Casella Waste Systems, Inc. (NASDAQ: CWST), a regional solid waste,
recycling and resource management services company, today reported
its financial results for the three month period ended March 31,
2020. The Company also withdraws guidance for the fiscal year
ending December 31, 2020.
Highlights for the Three Months Ended March 31,
2020:
- Revenues were $182.9 million for the quarter, up $19.2
million, or up 11.8%, from the same period in 2019.
- Overall solid waste pricing for the quarter was up
5.8%, driven by robust collection pricing, up 5.2%, and strong
disposal pricing, up 7.7%, from the same period in
2019.
- Net income was $1.0 million for the quarter, up $2.7
million from the same period in 2019.
- Adjusted Net Income* was $2.5 million for the quarter,
up $3.0 million from the same period in 2019.
- Adjusted EBITDA* was $33.5 million for the quarter, up
$6.9 million, or up 25.9%, from the same period in
2019.
- Net cash provided by operating activities was $14.8
million for the quarter, up $10.0 million, or up 209.6% from the
same period in 2019.
- Normalized Free Cash Flow* was $4.0 million for the
quarter, up $12.5 million from the same period in
2019.
“During the first quarter, we continued to execute well against
our key long-term strategies as part of our 2021 plan,” said John
W. Casella, Chairman and CEO of Casella Waste Systems, Inc. “Our
solid waste pricing programs were ahead of budget as we advanced
5.2% pricing in the collection line-of-business and 10.1% pricing
at the landfills, with overall solid waste price increasing by
5.8%. Solid waste volumes were down (2.7)% in the quarter, as we
continued to focus on shedding unprofitable work, advancing pricing
in excess of inflation, and we began to experience early negative
volume impacts from COVID-19 as the shelter-in-place orders forced
businesses to close and construction to come to a halt.”
“We continue to make substantial progress executing against our
strategic growth initiative, as we acquired four businesses with
approximately $13 million of annualized revenues in 2020,” Casella
said. “Our acquisition pipeline remains robust, and while we
believe that there is substantial opportunity to drive additional
cash flow growth across our footprint, we do expect acquisition
activity to slow in the near term as we focus on managing our
business through the COVID-19 pandemic.”
“During the first quarter we completed the realignment of our
recycling, organics and customer solutions groups into the newly
formed Resource Solutions segment,” Casella said. “This is an
important long-term strategic move to ensure that our
resource-oriented teams are well aligned as they help customers
achieve their sustainability goals, while effectively leveraging
synergies across operations, sales and the back-office. You will
see this change presented in our segment reporting for the
quarter.”
“Our first quarter results did not have significant negative
impacts from the COVID-19 pandemic as the stay-at-home orders and
widespread business shutdowns did not occur until roughly mid-March
across our operating footprint,” Casella said.
For the quarter, revenues were $182.9 million, up $19.2 million,
or 11.8%, from the same period in 2019, with revenue growth mainly
driven by: robust collection and strong disposal pricing; the
roll-over impact from acquisitions; higher resource solutions
volumes; higher recycling processing price; and higher fees;
partially offset by lower solid waste volumes and lower recycling
commodity prices.
Net income was $1.0 million for the quarter, or $0.02 per
diluted common share for the quarter, as compared to net loss of
$(1.7) million, or $(0.04) per diluted common share, for the same
period in 2019. The first quarter included $1.0 million of expense
from acquisition activities and other items and $0.6 million of
legal and other expenses associated with the Southbridge Landfill
closure. The same quarter last year included $0.7 million of
expense from acquisition activities and other items and $0.6
million of legal and other costs associated with the Southbridge
Landfill closure.
Adjusted Net Income was $2.5 million for the quarter, or
Adjusted Diluted Earnings Per Common Share* of $0.05 for the
quarter, as compared to Adjusted Net Loss of $(0.5) million, or
Adjusted Diluted Earnings Per Common Share of $(0.01), for the same
period in 2019.
Response to COVID-19 and Business Update
“I couldn’t be prouder of our 2,500 dedicated employees,
especially our frontline team members who have worked hard
throughout this challenging and uncertain time to effectively
service our customers while meeting our high safety and
environmental standards,” Casella said. “My heart goes out to the
individuals and communities, including first responders and
healthcare workers, most deeply impacted by the COVID-19 pandemic.
We have been working hard to do our part during this pandemic as an
essential service provider to keep our customers serviced and our
facilities operating in order to support hospitals, clinics,
grocery stores and other critical businesses and
industries.”
“Since the outbreak of COVID-19 in early March, our number one
priority has been to keep our people and the communities we operate
in safe and healthy by strictly adhering to CDC recommendations and
establishing appropriate personal protective equipment, exposure
reduction plans for each frontline role, contact tracing, and
disinfectant procedures,” Casella said. “We have also developed
operating continuity plans including the establishment of a
priority response team composed of top drivers, technicians, and
equipment operators that can be mobilized to any facility across
our footprint to reduce service interruptions. In addition, we have
effectively transitioned key back office functions to
work-from-home through the effective use of technology with minimal
impacts to our ability to execute each day. And, finally we have
focused on maintaining open communication with our customers and
working to create necessary flexibility of service and terms to
help our customers and communities through this challenging
time.”
“We entered the COVID-19 crisis as a strong company - with an
experienced and well balanced team, excellent culture and core
values, a solid balance sheet with sufficient liquidity, robust
cash flow generation, effective risk management programs, stable
business processes, and consistent strategic execution,” Casella
said. “As an essential service provider we have continued to
operate through the COVID-19 pandemic, with approximately 87% of
our revenues from stable recurring sources such as residential
collection, recycling processing, and organics
lines-of-business.”
“We have experienced revenue declines in our commercial
collection line-of-business as various commercial customers have
temporarily closed or reduced services; in our roll-off collection
line-of-business as many construction projects were temporarily
halted or industrial customers have reduced services; and in our
disposal line-of-business due to lower economic and construction
activity across our markets,” Casella said. “In April, revenues
declined -0.9% year-over-year, or declined approximately -8.1%
excluding the roll-over impact from acquisitions completed in the
last year.”
"We are actively managing our business to address the challenges
of uncertainty around COVID-19 and have taken the following steps
to adjust our cost structure, maintain liquidity, and increase cash
flows:
- Developed daily tracking tools to monitor any revenue or
expense changes to ensure proactive management;
- Downsized our workforce through the reduction of hours,
reduction of overtime, furloughs and layoffs;
- Actively flexed variable operating and general and
administration costs;
- Instituted a hiring freeze for all non-essential roles and
frozen salary increases;
- Increased cash on our balance sheet to $26.2 million at March
31, 2020; and
- Froze approximately $10.0 million of discretionary capital
expenditures."
The Company's next major debt maturity is its senior secured
credit facility in May 2023, and as of March 31, 2020 the Company
had $139.8 million of liquidity including cash and availability on
its revolving credit facility.
2020 Outlook
“We have chosen to withdraw our financial guidance for the
fiscal year ending December 31, 2020 due to the uncertainty of the
impacts of the COVID-19 pandemic,” Casella said. “We hope to have
more visibility on key variables such as the lifting of the
stay-at-home orders and the state of the economy when we announce
our second quarter results.”
Conference call to discuss quarter
The Company will host a conference call to discuss these results
on Friday, May 8, 2020 at 10:00 a.m. Eastern Time. Individuals
interested in participating in the call should dial (877) 838-4153
or for international participants (720) 545-0037 at least 10
minutes before start time. The Conference ID is 168 0479 for the
call and the replay.
The call will also be webcast; to listen, participants should
visit the company’s website at http://ir.casella.com and
follow the appropriate link to the webcast. A replay of the call
will be available on the Company's website, or by calling (855)
859-2056 or (404) 537-3406 (Conference ID 168 0479).
About Casella Waste Systems, Inc.
Casella Waste Systems, Inc., headquartered in Rutland, Vermont,
provides resource management expertise and services to residential,
commercial, municipal and industrial customers, primarily in the
areas of solid waste collection and disposal, transfer, recycling
and organics services in the northeastern United States. For
further information, investors contact Ned Coletta, Chief Financial
Officer at (802) 772-2239; media contact Joseph Fusco, Vice
President at (802) 772-2247; or visit the Company’s website at
http://www.casella.com.
*Non-GAAP Financial Measures
In addition to disclosing financial results prepared in
accordance with GAAP, the Company also discloses earnings before
interest, taxes, and depreciation and amortization, adjusted for
accretion, depletion of landfill operating lease obligations, the
Southbridge Landfill closure (settlement) charge, net, gains on
asset sales, development project charges, contract settlement
charges, legal settlement costs, tax settlement costs, bargain
purchase gains, asset impairment charges, environmental remediation
charges, severance and reorganization costs, expense from
acquisition activities and other items, gains on the settlement of
acquisition related contingent consideration, proxy contest costs,
withdrawal costs - multiemployer pension plan, as well as impacts
from divestiture transactions (“Adjusted EBITDA”), which is a
non-GAAP financial measure.
The Company also discloses earnings before interest and taxes,
adjusted for the Southbridge Landfill closure (settlement) charge,
net, gains on asset sales, development project charges, contract
settlement charges, legal settlement costs, tax settlement costs,
bargain purchase gains, asset impairment charges, environmental
remediation charges, severance and reorganization costs, expense
from acquisition activities and other items, gains on the
settlement of acquisition related contingent consideration, proxy
contest costs, withdrawal costs - multiemployer pension plan, as
well as impacts from divestiture transactions (“Adjusted Operating
Income”), which is a non-GAAP financial measure.
The Company also discloses net income (loss), adjusted for the
U.S. tax reform impact, the Southbridge Landfill closure
(settlement) charge, net, gains on asset sales, development project
charges, contract settlement charges, legal settlement costs, tax
settlement costs, bargain purchase gains, asset impairment charges,
environmental remediation charges, severance and reorganization
costs, expense from acquisition activities and other items, gains
on the settlement of acquisition related contingent consideration,
proxy contest costs, withdrawal costs - multiemployer pension plan,
impacts from divestiture transactions, losses on debt modifications
and extinguishments, as well as impairment of investments
("Adjusted Net Income (Loss)"), which is a non-GAAP financial
measure.
The Company also discloses Adjusted Diluted Earnings Per Common
Share, which is Adjusted Net Income (Loss) divided by Adjusted
Diluted Weighted Average Common Shares Outstanding, which includes
the dilutive effect of options and restricted / performance stock
units. Adjusted Diluted Earnings Per Common Share is a non-GAAP
financial measure.
The Company also discloses net cash provided by operating
activities, less capital expenditures, less payments on landfill
operating lease contracts, plus proceeds from divestiture
transactions, plus proceeds from the sale of property and
equipment, plus proceeds from property insurance settlement, plus
(less) contributions from (distributions to) noncontrolling
interest holders, plus (less) certain cash outflows (inflows)
associated with landfill closure, site improvement and remediation,
plus certain cash outflows associated with new contract and project
capital expenditures, plus certain cash outflows associated with
contract settlement costs, plus certain cash outflows associated
with expense from acquisition activities and other items, plus
certain cash outflows associated with capital expenditures related
to acquisitions or assumption of new customers from a distressed or
defunct market participant, plus (less) cash outflows (inflows)
associated with certain business dissolutions, plus cash interest
outflows associated with the timing of refinancing transactions,
plus cash outflows associated with Waste USA landfill phase VI
construction (“Normalized Free Cash Flow”), which is a non-GAAP
financial measure.
The Company also discloses net cash provided by operating
activities, plus changes in assets and liabilities, net of effects
of acquisitions and divestitures, gains on sale of property and
equipment, expense from acquisition activities and other items,
withdrawal costs - multiemployer pension plan, environmental
remediation charges, losses on debt modifications and
extinguishments, stock based compensation expense, development
project charges, the non-cash Southbridge Landfill closure charge
(settlement), net, impairment of investment, operating lease
right-of-use assets expense, interest expense - less amortization,
provisions for income taxes, net of deferred taxes, and adjustments
as allowed by the Company's credit facility agreement
("Consolidated EBITDA") and total debt, less unencumbered cash and
cash equivalents in excess of $2.0 million ("Consolidated Funded
Debt, Net" and, divided by Consolidated EBITDA, the "Consolidated
Net Leverage Ratio"), which are non-GAAP financial measures.
Adjusted EBITDA, Adjusted Operating Income and Adjusted Net
Income (Loss) are reconciled to net income (loss); Adjusted Diluted
Earnings Per Common Share is reconciled to diluted earnings per
common share; Normalized Free Cash Flow and Consolidated EBITDA are
reconciled to net cash provided by operating activities; and
Consolidated Funded Debt, Net is reconciled to total debt.
The Company presents Adjusted EBITDA, Adjusted Operating Income,
Adjusted Net Income (Loss), Adjusted Diluted Earnings Per Common
Share, Normalized Free Cash Flow, Consolidated EBITDA, Consolidated
Funded Debt, Net and the Consolidated Net Leverage Ratio 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 financial
measures to further understand its “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, Adjusted Net Income (Loss), Adjusted
Diluted Earnings Per Common Share, Normalized Free Cash Flow,
Consolidated EBITDA, Consolidated Funded Debt, Net and the
Consolidated Net Leverage Ratio 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.
Non-GAAP financial measures are not in accordance with or an
alternative for GAAP. Adjusted EBITDA, Adjusted Operating Income,
Adjusted Net Income (Loss), Adjusted Diluted Earnings Per Common
Share, Normalized Free Cash Flow, Consolidated EBITDA, Consolidated
Funded Debt, Net and the Consolidated Net Leverage Ratio should not
be considered in isolation from or as a substitute for financial
information presented in accordance with GAAP, and may be different
from Adjusted EBITDA, Adjusted Operating Income, Adjusted Net
Income (Loss), Adjusted Diluted Earnings Per Common Share,
Normalized Free Cash Flow, Consolidated EBITDA, Consolidated Funded
Debt, Net and the Consolidated Net Leverage Ratio presented by
other companies.
Safe Harbor Statement
Certain matters discussed in this press release, including, but
not limited to, the statements regarding our intentions, beliefs or
current expectations concerning, among other things, the expected
and potential direct or indirect impacts of the COVID-19 pandemic
on our business; our financial performance; financial condition;
operations and services; prospects; growth; strategies; and
guidance for fiscal 2020, are “forward-looking statements” intended
to qualify for the safe harbors from liability established by the
Private Securities Litigation Reform Act of 1995. These
forward-looking statements can generally be identified as such by
the context of the statements, including words such as “believe,”
“expect,” “anticipate,” “plan,” “may,” “would,” “intend,”
“estimate,” "will," “guidance” and other similar expressions,
whether in the negative or affirmative. These forward-looking
statements are based on current expectations, estimates, forecasts
and projections about the industry and markets in which the Company
operates and management’s beliefs and assumptions. The Company
cannot guarantee that it actually will achieve the financial
results, plans, intentions, expectations or guidance disclosed in
the forward-looking statements made. Such forward-looking
statements, and all phases of the Company's operations, involve a
number of risks and uncertainties, any one or more of which could
cause actual results to differ materially from those described in
its forward-looking statements.
Such risks and uncertainties include or relate to, among other
things: it is hard to predict the duration and severity of COVID-19
and its negative effect on the economy, our operations and
financial results; policies adopted by China and other countries
will further restrict imports of recyclable materials into those
countries and have a further material impact on the Company’s
financial results; the capping and closure of the Southbridge
Landfill and the pending litigation relating to the Southbridge
Landfill, the lawsuit relating to odors at the Ontario County
Landfill, and the lawsuit relating to the North Country landfill
could result in material unexpected costs; the refiling of the
Company's permit application for expansion airspace at the North
Country landfill could result in construction delays and could
result in material unexpected losses if rejected; adverse weather
conditions may negatively impact the Company's revenues and its
operating margin; the Company may be unable to increase volumes at
its landfills or improve its route profitability; the economics of
recycling programs may cause municipalities to reconsider the
viability of continuing these programs; the Company's need to
service its indebtedness may limit its ability to invest in its
business; the Company may be unable to reduce costs or increase
pricing or volumes sufficiently to achieve estimated Adjusted
EBITDA and other targets; landfill operations and permit status may
be affected by factors outside the Company's control; the Company
may be required to incur capital expenditures in excess of its
estimates; the Company's insurance coverage and self-insurance
reserves may be inadequate to cover all of its significant risk
exposures; fluctuations in energy pricing or the commodity pricing
of its recyclables may make it more difficult for the Company to
predict its results of operations or meet its estimates; the
Company may be unable to achieve its acquisition or development
targets on favorable pricing or at all; and the Company may incur
environmental charges or asset impairments in the future.
There are a number of other important risks and uncertainties
that could cause the Company's actual results to differ materially
from those indicated by such forward-looking statements. These
additional risks and uncertainties include, without limitation,
those detailed in Item 1A, “Risk Factors” in the Company's most
recently filed Form 10-K and in other filings that the Company may
make with the Securities and Exchange Commission in the future.
The Company undertakes no obligation to update publicly any
forward-looking statements whether as a result of new information,
future events or otherwise, except as required by law.
Investors:
Ned ColettaChief Financial Officer(802) 772-2239
Media:
Joseph FuscoVice President(802)
772-2247http://www.casella.com
CASELLA WASTE SYSTEMS, INC. AND
SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS(Unaudited)(In
thousands, except for per share data)
|
Three Months Ended March 31, |
|
2020 |
|
2019 |
Revenues |
$ |
182,910 |
|
|
$ |
163,664 |
|
Operating expenses: |
|
|
|
Cost of operations |
128,518 |
|
|
117,759 |
|
General and administration |
24,352 |
|
|
22,742 |
|
Depreciation and amortization |
21,406 |
|
|
17,489 |
|
Expense from acquisition activities and other items |
1,009 |
|
|
677 |
|
Southbridge landfill closure charge |
613 |
|
|
555 |
|
|
175,898 |
|
|
159,222 |
|
Operating income |
7,012 |
|
|
4,442 |
|
Other expense (income): |
|
|
|
Interest expense, net |
5,901 |
|
|
6,343 |
|
Other expense (income), net |
43 |
|
|
(216 |
) |
Other expense, net |
5,944 |
|
|
6,127 |
|
Income (loss) before income taxes |
1,068 |
|
|
(1,685 |
) |
Provision for income taxes |
109 |
|
|
29 |
|
Net income (loss) |
$ |
959 |
|
|
$ |
(1,714 |
) |
Basic weighted average common shares outstanding |
48,005 |
|
|
45,913 |
|
Basic earnings per common share |
$ |
0.02 |
|
|
$ |
(0.04 |
) |
Diluted weighted average common shares outstanding |
48,262 |
|
|
45,913 |
|
Diluted earnings per common share |
$ |
0.02 |
|
|
$ |
(0.04 |
) |
CASELLA WASTE SYSTEMS, INC. AND
SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE
SHEETS(In thousands)
|
March 31, 2020 |
|
December 31, 2019 |
|
(Unaudited) |
|
|
ASSETS |
|
|
|
CURRENT ASSETS: |
|
|
|
Cash and cash equivalents |
$ |
26,221 |
|
|
$ |
3,471 |
|
Accounts receivable, net of allowance for credit losses |
73,509 |
|
|
80,205 |
|
Other current assets |
19,824 |
|
|
19,137 |
|
Total current assets |
119,554 |
|
|
102,813 |
|
Property, plant and equipment, net of accumulated depreciation
and amortization |
454,800 |
|
|
443,825 |
|
Operating lease right-of-use assets |
107,133 |
|
|
108,025 |
|
Goodwill |
186,626 |
|
|
185,819 |
|
Intangible assets, net of accumulated amortization |
57,943 |
|
|
58,721 |
|
Restricted assets |
1,410 |
|
|
1,586 |
|
Cost method investments |
11,264 |
|
|
11,264 |
|
Deferred income taxes |
7,259 |
|
|
8,577 |
|
Other non-current assets |
11,651 |
|
|
11,552 |
|
Total assets |
$ |
957,640 |
|
|
$ |
932,182 |
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
CURRENT LIABILITIES: |
|
|
|
Current maturities of debt |
$ |
5,392 |
|
|
$ |
4,301 |
|
Current operating lease liabilities |
8,829 |
|
|
9,356 |
|
Accounts payable |
53,822 |
|
|
64,396 |
|
Other accrued liabilities |
47,110 |
|
|
52,536 |
|
Total current liabilities |
115,153 |
|
|
130,589 |
|
Debt, less current portion |
547,729 |
|
|
509,021 |
|
Operating lease liabilities, less current portion |
71,729 |
|
|
70,709 |
|
Other long-term liabilities |
105,033 |
|
|
99,110 |
|
Total stockholders' equity |
117,996 |
|
|
122,753 |
|
Total liabilities and stockholders' equity |
$ |
957,640 |
|
|
$ |
932,182 |
|
CASELLA WASTE SYSTEMS, INC. AND
SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS(Unaudited)(In
thousands)
|
Three Months Ended March 31, |
|
2020 |
|
2019 |
Cash Flows from Operating Activities: |
|
|
|
Net income
(loss) |
$ |
959 |
|
|
$ |
(1,714 |
) |
Adjustments to reconcile net income (loss) to net cash provided
by operating activities: |
|
|
|
Depreciation and amortization |
21,406 |
|
|
17,489 |
|
Depletion of landfill operating lease obligations |
1,673 |
|
|
1,648 |
|
Interest accretion on landfill and environmental remediation
liabilities |
1,794 |
|
|
1,804 |
|
Amortization of debt issuance costs |
527 |
|
|
575 |
|
Stock-based compensation |
1,562 |
|
|
1,431 |
|
Operating lease right-of-use assets expense |
2,417 |
|
|
2,579 |
|
Loss (gain) on sale of property and equipment |
137 |
|
|
(57 |
) |
Southbridge Landfill non-cash closure charge |
51 |
|
|
— |
|
Non-cash expense from acquisition activities and other items |
532 |
|
|
14 |
|
Deferred income taxes |
967 |
|
|
188 |
|
Changes in assets and liabilities, net of effects of acquisitions
and divestitures |
(17,234 |
) |
|
(19,180 |
) |
Net cash provided by operating activities |
14,791 |
|
|
4,777 |
|
Cash Flows from Investing Activities: |
|
|
|
Acquisitions, net of cash acquired |
(5,144 |
) |
|
(1,222 |
) |
Additions to property, plant and equipment |
(19,851 |
) |
|
(18,243 |
) |
Proceeds from sale of property and equipment |
51 |
|
|
57 |
|
Net cash used in investing activities |
(24,944 |
) |
|
(19,408 |
) |
Cash Flows from Financing Activities: |
|
|
|
Proceeds from debt borrowings |
73,500 |
|
|
10,600 |
|
Principal payments on debt |
(40,686 |
) |
|
(80,746 |
) |
Payments of debt issuance costs |
(11 |
) |
|
— |
|
Proceeds from the exercise of share based awards |
100 |
|
|
260 |
|
Proceeds from the public offering of Class A Common Stock |
— |
|
|
100,446 |
|
Net cash provided by financing activities |
32,903 |
|
|
30,560 |
|
Net increase in cash and cash equivalents |
22,750 |
|
|
15,929 |
|
Cash and cash equivalents, beginning of period |
3,471 |
|
|
4,007 |
|
Cash and cash equivalents, end of period |
$ |
26,221 |
|
|
$ |
19,936 |
|
Supplemental Disclosure of Cash Flow Information: |
|
|
|
Cash interest |
$ |
5,372 |
|
|
$ |
5,718 |
|
Cash income tax payments, net |
$ |
84 |
|
|
$ |
51 |
|
Supplemental Disclosure of Non-Cash Investing and Financing
Activities: |
|
|
|
Non-current assets obtained through long-term obligations |
$ |
6,469 |
|
|
$ |
2,473 |
|
CASELLA WASTE SYSTEMS, INC. AND
SUBSIDIARIESRECONCILIATION OF CERTAIN NON-GAAP
MEASURES(Unaudited)(In
thousands)
Following is a reconciliation of Adjusted EBITDA and
Adjusted Operating Income* from Net income
(loss):
|
Three Months Ended March 31, |
|
2020 |
|
2019 |
Net
income (loss) |
$ |
959 |
|
|
$ |
(1,714 |
) |
Net income (loss) as a percentage of
revenues |
0.5 |
% |
|
(1.0 |
)% |
Provision for income taxes |
109 |
|
|
29 |
|
Other expense (income), net |
43 |
|
|
(216 |
) |
Interest expense, net |
5,901 |
|
|
6,343 |
|
Expense from acquisition activities and other items |
1,009 |
|
|
677 |
|
Southbridge Landfill closure charge |
613 |
|
|
555 |
|
Depreciation and amortization |
21,406 |
|
|
17,489 |
|
Depletion of landfill operating lease obligations |
1,673 |
|
|
1,648 |
|
Interest accretion on landfill and environmental remediation
liabilities |
1,794 |
|
|
1,804 |
|
Adjusted EBITDA |
$ |
33,507 |
|
|
$ |
26,615 |
|
Adjusted EBITDA as a percentage of
revenues |
18.3 |
% |
|
16.3 |
% |
Depreciation and amortization |
(21,406 |
) |
|
(17,489 |
) |
Depletion of landfill operating lease obligations |
(1,673 |
) |
|
(1,648 |
) |
Interest accretion on landfill and environmental remediation
liabilities |
(1,794 |
) |
|
(1,804 |
) |
Adjusted Operating Income |
$ |
8,634 |
|
|
$ |
5,674 |
|
Adjusted Operating Income as a percentage of
revenues |
4.7 |
% |
|
3.5 |
% |
Following is a reconciliation of Adjusted Net Income
(Loss) from Net income (loss):
|
Three Months Ended March 31, |
|
2020 |
|
2019 |
Net
income (loss) |
$ |
959 |
|
|
$ |
(1,714 |
) |
Expense from acquisition activities and other items |
1,009 |
|
|
677 |
|
Southbridge Landfill closure charge |
613 |
|
|
555 |
|
Tax effect (i) |
(56 |
) |
|
(14 |
) |
Adjusted Net Income (Loss) |
$ |
2,525 |
|
|
$ |
(496 |
) |
Diluted weighted average common shares
outstanding |
48,262 |
|
|
45,913 |
|
Dilutive effect of options and other stock awards |
— |
|
|
— |
|
Adjusted Diluted Weighted Average Common Shares
Outstanding* |
48,262 |
|
|
45,913 |
|
Adjusted Diluted Earnings Per Common
Share |
$ |
0.05 |
|
|
$ |
(0.01 |
) |
(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 from Diluted earnings per common
share:
|
Three Months Ended March 31, |
|
2020 |
|
2019 |
Diluted earnings per common share |
$ |
0.02 |
|
|
$ |
(0.04 |
) |
Southbridge Landfill closure charge |
0.01 |
|
|
0.01 |
|
Expense from acquisition activities and other items |
0.02 |
|
|
0.02 |
|
Tax effect |
— |
|
|
— |
|
Adjusted Diluted Earnings Per Common
Share |
$ |
0.05 |
|
|
$ |
(0.01 |
) |
Following is a reconciliation of Normalized Free Cash
Flow from Net cash provided by operating
activities:
|
Three Months Ended March 31, |
|
2020 |
|
2019 |
Net
cash provided by operating activities |
$ |
14,791 |
|
|
$ |
4,777 |
|
Capital expenditures |
(19,851 |
) |
|
(18,243 |
) |
Proceeds from sale of property and equipment |
51 |
|
|
57 |
|
Landfill closure, site improvement and remediation (i) |
1,458 |
|
|
1,990 |
|
Expense from acquisition activities and other items (ii) |
477 |
|
|
663 |
|
Non-recurring capital expenditures (iii) |
5,860 |
|
|
2,308 |
|
Waste USA landfill phase VI capital expenditures (iv) |
1,235 |
|
|
— |
|
Normalized Free Cash Flow |
$ |
4,021 |
|
|
$ |
(8,448 |
) |
(i) Includes cash outlays associated with the Southbridge
Landfill closure and the Potsdam, New York environmental site
remediation.(ii) Includes cash outlays associated with
acquisition activities and other items.(iii) Includes capital
expenditures related to acquisitions and other non-recurring
items.(iv) Includes capital expenditures related to Waste USA
landfill phase VI construction and development.
Following is the Consolidated Net Leverage Ratio* and
the reconciliations of Consolidated Funded Debt, Net* from debt and
Consolidated EBITDA* from Net cash provided by operating
activities:
|
Twelve Months EndedMarch 31, 2020 |
|
Covenant Requirement atMarch 31, 2020 |
Consolidated Net Leverage Ratio (i) |
3.10 |
|
|
4.00 |
|
(i) Our credit agreement requires us to maintain a maximum
consolidated net leverage ratio, to be measured at the end of each
fiscal quarter ("Consolidated Net Leverage Ratio"). The
Consolidated Net Leverage Ratio is calculated as consolidated debt,
net of unencumbered cash and cash equivalents in excess of $2,000
("Consolidated Funded Debt, Net", calculated at $537,789 as of
March 31, 2020, or $562,010 of consolidated debt, less $24,221 of
cash and cash equivalents in excess of $2,000 as of March 31,
2020), divided by consolidated EBITDA as defined by our credit
agreement ("Consolidated EBITDA"). Consolidated EBITDA is based on
operating results for the twelve months preceding the measurement
date of March 31, 2020. A reconciliation of Consolidated EBITDA
from Net cash provided by operating activities is as follows:
|
Twelve Months EndedMarch 31, 2020 |
Net
cash provided by operating activities |
$ |
126,843 |
|
Changes in assets and liabilities, net of effects of acquisitions
and divestitures |
26,663 |
|
Gain on sale of property and equipment |
698 |
|
Non-cash expense from acquisition activities and other items |
(583 |
) |
Withdrawal costs - multiemployer pension plan |
(2,230 |
) |
Southbridge Landfill non-cash closure charge |
(125 |
) |
Operating lease right-of-use assets expense |
(9,397 |
) |
Stock-based compensation |
(7,354 |
) |
Interest expense, less amortization of debt issuance costs |
22,349 |
|
Benefit for income taxes, net of deferred income taxes |
(1,329 |
) |
Adjustments as allowed by the credit agreement |
18,061 |
|
Consolidated EBITDA |
$ |
173,596 |
|
CASELLA WASTE SYSTEMS, INC. AND
SUBSIDIARIESSUPPLEMENTAL DATA
TABLES(Unaudited)(In
thousands)
Amounts of total revenues attributable to services
provided for the three months ended March 31, 2020 and 2019 are as
follows:
|
Three Months Ended March 31, |
|
2020 |
|
% of Total
Revenues |
|
2019 |
|
% of Total
Revenues |
Collection |
$ |
94,577 |
|
|
51.7 |
% |
|
$ |
83,080 |
|
|
50.8 |
% |
Disposal |
38,625 |
|
|
21.1 |
% |
|
36,054 |
|
|
22.0 |
% |
Power generation |
1,026 |
|
|
0.6 |
% |
|
1,136 |
|
|
0.7 |
% |
Processing |
1,121 |
|
|
0.6 |
% |
|
878 |
|
|
0.5 |
% |
Solid waste operations |
135,349 |
|
|
74.0 |
% |
|
121,148 |
|
|
74.0 |
% |
Organics |
14,932 |
|
|
8.2 |
% |
|
13,596 |
|
|
8.3 |
% |
Customer solutions |
21,663 |
|
|
11.8 |
% |
|
18,154 |
|
|
11.1 |
% |
Recycling |
10,966 |
|
|
6.0 |
% |
|
10,766 |
|
|
6.6 |
% |
Resource solutions operations |
47,561 |
|
|
26.0 |
% |
|
$ |
42,516 |
|
|
26.0 |
% |
Total revenues |
$ |
182,910 |
|
|
100.0 |
% |
|
$ |
163,664 |
|
|
100.0 |
% |
Components of revenue growth for the three months ended
March 31, 2020 compared to the three months ended March 31, 2019
are as follows:
|
Amount |
|
% of Related
Business |
|
% of Operations |
|
% of Total Company |
Solid waste operations: |
|
|
|
|
|
|
|
Collection |
$ |
4,304 |
|
|
5.2 |
% |
|
3.6 |
% |
|
2.6 |
% |
Disposal |
2,759 |
|
|
7.7 |
% |
|
2.2 |
% |
|
1.7 |
% |
Processing |
— |
|
|
— |
% |
|
— |
% |
|
— |
% |
Solid waste price |
7,063 |
|
|
12.9 |
% |
|
5.8 |
% |
|
4.3 |
% |
Collection (i) |
(2,681 |
) |
|
|
|
(2.2 |
)% |
|
(1.6 |
)% |
Disposal |
(574 |
) |
|
|
|
(0.5 |
)% |
|
(0.4 |
)% |
Processing |
2 |
|
|
|
|
— |
% |
|
— |
% |
Solid waste volume |
(3,253 |
) |
|
|
|
(2.7 |
)% |
|
(2.0 |
)% |
Fuel surcharge and other fees |
1,256 |
|
|
|
|
1.1 |
% |
|
0.8 |
% |
Commodity price and volume |
(342 |
) |
|
|
|
(0.3 |
)% |
|
(0.2 |
)% |
Acquisitions, net divestitures |
10,266 |
|
|
|
|
8.5 |
% |
|
6.3 |
% |
Closed operations |
(10 |
) |
|
|
|
— |
% |
|
— |
% |
Total solid waste operations |
14,980 |
|
|
|
|
12.4 |
% |
|
9.2 |
% |
Resource solutions
operations: |
|
|
|
|
|
|
|
Organics |
1,336 |
|
|
|
|
3.1 |
% |
|
0.8 |
% |
Customer solutions (i) |
2,730 |
|
|
|
|
6.4 |
% |
|
1.7 |
% |
Recycling: |
|
|
|
|
|
|
|
Commodity price |
(2,159 |
) |
|
(20.1 |
)% |
|
(5.1 |
)% |
|
(1.3 |
)% |
Processing price |
2,002 |
|
|
18.6 |
% |
|
4.7 |
% |
|
1.2 |
% |
Volume |
77 |
|
|
0.7 |
% |
|
0.2 |
% |
|
— |
% |
Commodity acquisition |
280 |
|
|
2.7 |
% |
|
0.7 |
% |
|
0.2 |
% |
Recycling |
200 |
|
|
1.9 |
% |
|
0.5 |
% |
|
0.1 |
% |
Total resource solutions operations |
4,266 |
|
|
|
|
10.0 |
% |
|
2.6 |
% |
Total company |
$ |
19,246 |
|
|
|
|
|
|
11.8 |
% |
(i) Adjusted for $779 of inter-company movements between
solid waste collection volume and customer solutions associated
with the acquisition of a business.
Solid waste internalization rates by region for the
three months ended March 31, 2020 and 2019 are as
follows:
|
Three Months Ended March 31, |
|
2020 |
|
2019 |
Eastern
region |
47.4 |
% |
|
46.3 |
% |
Western region |
58.7 |
% |
|
61.5 |
% |
Solid waste internalization |
53.3 |
% |
|
53.5 |
% |
Components of capital expenditures (i) for the three
months ended March 31, 2020 and 2019 are as
follows:
|
Three Months Ended March 31, |
|
2020 |
|
2019 |
Growth capital expenditures |
$ |
504 |
|
|
$ |
501 |
|
Non-recurring capital
expenditures |
5,860 |
|
|
2,308 |
|
Waste USA landfill
phase VI capital expenditures |
1,235 |
|
|
— |
|
Replacement capital
expenditures: |
|
|
|
Landfill development |
4,058 |
|
|
2,245 |
|
Vehicles, machinery, equipment and containers |
6,093 |
|
|
11,916 |
|
Facilities |
1,043 |
|
|
1,076 |
|
Other |
1,058 |
|
|
197 |
|
Replacement capital
expenditures |
12,252 |
|
|
15,434 |
|
Capital
expenditures |
$ |
19,851 |
|
|
$ |
18,243 |
|
(i) The Company's capital expenditures are broadly defined
as pertaining to either growth, replacement or non-recurring
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.
Non-recurring capital expenditures are defined as costs of
equipment added directly as a result of new business growth related
to an acquisition or assumption of significant new customers from a
distressed or defunct market participant. Waste USA landfill phase
VI capital expenditures are defined as costs related to phase VI
cell permitting, engineering and construction.
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