Casella Waste Systems, Inc. (NASDAQ: CWST), a regional solid waste,
recycling and resource management services company, today reported
its financial results for the three month period ended March 31,
2021.
Highlights for the Three Months Ended March 31,
2021:
- Revenues were $189.5 million for the quarter, up $6.6
million, or up 3.6%, from the same period in 2020.
- Overall solid waste pricing for the quarter was up
3.4%, driven by collection pricing, up 3.5%, and landfill pricing,
up 3.5%, from the same period in 2020.
- Net income was $4.3 million for the quarter, up $3.3
million, or up 349.5%, from the same period in 2020.
- Adjusted EBITDA, a non-GAAP measure, was $38.8 million
for the quarter, up $5.3 million, or up 15.9%, from the same period
in 2020.
- Net income as a percentage of revenues was 2.3% for the
quarter, up 175 basis points from the same period in 2020. Adjusted
EBITDA as a percentage of revenues, a non-GAAP measure, was 20.5%
for the quarter, up 215 basis points from the same period in
2020.
- Net cash provided by operating activities was $32.1
million for the quarter, up $17.4 million, or up 117.3%, from the
same period in 2020.
- Adjusted Free Cash Flow, a non-GAAP measure, was $11.0
million for the quarter, up $6.9 million, or up 172.8%, from the
same period in 2020.
“Our team continued to execute very well through the first
quarter as we increased Adjusted EBITDA by 15.9%, Adjusted EBITDA
margins by 215 basis points, and Adjusted Free Cash Flow by 172.8%
year-over-year in the quarter despite continued solid waste volume
headwinds due to the COVID-19 pandemic,” said John W. Casella,
Chairman and CEO of Casella Waste Systems, Inc. “These positive
results are a testament to the hard work, adaptability and
dedication of our team, the resiliency of our business model, our
asset positioning in the disposal capacity constrained northeast
market that allowed us to advance positive solid waste pricing, and
strong execution against our operating and cost efficiency
programs.”
“Solid waste volume declines continued to moderate sequentially
from the fourth quarter of 2020 through the first quarter of fiscal
year 2021,” Casella said. “With volumes down (3.3)% year-over-year
in the quarter, we had a tough volume comparison in the first
quarter as we experienced only very limited negative impacts from
the COVID-19 pandemic late in the first quarter last year. We
expect solid waste volumes to improve year-over-year through the
remainder of fiscal year 2021.”
“As more Americans are vaccinated and the states in which we
operate further ease COVID-19 specific restrictions, we continue to
see additional commercial customers reopen or increase services,
construction activity increase, and overall economic activity
rebound across our mainly secondary and rural markets in the
northeast,” Casella said.
“We continued to make great progress against our 2021 strategic
plan during the quarter,” Casella said. “And, we are well
positioned to drive additional acquisition growth through the
remainder of the year as our acquisition pipeline remains robust
and activity is accelerating.”
For the quarter, revenues were $189.5 million, up $6.6 million,
or up 3.6%, from the same period in 2020, with revenue growth
mainly driven by: positive collection and disposal pricing; the
roll-over impact from acquisitions; higher recycling commodity
prices; and higher resource solutions non-processing revenues;
partially offset by lower solid waste volumes primarily due to the
negative impacts of the COVID-19 pandemic and lower fuel surcharge
and other fees.
Net income was $4.3 million for the quarter, or $0.08 per
diluted common share, up $3.3 million, or up 349.5%, as compared to
net income of $1.0 million, or $0.02 per diluted common share, for
the same period in 2020. The quarter included $0.4 million of
expense from acquisition activities and $0.2 million of legal and
other expenses associated with the closure of our landfill in
Southbridge, Massachusetts ("Southbridge Landfill"). The same
quarter last year included $1.0 million of expense from acquisition
activities and $0.6 million of legal and other costs associated
with the Southbridge Landfill closure.
Given the reversal of the tax valuation allowance in 2020, we
expect an income statement tax provision of approximately 31% in
fiscal year 2021. The income tax provision was $2.4 million in the
quarter, up $2.3 million from the same period in 2020, and as
expected we paid cash taxes of $0.2 million in the quarter.
Adjusted Net Income, a non-GAAP measure, was $4.8 million for
the quarter, or $0.09 Adjusted Diluted Earnings Per Common Share,
up $2.6 million, or up 122.1%, as compared to Adjusted Net Income
of $2.1 million, or $0.04 Adjusted Diluted Earnings Per Common
Share, for the same period in 2020.
Operating income was $12.0 million for the quarter, up $5.0
million, or up 71.3% from the same period in 2020. Adjusted EBITDA
was $38.8 million for the quarter, up $5.3 million, or up 15.9%,
from the same period in 2020.
Fiscal Year 2021 Outlook
“Given our solid execution year-to-date combined with increased
visibility of economic trends, we are updating our fiscal year 2021
guidance ranges that were first announced in mid-February,” Casella
said. “These guidance ranges assume a stable economic environment
continuing through the remainder of the year with only a modest
rebound in solid waste volumes as major cities in our markets are
slowly reopening from the COVID-19 pandemic.”
The Company raised guidance for fiscal year 2021 by estimating
results in the following ranges:
- Adjusted EBITDA between $185 million and $189 million (raised
from $184 million and $188 million);
- Net cash provided by operating activities between $150 million
and $154 million (raised from $149 million and $153 million);
and
- Adjusted Free Cash Flow between $76 million and $80 million
(raised from $75 million and $79 million).
And, the Company reaffirmed guidance for fiscal year 2021 by
estimating results in the following ranges:
- Revenues between $815 million and $830 million; and
- Net income between $33 million and $37 million.
Adjusted EBITDA and Adjusted Free Cash Flow related to fiscal
year 2021 are described in the Reconciliation of Fiscal Year 2021
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 2021 do not contemplate
any unanticipated or non-recurring impacts.
Conference call to discuss quarter
The Company will host a conference call to discuss these results
on Friday, April 30, 2021 at 10:00 a.m. Eastern Time.
Individuals interested in participating in the call should dial
(877) 838-4153 or for international participants (720) 545-0037 at
least 10 minutes before start time. The Conference ID is 760 9317
for the call and the replay.
The call will also be webcast; to listen, participants should
visit the company’s website at http://ir.casella.com and follow the
appropriate link to the webcast. A replay of the call will be
available on the Company's website, or by calling (855) 859-2056 or
(404) 537-3406 (Conference ID 760 9317).
About Casella Waste Systems, Inc.
Casella Waste Systems, Inc., headquartered in Rutland, Vermont,
provides resource management expertise and services to residential,
commercial, municipal and industrial customers, primarily in the
areas of solid waste collection and disposal, transfer, recycling
and organics services in the northeastern United States. For
further information, investors contact Ned Coletta, Chief Financial
Officer at (802) 772-2239; media contact Joseph Fusco, Vice
President at (802) 772-2247; or visit the Company’s website at
http://www.casella.com.
Safe Harbor Statement
Certain matters discussed in this press release, including, but
not limited to, the statements regarding our intentions, beliefs or
current expectations concerning, among other things, the expected
and potential direct or indirect impacts of the COVID-19 pandemic
on our business; our financial performance; financial condition;
operations and services; prospects; growth; strategies; and
guidance for fiscal year 2021, 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: it is challenging to predict the duration
and scope of the COVID-19 pandemic and its negative effect on the
economy, our operations and financial results; policies adopted by
China and other countries will further restrict imports of
recyclable materials into those countries and have a further
material impact on the Company’s financial results; the capping and
closure of the Southbridge Landfill and the lawsuit relating to the
North Country Landfill could result in material unexpected 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 economics of recycling programs may cause
municipalities to reconsider the viability of continuing these
programs; the Company's need to service its indebtedness may limit
its ability to invest in its business; the Company may be unable to
reduce costs or increase pricing or volumes sufficiently to achieve
estimated Adjusted EBITDA and other targets; landfill operations
and permit status may be affected by factors outside the Company's
control; the Company may be required to incur capital expenditures
in excess of its estimates; the Company's insurance coverage and
self-insurance reserves may be inadequate to cover all of its
significant risk exposures; fluctuations in energy pricing or the
commodity pricing of its recyclables may make it more difficult for
the Company to predict its results of operations or meet its
estimates; the Company may be unable to achieve its acquisition or
development targets on favorable pricing or at all; and the Company
may incur environmental charges or asset impairments in the
future.
There are a number of other important risks and uncertainties
that could cause the Company's actual results to differ materially
from those indicated by such forward-looking statements. These
additional risks and uncertainties include, without limitation,
those detailed in Item 1A, “Risk Factors” in the Company's most
recently filed Form 10-K and in other filings that the Company may
make with the Securities and Exchange Commission in the future.
The Company undertakes no obligation to update publicly any
forward-looking statements whether as a result of new information,
future events or otherwise, except as required by law.
Investors:
Ned ColettaChief Financial Officer(802) 772-2239
Media:
Joseph FuscoVice President(802)
772-2247http://www.casella.com
|
|
CASELLA WASTE SYSTEMS, INC. AND
SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS(Unaudited)(In
thousands, except for per share data) |
|
|
Three Months EndedMarch 31, |
|
2021 |
|
2020 |
Revenues |
$ |
189,532 |
|
|
$ |
182,910 |
|
Operating expenses: |
|
|
|
Cost of operations |
127,139 |
|
|
128,518 |
|
General and administration |
27,131 |
|
|
24,352 |
|
Depreciation and amortization |
22,682 |
|
|
21,406 |
|
Expense from acquisition activities |
414 |
|
|
1,009 |
|
Southbridge Landfill closure charge |
157 |
|
|
613 |
|
|
177,523 |
|
|
175,898 |
|
Operating income |
12,009 |
|
|
7,012 |
|
Other
expense (income): |
|
|
|
Interest expense, net |
5,404 |
|
|
5,901 |
|
Other (income) expense |
(138 |
) |
|
43 |
|
Other
expense, net |
5,266 |
|
|
5,944 |
|
Income before income taxes |
6,743 |
|
|
1,068 |
|
Provision for income taxes |
2,432 |
|
|
109 |
|
Net
income |
$ |
4,311 |
|
|
$ |
959 |
|
Basic
weighted average common shares outstanding |
51,179 |
|
|
48,005 |
|
Basic
earnings per common share |
$ |
0.08 |
|
|
$ |
0.02 |
|
Diluted weighted average common shares outstanding |
51,387 |
|
|
48,262 |
|
Diluted earnings per common share |
$ |
0.08 |
|
|
$ |
0.02 |
|
|
|
|
|
|
|
|
|
CASELLA WASTE SYSTEMS, INC. AND
SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE
SHEETS(In thousands) |
|
|
March 31,2021 |
|
December 31,2020 |
|
(Unaudited) |
|
|
ASSETS |
|
|
|
CURRENT ASSETS: |
|
|
|
Cash and cash equivalents |
$ |
152,555 |
|
|
$ |
154,342 |
|
Accounts receivable, net of allowance for credit losses |
66,326 |
|
|
74,198 |
|
Other current assets |
20,625 |
|
|
18,714 |
|
Total
current assets |
239,506 |
|
|
247,254 |
|
Property, plant and equipment, net of accumulated depreciation and
amortization |
523,316 |
|
|
510,512 |
|
Operating lease right-of-use assets |
92,537 |
|
|
95,310 |
|
Goodwill |
196,316 |
|
|
194,901 |
|
Intangible assets, net of accumulated amortization |
57,581 |
|
|
58,324 |
|
Restricted assets |
1,871 |
|
|
1,848 |
|
Cost
method investments |
11,264 |
|
|
11,264 |
|
Deferred income taxes |
57,731 |
|
|
61,163 |
|
Other
non-current assets |
14,124 |
|
|
13,322 |
|
Total assets |
$ |
1,194,246 |
|
|
$ |
1,193,898 |
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
CURRENT LIABILITIES: |
|
|
|
Current maturities of debt |
$ |
10,918 |
|
|
$ |
9,240 |
|
Current operating lease liabilities |
7,122 |
|
|
8,547 |
|
Accounts payable |
50,547 |
|
|
49,198 |
|
Other accrued liabilities |
54,488 |
|
|
64,223 |
|
Total
current liabilities |
123,075 |
|
|
131,208 |
|
Debt,
less current portion |
531,105 |
|
|
530,411 |
|
Operating lease liabilities, less current portion |
60,854 |
|
|
60,979 |
|
Other
long-term liabilities |
105,876 |
|
|
109,158 |
|
Total
stockholders' equity |
373,336 |
|
|
362,142 |
|
Total liabilities and stockholders' equity |
$ |
1,194,246 |
|
|
$ |
1,193,898 |
|
|
|
|
|
|
|
|
|
CASELLA WASTE SYSTEMS, INC. AND
SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS(Unaudited)(In
thousands) |
|
|
Three Months EndedMarch 31, |
|
2021 |
|
2020 |
Cash
Flows from Operating Activities: |
|
|
|
Net income |
$ |
4,311 |
|
|
$ |
959 |
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
|
|
|
|
Depreciation and amortization |
22,682 |
|
|
21,406 |
|
Depletion of landfill operating lease obligations |
1,604 |
|
|
1,673 |
|
Interest accretion on landfill and environmental remediation
liabilities |
1,957 |
|
|
1,794 |
|
Amortization of debt issuance costs |
572 |
|
|
527 |
|
Stock-based compensation |
2,941 |
|
|
1,562 |
|
Operating lease right-of-use assets expense |
1,411 |
|
|
2,417 |
|
(Gain) loss on sale of property and equipment |
(24 |
) |
|
137 |
|
Southbridge Landfill non-cash closure charge |
(7 |
) |
|
51 |
|
Non-cash expense from acquisition activities |
146 |
|
|
532 |
|
Deferred income taxes |
2,300 |
|
|
967 |
|
Changes in assets and liabilities, net of effects of acquisitions
and divestitures |
(5,746 |
) |
|
(17,234 |
) |
Net cash provided by operating activities |
32,147 |
|
|
14,791 |
|
Cash
Flows from Investing Activities: |
|
|
|
|
|
|
|
Acquisitions, net of cash acquired |
(4,568 |
) |
|
(5,144 |
) |
Additions to property, plant and equipment |
(26,832 |
) |
|
(19,851 |
) |
Proceeds from sale of property and equipment |
123 |
|
|
51 |
|
Net cash used in investing activities |
(31,277 |
) |
|
(24,944 |
) |
Cash
Flows from Financing Activities: |
|
|
|
Proceeds from debt borrowings |
— |
|
|
73,500 |
|
Principal payments on debt |
(2,769 |
) |
|
(40,686 |
) |
Payments of debt issuance costs |
— |
|
|
(11 |
) |
Proceeds from the exercise of share based awards |
112 |
|
|
100 |
|
Net cash (used in) provided by financing
activities |
(2,657 |
) |
|
32,903 |
|
Net
(decrease) increase in cash and cash equivalents |
(1,787 |
) |
|
22,750 |
|
Cash
and cash equivalents, beginning of period |
154,342 |
|
|
3,471 |
|
Cash
and cash equivalents, end of period |
$ |
152,555 |
|
|
$ |
26,221 |
|
Supplemental Disclosure of Cash Flow Information: |
|
|
|
Cash interest payments |
$ |
5,020 |
|
|
$ |
5,372 |
|
Cash income tax payments |
$ |
238 |
|
|
$ |
84 |
|
Non-current assets obtained through long-term financing
obligations |
$ |
4,569 |
|
|
$ |
6,469 |
|
Right-of-use assets obtained in exchange for operating lease
obligations |
$ |
512 |
|
|
$ |
2,366 |
|
|
|
|
|
|
|
|
|
CASELLA WASTE SYSTEMS, INC. AND
SUBSIDIARIESRECONCILIATION OF CERTAIN NON-GAAP
MEASURES(Unaudited)(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 EndedMarch 31, |
|
2021 |
|
2020 |
Net income |
$ |
4,311 |
|
|
|
$ |
959 |
|
|
Net income as a percentage of revenues |
2.3 |
|
% |
|
0.5 |
|
% |
Provision for income taxes |
2,432 |
|
|
|
109 |
|
|
Other (income) expense |
(138 |
) |
|
|
43 |
|
|
Interest expense, net |
5,404 |
|
|
|
5,901 |
|
|
Expense from acquisition activities (i) |
414 |
|
|
|
1,009 |
|
|
Southbridge Landfill closure charge (ii) |
157 |
|
|
|
613 |
|
|
Depreciation and amortization |
22,682 |
|
|
|
21,406 |
|
|
Depletion of landfill operating lease obligations |
1,604 |
|
|
|
1,673 |
|
|
Interest accretion on landfill and environmental remediation
liabilities |
1,957 |
|
|
|
1,794 |
|
|
Adjusted EBITDA |
$ |
38,823 |
|
|
|
$ |
33,507 |
|
|
Adjusted EBITDA as a percentage of revenues |
20.5 |
|
% |
|
18.3 |
|
% |
Depreciation and amortization |
(22,682 |
) |
|
|
(21,406 |
) |
|
Depletion of landfill operating lease obligations |
(1,604 |
) |
|
|
(1,673 |
) |
|
Interest accretion on landfill and environmental remediation
liabilities |
(1,957 |
) |
|
|
(1,794 |
) |
|
Adjusted Operating Income |
$ |
12,580 |
|
|
|
$ |
8,634 |
|
|
Adjusted Operating Income as a percentage of
revenues |
6.6 |
|
% |
|
4.7 |
|
% |
|
Three Months EndedMarch 31, |
|
2021 |
|
2020 |
Net income |
$ |
4,311 |
|
|
$ |
959 |
|
Expense from acquisition activities (i) |
414 |
|
|
1,009 |
|
Southbridge Landfill closure charge (ii) |
157 |
|
|
613 |
|
Tax effect (iii) |
(131 |
) |
|
(442 |
) |
Adjusted Net Income |
$ |
4,751 |
|
|
$ |
2,139 |
|
|
|
|
|
Diluted weighted average common shares
outstanding |
51,387 |
|
|
48,262 |
|
|
|
|
|
Diluted earnings per common share |
$ |
0.08 |
|
|
$ |
0.02 |
|
Expense from acquisition activities (i) |
0.01 |
|
|
0.02 |
|
Southbridge Landfill closure charge (ii) |
— |
|
|
0.01 |
|
Tax effect (iii) |
— |
|
|
(0.01 |
) |
Adjusted Diluted Earnings Per Common Share |
$ |
0.09 |
|
|
$ |
0.04 |
|
(i) Expense from acquisition activities are primarily
legal, consulting or other similar costs incurred during the period
related to acquisition diligence, acquisition integration or select
development projects as part of the Company’s strategic growth
initiative.
(ii) Southbridge Landfill closure charge are expenses
related to the unplanned early closure of the Southbridge Landfill
along with associated legal activities. The Company initiated the
unplanned, premature closure of the Southbridge Landfill in the
fiscal year ended December 31, 2017 due to the significant capital
investment required to obtain expansion permits and for future
development coupled with an uncertain regulatory environment. The
unplanned closure of the Southbridge Landfill reduced the economic
useful life of the assets from prior estimates by approximately ten
years. The Company expects to incur certain costs through
completion of the closure process.
(iii) 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, Bank Consolidated EBITDA,
Consolidated Funded Debt, Net and Consolidated Net Leverage Ratio
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
tables below, in some instances on an adjusted basis to exclude
certain items, set forth such liquidity
measures:
|
Three Months EndedMarch 31, |
|
2021 |
|
2020 |
Net cash provided by operating activities |
$ |
32,147 |
|
|
$ |
14,791 |
|
Capital expenditures |
(26,832 |
) |
|
(19,851 |
) |
Proceeds from sale of property and equipment |
123 |
|
|
51 |
|
Southbridge Landfill closure and Potsdam environmental remediation
(i) |
391 |
|
|
1,458 |
|
Cash outlays from acquisition activities (ii) |
268 |
|
|
477 |
|
Post acquisition and development project capital expenditures
(iii) |
3,771 |
|
|
5,860 |
|
Waste USA Landfill phase VI capital expenditures (iv) |
1,100 |
|
|
1,235 |
|
Adjusted Free Cash Flow |
$ |
10,968 |
|
|
$ |
4,021 |
|
(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 the following costs required to achieve initial operating
synergies: trucks, equipment and machinery; and facilities, land,
IT infrastructure or related upgrades to integrate operations.
(iv) Waste USA Landfill phase VI capital
expenditures are capital expenditures related to 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.
Following is the Consolidated Net Leverage Ratio and the
reconciliations of Consolidated Funded Debt, Net from debt and Bank
Consolidated EBITDA from Net cash provided by operating
activities:
|
Twelve Months Ended March 31, 2021 |
|
Covenant Requirement at March 31, 2021 |
Consolidated Net Leverage Ratio (i) |
2.66 |
|
|
4.00 |
|
(i) Our credit agreement requires us to
maintain a maximum consolidated net leverage ratio, to be measured
at the end of each fiscal quarter ("Consolidated Net Leverage
Ratio"). The Consolidated Net Leverage Ratio is calculated as
consolidated debt, net of unencumbered cash and cash equivalents in
excess of $2,000 and up to $50,000 ("Consolidated Funded Debt,
Net", calculated at $500,220 as of March 31, 2021, or $550,220 of
consolidated debt, less $50,000 of cash and cash equivalents in
excess of $2,000 and up to $50,000 as of March 31, 2021), divided
by consolidated EBITDA as defined by our credit agreement ("Bank
Consolidated EBITDA"). Bank Consolidated EBITDA is based on
operating results for the twelve months preceding the measurement
date of March 31, 2021. A reconciliation of Bank Consolidated
EBITDA from Net cash provided by operating activities is as
follows:
|
Twelve Months Ended March 31, 2021 |
Net cash provided by operating activities |
$ |
157,278 |
|
Changes in assets and liabilities, net of effects of acquisitions
and divestitures |
13,678 |
|
Loss on sale of property and equipment |
(775 |
) |
Non-cash expense from acquisition activities |
(168 |
) |
Southbridge Landfill non-cash closure charge |
(205 |
) |
Operating lease right-of-use assets expense |
(7,470 |
) |
Stock-based compensation |
(9,598 |
) |
Interest expense, less amortization of debt issuance costs |
19,673 |
|
Benefit for income taxes, net of deferred income taxes |
474 |
|
Adjustments as allowed by the credit agreement |
15,408 |
|
Bank Consolidated EBITDA |
$ |
188,295 |
|
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, Adjusted Free Cash
Flow, Bank Consolidated EBITDA, Consolidated Funded Debt, Net and
Consolidated Net Leverage Ratio should not be considered in
isolation from or as a substitute for financial information
presented in accordance with GAAP, and may be different from
Adjusted EBITDA, Adjusted 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, Adjusted Free Cash Flow, Bank
Consolidated EBITDA, Consolidated Funded Debt, Net and Consolidated
Net Leverage Ratio presented by other companies.
|
CASELLA WASTE SYSTEMS, INC. AND
SUBSIDIARIESRECONCILIATION OF FISCAL YEAR 2021
OUTLOOK NON-GAAP
MEASURES(Unaudited)(In
thousands) |
|
Following is a reconciliation of the Company's estimated
Adjusted EBITDA (i) from estimated Net income for fiscal year
2021: |
|
|
(Estimated) Fiscal Year Ending December 31,
2021 |
Net income |
$33,000 - $37,000 |
Provision for income taxes |
16,000 |
Other income |
(500) |
Interest expense, net |
22,000 |
Expense from acquisition activities |
1,000 |
Southbridge Landfill closure charge |
1,000 |
Depreciation and amortization |
98,000 |
Depletion of landfill operating lease obligations |
7,500 |
Interest accretion on landfill and environmental remediation
liabilities |
7,000 |
Adjusted EBITDA |
$185,000 - $189,000 |
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 2021: |
|
|
(Estimated) Fiscal Year Ending December 31,
2021 |
Net cash provided by
operating activities |
$150,000 - $154,000 |
Capital expenditures |
(113,000) |
Southbridge Landfill closure and Potsdam environmental
remediation |
10,000 |
Cash outlays from acquisition activities |
1,000 |
Post acquisition and development project capital expenditures |
15,000 |
Waste USA Landfill phase VI capital expenditures |
13,000 |
Adjusted Free Cash
Flow |
$76,000 - $80,000 |
|
|
(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
SUBSIDIARIESSUPPLEMENTAL DATA
TABLES(Unaudited)(In
thousands) |
|
Amounts
of total revenues attributable to services provided for the three
months ended March 31, 2021 and 2020 are as follows: |
|
|
Three Months Ended March 31, |
|
2021 |
|
% of TotalRevenues |
|
2020 |
|
% of TotalRevenues |
Collection |
$ |
97,469 |
|
|
51.4 |
% |
|
$ |
94,561 |
|
|
51.7 |
% |
Disposal |
37,853 |
|
|
20.0 |
% |
|
38,625 |
|
|
21.1 |
% |
Power
generation |
1,303 |
|
|
0.7 |
% |
|
1,026 |
|
|
0.6 |
% |
Processing |
1,484 |
|
|
0.8 |
% |
|
1,137 |
|
|
0.6 |
% |
Solid waste operations |
138,109 |
|
|
72.9 |
% |
|
135,349 |
|
|
74.0 |
% |
Processing |
17,272 |
|
|
9.1 |
% |
|
13,818 |
|
|
7.6 |
% |
Non-processing |
34,151 |
|
|
18.0 |
% |
|
33,743 |
|
|
18.4 |
% |
Resource solutions operations |
51,423 |
|
|
27.1 |
% |
|
47,561 |
|
|
26.0 |
% |
Total revenues |
$ |
189,532 |
|
|
100.0 |
% |
|
$ |
182,910 |
|
|
100.0 |
% |
Components of revenue growth for the three months ended
March 31, 2021 compared to the three months ended March 31, 2020
are as follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount |
|
%
ofRelatedBusiness |
|
% ofOperations |
|
% of TotalCompany |
Solid waste
operations: |
|
|
|
|
|
|
|
Collection |
$ |
3,272 |
|
|
3.5 |
% |
|
2.4 |
|
% |
|
1.8 |
|
% |
Disposal |
1,319 |
|
|
3.4 |
% |
|
1.0 |
|
% |
|
0.7 |
|
% |
Solid waste price |
4,591 |
|
|
|
|
3.4 |
|
% |
|
2.5 |
|
% |
Collection |
(2,212 |
) |
|
|
|
(1.6 |
) |
% |
|
(1.2 |
) |
% |
Disposal |
(2,531 |
) |
|
|
|
(1.9 |
) |
% |
|
(1.4 |
) |
% |
Processing |
321 |
|
|
|
|
0.2 |
|
% |
|
0.2 |
|
% |
Solid waste volume |
(4,422 |
) |
|
|
|
(3.3 |
) |
% |
|
(2.4 |
) |
% |
Fuel surcharge and other fees |
(1,580 |
) |
|
|
|
(1.2 |
) |
% |
|
(0.9 |
) |
% |
Commodity price and volume |
321 |
|
|
|
|
0.2 |
|
% |
|
0.2 |
|
% |
Acquisitions, net divestitures |
3,865 |
|
|
|
|
2.9 |
|
% |
|
2.1 |
|
% |
Closed operations |
(15 |
) |
|
|
|
— |
|
% |
|
— |
|
% |
Total solid waste
operations |
2,760 |
|
|
|
|
2.0 |
|
% |
|
1.5 |
|
% |
Resource solutions
operations: |
|
|
|
|
|
|
|
Processing - price |
3,254 |
|
|
|
|
6.8 |
|
% |
|
1.8 |
|
% |
Processing - volume |
200 |
|
|
|
|
0.4 |
|
% |
|
0.1 |
|
% |
Non-processing |
408 |
|
|
|
|
0.9 |
|
% |
|
0.2 |
|
% |
Total resource
solutions operations |
3,862 |
|
|
|
|
8.1 |
|
% |
|
2.1 |
|
% |
Total
company |
$ |
6,622 |
|
|
|
|
|
|
3.6 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
Solid
waste internalization rates by region for the three months ended
March 31, 2021 and 2020 are as follows: |
|
|
Three Months EndedMarch 31, |
|
2021 |
|
2020 |
Eastern region |
49.9 |
% |
|
47.4 |
% |
Western region |
61.5 |
% |
|
58.7 |
% |
Solid waste internalization |
56.0 |
% |
|
53.3 |
% |
Components
of capital expenditures (i) for the three months ended March 31,
2021 and 2020 are as follows: |
|
|
Three Months EndedMarch 31, |
|
2021 |
|
2020 |
Growth capital expenditures: |
|
|
|
Post acquisition and development project |
$ |
3,771 |
|
|
$ |
5,860 |
|
Waste USA Landfill phase VI |
1,100 |
|
|
1,235 |
|
Other |
1,015 |
|
|
504 |
|
Growth capital expenditures |
5,886 |
|
|
7,599 |
|
Replacement capital expenditures: |
|
|
|
|
|
|
|
Landfill development |
1,289 |
|
|
4,058 |
|
Vehicles, machinery, equipment and containers |
17,568 |
|
|
6,093 |
|
Facilities |
650 |
|
|
1,043 |
|
Other |
1,439 |
|
|
1,058 |
|
Replacement capital expenditures |
20,946 |
|
|
12,252 |
|
Capital expenditures |
$ |
26,832 |
|
|
$ |
19,851 |
|
(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
following capital expenditures required to achieve initial
operating synergies: trucks, equipment and machinery; and
facilities, land, IT infrastructure or related upgrades to
integrate operations; 2) Waste USA Landfill phase VI construction
and development for long-term infrastructure, which is unique and
different from landfill construction investments in the normal
course of operations because the Company is investing in long-term
infrastructure over an estimated four year period that will not
yield a positive economic benefit until 2023 and extending over
approximately 20 years; and 3) development of new airspace, permit
expansions, and new recycling contracts, equipment added directly
as a result of organic business growth and infrastructure added to
increase throughput at transfer stations and recycling facilities.
Replacement capital expenditures are defined as landfill cell
construction costs not related to expansion airspace, costs for
normal permit renewals, and replacement costs for equipment due to
age or obsolescence.
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