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Casella Waste Systems, Inc. Announces Fourth Quarter and Fiscal Year 2020 Results; and Provides Fiscal Year 2021 Guidance

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  • CWST

Financial results exceeded expectations, with strong operating execution, real-time cost controls and disciplined cash flow management.

RUTLAND, Vt., Feb. 18, 2021 (GLOBE NEWSWIRE) -- 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 twelve month periods ended December 31, 2020. The Company also provided guidance for the fiscal year ending December 31, 2021 ("fiscal year 2021").

Highlights for the Three and Twelve Months Ended December 31, 2020:

  • Revenues were $200.2 million for the quarter, up $6.6 million, or up 3.4%, from the same period in 2019. Revenues were $774.6 million for the twelve months ended December 31, 2020 ("fiscal year 2020"), up $31.3 million, or up 4.2%, from the fiscal year ended December 31, 2019 ("fiscal year 2019").

  • Overall solid waste pricing for the quarter was up 3.9%, driven by robust collection pricing, up 3.8%, and strong landfill pricing, up 5.6%, from the same period in 2019.

  • Net income was $62.9 million for the quarter, up $53.9 million from the same period in 2019. Net income was $91.1 million for fiscal year 2020, up $59.5 million from fiscal year 2019. The fourth quarter of fiscal year 2020 includes a $55.0 million non-recurring benefit to income taxes due to the reversal of a valuation allowance on the majority of our net operating loss carryforwards and other deferred tax assets.

  • Adjusted EBITDA, a non-GAAP measure, was $42.6 million for the quarter, up $1.5 million, or up 3.7%, from the same period in 2019. Adjusted EBITDA was $171.4 million for fiscal year 2020, up $14.9 million, or up 9.5%, from fiscal year 2019.

  • Net cash provided by operating activities was $139.9 million for fiscal year 2020, up $23.1 million, or up 19.8%, from fiscal year 2019.

  • Adjusted Free Cash Flow, a non-GAAP measure, was $69.1 million for fiscal year 2020, up $13.7 million, or up 24.7%, from fiscal year 2019.

  • Exceeded our initial guidance ranges announced in February 2020 for net income, net cash provided by operating activities and Adjusted Free Cash Flow and achieved our initial Adjusted EBITDA guidance range.

“The last year has been a challenging time and I am extremely proud of our 2,500 dedicated employees, especially our frontline team members who have worked hard to effectively service our customers while meeting our high safety and environmental standards,” said John W. Casella, Chairman and CEO of Casella Waste Systems, Inc. “As an essential services provider, we have continued to operate effectively through this period and our number one priority has been, and will continue to be, keeping our people and the communities we serve safe and healthy.”

“Solid waste volumes were down (4.6)% year-over-year in the quarter and down (7.2)% for the year, as certain customers sustained negative business impacts from the COVID-19 pandemic,” Casella said. “Volume declines continued to moderate throughout the fourth quarter as various commercial customers reopened or increased services, construction activity increased, and overall economic activity rebounded across our mainly secondary and rural markets in the northeast.”

“Despite the negative volume and cost impacts of the COVID-19 pandemic during 2020, we still increased Adjusted EBITDA by 9.5% and Adjusted Free Cash Flow by 24.7% year-over-year,” Casella said. “This is a true testament to the hard work and dedication of our team, the resiliency of our business model, and our asset positioning in the disposal capacity constrained northeast market that allowed us to advance positive pricing. Systems enhancements over the last year have improved our ability to analyze and respond to key sales trends and operational metrics in a more responsive and intelligent manner.”

“In addition, we continue to execute well against our long-term growth strategy, and year-to-date in 2021 we have acquired one business with approximately $4 million of annualized revenues,” Casella said. “Our acquisition and development pipeline remains robust, and we believe that there is substantial opportunity to drive additional cash flow growth across our footprint with opportunistic acquisitions.”

For the quarter, revenues were $200.2 million, up $6.6 million, or up 3.4%, from the same period in 2019, with revenue growth mainly driven by: positive collection and disposal pricing; the roll-over impact from acquisitions; higher resource solutions volumes; and higher recycling commodity prices; partially offset by lower fuel surcharge and other fees along with lower solid waste volumes primarily due to the negative economic impacts of the COVID-19 pandemic.

Net income was $62.9 million for the quarter, or $1.24 per diluted common share, up $53.9 million, or up 594.0%, as compared to net income of $9.1 million, or $0.19 per diluted common share, for the same period in 2019. The quarter included $0.3 million of expense from acquisition activities, $0.8 million of legal and other expenses associated with closure of our landfill in Southbridge, Massachusetts ("Southbridge Landfill"), and a $55.0 million non-recurring benefit to income taxes due to the reversal of a valuation allowance on the majority of our net operating loss carryforwards and other deferred tax assets. The same quarter last year included $0.5 million of expense from acquisition activities and $0.6 million of legal and other costs associated with the Southbridge Landfill closure. Adjusted Net Income, a non-GAAP measure, was $8.8 million for the quarter, or $0.17 Adjusted Diluted Earnings Per Common Share, down $(1.4) million, or down (14.2)%, as compared to Adjusted Net Income of $10.2 million, or $0.21 Adjusted Diluted Earnings Per Common Share, for the same period in 2019. Operating income was $14.2 million for the quarter, down $(0.4) million, or down (2.7)% from the same period in 2019. Adjusted EBITDA was $42.6 million for the quarter, up $1.5 million, or up 3.7%, from the same period in 2019.

For fiscal year 2020, revenues were $774.6 million, up $31.3 million, or up 4.2%, from fiscal year 2019. Net income was $91.1 million, or $1.86 per diluted common share, for fiscal year 2020, as compared to net income of $31.7 million, or $0.66 per diluted common share, for fiscal year 2019. Adjusted Net Income was $40.8 million, or $0.83 Adjusted Diluted Earnings Per Common Share, for fiscal year 2020, as compared to $40.6 million, or $0.85 Adjusted Diluted Earnings Per Common Share, for fiscal year 2019.

Operating income was $59.3 million for fiscal year 2020, up $6.2 million from fiscal year 2019. Adjusted Operating Income, a non-GAAP measure, was $65.7 million for fiscal year 2020, up $3.7 million from fiscal year 2019. Adjusted EBITDA was $171.4 million for fiscal year 2020, up $14.9 million from fiscal year 2019.

Net cash provided by operating activities was $139.9 million for fiscal year 2020, as compared to $116.8 million for fiscal year 2019. Adjusted Free Cash Flow was $69.1 million for fiscal year 2020, as compared to $55.5 million for fiscal year 2019. Adjusted Free Cash Flow for the fiscal year included the following adjustments: $8.9 million of landfill closure, site improvement and remediation expenditures associated with the remediation project at our Potsdam, New York scrap yard ("Potsdam") and the Southbridge Landfill closure; $1.3 million of cash outlays related to acquisition activities; $10.6 million of capital expenditures associated with the expansion at our landfill in Coventry, Vermont ("Waste USA Landfill"); and $16.0 million of non-recurring capital expenditures primarily related to acquisitions.

Fiscal Year 2021 Outlook

“Our 2021 budget is tracking ahead of the strategic plan that we first introduced in August 2017 and reflects continued execution of our key strategies with the goal of driving additional shareholder value," Casella said. “We expect solid growth again in 2021 despite continued volume headwinds and negative cost impacts of the COVID-19 pandemic.”

“Our guidance ranges assume a stable economic environment continuing from the fourth quarter 2020 through the remainder of 2021,” Casella said. "And the guidance ranges do not contemplate a severe relapse of the COVID-19 pandemic or new stay-at-home orders, which may negatively impact commercial and general economic activity in our markets through the remainder of 2021. There are still many variables outside of our control, such as new waves of COVID-19, additional stay-at-home orders, the availability and effectiveness of vaccines and therapeutics as well as impacts on the economy as the Federal stimulus programs run their course. However, our team has remained nimble in this rapidly changing environment and continues to flex operating costs and drive operating efficiencies to offset lower volumes or other headwinds.”

The Company provided guidance for fiscal year 2021 by estimating results in the following ranges:

  • Revenues between $815 million and $830 million (as compared to $774.6 million in fiscal year 2020);

  • Net income between $33 million and $37 million (as compared to $91.1 million in fiscal year 2020, which included a $55.0 million benefit from the reversal of the valuation allowance);

  • Adjusted EBITDA between $184 million and $188 million (as compared to $171.4 million in fiscal year 2020);

  • Net cash provided by operating activities between $149 million and $153 million (as compared to $139.9 million in fiscal year 2020); and

  • Adjusted Free Cash Flow between $75 million and $79 million (as compared to $69.1 million in fiscal year 2020).

Adjusted EBITDA and Adjusted Free Cash Flow related to fiscal year 2021 are described in the Reconciliation of Fiscal Year 2021 Outlook Non-GAAP Measures section of this press release. Net income and Net cash provided by operating activities are provided as the most directly comparable GAAP measures to Adjusted EBITDA and Adjusted Free Cash Flow, respectively, however these forward-looking estimates for fiscal year 2021 do not contemplate any unanticipated or non-recurring impacts.

The Company provided the following assumptions that are built into its outlook:

  • Overall the Company expects revenue growth of between 5.2% and 7.2% in fiscal year 2021, including 1.5% revenue growth from the roll-over impact of acquisitions completed during fiscal year 2020 and those already completed in early fiscal year 2021.

  • Does not include the impact of any acquisitions that have not yet been completed.

  • In the Solid Waste business, revenue growth of between 6.5% and 9.5%, with price growth from 3.5% to 4.5%, volume growth from 1.0% to 2.5%, and 2.0% growth from acquisitions completed during fiscal year 2020 and those already completed in early fiscal year 2021.

  • In the Resource Solutions business, revenue growth of approximately 1.5%, mainly driven by higher recycling commodity prices and neutral to slightly higher volumes, partially offset by lower processing fees.

  • Capital expenditures of approximately $113 million, which includes approximately $15 million of non-recurring capital associated with acquisition integration, and $13 million of Waste USA landfill phase VI construction capital expenditures.

  • Net cash provided by operating activities will be negatively impacted in fiscal year 2021 as we plan to spend $10 million on landfill closure, site improvement and remediation expenditures associated with the Southbridge landfill closure. We expect the Southbridge Landfill closure project to be substantially completed in fiscal year 2021.

  • Given the reversal of the tax valuation allowance in fiscal year 2020, we now expect an income statement tax provision of approximately 30.5% in fiscal year 2021. However, our cash taxes are expected to remain at approximately $1.5 million in fiscal year 2021.

Conference call to discuss quarter and fiscal year results

The Company will host a conference call to discuss these results on Friday, February 19, 2021 at 10:00 a.m. Eastern Time. Individuals interested in participating in the call should dial (877) 838-4153 or for international participants (720) 545-0037 at least 10 minutes before start time. The Conference ID is 933 8304 for the call and the replay.

The call will also be webcast; to listen, participants should visit the company’s website at http://ir.casella.com and follow the appropriate link to the webcast. A replay of the call will be available on the Company's website, or by calling (855) 859-2056 or (404) 537-3406 (Conference ID 933 8304).

About Casella Waste Systems, Inc.

Casella Waste Systems, Inc., headquartered in Rutland, Vermont, provides resource management expertise and services to residential, commercial, municipal and industrial customers, primarily in the areas of solid waste collection and disposal, transfer, recycling and organics services in the northeastern United States. For further information, investors contact Ned Coletta, Chief Financial Officer at (802) 772-2239; media contact Joseph Fusco, Vice President at (802) 772-2247; or visit the Company’s website at http://www.casella.com.

Safe Harbor Statement

Certain matters discussed in this press release, including, but not limited to, the statements regarding our intentions, beliefs or current expectations concerning, among other things, the expected and potential direct or indirect impacts of the COVID-19 pandemic on our business; our financial performance; financial condition; operations and services; prospects; growth; strategies; and guidance for fiscal year 2021, are “forward-looking statements” intended to qualify for the safe harbors from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements can generally be identified as such by the context of the statements, including words such as “believe,” “expect,” “anticipate,” “plan,” “may,” “would,” “intend,” “estimate,” "will," “guidance” and other similar expressions, whether in the negative or affirmative. These forward-looking statements are based on current expectations, estimates, forecasts and projections about the industry and markets in which the Company operates and management’s beliefs and assumptions. The Company cannot guarantee that it actually will achieve the financial results, plans, intentions, expectations or guidance disclosed in the forward-looking statements made. Such forward-looking statements, and all phases of the Company's operations, involve a number of risks and uncertainties, any one or more of which could cause actual results to differ materially from those described in its forward-looking statements.

Such risks and uncertainties include or relate to, among other things, the following: it is challenging to predict the duration and scope of the COVID-19 pandemic and its negative effect on the economy, our operations and financial results; policies adopted by China and other countries will further restrict imports of recyclable materials into those countries and have a further material impact on the Company’s financial results; the capping and closure of the Southbridge Landfill and the lawsuit relating to the North Country Landfill could result in material unexpected costs; adverse weather conditions may negatively impact the Company's revenues and its operating margin; the Company may be unable to increase volumes at its landfills or improve its route profitability; the economics of recycling programs may cause municipalities to reconsider the viability of continuing these programs; the Company's need to service its indebtedness may limit its ability to invest in its business; the Company may be unable to reduce costs or increase pricing or volumes sufficiently to achieve estimated Adjusted EBITDA and other targets; landfill operations and permit status may be affected by factors outside the Company's control; the Company may be required to incur capital expenditures in excess of its estimates; the Company's insurance coverage and self-insurance reserves may be inadequate to cover all of its significant risk exposures; fluctuations in energy pricing or the commodity pricing of its recyclables may make it more difficult for the Company to predict its results of operations or meet its estimates; the Company may be unable to achieve its acquisition or development targets on favorable pricing or at all; and the Company may incur environmental charges or asset impairments in the future.

There are a number of other important risks and uncertainties that could cause the Company's actual results to differ materially from those indicated by such forward-looking statements. These additional risks and uncertainties include, without limitation, those detailed in Item 1A, “Risk Factors” in the Company's most recently filed Form 10-K and 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:

Ned Coletta
Chief Financial Officer
(802) 772-2239

Media:

Joseph Fusco
Vice President
(802) 772-2247
http://www.casella.com

CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except for per share data)

Three Months Ended
December 31,

Twelve Months Ended
December 31,

2020

2019

2020

2019

Unaudited

Revenues

$

200,240

$

193,619

$

774,584

$

743,290

Operating expenses:

Cost of operations

133,260

130,949

515,646

508,656

General and administration

28,170

25,358

102,410

92,782

Depreciation and amortization

23,501

21,646

90,782

79,790

Southbridge Landfill closure charge

773

612

4,587

2,709

Expense from acquisition activities

328

450

1,862

2,687

Withdrawal costs - multiemployer pension plan

3,591

186,032

179,015

715,287

690,215

Operating income

14,208

14,604

59,297

53,075

Other expense (income):

Interest expense, net

5,401

6,174

22,068

24,735

Other income

(466

)

(480

)

(1,073

)

(1,439

)

Other expense, net

4,935

5,694

20,995

23,296

Income before income taxes

9,273

8,910

38,302

29,779

Benefit for income taxes

(53,644

)

(156

)

(52,804

)

(1,874

)

Net income

$

62,917

$

9,066

$

91,106

$

31,653

Basic weighted average common shares outstanding

50,436

47,811

48,793

47,226

Basic earnings per common share

$

1.25

$

0.19

$

1.87

$

0.67

Diluted weighted average common shares outstanding

50,719

48,583

49,045

47,966

Diluted earnings per common share

$

1.24

$

0.19

$

1.86

$

0.66


CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)

December 31,
2020

December 31,
2019

ASSETS

CURRENT ASSETS:

Cash and cash equivalents

$

154,342

$

3,471

Accounts receivable, net of allowance for credit losses

74,198

80,205

Other current assets

18,714

19,137

Total current assets

247,254

102,813

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

510,512

443,825

Operating lease right-of-use assets

95,310

108,025

Goodwill

194,901

185,819

Intangible assets, net of accumulated amortization

58,324

58,721

Restricted assets

1,848

1,586

Cost method investments

11,264

11,264

Deferred income taxes

61,163

8,577

Other non-current assets

13,322

11,552

Total assets

$

1,193,898

$

932,182

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:

Current maturities of debt

$

9,240

$

4,301

Current operating lease liabilities

8,547

9,356

Accounts payable

49,198

64,396

Other accrued liabilities

64,223

52,536

Total current liabilities

131,208

130,589

Debt, less current portion

530,411

509,021

Operating lease liabilities, less current portion

60,979

70,709

Other long-term liabilities

109,158

99,110

Total stockholders' equity

362,142

122,753

Total liabilities and stockholders' equity

$

1,193,898

$

932,182


CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

Twelve Months Ended
December 31,

2020

2019

Cash Flows from Operating Activities:

Net income

$

91,106

$

31,653

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

90,782

79,790

Depletion of landfill operating lease obligations

7,781

7,711

Interest accretion on landfill and environmental remediation liabilities

7,090

6,976

Amortization of debt issuance costs

2,169

2,293

Stock-based compensation

8,219

7,223

Operating lease right-of-use assets expense

8,476

9,559

Loss (gain) on sale of property and equipment

936

(892

)

Southbridge Landfill non-cash closure charge

263

74

Non-cash expense from acquisition activities

554

65

Withdrawal costs - multiemployer pension plan

2,230

Deferred income taxes

(52,288

)

(1,244

)

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

(25,166

)

(28,609

)

Net cash provided by operating activities

139,922

116,829

Cash Flows from Investing Activities:

Acquisitions, net of cash acquired

(32,457

)

(75,379

)

Additions to property, plant and equipment

(108,108

)

(103,165

)

Proceeds from sale of property and equipment

533

750

Proceeds from property insurance settlement

332

Net cash used in investing activities

(140,032

)

(177,462

)

Cash Flows from Financing Activities:

Proceeds from debt borrowings

157,000

197,800

Principal payments on debt

(149,378

)

(243,374

)

Payments of debt issuance costs

(1,531

)

(749

)

Proceeds from the exercise of share based awards

100

3,355

Proceeds from the public offering of Class A Common Stock

144,790

100,446

Proceeds from unregistered sale of Class A Common Stock

2,619

Net cash provided by financing activities

150,981

60,097

Net increase (decrease) in cash and cash equivalents

150,871

(536

)

Cash and cash equivalents, beginning of period

3,471

4,007

Cash and cash equivalents, end of period

$

154,342

$

3,471

Supplemental Disclosure of Cash Flow Information:

Cash interest

$

20,117

$

23,183

Cash income tax refunds

$

(1,534

)

$

(1,631

)

Supplemental Disclosure of Non-Cash Investing and Financing Activities:

Non-current assets obtained through long-term obligations

$

18,069

$

13,053


CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES

RECONCILIATION OF CERTAIN NON-GAAP MEASURES
(Unaudited)
(In thousands)

Non-GAAP Performance Measures

In addition to disclosing financial results prepared in accordance with generally accepted accounting principles in the United States ("GAAP"), the Company also presents non-GAAP performance measures such as Adjusted EBITDA, Adjusted Operating Income, 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 Ended
December 31,

Twelve Months Ended
December 31,

2020

2019

2020

2019

Net income

$

62,917

$

9,066

$

91,106

$

31,653

Net income as a percentage of revenues

31.4

%

4.7

%

11.8

%

4.3

%

Benefit for income taxes

(53,644

)

(156

)

(52,804

)

(1,874

)

Other income

(466

)

(480

)

(1,073

)

(1,439

)

Interest expense, net

5,401

6,174

22,068

24,735

Expense from acquisition activities (i)

328

450

1,862

2,687

Southbridge Landfill closure charge (ii)

773

612

4,587

2,709

Withdrawal costs - multiemployer pension plan (iii)

3,591

Depreciation and amortization

23,501

21,646

90,782

79,790

Depletion of landfill operating lease obligations

2,070

2,131

7,781

7,711

Interest accretion on landfill and environmental remediation liabilities

1,766

1,666

7,090

6,976

Adjusted EBITDA

$

42,646

$

41,109

$

171,399

$

156,539

Adjusted EBITDA as a percentage of revenues

21.3

%

21.2

%

22.1

%

21.1

%

Depreciation and amortization

(23,501

)

(21,646

)

(90,782

)

(79,790

)

Depletion of landfill operating lease obligations

(2,070

)

(2,131

)

(7,781

)

(7,711

)

Interest accretion on landfill and environmental remediation liabilities

(1,766

)

(1,666

)

(7,090

)

(6,976

)

Adjusted Operating Income

$

15,309

$

15,666

$

65,746

$

62,062

Adjusted Operating Income as a percentage of revenues

7.6

%

8.1

%

8.5

%

8.3

%



Three Months Ended
December 31,

Twelve Months Ended
December 31,

2020

2019

2020

2019

Net income

$

62,917

$

9,066

$

91,106

$

31,653

Expense from acquisition activities (i)

328

450

1,862

2,687

Southbridge Landfill closure charge (ii)

773

612

4,587

2,709

Withdrawal costs - multiemployer pension plan (iii)

3,591

Valuation allowance (iv)

(54,966

)

(54,966

)

Tax effect (v)

(300

)

67

(1,756

)

Adjusted Net Income

$

8,752

$

10,195

$

40,833

$

40,640

Diluted weighted average common shares outstanding

50,719

48,583

49,045

47,966

Diluted earnings per common share

$

1.24

$

0.19

$

1.86

$

0.66

Expense from acquisition activities (i)

0.01

0.01

0.04

0.06

Southbridge Landfill closure charge (ii)

0.02

0.01

0.09

0.06

Withdrawal costs - multiemployer pension plan (iii)

0.07

Valuation allowance (iv)

(1.09

)

(1.12

)

Tax effect (v)

(0.01

)

(0.04

)

Adjusted Diluted Earnings Per Common Share

$

0.17

$

0.21

$

0.83

$

0.85

(i) Expense from acquisition activities are primarily legal, consulting or other similar costs incurred during the period related to acquisition diligence, acquisition integration or select development projects as part of the Company’s strategic growth initiative.

(ii) Southbridge Landfill closure charge are expenses related to the unplanned early closure of the Southbridge Landfill along with associated legal activities. The Company initiated the unplanned, premature closure of the Southbridge Landfill in the fiscal year ended December 31, 2017 due to the significant capital investment required to obtain expansion permits and for future development coupled with an uncertain regulatory environment. The unplanned closure of the Southbridge Landfill reduced the economic useful life of the assets from prior estimates by approximately ten years. The Company expects to incur certain costs through completion of the closure process.

(iii) Withdrawal costs – multiemployer pension plan consists of a charge related to withdrawal from a multiemployer pension plan.

(iv) Valuation allowance consists of the income tax benefit associated with our assessment on the recoverability of deferred tax assets and the resulting unwinding of our valuation allowance pertaining to the majority of our net operating loss carryforwards and other deferred tax assets.

(v) 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. Amounts in the prior quarters has been adjusted to $442, $248, $766 for the three months ended March 31, 2020, June 30, 2020 and September 30, 2020, respectively, computed as if the valuation allowance was released at the beginning of the year and excluding the tax benefit from the release.

Non-GAAP Liquidity Measures

In addition to disclosing financial results prepared in accordance with GAAP, the Company also presents non-GAAP liquidity measures such as Adjusted Free Cash Flow, Bank Consolidated EBITDA, Consolidated Funded Debt, Net and Consolidated Net Leverage Ratio that provide an understanding of the Company's liquidity because it considers them important supplemental measures of its liquidity that are frequently used by securities analysts, investors and other interested parties in the evaluation of the Company's cash flow generation from its core operations that are then available to be deployed for strategic acquisitions, growth investments, development projects, unusual landfill closures, site improvement and remediation, and strengthening the Company’s balance sheet through paying down debt. The Company also believes that identifying the impact of certain items as adjustments provides more transparency and comparability across periods. Management uses non-GAAP liquidity measures to understand the Company’s cash flow provided by operating activities after certain expenditures along with its consolidated net leverage and believes that these measures demonstrate the Company’s ability to execute on its strategic initiatives. The Company believes that providing such non-GAAP liquidity measures to investors, in addition to corresponding cash flow statement measures, affords investors the benefit of viewing the Company’s liquidity using the same financial metrics that the management team uses in making many key decisions and understanding how the core business and cash flow generation has performed. The tables below, in some instances on an adjusted basis to exclude certain items, set forth such liquidity measures:

Three Months Ended
December 31,

Twelve Months Ended
December 31,

2020

2019

2020

2019

Net cash provided by operating activities

$

28,007

$

45,334

$

139,922

$

116,829

Capital expenditures

(30,837

)

(27,167

)

(108,108

)

(103,165

)

Proceeds from sale of property and equipment

103

208

533

750

Proceeds from property insurance settlement

332

Southbridge Landfill closure and Potsdam environmental remediation (i)

4,169

4,362

8,906

15,445

Cash outlays from acquisition activities (ii)

323

456

1,307

2,622

Post acquisition and development project capital expenditures (iii)

3,504

5,870

16,014

17,782

Waste USA Landfill phase VI capital expenditures (iv)

3,873

2,303

10,573

4,873

Adjusted Free Cash Flow

$

9,142

$

31,366

$

69,147

$

55,468

(i) Southbridge Landfill closure and Potsdam environmental remediation are cash outlays associated with the unplanned closure of the Southbridge Landfill and the Company's portion of costs associated with environmental remediation at Potsdam, which are added back when calculating Adjusted Free Cash Flow due to their non-recurring nature and the significance of the related cash flows. The Company initiated the unplanned closure of the Southbridge Landfill in the fiscal year ended December 31, 2017 and expects to incur cash outlays through completion of the closure and environmental remediation process. The Potsdam site was deemed a Superfund site in 2000 and is not associated with current operations.

(ii) Cash outlays from acquisition activities are cash outlays for transaction and integration costs relating to specific acquisition transactions and include legal, environmental, valuation and consulting as well as asset, workforce and system integration costs as part of the Company’s strategic growth initiative.

(iii) Post acquisition and development project capital expenditures are (x) acquisition related capital expenditures that are necessary to optimize strategic synergies associated with integrating newly acquired operations as contemplated by the discounted cash flow return analysis conducted by management as part of the acquisition investment decision; and (y) non-routine development investments that are expected to provide long-term returns. Acquisition related capital expenditures include the following costs required to achieve initial operating synergies: trucks, equipment and machinery; and facilities, land, IT infrastructure or related upgrades to integrate operations.

(iv) Waste USA Landfill phase VI capital expenditures are capital expenditures related to Waste USA Landfill phase VI construction and development that are added back when calculating Adjusted Free Cash Flow due to the specific nature of this investment in the development of long-term infrastructure which is different from landfill construction investments in the normal course of operations. This investment at the Waste USA Landfill is unique because the Company is investing in long-term infrastructure over an estimated four year period that will not yield a positive economic benefit until 2023 and extending over approximately 20 years.

Following is the Consolidated Net Leverage Ratio and the reconciliations of Consolidated Funded Debt, Net from debt and Bank Consolidated EBITDA from Net cash provided by operating activities:

Twelve Months Ended
December 31, 2020

Covenant Requirement at
December 31, 2020

Consolidated Net Leverage Ratio (i)

2.76

4.00

(i) Our credit agreement requires us to maintain a maximum consolidated net leverage ratio, to be measured at the end of each fiscal quarter ("Consolidated Net Leverage Ratio"). The Consolidated Net Leverage Ratio is calculated as consolidated debt, net of unencumbered cash and cash equivalents in excess of $2,000 and up to $50,000 ("Consolidated Funded Debt, Net", calculated at $498,419 as of December 31, 2020, or $548,419 of consolidated debt, less $50,000 of cash and cash equivalents in excess of $2,000 and up to $50,000 as of December 31, 2020), divided by consolidated EBITDA as defined by our credit agreement ("Bank Consolidated EBITDA"). Bank Consolidated EBITDA is based on operating results for the twelve months preceding the measurement date of December 31, 2020. A reconciliation of Bank Consolidated EBITDA from Net cash provided by operating activities is as follows:

Twelve Months Ended
December 31, 2020

Net cash provided by operating activities

$

139,922

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

25,166

Loss on sale of property and equipment

(936

)

Non-cash expense from acquisition activities

(554

)

Southbridge Landfill non-cash closure charge

(263

)

Operating lease right-of-use assets expense

(8,476

)

Stock-based compensation

(8,219

)

Interest expense, less amortization of debt issuance costs

20,202

Benefit for income taxes, net of deferred income taxes

(516

)

Adjustments as allowed by the credit agreement

14,130

Bank Consolidated EBITDA

$

180,456


CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES

RECONCILIATION OF FISCAL YEAR 2021 OUTLOOK NON-GAAP MEASURES
(Unaudited)
(In thousands)

Following is a reconciliation of the Company's estimated Adjusted EBITDA (i) from estimated Net income for fiscal year 2021:

(Estimated) Fiscal Year
Ending December 31, 2021

Net income

$33,000 - $37,000

Provision for income taxes

14,000

Other income

(500)

Interest expense, net

22,500

Expense from acquisition activities

1,000

Southbridge Landfill closure charge

1,000

Depreciation and amortization

98,000

Depletion of landfill operating lease obligations

8,000

Interest accretion on landfill and environmental remediation liabilities

7,000

Adjusted EBITDA

$184,000 - $188,000


Following is a reconciliation of the Company's estimated Adjusted Free Cash Flow (i) from estimated Net cash provided by operating activities for fiscal year 2021:

(Estimated) Fiscal Year
Ending December 31, 2021

Net cash provided by operating activities

$149,000 - $153,000

Capital expenditures

(113,000)

Southbridge Landfill closure and Potsdam environmental remediation

10,000

Cash outlays from acquisition activities

1,000

Post acquisition and development project capital expenditures

15,000

Waste USA Landfill phase VI capital expenditures

13,000

Adjusted Free Cash Flow

$75,000 - $79,000

(i) See footnotes for Non-GAAP Performance Measures and Non-GAAP Liquidity Measures included in the Reconciliation of Certain Non-GAAP Measures for further disclosure over the nature of the various adjustments to estimated Adjusted EBITDA and estimated Adjusted Free Cash Flow.

CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES
SUPPLEMENTAL DATA TABLES
(Unaudited)
(In thousands)

Amounts of total revenues attributable to services provided for the three and twelve months ended December 31, 2020 and 2019 are as follows:

Three Months Ended December 31,

2020

% of Total
Revenues

2019

% of Total
Revenues

Collection

$

100,600

50.2

%

$

97,930

50.6

%

Disposal

45,575

22.8

%

47,149

24.4

%

Power generation

1,141

0.6

%

921

0.5

%

Processing

1,937

0.9

%

1,750

0.8

%

Solid waste operations

149,253

74.5

%

147,750

76.3

%

Organics

14,504

7.3

%

13,658

7.0

%

Customer solutions

22,458

11.2

%

21,397

11.1

%

Recycling

14,025

7.0

%

10,814

5.6

%

Resource solutions operations

50,987

25.5

%

45,869

23.7

%

Total revenues

$

200,240

100.0

%

$

193,619

100.0

%



Twelve Months Ended December 31,

2020

% of Total
Revenues

2019

% of Total
Revenues

Collection

$

391,438

50.5

%

$

372,041

50.1

%

Disposal

175,546

22.7

%

181,895

24.5

%

Power generation

4,072

0.5

%

3,576

0.5

%

Processing

7,218

1.0

%

7,175

0.9

%

Solid waste operations

578,274

74.7

%

564,687

76.0

%

Organics

59,394

7.6

%

56,326

7.5

%

Customer solutions

86,680

11.2

%

79,457

10.7

%

Recycling

50,236

6.5

%

42,820

5.8

%

Resource solutions operations

196,310

25.3

%

178,603

24.0

%

Total revenues

$

774,584

100.0

%

$

743,290

100.0

%


Components of revenue growth for the three months ended December 31, 2020 compared to the three months ended December 31, 2019 are as follows:

Amount

% of
Related
Business

% of
Operations

% of Total
Company

Solid waste operations:

Collection

$

3,698

3.8

%

2.5

%

1.9

%

Disposal

1,992

4.2

%

1.4

%

1.0

%

Solid waste price

5,690

3.9

%

2.9

%

Collection

(2,939

)

(2.0

)

%

(1.5

)

%

Disposal

(4,105

)

(2.8

)

%

(2.1

)

%

Processing

181

0.2

%

0.1

%

Solid waste volume

(6,863

)

(4.6

)

%

(3.5

)

%

Fuel surcharge and other fees

(1,613

)

(1.2

)

%

(0.8

)

%

Commodity price and volume

231

0.2

%

0.1

%

Acquisitions, net divestitures

4,053

2.7

%

2.1

%

Closed operations

5

%

%

Total solid waste operations

1,503

1.0

%

0.8

%

Resource solutions operations:

Organics

846

1.8

%

0.4

%

Customer solutions

1,061

2.3

%

0.5

%

Recycling:

Commodity price

3,272

30.3

%

7.1

%

1.7

%

Processing price

(845

)

(7.8)

%

(1.8

)

%

(0.4

)

%

Volume

484

4.5

%

1.1

%

0.3

%

Commodity acquisition

300

2.7

%

0.6

%

0.1

%

Recycling

3,211

29.7

%

7.0

%

1.7

%

Total resource solutions operations

5,118

11.1

%

2.6

%

Total company

$

6,621

3.4

%


Solid waste internalization rates by region for the three and twelve months ended December 31, 2020 and 2019 are as follows:


Three Months Ended
December 31,

Twelve Months Ended
December 31,

2020

2019

2020

2019

Eastern region

44.7

%

49.4

%

47.0

%

49.7

%

Western region

59.0

%

57.6

%

60.7

%

60.2

%

Solid waste internalization

52.2

%

53.7

%

54.2

%

54.9

%


Components of capital expenditures (i) for the three and twelve months ended December 31, 2020 and 2019 are as follows:


Three Months Ended
December 31,

Twelve Months Ended
December 31,

2020

2019

2020

2019

Growth capital expenditures:

Post acquisition and development project

$

3,504

$

5,870

$

16,014

$

17,782

Waste USA Landfill phase VI

3,873

2,303

10,573

4,873

Other

2,452

740

4,362

1,582

Growth capital expenditures

9,829

8,913

30,949

24,237

Replacement capital expenditures:

Landfill development

7,061

5,637

36,981

26,915

Vehicles, machinery, equipment and containers

10,022

8,867

30,846

42,828

Facilities

2,611

2,946

5,170

7,001

Other

1,314

804

4,162

2,184

Replacement capital expenditures

21,008

18,254

77,159

78,928

Capital expenditures

$

30,837

$

27,167

$

108,108

$

103,165

(i) The Company's capital expenditures are broadly defined as pertaining to either growth or replacement activities. Growth capital expenditures are defined as costs related to development projects, organic business growth, and the integration of newly acquired operations. Growth capital expenditures include costs related to the following: 1) post acquisition and development projects that are necessary to optimize strategic synergies associated with integrating newly acquired operations as contemplated by the discounted cash flow return analysis conducted by management as part of the acquisition investment decision as well as non-routine development investments that are expected to provide long-term returns and includes the following capital expenditures required to achieve initial operating synergies: trucks, equipment and machinery; and facilities, land, IT infrastructure or related upgrades to integrate operations; 2) Waste USA Landfill phase VI construction and development for long-term infrastructure, which is unique and different from landfill construction investments in the normal course of operations because the Company is investing in long-term infrastructure over an estimated four year period that will not yield a positive economic benefit until 2023 and extending over approximately 20 years; and 3) development of new airspace, permit expansions, and new recycling contracts, equipment added directly as a result of organic business growth and infrastructure added to increase throughput at transfer stations and recycling facilities. Replacement capital expenditures are defined as landfill cell construction costs not related to expansion airspace, costs for normal permit renewals, and replacement costs for equipment due to age or obsolescence.