Casella Waste Systems, Inc. (NASDAQ:CWST), a regional solid waste,
recycling and resource management services company (the “Company”),
today announced that it has invited certain prospective lenders to
a meeting scheduled for September 27, 2016 for purposes of
considering a potential debt refinancing, pursuant to which the
Company intends to enter into a new term loan B facility in an
amount of approximately $350,000,000 and a revolving line of credit
facility in an amount of approximately $150,000,000 (the “Potential
Refinancing”). The proceeds of the Potential Refinancing, if
effected, would be used for the redemption of all of the Company’s
outstanding 7.75% Senior Subordinated Notes due 2019 (the “Senior
Subordinated Notes”), the repayment in full of the Company’s
existing senior secured asset-based revolving credit and letter of
credit facility, which matures on February 26, 2020 (or November
2018 if the Senior Subordinated Notes are not refinanced by then),
transaction related fees and expenses, working capital and other
purposes. The timing, size and terms of the Potential
Refinancing and the use of proceeds thereof are subject to market
and other conditions, and the Company makes no assurance that such
actions will take place at any specific time, or at all.
In conjunction with the Potential Refinancing, the
Company will provide the following updated guidance for the year
ending December 31, 2016 to prospective lenders:
Outlook
Given the Company’s strong pricing and operational
performance during the first two months of the third quarter, the
Company is increasing its Adjusted EBITDA* guidance for the year
ending December 31, 2016 by estimating results in the following
range:
- Adjusted EBITDA between $115 million and $117 million
(increased from a range of $111 million to $115 million as first
announced on March 1, 2016).
The Company reaffirms its Revenue guidance and has
established Normalized Free Cash Flow* guidance for the year by
estimating results in the following ranges:
- Revenues between $550 million and $560 million; and
- Normalized Free Cash Flow between $20 million and $24
million.
The Company has shifted from the previously
announced Free Cash Flow guidance to Normalized Free Cash Flow
guidance to eliminate the impact of cash interest timing
differences related to the Potential Refinancing.
The Company does not provide reconciling
information for forward-looking periods because such information is
not available without an unreasonable effort. The Company
believes that such information is not significant to an
understanding of its non-GAAP financial measures for
forward-looking periods because its methodology for calculating
such non-GAAP financial measures is based on sensitivity analysis
compared to budget at the business unit level rather than on
differences from GAAP financial measures.
About Casella Waste Systems,
Inc.
Casella Waste Systems, Inc., headquartered in
Rutland, Vermont, provides solid waste management services
consisting of collection, transfer, disposal, and recycling
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 Generally Accepted Accounting
Principles in the United States (“GAAP”), the Company also
discloses earnings before interest, taxes, and depreciation and
amortization, adjusted for accretion, depletion of landfill
operating lease obligations, gains on asset sales, development
project charge write-offs, contract settlement charges, legal
settlement costs, tax settlement costs, bargain purchase gains,
asset impairment charges, environmental remediation charges,
severance and reorganization costs, expenses from divestiture,
acquisition and financing costs, gains on the settlement of
acquisition related contingent consideration, fiscal year-end
transition costs, proxy contest costs, as well as impacts from
divestiture transactions (“Adjusted EBITDA”), which is a non-GAAP
measure.
The Company also discloses net cash provided by
operating activities, less capital expenditures (excluding
acquisition related 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, less
contributions from (distributions to) noncontrolling interest
holders plus certain cash outflows associated with landfill
closure, site improvement and remediation expenditures, plus
certain cash outflows associated with new contract and project
capital expenditures, plus cash (inflows) outflows associated with
certain business dissolutions, plus cash interest outflows
associated with the timing of refinancing transactions (“Normalized
Free Cash Flow”), which is a non-GAAP measure.
Adjusted EBITDA is reconciled to net loss, while
Normalized Free Cash Flow is reconciled to net cash provided by
operating activities.
The Company presents Adjusted EBITDA and Normalized
Free Cash Flow 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 measures to further understand the Company’s “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 and Normalized Free Cash Flow 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. In addition, the instruments
governing the Company’s indebtedness use EBITDA (with additional
adjustments) to measure its compliance with covenants.
Non-GAAP financial measures are not in accordance
with or an alternative for GAAP. Adjusted EBITDA and
Normalized 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 or
Normalized Free Cash Flow presented by other companies.
Safe Harbor Statement
Certain matters discussed in this press release,
including, but not limited to, the statements regarding financial
guidance, the Company’s plans, strategies and objectives for the
Potential Refinancing and the Company’s expectations regarding the
use of proceeds of the Potential Refinancing, 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,” “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 we operate
and management’s beliefs and assumptions. There can be no assurance
that the Company will be able to complete the Potential
Refinancing. We cannot guarantee that we 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 our 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 our forward-looking statements. Such risks and
uncertainties include or relate to, among other things: conditions
in financial and capital markets, including the impact of
prospective interest rate increases, could impact the Company’s
ability to complete the Potential Refinancing on favorable terms,
if at all; adverse weather conditions that have negatively impacted
and may continue to negatively impact our revenues and our
operating margin; current economic conditions that have adversely
affected and may continue to adversely affect our revenues and our
operating margin; we may be unable to increase volumes at our
landfills or improve our route profitability; our need to service
our indebtedness may limit our ability to invest in our business;
we 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 our control; groundwater contamination discovered
near our Southbridge landfill may delay our permitting activities
at that landfill and result in costs and liabilities as well as
impacting our disposal revenues at that site, each of which could
impact our results of operations; we may be required to incur
capital expenditures in excess of our estimates; fluctuations in
energy pricing or the commodity pricing of our recyclables may make
it more difficult for us to predict our results of operations or
meet our estimates; we may incur environmental charges or asset
impairments in the future; and actions of activist investors and
the cost and disruption of responding to those actions. There are a
number of other important risks and uncertainties that could cause
our 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 our Form 10-K for the fiscal year ended
December 31, 2015.
We undertake 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 Coletta
Chief Financial Officer
(802) 772-2239
Media:
Joseph Fusco
Vice President
(802) 772-2247
http://www.casella.com
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