Casella Waste Systems, Inc. (Nasdaq:CWST), a regional solid waste,
recycling and resource management services company, today reported
its first quarter financial results for the three month period
ended March 31, 2015 ("first quarter 2015").
First Quarter 2015 Financial Highlights
- Revenues were $116.6 million, up $3.4 million, or 3.0%,
from the same period in 2014.
- Adjusted EBITDA* was $14.5 million, up $1.1 million, or
7.9%, from the same period in 2014.
- Overall solid waste pricing was up 1.6%, mainly driven
by strong residential and commercial collection pricing which were
up 2.8%.
"We continued to execute well against our key management
strategies during the first quarter despite one of the worst
winters on record in the Northeast and lower recycling commodity
prices", said John W. Casella, chairman and CEO of Casella Waste
Systems. "Our teams responded well to this prolonged operational
challenge and we remain on track to achieve our financial targets
in 2015."
"Our efforts to drive pricing in the collection and disposal
lines-of-business continued to gain traction through the first
quarter," Casella continued. "The pricing programs that we launched
in the collection line-of-business this past fall have yielded
solid results. Residential and commercial collection pricing is up
2.8% year over year. Adding to this success, we advanced pricing
1.7% at our landfills in the Eastern Region as we began to
capitalize on the tightening disposal markets across this market
area. We expect these positive pricing trends to continue through
2015."
"In the first quarter we continued to enjoy success with our
Customer Solutions group, with revenues up 9.4% year-over-year,"
Casella noted. "More importantly, operating income in this group
was up $0.5 million year-over-year as we gained operating leverage
and scaled revenues on lower overhead costs."
"One of the largest challenges and opportunities facing the
solid waste industry today is the changing structure of the
recycling business," Casella continued. "Recycling commodity prices
continued to decline into early 2015, with our realized average
commodity revenue per ton down roughly 20% since October 2014. We
have taken swift action to reshape our recycling business through
increased tipping fees at our recycling facilities and we have
recently introduced an adjustment fee to our collection customers
to help offset the lower recycled commodity values. In addition,
through process improvements implemented over the last year, we
have reduced variable operating costs per ton by 1.5%."
For first quarter 2015, revenues were $116.6 million, up $3.4
million, or 3.0%, from the same period last year, with revenue
growth mainly driven by higher solid waste disposal and recycling
volumes, higher solid waste collection pricing, and customer
solutions growth, partially offset by lower recycling commodity
pricing and lower energy pricing.
Adjusted EBITDA was $14.5 million for first quarter 2015, up
$1.1 million, or 7.9%, from the same period last year with Adjusted
EBITDA margins expanding 0.6% year-over-year.
Operating income was $3.1 million for first quarter 2015, up
$6.8 million from the same period last year. First quarter 2015
includes a $4.9 million gain related to the disposal of certain
CARES water treatment assets and other related assets and a
reversal of excess costs related to the Maine Energy divestiture,
while the same period last year included a $1.4 million development
project charge, a $1.1 million gain on the settlement of contingent
consideration and $0.1 million of expense from divestiture,
acquisition and financing costs and severance and reorganization
costs.
The company's net loss attributable to common stockholders was
($9.3) million, or ($0.23) per common share for first quarter 2015,
compared to ($13.4) million, or ($0.34) per common share for the
same period last year. In addition to the items identified above,
first quarter 2015 also included a $0.5 million loss on debt
extinguishment related to refinancing of the company's Senior
Credit Facility, while the same quarter last year included a $0.2
million loss on the sale of an equity method investment.
As expected, given the operational and working capital
seasonality of our business, Free Cash Flow was ($7.5) million in
first quarter 2015, as compared to ($6.5) million for the same
period last year. Free Cash Flow is expected to be positive for the
remainder of our fiscal year.
Outlook
The company reaffirmed its 2015 guidance for the year ended
December 31, 2015 by estimating results in the following
ranges:
- Revenues between $520 million and $530 million;
- Adjusted EBITDA* between $103 million and $107 million;
and
- Free Cash Flow* between $14 million and $18 million.
Conference call to discuss quarter
The company will host a conference call to discuss these results
on Thursday, May 7, 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 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
18635534) until 11:59 p.m. ET on Thursday, May 14, 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 (gains) losses on divestiture
transactions ("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 (gains) losses on divestiture
transactions ("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 and distributions to non-controlling interest
holders ("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 is reconciled to net cash
provided by (used in) operating activities.
The company presents Adjusted EBITDA, Adjusted Operating Income,
and 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 and 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.
Non-GAAP financial measures are not in accordance with or an
alternative for GAAP. Adjusted EBITDA, Adjusted Operating Income,
and 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 or 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," "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: actions of activist investors and the cost and
disruption of responding to those actions; 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-KT for the transition period
ended December 31, 2014 and in our Form 10-Q for the quarterly
period ended March 31, 2015.
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.
CASELLA WASTE SYSTEMS,
INC. AND SUBSIDIARIES |
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS |
(Unaudited) |
(In thousands, except
amounts per share) |
|
|
Three Months
Ended |
|
March
31, |
|
2015 |
2014 |
|
|
|
|
|
|
Revenues |
$ 116,577 |
$ 113,197 |
|
|
|
Operating expenses: |
|
|
Cost of operations |
87,833 |
86,404 |
General and administration |
16,805 |
16,387 |
Depreciation and
amortization |
13,748 |
13,608 |
Divestiture transactions |
(4,935) |
-- |
Development project charge |
-- |
1,440 |
Severance and reorganization
costs |
-- |
80 |
Expense from divestiture,
acquisition and financing costs |
-- |
10 |
Gain on settlement of
acquisition related contingent consideration |
-- |
(1,058) |
|
113,451 |
116,871 |
|
|
|
Operating income (loss) |
3,126 |
(3,674) |
|
|
|
Other expense/(income), net: |
|
|
Interest expense, net |
9,985 |
9,496 |
Loss on debt
extinguishment |
521 |
-- |
Loss on derivative
instruments |
151 |
150 |
Income from equity method
investments |
-- |
(27) |
Loss on sale of equity method
investment |
-- |
221 |
Other income |
(164) |
(207) |
Other expense, net |
10,493 |
9,633 |
|
|
|
Loss before income taxes |
(7,367) |
(13,307) |
Provision for income taxes |
596 |
303 |
|
|
|
Net loss |
(7,963) |
(13,610) |
|
|
|
Less: Net income (loss)
attributable to noncontrolling interests |
1,308 |
(187) |
|
|
|
Net loss attributable to common
stockholders |
$ (9,271) |
$ (13,423) |
|
|
|
Basic and diluted weighted average common
shares outstanding |
40,417 |
39,909 |
|
|
|
Basic and diluted earnings per common
share |
$ (0.23) |
$ (0.34) |
|
|
|
Adjusted EBITDA * |
$ 14,477 |
$ 13,415 |
|
|
|
CASELLA WASTE SYSTEMS,
INC. AND SUBSIDIARIES |
CONDENSED CONSOLIDATED
BALANCE SHEETS |
(In
thousands) |
|
|
March 31, |
December 31, |
ASSETS |
2015 |
2014 |
|
(Unaudited) |
|
CURRENT ASSETS: |
|
|
Cash and cash equivalents |
$ 3,057 |
$ 2,205 |
Restricted cash |
-- |
76 |
Accounts receivable - trade,
net of allowance for doubtful accounts |
52,513 |
55,750 |
Other current assets |
17,459 |
20,638 |
Total current assets |
73,029 |
78,669 |
|
|
|
Property, plant and equipment, net of
accumulated depreciation and amortization |
404,453 |
414,542 |
Goodwill |
119,170 |
119,170 |
Intangible assets, net |
11,070 |
11,808 |
Restricted assets |
2,554 |
6,632 |
Cost method investments |
14,432 |
14,432 |
Other non-current assets |
29,696 |
24,542 |
|
|
|
Total assets |
$ 654,404 |
$ 669,795 |
|
|
|
LIABILITIES AND STOCKHOLDERS'
DEFICIT |
|
|
|
|
|
CURRENT LIABILITIES: |
|
|
Current maturities of long-term
debt and capital leases |
$ 1,457 |
$ 1,656 |
Accounts payable |
39,410 |
48,518 |
Other accrued liabilities |
27,266 |
36,258 |
Total current liabilities |
68,133 |
86,432 |
|
|
|
Long-term debt and capital leases, less
current maturities |
545,442 |
534,055 |
Other long-term liabilities |
61,685 |
61,328 |
|
|
|
Total stockholders' deficit |
(20,856) |
(12,020) |
|
|
|
Total liabilities and
stockholders' deficit |
$ 654,404 |
$ 669,795 |
|
CASELLA WASTE SYSTEMS,
INC. AND SUBSIDIARIES |
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS |
(Unaudited) |
(In
thousands) |
|
|
Three Months
Ended |
|
March
31, |
|
2015 |
2014 |
|
|
|
Cash Flows from Operating
Activities: |
|
|
Net loss |
$ (7,963) |
$ (13,610) |
Adjustments to reconcile net loss to net cash
(used in) provided by operating activities -- |
|
|
Depreciation and
amortization |
13,748 |
13,608 |
Depletion of landfill operating
lease obligations |
1,690 |
1,992 |
Interest accretion on landfill
and environmental remediation liabilities |
848 |
1,017 |
Stock-based compensation
expense |
660 |
576 |
Amortization of discount on
long-term debt |
80 |
62 |
Divestiture
transactions |
(4,935) |
-- |
Gain on sale of property and
equipment |
(46) |
(185) |
Development project
charge |
-- |
1,440 |
Gain on settlement of
acquisition related contingent consideration |
-- |
(1,058) |
Loss on debt
extinguishment |
521 |
-- |
Loss on derivative
instruments |
151 |
150 |
Income from equity method investments |
-- |
(27) |
Loss on sale of equity method investment |
-- |
221 |
Deferred income
taxes |
(49) |
243 |
Changes in assets and
liabilities, net of effects of acquisitions and
divestitures |
(10,400) |
(3,068) |
Net Cash (Used In) Provided by
Operating Activities |
(5,695) |
1,361 |
Cash Flows from Investing
Activities: |
|
|
Proceeds from settlement of
contingent consideration |
-- |
214 |
Acquisition related additions
to property, plant and equipment |
-- |
(79) |
Additions to property, plant
and equipment |
(4,444) |
(7,477) |
Payments on landfill operating
lease contracts |
(478) |
(563) |
Payment related to
investments |
-- |
(84) |
Proceeds from divestiture
transactions |
4,550 |
-- |
Proceeds from sale of property
and equipment |
89 |
216 |
Net Cash Used In Investing
Activities |
(283) |
(7,773) |
Cash Flows from Financing
Activities: |
|
|
Proceeds from long-term
borrowings |
197,591 |
47,860 |
Principal payments on long-term
debt |
(186,500) |
(41,250) |
Change in restricted
cash |
4,086 |
-- |
Payments of financing
costs |
(6,852) |
(17) |
Distribution to noncontrolling
interest holder |
(1,495) |
-- |
Net Cash Provided By Financing
Activities |
6,830 |
6,593 |
Net Cash Provided By
Discontinued Operations |
-- |
86 |
Net increase in cash and cash
equivalents |
852 |
267 |
Cash and cash equivalents, beginning of
period |
2,205 |
2,695 |
Cash and cash equivalents, end of
period |
$ 3,057 |
$ 2,962 |
|
|
|
Supplemental Disclosures: |
|
|
Cash interest |
$ 15,336 |
$ 14,959 |
Cash income taxes, net of refunds |
$ 30 |
$ 500 |
|
CASELLA WASTE SYSTEMS,
INC. AND SUBSIDIARIES |
RECONCILIATION OF
CERTAIN NON-GAAP MEASURES |
(Unaudited) |
(In
thousands) |
|
|
Following is a
reconciliation of Adjusted EBITDA and Adjusted Operating Loss to
Net Loss: |
|
|
Three Months
Ended |
|
March
31, |
|
2015 |
2014 |
|
|
|
Net Loss |
$ (7,963) |
$ (13,610) |
Provision for income
taxes |
596 |
303 |
Other expense, net |
508 |
137 |
Interest expense,
net |
9,985 |
9,496 |
Gain on settlement of
acquisition related contingent consideration |
-- |
(1,058) |
Expense from divestiture,
acquisition and financing costs |
-- |
10 |
Severance and reorganization
costs |
-- |
80 |
Development project
charge |
-- |
1,440 |
Divestiture
transactions |
(4,935) |
-- |
Depreciation and
amortization |
13,748 |
13,608 |
Depletion of landfill operating
lease obligations |
1,690 |
1,992 |
Interest accretion on landfill
and environmental remediation liabilities |
848 |
1,017 |
Adjusted EBITDA * |
$ 14,477 |
$ 13,415 |
Depreciation and
amortization |
(13,748) |
(13,608) |
Depletion of landfill operating
lease obligations |
(1,690) |
(1,992) |
Interest accretion on landfill
and environmental remediation liabilities |
(848) |
(1,017) |
Adjusted Operating Loss
* |
$ (1,809) |
$ (3,202) |
|
|
|
Following is a
reconciliation of Free Cash Flow to Net Cash Provided by Operating
Activities: |
|
|
Three Months
Ended |
|
March
31, |
|
2015 |
2014 |
Net Cash (Used In) Provided By
Operating Activities |
$ (5,695) |
$ 1,361 |
Capital expenditures |
(4,444) |
(7,477) |
Payments on landfill operating lease
contracts |
(478) |
(563) |
Proceeds from sale of property and
equipment |
89 |
216 |
Proceeds from divestiture transactions |
4,550 |
-- |
Distribution to noncontrolling interest
holder |
(1,495) |
-- |
Free Cash Flow * |
$ (7,473) |
$ (6,463) |
|
CASELLA WASTE SYSTEMS,
INC. AND SUBSIDIARIES |
SUPPLEMENTAL DATA
TABLES |
(Unaudited) |
(In
thousands) |
|
Amounts of our total revenues
attributable to services provided for the three months ended March
31, 2015 and 2014 are as follows: |
|
|
|
|
Three Months
Ended March 31, |
|
2015 |
% of Total
Revenue |
2014 |
% of Total
Revenue |
Collection |
$ 53,456 |
45.9% |
$ 52,543 |
46.4% |
Disposal |
27,637 |
23.7% |
24,075 |
21.3% |
Power generation |
2,047 |
1.8% |
3,349 |
2.9% |
Processing |
1,121 |
0.9% |
1,708 |
1.5% |
Solid waste
operations |
84,261 |
72.3% |
81,675 |
72.1% |
Organics |
9,020 |
7.7% |
9,276 |
8.2% |
Customer solutions |
13,002 |
11.2% |
11,885 |
10.5% |
Recycling |
10,294 |
8.8% |
10,361 |
9.2% |
Total revenues |
$ 116,577 |
100.0% |
$ 113,197 |
100.0% |
|
|
|
|
|
Components of revenue growth for the
three months ended March 31, 2015 compared to the three months
ended March 31, 2014 are as follows: |
|
|
|
|
|
|
|
|
|
|
Amount |
% of Related
Business |
% of Solid Waste
Operations |
% of Total
Company |
Solid Waste Operations: |
|
|
|
|
Collection |
$ 1,100 |
2.1% |
1.3% |
1.0% |
Disposal |
202 |
0.8% |
0.3% |
0.2% |
Solid Waste Yield |
1,302 |
|
1.6% |
1.2% |
|
|
|
|
|
Collection |
(57) |
|
-0.1% |
-0.1% |
Disposal |
3,338 |
|
4.1% |
3.0% |
Processing |
(366) |
|
-0.4% |
-0.3% |
Solid Waste Volume |
2,915 |
|
3.6% |
2.6% |
|
|
|
|
|
Fuel surcharge |
(223) |
|
-0.3% |
-0.2% |
Commodity price & volume |
(1,479) |
|
-1.8% |
-1.3% |
Acquisitions, net divestitures |
403 |
|
0.5% |
0.3% |
Closed landfill |
(332) |
|
-0.4% |
-0.3% |
Total Solid Waste |
2,586 |
|
3.2% |
2.3% |
|
|
|
|
|
Organics |
(256) |
|
|
-0.2% |
|
|
|
|
|
Customer Solutions |
1,117 |
|
|
1.0% |
|
|
|
|
|
Recycling Operations: |
|
|
% of Recycling
Operations |
|
Commodity price |
(1,643) |
|
-15.9% |
-1.5% |
Commodity volume |
1,576 |
|
15.2% |
1.4% |
Total Recycling |
(67) |
|
-0.7% |
-0.1% |
|
|
|
|
|
Total Company |
$ 3,380 |
|
|
3.0% |
|
|
|
|
|
Solid Waste Internalization Rates by
Region for the three months ended March 31, 2015 and 2014 are as
follows: |
|
|
|
|
|
|
|
|
|
|
Three Months
Ended March 31, |
|
|
|
2015 |
2014 |
|
|
Eastern region |
44.2% |
52.5% |
|
|
Western region |
71.7% |
76.4% |
|
|
Solid waste
internalization |
57.3% |
63.9% |
|
|
|
|
|
|
|
Components of Capital Expenditures
for the three months ended March 31, 2015 and 2014 are as follows
(i): |
|
|
|
|
|
|
|
|
|
|
Three Months
Ended March 31, |
|
|
|
2015 |
2014 |
|
|
|
|
|
|
|
Landfill development |
$ 2,202 |
$ 3,813 |
|
|
Vehicles, machinery, equipment and
containers |
1,412 |
3,051 |
|
|
Facilities |
244 |
339 |
|
|
Other |
586 |
274 |
|
|
Total capital
expenditures |
$ 4,444 |
$ 7,477 |
|
|
|
|
|
|
|
(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. |
CONTACT: 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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Casella Waste Systems (NASDAQ:CWST)
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From Apr 2023 to Apr 2024