CWST Casella Waste Systems Inc

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/

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