CWST Casella Waste Systems Inc

RUTLAND, Vt., Dec. 7 /PRNewswire-FirstCall/ -- Casella Waste Systems, Inc. (NASDAQ:CWST), a regional, non-hazardous solid waste services company, today reported financial results for the second quarter and first six months of its 2006 fiscal year. Second Quarter Results For the quarter ended October 31, 2005, the company reported revenues of $136.8 million, up $10.4 million, or 8.2 percent over the same quarter last year. The company's net income per common share was $0.13, up $0.03 over the same quarter last year. Operating income for the quarter was $13.7 million, up $950,000, or 7.4 percent over the same quarter last year. Cash provided by operating activities in the quarter was $14.0 million, down $2.2 million, or 13.3 percent compared to the same quarter last year. The company's earnings before interest, taxes, depreciation and amortization (EBITDA) were $30.6 million*, essentially unchanged from the same quarter last year. For the six months ended October 31, 2005, the company reported revenues of $268.8 million. The company's net income per common share was $0.22. Operating income for the six month period was $26.8 million. Cash provided by operating activities for the period was $36.6 million. The company's earnings before interest, taxes, depreciation and amortization (EBITDA) were $59.8 million*. Highlights of the Quarter "Our internal growth was solid, even taking into account the fuel and energy headwinds that everyone is facing," John W. Casella, chairman and chief executive officer, said. "Business conditions continue to present a mixed set of challenges," Casella said. "Margin improvement continues to be challenged mainly due to higher transportation and fuel costs. "The company also began operating the Chemung County landfill during the quarter. This is a superb facility right in the heart of our western New York state market. "The landfill's current utilization rate is 120,000 tons of municipal solid waste (MSW) per year, and we've begun efforts to increase the facility's capacity in accordance with the host community agreement and the public- private partnership," Casella said. The company said it also believes it will meet the low end of the range of its fiscal year 2006 EBITDA* guidance of $112.0 million to $116.0 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, December 8, 2005 at 10:00 a.m. ET. Individuals interested in participating in the call should dial 719-457-2659 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 #2066499) before 11:59 p.m. ET, Thursday, December 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. CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In thousands, except amounts per share) Three Months Ended Six Months Ended October 31, October 31, October 31, October 31, 2004 2005 2004 2005 Revenues $126,381 $136,795 $250,053 $268,795 Operating expenses: Cost of operations 79,385 88,043 157,663 173,630 General and administration 16,370 18,132 31,885 35,350 Depreciation and amortization 17,575 16,914 34,798 33,047 Deferred costs 295 - 295 - 113,625 123,089 224,641 242,027 Operating income 12,756 13,706 25,412 26,768 Other expense/ (income), net: Interest expense, net 7,240 7,821 14,327 15,172 Income from equity method investments (994) (1,513) (927) (1,443) Other (income)/expense 220 (133) 751 (83) 6,466 6,175 14,151 13,646 Income from continuing operations before income taxes and discontinued operations 6,290 7,531 11,261 13,122 Provision for income taxes 2,805 3,374 5,014 5,857 Income from continuing operations before discontinued operations 3,485 4,157 6,247 7,265 Discontinued Operations: Income from discontinued operations, net of income taxes 59 - 140 - Loss on disposal of discontinued operations, net of income taxes (150) - (150) - Net income 3,394 4,157 6,237 7,265 Preferred stock dividend 832 854 1,670 1,704 Net income available to common stockholders $2,562 $3,303 $4,567 $5,561 Common stock and common stock equivalent shares outstanding, assuming full dilution 25,003 25,358 25,040 25,277 Net income per common share before discontinued operations $0.11 $0.13 $0.18 $0.22 Net income per common share $0.10 $0.13 $0.18 $0.22 EBITDA (1) $30,626 $30,620 $60,505 $59,815 CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (In thousands) April 30, October 31, ASSETS 2005 2005 CURRENT ASSETS: Cash and cash equivalents $8,578 $7,579 Restricted cash 70 71 Accounts receivable -- trade, net of allowance for doubtful accounts 51,726 57,832 Other current assets 9,009 11,264 Total current assets 69,383 76,746 Property, plant and equipment, net of accumulated depreciation 412,753 453,628 Goodwill 157,492 169,610 Intangible assets, net 2,711 3,308 Restricted cash 12,124 12,253 Investments in unconsolidated entities 37,699 37,691 Other non-current assets 20,292 16,570 $712,454 $769,806 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Current maturities of long-term debt $281 $769 Current maturities of capital lease obligations 632 1,025 Accounts payable 46,107 43,700 Other accrued liabilities 45,734 42,267 Total current liabilities 92,754 87,761 Long-term debt, less current maturities 378,436 425,479 Capital lease obligations, less current maturities 1,475 2,274 Other long-term liabilities 33,043 39,425 Series A redeemable, convertible preferred stock 67,964 68,702 Stockholders' equity 138,782 146,165 $712,454 $769,806 CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands) Six Months Ended October 31, October 31, 2004 2005 Cash Flows from Operating Activities: Net income $6,237 $7,265 Adjustments to reconcile net income to net cash provided by operating activities -- Depreciation and amortization 34,798 33,047 Depletion of landfill operating lease obligations 2,588 2,974 Loss on disposal of discontinued operations, net 150 - Income from equity method investment (927) (1,443) Deferred costs 295 - Loss on sale of equipment 113 41 Deferred income taxes 3,701 3,993 Changes in assets and liabilities, net of effects of acquisitions and divestitures (11,109) (9,273) 29,609 29,339 Net Cash Provided by Operating Activities 35,846 36,604 Cash Flows from Investing Activities: Acquisitions, net of cash acquired (5,040) (15,507) Additions to property, plant and equipment -- Growth (10,289) (25,878) -- Maintenance (32,144) (39,021) Payments on landfill operating lease contracts (17,326) (5,869) Proceeds from divestitures 3,050 - Other 1,546 1,191 Net Cash Used In Investing Activities (60,203) (85,084) Cash Flows from Financing Activities: Proceeds from long-term borrowings 83,950 111,672 Principal payments on long-term debt (63,052) (64,807) Proceeds from exercise of stock options 224 616 Net Cash Provided by Financing Activities 21,122 47,481 Net decrease in cash and cash equivalents (3,235) (999) Cash and cash equivalents, beginning of period 8,007 8,578 Cash and cash equivalents, end of period $4,772 $7,579 CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES (Unaudited) (In thousands) Note 1: Non-GAAP Financial Measures In addition to disclosing financial results prepared in accordance with Generally Accepted Accounting Principles (GAAP), we also disclose EBITDA (earnings before interest, taxes, depreciation and amortization, deferred costs and impairment charge) 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. Following is a reconciliation of EBITDA to Cash Provided by Operating Activities: Three Months Ended Six Months Ended October 31, October 31, October 31, October 31, 2004 2005 2004 2005 Cash Provided by Operating Activities $16,133 $13,983 $35,846 $36,604 Changes in assets and liabilities, net of effects of acquisitions and divestitures 7,310 9,335 11,109 9,273 Deferred income taxes (1,946) (2,272) (3,701) (3,993) Income from discontinued operations (59) - (140) - Provision for income taxes 2,805 3,374 5,014 5,857 Interest expense, net 7,240 7,821 14,327 15,172 Depletion of landfill operating lease obligations (1,241) (1,545) (2,588) (2,974) Other (expense) income, net 384 (76) 638 (124) EBITDA $30,626 $30,620 $60,505 $59,815 Following is a reconciliation of Free Cash Flow to Cash Provided by Operating Activities: Three Months Six Months Ended October Ended October 31, 2005 31, 2005 EBITDA $30,620 $59,815 Add (deduct): Cash interest (12,546) (12,823) Capital expenditures (30,284) (64,899) Cash taxes (531) (1,059) Depletion of landfill operating lease obligations 1,545 2,974 Change in working capital, adjusted for non-cash items (4,098) (10,894) FREE CASH FLOW (15,294) (26,886) Add (deduct): Capital expenditures 30,284 64,899 Other (1,007) (1,409) Cash Provided by Operating Activities $13,983 $36,604 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 Six Months Ended October 31, October 31, 2004 2005 2004 2005 Collection $62,156 $66,152 $123,846 $131,419 Landfill / disposal facilities 22,091 26,498 42,525 49,761 Transfer 11,520 11,913 23,116 23,562 Recycling 30,614 32,232 60,566 64,053 Total revenues $126,381 $136,795 $250,053 $268,795 Components of revenue growth for the three months ended October 31, 2005 compared to the three months ended October 31, 2004: Percentage Solid Waste Operations (1) Price 5.3% Volume -0.4% Solid waste commodity price and volume 0.0% Total growth -- Solid Waste Operations 4.9% FCR Operations (1) Price 2.0% Volume 3.3% Total growth -- Recycling Operations 5.3% Rollover effect of acquisitions (as a percentage of total revenue) 3.2% Divestitures (as a percentage of total revenue) -0.3% Total revenue growth 8.2% (1) -- Calculated as a percentage of segment revenues. Solid Waste Internalization Rates by Region: Three Months Ended Six Months Ended October 31, October 31, 2004 2005 2004 2005 North Eastern region 58.9% 54.5% 57.9% 57.7% South Eastern region 49.0% 53.9% 51.6% 52.7% Central region 79.8% 79.2% 80.0% 78.7% Western region 36.6% 42.2% 40.8% 41.7% Solid waste operations 55.0% 57.7% 56.8% 57.3% US GreenFiber (50% owned) Financial Statistics: Three Months Ended Six Months Ended October 31, October 31, 2004 2005 2004 2005 Revenue $35,638 $42,934 $68,873 $74,538 Net Income 1,988 3,026 1,854 2,886 Cash flow from operations 3,273 5,456 6,269 9,965 Net working capital changes (94) 686 1,664 3,596 EBITDA $3,367 $4,770 $4,605 $6,369 As a percentage of revenue: Net income 5.6% 7.0% 2.7% 3.9% EBITDA 9.4% 11.1% 6.7% 8.5% Breakdown of Growth versus Maintenance Capital Expenditures (1): Three Months Six Months Ended October 31, Ended October 31, Growth Capital Expenditures: Landfill Development $10,342 $18,601 Boston MRF Building - 5,998 Other 595 1,279 Total Growth Capital Expenditures 11,316 26,257 Maintenance Capital Expenditures: Vehicles, Machinery / Equipment and Containers 7,769 21,494 Landfill Construction 8,470 12,782 Facilities 2,678 3,755 Other 430 989 Total Maintenance Capital Expenditures 18,968 38,642 Total Capital Expenditures $30,284 $64,899 (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 Joseph Fusco, vice president, both of Casella Waste Systems, Inc., +1-802-775-0325 Web site: http://www.casella.com/

Copyright