Casella Waste Systems, Inc. (NASDAQ: CWST), a regional solid waste,
recycling and resource management services company, today reported
its financial results for the three and nine month periods ended
September 30, 2022.
Highlights for the Three Months and Year-to-Date Period
Ended September 30,
2022:
- Revenues
were $295.3 million for the
quarter, up $53.3 million, or
up 22.0%, from the same period
in 2021.
- Overall
solid waste pricing for the quarter was up
6.6%, driven by collection pricing,
up 7.2%, and disposal pricing, up
6.0%, from the same period in
2021.
- Net income
was $22.7 million for the
quarter, up $6.8 million, or
up 42.9%, from the same period
in 2021.
- Adjusted
EBITDA, a non-GAAP measure, was $75.0
million for the quarter, up $13.8
million, or up
22.5%, from the same period in
2021.
- Net cash
provided by operating activities was $152.4
million for the year-to-date period, up
$18.3 million, or up
13.7%, from the same period in
2021.
- Adjusted
Free Cash Flow, a non-GAAP measure, was $81.7
million for the year-to-date period, up
$3.4 million, or up
4.3%, from the same period in
2021.
- Acquired 13
businesses year-to-date with approximately $48 million of
annualized revenues.
"We posted another strong quarter as our operating and pricing
initiatives worked well to offset inflation and drive Adjusted
EBITDA growth of 22.5% year-over-year in the quarter," said John W.
Casella, Chairman and CEO of Casella Waste Systems, Inc. "As
expected, we expanded Adjusted EBITDA margins in the third quarter
despite significant declines in commodity prices, acquisition
headwinds, and the negative impact from the accrual of a special
bonus we will pay in December to our hourly employees in
recognition of their excellent work."
"Our team is doing a great job navigating a complex economic
environment, while offsetting historically high inflation through
operating initiatives and nimble pricing programs," Casella said.
"We continue to invest in key operating initiatives that are
improving our service efficiency, reducing costs, and improving our
team's safety. Further, a 6.6% increase in solid waste price
demonstrates the flexibility we have in our programs to offset
inflation."
"Our fuel cost recovery program is working well and fully
mitigated the impact of higher fuel costs in the third quarter,"
Casella said. "With the changes we made late in the second quarter,
we now anticipate that our fuel cost recovery program will recoup
the impact of higher fuel costs this year."
“On top of the strong organic growth in our core business,
acquisitions remain a key part of our overall strategy.
Year-to-date, we have closed on 13 acquisitions with annualized
revenues of approximately $48 million. Our pipeline remains robust,
and we are actively working to close several additional
acquisitions in the next several quarters," Casella said.
For the quarter, revenues were $295.3 million, up $53.3 million,
or up 22.0%, from the same period in 2021, with revenue growth
mainly driven by: the roll-over impact from acquisitions along with
newly closed acquisitions; positive collection and disposal
pricing; higher solid waste fuel cost recovery fees; and higher
pricing, recycling processing fees and volume within our Resource
Solutions operating segment; partially offset by lower recycling
commodity prices.
Net income was $22.7 million for the quarter, or $0.44 per
diluted common share, up $6.8 million, or up 42.9%, as compared to
net income of $15.9 million, or $0.31 per diluted common share, for
the same period in 2021. Adjusted Net Income, a non-GAAP measure,
was $23.1 million for the quarter, or $0.45 Adjusted Diluted
Earnings Per Common Share, a non-GAAP measure, up $5.6 million, or
up 31.9%, as compared to Adjusted Net Income of $17.5 million, or
$0.34 Adjusted Diluted Earnings Per Common Share, for the same
period in 2021.
Operating income was $36.3 million for the quarter, up $8.9
million, or up 32.5%, from the same period in 2021. Adjusted EBITDA
was $75.0 million for the quarter, up $13.8 million, or up 22.5%,
from the same period in 2021.
For the year-to-date period, revenues were $813.0 million, up
$165.6 million, or up 25.6%, from the same period in 2021. Net
income was $44.7 million, or $0.86 per diluted common share, for
the year-to-date period, as compared to net income of $32.0
million, or $0.62 per diluted common share, for the same period in
2021. Adjusted Net Income was $47.4 million, or $0.92 Adjusted
Diluted Earnings Per Common Share, for the year-to-date period, as
compared to Adjusted Net Income of $35.3 million, or $0.68 Adjusted
Diluted Earnings Per Common Share, for the same period in 2021.
Operating income was $78.2 million for the year-to-date period,
up $16.8 million from the same period in 2021. Adjusted EBITDA was
$189.0 million for the year-to-date period, up $36.9 million from
the same period in 2021.
Please refer to "Non-GAAP Performance Measures" included in
"Reconciliation of Certain Non-GAAP Measures" below for additional
information and reconciliations of Adjusted Net Income, Adjusted
Diluted Earnings Per Common Share, Adjusted EBITDA and other
Non-GAAP performance measures to their most directly comparable
GAAP measures.
Net cash provided by operating activities was $152.4 million for
the year-to-date period, as compared to $134.1 million for the same
period in 2021. Adjusted Free Cash Flow was $81.7 million for the
year-to-date period, as compared to $78.3 million for the same
period in 2021.
Please refer to "Non-GAAP Liquidity Measures" included in
"Reconciliation of Certain Non-GAAP Measures" below for additional
information and reconciliation of Adjusted Free Cash Flow to its
most directly comparable GAAP measure.
Fiscal Year 2022 Outlook
“Given our strong operating execution year-to-date, the expected
positive contribution of acquisitions completed this year and
greater visibility through year-end, we are updating certain fiscal
year 2022 guidance ranges for the third time this year,” Casella
said. “These guidance ranges assume that the economy does not
significantly change through the remainder of the year, inflation
remains at current historically high levels, and recycling
commodity prices decline another 20% sequentially. We expect our
pricing, fuel cost recovery fees, and operating efficiency programs
will allow us to outpace higher costs and drive margin expansion in
the fourth quarter which sets us up well for 2023.”
The Company raised guidance for fiscal year 2022 by estimating
results in the following ranges:
- Revenues between $1.065 billion and
$1.080 billion (raised from a range of $1.035 billion to $1.050
billion);
- Net income between $53 million and $56
million (raised from a range of $50 million to $54 million);
- Adjusted EBITDA between $245 million
and $248 million (raised from a range of $238 million to $242
million); and
- Net cash provided by operating
activities between $210 million and $214 million (raised from a
range of $208 million to $212 million).
The Company reaffirmed certain guidance for fiscal year 2022 by
estimating results in the following ranges:
- Adjusted Free Cash Flow between $106
million and $110 million.
Adjusted EBITDA and Adjusted Free Cash Flow related to fiscal
year 2022 are described in the Reconciliation of Fiscal Year 2022
Outlook Non-GAAP Measures section of this press release. Net income
and Net cash provided by operating activities are provided as the
most directly comparable GAAP measures to Adjusted EBITDA and
Adjusted Free Cash Flow, respectively, however these
forward-looking estimates for fiscal year 2022 do not contemplate
any unanticipated or non-recurring impacts.
Conference call to discuss quarter
The Company will host a conference call to discuss these results
on Friday, October 28, 2022 at 10:00 a.m. Eastern Time.
Individuals interested in participating in the call should
register for the call by clicking here
to obtain a dial in number and unique passcode.
Alternatively upon registration, the website linked above provides
an option for the conference provider to call the registrant's
phone line, enabling participation on the call.
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 and accessible using the
same link.
About Casella Waste Systems, Inc.
Casella Waste Systems, Inc., headquartered in Rutland, Vermont,
provides resource management expertise and services to residential,
commercial, municipal, institutional 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 Jason
Mead, Senior Vice President of Finance and Treasurer at (802)
772-2293; media contact Joseph Fusco, Vice President at (802)
772-2247; or visit the Company’s website at
http://www.casella.com.
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, our financial
performance; financial condition; operations and services;
prospects; growth; strategies; anticipated impacts from future or
completed acquisitions; and guidance for fiscal year 2022, 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, the following: the Company may be unable to adequately
increase prices or drive operating efficiencies to adequately
offset increased costs and inflationary pressures, including
increased fuel prices and wages; it is challenging to predict the
duration and scope of the novel coronavirus pandemic and its
negative effect on the economy, our operations and financial
results; it is difficult to determine the timing or future impact
of a sustained economic slowdown that could negatively affect our
operations and financial results; the capping and closure of the
Subtitle D landfill located in Southbridge, Massachusetts
("Southbridge Landfill") could result in material unexpected costs;
recent changes in solid waste laws of the State of Maine may result
in lower revenues or higher operating costs; 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 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; the Company may not be able to
successfully integrate acquired businesses; 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, Form 10-Q 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:
Jason MeadSenior Vice President of Finance & Treasurer(802)
772-2293
Media:
Joseph FuscoVice President(802)
772-2247http://www.casella.com
CASELLA WASTE SYSTEMS, INC. AND
SUBSIDIARIESUNAUDITED CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS(In thousands, except for
per share data)
|
Three Months EndedSeptember
30, |
|
Nine Months EndedSeptember
30, |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Revenues |
$ |
295,268 |
|
|
$ |
241,969 |
|
|
$ |
812,962 |
|
|
$ |
647,375 |
|
Operating expenses: |
|
|
|
|
|
|
|
Cost of operations |
|
190,285 |
|
|
|
153,892 |
|
|
|
538,779 |
|
|
|
419,583 |
|
General and administration |
|
34,348 |
|
|
|
30,993 |
|
|
|
97,702 |
|
|
|
87,336 |
|
Depreciation and amortization |
|
32,527 |
|
|
|
27,491 |
|
|
|
93,106 |
|
|
|
74,510 |
|
Expense from acquisition activities |
|
816 |
|
|
|
1,904 |
|
|
|
3,878 |
|
|
|
3,950 |
|
Environmental remediation charge |
|
759 |
|
|
|
— |
|
|
|
759 |
|
|
|
— |
|
Southbridge Landfill closure charge |
|
245 |
|
|
|
302 |
|
|
|
563 |
|
|
|
653 |
|
|
|
258,980 |
|
|
|
214,582 |
|
|
|
734,787 |
|
|
|
586,032 |
|
Operating income |
|
36,288 |
|
|
|
27,387 |
|
|
|
78,175 |
|
|
|
61,343 |
|
Other expense (income): |
|
|
|
|
|
|
|
Interest expense, net |
|
5,999 |
|
|
|
5,103 |
|
|
|
16,818 |
|
|
|
15,737 |
|
Other income |
|
(1,523 |
) |
|
|
(178 |
) |
|
|
(1,978 |
) |
|
|
(825 |
) |
Other expense, net |
|
4,476 |
|
|
|
4,925 |
|
|
|
14,840 |
|
|
|
14,912 |
|
Income before income
taxes |
|
31,812 |
|
|
|
22,462 |
|
|
|
63,335 |
|
|
|
46,431 |
|
Provision for income
taxes |
|
9,140 |
|
|
|
6,601 |
|
|
|
18,677 |
|
|
|
14,476 |
|
Net income |
$ |
22,672 |
|
|
$ |
15,861 |
|
|
$ |
44,658 |
|
|
$ |
31,955 |
|
Basic weighted average common
shares outstanding |
|
51,677 |
|
|
|
51,389 |
|
|
|
51,604 |
|
|
|
51,312 |
|
Basic earnings per common
share |
$ |
0.44 |
|
|
$ |
0.31 |
|
|
$ |
0.87 |
|
|
$ |
0.62 |
|
Diluted weighted average
common shares outstanding |
|
51,806 |
|
|
|
51,586 |
|
|
|
51,749 |
|
|
|
51,506 |
|
Diluted earnings per common
share |
$ |
0.44 |
|
|
$ |
0.31 |
|
|
$ |
0.86 |
|
|
$ |
0.62 |
|
CASELLA WASTE SYSTEMS, INC. AND
SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE
SHEETS(In thousands)
|
September 30,2022 |
|
December 31,2021 |
|
(Unaudited) |
|
|
ASSETS |
|
|
|
CURRENT ASSETS: |
|
|
|
Cash and cash equivalents |
$ |
47,934 |
|
$ |
33,809 |
Accounts receivable, net of allowance for credit losses |
|
108,010 |
|
|
86,979 |
Other current assets |
|
35,539 |
|
|
25,691 |
Total current assets |
|
191,483 |
|
|
146,479 |
Property, plant and equipment,
net of accumulated depreciation and amortization |
|
685,348 |
|
|
644,604 |
Operating lease right-of-use
assets |
|
93,066 |
|
|
93,799 |
Goodwill |
|
272,442 |
|
|
232,860 |
Intangible assets, net of
accumulated amortization |
|
94,792 |
|
|
93,723 |
Other non-current assets |
|
62,216 |
|
|
72,115 |
Total assets |
$ |
1,399,347 |
|
$ |
1,283,580 |
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
CURRENT LIABILITIES: |
|
|
|
Current maturities of debt |
$ |
8,337 |
|
$ |
9,901 |
Current operating lease liabilities |
|
6,898 |
|
|
7,307 |
Accounts payable |
|
71,074 |
|
|
63,086 |
Other accrued liabilities |
|
76,523 |
|
|
71,899 |
Total current liabilities |
|
162,832 |
|
|
152,193 |
Debt, less current
portion |
|
578,462 |
|
|
542,503 |
Operating lease liabilities,
less current portion |
|
58,528 |
|
|
56,375 |
Other long-term
liabilities |
|
112,966 |
|
|
110,052 |
Total stockholders'
equity |
|
486,559 |
|
|
422,457 |
Total liabilities and stockholders' equity |
$ |
1,399,347 |
|
$ |
1,283,580 |
CASELLA WASTE SYSTEMS, INC. AND
SUBSIDIARIESUNAUDITED CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS(In
thousands)
|
Nine Months EndedSeptember
30, |
|
|
2022 |
|
|
|
2021 |
|
Cash Flows from Operating
Activities: |
|
|
|
Net income |
$ |
44,658 |
|
|
$ |
31,955 |
|
Adjustments to reconcile net
income to net cash provided by operating activities: |
|
|
|
Depreciation and amortization |
|
93,106 |
|
|
|
74,510 |
|
Interest accretion on landfill and environmental remediation
liabilities |
|
6,018 |
|
|
|
5,915 |
|
Amortization of debt issuance costs |
|
1,414 |
|
|
|
1,716 |
|
Stock-based compensation |
|
5,589 |
|
|
|
8,712 |
|
Operating lease right-of-use assets expense |
|
10,405 |
|
|
|
9,981 |
|
Gain on sale of property and equipment |
|
(580 |
) |
|
|
— |
|
Non-cash expense from acquisition activities |
|
298 |
|
|
|
532 |
|
Deferred income taxes |
|
13,819 |
|
|
|
12,974 |
|
Changes in assets and liabilities, net of effects of acquisitions
and divestitures |
|
(22,296 |
) |
|
|
(12,206 |
) |
Net cash provided by operating activities |
|
152,431 |
|
|
|
134,089 |
|
Cash Flows from Investing
Activities: |
|
|
|
Acquisitions, net of cash acquired |
|
(73,963 |
) |
|
|
(153,112 |
) |
Additions to property, plant and equipment |
|
(87,667 |
) |
|
|
(81,577 |
) |
Proceeds from sale of property and equipment |
|
571 |
|
|
|
593 |
|
Net cash used in investing activities |
|
(161,059 |
) |
|
|
(234,096 |
) |
Cash Flows from Financing
Activities: |
|
|
|
Proceeds from debt borrowings |
|
82,200 |
|
|
|
500 |
|
Principal payments on debt |
|
(57,407 |
) |
|
|
(8,517 |
) |
Payments of debt issuance costs |
|
(1,232 |
) |
|
|
— |
|
Payments of contingent consideration |
|
(1,000 |
) |
|
|
— |
|
Proceeds from the exercise of share based awards |
|
192 |
|
|
|
163 |
|
Net cash provided by (used in) financing
activities |
|
22,753 |
|
|
|
(7,854 |
) |
Net increase (decrease) in
cash and cash equivalents |
|
14,125 |
|
|
|
(107,861 |
) |
Cash and cash equivalents,
beginning of period |
|
33,809 |
|
|
|
154,342 |
|
Cash and cash equivalents, end
of period |
$ |
47,934 |
|
|
$ |
46,481 |
|
Supplemental Disclosure of
Cash Flow Information: |
|
|
|
Cash interest payments |
$ |
14,750 |
|
|
$ |
14,378 |
|
Cash income tax payments |
$ |
2,875 |
|
|
$ |
597 |
|
Right-of-use assets obtained in exchange for financing lease
obligations |
$ |
9,420 |
|
|
$ |
18,153 |
|
Right-of-use assets obtained in exchange for operating lease
obligations |
$ |
7,672 |
|
|
$ |
3,566 |
|
|
|
|
|
CASELLA WASTE SYSTEMS, INC. AND
SUBSIDIARIESUNAUDITED RECONCILIATION OF CERTAIN
NON-GAAP MEASURES(In thousands)
Non-GAAP Performance Measures
In addition to disclosing financial results prepared in
accordance with generally accepted accounting principles in the
United States ("GAAP"), the Company also presents non-GAAP
performance measures such as Adjusted EBITDA, Adjusted EBITDA as a
percentage of revenues, Adjusted Operating Income, Adjusted
Operating Income as a percentage of revenues, Adjusted Net Income
and Adjusted Diluted Earnings Per Common Share that provide an
understanding of operational performance because it considers them
important supplemental measures of the Company's performance that
are frequently used by securities analysts, investors and other
interested parties in the evaluation of the Company's results. The
Company also believes that identifying the impact of certain items
as adjustments provides more transparency and comparability across
periods. Management uses these non-GAAP performance measures to
further understand its “core operating performance” and believes
its “core operating performance” is helpful in understanding its
ongoing performance in the ordinary course of operations. The
Company believes that providing such non-GAAP performance measures
to investors, in addition to corresponding income statement
measures, affords investors the benefit of viewing the Company’s
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
tables below set forth such performance measures on an adjusted
basis to exclude such items:
|
Three Months EndedSeptember
30, |
|
Nine Months EndedSeptember
30, |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Net
income |
$ |
22,672 |
|
|
$ |
15,861 |
|
|
$ |
44,658 |
|
|
$ |
31,955 |
|
Net income as a
percentage of revenues |
|
7.7 |
% |
|
|
6.6 |
% |
|
|
5.5 |
% |
|
|
4.9 |
% |
Provision for income taxes |
|
9,140 |
|
|
|
6,601 |
|
|
|
18,677 |
|
|
|
14,476 |
|
Other income |
|
(1,523 |
) |
|
|
(178 |
) |
|
|
(1,978 |
) |
|
|
(825 |
) |
Interest expense, net |
|
5,999 |
|
|
|
5,103 |
|
|
|
16,818 |
|
|
|
15,737 |
|
Expense from acquisition activities (ii) |
|
816 |
|
|
|
1,904 |
|
|
|
3,878 |
|
|
|
3,950 |
|
Southbridge Landfill closure charge (iii) |
|
245 |
|
|
|
302 |
|
|
|
563 |
|
|
|
653 |
|
Environmental remediation charge (iv) |
|
759 |
|
|
|
— |
|
|
|
759 |
|
|
|
— |
|
Depreciation and amortization |
|
32,527 |
|
|
|
27,491 |
|
|
|
93,106 |
|
|
|
74,510 |
|
Depletion of landfill operating lease obligations |
|
2,376 |
|
|
|
2,199 |
|
|
|
6,523 |
|
|
|
5,781 |
|
Interest accretion on landfill and environmental remediation
liabilities |
|
2,002 |
|
|
|
1,953 |
|
|
|
6,018 |
|
|
|
5,915 |
|
Adjusted
EBITDA |
$ |
75,013 |
|
|
$ |
61,236 |
|
|
$ |
189,022 |
|
|
$ |
152,152 |
|
Adjusted EBITDA as a
percentage of revenues |
|
25.4 |
% |
|
|
25.3 |
% |
|
|
23.3 |
% |
|
|
23.5 |
% |
Depreciation and amortization |
|
(32,527 |
) |
|
|
(27,491 |
) |
|
|
(93,106 |
) |
|
|
(74,510 |
) |
Depletion of landfill operating lease obligations |
|
(2,376 |
) |
|
|
(2,199 |
) |
|
|
(6,523 |
) |
|
|
(5,781 |
) |
Interest accretion on landfill and environmental remediation
liabilities |
|
(2,002 |
) |
|
|
(1,953 |
) |
|
|
(6,018 |
) |
|
|
(5,915 |
) |
Adjusted Operating
Income |
$ |
38,108 |
|
|
$ |
29,593 |
|
|
$ |
83,375 |
|
|
$ |
65,946 |
|
Adjusted Operating
Income as a percentage of revenues |
|
12.9 |
% |
|
|
12.2 |
% |
|
|
10.3 |
% |
|
|
10.2 |
% |
|
Three Months EndedSeptember
30, |
|
Nine Months EndedSeptember
30, |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Net
income |
$ |
22,672 |
|
|
$ |
15,861 |
|
|
$ |
44,658 |
|
|
$ |
31,955 |
|
Gain on sale of cost method investment (i) |
|
(1,340 |
) |
|
|
— |
|
|
|
(1,340 |
) |
|
|
— |
|
Expense from acquisition activities (ii) |
|
816 |
|
|
|
1,904 |
|
|
|
3,878 |
|
|
|
3,950 |
|
Southbridge Landfill closure charge (iii) |
|
245 |
|
|
|
302 |
|
|
|
563 |
|
|
|
653 |
|
Environmental remediation charge (iv) |
|
759 |
|
|
|
— |
|
|
|
759 |
|
|
|
— |
|
Tax effect (v) |
|
(73 |
) |
|
|
(568 |
) |
|
|
(1,071 |
) |
|
|
(1,296 |
) |
Adjusted Net
Income |
$ |
23,079 |
|
|
$ |
17,499 |
|
|
$ |
47,447 |
|
|
$ |
35,262 |
|
|
|
|
|
|
|
|
|
Diluted weighted
average common shares outstanding |
|
51,806 |
|
|
|
51,586 |
|
|
|
51,749 |
|
|
|
51,506 |
|
|
|
|
|
|
|
|
|
Diluted earnings per
common share |
$ |
0.44 |
|
|
$ |
0.31 |
|
|
$ |
0.86 |
|
|
$ |
0.62 |
|
Gain on sale of cost method investment (i) |
|
(0.03 |
) |
|
|
— |
|
|
|
(0.03 |
) |
|
|
— |
|
Expense from acquisition activities (ii) |
|
0.03 |
|
|
|
0.03 |
|
|
|
0.08 |
|
|
|
0.08 |
|
Southbridge Landfill closure charge (iii) |
|
— |
|
|
|
0.01 |
|
|
|
0.01 |
|
|
|
0.01 |
|
Environmental remediation charge (iv) |
|
0.01 |
|
|
|
— |
|
|
|
0.01 |
|
|
|
— |
|
Tax effect (v) |
|
— |
|
|
|
(0.01 |
) |
|
|
(0.01 |
) |
|
|
(0.03 |
) |
Adjusted Diluted
Earnings Per Common Share |
$ |
0.45 |
|
|
$ |
0.34 |
|
|
$ |
0.92 |
|
|
$ |
0.68 |
|
(i) Gain on sale of cost method investment associated with
the sale of the Company's minority ownership interest in a
subsidiary of Vanguard Renewables.
(ii) Expense from acquisition activities is primarily
legal, consulting or other similar costs incurred during the period
associated with due diligence and the acquisition and integration
of acquired businesses or select development projects as part of
the Company’s strategic growth initiative.
(iii) Southbridge Landfill closure charge are expenses
related to the unplanned early closure of the Southbridge Landfill
along with associated legal activities. The Company initiated the
unplanned, premature closure of the Southbridge Landfill in the
fiscal year ended December 31, 2017 due to the significant capital
investment required to obtain expansion permits and for future
development coupled with an uncertain regulatory environment. The
unplanned closure of the Southbridge Landfill reduced the economic
useful life of the assets from prior estimates by approximately ten
years. The Company expects to incur certain costs through
completion of the closure process.
(iv) Environment remediation charge associated with the
investigation of potential remediation at an inactive waste
disposal site that adjoins one of the landfills we operate.
(v) Tax effect of the adjustments is an aggregate of the
current and deferred tax impact of each adjustment, including the
impact to the effective tax rate, current provision and deferred
provision. The computation considers all relevant impacts of the
adjustments, including available net operating loss carryforwards
and the impact on the remaining valuation allowance.
Non-GAAP Liquidity Measures
In addition to disclosing financial results prepared in
accordance with GAAP, the Company also presents non-GAAP liquidity
measures such as Adjusted Free Cash Flow that provide an
understanding of the Company's liquidity because it considers them
important supplemental measures of its liquidity that are
frequently used by securities analysts, investors and other
interested parties in the evaluation of the Company's cash flow
generation from its core operations that are then available to be
deployed for strategic acquisitions, growth investments,
development projects, unusual landfill closures, site improvement
and remediation, and strengthening the Company’s balance sheet
through paying down debt. The Company also believes that
identifying the impact of certain items as adjustments provides
more transparency and comparability across periods. Management uses
non-GAAP liquidity measures to understand the Company’s cash flow
provided by operating activities after certain expenditures along
with its consolidated net leverage and believes that these measures
demonstrate the Company’s ability to execute on its strategic
initiatives. The Company believes that providing such non-GAAP
liquidity measures to investors, in addition to corresponding cash
flow statement measures, affords investors the benefit of viewing
the Company’s liquidity using the same financial metrics that the
management team uses in making many key decisions and understanding
how the core business and cash flow generation has performed. The
table below, on an adjusted basis to exclude certain items, sets
forth such liquidity
measures:
|
Three Months EndedSeptember
30, |
|
Nine Months EndedSeptember
30, |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Net cash provided by
operating activities |
$ |
60,180 |
|
|
$ |
55,076 |
|
|
$ |
152,431 |
|
|
$ |
134,089 |
|
Capital expenditures |
|
(32,799 |
) |
|
|
(25,508 |
) |
|
|
(87,667 |
) |
|
|
(81,577 |
) |
Proceeds from sale of property and equipment |
|
64 |
|
|
|
190 |
|
|
|
571 |
|
|
|
593 |
|
Southbridge Landfill closure and Potsdam environmental remediation
(i) |
|
1,318 |
|
|
|
1,929 |
|
|
|
3,272 |
|
|
|
4,463 |
|
Cash outlays from acquisition activities (ii) |
|
1,163 |
|
|
|
2,394 |
|
|
|
3,579 |
|
|
|
3,418 |
|
Post acquisition and development project capital expenditures
(iii) |
|
5,511 |
|
|
|
2,805 |
|
|
|
9,499 |
|
|
|
7,083 |
|
Waste USA Landfill phase VI capital expenditures (iv) |
|
— |
|
|
|
3,802 |
|
|
|
— |
|
|
|
10,241 |
|
Adjusted Free Cash
Flow |
$ |
35,437 |
|
|
$ |
40,688 |
|
|
$ |
81,685 |
|
|
$ |
78,310 |
|
(i) Southbridge Landfill closure and Potsdam environmental
remediation are cash outlays associated with the unplanned closure
of the Southbridge Landfill and the Company's portion of costs
associated with environmental remediation at Potsdam, which are
added back when calculating Adjusted Free Cash Flow due to their
non-recurring nature and the significance of the related cash
flows. The Company initiated the unplanned closure of the
Southbridge Landfill in the fiscal year ended December 31, 2017 and
expects to incur cash outlays through completion of the closure and
environmental remediation process. The Potsdam site was deemed a
Superfund site in 2000 and is not associated with current
operations.
(ii) Cash outlays from acquisition activities are cash
outlays for transaction and integration costs relating to specific
acquisition transactions and include legal, environmental,
valuation and consulting as well as asset, workforce and system
integration costs as part of the Company’s strategic growth
initiative.
(iii) Post acquisition and development project capital
expenditures are (x) acquisition related capital expenditures that
are necessary to optimize strategic synergies associated with
integrating newly acquired operations as contemplated by the
discounted cash flow return analysis conducted by management as
part of the acquisition investment decision; and (y) non-routine
development investments that are expected to provide long-term
returns. Acquisition related capital expenditures include costs
required to achieve initial operating synergies and integrate
operations.
(iv) Waste USA Landfill phase VI capital expenditures
related to the Company's landfill in Coventry, Vermont ("Waste USA
Landfill") phase VI construction and development that are added
back when calculating Adjusted Free Cash Flow due to the specific
nature of this investment in the development of long-term
infrastructure which is different from landfill construction
investments in the normal course of operations. This investment at
the Waste USA Landfill is unique because the Company is investing
in long-term infrastructure over an estimated four year period that
will not yield a positive economic benefit until 2023 and extending
over approximately 20 years.
Non-GAAP financial measures are not in accordance with or an
alternative for GAAP. Adjusted EBITDA, Adjusted EBITDA as a
percentage of revenues, Adjusted Operating Income, Adjusted
Operating Income as a percentage of revenues, Adjusted Net Income,
Adjusted Diluted Earnings Per Common Share, and Adjusted 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 EBITDA as a
percentage of revenues, Adjusted Operating Income, Adjusted
Operating Income as a percentage of revenues, Adjusted Net Income,
Adjusted Diluted Earnings Per Common Share, and Adjusted Free Cash
Flow presented by other companies.
CASELLA WASTE SYSTEMS, INC. AND
SUBSIDIARIESUNAUDITED RECONCILIATION OF FISCAL
YEAR 2022 OUTLOOK NON-GAAP MEASURES(In
thousands)
Following is a reconciliation of the Company's estimated
Adjusted EBITDA (i) from estimated Net income for fiscal year
2022:
|
(Estimated) Fiscal Year Ending December 31,
2022 |
Net
income |
$53,000 - $56,000 |
Provision for income taxes |
23,000 |
Other income |
(2,000) |
Interest expense, net |
23,000 |
Environmental remediation charge |
800 |
Expense from acquisition activities |
4,000 |
Southbridge Landfill closure charge |
1,000 |
Depreciation and amortization |
126,000 |
Depletion of landfill operating lease obligations |
8,200 |
Interest accretion on landfill and environmental remediation
liabilities |
8,000 |
Adjusted
EBITDA |
$245,000 - $248,000 |
Following is a reconciliation of the Company's estimated
Adjusted Free Cash Flow (i) from estimated Net cash provided by
operating activities for fiscal year 2022:
|
(Estimated) Fiscal Year Ending December 31,
2022 |
Net cash provided by
operating activities |
$210,000 - $214,000 |
Capital expenditures |
(132,000) |
Proceeds from sale of property and equipment |
500 |
Southbridge Landfill closure and Potsdam environmental
remediation |
5,000 |
Cash outlays from acquisition activities |
4,000 |
Post acquisition and development project capital expenditures |
18,500 |
Adjusted Free Cash
Flow |
$106,000 - $110,000 |
(i) See footnotes for Non-GAAP Performance Measures and Non-GAAP
Liquidity Measures included in the Reconciliation of Certain
Non-GAAP Measures for further disclosure over the nature of the
various adjustments to estimated Adjusted EBITDA and estimated
Adjusted Free Cash Flow.
CASELLA WASTE SYSTEMS, INC. AND
SUBSIDIARIESUNAUDITED SUPPLEMENTAL DATA
TABLES(In thousands)
Amounts of total revenues attributable to services
provided for the three and nine
months ended September 30, 2022
and 2021 are as
follows:
|
Three Months Ended September 30, |
|
|
2022 |
|
% of TotalRevenues |
|
|
2021 |
|
% of TotalRevenues |
Collection |
$ |
144,117 |
|
48.8 |
% |
|
$ |
118,872 |
|
49.1 |
% |
Disposal |
|
66,147 |
|
22.4 |
% |
|
|
55,593 |
|
23.0 |
% |
Power generation |
|
1,643 |
|
0.6 |
% |
|
|
1,253 |
|
0.5 |
% |
Processing |
|
3,133 |
|
1.0 |
% |
|
|
2,959 |
|
1.2 |
% |
Solid waste operations |
|
215,040 |
|
72.8 |
% |
|
|
178,677 |
|
73.8 |
% |
Processing |
|
32,159 |
|
10.9 |
% |
|
|
27,418 |
|
11.4 |
% |
Non-processing |
|
48,069 |
|
16.3 |
% |
|
|
35,874 |
|
14.8 |
% |
Resource Solutions operations |
|
80,228 |
|
27.2 |
% |
|
|
63,292 |
|
26.2 |
% |
Total
revenues |
$ |
295,268 |
|
100.0 |
% |
|
$ |
241,969 |
|
100.0 |
% |
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, |
|
|
2022 |
|
% of TotalRevenues |
|
|
2021 |
|
% of TotalRevenues |
Collection |
$ |
400,910 |
|
49.3 |
% |
|
$ |
323,667 |
|
50.0 |
% |
Disposal |
|
169,503 |
|
20.9 |
% |
|
|
142,618 |
|
22.0 |
% |
Power generation |
|
6,050 |
|
0.7 |
% |
|
|
3,657 |
|
0.6 |
% |
Processing |
|
7,883 |
|
1.0 |
% |
|
|
6,754 |
|
1.0 |
% |
Solid waste operations |
|
584,346 |
|
71.9 |
% |
|
|
476,696 |
|
73.6 |
% |
Processing |
|
93,421 |
|
11.5 |
% |
|
|
65,721 |
|
10.2 |
% |
Non-processing |
|
135,195 |
|
16.6 |
% |
|
|
104,958 |
|
16.2 |
% |
Resource Solutions operations |
|
228,616 |
|
28.1 |
% |
|
|
170,679 |
|
26.4 |
% |
Total
revenues |
$ |
812,962 |
|
100.0 |
% |
|
$ |
647,375 |
|
100.0 |
% |
Components of revenue growth for the three months
ended September 30, 2022 compared
to the three months ended September 30,
2021 are as follows:
|
Amount |
|
%
ofRelatedBusiness |
|
% ofOperations |
|
% of TotalCompany |
Solid waste
operations: |
|
|
|
|
|
|
|
Collection |
$ |
8,516 |
|
|
7.2 |
% |
|
4.8 |
% |
|
3.5 |
% |
Disposal |
|
3,343 |
|
|
6.0 |
% |
|
1.8 |
% |
|
1.4 |
% |
Solid waste price |
|
11,859 |
|
|
|
|
6.6 |
% |
|
4.9 |
% |
Collection |
|
61 |
|
|
|
|
— |
% |
|
— |
% |
Disposal |
|
3,551 |
|
|
|
|
2.0 |
% |
|
1.5 |
% |
Processing |
|
8 |
|
|
|
|
— |
% |
|
— |
% |
Solid waste volume |
|
3,620 |
|
|
|
|
2.0 |
% |
|
1.5 |
% |
Surcharges and other fees |
|
11,499 |
|
|
|
|
6.6 |
% |
|
4.7 |
% |
Commodity price and volume |
|
371 |
|
|
|
|
0.2 |
% |
|
0.2 |
% |
Acquisitions |
|
9,016 |
|
|
|
|
5.0 |
% |
|
3.7 |
% |
Closed operations |
|
(2 |
) |
|
|
|
— |
% |
|
— |
% |
Total solid waste
operations |
|
36,363 |
|
|
|
|
20.4 |
% |
|
15.0 |
% |
Resource Solutions
operations: |
|
|
|
|
|
|
|
Price |
|
(577 |
) |
|
|
|
(0.9)% |
|
(0.2)% |
Volume |
|
4,870 |
|
|
|
|
7.7 |
% |
|
1.9 |
% |
Surcharges and other fees |
|
1,115 |
|
|
|
|
1.8 |
% |
|
0.5 |
% |
Acquisitions |
|
11,528 |
|
|
|
|
18.2 |
% |
|
4.8 |
% |
Total Resource
Solutions operations |
|
16,936 |
|
|
|
|
26.8 |
% |
|
7.0 |
% |
Total
Company |
$ |
53,299 |
|
|
|
|
|
|
22.0 |
% |
Solid waste internalization rates by region for
the three and nine months
ended September 30, 2022
and 2021 are as
follows:
|
Three Months EndedSeptember
30, |
|
Nine Months EndedSeptember
30, |
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
Eastern region |
41.6 |
% |
|
47.6 |
% |
|
40.1 |
% |
|
50.1 |
% |
Western region |
60.7 |
% |
|
63.8 |
% |
|
58.9 |
% |
|
61.8 |
% |
Solid waste
internalization |
51.1 |
% |
|
56.4 |
% |
|
49.5 |
% |
|
56.3 |
% |
Components of capital expenditures (i) for the
three and nine months ended
September 30, 2022 and
2021 are as follows:
|
Three Months EndedSeptember
30, |
|
Nine Months EndedSeptember
30, |
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
Growth capital
expenditures: |
|
|
|
|
|
|
|
Post acquisition and development project |
$ |
5,511 |
|
$ |
2,805 |
|
$ |
9,499 |
|
$ |
7,083 |
Waste USA Landfill phase VI |
|
— |
|
|
3,802 |
|
|
— |
|
|
10,241 |
Other |
|
1,015 |
|
|
2,630 |
|
|
3,501 |
|
|
9,024 |
Growth capital
expenditures |
|
6,526 |
|
|
9,237 |
|
|
13,000 |
|
|
26,348 |
Replacement capital
expenditures: |
|
|
|
|
|
|
|
Landfill development |
|
11,664 |
|
|
7,525 |
|
|
24,526 |
|
|
16,290 |
Vehicles, machinery, equipment and containers |
|
11,851 |
|
|
5,369 |
|
|
41,375 |
|
|
31,112 |
Facilities |
|
1,414 |
|
|
1,684 |
|
|
5,639 |
|
|
3,353 |
Other |
|
1,344 |
|
|
1,693 |
|
|
3,127 |
|
|
4,474 |
Replacement capital
expenditures |
|
26,273 |
|
|
16,271 |
|
|
74,667 |
|
|
55,229 |
Capital
expenditures |
$ |
32,799 |
|
$ |
25,508 |
|
$ |
87,667 |
|
$ |
81,577 |
(i) The Company's capital expenditures are broadly defined as
pertaining to either growth or replacement activities. Growth
capital expenditures are defined as costs related to development
projects, organic business growth, and the integration of newly
acquired operations. Growth capital expenditures include costs
related to the following: 1) post acquisition and development
projects that are necessary to optimize strategic synergies
associated with integrating newly acquired operations as
contemplated by the discounted cash flow return analysis conducted
by management as part of the acquisition investment decision as
well as non-routine development investments that are expected to
provide long-term returns and includes the capital expenditures
required to achieve initial operating synergies and integrate
operations; 2) Waste USA Landfill phase VI construction and
development for long-term infrastructure, which is unique and
different from landfill construction investments in the normal
course of operations because the Company is investing in long-term
infrastructure over an estimated four year period that will not
yield a positive economic benefit until 2023 and extending over
approximately 20 years; and 3) development of new airspace, permit
expansions, and new recycling contracts, equipment added directly
as a result of organic business growth and infrastructure added 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.
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