Casella Waste Systems, Inc. (NASDAQ: CWST), a regional vertically
integrated solid waste, recycling and resource management services
company, announced today that it has acquired all of the
outstanding capital stock of Blow Bros. (d/b/a Bestway Disposal
Services and BBI Waste Industries) ("BBI"), for a total
consideration of up to $20.0 million in cash plus 625,000 shares of
the Company's Class A Common Stock. The acquisition closed today,
December 6, 2012.
BBI is a provider of solid waste collection, transfer and liquid
waste services in New Hampshire and Maine and generated
approximately $20.0 million of revenues over the last twelve
months. Currently, BBI operates out of seven locations and gives
Casella the opportunity to internalize additional waste and
recyclables, and to consolidate operations, routes and
transportation post acquisition.
"The BBI team has built an exceptional solid waste company that
is well regarded by its municipal, commercial and residential
customers," said John W. Casella, chairman and CEO of Casella Waste
Systems. "The company and its employees are a great addition to our
team and will play a key role in our effort to serve our customers
and create value for our stakeholders."
"BBI's operations overlay well with our footprint in New
Hampshire and Maine and we expect the acquisition to drive
incremental value from our existing operations and provide a growth
platform in several new market areas," Casella said. "BBI collects
and transfers roughly 105,000 tons of solid waste and recyclables
and we expect to internalize close to 80% of this material at our
facilities. After recognizing the internalization benefits and cost
synergies, we expect BBI to generate roughly $4.9 million of
Adjusted EBITDA* in the second full 12 months of combined
operations following closing."
The transaction was structured as a stock purchase agreement for
consideration of $20.0 million in cash and 625,000 shares of the
Company's Class A Common Stock, with $18.0 million of the cash
proceeds paid at closing and $2.0 million withheld in escrow. Half
of the escrow amount will be disbursed contingent upon the business
achieving a pre-agreed upon minimum revenue level for the 90 days
after the sale and for net working capital adjustments during this
same period, and the other half of the escrow amount will be held
for 12 months to secure the seller's indemnification obligations
and certain expense adjustments to the purchase price. The cash
paid to the sellers at the closing was adjusted for indebtedness of
BBI. The shares issued to the owners of BBI may not be sold for a
period of six months following the closing.
*Non-GAAP Financial Measures
In addition to disclosing financial results prepared in
accordance with Generally Accepted Accounting Principles in the
United States (GAAP), the company also discloses earnings before
interest, taxes, depreciation and amortization, adjusted for
accretion, depletion of landfill operating lease obligations, gain
on sale of assets, development project charge write-offs, legal
settlement charges, bargain purchase gains, asset impairment
charges, environmental remediation charges, as well as severance
and reorganization charges (Adjusted EBITDA) which is a non-GAAP
measure.
Adjusted EBITDA is reconciled to net income as follows; in the
second full 12 months of combined operations following closing, we
estimate net income to be approximately $2.0 million, plus
estimated depreciation and amortization of $2.9 million which
equals estimated Adjusted EBITDA of $4.9 million.
The company presents Adjusted EBITDA because it considers it to
be an important supplemental measure of its performance and
believes that it is frequently used by securities analysts,
investors and other interested parties in the evaluation of the
company's results. Management uses this non-GAAP measures to
further understand the company's "core operating performance." The
company believes its "core operating performance" represents its
on-going performance in the ordinary course of operations. The
company believes that providing Adjusted EBITDA to investors, in
addition to corresponding income statement and cash flow statement
measures, affords investors the benefit of viewing its performance
using the same financial metrics that the management team uses in
making many key decisions and understanding how the core business
and its results of operations may look in the future. The company
further believes that providing this information allows its
investors greater transparency and a better understanding of its
core financial performance. In addition, the instruments governing
the company's indebtedness use EBITDA (with additional adjustments)
to measure its compliance with covenants such as interest coverage,
leverage and debt incurrence.
Non-GAAP financial measures are not in accordance with or an
alternative for GAAP. Adjusted EBITDA should not be considered in
isolation from or as a substitute for financial information
presented in accordance with GAAP, and may be different from
Adjusted EBITDA presented by other companies.
About Casella Waste Systems, Inc.
Casella Waste Systems, Inc., headquartered in Rutland, Vermont,
provides solid waste management services consisting of collection,
transfer, disposal, and recycling services in the northeastern
United States. For further information, investors should contact
Ned Coletta, chief financial officer at (802) 772-2239, and media
should contact Joseph Fusco, vice president at (802) 772-2247, or
visit the company's website at http://www.casella.com.
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 "believe," "expect," "anticipate," "plan,"
"may," "will," "would," "intend," "estimate," "guidance" 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, expectations or guidance 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 not fully recognize the expected
financial benefits from the acquisition due to the an inability to
recognize operational cost savings, general and administration cost
savings, or landfill or recycling facility internalization
benefits; we may not maintain the existing revenues after the
minimum revenue true-up period has expired because of competitive
or economic factors outside our control or for other reasons; or of
unanticipated costs. 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 additional risks and uncertainties include, without
limitation, those detailed in Item 1A, "Risk Factors" in our Form
10-K for the year ended April 30, 2012.
We undertake no obligation to update publicly any
forward-looking statements whether as a result of new information,
future events or otherwise, except as required by law.
Investors: Ned Coletta Chief Financial Officer (802) 772-2239
Media: Joseph Fusco Vice President (802) 772-2247
http://www.casella.com
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