Let's see, does the poster of msg#944 work for AW, WMI, or WWIN? Not sure, but clearly one of the three non growth companies in the industry. One of the reasons these companies are struggling in many markets is due to the high level of intelligence of local market management as is evidenced by this ignorant post. Lets deal with the facts, not opinion. Since 7-15-01 the company WCNX acquired in Memphis has internalized an average of 400+ TPD into its N.E.Miss. landfill utilizing its newly opened Memphis Transfer Station. All of this is either their own volumes, or volumes under contract. At a low twenties tip fee in Memphis and a landfill 50 miles away, they still make about $15 per ton at the landfill, with a cost of probably $5-$7 per ton at the landfill, providing a 50%+ margin at the landfill.You're right, doesn't sound like it will work, margins are too high compared to your company. Also, northeastern part of the state isn't a Knoxville play as I've heard, but rather north of there towards the landfill in Oneida and Southern Kentucky where they have major market share and longterm muni-contracts, Knoxville volumes are all pure upside. I think you need to remember, unlike your current employer, be it AW, WMI, or WWIN, WCNX has a history of equity value creation and has demonstarted they understand how to do deals and what the market dynamics are before entry, not after closing. I can understand how you cannot relate to this for your employer makes a habit of equity value destruction, deal overpayment, and blaming the markets for their lack of knowledge, but it is understandable, they rely on dumb
In the dow jones story on oct 8 about allied waste jaimi goodfriend of first analysis said that cash flow is a more important factor in valuing a waste company than earnings and by the way she has a strong buy rating on casella and raymond james also has a strong buy rating on casella.Both casella and waste connections have revenue which is approx the same but waste connections has a market cap of $769 million while casella has a market cap of $255 million and i think it is possible for casella to reach a market cap of $460 million which would be approx $20.please note the fact that i do not think that they will reach the same kind of valuation as waste connections.In boston i think you will find that casella does have disposal facilities that are near by in another state.on a go forward basis casella has said they will have ebita of $92-96 million for the fiscal year ending april 2002 and their debt is now approx $300 million plus market cap of 255 million;plus preferred stock of $55 million=EV of $610 million-$33 million positive working capital=Ev of $577 million.IF you divide the ev value of 577 million by ebita of $94 million you a multiple of 6.14 of enterprise value to ebita.WASTE connections had a ebita of $33.5 miiion in their latest quarterly report multipled by 4 =ebita of $134 million.ev=market cap of $769 million +debt of
$383 million+$150 million convertable debt=$1302 million final ev divided by ebita of $134 million=9.72 .THis means that waste connections has a multiple of 9.72 of enterprise value to ebita and is more EXPENSIVE than casella waste.If casella waste had the same valuation [ev to ebita multiple]it's stock price would be $24.00 not $10.88.DAniel bandi of the five star rated fund[morningstar]armada small cap value fund and another five star fund john hancock small cap value fund and manager tim quinlisk also like the stock.Doug sease of the wall street journal once recommaned the stock as one of his sleeper stocks on cnbc.I put a lot of money into waste management at a price of $15.80 when everybody was buying tech stocks in late 1999 and i din't buy casella when they were the most popular waste company on wall street,i paid $4.06 for my shares so i believe that i invest always with a attempt at a margin of safety. nobody should put their eggs in one basket and after i sell my stock i will not do so again.I thank you for the reply and i did not mean to insult waste connections or it's management.AT the csfb investor meeting
in june 2001 john casella himself kept comparing his company to waste connections by saying his company only wanted to be number 1 or 2 in any market[something he felt was already true]and concentrate on secondary markets to avoid competition with the majors which he felt he had in common with waste connections.To end on a technical note casella waste is still above it's 200 day moving average while waste connections has broken both it's 50 day and 200 day average plus casella was the only waste stock that did not gap down after the bin laden attack and allied warning.on the day after the attack it traded at about $13.00 on heavy volume of about 400,000 shares.
During their conference call on sep 6 the new cfo mentioned the fact that casella had free cash flow of $7 million in the latest three months.Their guidance for the year ending april 2002 is for free cash flow of $18-22 million.FOR the six months ending on june 30 2001 waste connections had cash flow from operations of approx $28.8 million and casella in the three months ending july 2001 had cash flow from operations of $22.2 million.Waste connections had $383 million in debt at the end of june 2001 and casella now has approx $300 million in debt after selling off non core assets eg recycling,power.They have kept all their solid waste assets and john casella has never said publicly that he wants to be bought out but he has said he wants to focus on the core solid waste business and grow through making tuck-in acquisitions.In dec 1998 before making the kti acquisition casella had a market cap of approx $600 million and solid waste revenue of only approx $150 million and now they have market cap of $255 million and solid waste revenues of approx $350 million.They used to have a price to sales ratio of 4 and waste connections if they had that kind of valuation would have a market cap of $1.2 billion-$1.6 billion.Wall street used to love the company because they were rated the number one waste company as recently as feb 2000.IF you look at the acquisition price rsg paid for richmond sanitation[$145 million for revenue of 75million]or allied paid for star services the lowest possible take out price should be approx $350 million plus assumption of debt.con
Well thought out post.....I commend u. As I stated before, I put together the deal in NE MS.......WCNX sees it for what it is, a smart long term bet. There are $$ to be made in that market. I also had an option on the Scott Co., TN site, another solid performer for WCNX for years to come. The fact of the matter is that there are very few comapnies these days which invoke the heyday of USA, Sanifill, American, etc. WCNX is the new darling, and from everything I've seen they are hitting their stride.