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