Casella Waste Systems, Inc. (NASDAQ: CWST), a regional solid waste,
recycling and resource management services company, today reported
its financial results for the three and six month periods ended
June 30, 2021.
Highlights for the Three Months and Year-to-Date Ended
June 30, 2021:
- Revenues were $215.9 million
for the quarter, up $27.1 million, or up 14.4%, from the same
period in 2020.
- Overall solid waste pricing for
the quarter was up 4.0%, driven by collection pricing, up 4.2%, and
landfill pricing, up 4.3%, from the same period in
2020.
- Net income was $11.8 million
for the quarter, down $(0.3) million, or down (2.7)%, from the same
period in 2020. Provision for income taxes was $5.4 million for the
quarter, up $5.1 million from the same period in
2020.
- Adjusted EBITDA, a non-GAAP
measure, was $52.1 million for the quarter, up $8.1 million, or up
18.5%, from the same period in 2020.
- Net income as a percentage of
revenues was 5.5% for the quarter, down (96) basis points from the
same period in 2020. Adjusted EBITDA as a percentage of revenues, a
non-GAAP measure, was 24.1% for the quarter, up 84 basis points
from the same period in 2020.
- Net cash provided by operating
activities was $79.0 million for the year-to-date period, up $16.5
million, or up 26.4%, from the same period in 2020.
- Adjusted Free Cash Flow, a
non-GAAP measure, was $39.8 million for the year-to-date period, up
$12.3 million, or up 44.8%, from the same period in
2020.
- The Company purchased
Willimantic Waste Paper Co., Inc. (“Willimantic”), an integrated
solid waste provider, on July 26, 2021. Willimantic has annualized
revenues of approximately $62 million.
"We had another strong operational quarter, as we continued to
execute well against our long-term strategic plan,” said John W.
Casella, Chairman and CEO of Casella Waste Systems, Inc. “As a
result, we increased Adjusted EBITDA by 18.5% and Adjusted EBITDA
margins by 84 basis points year-over-year in the quarter and we
increased year-to-date Adjusted Free Cash Flow by 44.8%
year-over-year."
“Our team did a great job controlling costs while volumes and
services continued to ramp back online during the quarter as
commercial customers added services, construction activity
increased, and overall economic activity rebounded across our
markets,” Casella said. “Given these positive economic trends,
solid waste volumes were up 7.1% year-over-year, while we advanced
solid waste pricing by 4.0% with strength in both the collection
and disposal lines-of-business. We expect volumes to continue to
rebound through the remainder of the year, with year-over-year
gains moderating through the remainder of the year.”
“Earlier this week we completed the acquisition of Willimantic,
an integrated solid waste collection, transfer, and recycling
business with operations in eastern Connecticut,” Casella said.
“This acquisition expands our operating footprint and provides an
exciting new platform for future growth. With the acquisition of
Willimantic, we have completed 5 acquisitions year-to-date with
approximately $67 million of annualized revenues. Our acquisition
and development pipeline remains robust, and we believe that there
is substantial opportunity to drive additional cash flow growth
with opportunistic acquisitions.”
For the quarter, revenues were $215.9 million, up $27.1 million,
or up 14.4%, from the same period in 2020, with revenue growth
mainly driven by: positive collection and disposal pricing; higher
solid waste volumes; the roll-over impact from acquisitions; higher
recycling commodity prices; higher resource solutions processing
volumes; and higher resource solutions non-processing revenues;
partially offset by lower fuel surcharge and other fees mainly
driven by higher commodity prices resulting in a lower
Sustainability Recycling Adjustment (SRA) fee.
Net income was $11.8 million for the quarter, or $0.23 per
diluted common share, down $(0.3) million, or down (2.7)%, as
compared to net income of $12.1 million, or $0.25 per diluted
common share, for the same period in 2020. The quarter included
$1.6 million of expense from acquisition activities and $0.2
million of legal and other expenses associated with the closure of
our landfill in Southbridge, Massachusetts ("Southbridge
Landfill"). The same quarter last year included $0.4 million of
expense from acquisition activities and $0.6 million of legal and
other costs associated with the Southbridge Landfill closure.
Given the reversal of the tax valuation allowance in 2020, we
expect an income statement tax provision at a rate of approximately
32% in fiscal year 2021. The income tax provision was $5.4 million
in the quarter, up $5.1 million from the same period in 2020.
Adjusted Net Income, a non-GAAP measure, was $13.0 million for
the quarter, or $0.25 Adjusted Diluted Earnings Per Common Share, a
non-GAAP measure, up $0.2 million, or up 1.9%, as compared to
Adjusted Net Income of $12.8 million, or $0.26 Adjusted Diluted
Earnings Per Common Share, for the same period in 2020.
Operating income was $21.9 million for the quarter, up $4.5
million, or up 25.8% from the same period in 2020. Adjusted
Operating Income, a non-GAAP measure, was $23.8 million for the
quarter, up $5.4 million, or up 29.5% from the same period in 2020.
Adjusted EBITDA was $52.1 million for the quarter, up $8.1 million,
or up 18.5%, from the same period in 2020.
For the year-to-date period, revenues were $405.4 million, up
$33.7 million, or up 9.1%, from the same period in 2020. Net income
was $16.1 million, or $0.31 per diluted common share, for the
year-to-date period, as compared to net income of $13.1 million, or
$0.27 per diluted common share, for the same period in 2020.
Adjusted Net Income was $17.8 million, or $0.35 Adjusted Diluted
Earnings Per Common Share, for the year-to-date period, as compared
to Adjusted Net Income of $14.9 million, or $0.31 Adjusted Diluted
Earnings Per Common Share, for the same period in 2020.
Operating income was $34.0 million for the year-to-date period,
up $9.5 million from the same period in 2020. Adjusted Operating
Income was $36.4 million for the year-to-date period, up $9.4
million from the same period in 2020. Adjusted EBITDA was $90.9
million for the year-to-date period, up $13.4 million from the same
period in 2020.
Net cash provided by operating activities was $79.0 million for
the year-to-date period, as compared to $62.5 million for the same
period in 2020. Adjusted Free Cash Flow was $39.8 million for the
year-to-date period, as compared to $27.5 million for the same
period in 2020. Adjusted Free Cash Flow for the year-to-date period
included the following adjustments: $2.5 million of landfill
closure, site improvement and remediation expenditures associated
with the remediation project at our Potsdam, New York scrap yard
("Potsdam") and the Southbridge Landfill closure; $1.0 million of
cash outlays related to acquisition activities; $6.4 million of
capital expenditures associated with the expansion at our landfill
in Coventry, Vermont ("Waste USA Landfill"); and $6.5 million of
non-recurring capital expenditures primarily related to
acquisitions.
Fiscal Year 2021 Outlook
“Given our solid execution year-to-date, the expected
contribution of acquisitions already completed this year and our
increased visibility of economic trends, we are updating our fiscal
year 2021 guidance ranges that were first announced in
mid-February,” Casella said. “These guidance ranges assume a stable
economic environment continuing through the remainder of the year
with only a modest further rebound in solid waste volumes.”
The Company raised guidance for the second time in fiscal year
2021 by estimating results (including Willimantic) in the following
ranges (as compared to the fiscal year 2021 guidance ranges as
updated on April 29, 2021):
- Revenues between
$850 million and $860 million (as compared to $815 million to $830
million);
- Net income between
$35 million and $39 million (as compared to $33 million to $37
million);
- Adjusted EBITDA
between $195 million and $199 million (as compared to $185 million
and $189 million);
- Net cash provided by
operating activities between $158 million and $162 million (as
compared to $150 million and $154 million); and
- Adjusted Free Cash
Flow between $79 million and $83 million (as compared to $76
million and $80 million).
Adjusted EBITDA and Adjusted Free Cash Flow related to fiscal
year 2021 are described in the Reconciliation of Fiscal Year 2021
Outlook Non-GAAP Measures section of this press release. Net income
and Net cash provided by operating activities are provided as the
most directly comparable GAAP measures to Adjusted EBITDA and
Adjusted Free Cash Flow, respectively, however these
forward-looking estimates for fiscal year 2021 do not contemplate
any unanticipated or non-recurring impacts.
Conference call to discuss quarter
The Company will host a conference call to discuss these results
on Friday, July 30, 2021 at 10:00 a.m. Eastern Time.
Individuals interested in participating in the call should dial
(877) 838-4153 or for international participants (720) 545-0037 at
least 10 minutes before start time. The Conference ID is 778 2866
for the call and the replay.
The call will also be webcast; to listen, participants should
visit the company’s website at http://ir.casella.com and follow the
appropriate link to the webcast. A replay of the call will be
available on the Company's website, or by calling (855) 859-2056 or
(404) 537-3406 (Conference ID 778 2866).
About Casella Waste Systems, Inc.
Casella Waste Systems, Inc., headquartered in Rutland, Vermont,
provides resource management expertise and services to residential,
commercial, municipal and industrial customers, primarily in the
areas of solid waste collection and disposal, transfer, recycling
and organics services in the northeastern United States. For
further information, investors contact Ned Coletta, Chief Financial
Officer at (802) 772-2239; media 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, including, but
not limited to, the statements regarding our intentions, beliefs or
current expectations concerning, among other things, our financial
performance; financial condition; operations and services;
prospects; growth; strategies; anticipated impacts from future or
completed acquisitions; and guidance for fiscal year 2021, 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,” “would,” “intend,” “estimate,” "will," “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 the Company operates and management’s beliefs and
assumptions. The Company cannot guarantee that it actually will
achieve the financial results, plans, intentions, expectations or
guidance disclosed in the forward-looking statements made. Such
forward-looking statements, and all phases of the Company's
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 its forward-looking statements.
Such risks and uncertainties include or relate to, among other
things, the following: it is challenging to predict the duration
and scope of the COVID-19 pandemic and its negative effect on the
economy, our operations and financial results; the capping and
closure of the Southbridge Landfill and the lawsuit relating to the
North Country Landfill could result in material unexpected costs;
adverse weather conditions may negatively impact the Company's
revenues and its operating margin; the Company may be unable to
increase volumes at its landfills or improve its route
profitability; the Company may be unable to reduce costs or
increase pricing or volumes sufficiently to achieve estimated
Adjusted EBITDA and other targets; landfill operations and permit
status may be affected by factors outside the Company's control;
the Company may be required to incur capital expenditures in excess
of its estimates; the Company's insurance coverage and
self-insurance reserves may be inadequate to cover all of its
significant risk exposures; fluctuations in energy pricing or the
commodity pricing of its recyclables may make it more difficult for
the Company to predict its results of operations or meet its
estimates; the Company may be unable to achieve its acquisition or
development targets on favorable pricing or at all; the Company may
not be able to successfully integrate acquired businesses; and the
Company may incur environmental charges or asset impairments in the
future.
There are a number of other important risks and uncertainties
that could cause the Company's 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 the Company's most
recently filed Form 10-K and in other filings that the Company may
make with the Securities and Exchange Commission in the future.
The Company undertakes 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
ColettaChief Financial Officer(802) 772-2239 |
|
|
Media: |
|
Joseph FuscoVice President(802)
772-2247http://www.casella.com |
|
|
CASELLA WASTE SYSTEMS, INC. AND
SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS(Unaudited)(In
thousands, except for per share data) |
|
|
|
Three Months EndedJune 30, |
|
Six Months EndedJune 30, |
|
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Revenues |
|
$ |
215,875 |
|
|
$ |
188,767 |
|
|
$ |
405,406 |
|
|
$ |
371,676 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
Cost of operations |
|
138,553 |
|
|
123,462 |
|
|
265,691 |
|
|
251,980 |
|
General and administration |
|
29,212 |
|
|
24,874 |
|
|
56,343 |
|
|
49,226 |
|
Depreciation and amortization |
|
24,337 |
|
|
22,076 |
|
|
47,019 |
|
|
43,482 |
|
Expense from acquisition activities |
|
1,632 |
|
|
352 |
|
|
2,046 |
|
|
1,360 |
|
Southbridge Landfill closure charge |
|
195 |
|
|
559 |
|
|
352 |
|
|
1,172 |
|
|
|
193,929 |
|
|
171,323 |
|
|
371,451 |
|
|
347,220 |
|
Operating income |
|
21,946 |
|
|
17,444 |
|
|
33,955 |
|
|
24,456 |
|
Other
expense (income): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net |
|
5,230 |
|
|
5,466 |
|
|
10,634 |
|
|
11,367 |
|
Other income |
|
(510 |
) |
|
(492 |
) |
|
(648 |
) |
|
(449 |
) |
Other
expense, net |
|
4,720 |
|
|
4,974 |
|
|
9,986 |
|
|
10,918 |
|
Income before income taxes |
|
17,226 |
|
|
12,470 |
|
|
23,969 |
|
|
13,538 |
|
Provision for income taxes |
|
5,443 |
|
|
357 |
|
|
7,875 |
|
|
466 |
|
Net
income |
|
$ |
11,783 |
|
|
$ |
12,113 |
|
|
$ |
16,094 |
|
|
$ |
13,072 |
|
Basic
weighted average common shares outstanding |
|
51,366 |
|
|
48,348 |
|
|
51,273 |
|
|
48,176 |
|
Basic
earnings per common share |
|
$ |
0.23 |
|
|
$ |
0.25 |
|
|
$ |
0.31 |
|
|
$ |
0.27 |
|
Diluted weighted average common shares outstanding |
|
51,546 |
|
|
48,563 |
|
|
51,466 |
|
|
48,411 |
|
Diluted earnings per common share |
|
$ |
0.23 |
|
|
$ |
0.25 |
|
|
$ |
0.31 |
|
|
$ |
0.27 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASELLA WASTE SYSTEMS, INC. AND
SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE
SHEETS(In thousands) |
|
|
June 30,2021 |
|
December 31,2020 |
|
(Unaudited) |
|
|
ASSETS |
|
|
|
CURRENT ASSETS: |
|
|
|
Cash and cash equivalents |
$ |
167,177 |
|
|
$ |
154,342 |
|
Accounts receivable, net of allowance for credit losses |
78,928 |
|
|
74,198 |
|
Other current assets |
23,150 |
|
|
18,714 |
|
Total
current assets |
269,255 |
|
|
247,254 |
|
Property, plant and equipment, net of accumulated depreciation and
amortization |
532,824 |
|
|
510,512 |
|
Operating lease right-of-use assets |
90,707 |
|
|
95,310 |
|
Goodwill |
196,686 |
|
|
194,901 |
|
Intangible assets, net of accumulated amortization |
55,927 |
|
|
58,324 |
|
Restricted assets |
1,953 |
|
|
1,848 |
|
Cost
method investments |
11,264 |
|
|
11,264 |
|
Deferred income taxes |
53,086 |
|
|
61,163 |
|
Other
non-current assets |
16,131 |
|
|
13,322 |
|
Total assets |
$ |
1,227,833 |
|
|
$ |
1,193,898 |
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
CURRENT LIABILITIES: |
|
|
|
Current maturities of debt |
$ |
14,716 |
|
|
$ |
9,240 |
|
Current operating lease liabilities |
7,207 |
|
|
8,547 |
|
Accounts payable |
60,064 |
|
|
49,198 |
|
Other accrued liabilities |
65,571 |
|
|
64,223 |
|
Total
current liabilities |
147,558 |
|
|
131,208 |
|
Debt,
less current portion |
526,830 |
|
|
530,411 |
|
Operating lease liabilities, less current portion |
59,536 |
|
|
60,979 |
|
Other
long-term liabilities |
105,417 |
|
|
109,158 |
|
Total
stockholders' equity |
388,492 |
|
|
362,142 |
|
Total liabilities and stockholders' equity |
$ |
1,227,833 |
|
|
$ |
1,193,898 |
|
|
|
|
|
|
|
|
|
CASELLA WASTE SYSTEMS, INC. AND
SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS(Unaudited)(In
thousands) |
|
|
Six Months EndedJune 30, |
|
2021 |
|
2020 |
Cash
Flows from Operating Activities: |
|
|
|
Net income |
$ |
16,094 |
|
|
$ |
13,072 |
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
Depreciation and amortization |
47,019 |
|
|
43,482 |
|
Depletion of landfill operating lease obligations |
3,581 |
|
|
3,468 |
|
Interest accretion on landfill and environmental remediation
liabilities |
3,962 |
|
|
3,542 |
|
Amortization of debt issuance costs |
1,144 |
|
|
1,054 |
|
Stock-based compensation |
6,057 |
|
|
3,380 |
|
Operating lease right-of-use assets expense |
2,826 |
|
|
4,588 |
|
(Gain) loss on sale of property and equipment |
(92 |
) |
|
131 |
|
Southbridge Landfill non-cash closure charge |
(16 |
) |
|
41 |
|
Non-cash expense from acquisition activities |
1,022 |
|
|
575 |
|
Deferred income taxes |
7,041 |
|
|
1,256 |
|
Changes in assets and liabilities, net of effects of acquisitions
and divestitures |
(9,625 |
) |
|
(12,096 |
) |
Net cash provided by operating activities |
79,013 |
|
|
62,493 |
|
Cash
Flows from Investing Activities: |
|
|
|
Acquisitions, net of cash acquired |
(5,481 |
) |
|
(20,091 |
) |
Additions to property, plant and equipment |
(56,069 |
) |
|
(51,570 |
) |
Proceeds from sale of property and equipment |
403 |
|
|
200 |
|
Net cash used in investing activities |
(61,147 |
) |
|
(71,461 |
) |
Cash
Flows from Financing Activities: |
|
|
|
Proceeds from debt borrowings |
500 |
|
|
91,200 |
|
Principal payments on debt |
(5,643 |
) |
|
(82,719 |
) |
Payments of debt issuance costs |
— |
|
|
(11 |
) |
Proceeds from the exercise of share based awards |
112 |
|
|
100 |
|
Net cash (used in) provided by financing activities |
(5,031 |
) |
|
8,570 |
|
Net
increase (decrease) in cash and cash equivalents |
12,835 |
|
|
(398 |
) |
Cash
and cash equivalents, beginning of period |
154,342 |
|
|
3,471 |
|
Cash
and cash equivalents, end of period |
$ |
167,177 |
|
|
$ |
3,073 |
|
Supplemental Disclosure of Cash Flow Information: |
|
|
|
Cash interest payments |
$ |
9,701 |
|
|
$ |
10,733 |
|
Cash income tax payments |
$ |
411 |
|
|
$ |
187 |
|
Non-current assets obtained through long-term financing
obligations |
$ |
5,894 |
|
|
$ |
11,859 |
|
Right-of-use assets obtained in exchange for operating lease
obligations |
$ |
1,251 |
|
|
$ |
3,142 |
|
|
|
|
|
|
|
|
|
CASELLA WASTE SYSTEMS, INC. AND
SUBSIDIARIESRECONCILIATION OF CERTAIN NON-GAAP
MEASURES(Unaudited)(In
thousands)
Non-GAAP Performance Measures
In addition to disclosing financial results prepared in
accordance with generally accepted accounting principles in the
United States ("GAAP"), the Company also presents non-GAAP
performance measures such as Adjusted EBITDA, Adjusted EBITDA as a
percentage of revenues, Adjusted Operating Income, Adjusted
Operating Income as a percentage of revenues, Adjusted Net Income
and Adjusted Diluted Earnings Per Common Share that provide an
understanding of operational performance because it considers them
important supplemental measures of the Company's performance that
are frequently used by securities analysts, investors and other
interested parties in the evaluation of the Company's results. The
Company also believes that identifying the impact of certain items
as adjustments provides more transparency and comparability across
periods. Management uses these non-GAAP performance measures to
further understand its “core operating performance” and believes
its “core operating performance” is helpful in understanding its
ongoing performance in the ordinary course of operations. The
Company believes that providing such non-GAAP performance measures
to investors, in addition to corresponding income statement
measures, affords investors the benefit of viewing the Company’s
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 has performed. The
tables below set forth such performance measures on an adjusted
basis to exclude such items:
|
|
Three Months EndedJune 30, |
|
Six Months EndedJune 30, |
|
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Net income |
|
$ |
11,783 |
|
|
|
$ |
12,113 |
|
|
|
$ |
16,094 |
|
|
|
$ |
13,072 |
|
|
Net income as a percentage of revenues |
|
5.5 |
|
% |
|
6.4 |
|
% |
|
4.0 |
|
% |
|
3.5 |
|
% |
Provision for income taxes |
|
5,443 |
|
|
|
357 |
|
|
|
7,875 |
|
|
|
466 |
|
|
Other income |
|
(510 |
) |
|
|
(492 |
) |
|
|
(648 |
) |
|
|
(449 |
) |
|
Interest expense, net |
|
5,230 |
|
|
|
5,466 |
|
|
|
10,634 |
|
|
|
11,367 |
|
|
Expense from acquisition activities (i) |
|
1,632 |
|
|
|
352 |
|
|
|
2,046 |
|
|
|
1,360 |
|
|
Southbridge Landfill closure charge (ii) |
|
195 |
|
|
|
559 |
|
|
|
352 |
|
|
|
1,172 |
|
|
Depreciation and amortization |
|
24,337 |
|
|
|
22,076 |
|
|
|
47,019 |
|
|
|
43,482 |
|
|
Depletion of landfill operating lease obligations |
|
1,977 |
|
|
|
1,795 |
|
|
|
3,581 |
|
|
|
3,468 |
|
|
Interest accretion on landfill and environmental remediation
liabilities |
|
2,005 |
|
|
|
1,748 |
|
|
|
3,962 |
|
|
|
3,542 |
|
|
Adjusted EBITDA |
|
$ |
52,092 |
|
|
|
$ |
43,974 |
|
|
|
$ |
90,915 |
|
|
|
$ |
77,480 |
|
|
Adjusted EBITDA as a percentage of revenues |
|
24.1 |
|
% |
|
23.3 |
|
% |
|
22.4 |
|
% |
|
20.8 |
|
% |
Depreciation and amortization |
|
(24,337 |
) |
|
|
(22,076 |
) |
|
|
(47,019 |
) |
|
|
(43,482 |
) |
|
Depletion of landfill operating lease obligations |
|
(1,977 |
) |
|
|
(1,795 |
) |
|
|
(3,581 |
) |
|
|
(3,468 |
) |
|
Interest accretion on landfill and environmental remediation
liabilities |
|
(2,005 |
) |
|
|
(1,748 |
) |
|
|
(3,962 |
) |
|
|
(3,542 |
) |
|
Adjusted Operating Income |
|
$ |
23,773 |
|
|
|
$ |
18,355 |
|
|
|
$ |
36,353 |
|
|
|
$ |
26,988 |
|
|
Adjusted Operating Income as a percentage of
revenues |
|
11.0 |
|
% |
|
9.7 |
|
% |
|
9.0 |
|
% |
|
7.3 |
|
% |
|
|
Three Months EndedJune 30, |
|
Six Months EndedJune 30, |
|
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Net income |
|
$ |
11,783 |
|
|
$ |
12,113 |
|
|
$ |
16,094 |
|
|
$ |
13,072 |
|
Expense from acquisition activities (i) |
|
1,632 |
|
|
352 |
|
|
2,046 |
|
|
1,360 |
|
Southbridge Landfill closure charge (ii) |
|
195 |
|
|
559 |
|
|
352 |
|
|
1,172 |
|
Tax effect (iii) |
|
(597 |
) |
|
(248 |
) |
|
(728 |
) |
|
(690 |
) |
Adjusted Net Income |
|
$ |
13,013 |
|
|
$ |
12,776 |
|
|
$ |
17,764 |
|
|
$ |
14,914 |
|
|
|
|
|
|
|
|
|
|
Diluted weighted average common shares
outstanding |
|
51,546 |
|
|
48,563 |
|
|
51,466 |
|
|
48,411 |
|
|
|
|
|
|
|
|
|
|
Diluted earnings per common share |
|
$ |
0.23 |
|
|
$ |
0.25 |
|
|
$ |
0.31 |
|
|
$ |
0.27 |
|
Expense from acquisition activities (i) |
|
0.03 |
|
|
0.01 |
|
|
0.04 |
|
|
0.03 |
|
Southbridge Landfill closure charge (ii) |
|
— |
|
|
0.01 |
|
|
0.01 |
|
|
0.02 |
|
Tax effect (iii) |
|
(0.01 |
) |
|
(0.01 |
) |
|
(0.01 |
) |
|
(0.01 |
) |
Adjusted Diluted Earnings Per Common Share |
|
$ |
0.25 |
|
|
$ |
0.26 |
|
|
$ |
0.35 |
|
|
$ |
0.31 |
|
(i) Expense from acquisition activities are primarily
legal, consulting or other similar costs incurred during the period
related to acquisition diligence, acquisition integration or select
development projects as part of the Company’s strategic growth
initiative. (ii) Southbridge Landfill
closure charge are expenses related to the unplanned early closure
of the Southbridge Landfill along with associated legal activities.
The Company initiated the unplanned, premature closure of the
Southbridge Landfill in the fiscal year ended December 31, 2017 due
to the significant capital investment required to obtain expansion
permits and for future development coupled with an uncertain
regulatory environment. The unplanned closure of the Southbridge
Landfill reduced the economic useful life of the assets from prior
estimates by approximately ten years. The Company expects to incur
certain costs through completion of the closure process.
(iii) Tax effect of the adjustments is an
aggregate of the current and deferred tax impact of each
adjustment, including the impact to the effective tax rate, current
provision and deferred provision. The computation considers all
relevant impacts of the adjustments, including available net
operating loss carryforwards and the impact on the remaining
valuation allowance.
Non-GAAP Liquidity Measures
In addition to disclosing financial results prepared in
accordance with GAAP, the Company also presents non-GAAP liquidity
measures such as Adjusted Free Cash Flow, Bank Consolidated EBITDA,
Consolidated Funded Debt, Net and Consolidated Net Leverage Ratio
that provide an understanding of the Company's liquidity because it
considers them important supplemental measures of its liquidity
that are frequently used by securities analysts, investors and
other interested parties in the evaluation of the Company's cash
flow generation from its core operations that are then available to
be deployed for strategic acquisitions, growth investments,
development projects, unusual landfill closures, site improvement
and remediation, and strengthening the Company’s balance sheet
through paying down debt. The Company also believes that
identifying the impact of certain items as adjustments provides
more transparency and comparability across periods. Management uses
non-GAAP liquidity measures to understand the Company’s cash flow
provided by operating activities after certain expenditures along
with its consolidated net leverage and believes that these measures
demonstrate the Company’s ability to execute on its strategic
initiatives. The Company believes that providing such non-GAAP
liquidity measures to investors, in addition to corresponding cash
flow statement measures, affords investors the benefit of viewing
the Company’s liquidity using the same financial metrics that the
management team uses in making many key decisions and understanding
how the core business and cash flow generation has performed. The
tables below, in some instances on an adjusted basis to exclude
certain items, set forth such liquidity
measures:
|
|
Three Months EndedJune 30, |
|
Six Months EndedJune 30, |
|
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Net cash provided by operating activities |
|
$ |
46,866 |
|
|
$ |
47,702 |
|
|
$ |
79,013 |
|
|
$ |
62,493 |
|
Capital expenditures |
|
(29,237 |
) |
|
(31,719 |
) |
|
(56,069 |
) |
|
(51,570 |
) |
Proceeds from sale of property and equipment |
|
280 |
|
|
149 |
|
|
403 |
|
|
200 |
|
Southbridge Landfill closure and Potsdam environmental remediation
(i) |
|
2,143 |
|
|
1,300 |
|
|
2,534 |
|
|
2,758 |
|
Cash outlays from acquisition activities (ii) |
|
756 |
|
|
308 |
|
|
1,024 |
|
|
785 |
|
Post acquisition and development project capital expenditures
(iii) |
|
2,696 |
|
|
3,415 |
|
|
6,467 |
|
|
9,275 |
|
Waste USA Landfill phase VI capital expenditures (iv) |
|
5,339 |
|
|
2,311 |
|
|
6,439 |
|
|
3,546 |
|
Adjusted Free Cash
Flow |
|
$ |
28,843 |
|
|
$ |
23,466 |
|
|
$ |
39,811 |
|
|
$ |
27,487 |
|
(i) Southbridge Landfill closure and Potsdam
environmental remediation are cash outlays associated with the
unplanned closure of the Southbridge Landfill and the Company's
portion of costs associated with environmental remediation at
Potsdam, which are added back when calculating Adjusted Free Cash
Flow due to their non-recurring nature and the significance of the
related cash flows. The Company initiated the unplanned closure of
the Southbridge Landfill in the fiscal year ended December 31, 2017
and expects to incur cash outlays through completion of the closure
and environmental remediation process. The Potsdam site was deemed
a Superfund site in 2000 and is not associated with current
operations. (ii) Cash outlays from
acquisition activities are cash outlays for transaction and
integration costs relating to specific acquisition transactions and
include legal, environmental, valuation and consulting as well as
asset, workforce and system integration costs as part of the
Company’s strategic growth initiative.
(iii) Post acquisition and development project
capital expenditures are (x) acquisition related capital
expenditures that are necessary to optimize strategic synergies
associated with integrating newly acquired operations as
contemplated by the discounted cash flow return analysis conducted
by management as part of the acquisition investment decision; and
(y) non-routine development investments that are expected to
provide long-term returns. Acquisition related capital expenditures
include the following costs required to achieve initial operating
synergies: trucks, equipment and machinery; and facilities, land,
IT infrastructure or related upgrades to integrate
operations. (iv) Waste USA Landfill phase VI
capital expenditures are capital expenditures related to Waste USA
Landfill phase VI construction and development that are added back
when calculating Adjusted Free Cash Flow due to the specific nature
of this investment in the development of long-term infrastructure
which is different from landfill construction investments in the
normal course of operations. This investment at the Waste USA
Landfill is unique because the Company is investing in long-term
infrastructure over an estimated four year period that will not
yield a positive economic benefit until 2023 and extending over
approximately 20 years.
Following is the Consolidated Net Leverage Ratio and the
reconciliations of Consolidated Funded Debt, Net from debt and Bank
Consolidated EBITDA from Net cash provided by operating
activities:
|
Twelve Months Ended June 30, 2021 |
|
Covenant Requirement at June 30, 2021 |
Consolidated Net
Leverage Ratio (i) |
2.54 |
|
4.00 |
(i) Our credit agreement requires us to maintain a maximum
consolidated net leverage ratio, to be measured at the end of each
fiscal quarter ("Consolidated Net Leverage Ratio"). The
Consolidated Net Leverage Ratio is calculated as consolidated debt,
net of unencumbered cash and cash equivalents in excess of $2,000
and up to $50,000 ("Consolidated Funded Debt, Net", calculated at
$499,171 as of June 30, 2021, or $549,171 of consolidated debt,
less $50,000 of cash and cash equivalents in excess of $2,000 and
up to $50,000 as of June 30, 2021), divided by consolidated EBITDA
as defined by our credit agreement ("Bank Consolidated EBITDA").
Bank Consolidated EBITDA is based on operating results for the
twelve months preceding the measurement date of June 30, 2021. A
reconciliation of Bank Consolidated EBITDA from Net cash provided
by operating activities is as follows:
|
Twelve Months Ended June 30, 2021 |
Net cash provided by operating activities |
$ |
156,442 |
|
Changes in assets and liabilities, net of effects of acquisitions
and divestitures |
22,695 |
|
Loss on sale of property and equipment |
(713 |
) |
Non-cash expense from acquisition activities |
(1,001 |
) |
Southbridge Landfill non-cash closure charge |
(206 |
) |
Operating lease right-of-use assets expense |
(6,714 |
) |
Stock-based compensation |
(10,896 |
) |
Interest expense, less amortization of debt issuance costs |
19,413 |
|
Provision for income taxes, net of deferred income taxes |
1,107 |
|
Adjustments as allowed by the credit agreement |
16,396 |
|
Bank Consolidated EBITDA |
$ |
196,523 |
|
Non-GAAP financial measures are not in accordance with or an
alternative for GAAP. Adjusted EBITDA, Adjusted EBITDA as a
percentage of revenues, Adjusted Operating Income, Adjusted
Operating Income as a percentage of revenues, Adjusted Net Income,
Adjusted Diluted Earnings Per Common Share, Adjusted Free Cash
Flow, Bank Consolidated EBITDA, Consolidated Funded Debt, Net and
Consolidated Net Leverage Ratio 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, Adjusted EBITDA as a percentage of revenues,
Adjusted Operating Income, Adjusted Operating Income as a
percentage of revenues, Adjusted Net Income, Adjusted Diluted
Earnings Per Common Share, Adjusted Free Cash Flow, Bank
Consolidated EBITDA, Consolidated Funded Debt, Net and Consolidated
Net Leverage Ratio presented by other companies.
CASELLA WASTE SYSTEMS, INC. AND
SUBSIDIARIESRECONCILIATION OF FISCAL YEAR 2021
OUTLOOK NON-GAAP
MEASURES(Unaudited)(In
thousands)
Following is a reconciliation of the Company's estimated
Adjusted EBITDA (i) from estimated Net income for fiscal year
2021:
|
(Estimated) Fiscal Year Ending December 31,
2021 |
Net income |
$35,000 - $39,000 |
Provision for income taxes |
17,000 |
Other income |
(500) |
Interest expense, net |
22,000 |
Expense from acquisition activities |
2,500 |
Southbridge Landfill closure charge |
1,000 |
Depreciation and amortization |
103,000 |
Depletion of landfill operating lease obligations |
7,500 |
Interest accretion on landfill and environmental remediation
liabilities |
7,500 |
Adjusted EBITDA |
$195,000 - $199,000 |
Following is a reconciliation of the Company's estimated
Adjusted Free Cash Flow (i) from estimated Net cash provided by
operating activities for fiscal year 2021:
|
(Estimated) Fiscal Year Ending December 31,
2021 |
Net cash provided by operating activities |
$158,000 - $162,000 |
Capital expenditures |
(122,000) |
Proceeds from sale of property and equipment |
500 |
Southbridge Landfill closure and Potsdam environmental
remediation |
8,500 |
Cash outlays from acquisition activities |
1,000 |
Post acquisition and development project capital expenditures |
20,000 |
Waste USA Landfill phase VI capital expenditures |
13,000 |
Adjusted Free Cash Flow |
$79,000 - $83,000 |
(i) See footnotes for Non-GAAP Performance
Measures and Non-GAAP Liquidity Measures included in the
Reconciliation of Certain Non-GAAP Measures for further disclosure
over the nature of the various adjustments to estimated Adjusted
EBITDA and estimated Adjusted Free Cash Flow.
CASELLA WASTE SYSTEMS, INC. AND
SUBSIDIARIESSUPPLEMENTAL DATA
TABLES(Unaudited)(In
thousands)
Amounts of total revenues attributable to services
provided for the three and six months ended June 30, 2021 and 2020
are as follows:
|
|
Three Months Ended June 30, |
|
|
2021 |
|
% of TotalRevenues |
|
2020 |
|
% of TotalRevenues |
Collection |
|
$ |
107,327 |
|
|
49.7 |
% |
|
$ |
94,008 |
|
|
49.8 |
% |
Disposal |
|
49,173 |
|
|
22.8 |
% |
|
43,746 |
|
|
23.2 |
% |
Power
generation |
|
1,100 |
|
|
0.5 |
% |
|
918 |
|
|
0.5 |
% |
Processing |
|
2,310 |
|
|
1.1 |
% |
|
1,950 |
|
|
1.0 |
% |
Solid waste operations |
|
159,910 |
|
|
74.1 |
% |
|
140,622 |
|
|
74.5 |
% |
Processing |
|
21,031 |
|
|
9.7 |
% |
|
16,205 |
|
|
8.6 |
% |
Non-processing |
|
34,934 |
|
|
16.2 |
% |
|
31,940 |
|
|
16.9 |
% |
Resource solutions operations |
|
55,965 |
|
|
25.9 |
% |
|
48,145 |
|
|
25.5 |
% |
Total revenues |
|
$ |
215,875 |
|
|
100.0 |
% |
|
$ |
188,767 |
|
|
100.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, |
|
|
2021 |
|
% of TotalRevenues |
|
2020 |
|
% of TotalRevenues |
Collection |
|
$ |
204,796 |
|
|
50.5 |
% |
|
$ |
188,568 |
|
|
50.7 |
% |
Disposal |
|
87,026 |
|
|
21.5 |
% |
|
82,371 |
|
|
22.2 |
% |
Power generation |
|
2,403 |
|
|
0.6 |
% |
|
1,944 |
|
|
0.5 |
% |
Processing |
|
3,794 |
|
|
0.9 |
% |
|
3,087 |
|
|
0.9 |
% |
Solid waste operations |
|
298,019 |
|
|
73.5 |
% |
|
275,970 |
|
|
74.3 |
% |
Processing |
|
38,302 |
|
|
9.5 |
% |
|
30,023 |
|
|
8.0 |
% |
Non-processing |
|
69,085 |
|
|
17.0 |
% |
|
65,683 |
|
|
17.7 |
% |
Resource solutions operations |
|
107,387 |
|
|
26.5 |
% |
|
95,706 |
|
|
25.7 |
% |
Total
revenues |
|
$ |
405,406 |
|
|
100.0 |
% |
|
$ |
371,676 |
|
|
100.0 |
% |
Components of revenue growth for the three months ended
June 30, 2021 compared to the three months ended June 30, 2020 are
as follows:
|
Amount |
|
%
ofRelatedBusiness |
|
% ofOperations |
|
% of TotalCompany |
Solid waste
operations: |
|
|
|
|
|
|
|
Collection |
$ |
3,916 |
|
|
4.2 |
% |
|
2.8 |
|
% |
|
2.1 |
|
% |
Disposal |
1,648 |
|
|
3.8 |
% |
|
1.2 |
|
% |
|
0.9 |
|
% |
Processing |
19 |
|
|
1.0 |
% |
|
— |
|
% |
|
— |
|
% |
Solid waste price |
5,583 |
|
|
|
|
4.0 |
|
% |
|
3.0 |
|
% |
Collection |
6,278 |
|
|
|
|
4.5 |
|
% |
|
3.3 |
|
% |
Disposal |
3,638 |
|
|
|
|
2.6 |
|
% |
|
1.9 |
|
% |
Processing |
133 |
|
|
|
|
— |
|
% |
|
0.1 |
|
% |
Solid waste volume |
10,049 |
|
|
|
|
7.1 |
|
% |
|
5.3 |
|
% |
Fuel surcharge and other fees |
(373 |
) |
|
|
|
(0.3 |
) |
% |
|
(0.2 |
) |
% |
Commodity price and volume |
380 |
|
|
|
|
0.3 |
|
% |
|
0.2 |
|
% |
Acquisitions, net divestitures |
3,678 |
|
|
|
|
2.6 |
|
% |
|
1.9 |
|
% |
Closed operations |
(29 |
) |
|
|
|
— |
|
% |
|
— |
|
% |
Total solid waste
operations |
19,288 |
|
|
|
|
13.7 |
|
% |
|
10.2 |
|
% |
Resource solutions
operations: |
|
|
|
|
|
|
|
Processing - price |
3,357 |
|
|
|
|
7.0 |
|
% |
|
1.8 |
|
% |
Processing - volume |
1,469 |
|
|
|
|
3.1 |
|
% |
|
0.8 |
|
% |
Non-processing |
2,994 |
|
|
|
|
6.2 |
|
% |
|
1.6 |
|
% |
Total resource
solutions operations |
7,820 |
|
|
|
|
16.3 |
|
% |
|
4.2 |
|
% |
Total
company |
$ |
27,108 |
|
|
|
|
|
|
14.4 |
|
% |
Solid waste internalization rates by region for the
three and six months ended June 30, 2021 and 2020 are as
follows:
|
|
Three Months EndedJune 30, |
|
Six Months EndedJune 30, |
|
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Eastern region |
|
52.6 |
% |
|
50.7 |
% |
|
51.4 |
% |
|
49.2 |
% |
Western region |
|
59.9 |
% |
|
63.5 |
% |
|
60.6 |
% |
|
61.2 |
% |
Solid waste
internalization |
|
56.4 |
% |
|
57.4 |
% |
|
56.2 |
% |
|
55.4 |
% |
Components of capital expenditures (i) for the three and
six months ended June 30, 2021 and 2020 are as
follows:
|
|
Three Months EndedJune 30, |
|
Six Months EndedJune 30, |
|
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Growth capital
expenditures: |
|
|
|
|
|
|
|
|
Post acquisition and development project |
|
$ |
2,696 |
|
|
$ |
3,415 |
|
|
$ |
6,467 |
|
|
$ |
9,275 |
|
Waste USA Landfill phase VI |
|
5,339 |
|
|
2,311 |
|
|
6,439 |
|
|
3,546 |
|
Other |
|
3,190 |
|
|
476 |
|
|
4,205 |
|
|
980 |
|
Growth capital
expenditures |
|
11,225 |
|
|
6,202 |
|
|
17,111 |
|
|
13,801 |
|
Replacement capital
expenditures: |
|
|
|
|
|
|
|
|
Landfill development |
|
7,476 |
|
|
15,762 |
|
|
8,765 |
|
|
19,820 |
|
Vehicles, machinery, equipment and containers |
|
8,175 |
|
|
8,276 |
|
|
25,743 |
|
|
14,369 |
|
Facilities |
|
1,019 |
|
|
521 |
|
|
1,669 |
|
|
1,564 |
|
Other |
|
1,342 |
|
|
958 |
|
|
2,781 |
|
|
2,016 |
|
Replacement capital
expenditures |
|
18,012 |
|
|
25,517 |
|
|
38,958 |
|
|
37,769 |
|
Capital
expenditures |
|
$ |
29,237 |
|
|
$ |
31,719 |
|
|
$ |
56,069 |
|
|
$ |
51,570 |
|
(i) The Company's capital expenditures are broadly defined
as pertaining to either growth or replacement activities. Growth
capital expenditures are defined as costs related to development
projects, organic business growth, and the integration of newly
acquired operations. Growth capital expenditures include costs
related to the following: 1) post acquisition and development
projects that are necessary to optimize strategic synergies
associated with integrating newly acquired operations as
contemplated by the discounted cash flow return analysis conducted
by management as part of the acquisition investment decision as
well as non-routine development investments that are expected to
provide long-term returns and includes the following capital
expenditures required to achieve initial operating synergies:
trucks, equipment and machinery; and facilities, land, IT
infrastructure or related upgrades to integrate operations; 2)
Waste USA Landfill phase VI construction and development for
long-term infrastructure, which is unique and different from
landfill construction investments in the normal course of
operations because the Company is investing in long-term
infrastructure over an estimated four year period that will not
yield a positive economic benefit until 2023 and extending over
approximately 20 years; and 3) development of new airspace, permit
expansions, and new recycling contracts, equipment added directly
as a result of organic business growth and infrastructure added to
increase throughput at transfer stations and recycling facilities.
Replacement 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.
Casella Waste Systems (NASDAQ:CWST)
Historical Stock Chart
From Jun 2024 to Jul 2024
Casella Waste Systems (NASDAQ:CWST)
Historical Stock Chart
From Jul 2023 to Jul 2024