Casella Waste Systems, Inc., Aiming to Drive Greater Utilization of its Existing Recycling Assets, Announces Acquisition of Blue
September 19 2005 - 9:49AM
PR Newswire (US)
RUTLAND, Vt., Sept. 19 /PRNewswire-FirstCall/ -- Casella Waste
Systems, Inc. (NASDAQ:CWST), a regional, non-hazardous solid waste
services company, today announced the acquisition of
Philadelphia-based Blue Mountain Recycling, LLC. Blue Mountain
Recycling, which has single stream processing facilities in
Philadelphia and Montgomeryville, Pennsylvania, has a long-term,
exclusive processing partnership and strategic alliance with
RecycleBank LLC, an innovative, incentive-based recycling service
that gives homeowners credits for recycling which can be used with
participating merchants. As part of the agreement, RecycleBank LLC
has agreed to extend their processing agreement and strategic
relationship with Blue Mountain Recycling to Casella Waste Systems.
Casella Waste Systems believes the transaction gives it a strategic
opportunity to increase the utilization of its network of recycling
assets, as well as provide a significant marketing advantage in
providing services to municipalities and developing solid waste
management infrastructure through public/private partnerships.
"This transaction is a great example of the execution of our
strategic goals of sustainability -- making recycling more
sustainable economically for both customers and providers of
services, and for driving significantly greater utilization of the
company's recycling assets," John W. Casella, chairman and chief
executive officer of Casella Waste Systems, said. Casella Waste
Systems purchased the equity of Blue Mountain Recycling, LLC. The
transaction included $15 million in initial consideration; total
consideration will be based on the attainment of targeted levels of
EBITDA and free cash flows and the accomplishment of certain
strategic initiatives over the next few years. For the remainder of
Casella Waste Systems' fiscal year, Blue Mountain Recycling is
projecting EBITDA* of $1.7 million. RecycleBank is a recycling
services company that uses incentive-based recycling to increase
diversion and participation rates in residential recycling. Through
an innovative use of technologies, RecycleBank measures homeowner
recycling rates with radio frequency identification, or RFID, which
it then credits to the homeowner who can use the credits with local
and national vendors. Current marketing partners providing rewards
and incentives to customers include The Home Depot, Starbucks,
Coca-Cola, FedEx Kinko's, Rite Aid, and Whole Foods Market. In
markets where RecycleBank is providing services, household
recycling participation rates have increased to as much as 85
percent. "We believe Blue Mountain's and RecycleBank's platform,
combined with our existing recycling infrastructure, represents
several unique short- and long- term opportunities," Casella said.
"First, there is an opportunity to increase the volume of
processables in our markets, resulting in a significant return on
net assets and capacity utilization increases at our existing
facilities. It also allows us to potentially extend the utilization
of our valuable long-term disposal capacity." "Second, our ability
to deliver recycling services that are economically and
environmentally sustainable gives us a significant marketing
advantage with local and state governments throughout our region,
both as a provider of the entire range of solid waste services and
as a partner in the development of municipal solid waste
infrastructure, including long-term disposal capacity," Casella
said. "And lastly, this provides us with the opportunity to couple
this capability with our strategic growth plan, and wield a
compelling advantage when pursuing new market entry opportunities."
The acquisition and agreement provides Casella Waste Systems with
exclusive processing rights to RecycleBank material anywhere in
North America, as well as co-marketing rights. Blue Mountain
Recycling recorded revenues of $5.1 million for the six months
ended June 30, 2005 and EBITDA* of $1.3 million, representing an
EBITDA margin of nearly 25 percent. Blue Mountain Recycling's
current management team will be joining Casella Waste Systems and
will remain in place, with responsibility to operate and grow that
segment of the business, the company said. The transaction was
effective September 19, 2005. Casella Waste Systems, headquartered
in Rutland, Vermont, provides collection, transfer, disposal and
recycling services primarily in the northeastern United States.
*Non-GAAP Financial Measures In addition to disclosing financial
results prepared in accordance with Generally Accepted Accounting
Principles (GAAP), we also disclose free cash flow and earnings
before interest, taxes, depreciation and amortization (EBITDA),
which are non-GAAP measures. These measures are provided because we
understand that certain investors use this information when
analyzing the financial position of the solid waste industry,
including us. Historically, these measures have been key in
comparing operating efficiency of publicly traded companies in the
solid waste industry, and assist investors in measuring our ability
to meet capital expenditure and working capital requirements. For
these reasons we utilize these non-GAAP metrics to measure our
performance at all levels. These measures do not represent, and
should not be considered as alternatives to cash provided by
operating activities as determined in accordance with GAAP.
Moreover, these measures do not necessarily indicate whether cash
flow will be sufficient for such items as working capital or
capital expenditures, or to react to changes in our industry or to
the economy generally. Because these measures are not calculated by
all companies in the same fashion, they may not be comparable to
similarly titled measures reported by other companies. For further
information about this transaction, or about the company, contact
Richard Norris, chief financial officer; or Joseph Fusco, vice
president; at (802) 775-0325, or visit the company's website at
http://www.casella.com/. Safe Harbor Statement Certain matters
discussed in this press release 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 the Company
"believes," "anticipates," "expects" or words of similar import.
Similarly, statements that describe the Company's future plans,
objectives or goals are forward- looking statements. 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: recycling
diversion rates may not increase as predicted as a result of the
Blue Mountain acquisition; we may be unable to make acquisitions
and otherwise develop additional disposal capacity; continuing
weakness in general economic conditions may affect our revenues;
increasing fuel costs may affect our cost of operations; we may be
required to incur capital expenditures in excess of our estimates;
and fluctuations in the commodity pricing of our recyclables may
make it more difficult for us to predict our results of operations.
Other factors which could materially affect such forward-looking
statements can be found in our periodic reports filed with the
Securities and Exchange Commission, including certain factors which
could affect future operating results detailed in the Management's
Discussion and Analysis section in our Form 10-K for the fiscal
year ended April 30, 2005. DATASOURCE: Casella Waste Systems, Inc.
CONTACT: Richard Norris, chief financial officer, or Joseph Fusco,
vice president, both of Casella Waste, +1-802-775-0325 Web site:
http://www.casella.com/
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