Meridian Waste Solutions Reports Second Quarter 2017 Results

Record Revenue Growth of 78% to $14.2 Million; Adjusted EBITDA of $2.1 Million

ATLANTA, GA / ACCESSWIRE / August 22, 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 June 30, 2017. Meridian Waste will host a shareholder update conference call on Thursday, September 14, 2017 at 4:30pm ET.

Key Highlights for Second Quarter 2017:

• Record quarterly revenues of $14.2 million, increased 78% compared to the first quarter ended March 31, 2016, primarily due to the acquisition of the CFS Group;
• Organic revenue growth of 10.2%;
• Adjusted EBITDA of $2.1 million in relation to interest expense of $2.2 million;
• Commenced service in St. Louis County, Missouri, Districts 4 and 6, to 22,000 homes, valued at over $25 million revenue over 5 years;
• Named Chris Diaz as CFO; and
• Acquired Mobile Science Technologies, Inc., to strengthen technology platform and advance communications and engagement with customers.

Segment and Related Information for the Six Months Ended June 30, 2017:

With the acquisition of the CFS Group during the three months ended March 31, 2017, the Company's operations are now managed through two operating segments:

• Mid-Atlantic region, centered upon the Richmond, VA area; and
• Midwest region, centered upon the St. Louis, MO area.

For the six months ended June 30, 2017, Adjusted EBITDA of $6.0 million in relation to interest expense of $3.9 million

"While it's been a very productive first half of 2017, unfortunately, we did not meet our funding goals in January's public offering and had to raise additional capital in June in order to keep up with our capital expenditure budgets," stated Chairman and Chief Executive Officer Jeff Cosman. Mr. Cosman, added, "Although this hurt our stock price, it was necessary to position us for continued growth to serve our customers. As we continue to execute within our two existing markets, there remains plenty of opportunity to further expand in other regions that we are evaluating. In addition to our commitment and the growth opportunities in our waste operations, I am very excited about identified opportunities with both Meridian Innovations and Mobile Science Technologies. In each opportunity, waste, innovations or technology, Meridian remains focused and committed to its integrated service platform from collection to landfill, long-term contracted revenue and developing technologies."

Two recent business developments demonstrate Meridian Waste's commitment to excellence in serving its customers:

• On April 1, 2017, Meridian Waste began providing garbage and recycling service to 22,000 homes in St. Louis County, Missouri, Districts 4 and 6. The value of the combined contracts is expected to be in excess of $25 million over the five-year term.
• On July 17, 2017, Meridian Waste successfully renewed its contract with Florissant, Missouri, and will continue to provide garbage and recycling services to 17,500+ homes through spring 2021 ensuring reliable collection and environmentally safe disposal services for years to come.

Meridian Waste provides non-hazardous solid waste collection, transfer, recycling and disposal services in two markets: St. Louis, Missouri and Richmond, Virginia. The Company's vertically integrated service platform consists of over 200 trucks, four transfer stations, and three municipal solid waste landfills. Currently, Meridian Waste serves 105,000 residential customers, covered by approximately 35 municipal contracts with terms having three to six years remaining. Additionally, Meridian Waste serves 8,000 commercial customers.

The Company's strategy in its base platform business of waste services is two-fold: (1) to grow existing markets with new contracts and acquiring tuck-in operations and (2) to enter new regional markets by completing more significant acquisitions. In the first quarter of 2017, Meridian Waste executed on this strategy by, (1) obtaining by bid contracts with St. Louis County Districts 4 and 6, which added more than 20,300 residential customers, and (2) entering the Richmond, Virginia market by completing the acquisition of The CFS Group, which added more than 30,000 residential and commercial customers, two landfills, one transfer station and one recycling facility.

Meridian Waste is also developing technologies to support growth and provide differentiation. The Company has advanced two operating subsidiaries to advance its technological efforts: Meridian Innovations, Inc. ("Meridian Innovations") and Mobile Science Technologies, Inc. ("Mobile Science").

Meridian Innovations is seeking to capitalize on the value of recovered materials by investing in advanced byproduct recovery technologies. Enormous volumes of manufacturing residues are disposed of on a daily basis and contain concentrated sources of otherwise valuable material that could yield superior economic value should they be efficiently recovered and further processed. The Company has assembled a team of technical experts with a successful track record in technology development and commercialization through the recovery of materials from otherwise low-value industrial byproduct streams.

The Company has negotiated a joint venture agreement for Meridian Innovations for the recovery of lignin from the byproduct streams of those businesses that process woody biomass. Lignin is an essential component in all plants and, if efficiently recovered and further processed, can be used to produce a wide array of valuable materials such as plastics, carbon fiber, adhesives and transportation fuels. The Joint Venture is subject to Meridian's credit agreement, and the Company has been working to bring this opportunity to commercialization. The Company is excited about the Meridian Innovations pipeline of acquisitions for toll processing and commercializing its products.

Mobile Science is applying technology and connectivity to improve operational efficiencies. Mobile communications with residents and municipalities provide real-time access to customers, enabling them to communicate, follow and complete transactions, which results in a competitive advantage for the Company. Through Mobile Science's [technology applications], the Company is implementing a direct connectivity customer service platform, systems for electronic invoicing and electronic payment, and additional non-waste oriented municipal access points. Mobile Science has been active on its pipeline of acquisitions as well.

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

For the three months ended June 30, 2017, revenues were $ 14.2 million, a 78% increase from $8.0 million for the three months ended June 30, 2016. Organic revenue growth of the Midwest segment of 10.2% was driven by additional customers and price increases.

Gross profit improved slightly by $44,249 to $2.8 million in the three months ended June 30, 2017, as compared to a $2.8 million gross profit in the three months ended June 30, 2016.

Operating expenses were $11.4 million or 80% of revenue, for the three months ended June 30, 2017, as compared to $5.2 million, or 65% of revenue, for the three months ended June 30, 2016. This is an increase of 15% of revenue from the three months ended June 30, 2016. The 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 28.5% of revenue. The reason for this is twofold; first, the Company needed to increase driver wages to help stabilize the workforce and avoid turnover, second, add-on revenue from the St. Louis County contracts has not materialized as quickly as expected, but the Company has increased its labor force to service the expected increased revenue.

Additionally, the CFS Group's operating expenses were significantly higher than that of the other operating subsidiaries and are being reduced to a more optimal level. Management believes there is an opportunity to improve efficiencies of operations at CFS, and would expect its operating margins to improve over time. There are also synergistic opportunities, such as creating density in some of its routes and internalization of its waste, which are also in process.

For the three months ended June 30, 2017, adjusted EBITDA was $2.1 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:

Net loss for the three months ended June 30, 2017, increased by $3.0 million to $7.5 million or $0.94 per share, as compared to $4.4 million or $3.48 per share in the three months ended June 30, 2016. Included in net loss attributable to common stockholders for the six months ended June 30, 2017, is a deemed dividend-related to beneficial conversion feature and accretion of a discount on Series C Preferred Stock of $2.1 million.

At June 30, 2017, Meridian Waste had $2.3 million of cash and cash equivalents, $6.9 million of capital leases, $82.0 million of debt and 9.4 million shares issued and outstanding.

Financial Results for the Six Months Ended June 30, 2017:

For the six months ended June 30, 2017, revenues were $25.1 million, a 62% increase from $15.5 million for the six months ended June 30, 2016. Organic revenue growth of the Midwest segment of 9.5% was driven by additional customers and price increases.

Gross profit improved by $1.3 million to $6.7 million in the six months ended June 30, 2017, as compared to a $5.4 million gross profit in the six months ended June 30, 2016.

Operating expenses were $18.4 million or 73% of revenue, for the six months ended June 30, 2017, as compared to $10.1 million, or 65% of revenue, for the six months ended June 30, 2016. This is an increase of 8% of revenue from the six months ended June 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 workforce 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.

Management believes there is an opportunity to improve efficiencies of operations at CFS, and would expect its operating margins to improve over time. There are also synergistic opportunities, such as creating density in some of its routes and internalization of its waste, which are also in process.

For the six months ended June 30, 2017, adjusted EBITDA was $2.9 million; includes a full quarter pro-forma effect of the CFS acquisition.

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:

Net loss for the six months ended June 30, 2017, increased by $2.1 million to $12.7 million or $1.78 per share, as compared to $10.6 million or $9.05 per share in the six months ended June 30, 2016. Included in net loss attributable to common stockholders for the six months ended June 30, 2017 is a deemed dividend related to beneficial conversion feature and accretion of a discount on Series C Preferred Stock of $2.1 million.

Conference Call Details:

Date: Thursday, September 14, 2017
Time: 4:30PM ET
Dial-in Number: (888) 567-1603
International Dial-in Number: (212) 548-3250
Webcast: http://www.investorcalendar.com/event/20007

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
[email protected]
(917) 658-7878

SOURCE: Meridian Waste Solutions, Inc.

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