Casella Waste Systems (CWST) 8-K Casella Waste Systems, Inc. Announces Second Quarter Fiscal Year 2006 Results

Exhibit 99.1

FOR IMMEDIATE RELEASE

CASELLA WASTE SYSTEMS, INC. ANNOUNCES SECOND QUARTER FISCAL YEAR 2006 RESULTS

RUTLAND, VERMONT (December 7, 2005)—Casella Waste Systems, Inc. (NASDAQ: CWST), a regional, non-hazardous solid waste services company, today reported financial results for the second quarter and first six months of its 2006 fiscal year.

Second Quarter Results

For the quarter ended October 31, 2005, the company reported revenues of $136.8 million, up $10.4 million, or 8.2 percent over the same quarter last year. The company’s net income per common share was $0.13, up $0.03 over the same quarter last year. Operating income for the quarter was $13.7 million, up $950,000, or 7.4 percent over the same quarter last year. Cash provided by operating activities in the quarter was $14.0 million, down $2.2 million, or 13.3 percent compared to the same quarter last year. The company’s earnings before interest, taxes, depreciation and amortization (EBITDA) were $30.6 million*, essentially unchanged from the same quarter last year.

For the six months ended October 31, 2005, the company reported revenues of $268.8 million. The company’s net income per common share was $0.22. Operating income for the six month period was $26.8 million. Cash provided by operating activities for the period was $36.6 million. The company’s earnings before interest, taxes, depreciation and amortization (EBITDA) were $59.8 million*.

Highlights of the Quarter

 “Our internal growth was solid, even taking into account the fuel and energy headwinds that everyone is facing,” John W. Casella, chairman and chief executive officer, said.

 “Business conditions continue to present a mixed set of challenges,” Casella said. “Margin improvement continues to be challenged mainly due to higher transportation and fuel costs.

“The company also began operating the Chemung County landfill during the quarter. This is a superb facility right in the heart of our western New York state market.

“The landfill’s current utilization rate is 120,000 tons of municipal solid waste (MSW) per year, and we’ve begun efforts to increase the facility’s capacity in accordance with the host community relationship and the public-private partnership,” Casella said.

The company said it also believes it will meet the low end of the range of its fiscal year 2006 EBITDA* guidance of $112.0 million to $116.0 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 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 expenditure and working capital requirements. For these reasons we utilize these non-GAAP metrics to measure our performance at all levels. These measures do not represent, and should not be considered as alternatives to cash provided by operating activities as determined in accordance with GAAP. Moreover, these measures do not necessarily indicate whether cash flow will be sufficient for such items as working capital or capital expenditures, 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.

More detailed financial results are contained in the tables accompanying this release.

Casella Waste Systems, headquartered in Rutland, Vermont, provides collection, transfer, disposal and recycling services primarily in the northeastern United States.

For further information, contact Richard Norris, chief financial officer; or Joseph Fusco, vice president; at (802) 775-0325, or visit the company’s website at http://www.casella.com.

The company will host a conference call to discuss these results on Thursday, December 8, 2005 at 10:00 a.m. ET. Individuals interested in participating in the call should dial 719-457-2659 at least 10 minutes before start time. The call will also be webcast; to listen, participants should visit Casella Waste Systems’ website at http://www.casella.com and follow the appropriate link to the webcast. A replay of the call will be available by calling 719-457-0820 (conference code #2066499) before 11:59 p.m. ET, Thursday, December 15, 2005, or by visiting the company’s website.

Safe Harbor Statement

Certain matters discussed in this press release 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 the Company “believes,” “anticipates,” “expects” or words of similar import. Similarly, statements that describe the Company’s future plans, objectives or goals are forward-looking statements. Such forward-looking statements, and all phases of our 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 our forward-looking statements. Such risks and uncertainties include or relate to, among other things: we may be unable to make acquisitions and otherwise develop additional disposal capacity; continuing weakness in general economic conditions may affect our revenues; increasing fuel costs may affect our cost of operations; we may be required to incur capital expenditures in excess of our estimates; and fluctuations in the commodity pricing of our recyclables may make it more difficult for us to predict our results of operations. Other factors which could materially affect such forward-looking statements can be found in our periodic reports filed with the Securities and Exchange Commission, including certain factors which could affect future operating results detailed in the Management’s Discussion and Analysis section in our Form 10-K for the fiscal year ended April 30, 2005.

(tables follow)

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12/07/05

CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES

SUPPLEMENTAL DATA TABLES

(Unaudited)

(In thousands)

Amounts of the Company’s total revenue attributable to services provided are as follows:

	Three Months Ended October 31,				Twelve Months Ended April 30,				Six Months Ended October 31,
	2004		2005		2004		2005		2004		2005
Collection	$	62,156	$	66,152	$	226,841	$	237,876	$	123,846	$	131,419
Landfill / disposal facilities	22,091		26,498		69,639		80,132		42,525		49,761
Transfer	11,520		11,913		38,830		41,862		23,116		23,562
Recycling	30,614		32,232		99,361		122,094		60,566		64,053
Total revenues	$	126,381	$	136,795	$	434,671	$	481,964	$	250,053	$	268,795

Components of revenue growth for the three months ended October 31, 2005 compared to the three months ended October 31, 2004:

		Percentage		Percentage
Solid Waste Operations (1)	Price	1.9	%	5.3	%
	Volume	1.7	%	-0.4	%
	Solid waste commodity price and volume	0.0	%	0.0	%
Total growth - Solid Waste Operations		3.6	%	4.9	%
FCR Operations (1)	Price	-0.9	%	2.0	%
	Volume	4.2	%	3.3	%
Total growth - Recycling Operations		3.3	%	5.3	%
Rollover effect of acquisitions (as a percentage of total revenue)		3.0	%	3.2	%
Divestitures (as a percentage of total revenue)				-0.3	%
Total revenue growth		6.4	%	8.2	%

(1) - Calculated as a percentage of segment revenues.

Solid Waste Internalization Rates by Region:

	Three Months Ended October 31,				Twelve Months Ended April 30,				Six Months Ended October 31,
	2004		2005		2004		2005		2004		2005
North Eastern region	58.9	%	54.5	%	56.9	%	57.9	%	57.9	%	57.7	%
South Eastern region	49.0	%	53.9	%	47.7	%	51.6	%	51.6	%	52.7	%
Central region	79.8	%	79.2	%	79.5	%	80.0	%	80.0	%	78.7	%
Western region	36.6	%	42.2	%	34.5	%	40.8	%	40.8	%	41.7	%
Solid waste operations	55.0	%	57.7	%	53.2	%	56.8	%	56.8	%	57.3	%

US GreenFiber (50% owned) Financial Statistics:

	Three Months Ended October 31,						Twelve Months Ended April 30,						Six Months Ended October 31,
	2004			2005			2004			2005			2004			2005
Revenue	$	35,638		$	42,934		$	116,057		$	136,409		$	68,873		$	74,538
Net Income	1,988			3,026			4,523			5,767			1,854			2,886
Cash flow from operations	3,273			5,456			3,944			15,101			6,269			9,965
Net working capital changes	(94		)	686			(5,810		)	3,478			1,664			3,596
EBITDA	$	3,367		$	4,770		$	9,754		$	11,623		$	4,605		$	6,369
As a percentage of revenue:
Net income	5.6		%	7.0		%	3.9		%	4.2		%	2.7		%	3.9		%
EBITDA	9.4		%	11.1		%	8.4		%	8.5		%	6.7		%	8.5		%

Breakdown of Growth versus Maintenance Capital Expenditures (1):

	Three Months Ended October 31, 2005		Twelve Months Ended April 30,		Six Months Ended October 31, 2005
Growth Capital Expenditures:			116,057	136,409
Landfill Development	$	10,342	4,523	5,767	$	18,601
Pinetree Landfill	—		3,944	15,101	—
Boston MRF Building	—		9,754	11,623	5,998
Other	595		9,754	11,623	1,279
Total Growth Capital Expenditures	10,937				25,878
Maintenance Capital Expenditures:
Vehicles, Machinery / Equipment and Containers	7,769				21,495
Landfill Construction	8,470				12,782
Facilities	2,678				3,755
Other	430				989
Total Maintenance Capital Expenditures	19,347				39,021
Total Capital Expenditures	$	30,284			$	64,899

(1) The Company’s capital expenditures are broadly defined as pertaining to either growth or maintenance activities.  Growth capital expenditures are defined as costs related to development of new airspace, permit expansions, new recycling contracts along with incremental costs of equipment and infrastructure added to further such activities.  Growth capital expenditures include the cost of equipment added directly as a result of new business as well as expenditures associated with increasing infrastructure to increase throughput at transfer stations and recycling facilities.  Growth capital expenditures also include those outlays associated with acquiring landfill operating leases, which do not meet the operating lease payment definition, but which were included as a commitment in the successful bid.  Maintenance 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.

CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

Unaudited

(In thousands, except amounts per share)

	Three Months Ended					Three Months Ended						Six Months Ended
	January 31, 2004					October 31, 2004			October 31, 2005			October 31, 2004			October 31, 2005
Revenues	$	104,558		100.0	%	$	126,381		$	136,795		$	250,053		$	268,795
Operating expenses:
Cost of operations	67,804			64.8	%	79,385			88,043			157,663			173,630
General and administration	14,733			14.1	%	16,370			18,132			31,885			35,350
Depreciation and amortization						17,575			16,914			34,798			33,047
Deferred costs	14,614			14.0	%	295			—			295			—
	97,151			92.9	%	113,625			123,089			224,641			242,027
Operating income	7,407			7.1	%	12,756			13,706			25,412			26,768
Other expense/(income), net:
Interest expense, net	6,278			6.0	%	7,240			7,821			14,327			15,172
Income from equity method investments	(1,171		)	-1.1	%	(994		)	(1,513		)	(927		)	(1,443		)
Other (income)/expense	(343		)	-0.3	%	220			(133		)	751			(83		)
	4,764			4.6	%	6,466			6,175			14,151			13,646
Income from continuing operations before income taxes and discontinued operations	2,643			2.5	%	6,290			7,531			11,261			13,122
Provision for income taxes	1,153			1.1	%	2,805			3,374			5,014			5,857
Income from continuing operations before discontinued operations	1,490			1.4	%	3,485			4,157			6,247			7,265
Discontinued Operations:
Income from discontinued operations, net of income taxes						59			—			140			—
Loss on disposal of discontinued operations, net of income taxes						(150		)	—			(150		)	—
Net income						3,394			4,157			6,237			7,265
Preferred stock dividend	818			0.8	%	832			854			1,670			1,704
Net income available to common stockholders						$	2,562		$	3,303		$	4,567		$	5,561
Common stock and common stock equivalent shares outstanding, assuming full dilution	24,795					25,003			25,358			25,040			25,277
Net income per common share before discontinued operations	$	0.03				$	0.11		$	0.13		$	0.18		$	0.22
Net income per common share						$	0.10		$	0.13		$	0.18		$	0.22
EBITDA (1)	$	22,021		21.1	%	$	30,626		$	30,620		$	60,505		$	59,815

CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

Unaudited

(In thousands)

	April 30, 2005		October 31, 2005
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	8,578	$	7,579
Restricted cash	70		71
Accounts receivable - trade, net of allowance for doubtful accounts	51,726		57,832
Other current assets	9,009		11,264
Total current assets	69,383		76,746
Property, plant and equipment, net of accumulated depreciation	412,753		453,628
Goodwill	157,492		169,610
Intangible assets, net	2,711		3,308
Restricted cash	12,124		12,253
Investments in unconsolidated entities	37,699		37,691
Other non-current assets	20,292		16,570
	$	712,454	$	769,806
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt	$	281	$	769
Current maturities of capital lease obligations	632		1,025
Accounts payable	46,107		43,700
Other accrued liabilities	45,734		42,267
Total current liabilities	92,754		87,761
Long-term debt, less current maturities	378,436		425,479
Capital lease obligations, less current maturities	1,475		2,274
Other long-term liabilities	33,043		39,425
Series A redeemable, convertible preferred stock	67,964		68,702
Stockholders’ equity	138,782		146,165
	$	712,454	$	769,806

CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Unaudited

(In thousands)

		Six Months Ended
		October 31, 2004			October 31, 2005
Cash Flows from Operating Activities:
Net income		$	6,237		$	7,265
Adjustments to reconcile net income to net cash provided by operating activities -
Depreciation and amortization		34,798			33,047
Depletion of landfill operating lease obligations		2,588			2,974
Loss on disposal of discontinued operations, net		150			—
Income from equity method investment		(927		)	(1,443		)
Deferred costs		295			—
Loss on sale of equipment		113			41
Deferred income taxes		3,701			3,993
Changes in assets and liabilities, net of effects of acquisitions and divestitures		(11,109		)	(9,273		)
		29,609			29,339
Net Cash Provided by Operating Activities		35,846			36,604
Cash Flows from Investing Activities:
Acquisitions, net of cash acquired		(5,040		)	(15,507		)
Additions to property, plant and equipment	- Growth	(10,289		)	(25,878		)
	- Maintenance	(32,144		)	(39,021		)
Payments on landfill operating lease contracts		(17,326		)	(5,869		)
Proceeds from divestitures		3,050			—
Other		1,546			1,191
Net Cash Used In Investing Activities		(60,203		)	(85,084		)
Cash Flows from Financing Activities:
Proceeds from long-term borrowings		83,950			111,672
Principal payments on long-term debt		(63,052		)	(64,807		)
Proceeds from exercise of stock options		224			616
Net Cash Provided by Financing Activities		21,122			47,481
Net decrease in cash and cash equivalents		(3,235		)	(999		)
Cash and cash equivalents, beginning of period		8,007			8,578
Cash and cash equivalents, end of period		$	4,772		$	7,579

CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES

Unaudited

(In thousands)

Note 1:   In the fourth quarter of fiscal 2003, we entered into negotiations with former employees for the transfer of our commercial recycling and domestic brokerage businesses. The commercial recycling business had been accounted for as a discontinued operation since fiscal 2001.  Due to the nature of the transfer transaction, we could not retain historical discontinued accounting treatment for this operation. Therefore the commercial recycling business’ operating results have been reclassified from discontinued to continuing operations for the three and twelve months ended April 30, 2003. Also in connection with the discontinued accounting treatment recorded in fiscal 2001, estimated future losses from this operation were classified as losses from discontinued operations. This amount has been reclassified and offset against actual losses from operations for the three and twelve months ended April 30, 2003.

Note 1:   The company divested the assets of Data Destruction Services, Inc. (Data Destruction) during the quarter ended October 31, 2004.  The transaction required discontinued operations treatment under SFAS No. 144, therefore the operating results of Data Destruction have been reclassified from continuing to discontinued operations for the quarter and six months ended October 31, 2004.

Note 1:   Non - - GAAP Financial Measures

In addition to disclosing financial results prepared in accordance with Generally Accepted Accounting Principles (GAAP), we also disclose EBITDA (earnings before interest, taxes, depreciation and amortization, deferred costs and impairment charge) and Free Cash Flow, which are non-GAAP measures.

These measures are provided because we understand that certain investors use this information when analyzing the financial position of the solid waste industry, including us. Historically, these measures have been key in comparing operating efficiency of publicly traded companies within the industry, and assist investors in measuring our ability to meet capital expenditure and working capital requirements. For these reasons, we utilize these non-GAAP metrics to measure our performance at all levels. These measures do not represent, and should not be considered as alternatives to cash provided by operating activities as determined in accordance with GAAP.  Moreover, these measures do not necessarily indicate whether cash flow will be sufficient for such items as working capital or capital expenditures, 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.

Following is a reconciliation of EBITDA to Cash Provided by Operating Activities:

	Three Months Ended						Six Months Ended
	October 31, 2004			October 31, 2005			October 31, 2004			October 31, 2005
Cash Provided by Operating Activities	$	16,133		$	13,983		$	35,846		$	36,604
Changes in assets and liabilities, net of effects of acquisitions and divestitures	7,310			9,335			11,109			9,273
Deferred income taxes	(1,946		)	(2,272		)	(3,701		)	(3,993		)
Income from discontinued operations	(59		)	—			(140		)	—
Provision for income taxes	2,805			3,374			5,014			5,857
Interest expense, net	7,240			7,821			14,327			15,172
Depletion of landfill operating lease obligations	(1,241		)	(1,545		)	(2,588		)	(2,974		)
Other (expense) income, net	384			(76		)	638			(124		)
EBITDA	$	30,626		$	30,620		$	60,505		$	59,815

Following is a reconciliation of Free Cash Flow to Cash Provided by Operating Activities:

		Three Months Ended October 31, 2005			Six Months Ended October 31, 2005
EBITDA		$	30,620		$	59,815
Add (deduct):	Cash interest	(12,546		)	(12,823		)
	Capital expenditures	(30,284		)	(64,899		)
	Cash taxes	(531		)	(1,059		)
	Depletion of landfill operating lease obligations	1,545			2,974
	Change in working capital, adjusted for non-cash items	(4,098		)	(10,894		)
FREE CASH FLOW		(15,294		)	(26,886		)
Add (deduct):	Capital expenditures	30,284			64,899
	Other	(1,007		)	(1,409		)
Cash Provided by Operating Activities		$	13,983		$	36,604