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 six-month periods ended
June 30, 2024.
Key Highlights:
- Revenues
were $377.2 million for the
quarter, up $87.5 million, or
up 30.2%, from the same period
in 2023.
- Solid waste
pricing for the quarter was up 5.7% from the same period in 2023,
driven by 6.2% collection price growth and 4.8% disposal price
growth.
- Net income was $7.0 million for the quarter, up $1.5
million, or up 27.6%, from the same period in 2023.
- Adjusted
EBITDA, a non-GAAP measure, was $91.6
million for the quarter, up $19.4
million, or up
26.9%, from the same period in
2023.
- Acquired
five businesses through August 1, 2024 with over
$100 million in aggregate annualized
revenues, including LMR Disposal, Inc. and Whitetail Disposal, Inc.
in the Mid-Atlantic region.
"We continued to execute on our core operating strategies in the
second quarter and have driven solid year-to-date performance,"
said John W. Casella, Chairman and CEO of Casella Waste Systems,
Inc. "The growth in our business, both organically and through
acquisitions, positions us well for the second half of the
year."
"Since the end of the second quarter, we acquired two high
quality companies in the Mid-Atlantic region that expand and
densify our operations in this market and offer exciting growth
opportunities," Casella said. "We would like to welcome our new
team members and customers, and we look forward to continuing to
deliver a high level of service. As we build scale in this market,
we see further value creation opportunity through cost efficiencies
and our differentiated service offerings. Our M&A pipeline
remains robust across our entire footprint with potential to close
on more acquisitions this year."
"Our overall operating performance has been consistent with our
plan through the first half of the year, though some discrete
factors negatively impacted Adjusted EBITDA on a year-over-year
basis in the second quarter," Casella said. "Volumes at the
landfills were down year-over-year, which we anticipated, but we
also incurred approximately $3 million of unanticipated expenses,
representing 80 basis points of margin headwind in the quarter,
notably higher leachate costs with the continued wet weather and
employee separation costs. These issues offset the underlying
success of our pricing programs, which remain ahead of inflation,
and our operating programs, which are driving costs out of our
collection line of business."
For the quarter, revenues were $377.2 million, up $87.5 million,
or up 30.2%, from the same period in 2023, with revenue growth
mainly driven by: the rollover contribution from acquisitions
closed in 2023; strong collection and disposal pricing; and higher
recycling commodity prices.
Operating income was $23.0 million for the quarter, up $0.4
million, or up 1.8%, from the same period in 2023.
Net income was $7.0 million for the quarter, or $0.12 per
diluted common share, as compared to net income of $5.5 million, or
$0.10 per diluted common share, for the same period in 2023.
Adjusted Net Income, a non-GAAP measure, was $12.5 million for the
quarter, or $0.22 Adjusted Diluted Earnings Per Common Share, a
non-GAAP measure, as compared to Adjusted Net Income of $18.8
million, or $0.36 Adjusted Diluted Earnings Per Common Share, for
the same period in 2023. Adjusted EBITDA was $91.6 million for the
quarter, up $19.4 million, or up 26.9%, from the same period in
2023, driven by acquisition rollover and 6.0% organic growth.
Please refer to "Non-GAAP Performance Measures" included in
"Unaudited Reconciliation of Certain Non-GAAP Measures" below for
additional information and reconciliations of Adjusted Net Income,
Adjusted Diluted Earnings Per Common Share, Adjusted EBITDA and
other non-GAAP performance measures to their most directly
comparable GAAP measures.
Net cash provided by operating activities was $79.8 million for
the year-to-date period, as compared to $83.2 million for the same
period in 2023, with the year-over-year variance mainly
attributable to higher cash interest payments and negative changes
in working capital. Adjusted Free Cash Flow was $39.5 million for
the year-to-date period, as compared to $47.9 million for the same
period in 2023, with the year-over-year variance further driven by
higher capital expenditures.
Please refer to "Non-GAAP Liquidity Measures" included in
"Unaudited Reconciliation of Certain Non-GAAP Measures" below for
additional information and reconciliation of Adjusted Free Cash
Flow to its most directly comparable GAAP measure.
Fiscal Year 2024 Outlook
"Incorporating acquisitions completed to date, we are raising
our revenue and Adjusted EBITDA guidance for fiscal year 2024,”
Casella said. “We are reaffirming guidance for Adjusted Free Cash
Flow, with the expected contribution from acquisitions offset by
the cost of financing and a conservative outlook on working
capital. We are lowering our ranges for net income and net cash
provided by operating activities primarily due to higher
acquisition-related expenditures. These updated ranges assume a
stable economic environment over the remainder of the year.”
The Company raised guidance for the fiscal year ending December
31, 2024 ("fiscal year 2024") by estimating results in the
following ranges:
- Revenues between $1.520 billion and $1.550 billion (raised from
a range of $1.480 billion to $1.510 billion); and
- Adjusted EBITDA
between $360 million and $370 million (raised from a range of $350
million to $360 million).
The Company reaffirmed guidance for fiscal year 2024 by
estimating results in the following ranges:
- Adjusted Free Cash
Flow between $140 million and $150 million.
The Company revised guidance for fiscal year 2024 by estimating
results in the following range:
- Net income between
$15 million and $25 million (lowered from a range of $35 million
and $45 million); and
- Net cash provided by
operating activities between $245 million and $255 million (lowered
from a range of $260 million and $270 million).
The guidance ranges do not include the impact of any
acquisitions that have not been completed. Adjusted EBITDA and
Adjusted Free Cash Flow related to fiscal year 2024 are described
in the Unaudited Reconciliation of Fiscal Year 2024 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 2024 do not contemplate any unanticipated
impacts.
Conference Call to Discuss Quarter
The Company will host a conference call to discuss these results
on Friday, August 2, 2024 at 10:00 a.m. Eastern Time. Individuals
interested in participating in the call should register for the
call by clicking here to obtain a dial in number and unique
passcode. Alternatively, upon registration, the website linked
above provides an option for the conference provider to call the
registrant's phone line, enabling participation on the call.
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 and accessible using the same
link.
About Casella Waste Systems, Inc.
Casella Waste Systems, Inc., headquartered in Rutland, Vermont,
provides resource management expertise and services to residential,
commercial, municipal, institutional and industrial customers,
primarily in the areas of solid waste collection and disposal,
transfer, recycling and organics services in the eastern United
States. For further information, investors may contact Charlie
Wohlhuter, Director of Investor Relations at (802) 772-2230; media
may contact Jeff Weld, Vice President of Communications at (802)
772-2234; 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 2024, 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 or drive operating efficiencies to adequately
offset increased costs and inflationary pressures, including
increased fuel prices and wages; it is difficult to determine the
timing or future impact of a sustained economic slowdown that could
negatively affect our operations and financial results; the closure
of the Subtitle D landfill located in Southbridge, Massachusetts
(“Southbridge Landfill”) could result in material unexpected costs;
the increasing focus on per - and polyfluoroalkyl substances
(“PFAS”) and other emerging contaminants, including the recent
designation by the U.S. Environmental Protection Agency of two PFAS
chemicals as hazardous substances under the Comprehensive
Environmental Response, Compensation, and Liability Act, will
likely lead to increased compliance and remediation costs and
litigation risks; 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 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, including due to the
failure to satisfy all closing conditions and to receive required
regulatory approvals that may prevent closing of any announced
transaction; the Company may not be able to successfully integrate
and recognize the expected financial benefits from 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, in Item 1A. “Risk Factors” in the
Company’s most recently filed Form 10-Q 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:
Charlie WohlhuterDirector of Investor
Relations(802) 772-2230
Media:
Jeff WeldVice President of
Communications(802) 772-2234http://www.casella.com
CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS(In thousands, except for per share
data) |
|
|
Three Months EndedJune 30, |
|
Six Months EndedJune 30, |
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
Revenues |
$ |
377,163 |
|
|
$ |
289,645 |
|
|
$ |
718,170 |
|
|
$ |
552,241 |
|
Operating expenses: |
|
|
|
|
|
|
|
Cost of operations |
|
243,787 |
|
|
|
186,319 |
|
|
|
474,578 |
|
|
|
366,563 |
|
General and administration |
|
47,184 |
|
|
|
35,865 |
|
|
|
91,517 |
|
|
|
71,544 |
|
Depreciation and amortization |
|
55,338 |
|
|
|
34,924 |
|
|
|
109,375 |
|
|
|
68,359 |
|
Expense from acquisition activities |
|
7,836 |
|
|
|
3,677 |
|
|
|
12,847 |
|
|
|
6,540 |
|
Legal settlement |
|
— |
|
|
|
6,150 |
|
|
|
— |
|
|
|
6,150 |
|
Southbridge Landfill closure charge |
|
— |
|
|
|
96 |
|
|
|
— |
|
|
|
206 |
|
|
|
354,145 |
|
|
|
267,031 |
|
|
|
688,317 |
|
|
|
519,362 |
|
Operating income |
|
23,018 |
|
|
|
22,614 |
|
|
|
29,853 |
|
|
|
32,879 |
|
Other
expense (income): |
|
|
|
|
|
|
|
Interest expense, net |
|
12,697 |
|
|
|
7,390 |
|
|
|
25,767 |
|
|
|
13,664 |
|
Loss from termination of bridge financing |
|
— |
|
|
|
8,198 |
|
|
|
— |
|
|
|
8,198 |
|
Other income |
|
(477 |
) |
|
|
(452 |
) |
|
|
(828 |
) |
|
|
(800 |
) |
Other
expense, net |
|
12,220 |
|
|
|
15,136 |
|
|
|
24,939 |
|
|
|
21,062 |
|
Income before income taxes |
|
10,798 |
|
|
|
7,478 |
|
|
|
4,914 |
|
|
|
11,817 |
|
Provision for income taxes |
|
3,792 |
|
|
|
1,988 |
|
|
|
2,025 |
|
|
|
2,779 |
|
Net
income |
$ |
7,006 |
|
|
$ |
5,490 |
|
|
$ |
2,889 |
|
|
$ |
9,038 |
|
Basic
weighted average common shares outstanding |
|
58,109 |
|
|
|
52,885 |
|
|
|
58,070 |
|
|
|
52,331 |
|
Basic
earnings per common share |
$ |
0.12 |
|
|
$ |
0.10 |
|
|
$ |
0.05 |
|
|
$ |
0.17 |
|
Diluted weighted average common shares outstanding |
|
58,199 |
|
|
|
52,980 |
|
|
|
58,161 |
|
|
|
52,427 |
|
Diluted earnings per common share |
$ |
0.12 |
|
|
$ |
0.10 |
|
|
$ |
0.05 |
|
|
$ |
0.17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASELLA WASTE SYSTEMS, INC. AND
SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE
SHEETS(In thousands) |
|
|
June 30,2024 |
|
December 31,2023 |
|
(Unaudited) |
|
|
ASSETS |
|
|
|
CURRENT ASSETS: |
|
|
|
Cash and cash equivalents |
$ |
208,502 |
|
|
$ |
220,912 |
|
Accounts receivable, net of allowance for credit losses |
|
161,247 |
|
|
|
157,324 |
|
Other current assets |
|
56,055 |
|
|
|
48,089 |
|
Total
current assets |
|
425,804 |
|
|
|
426,325 |
|
Property and equipment, net of accumulated depreciation and
amortization |
|
987,390 |
|
|
|
980,553 |
|
Operating lease right-of-use assets |
|
98,148 |
|
|
|
100,844 |
|
Goodwill |
|
737,253 |
|
|
|
735,670 |
|
Intangible assets, net of accumulated amortization |
|
216,961 |
|
|
|
241,429 |
|
Other
non-current assets |
|
46,309 |
|
|
|
50,649 |
|
Total assets |
$ |
2,511,865 |
|
|
$ |
2,535,470 |
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
CURRENT LIABILITIES: |
|
|
|
Current maturities of debt |
$ |
65,335 |
|
|
$ |
35,781 |
|
Current operating lease liabilities |
|
8,854 |
|
|
|
9,039 |
|
Accounts payable |
|
94,205 |
|
|
|
116,794 |
|
Current accrued final capping, closure and post-closure costs |
|
9,280 |
|
|
|
10,773 |
|
Other accrued liabilities |
|
92,014 |
|
|
|
106,471 |
|
Total
current liabilities |
|
269,688 |
|
|
|
278,858 |
|
Debt,
less current portion |
|
976,620 |
|
|
|
1,007,662 |
|
Operating lease liabilities, less current portion |
|
65,710 |
|
|
|
66,074 |
|
Accrued final capping, closure and post-closure costs, less current
portion |
|
131,488 |
|
|
|
123,131 |
|
Other
long-term liabilities |
|
30,845 |
|
|
|
37,954 |
|
Total
stockholders' equity |
|
1,037,514 |
|
|
|
1,021,791 |
|
Total liabilities and stockholders' equity |
$ |
2,511,865 |
|
|
$ |
2,535,470 |
|
|
|
|
|
|
|
|
|
CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS(In thousands) |
|
|
Six Months EndedJune 30, |
|
|
2024 |
|
|
|
2023 |
|
Cash
Flows from Operating Activities: |
|
|
|
Net
income |
$ |
2,889 |
|
|
$ |
9,038 |
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
Depreciation and amortization |
|
109,375 |
|
|
|
68,359 |
|
Interest accretion on landfill and environmental remediation
liabilities |
|
5,862 |
|
|
|
5,001 |
|
Amortization of debt issuance costs |
|
1,482 |
|
|
|
1,505 |
|
Stock-based compensation |
|
4,809 |
|
|
|
4,341 |
|
Operating lease right-of-use assets expense |
|
8,489 |
|
|
|
6,872 |
|
Disposition of assets, other items and charges, net |
|
3,209 |
|
|
|
(300 |
) |
Loss from termination of bridge financing |
|
— |
|
|
|
8,198 |
|
Deferred income taxes |
|
156 |
|
|
|
1,952 |
|
Changes in assets and liabilities, net of effects of acquisitions
and divestitures |
|
(56,490 |
) |
|
|
(21,770 |
) |
Net cash provided by operating activities |
|
79,781 |
|
|
|
83,196 |
|
Cash
Flows from Investing Activities: |
|
|
|
Acquisitions, net of cash acquired |
|
1,296 |
|
|
|
(547,587 |
) |
Additions to intangible assets |
|
(199 |
) |
|
|
— |
|
Additions to property and equipment |
|
(74,900 |
) |
|
|
(50,415 |
) |
Proceeds from sale of property and equipment |
|
827 |
|
|
|
776 |
|
Net cash used in investing activities |
|
(72,976 |
) |
|
|
(597,226 |
) |
Cash
Flows from Financing Activities: |
|
|
|
Proceeds from debt borrowings |
|
1,750 |
|
|
|
430,000 |
|
Principal payments on debt |
|
(20,020 |
) |
|
|
(10,625 |
) |
Payments of debt issuance costs |
|
— |
|
|
|
(7,185 |
) |
Proceeds from the public offering of Class A common stock |
|
— |
|
|
|
496,403 |
|
Net cash (used in) provided by financing activities |
|
(18,270 |
) |
|
|
908,593 |
|
Net
(decrease) increase in cash, cash equivalents and restricted
cash |
|
(11,465 |
) |
|
|
394,563 |
|
Cash,
cash equivalents and restricted cash, beginning of period |
|
220,912 |
|
|
|
71,152 |
|
Cash,
cash equivalents and restricted cash, end of period |
$ |
209,447 |
|
|
$ |
465,715 |
|
Supplemental Disclosure of Cash Flow Information: |
|
|
|
Cash interest payments |
$ |
30,389 |
|
|
$ |
14,196 |
|
Cash income tax payments |
$ |
5,098 |
|
|
$ |
7,913 |
|
Non-current assets obtained through long-term financing
obligations |
$ |
15,300 |
|
|
$ |
4,715 |
|
Right-of-use assets obtained in exchange for operating lease
obligations |
$ |
3,154 |
|
|
$ |
17,756 |
|
|
CASELLA WASTE SYSTEMS, INC. AND
SUBSIDIARIESUNAUDITED RECONCILIATION OF CERTAIN
NON-GAAP MEASURES(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 EndedJune 30, |
|
Six Months EndedJune 30, |
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
Net income |
$ |
7,006 |
|
|
$ |
5,490 |
|
|
$ |
2,889 |
|
|
$ |
9,038 |
|
Net income as a percentage of revenues |
|
1.9 |
% |
|
|
1.9 |
% |
|
|
0.4 |
% |
|
|
1.6 |
% |
Provision for income taxes |
|
3,792 |
|
|
|
1,988 |
|
|
|
2,025 |
|
|
|
2,779 |
|
Other income |
|
(477 |
) |
|
|
(452 |
) |
|
|
(828 |
) |
|
|
(800 |
) |
Loss from termination of bridge financing (i) |
|
— |
|
|
|
8,198 |
|
|
|
— |
|
|
|
8,198 |
|
Interest expense, net |
|
12,697 |
|
|
|
7,390 |
|
|
|
25,767 |
|
|
|
13,664 |
|
Southbridge Landfill closure charge (ii) |
|
— |
|
|
|
96 |
|
|
|
— |
|
|
|
206 |
|
Legal settlement (iii) |
|
— |
|
|
|
6,150 |
|
|
|
— |
|
|
|
6,150 |
|
Expense from acquisition activities (iv) |
|
7,836 |
|
|
|
3,677 |
|
|
|
12,847 |
|
|
|
6,540 |
|
Change in fair value of acquisition-related contingent
consideration (v) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(589 |
) |
Depreciation and amortization |
|
55,338 |
|
|
|
34,924 |
|
|
|
109,375 |
|
|
|
68,359 |
|
Depletion of landfill operating lease obligations |
|
2,497 |
|
|
|
2,230 |
|
|
|
4,695 |
|
|
|
4,303 |
|
Interest accretion on landfill and environmental remediation
liabilities |
|
2,926 |
|
|
|
2,491 |
|
|
|
5,862 |
|
|
|
5,001 |
|
Adjusted EBITDA |
$ |
91,615 |
|
|
$ |
72,182 |
|
|
$ |
162,632 |
|
|
$ |
122,849 |
|
Adjusted EBITDA as a percentage of revenues |
|
24.3 |
% |
|
|
24.9 |
% |
|
|
22.6 |
% |
|
|
22.2 |
% |
Depreciation and amortization |
|
(55,338 |
) |
|
|
(34,924 |
) |
|
|
(109,375 |
) |
|
|
(68,359 |
) |
Depletion of landfill operating lease obligations |
|
(2,497 |
) |
|
|
(2,230 |
) |
|
|
(4,695 |
) |
|
|
(4,303 |
) |
Interest accretion on landfill and environmental remediation
liabilities |
|
(2,926 |
) |
|
|
(2,491 |
) |
|
|
(5,862 |
) |
|
|
(5,001 |
) |
Adjusted Operating Income |
$ |
30,854 |
|
|
$ |
32,537 |
|
|
$ |
42,700 |
|
|
$ |
45,186 |
|
Adjusted Operating Income as a percentage of
revenues |
|
8.2 |
% |
|
|
11.2 |
% |
|
|
5.9 |
% |
|
|
8.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months EndedJune 30, |
|
Six Months EndedJune 30, |
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
Net income |
$ |
7,006 |
|
|
$ |
5,490 |
|
|
$ |
2,889 |
|
|
$ |
9,038 |
|
Loss from termination of bridge financing (i) |
|
— |
|
|
|
8,198 |
|
|
|
— |
|
|
|
8,198 |
|
Southbridge Landfill closure charge (ii) |
|
— |
|
|
|
96 |
|
|
|
— |
|
|
|
206 |
|
Legal settlement (iii) |
|
— |
|
|
|
6,150 |
|
|
|
— |
|
|
|
6,150 |
|
Expense from acquisition activities (iv) |
|
7,836 |
|
|
|
3,677 |
|
|
|
12,847 |
|
|
|
6,540 |
|
Change in fair value of acquisition-related contingent
consideration (v) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(589 |
) |
Interest expense from acquisition activities (vi) |
|
— |
|
|
|
496 |
|
|
|
— |
|
|
|
496 |
|
Tax effect (vii) |
|
(2,325 |
) |
|
|
(5,276 |
) |
|
|
(4,008 |
) |
|
|
(5,933 |
) |
Adjusted Net Income |
$ |
12,517 |
|
|
$ |
18,831 |
|
|
$ |
11,728 |
|
|
$ |
24,106 |
|
|
|
|
|
|
|
|
|
Diluted weighted average common shares
outstanding |
|
58,199 |
|
|
|
52,980 |
|
|
|
58,161 |
|
|
|
52,427 |
|
|
|
|
|
|
|
|
|
Diluted earnings per common share |
$ |
0.12 |
|
|
$ |
0.10 |
|
|
$ |
0.05 |
|
|
$ |
0.17 |
|
Loss from termination of bridge financing (i) |
|
— |
|
|
|
0.16 |
|
|
|
— |
|
|
|
0.16 |
|
Southbridge Landfill closure charge (ii) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Legal settlement (iii) |
|
— |
|
|
|
0.12 |
|
|
|
— |
|
|
|
0.12 |
|
Expense from acquisition activities (iv) |
|
0.13 |
|
|
|
0.07 |
|
|
|
0.22 |
|
|
|
0.12 |
|
Change in fair value of acquisition-related contingent
consideration (v) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(0.01 |
) |
Interest expense from acquisition activities (vi) |
|
— |
|
|
|
0.01 |
|
|
|
— |
|
|
|
0.01 |
|
Tax effect (vii) |
|
(0.03 |
) |
|
|
(0.10 |
) |
|
|
(0.07 |
) |
|
|
(0.11 |
) |
Adjusted Diluted Earnings Per Common Share |
$ |
0.22 |
|
|
$ |
0.36 |
|
|
$ |
0.20 |
|
|
$ |
0.46 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(i) Loss from termination of bridge financing is related to
the write-off of the remaining unamortized debt issuance costs
associated with the extinguishment of bridge financing agreements
associated with acquisitions.
(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) Legal settlement is related to reaching an agreement
in June 2023 with the collective class members of a class action
lawsuit relating to certain Fair Labor Standards Act of 1938
("FLSA") claims as well as state wage and hours laws. The agreement
remains subject to court approval.
(iv) Expense from acquisition activities is comprised
primarily of legal, consulting, rebranding and other costs
associated with the due diligence, acquisition and integration of
acquired businesses. The three and six months ended June 30, 2024
included a charge for an increase in the reserve against accounts
receivable of the businesses acquired in the GFL Acquisition as a
result of our inability to pursue collections during the transition
services period with the seller, resulting in accounts receivable
aged beyond what is typical in our business.
(v) Change in fair value of acquisition-related contingent
consideration is associated with the change in fair value of a
contingency related to a previous acquisition based upon a
probability-weighted analysis of the potential attainment of a
transfer station permit expansion.
(vi) Interest expense from acquisition activities is the
amortization of debt issuance costs during the three and six months
ended June 30, 2023 associated primarily with transaction, legal,
and other similar costs incurred during the periods associated with
bridge financing activities related to acquisitions.
(vii) 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 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 showing
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
table below, on an adjusted basis to exclude certain items, sets
forth such liquidity measures:
|
Three Months EndedJune 30, |
|
Six Months EndedJune 30, |
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
Net cash provided by operating activities |
$ |
72,102 |
|
|
$ |
67,117 |
|
|
$ |
79,781 |
|
|
$ |
83,196 |
|
Capital expenditures |
|
(44,649 |
) |
|
|
(32,536 |
) |
|
|
(74,900 |
) |
|
|
(50,415 |
) |
Proceeds from sale of property and equipment |
|
339 |
|
|
|
361 |
|
|
|
827 |
|
|
|
776 |
|
Southbridge Landfill closure (i) |
|
787 |
|
|
|
1,088 |
|
|
|
1,482 |
|
|
|
2,337 |
|
Cash outlays from acquisition activities (ii) |
|
4,941 |
|
|
|
5,195 |
|
|
|
9,435 |
|
|
|
6,059 |
|
Acquisition capital expenditures (iii) |
|
6,571 |
|
|
|
3,922 |
|
|
|
12,659 |
|
|
|
5,012 |
|
McKean Landfill rail capital expenditures (iv) |
|
1,030 |
|
|
|
479 |
|
|
|
3,225 |
|
|
|
903 |
|
FLSA legal settlement payment (v) |
|
— |
|
|
|
— |
|
|
|
6,150 |
|
|
|
— |
|
Landfill capping charge - veneer failure payment (vi) |
|
794 |
|
|
|
— |
|
|
|
850 |
|
|
|
— |
|
Adjusted Free Cash Flow |
$ |
41,915 |
|
|
$ |
45,626 |
|
|
$ |
39,509 |
|
|
$ |
47,868 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(i) Southbridge Landfill closure are cash outlays
associated with the unplanned, early closure of the Southbridge
Landfill. The Company initiated the unplanned, premature 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.
(ii) Cash outlays from acquisition activities are cash
outlays for transaction and integration costs relating to specific
acquisition transactions and include legal, consulting, rebranding
and other costs as part of the Company’s strategic growth
initiative.
(iii) Acquisition capital expenditures are 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. Acquisition related capital expenditures
include costs required to achieve initial operating synergies and
integrate operations.
(iv) McKean Landfill rail capital expenditures are
long-term infrastructure capital expenditures related to rail side
development at the Company's landfill in Mount Jewett, PA ("McKean
Landfill"), which is different from the landfill construction
investments in the normal course of operations.
(v) FLSA legal settlement payment is the cash outlay of a
legal settlement related to reaching an agreement in June 2023 with
the collective class members of a class action lawsuit relating to
certain claims under the FLSA as well as state wage and hours
laws.
(vi) Landfill capping charge - veneer failure payment is
the cash outlay associated with operating expenses incurred to
clean up the affected capping material at the Company's landfill in
Seneca, New York. Engineering analysis is currently underway to
determine root causes and responsibility for the event.
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, and Adjusted 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 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, and Adjusted Free Cash
Flow presented by other companies.
CASELLA WASTE SYSTEMS, INC. AND
SUBSIDIARIESUNAUDITED RECONCILIATION OF FISCAL
YEAR 2024 OUTLOOK NON-GAAP MEASURES(In
thousands) |
|
Following is a reconciliation of the Company's estimated
Adjusted
EBITDA(i)
from estimated Net income for fiscal year
2024:
|
(Estimated) Twelve Months Ending December 31,
2024 |
Net income |
$15,000 - $25,000 |
Provision for income taxes |
11,000 |
Other income |
(1,500) |
Interest expense, net |
57,000 |
Southbridge Landfill closure charge |
1,000 |
Expense from acquisition activities |
20,000 |
Depreciation and amortization |
236,000 |
Depletion of landfill operating lease obligations |
10,000 |
Interest accretion on landfill and environmental remediation
liabilities |
11,500 |
Adjusted EBITDA |
$360,000 - $370,000 |
|
|
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 2024:
|
(Estimated) Twelve Months Ending December 31,
2024 |
Net cash provided by
operating activities |
$245,000 - $255,000 |
Capital expenditures |
(187,000) |
Proceeds from sale of property and equipment |
1,500 |
FLSA legal settlement payment |
6,150 |
Southbridge Landfill closure |
3,000 |
Acquisition capital expenditures |
46,500 |
Cash outlays from acquisition activities |
17,000 |
McKean Landfill rail capital expenditures |
7,000 |
Landfill capping charge - veneer failure payment |
850 |
Adjusted Free Cash
Flow |
$140,000 - $150,000 |
|
|
(i) See footnotes for Non-GAAP Performance Measures and Non-GAAP
Liquidity Measures included in the Unaudited 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
SUBSIDIARIESUNAUDITED SUPPLEMENTAL DATA
TABLES(In thousands) |
|
Amounts of total revenues attributable to services
provided for the three and six
months ended June 30, 2024
and 2023 are as
follows:
|
Three Months Ended June 30, |
|
|
2024 |
|
|
% of TotalRevenues |
|
|
2023 |
|
|
% of TotalRevenues |
Collection |
$ |
223,959 |
|
|
|
59.4 |
% |
|
$ |
149,848 |
|
|
|
51.7 |
% |
Disposal |
|
65,123 |
|
|
|
17.3 |
% |
|
|
63,629 |
|
|
|
22.0 |
% |
Landfill gas-to-energy |
|
1,983 |
|
|
|
0.5 |
% |
|
|
1,321 |
|
|
|
0.5 |
% |
Processing |
|
2,880 |
|
|
|
0.7 |
% |
|
|
2,754 |
|
|
|
0.9 |
% |
Solid waste operations |
|
293,945 |
|
|
|
77.9 |
% |
|
|
217,552 |
|
|
|
75.1 |
% |
Processing |
|
33,275 |
|
|
|
8.9 |
% |
|
|
25,383 |
|
|
|
8.8 |
% |
National
Accounts |
|
49,943 |
|
|
|
13.2 |
% |
|
|
46,710 |
|
|
|
16.1 |
% |
Resource Solutions operations |
|
83,218 |
|
|
|
22.1 |
% |
|
|
72,093 |
|
|
|
24.9 |
% |
Total revenues |
$ |
377,163 |
|
|
|
100.0 |
% |
|
$ |
289,645 |
|
|
|
100.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, |
|
|
2024 |
|
|
% of TotalRevenues |
|
|
2023 |
|
|
% of TotalRevenues |
Collection |
$ |
435,318 |
|
|
|
60.6 |
% |
|
$ |
289,825 |
|
|
|
52.5 |
% |
Disposal |
|
115,262 |
|
|
|
16.0 |
% |
|
|
115,096 |
|
|
|
20.8 |
% |
Power
generation |
|
4,493 |
|
|
|
0.6 |
% |
|
|
3,245 |
|
|
|
0.6 |
% |
Processing |
|
4,808 |
|
|
|
0.8 |
% |
|
|
4,329 |
|
|
|
0.8 |
% |
Solid waste operations |
|
559,881 |
|
|
|
78.0 |
% |
|
|
412,495 |
|
|
|
74.7 |
% |
Processing |
|
63,038 |
|
|
|
8.7 |
% |
|
|
48,189 |
|
|
|
8.7 |
% |
National
Accounts |
|
95,251 |
|
|
|
13.3 |
% |
|
|
91,557 |
|
|
|
16.6 |
% |
Resource Solutions operations |
|
158,289 |
|
|
|
22.0 |
% |
|
|
139,746 |
|
|
|
25.3 |
% |
Total revenues |
$ |
718,170 |
|
|
|
100.0 |
% |
|
$ |
552,241 |
|
|
|
100.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Components of revenue growth for the three months
ended June 30, 2024 compared to
the three months ended June 30, 2023
are as follows:
|
Amount |
|
%
ofRelatedBusiness |
|
% ofOperations |
|
% of TotalCompany |
Solid waste operations: |
|
|
|
|
|
|
|
Collection |
$ |
9,234 |
|
|
|
6.2 |
% |
|
|
4.2 |
% |
|
|
3.2 |
% |
Disposal |
|
3,059 |
|
|
|
4.8 |
% |
|
|
1.5 |
% |
|
|
1.0 |
% |
Solid waste price |
|
12,293 |
|
|
|
|
|
5.7 |
% |
|
|
4.2 |
% |
Collection |
|
(1,762 |
) |
|
|
(1.2 |
)% |
|
|
(0.8 |
)% |
|
|
(0.6 |
)% |
Disposal |
|
(2,199 |
) |
|
|
(3.5 |
)% |
|
|
(1.0 |
)% |
|
|
(0.8 |
)% |
Processing |
|
(8 |
) |
|
|
|
|
— |
% |
|
|
— |
% |
Solid waste volume |
|
(3,969 |
) |
|
|
|
|
(1.8 |
)% |
|
|
(1.4 |
)% |
Surcharges and other fees |
|
500 |
|
|
|
|
|
0.1 |
% |
|
|
0.2 |
% |
Commodity price and volume |
|
797 |
|
|
|
|
|
0.4 |
% |
|
|
0.3 |
% |
Acquisitions |
|
66,772 |
|
|
|
|
|
30.7 |
% |
|
|
23.1 |
% |
Total solid waste operations |
|
76,393 |
|
|
|
|
|
35.1 |
% |
|
|
26.4 |
% |
Resource Solutions
operations: |
|
|
|
|
|
|
|
|
|
Price |
|
3,129 |
|
|
|
|
|
4.3 |
% |
|
|
1.1 |
% |
Volume |
|
4,793 |
|
|
|
|
|
6.7 |
% |
|
|
1.6 |
% |
Surcharges and other fees |
|
(59 |
) |
|
|
|
|
(0.1 |
)% |
|
|
— |
% |
Acquisitions |
|
3,262 |
|
|
|
|
|
4.5 |
% |
|
|
1.1 |
% |
Total Resource Solutions operations |
|
11,125 |
|
|
|
|
|
15.4 |
% |
|
|
3.8 |
% |
Total Company |
$ |
87,518 |
|
|
|
|
|
|
|
30.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Components of capital
expenditures(i)
for the three and six
months ended June 30, 2024
and 2023 are as
follows:
|
Three Months EndedJune 30, |
|
Six Months EndedJune 30, |
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
Growth capital expenditures: |
|
|
|
|
|
|
|
Acquisition capital expenditures |
$ |
6,571 |
|
|
$ |
3,922 |
|
|
$ |
12,659 |
|
|
$ |
5,012 |
|
McKean Landfill rail capital expenditures |
|
1,030 |
|
|
|
479 |
|
|
|
3,225 |
|
|
|
903 |
|
Other |
|
2,358 |
|
|
|
2,502 |
|
|
|
4,992 |
|
|
|
3,898 |
|
Growth capital expenditures |
|
9,959 |
|
|
|
6,903 |
|
|
|
20,876 |
|
|
|
9,813 |
|
Replacement capital expenditures: |
|
|
|
|
|
|
|
Landfill development |
|
13,606 |
|
|
|
9,736 |
|
|
|
17,808 |
|
|
|
11,198 |
|
Vehicles, machinery, equipment and containers |
|
15,491 |
|
|
|
11,973 |
|
|
|
28,245 |
|
|
|
19,772 |
|
Facilities |
|
4,447 |
|
|
|
2,515 |
|
|
|
6,009 |
|
|
|
6,570 |
|
Other |
|
1,146 |
|
|
|
1,409 |
|
|
|
1,962 |
|
|
|
3,062 |
|
Replacement capital expenditures |
|
34,690 |
|
|
|
25,633 |
|
|
|
54,024 |
|
|
|
40,602 |
|
Capital expenditures |
$ |
44,649 |
|
|
$ |
32,536 |
|
|
$ |
74,900 |
|
|
$ |
50,415 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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) acquisition 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 includes the
capital expenditures required to achieve initial operating
synergies and integrate operations; 2) McKean Landfill rail capital
expenditures, which is unique and different from landfill
construction investments in the normal course of operations because
the Company is investing in long-term infrastructure; 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, replacement
costs for equipment and other capital expenditures due to age or
obsolescence, and capital items not defined as growth capital
expenditures.
Casella Waste Systems (NASDAQ:CWST)
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From Jul 2024 to Aug 2024
Casella Waste Systems (NASDAQ:CWST)
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From Aug 2023 to Aug 2024