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 nine month periods ended
September 30, 2021.
Highlights for the Three Months and Year-to-Date Ended
September 30, 2021:
- Revenues
were $242.0 million for the quarter, up $39.3 million, or up 19.4%,
from the same period in 2020.
- Overall
solid waste pricing for the quarter was up 4.1%, driven by
collection pricing, up 4.6%, and landfill pricing, up 3.7%, from
the same period in 2020.
- Net income
was $15.9 million for the quarter, up $0.8 million, or up 4.9%,
from the same period in 2020. Provision for income taxes was $6.6
million for the quarter, up $6.2 million from the same period in
2020.
- Adjusted
EBITDA, a non-GAAP measure, was $61.2 million for the quarter, up
$10.0 million, or up 19.4%, from the same period in
2020.
- Net cash
provided by operating activities was $134.1 million for the
year-to-date period, up $22.2 million, or up 19.8%, from the same
period in 2020.
- Adjusted
Free Cash Flow, a non-GAAP measure, was $82.3 million for the
year-to-date period, up $22.3 million, or up 37.2%, from the same
period in 2020.
- Acquired nine businesses with approximately $86 million
of annualized revenues year-to-date.
"We had another strong operational quarter, as we continued to
execute well against our long-term strategic plan,” said John W.
Casella, Chairman and CEO of Casella Waste Systems, Inc. “As a
result, we increased revenues by 19.4% and Adjusted EBITDA by 19.4%
year-over-year in the quarter and we increased year-to-date
Adjusted Free Cash Flow by 37.2% year-over-year."
“These positive results are a testament to the hard work,
adaptability and dedication of our team, our asset positioning in
the disposal capacity constrained northeast market, and strong
execution against our operating and cost efficiency programs,”
Casella said. “Our solid waste pricing continued to improve
sequentially as we advanced 4.1% solid waste pricing during the
third quarter, with strength in both collection and disposal
lines-of-business. Solid waste volumes were up 2.8% year-over-year,
with much of this growth driven by the continued rebound of
disposal volumes, especially in the New York markets.”
“Our team did a great job controlling costs while volumes
continued to ramp back online during the quarter and certain cost
categories experienced heightened inflationary pressure,” Casella
said. “Our investments in technology, including our route
optimization program, continued automation of our fleet, and
real-time data analytics helped to offset these inflationary cost
increases.”
“We continue to execute well against our long-term growth
strategy and we have acquired nine businesses with approximately
$86 million of annualized revenues year-to-date through October,”
Casella said. "We expect to recognize roughly $50 million of
revenues in 2022 from the roll-over impact of acquisitions already
completed in 2021.”
“We are focused on acquiring well run businesses in strategic
markets that will drive long-term growth, additional vertical
integration and enhance operating synergies,” Casella said. “Our
acquisition pipeline remains robust, and we believe that there is
continued opportunity to drive additional cash flow growth across
our footprint through execution of our growth strategy.”
For the quarter, revenues were $242.0 million, up $39.3 million,
or up 19.4%, from the same period in 2020, with revenue growth
mainly driven by: the roll-over impact from acquisitions; positive
collection and disposal pricing; higher solid waste volumes; higher
recycling commodity prices; higher resource solutions processing
volumes; and higher resource solutions non-processing revenues;
partially offset by lower Sustainability Recycling Adjustment (SRA)
fees as we share higher commodity prices with our customers.
Net income was $15.9 million for the quarter, or $0.31 per
diluted common share, up $0.8 million, or up 4.9%, as compared to
net income of $15.1 million, or $0.31 per diluted common share, for
the same period in 2020. The quarter included $1.9 million of
expense from acquisition activities and $0.3 million of legal and
other expenses associated with the closure of our landfill in
Southbridge, Massachusetts ("Southbridge Landfill"). The same
quarter last year included $0.2 million of expense from acquisition
activities and $2.6 million of legal and other expenses associated
with the Southbridge Landfill closure.
Given the reversal of the tax valuation allowance in 2020, we
expect an income statement tax provision at a rate of approximately
31% in fiscal year 2021. The income tax provision was $6.6 million
in the quarter, up $6.2 million from the same period in 2020.
Adjusted Net Income, a non-GAAP measure, was $17.5 million for
the quarter, or $0.34 Adjusted Diluted Earnings Per Common Share, a
non-GAAP measure, up $0.3 million, or up 1.9%, as compared to
Adjusted Net Income of $17.2 million, or $0.35 Adjusted Diluted
Earnings Per Common Share, for the same period in 2020.
Operating income was $27.4 million for the quarter, up $6.8
million, or up 32.7%, from the same period in 2020. Adjusted
Operating Income, a non-GAAP measure, was $29.6 million for the
quarter, up $6.1 million, or up 26.2% from the same period in 2020.
Adjusted EBITDA was $61.2 million for the quarter, up $10.0
million, or up 19.4%, from the same period in 2020.
For the year-to-date period, revenues were $647.4 million, up
$73.0 million, or up 12.7%, from the same period in 2020. Net
income was $32.0 million, or $0.62 per diluted common share, for
the year-to-date period, as compared to net income of $28.2
million, or $0.58 per diluted common share, for the same period in
2020. Adjusted Net Income was $35.3 million, or $0.68 Adjusted
Diluted Earnings Per Common Share, for the year-to-date period, as
compared to Adjusted Net Income of $32.1 million, or $0.66 Adjusted
Diluted Earnings Per Common Share, for the same period in 2020.
Operating income was $61.3 million for the year-to-date period,
up $16.3 million from the same period in 2020. Adjusted Operating
Income was $65.9 million for the year-to-date period, up $15.5
million from the same period in 2020. Adjusted EBITDA was $152.2
million for the year-to-date period, up $23.4 million from the same
period in 2020.
Net cash provided by operating activities was $134.1 million for
the year-to-date period, as compared to $111.9 million for the same
period in 2020. Adjusted Free Cash Flow was $82.3 million for the
year-to-date period, as compared to $60.0 million for the same
period in 2020. Adjusted Free Cash Flow for the year-to-date period
included the following adjustments: $4.5 million of landfill
closure, site improvement and remediation expenditures associated
with the Southbridge Landfill closure; $3.4 million of cash outlays
related to acquisition activities; $10.2 million of capital
expenditures associated with the expansion at our landfill in
Coventry, Vermont ("Waste USA Landfill"); and $11.1 million of
non-recurring capital expenditures primarily related to
acquisitions.
Fiscal Year 2021 Outlook
“Given our strong execution during the third quarter, the
expected contribution of acquisitions already completed this year
and our 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 further rebound in solid waste volumes.”
The Company raised guidance for the third time in fiscal year
2021 by estimating results in the following ranges (as compared to
the fiscal year 2021 guidance ranges as updated on July 29,
2021):
- Revenues between
$870 million and $880 million (as compared to between $850 million
and $860 million);
- Net income between
$37 million and $41 million (as compared to between $35 million and
$39 million);
- Adjusted EBITDA
between $200 million and $204 million (as compared to between $195
million and $199 million);
- Net cash provided by
operating activities between $162 million and $166 million (as
compared to between $158 million and $162 million); and
- Adjusted Free Cash
Flow between $85 million and $89 million (as compared to between
$79 million and $83 million).
The updated guidance ranges include acquisitions already
completed in fiscal year 2021, but do not include the impact from
any acquisitions not yet completed.
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, October 29, 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 546 1439
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 546 1439).
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, our financial
performance; financial condition; operations and services;
prospects; growth; strategies; anticipated impacts from future or
completed acquisitions; 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: the Company may be unable to adequately
increase prices to offset increased costs and inflationary
pressures; 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; the capping and closure of the
Southbridge Landfill and the lawsuit relating to our landfill in
Bethlehem New Hampshire 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 Company may be unable to reduce costs or
increase pricing or volumes sufficiently to achieve estimated
Adjusted EBITDA and other targets; landfill operations and permit
status may be affected by factors outside the Company's control;
the Company may be required to incur capital expenditures in excess
of its estimates; the Company's insurance coverage and
self-insurance reserves may be inadequate to cover all of its
significant risk exposures; fluctuations in energy pricing or the
commodity pricing of its recyclables may make it more difficult for
the Company to predict its results of operations or meet its
estimates; the Company may be unable to achieve its acquisition or
development targets on favorable pricing or at all; the Company may
not be able to successfully integrate acquired businesses; and the
Company may incur environmental charges or asset impairments in the
future.
There are a number of other important risks and uncertainties
that could cause the Company's actual results to differ materially
from those indicated by such forward-looking statements. These
additional risks and uncertainties include, without limitation,
those detailed in Item 1A, “Risk Factors” in the Company's most
recently filed Form 10-K and 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 EndedSeptember
30, |
|
Nine Months EndedSeptember
30, |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Revenues |
$ |
241,969 |
|
|
$ |
202,667 |
|
|
$ |
647,375 |
|
|
$ |
574,344 |
|
Operating expenses: |
|
|
|
|
|
|
|
Cost of operations |
153,892 |
|
|
130,406 |
|
|
419,583 |
|
|
382,386 |
|
General and administration |
30,993 |
|
|
25,014 |
|
|
87,336 |
|
|
74,240 |
|
Depreciation and amortization |
27,491 |
|
|
23,799 |
|
|
74,510 |
|
|
67,281 |
|
Expense from acquisition activities |
1,904 |
|
|
173 |
|
|
3,950 |
|
|
1,533 |
|
Southbridge Landfill closure charge |
302 |
|
|
2,642 |
|
|
653 |
|
|
3,815 |
|
|
214,582 |
|
|
182,034 |
|
|
586,032 |
|
|
529,255 |
|
Operating income |
27,387 |
|
|
20,633 |
|
|
61,343 |
|
|
45,089 |
|
Other expense (income): |
|
|
|
|
|
|
|
Interest expense, net |
5,103 |
|
|
5,299 |
|
|
15,737 |
|
|
16,666 |
|
Other income |
(178 |
) |
|
(157 |
) |
|
(825 |
) |
|
(606 |
) |
Other expense, net |
4,925 |
|
|
5,142 |
|
|
14,912 |
|
|
16,060 |
|
Income before income
taxes |
22,462 |
|
|
15,491 |
|
|
46,431 |
|
|
29,029 |
|
Provision for income
taxes |
6,601 |
|
|
374 |
|
|
14,476 |
|
|
840 |
|
Net income |
$ |
15,861 |
|
|
$ |
15,117 |
|
|
$ |
31,955 |
|
|
$ |
28,189 |
|
Basic weighted average common
shares outstanding |
51,389 |
|
|
48,370 |
|
|
51,312 |
|
|
48,241 |
|
Basic earnings per common
share |
$ |
0.31 |
|
|
$ |
0.31 |
|
|
$ |
0.62 |
|
|
$ |
0.58 |
|
Diluted weighted average
common shares outstanding |
51,586 |
|
|
48,619 |
|
|
51,506 |
|
|
48,481 |
|
Diluted earnings per common
share |
$ |
0.31 |
|
|
$ |
0.31 |
|
|
$ |
0.62 |
|
|
$ |
0.58 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASELLA WASTE SYSTEMS, INC. AND
SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE
SHEETS(In thousands) |
|
|
|
|
|
September 30,2021 |
|
December 31,2020 |
|
(Unaudited) |
|
|
ASSETS |
|
|
|
CURRENT ASSETS: |
|
|
|
Cash and cash equivalents |
$ |
46,481 |
|
|
$ |
154,342 |
|
Accounts receivable, net of allowance for credit losses |
90,500 |
|
|
74,198 |
|
Other current assets |
30,178 |
|
|
18,714 |
|
Total current assets |
167,159 |
|
|
247,254 |
|
Property, plant and equipment,
net of accumulated depreciation and amortization |
617,348 |
|
|
510,512 |
|
Operating lease right-of-use
assets |
96,712 |
|
|
95,310 |
|
Goodwill |
227,929 |
|
|
194,901 |
|
Intangible assets, net of
accumulated amortization |
92,908 |
|
|
58,324 |
|
Restricted assets |
1,948 |
|
|
1,848 |
|
Cost method investments |
11,264 |
|
|
11,264 |
|
Deferred income taxes |
46,777 |
|
|
61,163 |
|
Other non-current assets |
18,352 |
|
|
13,322 |
|
Total assets |
$ |
1,280,397 |
|
|
$ |
1,193,898 |
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
CURRENT LIABILITIES: |
|
|
|
Current maturities of debt |
$ |
16,751 |
|
|
$ |
9,240 |
|
Current operating lease liabilities |
7,128 |
|
|
8,547 |
|
Accounts payable |
69,516 |
|
|
49,198 |
|
Other accrued liabilities |
84,974 |
|
|
64,223 |
|
Total current liabilities |
178,369 |
|
|
131,208 |
|
Debt, less current
portion |
534,752 |
|
|
530,411 |
|
Operating lease liabilities,
less current portion |
59,001 |
|
|
60,979 |
|
Other long-term
liabilities |
100,324 |
|
|
109,158 |
|
Total stockholders'
equity |
407,951 |
|
|
362,142 |
|
Total liabilities and stockholders' equity |
$ |
1,280,397 |
|
|
$ |
1,193,898 |
|
|
|
|
|
|
|
|
|
|
CASELLA WASTE SYSTEMS, INC. AND
SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS(Unaudited)(In
thousands) |
|
|
|
Nine Months EndedSeptember
30, |
|
2021 |
|
2020 |
Cash Flows from Operating
Activities: |
|
|
|
Net income |
$ |
31,955 |
|
|
$ |
28,189 |
|
Adjustments to reconcile net
income to net cash provided by operating activities: |
|
|
|
Depreciation and amortization |
74,510 |
|
|
67,281 |
|
Interest accretion on landfill and environmental remediation
liabilities |
5,915 |
|
|
5,324 |
|
Amortization of debt issuance costs |
1,716 |
|
|
1,597 |
|
Stock-based compensation |
8,712 |
|
|
5,345 |
|
Operating lease right-of-use assets expense |
9,981 |
|
|
12,347 |
|
(Gain) loss on sale of property and equipment |
(1 |
) |
|
254 |
|
Southbridge Landfill non-cash closure charge |
112 |
|
|
2,077 |
|
Non-cash expense from acquisition activities |
532 |
|
|
549 |
|
Deferred income taxes |
12,974 |
|
|
1,514 |
|
Changes in assets and liabilities, net of effects of acquisitions
and divestitures |
(12,317 |
) |
|
(12,562 |
) |
Net cash provided by operating activities |
134,089 |
|
|
111,915 |
|
Cash Flows from Investing
Activities: |
|
|
|
Acquisitions, net of cash acquired |
(153,112 |
) |
|
(25,379 |
) |
Additions to property, plant and equipment |
(81,577 |
) |
|
(77,271 |
) |
Proceeds from sale of property and equipment |
593 |
|
|
430 |
|
Net cash used in investing activities |
(234,096 |
) |
|
(102,220 |
) |
Cash Flows from Financing
Activities: |
|
|
|
Proceeds from debt borrowings |
500 |
|
|
154,400 |
|
Principal payments on debt |
(8,517 |
) |
|
(145,008 |
) |
Payments of debt issuance costs |
— |
|
|
(1,531 |
) |
Proceeds from the exercise of share based awards |
163 |
|
|
100 |
|
Net cash (used in) provided by financing activities |
(7,854 |
) |
|
7,961 |
|
Net (decrease) increase in
cash and cash equivalents |
(107,861 |
) |
|
17,656 |
|
Cash and cash equivalents,
beginning of period |
154,342 |
|
|
3,471 |
|
Cash and cash equivalents, end
of period |
$ |
46,481 |
|
|
$ |
21,127 |
|
Supplemental Disclosure of
Cash Flow Information: |
|
|
|
Cash interest payments |
$ |
14,378 |
|
|
$ |
15,239 |
|
Cash income tax payments |
$ |
597 |
|
|
$ |
(1,650 |
) |
Non-current assets obtained through long-term financing
obligations |
$ |
18,153 |
|
|
$ |
16,937 |
|
Right-of-use assets obtained in exchange for operating lease
obligations |
$ |
3,566 |
|
|
$ |
3,289 |
|
|
|
|
|
|
|
|
|
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 EndedSeptember
30, |
|
Nine Months EndedSeptember
30, |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Net income |
$ |
15,861 |
|
|
$ |
15,117 |
|
|
$ |
31,955 |
|
|
$ |
28,189 |
|
Net income as a
percentage of revenues |
6.6 |
% |
|
7.5 |
% |
|
4.9 |
% |
|
4.9 |
% |
Provision for income taxes |
6,601 |
|
|
374 |
|
|
14,476 |
|
|
840 |
|
Other income |
(178 |
) |
|
(157 |
) |
|
(825 |
) |
|
(606 |
) |
Interest expense, net |
5,103 |
|
|
5,299 |
|
|
15,737 |
|
|
16,666 |
|
Expense from acquisition activities (i) |
1,904 |
|
|
173 |
|
|
3,950 |
|
|
1,533 |
|
Southbridge Landfill closure charge (ii) |
302 |
|
|
2,642 |
|
|
653 |
|
|
3,815 |
|
Depreciation and amortization |
27,491 |
|
|
23,799 |
|
|
74,510 |
|
|
67,281 |
|
Depletion of landfill operating lease obligations |
2,199 |
|
|
2,243 |
|
|
5,781 |
|
|
5,711 |
|
Interest accretion on landfill and environmental remediation
liabilities |
1,953 |
|
|
1,782 |
|
|
5,915 |
|
|
5,324 |
|
Adjusted
EBITDA |
$ |
61,236 |
|
|
$ |
51,272 |
|
|
$ |
152,152 |
|
|
$ |
128,753 |
|
Adjusted EBITDA as a
percentage of revenues |
25.3 |
% |
|
25.3 |
% |
|
23.5 |
% |
|
22.4 |
% |
Depreciation and amortization |
(27,491 |
) |
|
(23,799 |
) |
|
(74,510 |
) |
|
(67,281 |
) |
Depletion of landfill operating lease obligations |
(2,199 |
) |
|
(2,243 |
) |
|
(5,781 |
) |
|
(5,711 |
) |
Interest accretion on landfill and environmental remediation
liabilities |
(1,953 |
) |
|
(1,782 |
) |
|
(5,915 |
) |
|
(5,324 |
) |
Adjusted Operating
Income |
$ |
29,593 |
|
|
$ |
23,448 |
|
|
$ |
65,946 |
|
|
$ |
50,437 |
|
Adjusted Operating
Income as a percentage of revenues |
12.2 |
% |
|
11.6 |
% |
|
10.2 |
% |
|
8.8 |
% |
|
Three Months EndedSeptember
30, |
|
Nine Months EndedSeptember
30, |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Net income |
$ |
15,861 |
|
|
$ |
15,117 |
|
|
$ |
31,955 |
|
|
$ |
28,189 |
|
Expense from acquisition activities (i) |
1,904 |
|
|
173 |
|
|
3,950 |
|
|
1,533 |
|
Southbridge Landfill closure charge (ii) |
302 |
|
|
2,642 |
|
|
653 |
|
|
3,815 |
|
Tax effect (iii) |
(568 |
) |
|
(766 |
) |
|
(1,296 |
) |
|
(1,456 |
) |
Adjusted Net
Income |
$ |
17,499 |
|
|
$ |
17,166 |
|
|
$ |
35,262 |
|
|
$ |
32,081 |
|
|
|
|
|
|
|
|
|
Diluted weighted
average common shares outstanding |
51,586 |
|
|
48,619 |
|
|
51,506 |
|
|
48,481 |
|
|
|
|
|
|
|
|
|
Diluted earnings per
common share |
$ |
0.31 |
|
|
$ |
0.31 |
|
|
$ |
0.62 |
|
|
$ |
0.58 |
|
Expense from acquisition activities (i) |
0.03 |
|
|
— |
|
|
0.08 |
|
|
0.03 |
|
Southbridge Landfill closure charge (ii) |
0.01 |
|
|
0.06 |
|
|
0.01 |
|
|
0.08 |
|
Tax effect (iii) |
(0.01 |
) |
|
(0.02 |
) |
|
(0.03 |
) |
|
(0.03 |
) |
Adjusted Diluted
Earnings Per Common Share |
$ |
0.34 |
|
|
$ |
0.35 |
|
|
$ |
0.68 |
|
|
$ |
0.66 |
|
(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 EndedSeptember
30, |
|
Nine Months EndedSeptember
30, |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Net cash provided by operating activities |
$ |
55,076 |
|
|
$ |
49,422 |
|
|
$ |
134,089 |
|
|
$ |
111,915 |
|
Capital expenditures |
(25,508 |
) |
|
(25,701 |
) |
|
(81,577 |
) |
|
(77,271 |
) |
Proceeds from sale of property and equipment |
190 |
|
|
230 |
|
|
593 |
|
|
430 |
|
Southbridge Landfill closure and Potsdam environmental remediation
(i) |
1,929 |
|
|
1,979 |
|
|
4,463 |
|
|
4,737 |
|
Cash outlays from acquisition activities (ii) |
2,394 |
|
|
199 |
|
|
3,418 |
|
|
984 |
|
Post acquisition and development project capital expenditures
(iii) |
4,616 |
|
|
3,235 |
|
|
11,083 |
|
|
12,510 |
|
Waste USA Landfill phase VI capital expenditures (iv) |
3,802 |
|
|
3,154 |
|
|
10,241 |
|
|
6,700 |
|
Adjusted Free Cash
Flow |
$ |
42,499 |
|
|
$ |
32,518 |
|
|
$ |
82,310 |
|
|
$ |
60,005 |
|
(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 EndedSeptember 30, 2021 |
|
Covenant Requirement atSeptember 30, 2021 |
Consolidated Net Leverage Ratio (i) |
2.34 |
|
|
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
$514,075 as of September 30, 2021, or $558,556 of consolidated
debt, less $44,481 of cash and cash equivalents in excess of $2,000
and up to $50,000 as of September 30, 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 September 30, 2021. A reconciliation of Bank Consolidated
EBITDA from Net cash provided by operating activities is as
follows:
|
Twelve Months EndedSeptember 30, 2021 |
Net cash provided by operating activities |
$ |
162,096 |
|
Changes in assets and liabilities, net of effects of acquisitions
and divestitures |
24,921 |
|
Loss on sale of property and equipment |
(681 |
) |
Non-cash expense from acquisition activities |
(537 |
) |
Southbridge Landfill non-cash closure charge |
1,702 |
|
Operating lease right-of-use assets expense |
(6,041 |
) |
Stock-based compensation |
(11,586 |
) |
Interest expense, less amortization of debt issuance costs |
19,142 |
|
Provision for income taxes, net of deferred income taxes |
1,659 |
|
Adjustments as allowed by the credit agreement |
28,847 |
|
Bank Consolidated
EBITDA |
$ |
219,522 |
|
|
|
|
|
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 YearEnding December 31,
2021 |
Net
income |
$37,000 - $41,000 |
Provision for income taxes |
18,000 |
Other income |
(1,000) |
Interest expense, net |
22,000 |
Expense from acquisition activities |
4,000 |
Southbridge Landfill closure charge |
1,000 |
Depreciation and amortization |
104,000 |
Depletion of landfill operating lease obligations |
7,500 |
Interest accretion on landfill and environmental remediation
liabilities |
7,500 |
Adjusted
EBITDA |
$200,000 - $204,000 |
|
|
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 YearEnding December 31,
2021 |
Net cash provided by
operating activities |
$162,000 - $166,000 |
Capital expenditures |
(117,000) |
Proceeds from sale of property and equipment |
500 |
Southbridge Landfill closure and Potsdam environmental
remediation |
6,500 |
Cash outlays from acquisition activities |
4,000 |
Post acquisition and development project capital expenditures |
16,000 |
Waste USA Landfill phase VI capital expenditures |
13,000 |
Adjusted Free Cash
Flow |
$85,000 - $89,000 |
|
|
(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 and nine months ended September 30, 2021 and
2020 are as follows:
|
Three Months Ended September 30, |
|
2021 |
|
% of TotalRevenues |
|
2020 |
|
% of TotalRevenues |
Collection |
$ |
118,872 |
|
|
49.1 |
% |
|
$ |
102,270 |
|
|
50.5 |
% |
Disposal |
55,593 |
|
|
23.0 |
% |
|
47,600 |
|
|
23.5 |
% |
Power generation |
1,253 |
|
|
0.5 |
% |
|
987 |
|
|
0.5 |
% |
Processing |
2,959 |
|
|
1.2 |
% |
|
2,194 |
|
|
1.0 |
% |
Solid waste operations |
178,677 |
|
|
73.8 |
% |
|
153,051 |
|
|
75.5 |
% |
Processing |
27,418 |
|
|
11.3 |
% |
|
15,701 |
|
|
7.7 |
% |
Non-processing |
35,874 |
|
|
14.8 |
% |
|
33,915 |
|
|
16.7 |
% |
Resource solutions operations |
63,292 |
|
|
26.2 |
% |
|
49,616 |
|
|
24.5 |
% |
Total
revenues |
$ |
241,969 |
|
|
100.0 |
% |
|
$ |
202,667 |
|
|
100.0 |
% |
|
Nine Months Ended September 30, |
|
2021 |
|
% of TotalRevenues |
|
2020 |
|
% of TotalRevenues |
Collection |
$ |
323,667 |
|
|
50.0 |
% |
|
$ |
290,837 |
|
|
50.6 |
% |
Disposal |
142,618 |
|
|
22.0 |
% |
|
129,971 |
|
|
22.6 |
% |
Power generation |
3,657 |
|
|
0.6 |
% |
|
2,931 |
|
|
0.5 |
% |
Processing |
6,754 |
|
|
1.0 |
% |
|
5,282 |
|
|
1.0 |
% |
Solid waste operations |
476,696 |
|
|
73.6 |
% |
|
429,021 |
|
|
74.7 |
% |
Processing |
65,721 |
|
|
10.2 |
% |
|
45,724 |
|
|
8.0 |
% |
Non-processing |
104,958 |
|
|
16.2 |
% |
|
99,599 |
|
|
17.3 |
% |
Resource solutions operations |
170,679 |
|
|
26.4 |
% |
|
145,323 |
|
|
25.3 |
% |
Total
revenues |
$ |
647,375 |
|
|
100.0 |
% |
|
$ |
574,344 |
|
|
100.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Components of revenue growth for the three months ended
September 30, 2021 compared to the three months ended September 30,
2020 are as follows:
|
Amount |
|
%
ofRelatedBusiness |
|
% ofOperations |
|
% of TotalCompany |
Solid waste
operations: |
|
|
|
|
|
|
|
Collection |
$ |
4,672 |
|
|
4.6 |
% |
|
3.1 |
% |
|
2.3 |
% |
Disposal |
1,559 |
|
|
3.3 |
% |
|
1.0 |
% |
|
0.8 |
% |
Solid waste price |
6,231 |
|
|
|
|
4.1 |
% |
|
3.1 |
% |
Collection |
455 |
|
|
|
|
0.3 |
% |
|
0.2 |
% |
Disposal |
3,562 |
|
|
|
|
2.3 |
% |
|
1.8 |
% |
Processing |
337 |
|
|
|
|
0.2 |
% |
|
0.1 |
% |
Solid waste volume |
4,354 |
|
|
|
|
2.8 |
% |
|
2.1 |
% |
Fuel surcharge and other fees |
(223 |
) |
|
|
|
(0.2 |
)% |
|
(0.2 |
)% |
Commodity price and volume |
531 |
|
|
|
|
0.3 |
% |
|
0.3 |
% |
Acquisitions, net divestitures |
14,773 |
|
|
|
|
9.7 |
% |
|
7.3 |
% |
Closed operations |
(40 |
) |
|
|
|
— |
% |
|
— |
% |
Total solid waste
operations |
25,626 |
|
|
|
|
16.7 |
% |
|
12.6 |
% |
Resource solutions
operations: |
|
|
|
|
|
|
|
Processing - price |
6,099 |
|
|
|
|
12.3 |
% |
|
3.0 |
% |
Processing - volume |
1,462 |
|
|
|
|
2.9 |
% |
|
0.7 |
% |
Processing - acquisition |
4,156 |
|
|
|
|
8.6 |
% |
|
2.1 |
% |
Non-processing |
1,959 |
|
|
|
|
3.9 |
% |
|
1.0 |
% |
Total resource
solutions operations |
13,676 |
|
|
|
|
27.7 |
% |
|
6.8 |
% |
Total
company |
$ |
39,302 |
|
|
|
|
|
|
19.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
Solid waste internalization rates by region for the
three and nine months ended September 30, 2021 and 2020 are as
follows:
|
Three Months EndedSeptember
30, |
|
Nine Months EndedSeptember
30, |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Eastern region |
47.6 |
% |
|
47.3 |
% |
|
50.1 |
% |
|
47.8 |
% |
Western region |
63.8 |
% |
|
61.4 |
% |
|
61.8 |
% |
|
61.3 |
% |
Solid waste
internalization |
56.4 |
% |
|
54.9 |
% |
|
56.3 |
% |
|
54.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Components of capital expenditures (i) for the three and
nine months ended September 30, 2021 and 2020 are as
follows:
|
Three Months EndedSeptember
30, |
|
Nine Months EndedSeptember
30, |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Growth capital
expenditures: |
|
|
|
|
|
|
|
Post acquisition and development project |
$ |
4,616 |
|
|
$ |
3,235 |
|
|
$ |
11,083 |
|
|
$ |
12,510 |
|
Waste USA Landfill phase VI |
3,802 |
|
|
3,154 |
|
|
10,241 |
|
|
6,700 |
|
Other |
819 |
|
|
930 |
|
|
5,024 |
|
|
1,910 |
|
Growth capital
expenditures |
9,237 |
|
|
7,319 |
|
|
26,348 |
|
|
21,120 |
|
Replacement capital
expenditures: |
|
|
|
|
|
|
|
Landfill development |
7,525 |
|
|
10,100 |
|
|
16,290 |
|
|
29,920 |
|
Vehicles, machinery, equipment and containers |
5,369 |
|
|
6,455 |
|
|
31,112 |
|
|
20,824 |
|
Facilities |
1,684 |
|
|
995 |
|
|
3,353 |
|
|
2,559 |
|
Other |
1,693 |
|
|
832 |
|
|
4,474 |
|
|
2,848 |
|
Replacement capital
expenditures |
16,271 |
|
|
18,382 |
|
|
55,229 |
|
|
56,151 |
|
Capital
expenditures |
$ |
25,508 |
|
|
$ |
25,701 |
|
|
$ |
81,577 |
|
|
$ |
77,271 |
|
(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.
Casella Waste Systems (NASDAQ:CWST)
Historical Stock Chart
From Jun 2024 to Jul 2024
Casella Waste Systems (NASDAQ:CWST)
Historical Stock Chart
From Jul 2023 to Jul 2024