
|
||
Total
|
2,839
|
|
|
—
|
|
||
Allocated as follows:
|
|
|
|
||||
Current assets
|
40
|
|
|
—
|
|
||
Land
|
353
|
|
|
—
|
|
||
Buildings
|
1,360
|
|
|
—
|
|
||
Equipment
|
269
|
|
|
—
|
|
||
Other liabilities, net
|
(106
|
)
|
|
—
|
|
||
Fair value of assets acquired and liabilities assumed
|
1,916
|
|
|
—
|
|
||
Excess purchase price allocated to goodwill
|
$
|
923
|
|
|
$
|
—
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Revenue
|
$
|
151,133
|
|
|
$
|
147,008
|
|
|
$
|
422,059
|
|
|
$
|
408,946
|
|
Operating income
|
$
|
17,378
|
|
|
$
|
12,617
|
|
|
$
|
34,868
|
|
|
$
|
26,926
|
|
Net income (loss) attributable to common stockholders
|
$
|
7,537
|
|
|
$
|
2,249
|
|
|
$
|
5,078
|
|
|
$
|
(6,093
|
)
|
Basic earnings per share attributable to common stockholders
|
$
|
0.18
|
|
|
$
|
0.06
|
|
|
$
|
0.12
|
|
|
$
|
(0.15
|
)
|
Basic weighted average shares outstanding
|
41,377
|
|
|
40,810
|
|
|
41,169
|
|
|
40,560
|
|
||||
Diluted earnings per share attributable to common stockholders
|
$
|
0.18
|
|
|
$
|
0.05
|
|
|
$
|
0.12
|
|
|
$
|
(0.15
|
)
|
Diluted weighted average shares outstanding
|
42,287
|
|
|
41,283
|
|
|
41,896
|
|
|
40,560
|
|
4.
|
GOODWILL AND INTANGIBLE ASSETS
|
|
December 31, 2015
|
|
Acquisitions
|
|
September 30, 2016
|
||||||
Eastern region
|
$
|
17,429
|
|
|
$
|
—
|
|
|
$
|
17,429
|
|
Western region
|
87,503
|
|
|
923
|
|
|
88,426
|
|
|||
Recycling
|
12,315
|
|
|
—
|
|
|
12,315
|
|
|||
Other
|
1,729
|
|
|
—
|
|
|
1,729
|
|
|||
Total
|
$
|
118,976
|
|
|
$
|
923
|
|
|
$
|
119,899
|
|
|
Covenants
Not-to-Compete
|
|
Client Lists
|
|
Total
|
||||||
Balance, September 30, 2016
|
|
|
|
|
|
||||||
Intangible assets
|
$
|
17,594
|
|
|
$
|
16,071
|
|
|
$
|
33,665
|
|
Less accumulated amortization
|
(16,288
|
)
|
|
(9,145
|
)
|
|
(25,433
|
)
|
|||
|
$
|
1,306
|
|
|
$
|
6,926
|
|
|
$
|
8,232
|
|
|
Covenants
Not-to-Compete
|
|
Client Lists
|
|
Total
|
||||||
Balance, December 31, 2015
|
|
|
|
|
|
||||||
Intangible assets
|
$
|
17,266
|
|
|
$
|
16,065
|
|
|
$
|
33,331
|
|
Less accumulated amortization
|
(16,198
|
)
|
|
(7,881
|
)
|
|
(24,079
|
)
|
|||
|
$
|
1,068
|
|
|
$
|
8,184
|
|
|
$
|
9,252
|
|
5.
|
ACCRUED FINAL CAPPING, CLOSURE AND POST CLOSURE
|
|
Nine Months Ended
September 30, |
||||||
|
2016
|
|
2015
|
||||
Beginning balance
|
$
|
41,041
|
|
|
$
|
39,829
|
|
Obligations incurred
|
1,828
|
|
|
1,971
|
|
||
Revisions in estimates (1)
|
(56
|
)
|
|
—
|
|
||
Accretion expense
|
2,688
|
|
|
2,513
|
|
||
Obligations settled (2)
|
(601
|
)
|
|
(2,209
|
)
|
||
Ending balance
|
$
|
44,900
|
|
|
$
|
42,104
|
|
(1)
|
Relates to changes in estimates and assumptions concerning the anticipated waste flow, cost and timing of future final capping, closure and post-closure activities at certain of our landfills.
|
(2)
|
Includes amounts that are being processed through accounts payable as a part of our disbursement cycle.
|
6.
|
LONG-TERM DEBT
|
|
September 30,
2016 |
|
December 31,
2015 |
||||
Senior Secured Asset-Based Revolving Credit Facility:
|
|
|
|
||||
Due February 2020; bearing interest at one-month LIBOR plus 2.25%
|
$
|
56,299
|
|
|
$
|
57,422
|
|
Tax-Exempt Bonds:
|
|
|
|
||||
New York State Environmental Facilities Corporation Solid Waste Disposal Revenue Bonds Series 2014 due December 2044 - fixed rate interest period through 2019, bearing interest at 3.75%
|
25,000
|
|
|
25,000
|
|
||
New York State Environmental Facilities Corporation Solid Waste Disposal Revenue Bonds Series 2014R-2 due December 2044 - fixed rate interest period through 2026, bearing interest at 3.125%
|
15,000
|
|
|
—
|
|
||
Finance Authority of Maine Solid Waste Disposal Revenue Bonds Series 2005R-2 due January 2025 - fixed rate interest period through 2017, bearing interest at 6.25%
|
21,400
|
|
|
21,400
|
|
||
Finance Authority of Maine Solid Waste Disposal Revenue Bonds Series 2015 due August 2035 - fixed rate interest period through 2025, bearing interest at 5.125%
|
15,000
|
|
|
15,000
|
|
||
Vermont Economic Development Authority Solid Waste Disposal Long-Term Revenue Bonds Series 2013 due April 2036 - fixed rate interest period through 2018, bearing interest at 4.75%
|
16,000
|
|
|
16,000
|
|
||
Business Finance Authority of the State of New Hampshire Solid Waste Disposal Revenue Bonds Series 2013 due April 2029 - fixed rate interest period through 2019, bearing interest at 4.00%
|
11,000
|
|
|
11,000
|
|
||
Finance Authority of Maine Solid Waste Disposal Revenue Bonds Series 2005R-1; letter of credit backed due January 2025 - variable rate interest period through 2017, bearing interest at SIFMA Index
|
3,600
|
|
|
3,600
|
|
||
Other:
|
|
|
|
||||
Capital leases maturing through April 2023, bearing interest at up to 7.70%
|
5,287
|
|
|
4,130
|
|
||
Notes payable maturing through January 2021, bearing interest at up to 7.00%
|
1,143
|
|
|
1,167
|
|
||
Senior Subordinated Notes:
|
|
|
|
||||
Due February 2019; bearing interest at 7.75%
|
345,570
|
|
|
370,300
|
|
||
Principal amount of long-term debt and capital leases
|
515,299
|
|
|
525,019
|
|
||
Less—unamortized discount and debt issuance costs (1)
|
14,698
|
|
|
17,586
|
|
||
Long-term debt and capital leases less unamortized discount and debt issuance costs
|
500,601
|
|
|
507,433
|
|
||
Less—current maturities of long-term debt
|
1,562
|
|
|
1,448
|
|
||
|
$
|
499,039
|
|
|
$
|
505,985
|
|
(1)
|
A summary of unamortized discount and debt issuance costs by debt instrument follows:
|
|
September 30,
2016 |
|
December 31,
2015 |
||||
Senior Secured Asset-Based Revolving Credit Facility
|
$
|
4,637
|
|
|
$
|
5,593
|
|
New York State Environmental Facilities Corporation Solid Waste Disposal Revenue Bonds Series 2014
|
1,267
|
|
|
1,407
|
|
||
New York State Environmental Facilities Corporation Solid Waste Disposal Revenue Bonds Series 2014R-2
|
586
|
|
|
—
|
|
||
Finance Authority of Maine Solid Waste Disposal Revenue Bonds Series 2005R-2
|
518
|
|
|
566
|
|
||
Finance Authority of Maine Solid Waste Disposal Revenue Bonds Series 2015
|
778
|
|
|
830
|
|
||
Vermont Economic Development Authority Solid Waste Disposal Long-Term Revenue Bonds Series 2013
|
612
|
|
|
636
|
|
||
Business Finance Authority of the State of New Hampshire Solid Waste Disposal Revenue Bonds Series 2013
|
595
|
|
|
690
|
|
||
Finance Authority of Maine Solid Waste Disposal Revenue Bonds Series 2005R-1
|
32
|
|
|
35
|
|
||
Senior Subordinated Notes
|
5,673
|
|
|
7,829
|
|
||
|
$
|
14,698
|
|
|
$
|
17,586
|
|
•
|
the repurchase price and write-off of debt issuance costs and unamortized original issue discount associated with the early redemption, repurchase and retirement of partial portions of our 2019 Notes; and
|
•
|
the write-off of debt issuance costs in connection with changes to the borrowing capacity from our previous senior revolving credit and letter of credit facility that was due March 2016 to the ABL Facility in the nine months ended September 30, 2015.
|
|
Nine Months Ended September 30,
|
||||||
|
2016
|
|
2015
|
||||
Beginning balance
|
$
|
5,221
|
|
|
$
|
5,142
|
|
Accretion expense
|
—
|
|
|
59
|
|
||
Obligations settled (1)
|
(255
|
)
|
|
—
|
|
||
Ending balance
|
$
|
4,966
|
|
|
$
|
5,201
|
|
(1)
|
Includes amounts that are being processed through accounts payable as a part of our disbursement cycle.
|
8.
|
STOCKHOLDERS' EQUITY
|
|
Stock Options
|
|
Weighted Average Exercise Price
|
|
Weighted Average Remaining Contractual Term (years)
|
|
Aggregate Intrinsic Value
|
|||||
Outstanding, December 31, 2015
|
1,297
|
|
|
$
|
7.03
|
|
|
|
|
|
||
Granted
|
—
|
|
|
$
|
—
|
|
|
|
|
|
||
Exercised
|
—
|
|
|
$
|
—
|
|
|
|
|
|
||
Forfeited
|
(196
|
)
|
|
$
|
12.93
|
|
|
|
|
|
||
Outstanding, September 30, 2016
|
1,101
|
|
|
$
|
5.98
|
|
|
5.7
|
|
$
|
4,993
|
|
Exercisable, September 30, 2016
|
800
|
|
|
$
|
5.95
|
|
|
4.6
|
|
$
|
3,710
|
|
Expected to vest, September 30, 2016
|
1,100
|
|
|
$
|
5.98
|
|
|
5.6
|
|
$
|
4,987
|
|
|
Restricted Stock, Restricted Stock Units, and Performance-Based Stock Units (1)
|
|
Weighted Average Exercise Price
|
|
Weighted Average Remaining Contractual Term (years)
|
|
Aggregate Intrinsic Value
|
|||||
Outstanding, December 31, 2015
|
962
|
|
|
$
|
4.49
|
|
|
|
|
|
||
Granted
|
400
|
|
|
$
|
6.32
|
|
|
|
|
|
||
Class A Common Stock Vested
|
(404
|
)
|
|
$
|
4.40
|
|
|
|
|
|
||
Forfeited
|
(7
|
)
|
|
$
|
5.52
|
|
|
|
|
|
||
Outstanding, September 30, 2016
|
951
|
|
|
$
|
5.29
|
|
|
1.8
|
|
$
|
4,768
|
|
Expected to vest, September 30, 2016
|
811
|
|
|
$
|
5.24
|
|
|
1.7
|
|
$
|
4,106
|
|
(1)
|
Performance-based stock units are included at the
100%
attainment level. Attainment of the maximum performance targets could result in the issuance of an additional
43
shares of Class A common stock.
|
|
Marketable
Securities
|
||
Balance, December 31, 2015
|
$
|
7
|
|
Other comprehensive loss before reclassifications
|
(50
|
)
|
|
Amounts reclassified from accumulated other comprehensive (loss) income
|
—
|
|
|
Net current-period other comprehensive loss
|
(50
|
)
|
|
Balance, September 30, 2016
|
$
|
(43
|
)
|
9.
|
EARNINGS PER SHARE
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Numerator:
|
|
|
|
|
|
|
|
||||||||
Net income (loss) attributable to common stockholders
|
$
|
7,537
|
|
|
$
|
2,296
|
|
|
$
|
5,125
|
|
|
$
|
(5,951
|
)
|
Denominators:
|
|
|
|
|
|
|
|
||||||||
Number of shares outstanding, end of period:
|
|
|
|
|
|
|
|
||||||||
Class A common stock
|
40,500
|
|
|
39,978
|
|
|
40,500
|
|
|
39,978
|
|
||||
Class B common stock
|
988
|
|
|
988
|
|
|
988
|
|
|
988
|
|
||||
Unvested restricted stock
|
(109
|
)
|
|
(127
|
)
|
|
(109
|
)
|
|
(127
|
)
|
||||
Effect of weighted average shares outstanding
|
(2
|
)
|
|
(29
|
)
|
|
(210
|
)
|
|
(279
|
)
|
||||
Basic weighted average common shares outstanding
|
41,377
|
|
|
40,810
|
|
|
41,169
|
|
|
40,560
|
|
||||
Impact of potentially dilutive securities:
|
|
|
|
|
|
|
|
||||||||
Dilutive effect of stock options and other stock awards
|
910
|
|
|
473
|
|
|
727
|
|
|
—
|
|
||||
Diluted weighted average common shares outstanding
|
42,287
|
|
|
41,283
|
|
|
41,896
|
|
|
40,560
|
|
||||
Anti-dilutive potentially issuable shares
|
322
|
|
|
665
|
|
|
322
|
|
|
2,157
|
|
10.
|
FAIR VALUE OF FINANCIAL INSRUMENTS
|
|
Fair Value Measurement at September 30, 2016 Using:
|
||||||||||
|
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
|
|
Significant Other
Observable Inputs
(Level 2)
|
|
Significant Unobservable Inputs (Level 3)
|
||||||
Assets:
|
|
|
|
|
|
||||||
Restricted cash - capital projects
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Restricted investments - landfill closure
|
931
|
|
|
—
|
|
|
—
|
|
|||
Total
|
$
|
931
|
|
|
$
|
—
|
|
|
$
|
—
|
|
11.
|
DIVESTITURE TRANSACTIONS
|
12.
|
SEGMENT REPORTING
|
Segment
|
Outside
revenues
|
|
Inter-company
revenue
|
|
Depreciation and
amortization
|
|
Operating
income
|
|
Total assets
|
||||||||||
Eastern
|
$
|
47,238
|
|
|
$
|
12,775
|
|
|
$
|
7,291
|
|
|
$
|
4,452
|
|
|
$
|
206,177
|
|
Western
|
63,171
|
|
|
18,560
|
|
|
7,010
|
|
|
11,392
|
|
|
326,862
|
|
|||||
Recycling
|
14,412
|
|
|
94
|
|
|
1,055
|
|
|
1,529
|
|
|
48,531
|
|
|||||
Other
|
26,312
|
|
|
530
|
|
|
819
|
|
|
5
|
|
|
53,685
|
|
|||||
Eliminations
|
—
|
|
|
(31,959
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
$
|
151,133
|
|
|
$
|
—
|
|
|
$
|
16,175
|
|
|
$
|
17,378
|
|
|
$
|
635,255
|
|
Segment
|
Outside
revenues
|
|
Inter-company
revenue
|
|
Depreciation and
amortization
|
|
Operating
income (loss)
|
|
Total assets
|
||||||||||
Eastern
|
$
|
46,143
|
|
|
$
|
12,531
|
|
|
$
|
6,956
|
|
|
$
|
4,523
|
|
|
$
|
210,292
|
|
Western
|
62,387
|
|
|
18,236
|
|
|
7,617
|
|
|
7,792
|
|
|
323,915
|
|
|||||
Recycling
|
12,700
|
|
|
318
|
|
|
1,130
|
|
|
277
|
|
|
50,038
|
|
|||||
Other
|
24,955
|
|
|
300
|
|
|
682
|
|
|
104
|
|
|
59,209
|
|
|||||
Eliminations
|
—
|
|
|
(31,385
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
$
|
146,185
|
|
|
$
|
—
|
|
|
$
|
16,385
|
|
|
$
|
12,696
|
|
|
$
|
643,455
|
|
Segment
|
Outside
revenues
|
|
Inter-company
revenue
|
|
Depreciation and
amortization
|
|
Operating
income (loss)
|
|
Total assets
|
||||||||||
Eastern
|
$
|
131,630
|
|
|
$
|
34,003
|
|
|
$
|
20,618
|
|
|
$
|
6,742
|
|
|
$
|
206,177
|
|
Western
|
175,093
|
|
|
51,300
|
|
|
20,409
|
|
|
24,561
|
|
|
326,862
|
|
|||||
Recycling
|
37,865
|
|
|
1,026
|
|
|
3,187
|
|
|
923
|
|
|
48,531
|
|
|||||
Other
|
76,648
|
|
|
1,213
|
|
|
2,216
|
|
|
2,721
|
|
|
53,685
|
|
|||||
Eliminations
|
—
|
|
|
(87,542
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
$
|
421,236
|
|
|
$
|
—
|
|
|
$
|
46,430
|
|
|
$
|
34,947
|
|
|
$
|
635,255
|
|
Segment
|
Outside
revenues
|
|
Inter-company
revenue
|
|
Depreciation and
amortization
|
|
Operating
income (loss)
|
|
Total assets
|
||||||||||
Eastern
|
$
|
123,233
|
|
|
$
|
31,948
|
|
|
$
|
18,946
|
|
|
$
|
7,224
|
|
|
$
|
210,292
|
|
Western
|
173,429
|
|
|
51,138
|
|
|
22,029
|
|
|
20,471
|
|
|
323,915
|
|
|||||
Recycling
|
34,456
|
|
|
575
|
|
|
3,356
|
|
|
(2,134
|
)
|
|
50,038
|
|
|||||
Other
|
75,358
|
|
|
791
|
|
|
2,043
|
|
|
1,603
|
|
|
59,209
|
|
|||||
Eliminations
|
—
|
|
|
(84,452
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
$
|
406,476
|
|
|
$
|
—
|
|
|
$
|
46,374
|
|
|
$
|
27,164
|
|
|
$
|
643,455
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Collection
|
$
|
65,581
|
|
|
$
|
63,588
|
|
|
$
|
187,117
|
|
|
$
|
177,550
|
|
Disposal
|
43,412
|
|
|
43,168
|
|
|
115,050
|
|
|
114,999
|
|
||||
Power generation
|
1,610
|
|
|
1,694
|
|
|
4,777
|
|
|
5,305
|
|
||||
Processing
|
1,974
|
|
|
1,866
|
|
|
4,694
|
|
|
4,652
|
|
||||
Solid waste operations
|
112,577
|
|
|
110,316
|
|
|
311,638
|
|
|
302,506
|
|
||||
Organics
|
10,266
|
|
|
9,753
|
|
|
31,372
|
|
|
29,619
|
|
||||
Customer solutions
|
13,878
|
|
|
13,416
|
|
|
40,361
|
|
|
39,895
|
|
||||
Recycling
|
14,412
|
|
|
12,700
|
|
|
37,865
|
|
|
34,456
|
|
||||
Total revenues
|
$
|
151,133
|
|
|
$
|
146,185
|
|
|
$
|
421,236
|
|
|
$
|
406,476
|
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
•
|
expected liquidity and financing plans;
|
•
|
expected future revenues, operations, expenditures and cash needs;
|
•
|
fluctuations in the commodity pricing of our recyclables, increases in landfill tipping fees and fuel costs and general economic and weather conditions;
|
•
|
projected future obligations related to final capping, closure and post-closure costs of our existing landfills and any disposal facilities which we may own or operate in the future;
|
•
|
our ability to use our net operating losses and tax positions;
|
•
|
our ability to service our debt obligations;
|
•
|
the projected development of additional disposal capacity or expectations regarding permits for existing capacity;
|
•
|
the recoverability or impairment of any of our assets or goodwill;
|
•
|
estimates of the potential markets for our products and services, including the anticipated drivers for future growth;
|
•
|
sales and marketing plans or price and volume assumptions;
|
•
|
the outcome of any legal or regulatory matter;
|
•
|
actions of activist investors and the cost and disruption of responding to those actions;
|
•
|
potential business combinations or divestitures; and
|
•
|
projected improvements to our infrastructure and the impact of such improvements on our business and operations.
|
|
Three Months Ended September 30,
|
|
$
Change
|
|
Nine Months Ended September 30,
|
|
$
Change
|
||||||||||||||||||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|||||||||||||||||||||||||||
Collection
|
$
|
65.6
|
|
|
43.4
|
%
|
|
$
|
63.6
|
|
|
43.5
|
%
|
|
$
|
2.0
|
|
|
$
|
187.1
|
|
|
44.4
|
%
|
|
$
|
177.6
|
|
|
43.7
|
%
|
|
$
|
9.5
|
|
Disposal
|
43.4
|
|
|
28.7
|
%
|
|
43.2
|
|
|
29.5
|
%
|
|
0.2
|
|
|
115.0
|
|
|
27.3
|
%
|
|
115.0
|
|
|
28.3
|
%
|
|
—
|
|
||||||
Power
|
1.6
|
|
|
1.1
|
%
|
|
1.7
|
|
|
1.2
|
%
|
|
(0.1
|
)
|
|
4.8
|
|
|
1.1
|
%
|
|
5.3
|
|
|
1.3
|
%
|
|
(0.5
|
)
|
||||||
Processing
|
2.0
|
|
|
1.3
|
%
|
|
1.8
|
|
|
1.2
|
%
|
|
0.2
|
|
|
4.7
|
|
|
1.2
|
%
|
|
4.6
|
|
|
1.1
|
%
|
|
0.1
|
|
||||||
Solid waste
|
112.6
|
|
|
74.5
|
%
|
|
110.3
|
|
|
75.4
|
%
|
|
2.3
|
|
|
311.6
|
|
|
74.0
|
%
|
|
302.5
|
|
|
74.4
|
%
|
|
9.1
|
|
||||||
Organics
|
10.2
|
|
|
6.8
|
%
|
|
9.8
|
|
|
6.7
|
%
|
|
0.4
|
|
|
31.3
|
|
|
7.4
|
%
|
|
29.6
|
|
|
7.3
|
%
|
|
1.7
|
|
||||||
Customer solutions
|
13.9
|
|
|
9.2
|
%
|
|
13.4
|
|
|
9.2
|
%
|
|
0.5
|
|
|
40.4
|
|
|
9.6
|
%
|
|
39.9
|
|
|
9.8
|
%
|
|
0.5
|
|
||||||
Recycling
|
14.4
|
|
|
9.5
|
%
|
|
12.7
|
|
|
8.7
|
%
|
|
1.7
|
|
|
37.9
|
|
|
9.0
|
%
|
|
34.5
|
|
|
8.5
|
%
|
|
3.4
|
|
||||||
Total revenues
|
$
|
151.1
|
|
|
100.0
|
%
|
|
$
|
146.2
|
|
|
100.0
|
%
|
|
$
|
4.9
|
|
|
$
|
421.2
|
|
|
100.0
|
%
|
|
$
|
406.5
|
|
|
100.0
|
%
|
|
$
|
14.7
|
|
|
Period-to-Period
Change for the Three Months Ended September 30, 2016 vs. 2015 |
|
Period-to-Period
Change for the Nine Months Ended September 30, 2016 vs. 2015 |
||||||||||
|
Amount
|
|
% of Growth
|
|
Amount
|
|
% of Growth
|
||||||
Price
|
$
|
3.4
|
|
|
2.3
|
%
|
|
$
|
11.1
|
|
|
2.7
|
%
|
Volume
|
(1.6
|
)
|
|
(1.2
|
)%
|
|
(2.4
|
)
|
|
(0.6
|
)%
|
||
Fuel and oil recovery fee
|
—
|
|
|
—
|
%
|
|
(0.1
|
)
|
|
—
|
%
|
||
Commodity price and volume
|
—
|
|
|
—
|
%
|
|
(0.4
|
)
|
|
(0.1
|
)%
|
||
Acquisitions and divestitures
|
0.5
|
|
|
0.4
|
%
|
|
0.9
|
|
|
0.2
|
%
|
||
Solid waste
|
$
|
2.3
|
|
|
1.5
|
%
|
|
$
|
9.1
|
|
|
2.2
|
%
|
•
|
$
2.4 million
from
favorable
collection pricing, including a floating sustainability recycling adjustment fee to mitigate recycling commodity risk; and
|
•
|
$
1.0 million
from
favorable
disposal pricing associated with our landfills and transfer stations.
|
•
|
$
8.9 million
from
favorable
collection pricing, including a floating sustainability recycling adjustment fee to mitigate recycling commodity risk; and
|
•
|
$
2.2 million
from
favorable
disposal pricing associated with our landfills and transfer stations.
|
•
|
$
(1.3) million
from
lower
disposal volumes (of which $(1.1) million relates to lower transportation volumes associated with lower drill cutting volumes and $(0.2) million relates to lower landfill volumes, including lower drill cutting volumes and the diversion of certain lower priced tons); and
|
•
|
$
(0.3) million
from
lower
collection volumes in the Western region, more than offsetting higher collection volumes in the Eastern region.
|
•
|
$
(3.5) million
from
lower
disposal volume (of which $(3.2) million relates to lower transportation volumes associated with lower drill cutting volumes, $(1.1) million relates to lower landfill volumes, including lower drill cutting volumes and the diversion of certain lower priced tons, and $0.8 million relates to higher transfer station volumes); and
|
•
|
$
(0.1) million
from
lower
processing volumes; partially offset by
|
•
|
$
1.2 million
from
higher
collection volumes in the Eastern region, partially offset by lower collection volumes in the Western region.
|
•
|
$(0.7) million from unfavorable energy pricing at our landfill gas-to-energy operations; partially offset by
|
•
|
$0.2 million from higher landfill gas-to-energy volumes; and
|
•
|
$0.1 million from favorable processing commodity pricing.
|
•
|
$
2.2 million
from
favorable
commodity pricing in the marketplace; partially offset by
|
•
|
$
(0.3) million
from
lower
tipping fees; and
|
•
|
$
(0.2) million
from
lower
commodity volumes.
|
•
|
$
1.8 million
from
favorable
commodity pricing in the marketplace;
|
•
|
$
0.9 million
from
higher
commodity volumes; and
|
•
|
$
0.7 million
from
higher
tipping fees.
|
|
Three Months Ended September 30,
|
|
$
Change
|
|
Nine Months Ended September 30,
|
|
$
Change
|
||||||||||||||||||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|||||||||||||||||||||||||||
Cost of operations
|
$
|
98.8
|
|
|
65.4
|
%
|
|
$
|
99.7
|
|
|
68.2
|
%
|
|
$
|
(0.9
|
)
|
|
$
|
284.4
|
|
|
67.5
|
%
|
|
$
|
286.2
|
|
|
70.4
|
%
|
|
$
|
(1.8
|
)
|
General and administration
|
$
|
18.8
|
|
|
12.4
|
%
|
|
$
|
17.4
|
|
|
11.9
|
%
|
|
$
|
1.4
|
|
|
$
|
55.5
|
|
|
13.2
|
%
|
|
$
|
52.3
|
|
|
12.9
|
%
|
|
$
|
3.2
|
|
Depreciation and amortization
|
$
|
16.2
|
|
|
10.7
|
%
|
|
$
|
16.4
|
|
|
11.2
|
%
|
|
$
|
(0.2
|
)
|
|
$
|
46.4
|
|
|
11.0
|
%
|
|
$
|
46.4
|
|
|
11.4
|
%
|
|
$
|
—
|
|
•
|
higher disposal costs associated with increased volumes in our Organics business; and
|
•
|
higher hauling and transportation costs associated with increased volumes in our Customer Solutions business; offset by
|
•
|
lower hauling and transportation costs associated with decreased collection and transportation volumes in our Western region;
|
•
|
lower year-to-date purchased material costs in our Recycling business; and
|
•
|
lower year-to-date purchased material costs in our Customer Solutions business.
|
•
|
lower healthcare costs related to plan improvements and lower overall claim activity; and
|
•
|
lower labor and related benefit costs on lower volumes in the Western region; partially offset by
|
•
|
higher workers compensation costs; and
|
•
|
higher labor and related benefit costs on higher collection volumes in our Eastern region.
|
•
|
higher equipment rental costs;
|
•
|
higher vehicle self-insurance costs;
|
•
|
higher landfill operating lease amortization in our Western region primarily due to higher quarterly tons at certain of our landfills;
|
•
|
higher gas control and other landfill operating costs in our Eastern region; and
|
•
|
higher host royalty fees on a year-to-date basis; partially offset by
|
•
|
lower leachate disposal costs at certain landfills in our Western region; and
|
•
|
lower landfill operating lease amortization on lower rates and tons at our Southbridge landfill in our Eastern region.
|
•
|
lower diesel fuel prices in the marketplace; and
|
•
|
the consumption of less diesel fuel in our fleet year-to-date.
|
•
|
higher maintenance costs in our Recycling segment; and
|
•
|
higher facility maintenance costs; offset by
|
•
|
lower quarterly, and to a lesser extent year-to-date, fleet maintenance costs in our Western region.
|
|
Three Months Ended September 30,
|
|
$
Change
|
|
Nine Months Ended September 30,
|
|
$
Change
|
||||||||||||||||||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|||||||||||||||||||||||||||
Depreciation
|
$
|
8.2
|
|
|
5.4
|
%
|
|
$
|
8.3
|
|
|
5.7
|
%
|
|
$
|
(0.1
|
)
|
|
$
|
24.9
|
|
|
5.9
|
%
|
|
$
|
24.9
|
|
|
6.1
|
%
|
|
$
|
—
|
|
Landfill amortization
|
7.4
|
|
|
4.9
|
%
|
|
7.5
|
|
|
5.1
|
%
|
|
(0.1
|
)
|
|
19.9
|
|
|
4.7
|
%
|
|
19.5
|
|
|
4.8
|
%
|
|
0.4
|
|
||||||
Other amortization
|
0.6
|
|
|
0.4
|
%
|
|
0.6
|
|
|
0.4
|
%
|
|
—
|
|
|
1.6
|
|
|
0.4
|
%
|
|
2.0
|
|
|
0.5
|
%
|
|
(0.4
|
)
|
||||||
|
$
|
16.2
|
|
|
10.7
|
%
|
|
$
|
16.4
|
|
|
11.2
|
%
|
|
$
|
(0.2
|
)
|
|
$
|
46.4
|
|
|
11.0
|
%
|
|
$
|
46.4
|
|
|
11.4
|
%
|
|
$
|
—
|
|
•
|
Year-to-date landfill amortization expense increased due to higher landfill volumes, combined with an increase in our overall average amortization rate.
|
•
|
Year-to-date other amortization expense decreased due to the makeup and timing of definite life intangible assets.
|
•
|
we repurchased or redeemed, as applicable, and retired $39.4 million of our most expensive debt, the 7.75% senior subordinated notes due February 2019 (“2019 Notes”), between September 2015 and September 2016;
|
•
|
we completed the issuance of $15.0 million of Solid Waste Disposal Revenue Bonds Series 2014R-2 (“New York Bonds 2016”) in June 2016;
|
•
|
we completed the issuance of $15.0 million of Finance Authority of Maine Solid Waste Disposal Revenue Bonds Series 2015 (“FAME Bonds 2015”) in August 2015; and
|
•
|
we completed the refinancing of our senior revolving credit and letter of credit facility that was due March 2016 to our senior secured asset-based revolving credit and letter of credit facility due February 2020 (“ABL Facility”), which included the issuance of an additional $60.0 million of 2019 Notes, in February 2015.
|
•
|
the repurchase price and write-off of debt issuance costs and unamortized original issue discount associated with the early redemption, repurchase and retirement of partial portions of our 2019 Notes; and
|
•
|
the write-off of debt issuance costs in connection with changes to the borrowing capacity from our previous senior revolving credit and letter of credit facility that was due March 2016 to the ABL Facility in the nine months ended September 30, 2015.
|
|
Three Months Ended September 30,
|
|
$
Change
|
|
Nine Months Ended September 30,
|
|
$
Change
|
||||||||||||||||
Segment
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|||||||||||||||
Eastern
|
$
|
47.2
|
|
|
$
|
46.1
|
|
|
$
|
1.1
|
|
|
$
|
131.6
|
|
|
$
|
123.2
|
|
|
$
|
8.4
|
|
Western
|
63.2
|
|
|
62.4
|
|
|
0.8
|
|
|
175.1
|
|
|
173.4
|
|
|
1.7
|
|
||||||
Recycling
|
14.4
|
|
|
12.7
|
|
|
1.7
|
|
|
37.9
|
|
|
34.5
|
|
|
3.4
|
|
||||||
Other
|
26.3
|
|
|
25.0
|
|
|
1.3
|
|
|
76.6
|
|
|
75.4
|
|
|
1.2
|
|
||||||
Total
|
$
|
151.1
|
|
|
$
|
146.2
|
|
|
$
|
4.9
|
|
|
$
|
421.2
|
|
|
$
|
406.5
|
|
|
$
|
14.7
|
|
|
Period-to-Period Change for the Three Months Ended September 30, 2016 vs. 2015
|
|
Period-to-Period Change for the Nine Months Ended September 30, 2016 vs. 2015
|
||||||||||
|
Amount
|
|
% of Growth
|
|
Amount
|
|
% of Growth
|
||||||
Price
|
$
|
1.4
|
|
|
3.0
|
%
|
|
$
|
4.5
|
|
|
3.7
|
%
|
Volume
|
(0.1
|
)
|
|
(0.3
|
)%
|
|
3.9
|
|
|
3.1
|
%
|
||
Commodity price and volume
|
(0.2
|
)
|
|
(0.3
|
)%
|
|
—
|
|
|
—
|
%
|
||
Solid waste
|
$
|
1.1
|
|
|
2.4
|
%
|
|
$
|
8.4
|
|
|
6.8
|
%
|
•
|
$0.8 million
from
favorable
collection pricing, including a floating sustainability recycling adjustment fee; and
|
•
|
$0.6 million
from
favorable
disposal pricing related to transfer stations and landfills.
|
•
|
$3.1 million
from
favorable
collection pricing, including a floating sustainability recycling adjustment fee; and
|
•
|
$1.4 million
from
favorable
disposal pricing related to transfer stations and landfills.
|
•
|
$(0.6) million
from
lower
disposal volumes (of which $(0.3) million relates to lower landfill volumes and $(0.3) million relates to lower transfer station volumes); partially offset by
|
•
|
$0.4 million
from
higher
collection volumes.
|
•
|
$3.6 million
from
higher
collection volumes; and
|
•
|
$0.3 million
from
higher
disposal volumes (of which $0.1 million relates to higher landfill volumes and $0.2 million relates to higher transfer station volumes).
|
|
Period-to-Period Change for the Three Months Ended September 30, 2016 vs. 2015
|
|
Period-to-Period Change for the Nine Months Ended September 30, 2016 vs. 2015
|
||||||||||
|
Amount
|
|
% of Growth
|
|
Amount
|
|
% of Growth
|
||||||
Price
|
$
|
2.0
|
|
|
3.1
|
%
|
|
$
|
6.5
|
|
|
3.8
|
%
|
Volume
|
(1.9
|
)
|
|
(3.0
|
)%
|
|
(5.3
|
)
|
|
(3.1
|
)%
|
||
Commodity price and volume
|
0.2
|
|
|
0.4
|
%
|
|
(0.4
|
)
|
|
(0.2
|
)%
|
||
Acquisitions & divestitures
|
0.5
|
|
|
0.8
|
%
|
|
0.9
|
|
|
0.5
|
%
|
||
Solid waste
|
$
|
0.8
|
|
|
1.3
|
%
|
|
$
|
1.7
|
|
|
1.0
|
%
|
•
|
$1.6 million
from
favorable
collection pricing, including a floating sustainability recycling adjustment fee; and
|
•
|
$0.3 million
from
favorable
disposal pricing related to landfills.
|
•
|
$5.8 million
from
favorable
collection pricing, including a floating sustainability recycling adjustment fee; and
|
•
|
$0.8 million
from
favorable
disposal pricing related to transfer stations and landfills.
|
•
|
$(1.1) million
from
lower
disposal volumes (of which $(1.5) million relates to lower transportation volumes associated with lower drill cutting volumes and $0.3 million relates to higher transfer station volumes); and
|
•
|
$(0.7) million
from
lower
collection volumes.
|
•
|
$(2.9) million
from
lower
disposal volumes (of which $(1.2) million relates to lower landfill volumes, including lower drill cutting volumes, $(2.3) million relates to lower transportation volumes associated with lower drill cutting volumes, and $0.6 million relates to higher transfer station volumes); and
|
•
|
$(2.3) million
from
lower
collection volumes.
|
•
|
$0.2 million
from favorable commodity and energy pricing and higher volumes within our landfill gas-to-energy and processing operations.
|
•
|
$(0.4) million
from unfavorable energy pricing within our landfill gas-to-energy operations, partially offset by higher volumes within our landfill gas-to-energy operations and favorable commodity pricing within our processing operations.
|
|
Three Months Ended September 30,
|
|
$
Change
|
|
Nine Months Ended September 30,
|
|
$
Change
|
||||||||||||||||
Segment
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|||||||||||||||
Eastern
|
$
|
4.5
|
|
|
$
|
4.5
|
|
|
$
|
—
|
|
|
$
|
6.7
|
|
|
$
|
7.2
|
|
|
$
|
(0.5
|
)
|
Western
|
11.4
|
|
|
7.8
|
|
|
3.6
|
|
|
24.6
|
|
|
20.5
|
|
|
4.1
|
|
||||||
Recycling
|
1.5
|
|
|
0.3
|
|
|
1.2
|
|
|
0.9
|
|
|
(2.1
|
)
|
|
3.0
|
|
||||||
Other
|
—
|
|
|
0.1
|
|
|
(0.1
|
)
|
|
2.7
|
|
|
1.6
|
|
|
1.1
|
|
||||||
Total
|
$
|
17.4
|
|
|
$
|
12.7
|
|
|
$
|
4.7
|
|
|
$
|
34.9
|
|
|
$
|
27.2
|
|
|
$
|
7.7
|
|
•
|
higher third-party disposal costs on a year-to-date basis associated with higher collection and, to a lesser extent, higher disposal volumes from organic customer growth;
|
•
|
higher quarterly labor and related benefit costs on higher collection volumes;
|
•
|
higher direct operational costs (including gas control and other landfill operating costs, higher equipment rental costs, and higher vehicle self-insurance costs); and
|
•
|
higher year-to-date, and to a lesser extent quarterly, facility maintenance and repair costs; partially offset by
|
•
|
lower diesel fuel costs on lower prices;
|
•
|
lower landfill operating lease amortization due to a lower rate and lower tons at our Southbridge landfill;
|
•
|
lower host royalty fees at our Southbridge landfill; and
|
•
|
lower fleet maintenance costs.
|
•
|
an increase in the amortization rates at our Southbridge landfill; and
|
•
|
higher overall landfill tons on a year-to-date basis.
|
•
|
lower third-party hauling and transportation costs associated with lower collection and transportation volumes;
|
•
|
lower healthcare costs related to plan improvements and lower overall claim activity;
|
•
|
lower labor and related benefit costs on lower volumes;
|
•
|
lower fleet maintenance costs; and
|
•
|
lower diesel fuel costs on lower prices and volumes; partially offset by
|
•
|
higher year-to-date direct operational costs (including higher equipment rental costs, higher vehicle self-insurance costs, higher host royalty fees, and higher landfill operating lease amortization);
|
•
|
higher workers compensation costs; and
|
•
|
higher facility maintenance costs.
|
•
|
higher maintenance costs; partially offset by
|
•
|
lower year-to-date purchased material costs.
|
|
September 30,
2016 |
|
December 31,
2015 |
||||
Cash and cash equivalents
|
$
|
3.6
|
|
|
$
|
2.3
|
|
Restricted assets:
|
|
|
|
||||
Restricted cash - capital projects
|
$
|
—
|
|
|
$
|
1.4
|
|
Restricted investments - landfill closure
|
0.9
|
|
|
0.9
|
|
||
Total restricted assets
|
$
|
0.9
|
|
|
$
|
2.3
|
|
Long-term debt:
|
|
|
|
||||
Current portion
|
$
|
1.6
|
|
|
$
|
1.4
|
|
Long-term portion
|
499.0
|
|
|
506.0
|
|
||
Total long-term debt
|
$
|
500.6
|
|
|
$
|
507.4
|
|
|
Nine Months Ended September 30,
|
|
$
Change
|
||||||||
|
2016
|
|
2015
|
|
|||||||
Net cash provided by operating activities
|
$
|
56.1
|
|
|
$
|
40.5
|
|
|
$
|
15.6
|
|
Net cash used in investing activities
|
$
|
(43.7
|
)
|
|
$
|
(27.5
|
)
|
|
$
|
(16.2
|
)
|
Net cash used in financing activities
|
$
|
(11.2
|
)
|
|
$
|
(13.2
|
)
|
|
$
|
2.0
|
|
|
Nine Months Ended
September 30, |
||||||
|
2016
|
|
2015
|
||||
Net income (loss)
|
$
|
5.1
|
|
|
$
|
(4.8
|
)
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
46.4
|
|
|
46.4
|
|
||
Depletion of landfill operating lease obligations
|
7.1
|
|
|
7.0
|
|
||
Interest accretion on landfill and environmental remediation liabilities
|
2.7
|
|
|
2.6
|
|
||
Amortization of debt issuance costs and discount on long-term debt
|
3.1
|
|
|
2.9
|
|
||
Stock-based compensation
|
2.4
|
|
|
2.3
|
|
||
Gain on sale of property and equipment
|
(0.5
|
)
|
|
(0.1
|
)
|
||
Divestiture transactions
|
—
|
|
|
(5.6
|
)
|
||
Loss on debt extinguishment
|
0.7
|
|
|
0.9
|
|
||
Loss on derivative instruments
|
—
|
|
|
0.2
|
|
||
Excess tax benefit on the vesting of share based awards
|
—
|
|
|
(0.2
|
)
|
||
Deferred income taxes
|
0.5
|
|
|
0.6
|
|
||
|
67.5
|
|
|
52.2
|
|
||
Changes in assets and liabilities, net
|
(11.4
|
)
|
|
(11.7
|
)
|
||
Net cash provided by operating activities
|
$
|
56.1
|
|
|
$
|
40.5
|
|
•
|
higher revenues of
$14.7 million
driven by our collection line-of-business, as well as our Organics and Recycling businesses; and
|
•
|
lower cost of operations of
$(1.8) million
driven by lower third-party direct costs, lower labor and related benefit costs, and lower fuel costs; partially offset by
|
•
|
higher general and administration expenses of
$3.2 million
driven by higher labor and related benefit costs.
|
•
|
favorable cash flow impacts associated with accounts receivable and accounts payable; partially offset by
|
•
|
the unfavorable cash flow impacts associated with prepaid expenses, inventories and other assets.
|
•
|
the issuance of an additional $60.0 million of 2019 Notes and the refinancing of our previous senior revolving credit and letter of credit facility that was due March 2016 ("Senior Credit Facility") in the
nine
months ended
September 30, 2015
; and
|
•
|
the repurchase or redemption, as applicable, and retirement of $24.7 million aggregate principal amount of 2019 Notes in the
nine
months ended
September 30, 2016
in order to maximize interest savings by paying down our most expensive debt.
|
•
|
in the nine months ended September 30, 2015, we obtained $5.6 million of restricted cash associated with the issuance of $15.0 million aggregate principal amount of FAME Bonds 2015 and used $6.9 million of the restricted cash associated with the issuance of the FAME Bonds 2015 and the New York Bonds 2014 to pay down ABL Facility borrowings used to finance certain capital projects in the states of New York and Maine;
|
•
|
in the nine months ended September 30, 2016, we used the remaining $1.3 million of restricted cash associated with the issuance of FAME Bonds 2015 to pay down ABL Facility borrowings for costs incurred to fund certain capital projects in the state of Maine; and
|
•
|
in the nine months ended September 30, 2016, we obtained $3.0 million of restricted cash from the issuance of $15.0 million aggregate principal amount of New York Bonds 2016 and subsequently used these funds to pay down ABL Facility borrowings for costs incurred to fund certain capital projects in the state of New York.
|
|
Twelve Months Ended September 30, 2016
|
|
Covenant Requirement at September 30, 2016
|
||
Maximum consolidated net leverage ratio (1)
|
4.41
|
|
|
5.375
|
|
(1)
|
The maximum consolidated net leverage ratio is calculated as consolidated funded debt, net of unencumbered cash and cash equivalents in excess of $2.0 million (calculated at $535.5 million as of
September 30, 2016
, or $515.3 million of consolidated funded debt less $1.6 million of cash and cash equivalents in excess of $2.0 million as of
September 30, 2016
and including $21.8 million of cash expenditures associated with the Redemption and repayment of the ABL Facility), divided by minimum consolidated EBITDA. Minimum consolidated EBITDA is based on operating results for the twelve months preceding the measurement date of
September 30, 2016
. Consolidated funded debt, net unencumbered cash and cash equivalents in excess of $2.0 million, and minimum consolidated EBITDA are non-GAAP financial measures that should not be considered an alternative to any measure of financial performance calculated and presented in accordance with generally accepted accounting principles in the United States. A reconciliation of net cash provided by operating activities to minimum consolidated EBITDA is as follows (in millions):
|
|
Twelve Months Ended September 30, 2016
|
||
Net cash provided by operating activities
|
$
|
86.0
|
|
Changes in assets and liabilities, net of effects of acquisitions and divestitures
|
(1.5
|
)
|
|
Divestiture transactions
|
(0.1
|
)
|
|
Gain on sale of property and equipment
|
0.5
|
|
|
Loss on debt extinguishment
|
(0.9
|
)
|
|
Stock based compensation, net of excess tax benefit
|
(3.1
|
)
|
|
Impairment of investments
|
(2.1
|
)
|
|
Interest expense, less amortization of debt issuance costs and discount on long-term debt
|
35.6
|
|
|
Provision for income taxes, net of deferred taxes
|
(0.1
|
)
|
|
Other adjustments as allowed by the Credit Facility agreement
|
7.2
|
|
|
Minimum consolidated EBITDA
|
$
|
121.5
|
|
•
|
the volume of waste relating to C&D activities decreases substantially during the winter months in the northeastern United States; and
|
•
|
decreased tourism in Vermont, New Hampshire, Maine and eastern New York during the winter months tends to lower the volume of waste generated by commercial and restaurant customers, which is partially offset by increased volume from the ski industry.
|
ITEM 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 4.
|
CONTROLS AND PROCEDURES
|
ITEM 1.
|
LEGAL PROCEEDINGS
|
|
Nine Months Ended September 30,
|
||||||
|
2016
|
|
2015
|
||||
Beginning balance
|
$
|
5.2
|
|
|
$
|
5.1
|
|
Accretion expense
|
—
|
|
|
0.1
|
|
||
Obligations settled (1)
|
(0.2
|
)
|
|
—
|
|
||
Ending balance
|
$
|
5.0
|
|
|
$
|
5.2
|
|
(1)
|
Includes amounts that are being processed through accounts payable as a part of our disbursement cycle.
|
ITEM 1A.
|
RISK FACTORS
|
•
|
minimum consolidated EBITDA to consolidated cash interest charges ratio; and
|
•
|
maximum consolidated funded debt (net of up to an agreed amount of cash and cash equivalents) to consolidated EBITDA ratio.
|
ITEM 6.
|
EXHIBITS
|
|
Casella Waste Systems, Inc.
|
|
|
Date: November 4, 2016
|
By: /s/ Christopher B. Heald
|
|
Christopher B. Heald
|
|
Vice President and Chief Accounting Officer
|
|
(Principal Accounting Officer)
|
|
|
Date: November 4, 2016
|
By: /s/ Edmond R. Coletta
|
|
Edmond R. Coletta
|
|
Senior Vice President and Chief Financial Officer
|
|
(Principal Financial Officer)
|
10.1
|
|
Credit Agreement, dated as of October 17, 2016, among Casella Waste Systems, Inc., the subsidiaries of Casella Waste Systems, Inc. identified therein and Bank of America, N.A., as agent for the lender party thereto (incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K of Casella Waste Systems, Inc. as filed on October 17, 2016 (file No. 000-232111)).
|
31.1 +
|
|
Certification of John W. Casella, Principal Executive Officer, pursuant to Section 302 of the Sarbanes – Oxley Act of 2002.
|
31.2 +
|
|
Certification of Edmond R. Coletta, Principal Financial Officer, pursuant to Section 302 of the Sarbanes – Oxley Act of 2002.
|
32.1 ++
|
|
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes- Oxley Act of 2002.
|
32.2 ++
|
|
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes- Oxley Act of 2002.
|
101.INS
|
|
XBRL Instance Document.**
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document.**
|
101.CAL
|
|
XBRL Taxonomy Calculation Linkbase Document.**
|
101.LAB
|
|
XBRL Taxonomy Label Linkbase Document.**
|
101.PRE
|
|
XBRL Taxonomy Presentation Linkbase Document.**
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document.**
|
**
|
Submitted Electronically Herewith. Attached as Exhibit 101 to this report are the following formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Balance Sheets as of September 30, 2016 and December 31, 2015, (ii) Consolidated Statements of Operations for the three and nine months ended September 30, 2016 and 2015, (iii) Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended September 30, 2016 and 2015, (iv) Consolidated Statement of Stockholders’ Deficit for the nine months ended September 30, 2016, (v) Consolidated Statements of Cash Flows for the nine months ended September 30, 2016 and 2015, and (vi) Notes to Consolidated Financial Statements.
|
+
|
Filed Herewith
|
++
|
Furnished Herewith
|
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