UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 25, 2015

 

 

Casella Waste Systems, Inc.

(Exact Name of Registrant as Specified in Charter)

 

 

 

Delaware   000-23211   03-0338873

(State or Other Jurisdiction

of Incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

 

25 Greens Hill Lane

Rutland, Vermont

  05701
(Address of Principal Executive Offices)   (Zip Code)

Registrant’s telephone number, including area code: (802) 775-0325

Not applicable

(Former Name or Former Address, if Changed Since Last Report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 


Item 2.02. Results of Operations and Financial Condition.

On February 25, 2015, Casella Waste Systems, Inc. (the “Company”) issued a press release announcing its financial results for the eight-month transition period ended December 31, 2014. The full text of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

The information in this Item 2.02 of this Form 8-K (including Exhibit 99.1) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

 

99.1 Press Release of Casella Waste Systems, Inc. dated February 25, 2015.


SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

CASELLA WASTE SYSTEMS, INC.
Date: February 25, 2015 By:

/s/ Edmond R. Coletta

Edmond R. Coletta
Senior Vice President and Chief Financial Officer


Exhibit Index

 

99.1 Press Release of Casella Waste Systems, Inc. dated February 25, 2015


Exhibit 99.1

FOR IMMEDIATE RELEASE

CASELLA WASTE SYSTEMS, INC. ANNOUNCES RESULTS FOR EIGHT MONTH TRANSITION PERIOD; AND REAFFIRMS 2015 GUIDANCE

RUTLAND, VERMONT (February 25, 2015) — Casella Waste Systems, Inc. (NASDAQ: CWST), a regional solid waste, recycling and resource management services company, today reported financial results for the eight month transition period ended December 31, 2014 (“Transition Period 2014”). The company also reaffirms guidance for its next full fiscal year ending December 31, 2015.

Transition Period 2014 Financial Highlights

 

    Revenues for Transition Period 2014 were $368.4 million up 8.3% from the same period in 2013, exceeding the company’s previously announced guidance range of $356.0 million to $366.0 million.

 

    Adjusted EBITDA* for Transition Period 2014 was $74.7 million up $1.7 million from the same period in 2013, at the high end of the company’s previously announced guidance range of $71.0 million to $75.0 million. Excluding the impact of the closure of the Worcester landfill, the company’s Adjusted EBITDA was up $4.5 million from the same period in 2013.

 

    Overall solid waste pricing was up 1.0%, mainly driven by strong residential and commercial collection pricing up 2.2%.

“Over the last two years, we have successfully refocused the company’s strategy and made excellent progress towards our long-term goals,” said John W. Casella, chairman and CEO of Casella Waste Systems, said. “We continue to execute on each of our key management strategies with notable gains at our landfills, where we have increased annualized landfill volumes by 660,000 tons per year since fiscal year 2013, up from 3.6 million tons per year to 4.2 million tons per year.”

“We continue to see competitor disposal facilities permanently close across the Northeast, with roughly 1.5 million tons of annual disposal capacity closed over the last three years and another 1.3 million tons of annual disposal capacity expected to close over the next several years,” Casella said. “We have excellent asset positioning in these markets, and have been able to capitalize on the changing dynamics to gain market share, improve pricing, and drive higher cash flows and returns. We expect to further take advantage of these improving disposal market dynamics in fiscal year 2015 through our focused sales efforts and targeted pricing initiatives.”

“Since late 2014 and into early 2015, recycling commodity prices have continued to decline, with the average commodity revenue per ton down roughly 25% since October 2014,” Casella said. “We believe that these declines in recycling commodity prices are not short-lived, but rather reflect changing international markets for recycled commodity products, including lower demand from the Chinese markets due to slower economic growth and growth in the Chinese domestic markets. We have taken action to begin to reshape our recycling business model through increased tipping fees at our recycling facilities and pricing increases to our collection customers to reflect the dramatically lower recycling commodity values. We expect these actions to offset a significant portion of the impact associated with lower commodity prices in fiscal year 2015.”

For Transition Period 2014, revenues were $368.4 million, up $28.3 million, or 8.3%, from the same period in 2013, with revenue growth mainly driven by higher solid waste disposal volumes, Customer Solutions growth, and acquisitions.

Adjusted EBITDA was $74.7 million for Transition Period 2014, up $1.7 million from the same period in 2013. Excluding the negative impact of the closure of the Worcester landfill, Adjusted EBITDA was up $4.5 million from the same period last year. In addition, higher than anticipated healthcare costs

 

1


negatively impacted results in Transition Period 2014, with healthcare costs up $2.6 million from the same period in 2013.

Operating income was $22.1 million for Transition Period 2014, up $0.2 million from the same period in 2013. Transition Period 2014 includes a $1.0 million environmental remediation charge associated with the movement of stockpiled earth at our Southbridge landfill, a $0.6 million gain resulting from the reversal of the excess remaining reserves not needed to complete the site improvements related to the divestiture of our BioFuels operation, and $0.5 million of expenses related to our change in fiscal year end; while the same period in 2013 included a $0.4 million environmental remediation charge, $0.1 million of expense from divestiture, and $0.2 million of severance and reorganization costs.

The company’s net loss attributable to common stockholders was ($6.0) million, or ($0.15) per share for Transition Period 2014, compared to ($3.7) million, or ($0.09) per share for the same period in 2013. In addition to the unusual items identified above, Transition Period 2014 includes a $2.3 million impairment of our investment in RecycleRewards, Inc., while the 2013 period included a $0.8 million gain on the divestiture of the Company’s 50% membership interest in US GreenFiber LLC and a $0.1 million loss from discontinued operations.

“Overall, our team has done an excellent job driving higher revenues in each of our business lines,” Casella said. “We’re pleased with the execution of our key management strategies to date and, while we still have work to do, we are optimistic about the company’s positioning for 2015 and beyond.”

Outlook

The company reaffirmed guidance for its next full fiscal year ending December 31, 2015, by estimating results in the following ranges:

 

    Revenues between $520 million and $530 million (as compared to $525.9 million for the twelve months ended December 31, 2014);

 

    Adjusted EBITDA* between $103 million and $107 million (as compared to $96.9 million for the twelve months ended December 31, 2014); and

 

    Free Cash Flow* between $14 million and $18 million (as compared to ($9.7) million for the twelve months ended December 31, 2014).

The company provided the following assumptions that are built into its fiscal year 2015 outlook:

 

    No material changes in the regional economy from the last 12 months.

 

    In the solid waste business, revenue growth of between 0% and 2%, with price growth from 1% to 2%.

 

    In the recycling business, overall revenue declines of between (10%) and (14%), driven by lower commodity price, partially offset by higher volumes.

 

    In the Other segment, revenue growth of between 1% and 2%, principally due to growth in the Customer Solutions group.

 

    No acquisitions beyond the above-mentioned roll-over impact of the acquisitions completed during the last 12 months are included.

 

    Capital Expenditures of between $45 million and $48 million, and payments on operating leases of roughly $6.5 million.

Conference call to discuss quarter

The Company will host a conference call to discuss these results on Thursday, February 26, 2015 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 call will also be

 

2


webcast; to listen, participants should visit Casella Waste Systems’ 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 76800251) until 11:59 p.m. ET on Thursday, March 5, 2015.

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 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.

*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 costs, tax settlement costs, bargain purchase gains, asset impairment charges, environmental remediation charges, severance and reorganization costs, (gains) expenses from divestiture, acquisition and financing costs, gains on the settlement of acquisition related contingent consideration, fiscal year-end transition costs, as well as losses on divestiture (“Adjusted EBITDA”) which is a non-GAAP measure.

The company also discloses earnings before interest, taxes, adjusted for gain on sale of assets, development project charge write-offs, legal settlement charges, tax settlement costs, bargain purchase gains, asset impairment charges, environmental remediation charges, severance and reorganization costs, (gains) expenses from divestiture, acquisition and financing costs, gains on the settlement of acquisition related contingent consideration, fiscal year-end transition costs, as well as losses on divestiture (“Adjusted Operating Income”) which is a non-GAAP measure.

The company also discloses net cash provided by operating activities, less capital expenditures (excluding acquisition related capital expenditures), less payments on landfill operating leases, less assets acquired through financing leases, plus proceeds from the sale of property and equipment, plus contributions from non-controlling interest holders (“Free Cash Flow”), which is a non-GAAP measure.

And lastly, the company discloses Free Cash Flow plus landfill closure, site improvement and remediation expenditures, plus new contract and project capital expenditures (“Normalized Free Cash Flow”), which is a non-GAAP measure.

Adjusted EBITDA and Adjusted Operating Income are reconciled to net income (loss), while Free Cash Flow and Normalized Free Cash Flow are reconciled to net cash provided by operating activities.

The company presents Adjusted EBITDA, Adjusted Operating Income, Free Cash Flow, and Normalized Free Cash Flow because it considers them important supplemental measures of its performance and believes they are frequently used by securities analysts, investors and other interested parties in the evaluation of the company’s results. Management uses these non-GAAP measures to further understand the company’s “core operating performance.” The company believes its “core operating performance” is helpful in understanding its ongoing performance in the ordinary course of operations. The company believes that providing Adjusted EBITDA, Adjusted Operating Income, Free Cash Flow, and Normalized Free Cash Flow 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 has performed. 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.

 

3


Non-GAAP financial measures are not in accordance with or an alternative for GAAP. Adjusted EBITDA, Adjusted Operating Income, Free Cash Flow, and Normalized Free Cash Flow 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 Operating Income, Free Cash Flow, or Normalized Free Cash Flow presented by other companies.

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: adverse weather conditions that have negatively impacted and may continue to negatively impact our revenues and our operating margin; current economic conditions that have adversely affected and may continue to adversely affect our revenues and our operating margin; we may be unable to increase volumes at our landfills or improve our route profitability; our need to service our indebtedness may limit our ability to invest in our business; we 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 our control; we may be required to incur capital expenditures in excess of our estimates; fluctuations in energy pricing or the commodity pricing of our recyclables may make it more difficult for us to predict our results of operations or meet our estimates; and we may incur environmental charges or asset impairments in the future. 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, 2014 and in our Form 10-Q for the quarterly period ended October 31, 2014.

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

 

4


CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except amounts per share)

 

     Eight Months Ended  
     December 31,
2014
    December 31,
2013
 
           (Unaudited)  

Revenues

   $ 368,374      $ 340,069   

Operating expenses:

    

Cost of operations

     258,650        236,076   

General and administration

     45,732        40,803   

Depreciation and amortization

     41,485        40,618   

Environmental remediation charge

     950        400   

(Gain) expense from divestiture, acquisition and financing costs

     (553     120   

Severance and reorganization costs

     —          161   
  

 

 

   

 

 

 
  346,264      318,178   
  

 

 

   

 

 

 

Operating income

  22,110      21,891   

Other expense/(income), net:

Interest expense, net

  25,392      25,173   

Loss from equity method investments

  —        1,027   

Gain on sale of equity method investment

  —        (815

Impairment of investments

  2,320      —     

Loss (gain) on derivative instruments

  225      (69

Other income

  (720   (603
  

 

 

   

 

 

 

Other expense, net

  27,217      24,713   
  

 

 

   

 

 

 

Loss from continuing operations before income taxes and discontinued operations

  (5,107   (2,822

Provision for income taxes

  703      1,162   
  

 

 

   

 

 

 

Loss from continuing operations before discontinued operations

  (5,810   (3,984

Discontinued operations:(i)

Income from discontinued operations, net of income taxes

  —        284   

Loss on disposal of discontinued operations, net of income taxes

  —        (378
  

 

 

   

 

 

 

Net loss

  (5,810   (4,078
  

 

 

   

 

 

 

Less: Net income (loss) attributable to noncontrolling interests

  208      (355
  

 

 

   

 

 

 

Net loss attributable to common stockholders

$ (6,018 $ (3,723
  

 

 

   

 

 

 

Basic and diluted weighted average common shares outstanding

  40,262      39,774   
  

 

 

   

 

 

 

Basic and diluted net loss per common share

$ (0.15 $ (0.09
  

 

 

   

 

 

 

Adjusted EBITDA

$ 74,695    $ 72,957   
  

 

 

   

 

 

 

(i) Discontinued Operations

In fiscal year 2013, we initiated a plan to dispose of KTI BioFuels, Inc. (“BioFuels”) and as a result, the assets associated with BioFuels were classified as held-for-sale and the results of operations were recorded as income from discontinued operations. Assets of the disposal group previously classified as held-for-sale, and subsequently included in discontinued operations, included certain inventory along with plant and equipment. In the first quarter of fiscal year 2014, we executed a purchase and sale agreement with ReEnergy Lewiston LLC (“ReEnergy”), pursuant to which we agreed to sell certain assets of BioFuels, which was located in our Eastern region, to ReEnergy. We agreed to sell the BioFuels assets for undiscounted purchase consideration of $2,000, which was to be paid to us in equal quarterly installments over five years commencing November 1, 2013, subject to the terms of the purchase and sale agreement. The related note receivable, which ReEnergy paid in full in the eight months ended December 31, 2014, was recorded in current and non-current assets of discontinued operations in the consolidated balance sheets as of April 30, 2014. We recognized a $378 loss on disposal of discontinued operations in the eight months ended December 31, 2013 associated with the disposition.

The operating results of these operations, including those related to prior years, have been reclassified from continuing to discontinued operations in the accompanying consolidated financial statements. Revenues and income before income taxes attributable to discontinued operations for the eight months ended December 31, 2014 and 2013, respectively, are as follows:

 

     Eight Months Ended
December 31,
 
     2014      2013  

Revenues

   $     —         $ 3,316   

Income before income taxes

   $     —         $ 284   

 

5


CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

 

ASSETS    December 31,
2014
    April 30,
2014
 

CURRENT ASSETS:

    

Cash and cash equivalents

   $ 2,205      $ 2,464   

Restricted cash

     76        76   

Accounts receivable—trade, net of allowance for doubtful accounts

     55,750        52,603   

Other current assets

     20,638        15,662   
  

 

 

   

 

 

 

Total current assets

  78,669      70,805   

Property, plant and equipment, net of accumulated depreciation and amortization

  414,542      403,424   

Goodwill

  119,170      119,139   

Intangible assets, net

  11,808      13,420   

Restricted assets

  6,632      681   

Cost method investments

  14,432      16,752   

Other non-current assets

  24,542      25,676   
  

 

 

   

 

 

 

Total assets

$ 669,795    $ 649,897   
  

 

 

   

 

 

 
LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES:

Current maturities of long-term debt and capital leases

$ 1,656    $ 885   

Accounts payable

  48,518      51,788   

Other accrued liabilities

  36,258      37,073   
  

 

 

   

 

 

 

Total current liabilities

  86,432      89,746   

Long-term debt and capital leases, less current maturities

  534,055      507,134   

Other long-term liabilities

  61,328      61,554   

Total stockholders' deficit

  (12,020   (8,537
  

 

 

   

 

 

 

Total liabilities and stockholders’ deficit

$ 669,795    $ 649,897   
  

 

 

   

 

 

 

 

6


CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

 

     Eight Months Ended  
     December 31,
2014
    December 31,
2013
 
           (Unaudited)  

Cash Flows from Operating Activities:

    

Net loss

   $ (5,810   $ (4,078

Income from discontinued operations, net

     —          (284

Loss on disposal of discontinued operations, net

     —          378   

Adjustments to reconcile net loss to net cash provided by operating activities—

    

Gain on divestiture

     (553     —     

Gain on sale of property and equipment

     (197     (544

Depreciation and amortization

     41,485        40,618   

Depletion of landfill operating lease obligations

     7,799        7,021   

Interest accretion on landfill and environmental remediation liabilities

     2,366        2,746   

Amortization of discount on senior subordinated notes

     173        159   

Loss from equity method investments

     —          804   

Impairment of investments

     2,320        —     

Gain on sale of equity method investment

     —          (593

Loss (gain) on derivative instruments

     225        (69

Stock-based compensation expense

     1,639        1,649   

Excess tax benefit on the vesting of share based awards

     (84     —     

Deferred income taxes

     605        1,003   

Changes in assets and liabilities, net of effects of acquisitions and divestitures

     (11,682     (23,040
  

 

 

   

 

 

 

Net Cash Provided by Operating Activities

  38,286      25,770   
  

 

 

   

 

 

 

Cash Flows from Investing Activities:

Acquisitions, net of cash acquired

  (360   (8,519

Acquisition related additions to property, plant and equipment

  (45   (2,412

Additions to property, plant and equipment

  (55,016   (31,090

Payments on landfill operating lease contracts

  (4,739   (5,804

Payments related to investments

  —        (2,023

Proceeds from sale of equity method investment

  —        2,845   

Proceeds from sale of property and equipment

  463      1,172   
  

 

 

   

 

 

 

Net Cash Used In Investing Activities

  (59,697   (45,831
  

 

 

   

 

 

 

Cash Flows from Financing Activities:

Proceeds from long-term borrowings

  136,800      110,190   

Principal payments on long-term debt

  (109,281   (88,684

Change in restricted cash

  (5,819   —     

Payments of financing costs

  (2,605   (388

Proceeds from the exercise of share based awards

  143      —     

Excess tax benefit on the vesting of share based awards

  84      —     
  

 

 

   

 

 

 

Net Cash Provided By Financing Activities

  19,322      21,118   
  

 

 

   

 

 

 

Net Cash Provided By (Used In) Discontinued Operations

  1,830      (117
  

 

 

   

 

 

 

Net (decrease) increase in cash and cash equivalents

  (259   940   

Cash and cash equivalents, beginning of period

  2,464      1,755   
  

 

 

   

 

 

 

Cash and cash equivalents, end of period

$ 2,205    $ 2,695   
  

 

 

   

 

 

 

Supplemental Disclosures:

Cash interest

$ 18,439    $ 18,724   

Cash income taxes, net of refunds

$ 182    $ 618   

 

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Following is a reconciliation of Adjusted EBITDA and Adjusted Operating Income to Net Loss:

 

     Eight Months Ended  
     December 31,
2014
    December 31,
2013
 

Net Loss

   $ (5,810   $ (4,078

Income from discontinued operations, net

     —          (284

Loss on disposal of discontinued operations, net

     —          378   

Provision for income taxes

     703        1,162   

Other expense (income), net

     1,825        (460

Interest expense, net

     25,392        25,173   

(Gain) expense from divestiture, acquisition and financing costs

     (553     120   

Severance and reorganization costs

     —          161   

Environmental remediation charge

     950        400   

Depreciation and amortization

     41,485        40,618   

Fiscal year-end transition costs

     538        —     

Depletion of landfill operating lease obligations

     7,799        7,021   

Interest accretion on landfill and environmental remediation liabilities

     2,366        2,746   
  

 

 

   

 

 

 

Adjusted EBITDA

$ 74,695    $ 72,957   

Depreciation and amortization

  (41,485   (40,618

Depletion of landfill operating lease obligations

  (7,799   (7,021

Interest accretion on landfill and environmental remediation liabilities

  (2,366   (2,746
  

 

 

   

 

 

 

Adjusted Operating Income *

$ 23,045    $ 22,572   
  

 

 

   

 

 

 

Following is a reconciliation of Free Cash Flow and Normalized Free Cash Flow to Net Cash Provided by Operating Activities:

 

     Eight Months Ended  
     December 31,
2014
    December 31,
2013
 

Net Cash Provided by Operating Activities

   $ 38,286      $ 25,770   

Capital expenditures

     (55,016     (31,090

Payments on landfill operating lease contracts

     (4,739     (5,804

Proceeds from sale of property and equipment

     463        1,172   
  

 

 

   

 

 

 

Free Cash Flow

$ (21,006 $ (9,952
  

 

 

   

 

 

 

Landfill closure, site improvement and remediation expenditures (i)

  6,882      2,483   

New contract and project capital expenditures (ii)

  11,048      94   
  

 

 

   

 

 

 

Normalized Free Cash Flow *

$ (3,076 $ (7,375
  

 

 

   

 

 

 

 

(i) Includes cash outlays associated with the following identified items: Worcester landfill capping, BioFuels site improvement, and Maine Energy decommissioning, demolition and site remediation.
(ii) Includes cash outlays related to capital investments associated with certain new contracts and projects, including: the Thiopaq gas treatment system, the Lewiston, ME Zero-Sort material recovery facility, the Rockland, NY material recovery facility, the Concord, NH waste services contract, the City of Boston, MA recycling contract, and the Brookline, MA, Otsego, NY, Tompkins, NY and Schoharie, NY transfer stations.

 

8


CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES

SUPPLEMENTAL DATA TABLES

(Unaudited)

(In thousands)

Amounts of our total revenues attributable to services provided for the eight months ended December 31, 2014 and 2013 are as follows:

 

     Eight Months Ended December 31,  
     2014      % of Total
Revenue
    2013      % of Total
Revenue
 

Collection

   $ 157,809         42.8   $ 153,156         45.0

Disposal

     102,304         27.8     93,015         27.4

Power generation

     5,049         1.4     5,478         1.6

Processing

     6,643         1.8     7,124         2.1
  

 

 

    

 

 

   

 

 

    

 

 

 

Solid waste operations

     271,805         73.8     258,773         76.1

Organics

     27,012         7.3     25,035         7.4

Customer solutions

     35,816         9.7     26,947         7.9

Recycling

     33,741         9.2     29,314         8.6
  

 

 

    

 

 

   

 

 

    

 

 

 

Total revenues

   $ 368,374         100.0   $ 340,069         100.0
  

 

 

    

 

 

   

 

 

    

 

 

 

Components of revenue growth for the eight months ended December 31, 2014 compared to the eight months ended December 31, 2013 are as follows:

 

     Amount     % of Related
Business
    % of Solid
Waste
Operations
    % of Total
Company
 

Solid Waste Operations:

        

Collection

   $ 2,528        1.7     1.0     0.7

Disposal

     98        0.1     0.1     0.1
  

 

 

   

 

 

   

 

 

   

 

 

 

Solid Waste Yield

     2,626          1.1     0.8

Collection

     1,173          0.5     0.3

Disposal

     10,605          4.1     3.1

Processing

     (96       -0.1     0.0
  

 

 

     

 

 

   

 

 

 

Solid Waste Volume

     11,682          4.5     3.4

Fuel surcharge

     (9       0.0     0.0

Commodity price & volume

     (624       -0.3     -0.2

Acquisitions, net divestitures

     3,696          1.4     1.1

Closed landfill

     (4,339       -1.7     -1.3
  

 

 

     

 

 

   

 

 

 

Total Solid Waste

     13,032          5.0     3.8
  

 

 

     

 

 

   

 

 

 

Organics

     1,977            0.6
  

 

 

       

 

 

 

Customer Solutions

     8,869            2.6
  

 

 

       

 

 

 
Recycling Operations:                % of
Recycling
Operations
       

Commodity price

     254          0.8     0.1

Commodity volume

     3,098          10.6     0.9

Commodity acquisition

     1,075          3.7     0.3
  

 

 

     

 

 

   

 

 

 

Total Recycling

     4,427          15.1     1.3
  

 

 

     

 

 

   

 

 

 

Total Company

   $ 28,305            8.3

Solid Waste Internalization Rates by Region for the eight months ended December 31, 2014 and 2013 are as follows:

 

     Eight Months Ended
December 31,
 
             2014                     2013          

Eastern region

     52.9     51.8

Western region

     79.0     74.8

Solid waste internalization

     65.6     63.4

Components of Capital Expenditures for the eight months ended December 31, 2014 and 2013 are as follows (i):

 

     Eight Months Ended
December 31,
 
             2014                      2013          

Landfill development

   $ 19,265       $ 15,412   

Vehicles, machinery, equipment and containers

     29,471         12,124   

Facilities

     4,795         2,803   

Other

     1,485         751   
  

 

 

    

 

 

 

Total capital expenditures

   $ 55,016       $ 31,090   
  

 

 

    

 

 

 

 

(i) Does not include acquisition related capital expenditures, which are defined as costs of equipment added directly as a result of new business growth related to an acquisition.

 

9


CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES

SUPPLEMENTAL DATA TABLES (Continued)

(Unaudited)

(In thousands)

We have provided the following unaudited financial results for the three months ended March 31, 2014, June 30, 2014, September 30, 2014 and December 31, 2014 and for twelve months ended December 31, 2014. This information has been prepared by and is the responsibility of management. The financial results provided may be subject to adjustment as a result of the completion of review procedures by our independent registered public accounting firm as a part of the quarterly reviews they perform over the quarterly interim periods of our fiscal year ending December 31, 2015.

Condensed consolidated statements of operations by quarter for the twelve months ended December 31, 2014 are as follows:

 

     Three Months Ended     Twelve Months
Ended
December 31,
2014
 
     March 31,
2014
    June 30,
2014
    September 30,
2014
    December 31,
2014
   

Revenues

   $ 113,197      $ 137,279      $ 141,924      $ 133,538      $ 525,938   

Operating expenses:

          

Cost of operations

     86,404        97,218        98,228        95,316        377,166   

General and administration

     16,387        15,594        17,215        17,597        66,793   

Depreciation and amortization

     13,608        17,167        15,787        14,644        61,206   

Asset impairment charge

     —          7,455        —          —          7,455   

Development project charge

     1,440        (46     —          —          1,394   

Environmental remediation charge

     —          —          75        875        950   

Severance and reorganization costs

     80        350        (4     —          426   

Expense (gain) from divestiture, acquisition and financing costs

     10        14        —          (553     (529

Gain on settlement of acquisition related contingent consideration

     (1,058     —          —          —          (1,058
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  116,871      137,752      131,301      127,879      513,803   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating loss

  (3,674   (473   10,623      5,659      12,135   

Other expense/(income), net:

Interest expense, net

  9,496      9,503      9,440      9,643      38,082   

Income from equity method investments

  (27   (63   —        —        (90

Loss on sale of equity method investment

  221      —        —        —        221   

Loss (gain) on derivative instruments

  150      298      (82   209      575   

Impairment of investments

  —        —        —        2,320      2,320   

Other income

  (207   (361   (204   (405   (1,177
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
  9,633      9,377      9,154      11,767      39,931   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

(Loss) income from continuing operations before income taxes

  (13,307   (9,850   1,469      (6,108   (27,796

Provision for income taxes

  303      528      229      280      1,340   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net (loss) income

  (13,610   (10,378   1,240      (6,388   (29,136
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Less: Net (loss) income attributable to noncontrolling interests

  (187   (3,723   160      5      (3,745
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net (loss) income attributable to common stockholders

$ (13,423 $ (6,655 $ 1,080    $ (6,393 $ (25,391
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Amounts of our total revenues attributable to services provided by quarter for the twelve months ended December 31, 2014 are as follows:

   

     Three Months Ended     Twelve Months
Ended
December 31,
2014
 
     March 31,
2014
    June 30,
2014
    September 30,
2014
    December 31,
2014
   

Collection

   $ 52,543      $ 58,368      $ 60,648      $ 57,587      $ 229,146   

Disposal

     24,075        38,128        39,561        36,304        138,068   

Power generation

     3,349        1,998        1,902        1,834        9,083   

Processing

     1,708        2,817        2,819        1,976        9,320   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Solid waste operations

  81,675      101,311      104,930      97,701      385,617   

Organics

  9,276      10,715      10,129      9,684      39,804   

Customer solutions

  11,885      13,274      13,559      13,547      52,265   

Recycling

  10,361      11,979      13,306      12,606      48,252   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

$ 113,197    $ 137,279    $ 141,924    $ 133,538    $ 525,938   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Components of our capital expenditures by quarter for the twelve months ended December 31, 2014 are as follows (i):

 

  

     Three Months Ended     Twelve Months
Ended
December 31,
2014
 
     March 31,
2014
    June 30,
2014
    September 30,
2014
    December 31,
2014
   

Landfill development

   $ 3,813      $ 6,456      $ 7,538      $ 7,299      $ 25,106   

Vehicles, machinery, equipment and containers

     3,051        8,311        10,582        12,753        34,697   

Facilities

     339        912        1,390        3,046        5,687   

Other

     274        149        199        1,140        1,762   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total capital expenditures

$ 7,477    $ 15,828    $ 19,709    $ 24,238    $ 67,252   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

(i)     Does not include acquisition related capital expenditures, which are defined as costs of equipment added directly as a result of new business growth related to an acquisition.

         

Following is a reconciliation of Adjusted Operating (Loss) Income to Adjusted EBITDA to Net (Loss) Income by quarter for the twelve months ended December 31, 2014:    
     Three Months Ended     Twelve Months
Ended
December 31,
2014
 
     March 31,
2014
    June 30,
2014
    September 30,
2014
    December 31,
2014
   

Net (Loss) Income

   $ (13,610   $ (10,378   $ 1,240      $ (6,388   $ (29,136

Provision for income taxes

     303        528        229        280        1,340   

Other expense (income), net

     137        (126     (286     2,124        1,849   

Interest expense, net

     9,496        9,503        9,440        9,643        38,082   

Expense (gain) from divestiture, acquisition and financing costs

     10        14        —          (553     (529

Severance and reorganization costs

     80        350        (4     —          426   

Environmental remediation charge

     —          —          75        875        950   

Depreciation and amortization

     13,608        17,167        15,787        14,644        61,206   

Fiscal year-end transition costs

     —          —          336        202        538   

Asset impairment charge

     —          7,455        —          —          7,455   

Gain on settlement of acquisition related contingent consideration

     (1,058     —          —          —          (1,058

Development project charge

     1,440        (46     —          —          1,394   

Depletion of landfill operating lease obligations

     1,992        3,046        3,066        2,621        10,725   

Interest accretion on landfill and environmental remediation liabilities

     1,017        809        829        951        3,606   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

$ 13,415    $ 28,322    $ 30,712    $ 24,399    $ 96,848   

Depreciation and amortization

  (13,608   (17,167   (15,787   (14,644   (61,206

Depletion of landfill operating lease obligations

  (1,992   (3,046   (3,066   (2,621   (10,725

Interest accretion on landfill and environmental remediation liabilities

  (1,017   (809   (829   (951   (3,606
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted Operating (Loss) Income

$ (3,202 $ 7,300    $ 11,030    $ 6,183    $ 21,311   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

10


Condensed consolidated statement of cash flows for the twelve months ended December 31, 2014 is as follows:

 

     Twelve Months
Ended
December 31,
2014
 

Cash Flows from Operating Activities:

  

Net loss

   $ (29,136

Adjustments to reconcile net loss to net cash provided by operating activities—

  

Gain on divestiture

     (553

Gain on sale of property and equipment

     (493

Depreciation and amortization

     61,206   

Depletion of landfill operating lease obligations

     10,726   

Interest accretion on landfill and environmental remediation liabilities

     3,605   

Asset impairment charge

     7,455   

Development project charge

     1,394   

Gain on settlement of acquisition related contingent consideration

     (1,058

Amortization of discount on senior subordinated notes

     257   

Income from equity method investments

     (90

Impairment of investments

     2,320   

Loss on sale of equity method investment

     221   

Loss on derivative instruments

     575   

Stock-based compensation expense

     2,394   

Excess tax benefit on the vesting of share based awards

     (84

Deferred income taxes

     1,181   

Changes in assets and liabilities, net of effects of acquisitions and divestitures

     2,238   
  

 

 

 

Net Cash Provided by Operating Activities

     62,158   
  

 

 

 

Cash Flows from Investing Activities:

  

Acquisitions, net of cash acquired

     (146

Acquisition related additions to property, plant and equipment

     (266

Additions to property, plant and equipment

     (67,252

Payments on landfill operating lease contracts

     (5,440

Payments related to investments

     (84

Proceeds from sale of equity method investment

     597   

Proceeds from sale of property and equipment

     815   
  

 

 

 

Net Cash Used In Investing Activities

     (71,776
  

 

 

 

Cash Flows from Financing Activities:

  

Proceeds from long-term borrowings

     188,260   

Principal payments on long-term debt

     (172,977

Change in restricted cash

     (5,819

Payments of financing costs

     (2,622

Proceeds from the exercise of share based awards

     286   

Excess tax benefit on the vesting of share based awards

     84   
  

 

 

 

Net Cash Provided By Financing Activities

     7,212   
  

 

 

 

Net Cash Provided By Discontinued Operations

     1,916   

Net decrease in cash and cash equivalents

     (490

Cash and cash equivalents, beginning of period

     2,695   
  

 

 

 

Cash and cash equivalents, end of period

   $ 2,205   
  

 

 

 

Supplemental Disclosures:

  

Cash interest

   $ 34,877   

Cash income taxes, net of refunds

   $ 182   
Following is a reconciliation of Free Cash Flow and Normalized Free Cash Flow to Net Cash Provided by Operating Activities for the twelve months ended December 31, 214:    
     Twelve Months
Ended
December 31,
2014
 

Net Cash Provided by Operating Activities

   $ 62,158   

Capital expenditures

     (67,252

Payments on landfill operating lease contracts

     (5,440

Proceeds from sale of property and equipment

     815   

Contributions from noncontrolling interest holders

     —     
  

 

 

 

Free Cash Flow

   $ (9,719
  

 

 

 

Landfill closure, site improvement and remediation expenditures (i)

     7,494   

New contract and project capital expenditures (ii)

     11,528   
  

 

 

 

Normalized Free Cash Flow

   $ 9,303   
  

 

 

 

 

(i) Includes cash outlays associated with the following identified items: Worcester landfill capping, BioFuels site improvement, and Maine Energy decommissioning, demolition and site remediation.

 

(ii) Includes cash outlays related to capital investments associated with certain new contracts and projects, including: the Thiopaq gas treatment system, the Lewiston, ME Zero-Sort material recovery facility, the Rockland, NY material recovery facility, the Concord, NH waste services contract, the City of Boston, MA recycling contract, and the Brookline, MA, Otsego, NY, Tompkins, NY and Schoharie, NY transfer stations.

 

11

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