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8-K - FORM 8-K - CASELLA WASTE SYSTEMS INCd559645d8k.htm
EX-10.1 - EX-10.1 - CASELLA WASTE SYSTEMS INCd559645dex101.htm

Exhibit 99.1

FOR IMMEDIATE RELEASE

CASELLA WASTE SYSTEMS, INC. ANNOUNCES FOURTH QUARTER AND FISCAL YEAR 2013 RESULTS; PROVIDES FISCAL YEAR 2014 GUIDANCE

RUTLAND, VERMONT (June 26, 2013) — Casella Waste Systems, Inc. (NASDAQ: CWST), a regional solid waste, recycling and resource management services company, today reported financial results for its fourth quarter and fiscal year 2013, and gave guidance for its fiscal year 2014.

Highlights for the quarter included:

 

   

Revenue growth of 2.2 percent over the same quarter last year.

 

   

Overall solid waste pricing growth of 0.7 percent was primarily driven by collection pricing growth of 1.5 percent as a percentage of collection revenues.

 

   

Adjusted EBITDA* was $19.4 million for the quarter.

For the quarter ended April 30, 2013, revenues were $108.7 million, up $2.3 million, or 2.2 percent, from the same quarter last year, with revenue growth mainly driven by acquisition activity, higher recycling volumes, and higher solid waste collection pricing.

The company’s net loss attributable to common stockholders was ($13.4) million, or ($0.34) per share for the quarter, compared to net loss of ($49.1) million, or ($1.83) per share for the same quarter last year.

The current quarter includes a $0.2 million severance and reorganization charge related to the sale of the Maine Energy Recovery Company LP (“Maine Energy”) facility and other realignment activities, $0.4 million of expenses related to the divestiture of Maine Energy and the acquisition of Blow Brothers Inc. (“BBI”), a $0.4 million reversal of a prior estimated loss on the divestiture of Maine Energy, $0.7 million of legal expenses related to the settlement of the New York State income tax matter, and a $3.7 million loss from discontinued operations related to the planned disposal of the company’s only construction and demolition processing business. By comparison, the quarter ended April 30, 2012 included a $40.7 million non-cash asset impairment charge associated with the sale of Maine Energy, a $0.3 million loss on the extinguishment of debt, and a $0.1 million loss from discontinued operations.

Excluding the unusual charges identified in the prior paragraph from each period and assuming no tax impact, the company’s net loss attributable to common shareholders was ($8.7) million, or ($0.22) per common share for the quarter, compared to net loss of ($7.9) million, or ($0.30) per share for the same quarter last year.

Operating income was $2.1 million for the quarter, up from an operating loss of ($37.7) million in the same quarter last year. Excluding the unusual charges identified in the second preceding paragraph, Adjusted Operating Income* in the current quarter was $3.1 million, flat to the same quarter last year. Adjusted EBITDA was $19.4 million for the quarter, down $0.6 million from the same quarter last year.

“In early March, we announced our comprehensive plan to improve the operating performance of the business, and I am happy to report that we are making excellent progress,” said John W. Casella, chairman and CEO of Casella Waste Systems. “At that time we laid out four specific areas of enhanced focus for the coming next year - sourcing incremental landfill volumes; improving collection route profitability; completing the multi-year Eastern region strategy; and placing the right leaders in the right roles.”

“During the first two months of our fourth quarter we continued to experience negative year-over-year results as our enhanced focus on these operational areas had not yet shown results; however, in April our Adjusted EBITDA was up $1.1 million year-over-year and we are seeing the same positive volumes and operating trends continue into May and early June,” Casella said. “We believe that this improvement is directly attributable to our focused management efforts over the last three months, and we expect to further these efforts over the remainder of our fiscal year 2014.”

 

1


Fiscal Year 2013 Financial Results

For the fiscal year ended April 30, 2013, revenues were $455.3 million, down $12.7 million or 2.7 percent from the fiscal year ended April 30, 2012, with revenue declines mainly driven by lower solid waste volumes and lower recycling commodity pricing.

The company’s net loss attributable to common stockholders was ($54.1) million, or ($1.59) per share for fiscal year 2013, compared to net loss of ($77.6) million, or ($2.90) per share for fiscal year 2012.

The current fiscal year includes a $3.7 million severance and reorganization charge related to the company’s August realignment, the sale of Maine Energy and other realignment activities, $1.4 million of expenses related to the divestiture of Maine Energy, the acquisition of BBI and certain financing activities, $0.7 million of legal expenses related to the settlement of the New York State income tax matter, a $15.6 million loss on the extinguishment of debt related to the repurchase of the company’s second lien notes, a $3.6 million loss on derivative instruments, and a $4.5 million loss from discontinued operations related to the planned disposal of the company’s only construction and demolition processing business.

By comparison, the fiscal year ended April 30, 2012 included a $40.7 million non-cash asset impairment charge for the company’s Eastern region assets related to the sale of Maine Energy, $1.4 million of legal settlement charges, a $0.1 million development project charge, two non-cash charges totaling $15.8 million related to the company’s investment in US GreenFiber LLC, a $0.3 million loss on the extinguishment of debt, and a $0.1 million gain from discontinued operations

Excluding the unusual charges from each period identified in the two preceding paragraphs and assuming no tax impact, the company’s net loss attributable to common shareholders was ($24.7) million, or ($0.72) per common share for the fiscal year ended April 30, 2013, compared to net loss of ($19.4) million, or ($0.72) per share for the previous fiscal year.

Operating income was $12.4 million for current fiscal year, up from an operating loss of ($11.0) million for the previous fiscal year. Excluding the unusual and one-time charges, Adjusted Operating Income* in the current fiscal year was $18.2 million, down $13.0 million from the previous fiscal year. Adjusted EBITDA was $87.8 million for the current fiscal year, down $13.8 million from same period last year.

Fiscal 2014 Outlook

“For our fiscal year 2014 budget we applied a conservative and consistent framework for all assumptions outside of our direct control, such as new landfill volumes. Our plan for the fiscal year assumes that economic activity in the northeast remains soft with limited GDP growth, landfill volumes decline further in Western New York and Pennsylvania, and recycling commodity prices remain flat.”

The company provided guidance for its fiscal year 2014, which began May 1, 2013, by estimating results in the following ranges:

 

   

Revenues between $465.0 million and $475.0 million (representing growth of 2.1 percent to 4.3 percent);

 

   

Adjusted EBITDA* between $91.0 million and $95.0 million; and

 

   

Free Cash Flow* between $4.0 million and $8.0 million.

 

   

Capital Expenditures of roughly between $42.0 million and $44.0 million.

The company provided the following assumptions that are built into its fiscal year 2014 outlook:

 

   

No material changes in the regional economy from fiscal year 2013.

 

2


   

In the solid waste business, revenue growth of between 2.8 percent and 5.1 percent, with price growth from 1.0 percent to 1.5 percent; volumes from a (0.3) percent decline to 1.5 percent growth; and the roll-over impact of acquisitions contributing 2.1 percent.

 

   

In the recycling business, overall revenue declines of between 2.0 percent and 3.5 percent, with price declines on lower commodity pricing and flat volumes.

 

   

In the Other segment, revenue growth of between 2.0 percent and 4.2 percent, principally due to increased volumes in the Customer Resource Solutions group, formerly known as the company’s Major Accounts group.

 

   

No acquisitions beyond the above-mentioned roll-over impact of the acquisitions completed during fiscal year 2013 are included.

*Non-GAAP Financial Measures

In addition to disclosing financial results prepared in accordance with Generally Accepted Accounting Principles in the United States (GAAP), the company also discloses earnings before interest, taxes, depreciation and amortization, adjusted for accretion, depletion of landfill operating lease obligations, gain on sale of assets, development project charge write-offs, legal settlement charges, tax settlement costs, bargain purchase gains, asset impairment charges, environmental remediation charges, severance and reorganization charges, expenses from divestiture, acquisition and financing costs, as well as losses on divestiture (Adjusted EBITDA) which is a non-GAAP measure. The company also discloses earnings before interest, taxes, adjusted for gain on sale of assets, development project charge write-offs, legal settlement charges, tax settlement costs, bargain purchase gains, asset impairment charges, environmental remediation charges, severance and reorganization charges, expenses from divestiture, acquisition and financing costs, as well as losses on divestiture (Adjusted Operating Income) which is a non-GAAP measure. The company also discloses Free Cash Flow, which is defined as net cash provided by operating activities, less capital expenditures attributable to growth and maintenance (excluding acquisition related capital), less payments on landfill operating leases, less assets acquired through financing leases, plus proceeds from the sale of property and equipment, plus contributions from non-controlling interest holder, which is a non-GAAP measure. Adjusted EBITDA and Adjusted Operating Income are reconciled to net income (loss), while Free Cash Flow is reconciled to net cash provided by operating activities.

The company presents Adjusted EBITDA, Adjusted Operating Income, and Free Cash Flow because it considers them important supplemental measures of its performance and believes they are frequently used by securities analysts, investors and other interested parties in the evaluation of the company’s results. Management uses these non-GAAP measures to further understand the company’s “core operating performance.” The company believes its “core operating performance” represents its on-going performance in the ordinary course of operations. The company believes that providing Adjusted EBITDA, Adjusted Operating Income, and Free Cash Flow to investors, in addition to corresponding income statement and cash flow statement measures, affords investors the benefit of viewing its performance using the same financial metrics that the management team uses in making many key decisions and understanding how the core business and its results of operations may look in the future. The company further believes that providing this information allows its investors greater transparency and a better understanding of its core financial performance. In addition, the instruments governing the company’s indebtedness use EBITDA (with additional adjustments) to measure its compliance with covenants such as interest coverage, leverage and debt incurrence.

Non-GAAP financial measures are not in accordance with or an alternative for GAAP. Adjusted EBITDA, Adjusted Operating Income, and Free Cash Flow should not be considered in isolation from or as a substitute for financial information presented in accordance with GAAP, and may be different from Adjusted EBITDA, Adjusted Operating Income, or Free Cash Flow presented by other companies.

 

3


About Casella Waste Systems, Inc.

Casella Waste Systems, Inc., headquartered in Rutland, Vermont, provides solid waste management services consisting of collection, transfer, disposal, and recycling services in the northeastern United States. For further information, investors contact Ned Coletta, Chief Financial Officer at (802) 772-2239, media contact Joseph Fusco, Vice President at (802) 772-2247, or visit the company’s website at http://www.casella.com.

Conference call to discuss quarter

The Company will host a conference call to discuss these results on Thursday, June 27, 2013 at 10:00 a.m. ET. Individuals interested in participating in the call should dial (877) 548-9590 or (720) 545-0037 at least 10 minutes before start time. The call will also be webcast; to listen, participants should visit Casella Waste Systems’ website at http://ir.casella.com and follow the appropriate link to the webcast. A replay of the call will be available on the company’s website, or by calling (855) 859-2056 or (404) 537-3406 (Conference ID 97648289) until 11:59 p.m. ET on Thursday, July 4, 2013.

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 “believe,” “expect,” “anticipate,” “plan,” “may,” “will,” “would,” “intend,” “estimate,” “guidance” and other similar expressions, whether in the negative or affirmative. These forward-looking statements are based on current expectations, estimates, forecasts and projections about the industry and markets in which we operate and management’s beliefs and assumptions. We cannot guarantee that we actually will achieve the plans, intentions, expectations or guidance disclosed in the forward-looking statements made. 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: current economic conditions that have adversely affected and may continue to adversely affect our revenues and our operating margin; we may be unable to increase volumes at our landfills; our need to service our indebtedness may limit our ability to invest in our business; we 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 our control; we may be required to incur capital expenditures in excess of our estimates; fluctuations in energy pricing or the commodity pricing of our recyclables may make it more difficult for us to predict our results of operations or meet our estimates; we may incur environmental charges or asset impairments in the future; and we may not fully recognize the expected financial benefits from the BBI acquisition due to the an inability to recognize operational cost savings, general and administration cost savings, or landfill or recycling facility internalization benefits. There are a number of other important risks and uncertainties that could cause our 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 our Form 10-K for the year ended April 30, 2012.

We undertake 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 Coletta

Chief Financial Officer

(802) 772-2239

 

4


Media:

Joseph Fusco

Vice President

(802) 772-2247

http://www.casella.com

 

5


CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except amounts per share)

 

     Three Months Ended     Fiscal Year Ended  
     April 30,
2013
    April 30,
2012
    April 30,
2013
    April 30,
2012
 

Revenues

   $ 108,694      $ 106,375      $ 455,335      $ 467,950   

Operating expenses:

        

Cost of operations

     78,147        74,757        323,014        318,068   

General and administration

     14,804        14,414        58,205        60,264   

Depreciation and amortization

     13,332        14,137        56,576        58,415   

Severance and reorganization costs

     246        —          3,709        —     

Expense from divestiture, acquisition and financing costs

     408        —          1,410        —     

Reversal of loss on divestiture

     (353     —          —          —     

Asset impairment charge

     —          40,746        —          40,746   

Legal settlement

     —          —          —          1,359   

Development project charge

     —          —          —          131   
  

 

 

   

 

 

   

 

 

   

 

 

 
     106,584        144,054        442,914        478,983   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

     2,110        (37,679     12,421        (11,033

Other expense/(income), net:

        

Interest expense, net

     9,081        11,548        41,429        44,966   

Loss (gain) from equity method investments

     1,131        (169     4,441        9,994   

Impairment of equity method investment

     —          —          —          10,680   

Loss on derivative instruments

     640        —          4,512        —     

Loss on debt extinguishment

     —          300        15,584        300   

Other income

     (298     (313     (1,036     (863
  

 

 

   

 

 

   

 

 

   

 

 

 

Other expense, net

     10,554        11,366        64,930        65,077   
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss from continuing operations before income taxes and discontinued operations

     (8,444     (49,045     (52,509     (76,110

Provision (benefit) for income taxes

     1,373        (54     (2,526     1,593   
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss from continuing operations before discontinued operations

     (9,817     (48,991     (49,983     (77,703

Discontinued operations:

        

Loss from discontinued operations, net of income taxes (1)

     (3,700     (140     (4,480     (614

Gain on disposal of discontinued operations, net of income taxes (1)

     —          —          —          725   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss

     (13,517     (49,131     (54,463     (77,592
  

 

 

   

 

 

   

 

 

   

 

 

 

Less: Net loss attributable to noncontrolling interests

     (120     (6     (321     (6
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss attributable to common stockholders

   $ (13,397   $ (49,125   $ (54,142   $ (77,586
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average common shares outstanding

     39,515        26,851        34,015        26,749   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss per common share

   $ (0.34   $ (1.83   $ (1.59   $ (2.90
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA (2)

   $ 19,355      $ 19,982      $ 87,842      $ 101,578   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

1


CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands)

 

     April 30,
2013
     April 30,
2012
 
ASSETS      

CURRENT ASSETS:

     

Cash and cash equivalents

   $ 1,755       $ 4,534   

Restricted cash

     76         76   

Accounts receivable - trade, net of allowance for doubtful accounts

     48,689         47,472   

Other current assets

     10,533         15,274   
  

 

 

    

 

 

 

Total current assets

     61,053         67,356   

Property, plant and equipment, net of accumulated depreciation and amortization

     422,502         414,666   

Goodwill

     115,928         101,706   

Intangible assets, net

     11,674         2,970   

Restricted assets

     545         424   

Notes receivable - related party

     147         144   

Investments in unconsolidated entities

     20,252         22,781   

Other non-current assets

     27,526         23,696   
  

 

 

    

 

 

 

Total assets

   $ 659,627       $ 633,743   
  

 

 

    

 

 

 
LIABILITIES AND STOCKHOLDERS’ EQUITY      

CURRENT LIABILITIES:

     

Current maturities of long-term debt and capital leases

   $ 857       $ 1,228   

Current maturities of financing lease obligations

     361         338   

Accounts payable

     51,974         46,709   

Other accrued liabilities

     34,906         32,971   
  

 

 

    

 

 

 

Total current liabilities

     88,098         81,246   

Long-term debt and capital leases, less current maturities

     493,531         473,381   

Financing lease obligations, less current maturities

     1,456         1,818   

Other long-term liabilities

     61,091         59,067   

Total stockholders’ equity

     15,451         18,231   
  

 

 

    

 

 

 

Total liabilities and stockholders’ equity

   $ 659,627       $ 633,743   
  

 

 

    

 

 

 

 

2


CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

 

     Fiscal Year Ended  
     April 30,
2013
    April 30,
2012
 

Cash Flows from Operating Activities:

    

Net loss

   $ (54,463   $ (77,592

Loss from discontinued operations, net

     4,480        614   

Gain on disposal of discontinued operations, net

     —          (725

Adjustments to reconcile net loss to net cash provided by operating activities -

    

Gain on sale of property and equipment

     (407     (1,004

Depreciation and amortization

     56,576        58,415   

Depletion of landfill operating lease obligations

     9,372        8,482   

Interest accretion on landfill and environmental remediation liabilities

     3,675        3,479   

Asset impairment charge

     —          40,746   

Development project charge

     —          131   

Amortization of discount on second lien notes and senior subordinated notes

     626        964   

Loss from equity method investments

     4,441        9,994   

Impairment of equity method investment

     —          10,680   

Loss on derivative instruments, net

     4,512        —     

Loss on debt extinguishment

     15,584        300   

Stock-based compensation expense and related severance expense

     2,516        1,855   

Excess tax benefit on the vesting of share based awards

     (96     (254

Deferred income taxes

     (3,543     1,824   

Changes in assets and liabilities, net of effects of acquisitions and divestitures

     588        6,262   
  

 

 

   

 

 

 

Net Cash Provided by Operating Activities

     43,861        64,171   
  

 

 

   

 

 

 

Cash Flows from Investing Activities:

    

Acquisitions, net of cash acquired

     (25,225     (2,102

Additions to property, plant and equipment - acquisitions

     (1,746     (529

- growth

     (12,192     (12,211

- maintenance

     (40,823     (45,463

Payments on landfill operating lease contracts

     (6,261     (6,616

Payment for capital related to divestiture

     (618     —     

Investments in unconsolidated entities

     (3,207     (5,045

Proceeds from sale of property and equipment

     883        1,492   
  

 

 

   

 

 

 

Net Cash Used In Investing Activities

     (89,189     (70,474
  

 

 

   

 

 

 

Cash Flows from Financing Activities:

    

Proceeds from long-term borrowings

     376,346        163,500   

Principal payments on long-term debt

     (360,858     (152,806

Payment of tender premium and costs on second lien notes

     (10,743     —     

Payments of financing costs

     (4,609     (1,592

Net proceeds from the sale of Class A common stock

     42,184        —     

Proceeds from the exercise of share based awards

     —          337   

Excess tax benefit on the vesting of share based awards

     96        254   

Contributions from noncontrolling interest holders

     2,531        536   
  

 

 

   

 

 

 

Net Cash Provided By Financing Activities

     44,947        10,229   
  

 

 

   

 

 

 

Net Cash Used In Discontinued Operations

     (2,398     (1,209
  

 

 

   

 

 

 

Net decrease (increase) in cash and cash equivalents

     (2,779     2,717   

Cash and cash equivalents, beginning of period

     4,534        1,817   
  

 

 

   

 

 

 

Cash and cash equivalents, end of period

   $ 1,755      $ 4,534   
  

 

 

   

 

 

 

Supplemental Disclosures:

    

Cash interest

   $ 41,348      $ 40,710   

Cash income tax (refunds) payments, net

   $ (253   $ 5,048   

 

3


CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(In thousands)

 

Note 1: Divestiture and Discontinued Operations

Maine Energy Divestiture

In the first quarter of fiscal year 2013, we executed a purchase and sale agreement with the City of Biddeford, Maine pursuant to which we agreed to sell the real property of Maine Energy Recovery Company, LP (“Maine Energy”), which is located in our Eastern region, to the City of Biddeford, subject to satisfaction of conditions precedent and closing. We agreed to sell Maine Energy for undiscounted purchase consideration of $6,650, which shall be paid to us in equal installments over the next 21 years, subject to the terms of the purchase and sale agreement. The transaction closed in November 2012, and we waived certain conditions precedent not satisfied at that time. In December 2012, we closed the facility and initiated the decommissioning process in accordance with the provisions of the agreement. Following the decommissioning of Maine Energy, it is our responsibility to demolish the facility, at our cost, within twelve months of the closing date and in accordance with the terms of the purchase and sale agreement. We initially recorded a charge to loss on divestiture of $353 in the third quarter of fiscal year 2013 as a result of this transaction. In the fourth quarter of fiscal year 2013, as more information became available, we made revisions to the estimated closing costs associated with the divestiture resulting in the reversal of the initial loss on divestiture of $353. Due to the inherent judgments and estimates regarding the remaining costs to fulfill our obligation under the purchase and sale agreement to demolish the facility and remediate the site, recognition of a loss on divestiture, or a potential gain on divestiture, is possible.

Discontinued Operations

In the fourth quarter of fiscal year 2013, we initiated a plan to dispose of Bio Fuels, a construction and demolition material processing facility located in Lewiston, Maine, and as a result, the assets associated with Bio Fuels were classified as held-for-sale and the results of operations were recorded as discontinued operations. Assets of the disposal group classified as held-for-sale include certain inventory and plant and equipment. We recognized a $3,261 charge associated with the adjustment of the disposal group to fair value as loss from discontinued operations. There are inherent judgments and estimates used in determining impairment charges and the actual sale of a business can result in the recognition of an additional gain or loss.

In the third quarter of fiscal year 2011, we entered into a purchase and sale agreement and related agreements to sell non-integrated recycling assets and select intellectual property assets. Pursuant to these agreements, we divested non-integrated recycling assets located outside our core operating regions of New York, Massachusetts, Vermont, New Hampshire, Maine and northern Pennsylvania, including 17 material recovery facilities (“MRFs”), one transfer station and certain related intellectual property assets. Following the transaction, we retained four integrated MRFs located in our core operating regions. As a part of the disposition, we also entered into a ten-year commodities marketing agreement with the purchaser to market 100% of the tonnage from three of our remaining integrated MRFs.

We completed the transaction in the fourth quarter of fiscal year 2011 for $134,195 in gross cash proceeds. This included an estimated $3,795 working capital and other purchase price adjustment, which was subject to further adjustment, as defined in the purchase and sale agreement. The final working capital adjustment, along with additional legal expenses related to the transaction, of $646 was recorded to gain on disposal of discontinued operations, net of income taxes in the first quarter of fiscal year 2012.

In the second quarter of fiscal year 2012, we recorded an additional working capital adjustment of $79 to gain on disposal of discontinued operations, net of income taxes, which related to our subsequent collection of receivable balances that were released to us for collection by the purchaser.

The operating results of these operations for the three and twelve months ended April 30, 2013 and 2012, including those related to prior years, have been reclassified from continuing to discontinued operations in the accompanying condensed consolidated financial statements. Revenues and loss before income taxes attributable to discontinued operations for the three and twelve months ended April 30, 2013 and 2012, respectively, are as follows:

 

     Three Months Ended April 30,     Fiscal Year Ended April 30,  
     2013     2012     2013     2012  

Revenues

   $ 2,143      $ 2,803      $ 12,033      $ 12,865   

Loss before income taxes

   $ (3,700   $ (234   $ (4,480   $ (1,025

 

Note 2: Non - GAAP Financial Measures

In addition to disclosing financial results prepared in accordance with Generally Accepted Accounting Principles in the United States (GAAP), we also disclose earnings before interest, taxes, depreciation and amortization, adjusted for accretion, depletion of landfill operating lease obligations, gain on sale of assets, development project charge write-offs, legal settlement charges, tax settlement costs, bargain purchase gains, asset impairment charges, environmental remediation charges, severance and reorganization charges, expenses from divestiture, acquisition and financing costs, as well as losses on divestiture (Adjusted EBITDA), which is a non-GAAP measure. We also disclose earnings before interest, taxes, adjusted for gain on sale of assets, development project charge write-offs, legal settlement charges, tax settlement costs, bargain purchase gains, asset impairment charges, environmental remediation charges, severance and reorganization charges, expenses from divestiture, acquisition and financing costs, as well as losses on divestiture (Adjusted Operating Income), which is a non-GAAP measure. We also disclose Free Cash Flow, which is defined as net cash provided by operating activities, less capital expenditures attributable to growth and maintenance (excluding acquisition related capital), less payments on landfill operating leases, less assets acquired through financing leases, plus proceeds from the sale of property and equipment, plus contributions from non-controlling interest holder, which is a non-GAAP measure. Adjusted EBITDA and Adjusted Operating Income are reconciled to net income (loss), while Free Cash Flow is reconciled to net cash provided by operating activities.

We present Adjusted EBITDA, Adjusted Operating Income, and Free Cash Flow because we consider them important supplemental measures of our performance and believe they are frequently used by securities analysts, investors and other interested parties in the evaluation of our results. We use these non-GAAP measures to further understand our “core operating performance.” We believe our “core operating performance” represents our on-going performance in the ordinary course of operations. We believe that providing Adjusted EBITDA, Adjusted Operating Income, and Free Cash Flow to investors, in addition to corresponding income statement and cash flow statement measures, affords investors the benefit of viewing our performance using the same financial metrics that our management team uses in making many key decisions and understanding how the core business and our results of operations may look in the future. We further believe that providing this information allows our investors greater transparency and a better understanding of our core financial performance. In addition, the instruments governing our indebtedness use EBITDA (with additional adjustments) to measure our compliance with covenants such as interest coverage, leverage and debt incurrence.

Non-GAAP financial measures are not in accordance with or an alternative for GAAP. Adjusted EBITDA, Adjusted Operating Income, and Free Cash Flow should not be considered in isolation from or as a substitute for financial information presented in accordance with GAAP, and may be different from Adjusted EBITDA, Adjusted Operating Income, or Free Cash Flow presented by other companies.

 

4


Following is a reconciliation of Adjusted EBITDA and Adjusted Operating Income to Net Loss:

 

     Three Months Ended     Fiscal Year Ended  
     April 30,
2013
    April 30,
2012
    April 30,
2013
    April 30,
2012
 

Net Loss

   $ (13,517   $ (49,131   $ (54,463   $ (77,592

Loss from discontinued operations, net

     3,700        140        4,480        614   

Gain on disposal of discontinued operations, net

     —          —          —          (725

Provision (benefit) for income taxes

     1,373        (54     (2,526     1,593   

Other expense (income), net

     1,473        (182     23,501        20,110   

Interest expense, net

     9,081        11,548        41,429        44,966   

Expense from divestiture, acquisition and financing costs

     408        —          1,410        —     

Depreciation and amortization

     13,332        14,137        56,576        58,415   

Severance and reorganization costs

     246        —          3,709        —     

Tax settlement costs

     679        —          679        —     

Reversal of loss on divestiture

     (353     —          —          —     

Asset impairment charge

     —          40,746        —          40,746   

Legal settlement

     —          —          —          1,359   

Development project charge

     —          —          —          131   

Depletion of landfill operating lease obligations

     2,014        1,912        9,372        8,482   

Interest accretion on landfill and environmental remediation liabilities

     919        866        3,675        3,479   
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA (2)

   $ 19,355      $ 19,982      $ 87,842      $ 101,578   

Depreciation and amortization

     (13,332     (14,137     (56,576     (58,415

Depletion of landfill operating lease obligations

     (2,014     (1,912     (9,372     (8,482

Interest accretion on landfill and environmental remediation liabilities

     (919     (866     (3,675     (3,479
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted Operating Income (2)

   $ 3,090      $ 3,067      $ 18,219      $ 31,202   
  

 

 

   

 

 

   

 

 

   

 

 

 

Following is a reconciliation of Free Cash Flow to Net Cash Provided by Operating Activities:

 

     Three Months Ended     Fiscal Year Ended  
     April 30,
2013
    April 30,
2012
    April 30,
2013
    April 30,
2012
 

Net Cash Provided by Operating Activities

   $ 12,690      $ 14,172      $ 43,861      $ 64,171   

Capital expenditures - growth and maintenance

     (10,418     (9,688     (53,015     (57,674

Payments on landfill operating lease contracts

     (535     (564     (6,261     (6,616

Proceeds from sale of property and equipment

     102        155        883        1,492   

Contributions from noncontrolling interest holders

     1,336        362        2,531        536   
  

 

 

   

 

 

   

 

 

   

 

 

 

Free Cash Flow (2)

   $ 3,175      $ 4,437      $ (12,001   $ 1,909   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

5


CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES

SUPPLEMENTAL DATA TABLES

(Unaudited)

(In thousands)

Amounts of our total revenues attributable to services provided for the three and twelve months ended April 30, 2013 and 2012 are as follows:

 

     Three Months Ended April 30,  
     2013      % of Total
Revenue
    2012      % of Total
Revenue
 

Collection

   $ 51,848         47.7   $ 48,038         45.2

Disposal

     24,481         22.5     26,969         25.4

Power generation

     2,498         2.3     2,479         2.3

Organics and processing

     11,885         11.0     10,004         9.4
  

 

 

    

 

 

   

 

 

    

 

 

 

Solid waste operations

     90,712         83.5     87,490         82.3

Customer resource solutions

     8,159         7.5     8,546         8.0

Recycling

     9,823         9.0     10,339         9.7
  

 

 

    

 

 

   

 

 

    

 

 

 

Total revenues

   $ 108,694         100.0   $ 106,375         100.0
  

 

 

    

 

 

   

 

 

    

 

 

 

 

     Fiscal Year Ended April 30,  
     2013      % of Total
Revenue
    2012      % of Total
Revenue
 

Collection

   $ 208,973         45.9   $ 205,296         43.9

Disposal

     115,049         25.3     123,620         26.4

Power generation

     11,354         2.4     11,894         2.6

Organics and processing

     45,373         10.0     40,904         8.7
  

 

 

    

 

 

   

 

 

    

 

 

 

Solid waste operations

     380,749         83.6     381,714         81.6

Customer resource solutions

     35,455         7.8     38,302         8.2

Recycling

     39,131         8.6     47,934         10.2
  

 

 

    

 

 

   

 

 

    

 

 

 

Total revenues

   $ 455,335         100.0   $ 467,950         100.0
  

 

 

    

 

 

   

 

 

    

 

 

 

Components of revenue growth for the three months ended April 30, 2013 compared to the three months ended April 30, 2012 are as follows:

 

     Amount     % of Related
Business
    % of Solid Waste
Operations
    % of Total
Company
 

Solid Waste Operations:

        

Collection

   $ 702        1.5     0.8     0.7

Disposal

     (108     -0.4     -0.1     -0.1
  

 

 

     

 

 

   

 

 

 

Solid Waste Yield

     594          0.7     0.6

Collection

     (1,105       -1.3     -1.0

Disposal

     (489       -0.5     -0.5

Processing and organics

     551          0.6     0.5
  

 

 

     

 

 

   

 

 

 

Solid Waste Volume

     (1,043       -1.2     -1.0

Fuel surcharge

     65          0.1     0.1

Commodity price & volume

     1,791          2.0     1.7

Acquisitions, net divestitures

     3,463          4.0     3.2

Closed landfill

     (1,647       -1.9     -1.6
  

 

 

     

 

 

   

 

 

 

Total Solid Waste

     3,222          3.7     3.0
  

 

 

     

 

 

   

 

 

 

Customer Resource Solutions

     (387         -0.4
  

 

 

       

 

 

 
                 % of Recycling
Operations
       

Recycling Operations:

        

Commodity price

     (1,375       -13.3     -1.3

Commodity volume

     859          8.3     0.8
  

 

 

     

 

 

   

 

 

 

Total Recycling

     (516       -5.0     -0.5
  

 

 

     

 

 

   

 

 

 

Total Company

   $ 2,319            2.2
  

 

 

       

 

 

 

Solid Waste Internalization Rates by Region:

 

     Three Months Ended April 30,     Fiscal Year Ended April 30,  
     2013     2012     2013     2012  

Eastern region

     55.8     52.9     54.3     54.9

Western region

     72.5     74.5     73.3     76.3

Solid waste internalization

     64.2     64.4     64.5     66.2


CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES

SUPPLEMENTAL DATA TABLES

(Unaudited)

(In thousands)

GreenFiber Financial Statistics (1):

 

     Three Months Ended April 30,     Fiscal Year Ended April 30,  
     2013     2012     2013     2012  

Revenues

   $ 16,859      $ 16,228      $ 67,062      $ 77,544   

Net loss

     (1,097     (2,108     (8,810     (20,003

Cash flow provided by (used in) operations

     101        2,517        (1,050     (2,712

Net working capital changes

     (425     2,707        (496     831   

Adjusted EBITDA

   $ 526      $ (190   $ (554   $ (3,543

As a percentage of revenues:

        

Net loss

     -6.5     -13.0     -13.1     -25.8

Adjusted EBITDA

     3.1     -1.2     -0.8     -4.6

 

(1) We hold a 50% interest in US Green Fiber, LLC (“GreenFiber”), a joint venture that manufactures, markets and sells cellulose insulation made from recycled fiber.

Components of Growth and Maintenance Capital Expenditures (1):

 

     Three Months Ended April 30,      Fiscal Year Ended April 30,  
     2013      2012      2013      2012  

Growth capital expenditures:

           

Landfill development

   $ 366       $ 372       $ 955       $ 1,030   

Water treatment facility

     135         —           5,010         —     

Transfer station construction

     396         —           3,605         —     

Landfill gas-to-energy project

     —           1,133         —           2,500   

MRF equipment upgrades

     —           —           —           3,104   

Other

     880         873         2,622         5,577   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total Growth Capital Expenditures

     1,777         2,378         12,192         12,211   
  

 

 

    

 

 

    

 

 

    

 

 

 

Maintenance capital expenditures:

           

Vehicles, machinery / equipment and containers

   $ 2,121       $ 2,931       $ 8,552       $ 18,117   

Landfill construction & equipment

     5,962         3,466         29,617         24,080   

Facilities

     535         833         2,254         2,699   

Other

     23         80         400         567   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total Maintenance Capital Expenditures

     8,641         7,310         40,823         45,463   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total Growth and Maintenance Capital Expenditures

   $ 10,418       $ 9,688       $ 53,015       $ 57,674   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(1) Our capital expenditures are broadly defined as pertaining to either growth, maintenance or acquisition activities. Growth capital expenditures are defined as costs related to development of new airspace, permit expansions, and new recycling contracts along with incremental costs of equipment and infrastructure added to further such activities. Growth capital expenditures include the cost of equipment added directly as a result of organic business growth as well as expenditures associated with increasing infrastructure to increase throughput at transfer stations and recycling facilities. Maintenance capital expenditures are defined as landfill cell construction costs not related to expansion airspace, costs for normal permit renewals, and replacement costs for equipment due to age or obsolescence. Acquisition capital expenditures are defined as costs of equipment added directly as a result of new business growth related to an acquisition.