Meridian Waste Solutions sees increased revenue in third quarter

Meridian Waste Solutions Inc., a vertically integrated, nonhazardous solid waste services company headquartered in Atlanta, has reported financial and operational results for the three-month period ended Sept. 30, 2017. 

Key highlights of Q3 2017 include:

• record quarterly revenues of $14.8 million, increased 77 percent compared to the Q3 2016, primarily due to the acquisition of the CFS Group;
• organic revenue growth of 9 percent;
• operating expenses as a percentage of revenue declined to 70 percent from 8 percent in 2Q 2017;
• adjusted earnings before interest, taxes, depreciation and amortization (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 ending Sept. 30, 2017, include:

• revenue of $40 million, increased 67 percent compared to the nine months ended Sept. 30, 2016, primarily due to the acquisition of the CFS Group;
• organic revenue growth of 10 percent;
• 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 proforma effect of the CFS acquisition.

“We continue to integrate and improve efficiencies in our Mid-Atlantic segment, particularly our Virginia assets, and uncover ways to improve margins,” Jeff Cosman, chairman and CEO, says. “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., attaining a facility and exclusive license for advanced biorefining technology. We believe that our partnership with and investment into American Science and Technology (AST) invigorates the bioeconomy. 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, Wisconsin. We are confident that, using the AST technology alongside Meridian Innovations’ process engineering and biomaterial development resources, a sustainable commercial biorefining 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 biorefining upgrades. The current antiquated pulp and paper processing methods are designed to only recover and sell about 50 percent of the processed biomass into high value applications, meaning that the remaining 50 percent 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.”

Revenues were $14.8 million in 3Q, a 77 percent increase from $8.4 million in 3Q 2016. Organic revenue growth of the Midwest segment of 9 percent was driven by additional customers and price increases.

Gross profit improved by $1.5 million to $4.5 million 3Q 2017, as compared to a $3.0 million gross profit in 3Q 2016.

Operating expenses were $10.4 million or 70 percent of revenue in Q3 as compared to $5.4 million, or 64 percent of revenue, in Q3 2016. This is increase is due to increased labor costs in 2017 in the Midwest segment. Operating labor expenses for the 2016 period were 19 percent of revenues, whereas 2017 expenses are 27 percent 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 Q3, 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 percent of revenue from the second quarter of 2017.

Adjusted EBITDA for the core waste management and services segment was $3.4 million in Q3.

To read more about Meridian’s financial results, visit www.mwsinc.com/news-room/2017/meridian-waste-solutions-reports-third-quarter-2017-results.