Casella Waste Systems Inc. (CWST)

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Quarter Fiscal Year 2009 Results
Wednesday December 3, 4:05 pm ET


RUTLAND, VT--(MARKET WIRE)--Dec 3, 2008 -- Casella Waste Systems, Inc. (NasdaqGS:CWST - News), a regional solid waste, recycling and resource management services company, today reported financial results for the second quarter of its 2009 fiscal year.


Highlights of the quarter include:


Free cash flow* for the quarter was up $8.2 million over the same period last year;
Operating income for the quarter was up 1.3 percent over same period last year; and
Solid waste operations continue to perform well through the economic slowdown, while the recycling group faces pressures from volatile commodity pricing.
"Since the northeastern U.S. economy first began to slow in July 2006, we have taken steps to better position our business to perform well in this uncertain economic environment," John W. Casella, chairman and CEO of Casella Waste Systems, said. "We continue to execute well against factors that we can control by combining our successful cost reduction initiatives from the past 18 months with operating programs that enhance productivity and asset utilization."

"These efforts are currently offsetting economic pressures in our solid waste group, with performance in the quarter driven by increases in landfill volumes, improved operating performance of the hauling operations, and roll over impacts from the successful divestiture program of under-performing assets," Casella said.

"While it is difficult to fully assess the potential economic impacts from the financial market turmoil, the recession-resistant qualities of our integrated solid waste group will help our business maintain stability," Casella said.

"The global slowdown is negatively impacting recycling commodity pricing," Casella said. "However, our commodity risk mitigation programs are dampening pricing exposure through the use of hedging agreements, floor price contracts, and long-term supply contracts with customers."

Second Quarter Financial Results

For the quarter ended October 31, 2008, the company reported revenues of $157.5 million, up $7.0 million, or 4.7 percent over the same quarter last year. The company's net income available to common shareholders was $2.1 million or $0.08 per common share compared with net income of $2.8 million or $0.11 per common share in the same quarter last year.

Operating income for the quarter was $16.0 million, up $0.2 million or 1.3 percent over the same quarter last year. Net cash provided by operating activities in the quarter was $19.4 million, compared to $15.1 million in the same quarter last year. The company's earnings before interest, taxes, depreciation and amortization (EBITDA*) were $35.5 million, down $0.5 million or 1.4 percent over the same quarter last year. The company's free cash flow for the quarter was $6.2 million, up $8.2 million over the same period last year.

In early August 2008, the company ceased accepting waste at the Colebrook, NH landfill closure project, creating a negative $1.1 million EBITDA variance for the second quarter of fiscal year 2009 over the same period last year. Excluding the negative year-over-year impact of closing Colebrook, EBITDA for the quarter was up $0.6 million or 1.7 percent over the same quarter last year.

Six Months Financial Results

For the six months ended October 31, 2008, the company reported revenues of $315.4 million, up 5.5 percent over the same period last year. The company's net income per common share for the six month period was $0.17, compared to a net income per common share of $0.18 in the same period last year.

Operating income for the six month period was $31.6 million, up $1.9 million or 6.4 percent over the same period last year. Net cash provided by operating activities for the six month period was $39.2 million, up $3.9 million compared to the same period last year. EBITDA was $70.5 million for the six month period, up $0.8 million or 1.1% from the same period last year. The company's free cash flow for six months period was $4.4 million, up $5.5 million over the same period last year.

Fiscal 2009 Outlook

The company said that its solid waste group continues to maintain a stable level of performance, while the recycling group faces pressures from softer commodity pricing. As expected in late October, commodity pricing continued to weaken during November and the company forecasts average commodity pricing to be down approximately 55 percent from our first quarter of fiscal year 2009 through the remainder of our fiscal year. The updated fiscal year 2009 guidance reflects continued weakness in commodity pricing and softening of economic conditions through the remainder of the fiscal year.

The company has updated its guidance for fiscal year 2009 to the following ranges:


Revenues between $580.0 million and $600.0 million;
Free cash flow remaining constant at the original range of $8.0 million to $14.0 million;
EBITDA between $120.0 million and $124.0 million; and
Capital expenditures between $65.0 million and $69.0 million.
*Non-GAAP Financial Measures

In addition to disclosing financial results prepared in accordance with Generally Accepted Accounting Principles (GAAP), we also disclose free cash flow and earnings before interest, taxes, depreciation and amortization (EBITDA), which are non-GAAP measures.

These measures are provided because we understand that certain investors use this information when analyzing the financial position of companies in the solid waste industry, including us. Historically, these measures have been key in comparing operating efficiency of publicly traded companies in the solid waste industry, and assist investors in measuring our ability to meet capital expenditures, payments on landfill operating lease contracts, and working capital requirements. For these reasons we utilize these non-GAAP metrics to measure our performance at all levels. Free cash flow and EBITDA are not intended to replace "Net Cash Provided by Operating Activities," which is the most comparable GAAP financial measure. Moreover, these measures do not necessarily indicate whether cash flow will be sufficient for such items as capital expenditures, payments on landfill operating lease contracts, or working capital, or to react to changes in our industry or to the economy generally. Because these measures are not calculated by all companies in the same fashion, they may not be comparable to similarly titled measures reported by other companies.

Casella Waste Systems, Inc., headquartered in Rutland, Vermont, provides solid waste management services consisting of collection, transfer, disposal, and recycling services primarily in the eastern United States.