Casella Waste Systems (CWST) Q4 2003 earnings summary

Executive summary

• FY2003 strategy centered on traditional integrated solid-waste and recycling operations after non-core divestitures, with disciplined core-market expansion and lower debt.

• Long-term vision: double the business over 3–5 years by densifying existing markets, acquiring tuck-ins and divested assets, and adding disposal capacity.

• Market position included #1 or #2 collection-provider status in 80% of served markets and operations spanning collection, transfer, recycling and disposal.

Financial highlights

• FY2003 revenue was $420.9M, down $0.3M YoY; core solid-waste price and volume gains, higher recycling prices and volumes, and acquisition rollover largely offset divestiture-related declines.

• Operating income was $34.0M vs. $39.8M in FY2002; higher insurance costs and a $4.9M impairment charge weighed on results.

• Reported net loss was $59.8M and diluted EPS was $(2.63), including a $63.9M goodwill impairment charge, net of tax; adjusted net income available to common stockholders was $1.0M and adjusted EPS was $0.04.

• Operating cash flow was $65.0M vs. $67.7M in FY2002; capital expenditures were $41.9M, up from $37.7M.

Outlook and guidance

• FY2004 capital spending expected at approximately $45.0M, primarily for ongoing fleet, facility and landfill needs.

• Management planned to pursue growth in existing core markets and targeted doubling the business over the next 3–5 years, with disposal capacity the top strategic priority.

• Templeton landfill operations were expected to begin in mid-2004, subject to permitting; the facility was expected to accept 500 tons/day of municipal solid waste.

• Management expected cash from operations and the secured credit facility to meet working-capital and other cash needs for the foreseeable future.