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, 2016. The Company also provides guidance for its
next fiscal year ending December 31, 2017.
Highlights for the Three and Twelve Months Ended
December 31, 2016:
- 2016 results exceeded guidance for Revenues, Adjusted
EBITDA* and Normalized Free Cash Flow*.
- Revenues were $143.8 million for the quarter, up $3.8
million, or 2.7%, from the same period in 2015. Revenues were
$565.0 million for the fiscal year, up $18.5 million, or 3.4%, from
fiscal year 2015.
- Net loss was $(12.0) million for the quarter,
down $(5.0) million, or 70.6%, from the same
period in 2015. Net loss was $(6.9) million for the fiscal year,
up $4.9 million, or 41.8%, from fiscal year
2015.
- Adjusted net income attributable to common
stockholders* was $1.9 million for the quarter, up $3.6 million
from the same period in 2015. Adjusted net income attributable to
common stockholders was $7.8 million for the fiscal year, up $19.0
million from fiscal year 2015.
- Adjusted EBITDA was $29.4 million for the quarter, up
$1.6 million, or 5.9%, from the same period in 2015. Adjusted
EBITDA was $120.6 million for the fiscal year, up $14.5 million, or
13.7%, from fiscal year 2015.
- Adjusted Operating Income* was $10.9 million for the
quarter, up $2.7 million, or 33.7%, from the same period in 2015.
Adjusted Operating Income was $45.8 million for the fiscal year, up
$15.4 million, or 50.3%, from fiscal year 2015.
- Net cash provided by operating activities was $80.4
million in the fiscal year, up $9.9 million, or 14.1%, from fiscal
year 2015.
- Normalized Free Cash Flow was $27.1 million for the
fiscal year, up $8.5 million, or 45.6%, from fiscal year
2015.
"We had another strong quarter as we continued to execute well
against our key management strategies of increasing landfill
returns, improving collection profitability, creating incremental
value through resource solutions, and reducing leverage through
strict capital discipline and debt repayment,” said John W.
Casella, Chairman and CEO of Casella Waste Systems, Inc. “The
progress we have made on our strategies clearly drove positive
financial results in fiscal year 2016, with Adjusted Operating
Income up 50.3%, Adjusted Operating Income margins up 250 basis
points, Normalized Free Cash Flow up 45.6%, and total shareholder
returns of 107.5% during 2016.”
“From an operating standpoint, our disciplined solid waste
pricing programs continued to outpace internal inflation with
overall solid waste pricing up 2.6% in the quarter, driven by
strong residential and commercial pricing, which was up 3.6%, and
landfill pricing up 2.7%,” Casella said. “Further, our
efforts to reduce operating costs and drive efficiencies continued
to gain traction in the fourth quarter, with our cost of operations
as a percentage of revenues down 100 bps year-over-year.”
“As previously announced, on October 17, 2016, we refinanced our
ABL revolver due 2020 and our 7.75% senior subordinated notes due
2019, with a new $160 million revolving credit facility and a $350
million term loan B,” Casella said. “We believe that this
transaction positions us well to continue to execute against our
strategic plan by reducing our cash interest costs by approximately
$11.0 million per year, improving our financial flexibility, and
moving out debt maturities.”
“We have worked hard over the last two years to reshape our
recycling sales model in the face of historically low recycling
commodity markets with a goal of making a return on our invested
capital in all commodity market cycles,” Casella said. “We
have made great strides in accomplishing this goal through a
combination of our Sustainability/Recycling Adjustment fee applied
to hauling customers, floating rebates or tipping fees applied to
recycling processing customers, and efforts to reduce operating
costs at our materials processing facilities.”
For the fourth quarter, revenues were $143.8 million, up $3.8
million, or 2.7%, from the same period in 2015, with revenue growth
mainly driven by robust collection, disposal and recycling
commodity pricing, the roll-over impact from the acquisition of
three transfer stations in the second quarter, and higher volumes
in the Company's organics and customer solutions lines-of-business,
partially offset by lower solid waste volumes, primarily associated
with lower margin transportation volumes.
Net loss attributable to common stockholders was $(12.0)
million, or $(0.29) per diluted common share for the quarter,
compared to net loss attributable to common stockholders of $(7.0)
million, or $(0.17) per diluted common share for the same period in
2015. Adjusted net income attributable to common stockholders was
$1.9 million, or $0.05 per diluted common share for the quarter,
compared to adjusted net loss attributable to common stockholders
of $(1.6) million, or $(0.04) per diluted common share for the same
period in 2015.
Operating income was $10.0 million for the quarter, up $5.3
million from the same period in 2015, whereas Adjusted Operating
Income was $10.9 million for the quarter, up $2.7 million from the
same period in 2015. Adjusted EBITDA was $29.4 million for the
quarter, up $1.6 million, or 5.9%, from the same period in 2015,
with growth mainly driven by improved performance in the Company's
collection, recycling, organics, and customer solutions
lines-of-business.
The fourth quarter of 2016 included a $0.9 million environmental
remediation charge and a $13.0 million loss on debt extinguishment
related to the early redemption, repurchase and retirement of the
Company's remaining 7.75% senior subordinated notes due 2019 ("2019
Notes") and the repayment of the Company's senior secured
asset-based revolving credit and letter of credit facility due
February 2020 ("ABL Facility"), while the same quarter in 2015
included $1.1 million of proxy contest costs, $0.3 million of
severance and reorganization costs, a $1.9 million contract
settlement charge, a $0.1 million non-cash charge related to
divestiture transactions, a $1.8 million non-cash charge related to
the impairment of investments, and a $0.1 million loss on debt
extinguishment related to the repurchase and permanent retirement
of $5.0 million of 2019 Notes.
Net cash provided by operating activities was $24.4 million in
the quarter, down $(5.6) million from the same period in 2015.
Normalized Free Cash Flow was $12.2 million in the quarter, as
compared to $8.7 million for the same period in 2015. The fourth
quarter of 2016 included a $6.8 million adjustment for the interest
payment associated with the redemption of the 2019 Notes, while the
same period in 2015 included a $0.1 million adjustment for cash
outlays associated with capping at the Company's Worcester
landfill.
For the fiscal year, revenues were $565.0 million, up $18.5
million, or 3.4%, from fiscal year 2015, reflecting the impact of
robust collection, disposal and recycling commodity pricing, the
roll-over impact from the acquisition of three transfer stations in
the second quarter, and higher volumes in the Company's collection,
organics and customer solutions lines-of-business, partially offset
by lower solid waste volumes and lower energy pricing.
Net loss attributable to common stockholders was $(6.8) million,
or $(0.17) per diluted common share for the fiscal year, compared
to net loss attributable to common stockholders of $(13.0) million,
or $(0.32) per diluted common share for fiscal year 2015. Adjusted
net income attributable to common stockholders was $7.8 million, or
$0.19 per diluted common share for the fiscal year, compared to
adjusted net loss attributable to common stockholders of $(11.2)
million, or $(0.28) per diluted common share for fiscal year
2015.
Operating income was $44.9 million for the fiscal year, up $13.1
million from fiscal year 2015, whereas Adjusted Operating Income
was $45.8 million for the fiscal year, up $15.4 million from fiscal
year 2015. Adjusted EBITDA was $120.6 million for the fiscal year,
up $14.5 million, or 13.7%, from fiscal year 2015.
Net cash provided by operating activities was $80.4 million in
the fiscal year, up $9.9 million from fiscal year 2015. Normalized
Free Cash Flow was $27.1 million in the fiscal year, as compared to
$18.6 million for fiscal year 2015.
2017 Outlook
“Our fiscal year 2017 budget reflects continued execution of our
key strategies with the goal of driving additional shareholder
value," Casella said. The Company provided guidance for its
next fiscal year ending December 31, 2017 by estimating results in
the following ranges:
- Revenues between $577 million and $587 million (as compared to
$565.0 million in fiscal year 2016);
- Adjusted EBITDA between $124 million and $128 million (as
compared to $120.6 million in fiscal year 2016); and
- Normalized Free Cash Flow between $32 million and $36 million
(as compared to $27.1 million in fiscal year 2016).
“Given the timing delays and challenges at the Southbridge
landfill, we ramped down amortizable volumes at the site to
approximately 325,000 tons in fiscal year 2016,” Casella
said. “In fiscal year 2017, we plan to further reduce
amortizable volumes to the site by 50,000 to 100,000 tons. We
expect this further volume reduction to negatively impact revenues
by approximately $3.0 million to $5.0 million and negatively impact
Adjusted EBITDA by $2.0 million to $4.0 million as compared to
fiscal year 2016, with both reductions already contemplated in our
guidance ranges for fiscal year 2017. While we continue to
pursue future expansion capacity at the Southbridge landfill, we
currently do not have visibility on whether we will be able to
develop this expansion capacity at an adequate risk adjusted
return, and it is possible that at some point in the future we
could conclude that closing the site is in the company’s best
economic interest. However, even if we are unsuccessful from
a permitting standpoint at the Southbridge landfill, we remain
confident that we can achieve our fiscal year 2018 financial
targets that we first announced in August 2015.”
The Company provided the following assumptions that are built
into its outlook:
- No material changes in the regional economy from the last 12
months.
- In the solid waste business, revenue growth of between 1.0% and
3.3%, with price growth from 2.5% to 3.5% and lower volumes
associated with the planned ramp down of volumes at the Southbridge
landfill.
- In the recycling business, overall revenue growth of between
10.0% and 15.0%, driven by higher commodity prices, partially
offset by lower processing fees and lower volumes.
- In the Other segment, overall revenue growth of between 2.0%
and 3.0%, with growth in the industrial segment for Customer
Solutions group offsetting lower volumes in the Organics
group.
- No new acquisitions are included.
- Capital expenditures of between $55 million and $59 million,
and payments on operating leases of roughly $7 million.
The Company does not provide reconciling information of non-GAAP
financial measures on a forward-looking basis because such
information is not available without an unreasonable effort.
The Company believes that such information is not significant to an
understanding of its non-GAAP financial measures for
forward-looking periods because its methodology for calculating
such non-GAAP financial measures is based on sensitivity analysis
compared to budget at the business unit level rather than on
differences from Generally Accepted Accounting Principles in the
United States (“GAAP”) financial measures.
Conference call to discuss quarter and fiscal year
results
The Company will host a conference call to discuss these results
on Thursday, March 2, 2017 at 10:00 a.m. Eastern Time.
Individuals interested in participating in the call should dial
(877) 838-4153 or for international participants
(720) 545-0037 at least 10 minutes before start time. The call
will also be webcast; to listen, participants should visit Casella
Waste Systems’ website at http://ir.casella.com and follow the
appropriate link to the webcast.
A replay of the call will be available on the Company’s website,
or by calling (855) 859-2056 or (404) 537-3406
(Conference ID56086480) until 12:00 p.m. ET on March 9,
2017.
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 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 loss attributable to common
stockholders, adjusted for 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, impacts from divestiture
transactions, losses on debt modifications, as well as impairment
of investments ("Adjusted Net Income (Loss) Attributable to
Common Stockholders"), which is a non-GAAP measure.
The Company also discloses earnings before interest and taxes,
adjusted for 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 Operating Income”), 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, plus (less) contributions from
(distributions to) noncontrolling interest holders (“Free Cash
Flow”), which is a non-GAAP measure.
The Company also discloses Free Cash Flow 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, (less) 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 and Adjusted Operating Income are reconciled to
net loss, while Adjusted Net Income (Loss) Attributable to Common
Stockholders is reconciled to net loss attributable to common
stockholders and Free Cash Flow and Normalized Free Cash Flow are
reconciled to net cash provided by operating activities.
The Company presents Adjusted EBITDA, Adjusted Operating Income,
Adjusted Net Income (Loss) Attributable to Common Stockholders,
Free Cash Flow, 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 its “core operating performance.” The Company believes
its “core operating performance” is helpful in understanding its
ongoing performance in the ordinary course of operations. The
Company believes that providing Adjusted EBITDA, Adjusted Operating
Income, Adjusted Net Income (Loss) Attributable to Common
Stockholders, Free Cash Flow, 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, Adjusted Operating Income,
Adjusted Net Income (Loss) Attributable to Common Stockholders,
Free Cash Flow, 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, Adjusted Operating Income, Adjusted Net
Income (Loss) Attributable to Common Stockholders, Free Cash Flow,
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 results and
guidance, 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 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 outcome of its expansion efforts
and related matters at the Southbridge landfill, including the
uncertainty of the permitting process and groundwater contamination
discovered near the landfill, which may delay or negatively impact
its permitting activities at that landfill and result in increased
costs and liabilities as well as potentially leading to a
discontinuation of operations at the landfill; adverse weather
conditions that have negatively impacted and may continue to
negatively impact its revenues and its operating margin; current
economic conditions that have adversely affected and may continue
to adversely affect its revenues and its operating margin; the
Company may be unable to increase volumes at its landfills or
improve its route profitability; the Company's need to service its
indebtedness may limit its ability to invest in its business; the
Company may be unable to reduce costs or increase pricing or
volumes sufficiently to achieve estimated Adjusted EBITDA and other
targets; landfill operations and permit status may be affected by
factors outside its control; the Company may be required to incur
capital expenditures in excess of its estimates; 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 incur
environmental charges or asset impairments in the future; and the
Company's credit facility agreement requires it to meet a number of
financial ratios and covenants. 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 Form 10-K for the
fiscal year ended December 31, 2015 and in our Form 10-Q for
the quarterly period ended September 30, 2016.
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.
|
CASELLA WASTE SYSTEMS, INC. AND
SUBSIDIARIES |
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS |
(In thousands, except for per share
data) |
|
|
Three Months Ended December 31, |
|
Fiscal Year Ended December 31, |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Unaudited |
|
|
|
|
Revenues |
$ |
143,795 |
|
|
$ |
140,024 |
|
|
$ |
565,030 |
|
|
$ |
546,500 |
|
Operating
expenses: |
|
|
|
|
|
|
|
Cost of
operations |
97,565 |
|
|
96,390 |
|
|
381,973 |
|
|
382,615 |
|
General
and administration |
19,908 |
|
|
20,568 |
|
|
75,356 |
|
|
72,892 |
|
Depreciation and amortization |
15,425 |
|
|
16,330 |
|
|
61,856 |
|
|
62,704 |
|
Environmental remediation charge |
900 |
|
|
— |
|
|
900 |
|
|
— |
|
Contract
settlement charge |
— |
|
|
1,940 |
|
|
— |
|
|
1,940 |
|
Divestiture transactions |
— |
|
|
94 |
|
|
— |
|
|
(5,517 |
) |
|
133,798 |
|
|
135,322 |
|
|
520,085 |
|
|
514,634 |
|
Operating income |
9,997 |
|
|
4,702 |
|
|
44,945 |
|
|
31,866 |
|
Other expense
(income): |
|
|
|
|
|
|
|
Interest
expense, net |
9,204 |
|
|
9,994 |
|
|
38,652 |
|
|
40,090 |
|
Loss on
debt extinguishment |
13,011 |
|
|
133 |
|
|
13,747 |
|
|
999 |
|
Impairment of investments |
— |
|
|
1,781 |
|
|
— |
|
|
2,099 |
|
Loss
(gain) on derivative instruments |
— |
|
|
(12 |
) |
|
— |
|
|
227 |
|
Other
income |
(394 |
) |
|
(414 |
) |
|
(1,090 |
) |
|
(1,119 |
) |
Other expense, net |
21,821 |
|
|
11,482 |
|
|
51,309 |
|
|
42,296 |
|
Loss before income
taxes |
(11,824 |
) |
|
(6,780 |
) |
|
(6,364 |
) |
|
(10,430 |
) |
Provision for income
taxes |
150 |
|
|
240 |
|
|
494 |
|
|
1,351 |
|
Net loss |
(11,974 |
) |
|
(7,020 |
) |
|
(6,858 |
) |
|
(11,781 |
) |
Less: Net
income (loss) attributable to noncontrolling interests |
— |
|
|
(1 |
) |
|
(9 |
) |
|
1,188 |
|
Net loss attributable
to common stockholders |
$ |
(11,974 |
) |
|
$ |
(7,019 |
) |
|
$ |
(6,849 |
) |
|
$ |
(12,969 |
) |
Basic and diluted
weighted average common shares outstanding |
41,422 |
|
|
40,889 |
|
|
41,233 |
|
|
40,642 |
|
Basic and diluted
earnings per share |
$ |
(0.29 |
) |
|
$ |
(0.17 |
) |
|
$ |
(0.17 |
) |
|
$ |
(0.32 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASELLA WASTE SYSTEMS, INC. AND
SUBSIDIARIES |
CONDENSED CONSOLIDATED BALANCE
SHEETS |
(In thousands) |
|
ASSETS |
|
December 31, 2016 |
|
December 31, 2015 |
|
|
|
|
|
CURRENT ASSETS: |
|
|
|
|
Cash and
cash equivalents |
|
$ |
2,544 |
|
|
$ |
2,312 |
|
Accounts
receivable - trade, net |
|
61,196 |
|
|
60,167 |
|
Other
current assets |
|
14,848 |
|
|
14,189 |
|
Total current
assets |
|
78,588 |
|
|
76,668 |
|
Property, plant and
equipment, net |
|
398,466 |
|
|
402,252 |
|
Goodwill |
|
119,899 |
|
|
118,976 |
|
Intangible assets,
net |
|
7,696 |
|
|
9,252 |
|
Restricted assets |
|
1,002 |
|
|
2,251 |
|
Cost method
investments |
|
12,333 |
|
|
12,333 |
|
Other non-current
assets |
|
13,528 |
|
|
11,937 |
|
Total
assets |
|
$ |
631,512 |
|
|
$ |
633,669 |
|
LIABILITIES AND
STOCKHOLDERS' DEFICIT |
|
|
|
|
CURRENT
LIABILITIES: |
|
|
|
|
Current
maturities of long-term debt and capital leases |
|
$ |
4,686 |
|
|
$ |
1,448 |
|
Accounts
payable |
|
44,997 |
|
|
44,921 |
|
Other
accrued liabilities |
|
32,743 |
|
|
38,977 |
|
Total current
liabilities |
|
82,426 |
|
|
85,346 |
|
Long-term debt and
capital leases, less current maturities |
|
503,961 |
|
|
505,985 |
|
Other long-term
liabilities |
|
69,675 |
|
|
63,935 |
|
Total stockholders'
deficit |
|
(24,550 |
) |
|
(21,597 |
) |
Total
liabilities and stockholders' deficit |
|
$ |
631,512 |
|
|
$ |
633,669 |
|
|
|
|
|
|
|
|
|
|
CASELLA WASTE SYSTEMS, INC. AND
SUBSIDIARIES |
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS |
(In thousands) |
|
|
Fiscal Year Ended December 31, |
|
2016 |
|
2015 |
Cash Flows from
Operating Activities: |
|
|
|
Net loss |
$ |
(6,858 |
) |
|
$ |
(11,781 |
) |
Adjustments to
reconcile net loss to net cash provided by operating
activities: |
|
|
|
Depreciation and amortization |
61,856 |
|
|
62,704 |
|
Depletion
of landfill operating lease obligations |
9,295 |
|
|
9,428 |
|
Interest
accretion on landfill and environmental remediation
liabilities |
3,606 |
|
|
3,449 |
|
Amortization of debt issuance costs and discount on long-term
debt |
3,881 |
|
|
3,977 |
|
Stock-based compensation |
3,393 |
|
|
3,079 |
|
Environmental remediation charge |
900 |
|
|
— |
|
Gain on
sale of property and equipment |
(574 |
) |
|
(131 |
) |
Divestiture transactions |
— |
|
|
(5,517 |
) |
Loss on
debt extinguishment |
13,747 |
|
|
999 |
|
Loss on
derivative instruments |
— |
|
|
227 |
|
Impairment of investments |
— |
|
|
2,099 |
|
Excess
tax benefit on the vesting of share based awards |
— |
|
|
(185 |
) |
Deferred
income taxes |
583 |
|
|
795 |
|
Changes
in assets and liabilities, net of effects of acquisitions and
divestitures |
(9,395 |
) |
|
1,364 |
|
Net cash
provided by operating activities |
80,434 |
|
|
70,507 |
|
Cash Flows from
Investing Activities: |
|
|
|
Acquisitions, net of cash acquired |
(2,839 |
) |
|
— |
|
Acquisition related additions to property, plant and equipment |
(38 |
) |
|
— |
|
Additions
to property, plant and equipment |
(54,200 |
) |
|
(49,995 |
) |
Payments
on landfill operating lease contracts |
(7,249 |
) |
|
(5,385 |
) |
Proceeds
from divestiture transactions |
— |
|
|
5,335 |
|
Proceeds
from sale of property and equipment |
1,362 |
|
|
715 |
|
Proceeds
from property insurance settlement |
— |
|
|
546 |
|
Net cash
used in investing activities |
(62,964 |
) |
|
(48,784 |
) |
Cash Flows from
Financing Activities: |
|
|
|
Proceeds
from long-term borrowings |
604,850 |
|
|
355,229 |
|
Principal
payments on long-term debt |
(608,198 |
) |
|
(370,996 |
) |
Payments
of debt issuance costs |
(8,146 |
) |
|
(9,025 |
) |
Payments
of debt extinguishment costs |
(7,219 |
) |
|
(146 |
) |
Proceeds
from the exercise of share based awards |
128 |
|
|
161 |
|
Excess
tax benefit on the vesting of share based awards |
— |
|
|
185 |
|
Change in
restricted cash |
1,347 |
|
|
4,471 |
|
Distribution to noncontrolling interest holder |
— |
|
|
(1,495 |
) |
Net cash
used in financing activities |
(17,238 |
) |
|
(21,616 |
) |
Net increase in cash
and cash equivalents |
232 |
|
|
107 |
|
Cash and cash
equivalents, beginning of period |
2,312 |
|
|
2,205 |
|
Cash and cash
equivalents, end of period |
$ |
2,544 |
|
|
$ |
2,312 |
|
Supplemental Disclosure
of Cash Flow Information: |
|
|
|
Cash
interest |
$ |
42,712 |
|
|
$ |
35,232 |
|
Cash
income taxes, net of refunds |
$ |
274 |
|
|
$ |
282 |
|
Supplemental Disclosure
of Non-Cash Investing and Financing Activities: |
|
|
|
Non-current assets acquired through long-term obligations |
$ |
2,299 |
|
|
$ |
3,264 |
|
CASELLA WASTE SYSTEMS, INC. AND
SUBSIDIARIES RECONCILIATION OF CERTAIN
NON-GAAP
MEASURES (Unaudited) (In
thousands, except for per share data)
Following is a reconciliation of Adjusted EBITDA and
Adjusted Operating Income to Net loss:
|
Three Months Ended December 31, |
|
Fiscal Year Ended December 31, |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
Net
loss |
$ |
(11,974 |
) |
|
$ |
(7,020 |
) |
|
$ |
(6,858 |
) |
|
$ |
(11,781 |
) |
Net loss margin
for income taxes |
(8.3 |
)% |
|
(5.0 |
)% |
|
(1.2 |
)% |
|
(2.2 |
)% |
Provision
for income taxes |
150 |
|
|
240 |
|
|
494 |
|
|
1,351 |
|
Other
income |
(394 |
) |
|
(414 |
) |
|
(1,090 |
) |
|
(1,119 |
) |
Loss
(gain) on derivative instruments |
— |
|
|
(12 |
) |
|
— |
|
|
227 |
|
Impairment of investments |
— |
|
|
1,781 |
|
|
— |
|
|
2,099 |
|
Loss on
debt extinguishment |
13,011 |
|
|
133 |
|
|
13,747 |
|
|
999 |
|
Interest
expense, net |
9,204 |
|
|
9,994 |
|
|
38,652 |
|
|
40,090 |
|
Divestiture transactions |
— |
|
|
94 |
|
|
— |
|
|
(5,517 |
) |
Contract
settlement charge |
— |
|
|
1,940 |
|
|
— |
|
|
1,940 |
|
Environmental remediation charge |
900 |
|
|
— |
|
|
900 |
|
|
— |
|
Severance
and reorganization costs |
— |
|
|
302 |
|
|
— |
|
|
302 |
|
Proxy
contest costs |
— |
|
|
1,111 |
|
|
— |
|
|
1,902 |
|
Depreciation and amortization |
15,425 |
|
|
16,330 |
|
|
61,856 |
|
|
62,704 |
|
Depletion
of landfill operating lease obligations |
2,165 |
|
|
2,409 |
|
|
9,295 |
|
|
9,428 |
|
Interest
accretion on landfill and environmental remediation
liabilities |
918 |
|
|
877 |
|
|
3,606 |
|
|
3,449 |
|
Adjusted
EBITDA |
$ |
29,405 |
|
|
$ |
27,765 |
|
|
$ |
120,602 |
|
|
$ |
106,074 |
|
Adjusted EBITDA
margin |
20.4 |
% |
|
19.8 |
% |
|
21.3 |
% |
|
19.4 |
% |
Depreciation and amortization |
(15,425 |
) |
|
(16,330 |
) |
|
(61,856 |
) |
|
(62,704 |
) |
Depletion
of landfill operating lease obligations |
(2,165 |
) |
|
(2,409 |
) |
|
(9,295 |
) |
|
(9,428 |
) |
Interest
accretion on landfill and environmental remediation
liabilities |
(918 |
) |
|
(877 |
) |
|
(3,606 |
) |
|
(3,449 |
) |
Adjusted
Operating Income |
$ |
10,897 |
|
|
$ |
8,149 |
|
|
$ |
45,845 |
|
|
$ |
30,493 |
|
Adjusted
Operating Income margin |
7.6 |
% |
|
5.8 |
% |
|
8.1 |
% |
|
5.6 |
% |
Following is a reconciliation of Adjusted Net Income
(Loss) Attributable to Common Stockholders to Net loss attributable
to common stockholders:
|
Three Months Ended December 31, |
|
Fiscal Year Ended December 31, |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
Net loss
attributable to common stockholders |
$ |
(11,974 |
) |
|
$ |
(7,019 |
) |
|
$ |
(6,849 |
) |
|
$ |
(12,969 |
) |
Impairment of investments |
— |
|
|
1,781 |
|
|
— |
|
|
2,099 |
|
Loss on
debt extinguishment |
13,011 |
|
|
133 |
|
|
13,747 |
|
|
999 |
|
Divestiture transactions |
— |
|
|
94 |
|
|
— |
|
|
(5,517 |
) |
Contract
settlement charge |
— |
|
|
1,940 |
|
|
— |
|
|
1,940 |
|
Environmental remediation charge |
900 |
|
|
— |
|
|
900 |
|
|
— |
|
Severance
and reorganization costs |
— |
|
|
302 |
|
|
— |
|
|
302 |
|
Proxy
contest costs |
— |
|
|
1,111 |
|
|
— |
|
|
1,902 |
|
Tax
effect (i) |
— |
|
|
38 |
|
|
— |
|
|
35 |
|
Adjusted Net
Income (Loss) Attributable to Common Stockholders |
$ |
1,937 |
|
|
$ |
(1,620 |
) |
|
$ |
7,798 |
|
|
$ |
(11,209 |
) |
Adjusted
diluted weighted average common shares outstanding |
42,553 |
|
|
40,889 |
|
|
42,134 |
|
|
40,642 |
|
Adjusted
diluted earnings per common share |
$ |
0.05 |
|
|
$ |
(0.04 |
) |
|
$ |
0.19 |
|
|
$ |
(0.28 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(i) The aggregate tax effect of the adjustments, including
the impact of deferred tax adjustments.
Following is a reconciliation of Free Cash Flow and
Normalized Free Cash Flow to Net cash provided by operating
activities:
|
Three Months Ended December 31, |
|
Fiscal Year Ended December 31, |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
Net cash
provided by operating activities |
$ |
24,363 |
|
|
$ |
29,977 |
|
|
$ |
80,434 |
|
|
$ |
70,507 |
|
Capital
expenditures |
(16,765 |
) |
|
(18,957 |
) |
|
(54,200 |
) |
|
(49,995 |
) |
Payments
on landfill operating lease contracts |
(2,438 |
) |
|
(2,429 |
) |
|
(7,249 |
) |
|
(5,385 |
) |
Proceeds
from sale of property and equipment |
293 |
|
|
79 |
|
|
1,362 |
|
|
715 |
|
Proceeds
from divestiture transactions |
— |
|
|
— |
|
|
— |
|
|
5,335 |
|
Proceeds
from property insurance settlement |
— |
|
|
— |
|
|
— |
|
|
546 |
|
Distribution to noncontrolling interest holder |
— |
|
|
— |
|
|
— |
|
|
(1,495 |
) |
Free Cash
Flow* |
$ |
5,453 |
|
|
$ |
8,670 |
|
|
$ |
20,347 |
|
|
$ |
20,228 |
|
Interest
payment on redemption of senior subordinated notes (ii) |
6,770 |
|
|
— |
|
|
6,770 |
|
|
— |
|
Landfill
closure, site improvement and remediation expenditures (iii) |
— |
|
|
51 |
|
|
— |
|
|
1,447 |
|
Net cash
proceeds from CARES dissolution (iv) |
— |
|
|
— |
|
|
— |
|
|
(3,055 |
) |
Normalized Free
Cash Flow |
$ |
12,223 |
|
|
$ |
8,721 |
|
|
$ |
27,117 |
|
|
$ |
18,620 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(ii) Includes interest payment required upon redemption of
the senior subordinated notes.(iii) Includes cash outlays
associated with Worcester landfill capping.(iv) Includes cash
proceeds and cash distribution associated with the dissolution of
CARES.
CASELLA WASTE SYSTEMS, INC. AND
SUBSIDIARIESSUPPLEMENTAL DATA
TABLES(Unaudited)(In
thousands)
Amounts of total revenues attributable to services
provided for the three and twelve months ended December 31,
2016 and 2015 are as follows:
|
Three Months Ended December 31, |
|
2016 |
|
% of TotalRevenues |
|
2015 |
|
% of TotalRevenues |
Collection |
$ |
62,524 |
|
|
43.5 |
% |
|
$ |
60,751 |
|
|
43.4 |
% |
Disposal |
39,161 |
|
|
27.2 |
% |
|
41,537 |
|
|
29.6 |
% |
Power generation |
1,143 |
|
|
0.8 |
% |
|
1,491 |
|
|
1.1 |
% |
Processing |
1,589 |
|
|
1.1 |
% |
|
1,409 |
|
|
1.0 |
% |
Solid waste operations |
104,417 |
|
|
72.6 |
% |
|
105,188 |
|
|
75.1 |
% |
Organics |
10,215 |
|
|
7.1 |
% |
|
9,515 |
|
|
6.8 |
% |
Customer
solutions |
14,117 |
|
|
9.8 |
% |
|
13,439 |
|
|
9.6 |
% |
Recycling |
15,046 |
|
|
10.5 |
% |
|
11,882 |
|
|
8.5 |
% |
Total
revenues |
$ |
143,795 |
|
|
100.0 |
% |
|
$ |
140,024 |
|
|
100.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended December 31, |
|
2016 |
|
% of
TotalRevenues |
|
2015 |
|
% of
TotalRevenues |
Collection |
$ |
249,640 |
|
|
44.2 |
% |
|
$ |
238,301 |
|
|
43.6 |
% |
Disposal |
154,211 |
|
|
27.3 |
% |
|
156,536 |
|
|
28.6 |
% |
Power generation |
5,921 |
|
|
1.0 |
% |
|
6,796 |
|
|
1.2 |
% |
Processing |
6,282 |
|
|
1.1 |
% |
|
6,061 |
|
|
1.1 |
% |
Solid waste operations |
416,054 |
|
|
73.6 |
% |
|
407,694 |
|
|
74.5 |
% |
Organics |
41,587 |
|
|
7.4 |
% |
|
39,134 |
|
|
7.2 |
% |
Customer
solutions |
54,478 |
|
|
9.6 |
% |
|
53,334 |
|
|
9.8 |
% |
Recycling |
52,911 |
|
|
9.4 |
% |
|
46,338 |
|
|
8.5 |
% |
Total
revenues |
$ |
565,030 |
|
|
100.0 |
% |
|
$ |
546,500 |
|
|
100.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Components of revenue growth for the three months ended
December 31, 2016 compared to the three months ended
December 31, 2015 are as follows:
|
Amount |
|
%
ofRelatedBusiness |
|
% of
SolidWasteOperations |
|
% of TotalCompany |
Solid Waste
Operations: |
|
|
|
|
|
|
|
Collection |
$ |
1,968 |
|
|
3.2 |
% |
|
1.9 |
% |
|
1.4 |
% |
Disposal |
816 |
|
|
2.0 |
% |
|
0.7 |
% |
|
0.6 |
% |
Processing |
— |
|
|
— |
% |
|
— |
% |
|
— |
% |
Solid
Waste Price |
2,784 |
|
|
|
|
2.6 |
% |
|
2.0 |
% |
Collection |
(90 |
) |
|
|
|
(0.1 |
)% |
|
(0.1 |
)% |
Disposal |
(3,564 |
) |
|
|
|
(3.4 |
)% |
|
(2.5 |
)% |
Processing |
(17 |
) |
|
|
|
— |
% |
|
— |
% |
Solid
Waste Volume |
(3,671 |
) |
|
|
|
(3.5 |
)% |
|
(2.6 |
)% |
Fuel
surcharge |
(12 |
) |
|
|
|
— |
% |
|
(0.1 |
)% |
Commodity
price & volume |
(151 |
) |
|
|
|
(0.1 |
)% |
|
(0.1 |
)% |
Acquisitions, net divestitures |
279 |
|
|
|
|
0.3 |
% |
|
0.2 |
% |
Closed
landfill |
— |
|
|
|
|
— |
% |
|
— |
% |
Total Solid
Waste |
(771 |
) |
|
|
|
(0.7 |
)% |
|
(0.6 |
)% |
Organics |
700 |
|
|
|
|
|
|
0.5 |
% |
Customer
Solutions |
678 |
|
|
|
|
|
|
0.5 |
% |
Recycling
Operations: |
|
|
|
|
% of Recycling
Operations |
|
|
|
Price |
2,894 |
|
|
|
|
24.3 |
% |
|
2.1 |
% |
Volume |
270 |
|
|
|
|
2.3 |
% |
|
0.2 |
% |
Total
Recycling |
3,164 |
|
|
|
|
26.6 |
% |
|
2.3 |
% |
Total
Company |
$ |
3,771 |
|
|
|
|
|
|
2.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
Solid Waste Internalization Rates by Region for the
three and twelve months ended December 31, 2016 and 2015 are
as follows:
|
Three Months Ended December 31, |
|
Fiscal Year Ended December 31, |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
Eastern region |
56.4 |
% |
|
53.9 |
% |
|
53.8 |
% |
|
51.4 |
% |
Western region |
73.6 |
% |
|
73.5 |
% |
|
74.4 |
% |
|
72.5 |
% |
Solid waste
internalization |
64.3 |
% |
|
62.9 |
% |
|
63.4 |
% |
|
61.4 |
% |
Components of capital expenditures for the three and
twelve months ended December 31, 2016 and 2015 are as follows
(v):
|
Three Months Ended December 31, |
|
Fiscal Year Ended December 31, |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
Total Growth
Capital Expenditures |
$ |
1,082 |
|
|
$ |
3,857 |
|
|
$ |
5,373 |
|
|
$ |
7,244 |
|
Replacement
Capital Expenditures: |
|
|
|
|
|
|
|
Landfill
development |
8,019 |
|
|
6,876 |
|
|
29,666 |
|
|
18,828 |
|
Vehicles,
machinery, equipment and containers |
5,832 |
|
|
5,829 |
|
|
15,512 |
|
|
18,866 |
|
Facilities |
1,449 |
|
|
1,711 |
|
|
2,581 |
|
|
2,873 |
|
Other |
383 |
|
|
684 |
|
|
1,068 |
|
|
2,184 |
|
Total
Replacement Capital Expenditures |
15,683 |
|
|
15,100 |
|
|
48,827 |
|
|
42,751 |
|
Total Growth
and Replacement Capital Expenditures |
$ |
16,765 |
|
|
$ |
18,957 |
|
|
$ |
54,200 |
|
|
$ |
49,995 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(v) The Company's capital expenditures are broadly defined
as pertaining to either growth, replacement or acquisition
activities. Growth capital expenditures are defined as costs
related to development of new airspace, permit expansions, and new
recycling contracts along with incremental costs of equipment and
infrastructure added to further such activities. Growth capital
expenditures include the cost of equipment added directly as a
result of organic business growth as well as expenditures
associated with adding infrastructure to increase throughput at
transfer stations and recycling facilities. Replacement capital
expenditures are defined as landfill cell construction costs not
related to expansion airspace, costs for normal permit renewals,
and replacement costs for equipment due to age or obsolescence.
Acquisition capital expenditures, which are not included in the
table above, are defined as costs of equipment added directly as a
result of new business growth related to an acquisition.
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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