CWST Casella Waste Systems Inc

RUTLAND, Vt., Sept. 6 /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 2007 fiscal year. First Quarter Results For the quarter ended July 31, 2006, the company reported revenues of $143.5 million versus $132.0 million for the same period in fiscal year 2006. The company's net loss per common share was $0.04, versus net income per common share of $0.09 for the same period a year ago. Operating income for the quarter was $8.7 million versus $13.0 million for the same quarter a year ago. Cash provided by operating activities in the quarter was $18.4 million versus $22.6 million in the first quarter last year. The company's earnings before interest, taxes, depreciation and amortization (EBITDA*) was $26.6 million* versus $29.1 million in the first quarter last year. As of July 31, 2006, the company had cash on hand of $6.7 million, and had an outstanding total debt level of $459.7 million. "Obviously, as we indicated during our pre-release in mid-August, we are disappointed in the company's performance this quarter," John W. Casella, chairman and chief executive officer, said. "As we indicated in mid-August, these results reflect the cumulative impact of a number of factors, including historical record rainfalls affecting already-flat seasonal construction activity, as well as landfill maintenance costs, landfill volume pressures in our Massachusetts market, a drop in plastics commodities pricing, and additional and front-loaded general and administration expenses." Business Update The company pointed to positive trends in its business environment: * In the company's market, the slower-growing northeastern U.S., solid waste pricing remains positive at nearly 2 percent, exclusive of the company's fuel surcharge, over the same quarter a year ago; * The company's internalization rate was up 2.6 percent on a year-over-year basis, driven primarily by the Western region. The company also said EBITDA* from its joint venture, US GreenFiber, increased $1.1 million, or 67.0 percent, on a year-over-year basis in Casella Waste Systems' fiscal year first quarter. Updated Fiscal 2007 Outlook The company also updated its guidance for its fiscal year 2007, which began May 1, 2006. For the fiscal year 2007, the company believes that its results will be approximately in the following ranges: * Revenues between $550.0 million and $570.0 million; * EBITDA* between $113.0 million and $117.0 million; * Capital expenditures between $100.0 million and $104.0 million; and * Free cash flow between $(30.0) million and $(22.0) million. The EBITDA forecast is based on estimated projections of net cash provided by operating activities of $80.0 million to $84.0 million, interest expense of approximately $39.5 million, depletion of landfill operating leases of $8.0 million, cash taxes of $2.5 million, and positive changes in other assets and liabilities of $4.0 million. Free cash flow of $(30.0) million to $(22.0) million is based on net cash provided by operating activities of $80.0 million to $84.0 million, less estimated capital expenditures of $100.0 million to $104.0 million and other balance sheet changes. *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. 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 (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 7, 2006 at 10:00 a.m. ET. Individuals interested in participating in the call should dial (719) 457-2645 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 #6374936) before 11:59 p.m. ET, Thursday, September 14, 2006, 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: we may be unable to make acquisitions and otherwise develop additional disposal capacity; 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 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 July 31, July 31, 2005 2006 Revenues $132,000 $143,519 Operating expenses: Cost of operations 85,686 95,735 General and administration 17,218 21,179 Depreciation and amortization 16,134 17,942 119,038 134,856 Operating income (1) 12,962 8,663 Other expense/(income), net: Interest expense, net 7,350 9,504 (Income) loss from equity method investments 70 (123) Other income (1) (48) (55) 7,372 9,326 (Loss) income before income taxes 5,590 (663) (Benefit) provision for income taxes 2,483 (610) Net (loss) income 3,107 (53) Preferred stock dividend 850 881 Net (loss) income available to common stockholders $2,257 $(934) Common stock and common stock equivalent shares outstanding, assuming full dilution 25,218 25,236 Net (loss) income per common share $0.09 $(0.04) EBITDA (2) $29,096 $26,605 CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS Unaudited (In thousands) April 30, July 31, ASSETS 2006 2006 CURRENT ASSETS: Cash and cash equivalents $7,429 $6,667 Restricted cash 72 72 Accounts receivable - trade, net of allowance for doubtful account 56,269 61,368 Other current assets 15,204 16,656 Total current assets 78,974 84,763 Property, plant and equipment, net of accumulated depreciation 481,284 494,951 Goodwill 171,258 171,602 Intangible assets, net 2,762 2,570 Restricted cash 17,887 13,686 Investments in unconsolidated entities 44,491 45,262 Other non-current assets 14,455 14,050 $811,111 $826,884 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Current maturities of long-term debt $527 $1,412 Current maturities of capital lease obligations 1,061 1,080 Accounts payable 46,364 46,309 Other accrued liabilities 46,813 52,004 Total current liabilities 94,765 100,805 Long-term debt, less current maturities 452,720 460,512 Capital lease obligations, less current maturities 1,747 1,477 Other long-term liabilities 41,959 42,772 Series A redeemable, convertible preferred stock 70,430 71,311 Stockholders' equity 149,490 150,007 $811,111 $826,884 CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Unaudited (In thousands) Three Months Ended July 31, July 31, 2005 2006 Cash Flows from Operating Activities: Net (loss) income $3,107 $(53) Adjustments to reconcile net income to net cash provided by operating activities - Depreciation and amortization 16,134 17,942 Depletion of landfill operating lease obligations 1,428 1,924 (Income) loss from equity method investments 70 (123) (Gain) loss on sale of equipment 99 (256) Stock-based compensation - 134 Excess tax benefit on the exercise of stock options - (141) Deferred income taxes 1,721 (1,135) Changes in assets and liabilities, net of effects of acquisitions and divestitures 62 101 19,514 18,446 Net Cash Provided by Operating Activities 22,621 18,393 Cash Flows from Investing Activities: Acquisitions, net of cash acquired (1,044) (632) Additions to property, plant and equipment - growth (14,941) (8,487) - maintenance (19,675) (23,783) Payments on landfill operating lease contracts (428) (618) Restricted cash from revenue bond issuance - 4,419 Other 638 456 Net Cash Used In Investing Activities (35,450) (28,645) Cash Flows from Financing Activities: Proceeds from long-term borrowings 35,955 139,200 Principal payments on long-term debt (24,931) (130,751) Proceeds from exercise of stock options - 900 Excess tax benefit on the exercise of stock options - 141 Net Cash Provided by Financing Activities 11,024 9,490 Net decrease in cash and cash equivalents (1,805) (762) Cash and cash equivalents, beginning of period 8,578 7,429 Cash and cash equivalents, end of period $6,773 $6,667 CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES Unaudited (In thousands) Note 1: Reclassifications Effective May 1, 2006, the Company began recording (gain) loss on sale of equipment as a component of cost of operations. Previously this had been recorded as a component of other income. Accordingly, (gain) loss on sale of equipment for the three months ended July 31, 2005 has been reclassified to conform to current year presentation. 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) 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 July 31, July 31, 2005 2006 Net Cash Provided by Operating Activities $22,621 $18,393 Changes in assets and liabilities, net of effects of acquisitions and divestitures (62) (101) Deferred income taxes (1,721) 1,135 Stock-based compensation - (134) Excess tax benefit on the exercise of stock options - 141 (Benefit) provision for income taxes 2,483 (610) Interest expense, net 7,350 9,504 Depletion of landfill operating lease obligations (1,428) (1,924) Gain (loss) on sale of equipment (99) 256 Other expense, net (48) (55) EBITDA $29,096 $26,605 Following is a reconciliation of Free Cash Flow to Net Cash Provided by Operating Activities: Three Months Ended July 31, July 31, 2005 2006 EBITDA $29,096 $26,605 Add (deduct): Cash interest (276) (3,631) Capital expenditures (34,616) (32,270) Cash taxes (528) (656) Depletion of landfill operating lease obligations 1,428 1,924 Change in working capital, adjusted for non-cash items (6,795) (4,609) FREE CASH FLOW (11,691) (12,637) Add (deduct): Capital expenditures 34,616 32,270 Other (304) (1,240) Net Cash Provided by Operating Activities $22,621 $18,393 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 July 31, 2005 2006 Collection $65,267 $68,497 Landfill / disposal facilities 23,263 28,376 Transfer 11,649 12,309 Recycling 31,821 34,337 Total revenues $132,000 $143,519 Components of revenue growth for the three months ended July 31, 2006 compared to the three months ended July 31, 2005: Percentage Solid Waste Operations(1) Price 3.0% Volume -0.9% Solid waste commodity price and volume 0.3% Total growth - Solid Waste Operations 2.4% FCR Operations (1) Price -1.0% Volume 4.3% Total growth - FCR Operations 3.3% Rollover effect of acquisitions (as a percentage of total revenues) 5.6% Divestitures (as a percentage of total revenues) -0.4% Total revenue growth 8.7% (1) - Calculated as a percentage of segment revenues. Solid Waste Internalization Rates by Region: Three Months Ended July 31, 2005 2006 North Eastern region 60.5% 57.8% South Eastern region 41.9% 39.5% Central region 78.2% 79.0% Western region 41.2% 50.3% Solid waste operations 55.7% 58.3% US GreenFiber (50% owned) Financial Statistics: Three Months Ended July 31, 2005 2006 Revenues $31,599 $44,396 Net Income (loss) (140) 515 Cash flow from operations 4,504 8,179 Net working capital changes 2,888 5,480 EBITDA $1,616 $2,699 As a percentage of revenue: Net income -0.4% 1.2% EBITDA 5.1% 6.1% Components of Growth versus Maintenance Capital Expenditures (1): Three Months Ended July 31, 2005 2006 Growth Capital Expenditures: Landfill Development $8,259 $6,022 Boston MRF Building 5,998 - MRF Equipment Upgrades - 845 Other 684 1,620 Total Growth Capital Expenditures 14,941 8,487 Maintenance Capital Expenditures: Vehicles, Machinery / Equipment and Containers 13,726 13,830 Landfill Construction & Equipment 4,312 8,077 Facilities 1,077 1,039 Other 560 837 Total Maintenance Capital Expenditures 19,675 23,783 Total Capital Expenditures $34,616 $32,270 (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 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 at +1-802-775-0325 Web site: http://www.casella.com/

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