Casella Waste Systems (CWST) Q4 1998 earnings summary

Executive summary

• FY1998 growth was driven by acquisitions and internal gains; revenue reached $118.1M, operating income $11.5M and net income $2.7M.

• Market value increased over 70% from the November 1997 IPO pricing to April 30, 1998; 34 acquisitions added $41M in annualized revenue.

• Strategy centered on consolidating fragmented rural Northeast markets, integrating operations and leveraging landfill assets across neighboring markets.

Financial highlights

• FY1998 revenue was $118.067M, up 48.5% YoY; $33.4M of the increase came from acquisitions, $4.7M from internal price and volume growth, and $0.4M from higher commodity prices.

• Operating income rose to $11.494M from $5.246M; net income was $2.657M versus a $0.419M loss in FY1997.

• GAAP net loss applicable to common shareholders was $3.081M, or $0.39/share, reflecting $5.738M of preferred-stock and warrant accretion; pro forma EPS was $0.37, excluding merger costs and the impairment charge.

• EBITDA was $30.810M, with EBITDA margin at 26.1% versus 25.1% in FY1997; operating cash flow rose to $19.447M from $14.765M.

• Positive working capital was $3.818M at April 30, 1998, versus a $5.577M deficit a year earlier; total assets were $189.033M and long-term debt was $73.748M.

Outlook and guidance

• Priorities included maintaining acquisition pace in core markets, pursuing landfill privatization and municipal partnerships, and improving operational and financial performance.

• Several public-sector privatization initiatives, including landfill projects, were expected to advance in FY1999; regional landfill and operating networks were positioned to support bids.

• Cash from operations, available credit and proposed equity proceeds were expected to support working-capital needs for the next fiscal year.

• Continued growth depended on successfully sourcing and integrating acquisitions, retaining experienced managers, and obtaining capital on acceptable terms.