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 twelve month periods ended
December 31, 2022. The Company also provided guidance for the
fiscal year ending December 31, 2023 ("fiscal year 2023").
Highlights for the Three Months and Twelve Months
Ended December 31,
2022:
- Revenues
were $272.1 million for the
quarter, up $30.3 million, or
up 12.5%, from the same period
in 2021. Revenues were
$1,085.1 million for fiscal year 2022,
up $195.9 million, or up
22.0%, from the fiscal year ended December
31, 2021 ("fiscal year
2021").
- Overall
solid waste pricing for the quarter was up
6.2%, driven by collection pricing,
up 6.7%, and disposal pricing, up
5.4%, from the same period in
2021.
- Net income
was $8.4 million for the quarter,
down $(0.7) million, or
down (7.9)%, from the same period
in 2021. Net income was
$53.1 million for fiscal year 2022,
up $12.0 million, or up 29.1%,
from fiscal year
2021.
- Adjusted
EBITDA, a non-GAAP measure, was $56.2
million for the quarter, up $4.8
million, or up
9.3%, from the same period in
2021. Adjusted EBITDA was
$245.2 million for fiscal year 2022,
up $41.7 million, or up
20.5%, from fiscal year
2021.
- Net cash
provided by operating activities was $217.3
million for fiscal year 2022, up
$34.6 million, or up
18.9%, from fiscal year
2021.
- Adjusted
Free Cash Flow, a non-GAAP measure, was $111.2
million for fiscal year 2022, up
$15.9 million, or up
16.7%, from fiscal year
2021.
- Acquired 14
businesses with approximately $51 million of annualized revenues in
fiscal year 2022.
"We had another solid quarter and an exceptional year despite
high inflation and a volatile period for recycling commodities,"
said John W. Casella, Chairman and CEO of Casella Waste Systems,
Inc. "Continued execution against our long-term strategic plan
resulted in surpassing both $1 billion in revenues and $100 million
in Adjusted Free Cash Flow in fiscal year 2022 for the first time
in the Company’s history. Our team deserves tremendous recognition
for these achievements and the resilience shown this past year
positions us well for continued execution and for our next stage of
growth."
"In fiscal year 2022, we grew revenues by 22.0%, Adjusted EBITDA
by 20.5%, and Adjusted Free Cash Flow by 16.7%," Casella said.
"These positive results reflect continued returns from our
operating initiatives, the flexibility of our pricing and
risk-mitigating fee programs, and the agility of our operating
teams in a complex operating environment as we continue to grow the
business. In the year, we advanced collection pricing of 7.0% and
solid waste pricing of 6.4%. Given the persistent inflationary
environment, we have initiated another year of comprehensive
pricing in 2023 in an effort to offset this headwind and drive
further value. From a solid waste volume perspective, sequential
trends in the fourth quarter were slightly weaker than expected as
we experienced tonnage pull forward into the third quarter and
lower roll-off pulls in select markets. However, activity levels
are strong in early 2023 and solid waste volumes have rebounded
from the fourth quarter."
"We continue to invest in operating initiatives and technology
aimed at enhancing safety, efficiencies, and financial returns
while meeting the growing resource management needs of our
customers. We have increased the proportion of automated trucks
across our fleet, implemented route optimization software,
installed more onboard computers, and enhanced back-office systems.
We have made considerable progress in these areas, but there is
still opportunity to further drive cost efficiencies and customer
value," Casella said.
"Further, our risk-mitigating programs are working well to
mitigate the impact from lower recycling commodity prices and
elevated fuel prices. Higher fuel costs weighed negatively on
margins by approximately 40 basis points in fiscal year 2022
despite our success in fully offsetting the higher costs with our
fuel recovery fee program. Our team has done a phenomenal job
reducing risk across the business in these areas, which has
resulted in increased stability and consistency of our overall
performance," Casella said.
"Growth through acquisitions is an integral part of our
strategy. In fiscal year 2022, we acquired 14 businesses with
annualized revenues of approximately $51 million, of which we
expect to recognize roughly $15.5 million of revenues in fiscal
year 2023 from the rollover impact of acquisitions completed
throughout 2022. We have a robust pipeline including a number of
deals in the late stages, and we expect another year of strong
execution against our growth strategy in 2023," Casella said.
For the quarter, revenues were $272.1 million, up $30.3 million,
or up 12.5%, from the same period in 2021, with revenue growth
mainly driven by: positive collection and disposal pricing; higher
solid waste fuel cost recovery fees; the roll-over impact from
acquisitions closed in fiscal year 2021 along with the impact of
acquisitions closed in fiscal year 2022; and higher pricing,
recycling processing fees and volume within our Resource Solutions
operating segment; partially offset by lower solid waste volumes
and recycling commodity prices and volumes.
Net income was $8.4 million for the quarter, or $0.16 per
diluted common share, down $(0.7) million, or down (7.9)%, as
compared to net income of $9.1 million, or $0.18 per diluted common
share, for the same period in 2021. Adjusted Net Income, a non-GAAP
measure, was $9.5 million for the quarter, or $0.18 Adjusted
Diluted Earnings Per Common Share, a non-GAAP measure, down $(1.5)
million, or down (13.9)%, as compared to Adjusted Net Income of
$11.0 million, or $0.21 Adjusted Diluted Earnings Per Common Share,
for the same period in 2021.
Operating income was $17.2 million for the quarter, up $0.9
million, or up 5.5%, from the same period in 2021. Adjusted EBITDA
was $56.2 million for the quarter, up $4.8 million, or up 9.3%,
from the same period in 2021.
For fiscal year 2022, revenues were $1,085.1 million, up $195.9
million, or up 22.0%, from fiscal year 2021. Net income was $53.1
million, or $1.03 per diluted common share, for fiscal year 2022,
as compared to net income of $41.1 million, or $0.80 per diluted
common share, for fiscal year 2021. Adjusted Net Income was $56.9
million, or $1.10 Adjusted Diluted Earnings Per Common Share, for
fiscal year 2022, as compared to Adjusted Net Income of $46.3
million, or $0.90 Adjusted Diluted Earnings Per Common Share, for
fiscal year 2021.
Operating income was $95.4 million for fiscal year 2022, up
$17.7 million from fiscal year 2021. Adjusted EBITDA was $245.2
million for fiscal year 2022, up $41.7 million from fiscal year
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 $217.3 million for
fiscal year 2022, as compared to $182.7 million for fiscal year
2021. Adjusted Free Cash Flow was $111.2 million for fiscal year
2022, as compared to $95.3 million for fiscal year 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 2023 Outlook
"Our guidance assumes a stable economic environment for the
remainder of 2023, with a year-over-year headwind from lower
recycling commodity values during the first half of the year,"
Casella said. "We believe our operating and pricing programs,
coupled with ongoing return-driven investments, will bolster margin
expansion in 2023. In addition, we look forward to several notable
projects coming online in the near future, including the
installation of modernized equipment upgrades at our Boston,
Massachusetts recycling facility currently underway, two renewable
natural gas facilities slated for 2023, and the initial investment
of rail infrastructure at our McKean landfill in Pennsylvania,
which is expected to be operational in 2024."
The Company provided guidance for fiscal year 2023 by estimating
results in the following ranges:
- Revenues between
$1.150 billion and $1.180 billion (as compared to $1.085 billion in
fiscal year 2022);
- Net income between
$56 million and $62 million (as compared to $53.1 million in fiscal
year 2022);
- Adjusted EBITDA
between $266 million and $272 million (as compared to $245.2
million in fiscal year 2022);
- Net cash provided by
operating activities between $227 million and $233 million (as
compared to $217.3 million in fiscal year 2022); and
- Adjusted Free Cash
Flow between $119 million and $125 million (as compared to $111.2
million in fiscal year 2022).
Adjusted EBITDA and Adjusted Free Cash Flow related to fiscal
year 2023 are described in the Reconciliation of Fiscal Year 2023
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 2023 do not contemplate
any unanticipated or non-recurring impacts.
The Company provided the following assumptions that are built
into its outlook.
- Overall, the Company
expects revenue growth of between 6.0% and 8.7% in fiscal year
2023, including approximately 1.4% (or $15.5 million) of revenue
growth from the roll-over impact of acquisitions completed during
fiscal year 2022.
- The Company has two
potential acquisitions with approximately $30 million of annualized
revenues under letter of intent and expects to close on these
transactions by the end of the second quarter. Fiscal year 2023
guidance does not include either of these potential acquisitions or
the impact of any other acquisitions that have not yet been
completed.
- In the Solid Waste
business, revenue growth of between 9.7% and 11.2%, with price
growth from 6.0% to 7.0%, volume growth from 0.5% to 1.0%, and 1.3%
growth from acquisitions completed during fiscal year 2022.
- In the Resource
Solutions business, revenue growth of between (3.7)% and 2.3%,
driven by 1.7% growth from acquisitions completed during fiscal
year 2022, and positive price and volumes, mainly offset by lower
recycling commodity prices.
- Capital expenditures
of approximately $141 million, which includes approximately $18
million of non-recurring capital associated with acquisition
integration and approximately $10 million of capital associated
with the first phase of the McKean landfill rail project.
- Net cash provided by
operating activities will be negatively impacted in fiscal year
2023 as we plan to spend approximately $11.0 million on landfill
capping, closure and post-closure expenditures to help reduce
emissions and adhere to regulatory requirements.
Conference call to discuss quarter
The Company will host a conference call to discuss these results
on Friday, February 17, 2023 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 Jeff Weld, Director of Communications at
(802) 772-2234; 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 2023, 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 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 and 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:
Jeff WeldDirector of Communications(802)
772-2234http://www.casella.com
CASELLA WASTE SYSTEMS, INC. AND
SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS(In thousands, except for per share
data)
|
Three Months EndedDecember
31, |
|
Twelve Months EndedDecember
31, |
|
Unaudited |
|
|
|
|
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Revenues |
$ |
272,127 |
|
|
$ |
241,836 |
|
|
$ |
1,085,089 |
|
|
$ |
889,211 |
|
Operating expenses: |
|
|
|
|
|
|
|
Cost of operations |
|
184,339 |
|
|
|
162,820 |
|
|
|
723,117 |
|
|
|
582,403 |
|
General and administration |
|
35,717 |
|
|
|
31,499 |
|
|
|
133,419 |
|
|
|
118,834 |
|
Depreciation and amortization |
|
33,245 |
|
|
|
29,080 |
|
|
|
126,351 |
|
|
|
103,590 |
|
Expense from acquisition activities |
|
735 |
|
|
|
1,353 |
|
|
|
4,613 |
|
|
|
5,304 |
|
Environmental remediation charge |
|
— |
|
|
|
924 |
|
|
|
759 |
|
|
|
924 |
|
Southbridge Landfill closure charge (credit), net |
|
872 |
|
|
|
(157 |
) |
|
|
1,436 |
|
|
|
496 |
|
|
|
254,908 |
|
|
|
225,519 |
|
|
|
989,695 |
|
|
|
811,551 |
|
Operating income |
|
17,219 |
|
|
|
16,317 |
|
|
|
95,394 |
|
|
|
77,660 |
|
Other expense (income): |
|
|
|
|
|
|
|
Interest expense, net |
|
6,195 |
|
|
|
5,190 |
|
|
|
23,013 |
|
|
|
20,927 |
|
Other income |
|
(607 |
) |
|
|
(488 |
) |
|
|
(2,585 |
) |
|
|
(1,313 |
) |
Other expense, net |
|
5,588 |
|
|
|
4,702 |
|
|
|
20,428 |
|
|
|
19,614 |
|
Income before income
taxes |
|
11,631 |
|
|
|
11,615 |
|
|
|
74,966 |
|
|
|
58,046 |
|
Provision for income
taxes |
|
3,210 |
|
|
|
2,470 |
|
|
|
21,887 |
|
|
|
16,946 |
|
Net income |
$ |
8,421 |
|
|
$ |
9,145 |
|
|
$ |
53,079 |
|
|
$ |
41,100 |
|
Basic weighted average common
shares outstanding |
|
51,678 |
|
|
|
51,404 |
|
|
|
51,623 |
|
|
|
51,312 |
|
Basic earnings per common
share |
$ |
0.16 |
|
|
$ |
0.18 |
|
|
$ |
1.03 |
|
|
$ |
0.80 |
|
Diluted weighted average
common shares outstanding |
|
51,825 |
|
|
|
51,624 |
|
|
|
51,767 |
|
|
|
51,515 |
|
Diluted earnings per common
share |
$ |
0.16 |
|
|
$ |
0.18 |
|
|
$ |
1.03 |
|
|
$ |
0.80 |
|
CASELLA WASTE SYSTEMS, INC. AND
SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE
SHEETS(In thousands)
|
December 31,2022 |
|
December 31,2021 |
ASSETS |
|
|
|
CURRENT ASSETS: |
|
|
|
Cash and cash equivalents |
$ |
71,152 |
|
$ |
33,809 |
Accounts receivable, net of allowance for credit losses |
|
100,886 |
|
|
86,979 |
Other current assets |
|
35,441 |
|
|
25,691 |
Total current assets |
|
207,479 |
|
|
146,479 |
Property, plant and equipment,
net of accumulated depreciation and amortization |
|
720,550 |
|
|
644,604 |
Operating lease right-of-use
assets |
|
92,063 |
|
|
93,799 |
Goodwill |
|
274,458 |
|
|
232,860 |
Intangible assets, net of
accumulated amortization |
|
91,783 |
|
|
93,723 |
Other non-current assets |
|
62,882 |
|
|
72,115 |
Total assets |
$ |
1,449,215 |
|
$ |
1,283,580 |
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
CURRENT LIABILITIES: |
|
|
|
Current maturities of debt |
$ |
8,968 |
|
$ |
9,901 |
Current operating lease liabilities |
|
7,000 |
|
|
7,307 |
Accounts payable |
|
74,203 |
|
|
63,086 |
Other accrued liabilities |
|
87,429 |
|
|
71,899 |
Total current liabilities |
|
177,600 |
|
|
152,193 |
Debt, less current
portion |
|
585,015 |
|
|
542,503 |
Operating lease liabilities,
less current portion |
|
57,345 |
|
|
56,375 |
Other long-term
liabilities |
|
131,355 |
|
|
110,052 |
Total stockholders'
equity |
|
497,900 |
|
|
422,457 |
Total liabilities and stockholders' equity |
$ |
1,449,215 |
|
$ |
1,283,580 |
CASELLA WASTE SYSTEMS, INC. AND
SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS(In thousands)
|
Twelve Months EndedDecember
31, |
|
|
2022 |
|
|
|
2021 |
|
Cash Flows from Operating
Activities: |
|
|
|
Net income |
$ |
53,079 |
|
|
$ |
41,100 |
|
Adjustments to reconcile net
income to net cash provided by operating activities: |
|
|
|
Depreciation and amortization |
|
126,351 |
|
|
|
103,590 |
|
Interest accretion on landfill and environmental remediation
liabilities |
|
8,008 |
|
|
|
7,324 |
|
Amortization of debt issuance costs on long term debt |
|
1,903 |
|
|
|
2,288 |
|
Stock-based compensation |
|
8,155 |
|
|
|
11,551 |
|
Operating lease right-of-use assets expense |
|
13,804 |
|
|
|
13,827 |
|
Disposition of assets, other items and charges, net |
|
737 |
|
|
|
1,055 |
|
Deferred income taxes |
|
16,527 |
|
|
|
15,073 |
|
Changes in assets and liabilities, net of effects of acquisitions
and divestitures |
|
(11,250 |
) |
|
|
(13,071 |
) |
Net cash provided by operating activities |
|
217,314 |
|
|
|
182,737 |
|
Cash Flows from Investing
Activities: |
|
|
|
Acquisitions, net of cash acquired |
|
(78,197 |
) |
|
|
(170,647 |
) |
Additions to property, plant and equipment |
|
(130,960 |
) |
|
|
(123,295 |
) |
Proceeds from sale of cost method investments |
|
1,637 |
|
|
|
— |
|
Proceeds from sale of property and equipment |
|
600 |
|
|
|
788 |
|
Net cash used in investing activities |
|
(206,920 |
) |
|
|
(293,154 |
) |
Cash Flows from Financing
Activities: |
|
|
|
Proceeds from debt borrowings |
|
88,200 |
|
|
|
3,701 |
|
Principal payments on debt |
|
(59,211 |
) |
|
|
(10,305 |
) |
Payments of debt issuance costs |
|
(1,232 |
) |
|
|
(3,684 |
) |
Payments of contingent consideration |
|
(1,000 |
) |
|
|
— |
|
Proceeds from the exercise of share based awards |
|
192 |
|
|
|
172 |
|
Net cash provided by (used in) financing activities |
|
26,949 |
|
|
|
(10,116 |
) |
Net increase (decrease) in
cash and cash equivalents |
|
37,343 |
|
|
|
(120,533 |
) |
Cash and cash equivalents,
beginning of period |
|
33,809 |
|
|
|
154,342 |
|
Cash and cash equivalents, end
of period |
$ |
71,152 |
|
|
$ |
33,809 |
|
Supplemental Disclosure of
Cash Flow Information: |
|
|
|
Cash interest payments |
$ |
21,003 |
|
|
$ |
19,025 |
|
Cash income tax payments, net |
$ |
2,798 |
|
|
$ |
1,438 |
|
Right-of-use assets obtained in exchange for financing lease
obligations |
$ |
11,919 |
|
|
$ |
20,753 |
|
Right-of-use assets obtained in exchange for operating lease
obligations |
$ |
9,835 |
|
|
$ |
3,827 |
|
|
|
|
|
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 EndedDecember
31, |
|
Twelve Months EndedDecember
31, |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Net
income |
$ |
8,421 |
|
|
$ |
9,145 |
|
|
$ |
53,079 |
|
|
$ |
41,100 |
|
Net income as a
percentage of revenues |
|
3.1 |
% |
|
|
3.8 |
% |
|
|
4.9 |
% |
|
|
4.6 |
% |
Provision for income taxes |
|
3,210 |
|
|
|
2,470 |
|
|
|
21,887 |
|
|
|
16,946 |
|
Other income |
|
(607 |
) |
|
|
(488 |
) |
|
|
(2,585 |
) |
|
|
(1,313 |
) |
Interest expense, net |
|
6,195 |
|
|
|
5,190 |
|
|
|
23,013 |
|
|
|
20,927 |
|
Expense from acquisition activities (ii) |
|
735 |
|
|
|
1,353 |
|
|
|
4,613 |
|
|
|
5,304 |
|
Southbridge Landfill closure charge (credit), net (iii) |
|
872 |
|
|
|
(157 |
) |
|
|
1,436 |
|
|
|
496 |
|
Environmental remediation charge (iv) |
|
— |
|
|
|
924 |
|
|
|
759 |
|
|
|
924 |
|
Depreciation and amortization |
|
33,245 |
|
|
|
29,080 |
|
|
|
126,351 |
|
|
|
103,590 |
|
Depletion of landfill operating lease obligations |
|
2,150 |
|
|
|
2,485 |
|
|
|
8,674 |
|
|
|
8,265 |
|
Interest accretion on landfill and environmental remediation
liabilities |
|
1,991 |
|
|
|
1,409 |
|
|
|
8,008 |
|
|
|
7,324 |
|
Adjusted
EBITDA |
$ |
56,212 |
|
|
$ |
51,411 |
|
|
$ |
245,235 |
|
|
$ |
203,563 |
|
Adjusted EBITDA as a
percentage of revenues |
|
20.7 |
% |
|
|
21.3 |
% |
|
|
22.6 |
% |
|
|
22.9 |
% |
Depreciation and amortization |
|
(33,245 |
) |
|
|
(29,080 |
) |
|
|
(126,351 |
) |
|
|
(103,590 |
) |
Depletion of landfill operating lease obligations |
|
(2,150 |
) |
|
|
(2,485 |
) |
|
|
(8,674 |
) |
|
|
(8,265 |
) |
Interest accretion on landfill and environmental remediation
liabilities |
|
(1,991 |
) |
|
|
(1,409 |
) |
|
|
(8,008 |
) |
|
|
(7,324 |
) |
Adjusted Operating
Income |
$ |
18,826 |
|
|
$ |
18,437 |
|
|
$ |
102,202 |
|
|
$ |
84,384 |
|
Adjusted Operating
Income as a percentage of revenues |
|
6.9 |
% |
|
|
7.6 |
% |
|
|
9.4 |
% |
|
|
9.5 |
% |
|
Three Months EndedDecember
31, |
|
Twelve Months EndedDecember
31, |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Net
income |
$ |
8,421 |
|
|
$ |
9,145 |
|
|
$ |
53,079 |
|
|
$ |
41,100 |
|
Gain on sale of cost method investment (i) |
|
— |
|
|
|
— |
|
|
|
(1,340 |
) |
|
|
— |
|
Expense from acquisition activities (ii) |
|
735 |
|
|
|
1,353 |
|
|
|
4,613 |
|
|
|
5,304 |
|
Southbridge Landfill closure charge (credit), net (iii) |
|
872 |
|
|
|
(157 |
) |
|
|
1,436 |
|
|
|
496 |
|
Environmental remediation charge (iv) |
|
— |
|
|
|
924 |
|
|
|
759 |
|
|
|
924 |
|
Tax effect (v) |
|
(569 |
) |
|
|
(275 |
) |
|
|
(1,640 |
) |
|
|
(1,571 |
) |
Adjusted Net
Income |
$ |
9,459 |
|
|
$ |
10,990 |
|
|
$ |
56,907 |
|
|
$ |
46,253 |
|
|
|
|
|
|
|
|
|
Diluted weighted
average common shares outstanding |
|
51,825 |
|
|
|
51,624 |
|
|
|
51,767 |
|
|
|
51,515 |
|
|
|
|
|
|
|
|
|
Diluted earnings per
common share |
$ |
0.16 |
|
|
$ |
0.18 |
|
|
$ |
1.03 |
|
|
$ |
0.80 |
|
Gain on sale of cost method investment (i) |
|
— |
|
|
|
— |
|
|
|
(0.03 |
) |
|
|
— |
|
Expense from acquisition activities (ii) |
|
0.01 |
|
|
|
0.02 |
|
|
|
0.09 |
|
|
|
0.10 |
|
Southbridge Landfill closure charge (credit), net (iii) |
|
0.02 |
|
|
|
— |
|
|
|
0.03 |
|
|
|
0.01 |
|
Environmental remediation charge (iv) |
|
— |
|
|
|
0.02 |
|
|
|
0.01 |
|
|
|
0.02 |
|
Tax effect (v) |
|
(0.01 |
) |
|
|
(0.01 |
) |
|
|
(0.03 |
) |
|
|
(0.03 |
) |
Adjusted Diluted
Earnings Per Common Share |
$ |
0.18 |
|
|
$ |
0.21 |
|
|
$ |
1.10 |
|
|
$ |
0.90 |
|
(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
(credit), net 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) Environmental 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 EndedDecember
31, |
|
Twelve Months EndedDecember
31, |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Net cash provided by
operating activities |
$ |
64,883 |
|
|
$ |
48,648 |
|
|
$ |
217,314 |
|
|
$ |
182,737 |
|
Capital expenditures |
|
(43,293 |
) |
|
|
(41,718 |
) |
|
|
(130,960 |
) |
|
|
(123,295 |
) |
Proceeds from sale of property and equipment |
|
29 |
|
|
|
195 |
|
|
|
600 |
|
|
|
788 |
|
Southbridge Landfill closure and Potsdam environmental remediation
(i) |
|
494 |
|
|
|
1,811 |
|
|
|
3,766 |
|
|
|
6,274 |
|
Cash outlays from acquisition activities (ii) |
|
705 |
|
|
|
1,570 |
|
|
|
4,284 |
|
|
|
4,988 |
|
Post acquisition and development project capital expenditures
(iii) |
|
6,710 |
|
|
|
3,432 |
|
|
|
16,209 |
|
|
|
10,515 |
|
Waste USA Landfill phase VI capital expenditures (iv) |
|
— |
|
|
|
3,084 |
|
|
|
— |
|
|
|
13,325 |
|
Adjusted Free Cash
Flow |
$ |
29,528 |
|
|
$ |
17,022 |
|
|
$ |
111,213 |
|
|
$ |
95,332 |
|
(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 2023 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
2023:
|
(Estimated) Twelve Months Ending December 31,
2023 |
Net
income |
$56,000 - $62,000 |
Provision for income taxes |
24,500 |
Other income |
(500) |
Interest expense, net |
26,000 |
Southbridge Landfill closure charge |
1,000 |
Depreciation and amortization |
141,000 |
Depletion of landfill operating lease obligations |
9,500 |
Interest accretion on landfill and environmental remediation
liabilities |
8,500 |
Adjusted
EBITDA |
$266,000 - $272,000 |
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 2023:
|
(Estimated) Twelve Months Ending December 31,
2023 |
Net cash provided by
operating activities |
$227,000 - $233,000 |
Capital expenditures |
(141,000) |
Southbridge Landfill closure and Potsdam environmental
remediation |
5,000 |
Post acquisition and development project capital expenditures |
18,000 |
McKean Landfill rail capital expenditures |
10,000 |
Adjusted Free Cash
Flow |
$119,000 - $125,000 |
(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 twelve months
ended December 31, 2022
and 2021 are as
follows:
|
Three Months Ended December 31, |
|
|
2022 |
|
% of TotalRevenues |
|
|
2021 |
|
% of TotalRevenues |
Collection |
$ |
138,677 |
|
51.0 |
% |
|
$ |
119,017 |
|
49.2 |
% |
Disposal |
|
58,468 |
|
21.5 |
% |
|
|
54,366 |
|
22.5 |
% |
Power generation |
|
1,469 |
|
0.5 |
% |
|
|
1,482 |
|
0.6 |
% |
Processing |
|
2,252 |
|
0.8 |
% |
|
|
2,527 |
|
1.1 |
% |
Solid waste operations |
|
200,866 |
|
73.8 |
% |
|
|
177,392 |
|
73.4 |
% |
Processing |
|
25,623 |
|
9.4 |
% |
|
|
27,605 |
|
11.4 |
% |
Customer solutions |
|
45,638 |
|
16.8 |
% |
|
|
36,839 |
|
15.2 |
% |
Resource Solutions operations |
|
71,261 |
|
26.2 |
% |
|
|
64,444 |
|
26.6 |
% |
Total
revenues |
$ |
272,127 |
|
100.0 |
% |
|
$ |
241,836 |
|
100.0 |
% |
|
|
|
|
|
|
|
|
|
Twelve Months Ended December 31, |
|
|
2022 |
|
% of TotalRevenues |
|
|
2021 |
|
% of TotalRevenues |
Collection |
$ |
539,587 |
|
49.7 |
% |
|
$ |
442,685 |
|
49.8 |
% |
Disposal |
|
227,971 |
|
21.0 |
% |
|
|
196,985 |
|
22.2 |
% |
Power generation |
|
7,519 |
|
0.7 |
% |
|
|
5,138 |
|
0.6 |
% |
Processing |
|
10,134 |
|
1.0 |
% |
|
|
9,281 |
|
1.0 |
% |
Solid waste operations |
|
785,211 |
|
72.4 |
% |
|
|
654,089 |
|
73.6 |
% |
Processing |
|
119,045 |
|
10.9 |
% |
|
|
93,323 |
|
10.5 |
% |
Customer solutions |
|
180,833 |
|
16.7 |
% |
|
|
141,799 |
|
15.9 |
% |
Resource Solutions operations |
|
299,878 |
|
27.6 |
% |
|
|
235,122 |
|
26.4 |
% |
Total
revenues |
$ |
1,085,089 |
|
100.0 |
% |
|
$ |
889,211 |
|
100.0 |
% |
Components of revenue growth for the three months
ended December 31, 2022 compared
to the three months ended December 31,
2021 are as follows:
|
Amount |
|
%
ofRelatedBusiness |
|
% ofOperations |
|
% of TotalCompany |
Solid waste
operations: |
|
|
|
|
|
|
|
Collection |
$ |
8,032 |
|
|
6.7 |
% |
|
4.5 |
% |
|
3.3 |
% |
Disposal |
|
2,918 |
|
|
5.4 |
% |
|
1.7 |
% |
|
1.2 |
% |
Solid waste price |
|
10,950 |
|
|
|
|
6.2 |
% |
|
4.5 |
% |
Collection |
|
(1,295 |
) |
|
|
|
(0.7 |
)% |
|
(0.5 |
)% |
Disposal |
|
(571 |
) |
|
|
|
(0.3 |
)% |
|
(0.2 |
)% |
Processing |
|
63 |
|
|
|
|
— |
% |
|
— |
% |
Solid waste volume |
|
(1,803 |
) |
|
|
|
(1.0 |
)% |
|
(0.7 |
)% |
Surcharges and other fees |
|
10,907 |
|
|
|
|
6.0 |
% |
|
4.5 |
% |
Commodity price and volume |
|
(419 |
) |
|
|
|
(0.2 |
)% |
|
(0.2 |
)% |
Acquisitions |
|
3,839 |
|
|
|
|
2.2 |
% |
|
1.6 |
% |
Closed operations |
|
— |
|
|
|
|
— |
% |
|
— |
% |
Total solid waste
operations |
|
23,474 |
|
|
|
|
13.2 |
% |
|
9.7 |
% |
Resource Solutions
operations: |
|
|
|
|
|
|
|
Price |
|
(3,480 |
) |
|
|
|
(5.4 |
)% |
|
(1.4 |
)% |
Volume |
|
4,473 |
|
|
|
|
6.9 |
% |
|
1.8 |
% |
Surcharges and other fees |
|
972 |
|
|
|
|
1.6 |
% |
|
0.4 |
% |
Acquisitions |
|
4,852 |
|
|
|
|
7.5 |
% |
|
2.0 |
% |
Total Resource
Solutions operations |
|
6,817 |
|
|
|
|
10.6 |
% |
|
2.8 |
% |
Total
Company |
$ |
30,291 |
|
|
|
|
|
|
12.5 |
% |
Solid waste internalization rates by region for the
three and twelve months ended
December 31, 2022 and
2021 are as follows:
|
Three Months EndedDecember
31, |
|
Twelve Months EndedDecember
31, |
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
Eastern region |
40.8 |
% |
|
45.2 |
% |
|
40.3 |
% |
|
48.8 |
% |
Western region |
60.3 |
% |
|
56.5 |
% |
|
59.2 |
% |
|
60.4 |
% |
Solid waste
internalization |
51.1 |
% |
|
51.4 |
% |
|
49.5 |
% |
|
55.0 |
% |
Components of capital expenditures (i) for the three
and twelve months ended December
31, 2022 and 2021
are as follows:
|
Three Months EndedDecember
31, |
|
Twelve Months EndedDecember
31, |
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
Growth capital
expenditures: |
|
|
|
|
|
|
|
Post acquisition and development project |
$ |
6,710 |
|
$ |
3,432 |
|
$ |
16,209 |
|
$ |
10,515 |
Waste USA Landfill phase VI |
|
— |
|
|
3,084 |
|
|
— |
|
|
13,325 |
Other |
|
2,135 |
|
|
4,456 |
|
|
5,636 |
|
|
13,480 |
Growth capital
expenditures |
|
8,845 |
|
|
10,972 |
|
|
21,845 |
|
|
37,320 |
Replacement capital
expenditures: |
|
|
|
|
|
|
|
Landfill development |
|
6,158 |
|
|
7,200 |
|
|
30,684 |
|
|
23,490 |
Vehicles, machinery, equipment and containers |
|
19,561 |
|
|
17,315 |
|
|
60,936 |
|
|
48,427 |
Facilities |
|
6,855 |
|
|
4,197 |
|
|
12,494 |
|
|
7,550 |
Other |
|
1,874 |
|
|
2,034 |
|
|
5,001 |
|
|
6,508 |
Replacement capital
expenditures |
|
34,448 |
|
|
30,746 |
|
|
109,115 |
|
|
85,975 |
Capital
expenditures |
$ |
43,293 |
|
$ |
41,718 |
|
$ |
130,960 |
|
$ |
123,295 |
(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.
Casella Waste Systems (NASDAQ:CWST)
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From Jun 2024 to Jul 2024
Casella Waste Systems (NASDAQ:CWST)
Historical Stock Chart
From Jul 2023 to Jul 2024