Casella reports gain in revenues

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Casella reports gain in revenues

Thu, 05/04/2017 - 5:38pm -- tim

Vermont Business Magazine Casella Waste Systems, Inc (NASDAQ:CWST), a Rutland-based regional solid waste, recycling and resource management services company, today reported its financial results for the three month period ended March 31, 2017. Casella will hold a conference call to discuss these results on Friday, May 5, 2017 at 9 am. “We had another strong quarter as we continued to execute well against our key management strategies and benefited from stronger recycled commodity pricing for fibers,” said John W Casella, Chairman and CEO of Casella Waste Systems, Inc. “We remain focused on creating shareholder value through increasing landfill returns, improving collection profitability, creating incremental value through resource solutions, improving returns in our recycling business, and reducing leverage through strict capital discipline and debt repayment. The progress we have made on our strategies clearly drove positive financial results in the first quarter, with operating income up $4.6 million, operating income margins up 330 bps, and consolidated net leverage down year-over-year.”

Highlights for the Three Months Ended March 31, 2017:

  • Revenues were $133.8 million for the quarter, up $8.4 million, or 6.7%, from the same period in 2016.
  • Net loss improved by $7.4 million to $(0.2) million for the quarter, compared to $(7.6) million for the same period in 2016.
  • Adjusted Net Income (Loss) Attributable to Common Stockholders* was $0.3 million for the quarter, compared to $(7.7) million for the same period in 2016.
  • Adjusted EBITDA* was $23.1 million for the quarter, up $3.9 million, or 20.1%, from the same period in 2016.
  • Operating income was $6.6 million for the quarter, up $4.6 million, or 232.5%, from the same period in 2016.
  • Net cash provided by operating activities was $10.7 million for the quarter, up $9.0 million from the same period in 2016.
  • Free Cash Flow* was $1.1 million for the quarter, up $9.4 million from the same period in 2016.

“From an operating standpoint, our disciplined solid waste pricing programs continued to outpace internal inflation with overall solid waste pricing up 2.4% in the quarter, driven by strong landfill pricing which was up 3.4%, and robust residential and commercial pricing which was up 3.1%,” Casella said. “Further, our efforts to reduce operating costs and drive efficiencies continued to gain traction in the first quarter, with our cost of operations as a percentage of revenues down 140 bps year-over-year.”

“Our solid waste volumes were down 1.5% in the first quarter, mainly due to a 6.4% decline in disposal volumes,” Casella said. “Disposal volumes were down as we continued to ramp down volumes at our Southbridge landfill, and we purposely shed lower priced volumes as we worked to improve price and mix at our landfills. We also faced a tough year-over-year weather comparison with typical winter weather in the northeast this year, as compared to historically warm winter weather last year that pulled forward volumes into the first quarter.”

“Recycling commodity prices were up 22.6% sequentially from the fourth quarter of 2016 to the first quarter, mainly driven by higher paper and cardboard pricing,” Casella said. “Higher commodity prices, coupled with the changes that we made over the last two years to reshape our recycling business model, helped to drive strong recycling performance in the quarter. While recycling commodity prices have dropped by roughly 25% from March to April on weakness in paper and cardboard pricing, we do not expect this decline to impact our guidance for the year since we had previously budgeted prices to moderate throughout the year.”

For the quarter, revenues were $133.8 million, up $8.4 million, or 6.7%, from the same period in 2016, with revenue growth mainly driven by: robust collection, disposal and recycling commodity pricing; the roll-over impact from the acquisition of three transfer stations in the second quarter of 2016; and higher volumes in the Company's organics and customer solutions lines-of-business; partially offset by lower solid waste volumes, primarily associated with the planned ramp down of volumes at the Southbridge landfill, the shedding of low priced volumes, and a tough year-over-year comparison due to weather.

Net loss attributable to common stockholders was $(0.2) million, or $(0.01) per diluted common share for the quarter, as compared to net loss attributable to common stockholders of $(7.6) million, or $(0.19) per diluted common share for the same period in 2016. Adjusted Net Income Attributable to Common Stockholders was $0.3 million for the quarter, or an Adjusted Diluted Earnings Per Common Share* of $0.01 for the quarter, as compared to Adjusted Net Loss Attributable to Common Stockholders of $(7.7) million, or an Adjusted Diluted Earnings Per Common Share of $(0.19) for the same period in 2016.

Operating income was $6.6 million for the quarter, up $4.6 million from the same period in 2016. Adjusted EBITDA was $23.1 million for the quarter, up $3.9 million from the same period in 2016, with growth mainly driven by improved performance in the Company's collection and recycling lines-of-business.

The first quarter included a $0.5 million loss on debt extinguishment related to the remarketing of our $25.0 million aggregate principal amount of Finance Authority of Maine Solid Waste Disposal Revenue Bonds.

Net cash provided by operating activities was $10.7 million for the quarter, up $9.0 million from the same period in 2016. Free Cash Flow was $1.1 million for the quarter, as compared to $(8.3) million for the same period in 2016.

Outlook

The Company reaffirmed its guidance for the year ending December 31, 2017 by estimating results in the following ranges:

  • Revenues between $577 million and $587 million (as compared to $565.0 million in fiscal year 2016);
  • Adjusted EBITDA between $124 million and $128 million (as compared to $120.6 million in fiscal year 2016); and
  • Normalized Free Cash Flow between $32 million and $36 million (as compared to $27.1 million in fiscal year 2016).

The Company does not provide reconciling information of non-GAAP financial measures on a forward-looking basis because such information is not available without an unreasonable effort. The Company believes that such information is not significant to an understanding of its non-GAAP financial measures for forward-looking periods because its methodology for calculating such non-GAAP financial measures is based on sensitivity analysis compared to budget at the business unit level rather than on differences from Generally Accepted Accounting Principles in the United States (“GAAP”) financial measures.

Conference call to discuss quarter

The Company will host a conference call to discuss these results on Friday, May 5, 2017 at 9:00 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 11930800) until 12:00 p.m. ET on May 12, 2017.

 
CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except for per share data)
 
  Three Months Ended
March 31,
  2017   2016
Revenues $ 133,802     $ 125,432  
Operating expenses:      
Cost of operations 94,544     90,418  
General and administration 18,845     18,587  
Depreciation and amortization 13,849     14,453  
  127,238     123,458  
Operating income 6,564     1,974  
Other expense (income):      
Interest expense, net 6,381     9,926  
Loss (gain) on debt extinguishment 472     (48 )
Other income (81 )   (141 )
Other expense, net 6,772     9,737  
Loss before income taxes (208 )   (7,763 )
Provision (benefit) for income taxes 16     (149 )
Net loss (224 )   (7,614 )
Less: Net loss attributable to noncontrolling interests     (6 )
Net loss attributable to common stockholders $ (224 )   $ (7,608 )
Basic and diluted weighted average common shares outstanding 41,584     40,996  
Basic and diluted earnings per common share $ (0.01 )   $ (0.19 )

 

 
CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
 
  March 31,
2017
  December 31,
2016
ASSETS (Unaudited)    
CURRENT ASSETS:      
Cash and cash equivalents $ 2,226     $ 2,544  
Accounts receivable - trade, net of allowance for doubtful accounts 55,627     61,196  
Other current assets 14,882     14,848  
Total current assets 72,735     78,588  
Property, plant and equipment, net of accumulated depreciation and amortization 393,744     398,466  
Goodwill 119,936     119,899  
Intangible assets, net 7,472     7,696  
Restricted assets 1,039     1,002  
Cost method investments 12,333     12,333  
Other non-current assets 13,990     13,528  
Total assets $ 621,249     $ 631,512  
LIABILITIES AND STOCKHOLDERS' DEFICIT      
CURRENT LIABILITIES:      
Current maturities of long-term debt and capital leases $ 4,669     $ 4,686  
Accounts payable 40,512     44,997  
Other accrued liabilities 24,300     32,743  
Total current liabilities 69,481     82,426  
Long-term debt and capital leases, less current maturities 503,743     503,961  
Other long-term liabilities 71,202     69,675  
Total stockholders' deficit (23,177 )   (24,550 )
Total liabilities and stockholders' deficit $ 621,249     $ 631,512  

 

 
CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
 
  Three Months Ended
March 31,
  2017   2016
Cash Flows from Operating Activities:      
Net loss $ (224 )   $ (7,614 )
Adjustments to reconcile net loss to net cash provided by operating activities:      
Depreciation and amortization 13,849     14,453  
Depletion of landfill operating lease obligations 1,764     1,950  
Interest accretion on landfill and environmental remediation liabilities 965     886  
Amortization of debt issuance costs and discount on long-term debt 646     1,040  
Stock-based compensation 1,257     722  
Gain on sale of property and equipment (84 )   (203 )
Loss (gain) on debt extinguishment 472     (48 )
Deferred income taxes (74 )   100  
Changes in assets and liabilities, net of effects of acquisitions and divestitures (7,895 )   (9,562 )
  Net cash provided by operating activities 10,676     1,724  
Cash Flows from Investing Activities:      
Acquisitions, net of cash acquired (414 )    
Acquisition related additions to property, plant and equipment (58 )    
Additions to property, plant and equipment (8,634 )   (9,848 )
Payments on landfill operating lease contracts (977 )   (500 )
Proceeds from sale of property and equipment 84     359  
  Net cash used in investing activities (9,999 )   (9,989 )
Cash Flows from Financing Activities:      
Proceeds from long-term borrowings 71,200     64,300  
Principal payments on long-term debt (71,933 )   (57,948 )
Payments of debt issuance costs (620 )   (99 )
Proceeds from the exercise of share based awards 358      
Change in restricted cash     1,348  
  Net cash (used in) provided by financing activities (995 )   7,601  
Net decrease in cash and cash equivalents (318 )   (664 )
Cash and cash equivalents, beginning of period 2,544     2,312  
Cash and cash equivalents, end of period $ 2,226     $ 1,648  
Supplemental Disclosure of Cash Flow Information:      
Cash interest $ 8,045     $ 16,122  
Cash income taxes, net of refunds $ 54     $ 101  

 

 
CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES
RECONCILIATION OF CERTAIN NON-GAAP MEASURES
(Unaudited)
(In thousands)
 
Following is a reconciliation of Adjusted EBITDA to Net loss:
 
  Three Months Ended
March 31,
  2017   2016
Net loss $ (224 )   $ (7,614 )
Net loss margin (0.2 )%   (6.1 )%
Provision (benefit) for income taxes 16     (149 )
Other income (81 )   (141 )
Loss (gain) on debt extinguishment 472     (48 )
Interest expense, net 6,381     9,926  
Depreciation and amortization 13,849     14,453  
Depletion of landfill operating lease obligations 1,764     1,950  
Interest accretion on landfill and environmental remediation liabilities 965     886  
Adjusted EBITDA $ 23,142     $ 19,263  
Adjusted EBITDA margin 17.3 %   15.4 %

 

 
Following is a reconciliation of Adjusted Net Income (Loss) Attributable to Common Stockholders to Net loss
attributable to common stockholders:
   
  Three Months Ended
March 31,
  2017   2016
Net loss attributable to common stockholders $ (224 )   $ (7,608 )
Loss (gain) on debt extinguishment 472     (48 )
Tax effect (i) 2      
Adjusted Net Income (Loss) Attributable to Common Stockholders $ 250     $ (7,656 )
Diluted weighted average common shares outstanding 41,584     40,996  
Dilutive effect of options and restricted / performance stock units 938      
Adjusted Diluted Weighted Average Common Shares Outstanding 42,522     40,996  
Adjusted Diluted Earnings Per Common Share $ 0.01     $ (0.19 )

 

(i) The aggregate tax effect of the adjustments, including any impact of deferred tax adjustments.

 

Following is a reconciliation of Adjusted Diluted Earnings Per Common Share to Diluted earnings per common share:
 
  Three Months Ended
March 31,
  2017   2016
Diluted earnings per common share $ (0.01 )   $ (0.19 )
Loss (gain) on debt extinguishment 0.02      
Tax effect      
Adjusted Diluted Earnings Per Common Share $ 0.01     $ (0.19 )

 

 
Following is a reconciliation of Free Cash Flow to Net cash provided by operating activities:
 
  Three Months Ended
March 31,
  2017   2016
Net cash provided by operating activities $ 10,676     $ 1,724  
Capital expenditures (8,634 )   (9,848 )
Payments on landfill operating lease contracts (977 )   (500 )
Proceeds from sale of property and equipment 84     359  
Free Cash Flow $ 1,149     $ (8,265 )

 

 
CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES
SUPPLEMENTAL DATA TABLES
(Unaudited)
(In thousands)
 
Amounts of total revenues attributable to services provided for the three months ended March 31, 2017 and 2016 are as
follows:
   
  Three Months Ended March 31,
  2017   % of Total
Revenue
  2016   % of Total
Revenue
Collection $ 59,838     44.7%     $ 57,851     46.1%  
Disposal 31,281     23.4%     32,253     25.7%  
Power generation 1,352     1.0%     1,707     1.4%  
Processing 1,660     1.3%     973     0.8%  
Solid waste operations 94,131     70.4%     92,784     74.0%  
Organics 9,214     6.9%     8,935     7.1%  
Customer solutions 13,822     10.3%     13,075     10.4%  
Recycling 16,635     12.4%     10,638     8.5%  
Total revenues $ 133,802     100.0%     $ 125,432     100.0%  

 

 
Components of revenue growth for the three months ended March 31, 2017 compared to the three months ended
March 31, 2016 are as follows:
 
  Amount   % of
Related
Business
  % of Solid
Waste
Operations
  % of Total
Company
Solid Waste Operations:              
Collection $ 1,375     2.4%     1.5%     1.1%  
Disposal 839     2.6%     0.9%     0.7%  
Solid Waste Price 2,214         2.4%     1.8%  
Collection 556         0.6%     0.4%  
Disposal (2,064 )       (2.2)%     (1.6)%  
Processing 127         0.1%     0.1%  
Solid Waste Volume (1,381 )       (1.5)%     (1.1)%  
Fuel surcharge (7 )       —%     —%  
Commodity price & volume 205         0.2%     0.2%  
Acquisitions, net divestitures 316         0.4%     0.2%  
Total Solid Waste 1,347         1.5%     1.1%  
Organics 279             0.2%  
Customer Solutions 747             0.6%  
Recycling Operations:         % of Recycling
Operations
   
Price 5,590         52.6%     4.5%  
Volume 407         3.8%     0.3%  
Total Recycling 5,997         56.4%     4.8%  
Total Company $ 8,370             6.7%  

 

   
Solid waste internalization rates by region for the three months ended March 31, 2017 and 2016 are as follows:
   
  Three Months Ended
March 31,
  2017   2016
Eastern region 47.1%     44.7%  
Western region 68.4%     72.6%  
Solid waste internalization 57.1%     57.5%  

 

 
Components of capital expenditures for the three months ended March 31, 2017 and 2016 are as follows (ii):
 
  Three Months Ended
March 31,
  2017   2016
Total Growth Capital Expenditures $ 982     $ 1,346  
Replacement Capital Expenditures:      
Landfill development 2,814     3,787  
Vehicles, machinery, equipment and containers 3,971     4,194  
Facilities 580     154  
Other 287     367  
Total Replacement Capital Expenditures 7,652     8,502  
Total Growth and Replacement Capital Expenditures $ 8,634     $ 9,848  

 

(ii) The Company's capital expenditures are broadly defined as pertaining to either growth, replacement or acquisition activities. Growth capital expenditures are defined as costs related to development of new airspace, permit expansions, and new recycling contracts along with incremental costs of equipment and infrastructure added to further such activities. Growth capital expenditures include the cost of equipment added directly as a result of organic business growth as well as expenditures associated with adding infrastructure 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. Acquisition capital expenditures, which are not included in the table above, are defined as costs of equipment added directly as a result of new business growth related to an acquisition.
   

 RUTLAND, Vt., May 04, 2017 (GLOBE NEWSWIRE) -- Casella Waste Systems, Incwww.casella.com