| Item 2.02 | Results of Operations and Financial Condition. |
On January 22, 2019, Casella Waste Systems, Inc. (the “Company”) announced certain preliminary financial information as of and for the fiscal year ended December 31, 2018 (“fiscal year 2018”).
The preliminary estimated financial results presented below are based upon information available to the Company as of January 22, 2019 and have been prepared by and are the responsibility of management. Neither the Company’s independent registered public accounting firm nor any other independent registered public accounting firm has audited, reviewed or compiled, examined or performed any procedures with respect to the preliminary estimated financial results, nor have they expressed any opinion or any other form of assurance on the preliminary estimated financial results. These preliminary estimated financial results relating to the fiscal year 2018 are subject to adjustment as a result of the completion of the audit of the Company’s financial statements, and the Company’s actual results may differ materially from these preliminary results.
| | • | | Revenues are estimated to be between $660.2 million and $661.2 million for fiscal year 2018, as compared to $599.3 million in the fiscal year ended December 31, 2017 (“fiscal year 2017”), exceeding the previously disclosed guidance range of $642 million to $652 million. |
| | • | | Net income is estimated to be between $7.2 million and $7.8 million for fiscal year 2018, as compared to a Net loss of $(21.8) million in fiscal year 2017. |
| | • | | Adjusted EBITDA* is estimated to be between $137.7 million and $138.3 million for fiscal year 2018, as compared to $129.0 million in fiscal year 2017, within the previously disclosed guidance range of $137 million to $140 million. |
| | • | | Net cash provided by operating activities is estimated to be between $120.5 million and $121.1 million for fiscal year 2018, as compared to $107.5 million in fiscal year 2017. |
| | • | | Normalized Free Cash Flow* is estimated to be between $46.8 million and $47.4 million for fiscal year 2018, as compared to $38.8 million in fiscal year 2017, exceeding the previously disclosed guidance range of $44 million to $47 million. |
As of December 31, 2018, the Company had cash and cash equivalents of $4.0 million as compared to cash and cash equivalents of $3.1 million as of September 30, 2018. As of December 31, 2018, the Company had outstanding total debt of $555.2 million, as compared to outstanding total debt of $528.2 million as of September 30, 2018, with the increase due mainly to acquisition activity during the fourth quarter of 2018.
*Non-GAAP Financial Measures
In addition to disclosing financial results prepared in accordance with GAAP, the Company also discloses earnings before interest, taxes, and depreciation and amortization, adjusted for accretion, depletion of landfill operating lease obligations, the Southbridge Landfill closure (settlement) charge, net, gains on asset sales, development project charges, contract settlement charges, legal settlement costs, tax settlement costs, bargain purchase gains, asset impairment charges, environmental remediation charges, severance and reorganization costs, expense from acquisition activities and other items, gains on the settlement of acquisition related contingent consideration, proxy contest costs, as well as impacts from divestiture transactions (“Adjusted EBITDA”), which is anon-GAAP financial measure.
The Company also discloses net cash provided by operating activities, less capital expenditures, less payments on landfill operating lease contracts, plus proceeds from divestiture transactions, plus proceeds from the sale of property and equipment, plus proceeds from property insurance settlement, plus (less) contributions from (distributions to) noncontrolling interest holders, (less) certain cash outflows (inflows) associated with landfill closure, site improvement and remediation, plus certain cash outflows associated with new contract and project capital expenditures, plus certain cash outflows associated with contract settlement costs, plus certain cash outflows associated with expense from acquisition activities and other items, plus certain cash outflows associated with capital expenditures related to acquisitions or assumption of new customers from a distressed or defunct market participant, plus (less) cash outflows (inflows) associated with certain business dissolutions, plus cash interest outflows associated with the timing of refinancing transactions (“Normalized Free Cash Flow”), which is anon-GAAP financial measure.
Adjusted EBITDA is reconciled to net income (loss); Normalized Free Cash Flow is reconciled to net cash provided by operating activities.
The Company presents Adjusted EBITDA and Normalized Free Cash Flow because it considers them important supplemental measures of its performance and believes they are frequently used by securities analysts, investors and other interested parties in the evaluation of the Company’s results. Management uses thesenon-GAAP financial measures to further understand its “core operating performance.” The Company believes its “core operating performance” is helpful in understanding its ongoing performance in the ordinary course of operations. The Company believes that providing Adjusted EBITDA and Normalized Free Cash Flow, to investors, in addition to corresponding income statement and cash flow statement measures, affords investors the benefit of viewing its 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 Company further believes that providing this information allows its investors greater transparency and a better understanding of its core financial performance.
