Meridian Waste Solutions Reports Third Quarter 2017 Results

Record Revenue Growth of 77% to $14.8 Million
Adjusted EBITDA of $3.4 Million

ATLANTA, GA / ACCESSWIRE / November 15, 2017 / Meridian Waste Solutions, Inc. (NASDAQ: MRDN) (“Meridian Waste” or the “Company”), a vertically integrated, non-hazardous solid waste services company, today reported financial and operational results for the three-month period ended September 30, 2017.

Key Highlights for Third Quarter 2017:

Record quarterly revenues of $14.8 million, increased 77% compared to the third quarter ended September 30, 2016, primarily due to the acquisition of the CFS Group;
Organic revenue growth of 9.0%;
Operating expenses as a percentage of revenue declined to 70%, from 80% in the second quarter 2017;
Adjusted EBITDA of $3.4 million, for the core waste management and services segment, in relation to interest expense of $2.7 million

Key Highlights for the Nine Months ended September 30, 2017:

Revenue of $40.0 million, increased 67% compared to the nine months ended September 30, 2016, primarily due to the acquisition of the CFS Group;
Organic revenue growth of 10.0%;
Adjusted EBITDA of $8.8 million, for the core waste management and services segment, in relation to interest expense of $6.6 million; includes a full quarter pro-forma effect of the CFS acquisition

Service

Revenues

Net

Income

(loss)

Depreciation

and

Amortization

Capital

Expenditures

Goodwill

Total

Assets

Mid-Atlantic

13,680,000

(4,118,000

)

5,100,000

3,726,000

6,014,000

57,400,000

Midwest

26,273,000

(2,796,000

)

6,500,000

6,746,000

7,234,000

46,900,000

Corporate

–

(10,252,000

)

100,000

–

1,100,000

Total

39,953,000

(17,166,000

)

11,700,000

10,572,000

13,248,000

105,400,000

Chairman and Chief Executive Officer Jeff Cosman, commented, “We continue to integrate and improve efficiencies in our Mid-Atlantic segment, particularly our Virginia assets, and uncover ways to improve margins. Thanks to being able to access the capital markets for an additional $5 million over the past few months, we have been able to deploy new equipment in Virginia to be able to improve our operating efficiencies and margins. It is these developments and processes that increase our value for the longer-term. We continue to look for growth opportunities in all areas of our waste operations; the core platform of waste management and services and the emerging growth innovations and technology.

We are very excited about our recent announcement of our wholly owned subsidiary, Meridian Innovations, Inc. (“Innovations”), attaining a facility and exclusive license for advanced bio-refining technology. We believe that our partnership with and investment into American Science and Technology (“AST”), provides us with exclusive biomass separation and conversion technology that will give us significant advantages in the biomass market. The patented technology drives the value of lignin from $50 to up to $2,000 per ton. Under the terms of this agreement, Meridian Innovations will have an exclusive commercial license to the AST patents and a lease for the AST biomass processing facility in Wausau, WI. We are confident that, using the AST technology alongside Meridian Innovations’ process engineering and biomaterial development resources, a sustainable commercial bio-refining industry can be immediately launched.

The Meridian technology platform is largely in response to the current inefficiencies and outdated technology used in the pulp and paper industry. While the industry has prospered using clean process technologies and sustainable land management practices, its core technology is more than 100 years old and unable to implement efficient separation and bio-refining upgrades. The current antiquated pulp and paper processing methods are designed to only recover and sell about 50% of the processed biomass into high-value applications, meaning that the remaining 50% must be incinerated to recover and recycle the sodium-based solvents.

We are very enthused about what we have assembled with Innovations and look forward to sharing our progress with the markets in the near future.”

Financial Results for the Three Months Ended September 30, 2017:

For the three months ended September 30, 2017, revenues were $14.8 million, a 77% increase from $8.4 million for the three months ended September 30, 2016. Organic revenue growth of the Midwest segment of 9.0% was driven by additional customers and price increases.

Gross profit improved by $1.5 million to $4.5 million in the three months ended September 30, 2017, as compared to a $3.0 million gross profit in the three months ended September 30, 2016.

Operating expenses were $10.4 million or 70% of revenue, for the three months ended September 30, 2017 as compared to $5.4 million, or 64% of revenue, for the three months ended September 30, 2016. This increase is due to increased labor costs in 2017 in the Midwest segment. Operating labor expenses for the 2016 period were 19% of revenues, whereas 2017 expenses are 27% of revenue. The reason for this is twofold; first, the Company needed to increase driver wages to help stabilize the work force and avoid turnover, second, add-on revenue from the new St. Louis County contracts has not materialized as quickly as expected, although it has improved starting in the third quarter, but the Company has increased its labor force to service the expected increased revenue. As revenue increases to expected levels from these new St. Louis contracts, operating expenses as a percent of revenue will decrease.

Of note, operating expenses did decline from 80% of revenue from the second quarter of 2017.

For the three months ended September 30, 2017, adjusted EBITDA for the core waste management and services segment was $3.4 million.

The following table presents Adjusted EBITDA, a non-GAAP financial measure, and provides a reconciliation of Adjusted EBITDA to the directly comparable GAAP measure reported in the Company’s consolidated financial statements:

September 30, 2017

Net loss

(6,610,531

)

Extinguishment of derivative liability

Depreciation and amortization

4,447,494

Financing and acquisition related costs

197,500

Interest expense

2,669,778

Other income, corporate overhead, bonus, internalization

2,748,871

Adjusted EBITDA

3,453,112

Net loss attributable to common shareholders for the three months ended September 30, 2017 increased by $3.7 million to $7.4 million or $0.71 per share, as compared to $3.7 million or $2.96 per share in the three months ended September 30, 2016. Included in the net loss attributable to common stockholders for the three months ended September 30, 2017 are deemed dividends totaling $531,692 related to beneficial conversion features and preferred stock dividends of $241,946.

Financial Results for the Nine Months Ended September 30, 2017:

For the nine months ended September 30, 2017, revenues were $40.0 million, a 67% increase from $23.9 million for the nine months ended September 30, 2016. Organic revenue growth of the Midwest segment of 10.0% was driven by additional customers and price increases.

Gross profit improved by $2.5 million to $11.2 million in the nine months ended September 30, 2017, as compared to a $8.7 million gross profit in the nine months ended September 30, 2016.

Operating expenses were $28.7 million or 72% of revenue, for the nine months ended September 30, 2017 as compared to $15.2 million, or 64% of revenue, for the nine months ended September 30, 2016. The increase is primarily due to increased labor costs in 2017 in the Midwest segment. Operating labor expenses for the 2016 period were 19.5% of revenue, whereas 2017 expenses are 27.1% of revenue. The reason for this is twofold; first, the Company needed to increase driver wages to help stabilize the work force and avoid turnover, second, add-on revenue from the St. Louis contracts has not materialized as quickly as expected, but the Company has increased its labor force to service the expected increased revenue.

For the nine months ended September 30, 2017, adjusted EBITDA for the core waste management and services segment was $8.8 million; includes a full quarter pro-forma effect of the CFS acquisition.

September 30, 2017

Net loss

(17,165,701

)

Extinguishment of derivative liability

(2,100,700)

Depreciation and amortization

12,008,291

Financing and acquisition related costs

1,254,900

Interest expense

6,594,382

Other income, corporate overhead, bonus, internalization

8,234,671

Adjusted EBITDA

8,825,843

Net loss attributable to common shareholders for the nine months ended September 30, 2017 increased by $5.9 million to $20.2 million or $2.44 per share, as compared to $14.3 million or $11.92 per share in the nine months ended September 30, 2016. Included in the net loss attributable to common stockholders for the nine months ended September 30, 2017 are deemed dividends totaling $2,647,009 related to beneficial conversion features and preferred stock dividends of $241,946.

Conference Call Details:

Date: Wednesday, November 15, 2017
Time: 9:00AM ET
Dial-in Number: (866) 682-6100
International Dial-in Number: (404) 267-0373
Webcast: http://www.investorcalendar.com/event/22635

Non-GAAP Financial Measure – Adjusted EBITDA

We make reference to “Adjusted EBITDA,” a measure of financial performance not calculated in accordance with accounting principles generally accepted in the United States (“GAAP”). Management has included Adjusted EBITDA because it believes that investors may find it useful to review our financial results as adjusted to exclude items as determined by management. Reconciliations of this non-GAAP financial measure to the most directly comparable GAAP financial measure, net loss, to the extent available without unreasonable effort, are set forth below. The Company defines Adjusted EBITDA as earnings or (loss) from continuing operations before the items noted in the table on page 2.

Management believes Adjusted EBITDA provides a meaningful representation of our operating performance that provides useful information to investors regarding our financial condition and results of operations. Adjusted EBITDA is commonly used by financial analysts and others to measure operating performance. Furthermore, management believes that this non-GAAP financial measure may provide investors with additional meaningful comparisons between current results and results of prior periods as they are expected to be reflective of our core ongoing business. However, while we consider Adjusted EBITDA to be an important measure of operating performance, Adjusted EBITDA and other non-GAAP financial measures have limitations, and investors should not consider them in isolation or as a substitute for analysis of our results as reported under GAAP. Further, Adjusted EBITDA, as we define it, may not be comparable to EBITDA, or similarly titled measures, as defined by other companies.

About Meridian Waste Solutions, Inc.

Meridian Waste Solutions, Inc. (NASDAQ: MRDN) is a company defined by our commitment to servicing our customers with unwavering respect, fairness and care. We are focused on finding and implementing solutions to solid waste needs and challenges within the industry and for our customers. Meridian Waste’s core business is centered on residential and commercial waste collection and disposal but it also includes a fundamental objective to seek rewarding environmental solutions through innovation. Currently, the company operates in St. Louis, Missouri and Richmond, Virginia servicing over 113,000 residential, commercial, industrial and governmental customers. In addition to a fleet of commercial, residential and roll off trucks, the Company operates four transfer stations, one recycling facility and three municipal solid waste landfills. For more information, visit www.MWSinc.com.

Forward-Looking Statements

This press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve certain risks and uncertainties. The actual results or outcomes of Meridian Waste Solutions, Inc. may differ materially from those anticipated. Although Meridian Waste Solutions, Inc. believes that the assumptions underlying the forward-looking statements contained herein are reasonable, any such assumptions could prove to be inaccurate. Therefore, Meridian Waste Solutions, Inc. can provide no assurance that any of the forward-looking statements contained in this press release will prove to be accurate.

In light of the significant uncertainties and risks inherent in the forward-looking statements included in this press release, such information should not be regarded as a representation by Meridian Waste Solutions, Inc. that its objectives or plans will be achieved. Included in these uncertainties and risks are, among other things, fluctuations in operating results, general economic conditions, uncertainty regarding the results of certain legal proceedings and competition. Forward-looking statements consist of statements other than a recitation of historical fact and can be identified by the use of forward-looking terminology such as “may,” “intend,” “expect,” “will,” “anticipate,” “estimate” or “continue” or the negatives thereof or other variations thereon or comparable terminology. Because they are forward-looking, such statements should be evaluated in light of important risk factors and uncertainties. These risk factors and uncertainties are more fully described in Meridian Waste Solutions, Inc.’s most recent Annual and Quarterly Reports filed with the Securities and Exchange Commission, including under the heading entitled “Risk Factors.” Meridian Waste Solutions, Inc. does not undertake an obligation to update publicly any of its forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Contact:

Hayden IR
ir@meridianwastesolutions.com
(917) 658-7878

Meridian Waste Solutions, Inc. and Subsidiaries
Consolidated Balance Sheets

September 30, 2017

December 31, 2016

Assets

Current assets:

Cash and cash equivalents

664,064

824,928

Short-term investments – Restricted

–

1,953,969

Accounts receivable, net of allowance

6,593,137

2,540,657

Prepaid expenses

1,106,762

746,776

Other current assets

666,501

39,895

Total current assets

9,030,464

6,106,225

Property, plant and equipment, at cost net of accumulated depreciation

35,884,957

16,797,015

Landfill assets, net of accumulated amortization

31,992,005

3,278,817

Assets held for sale

395,000

Other assets:

Investment in related party affiliate

–

Deposits

218,667

144,793

Contract Receivable

167,586

179,067

Goodwill

13,248,633

7,234,420

Capitalized software

120,019

356,167

Trademarks

183,750

–

Customer list, net of accumulated amortization

14,080,675

14,553,629

Non-compete, net of accumulated amortization

83,780

114,680

Website, net of accumulated amortization

34,684

38,819

Total other assets

28,137,794

22,621,575

Total assets

105,440,220

49,198,632

Liabilities and Shareholders’ Deficit

Current liabilities:

Accounts payable

4,185,909

3,327,618

Accrued expenses

2,920,009

2,005,357

Notes payable, related parties

6,891

609,891

Deferred compensation

–

769,709

Deferred revenue

5,568,334

3,431,869

Derivative liability

–

3,343,623

Current portion – capital leases payable

536,937

–

Current portion – long term debt

1,358,484

1,385,380

Total current liabilities

14,576,563

14,873,447

Long term liabilities:

Asset retirement obligation

8,212,012

5,299

Deferred Tax Liability

418,000

193,482

Deferred Rent

53,783

Capital leases, payable

6,246,887

–

Long term debt, net of current

82,335,785

41,810,733

Total long term liabilities

97,266,467

42,009,514

Total liabilities

111,843,031

56,882,961

Preferred Series C stock redeemable, cumulative, stated value $100 per share, par value $.001, 67,361 shares authorized, 35,750 and 0 shares issued and outstanding, respectively

–

2,644,951

Shareholders’ deficit:

Preferred Series A stock, par value $.001, 51 shares authorized, issued and outstanding

–

Preferred Series B stock, par value $.001, 71,210 shares authorized, 0 and 71,210 issued and outstanding

–

Preferred Series D stock, cumulative, stated value $100 per share, par value $.001, 67,361 shares authorized, 35,750 and 0 shares issued and outstanding, respectively

531,691

–

Common stock, par value $.025, 75,000,000 shares authorized, 6,944,244 and 1,712,471 shares issued and 6,932,744 and 1,700,971 shares outstanding, respectively

256,976

42,812

Common stock to be issued

16,979

Treasury stock, at cost, 11,500 shares

(224,250

)

(224,250

)

Additional paid in capital

55,942,076

35,752,738

Accumulated deficit

(63,187,084

)

(45,900,580

)

Total Meridian Waste Solutions, Inc. shareholders’ deficit

(6,663,612

)

(10,329,281

)

Noncontrolling Interest

260,802

–

Total equity

(6,402,810

)

(10,329,281

)

Total liabilities and shareholders’ deficit

105,440,220

49,198,632

Meridian Waste Solutions, Inc. and Subsidiaries
Consolidated Statements of Operations

Three months ended

September 30, 2017

September 30, 2016

Revenue

(Unaudited)

Services

14,827,565

8,389,326

Total revenue

14,827,565

8,389,326

Cost and expenses:

Operating

10,358,011

5,070,322

Bad debt expense

(13,285

)

112,950

Depreciation and amortization

4,352,077

1,833,079

Accretion expense

133,887

–

Impairment expense

–

Selling, general and administrative

3,940,301

4,462,775

Total cost and expenses

18,770,991

11,479,126

Other income (expenses):

Miscellaneous (expense) income

(20,458

)

(11,354

)

Gain (loss) on disposal of assets

21,001

–

Unrealized gain (loss) on change in fair value of derivative liability

–

733,031

Unrealized gain (loss) on investment

)

547

Gain on contingent liability

–

Interest income

2,130

844

Interest expense

(2,669,778

)

(1,224,217

)

Total other income (expenses)

(2,667,105

)

(501,149

)

Loss before income taxes

(6,610,531

)

(3,590,949

)

Provision for income taxes

–

(145,000

)

Net loss

(6,610,531

)

(3,735,949

)

Net loss attributable to noncontrolling interest

46,054

–

Net loss attributable to Meridian Waste Solutions, Inc

(6,656,585

)

(3,735,949

)

Deemed dividend related to beneficial conversion feature and accretion of a discount on Series C Preferred Stock

–

Stock dividend related to Series C Preferred Stock

(40,194

)

–

Deemed dividend related to issuance of Series D Preferred Stock

(531,692

)

–

Stock dividend related to issuance of Series D Preferred Stock

(106,874

)

Net loss attributable to common stockholders

(7,335,345

)

(3,735,949

)

Basic net loss per share

(0.70

)

(2.96

)

Weighted average number of shares outstanding

10,503,986

1,261,085

Meridian Waste Solutions, Inc. and Subsidiaries
Consolidated Statements of Cash Flows

Nine months ended

September 30, 2017

September 30, 2016

Revenue

(Unaudited)

Services

39,953,055

23,883,663

Total revenue

39,953,055

23,883,663

Cost and expenses:

Operating

28,716,137

14,288,853

Bad debt expense

324,089

168,508

Depreciation and amortization

11,743,668

5,338,919

Accretion Expense

303,093

Impairment expense

221,146

1,255,267

Selling, general and administrative

11,168,146

15,258,097

Total cost and expenses

52,476,279

36,309,644

Other income (expenses):

Miscellaneous income

49,785

(9,090

)

Gain (loss) on disposal of assets

21,842

3,053

Unrealized gain (loss) on change in fair value of derivative liability

(554,112

)

853,031

Gain on extinguishment of debt

2,654,821

–

Loss from proportionate share of equity method investment

–

(2,105

)

Unrealized gain (loss) on investment

(8,179

)

547

Gain on contingent liability

–

1,000,000

Interest income

12,266

7,270

Interest expense

(6,594,382

)

(3,603,807

)

Total other income (expenses)

(4,417,959

)

(1,751,101

)

Loss before income taxes

(16,941,183

)

(14,177,082

)

Provision for income taxes

(224,518

)

(145,000

)

Net loss

(17,165,701

)

(14,322,082

)

Net loss attributable to noncontrolling interest

120,802

–

Net loss attributable to Meridian Waste Solutions, Inc

(17,286,503

)

(14,322,082

)

Deemed dividend related to beneficial conversion feature and accretion of a discount on Series C Preferred Stock

(2,115,317

)

–

Stock dividend related to Series C Preferred Stock

(40,194

)

–

Deemed dividend related to issuance of Series D Preferred Stock

(531,692

)

–

Stock dividend related to issuance of Series D Preferred Stock

(106,874

)

Net loss attributable to common stockholders

(20,080,580

)

(14,322,082

)

Basic net loss per share

(2.43

)

(11.92

)

Weighted average number of shares outstanding

(Basic and Diluted)

8,274,316

1,201,394

SOURCE: Meridian Waste Solutions, Inc.

ReleaseID: 481991

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