Casella reports mixed Q3 performance

Casella Waste Systems Inc., a Rutland, Vermont-based solid waste, recycling and resource management services company, has reported mixed financial results for the third quarter, with revenues up from the same quarter the previous year, though not as high as analysts had expected, while operating income and net income were down from the same quarter the previous year.

Revenues were $411.6 million for the quarter, up 16.7 percent from the same period in 2023, with revenue growth mainly driven by newly closed acquisitions along with the rollover impact from acquisitions closed in prior periods, strong collection and disposal pricing and higher recycling commodity volumes and prices, according the company.

Operating income was $24.4 million for the quarter, down 28.7 percent from 2023, as a result of revised accrued postclosure monitoring costs at a Massachusetts landfill, higher expense from acquisition activities and higher depreciation and amortization expenses related to recently closed acquisitions, the company says. Net income was $5.8 million for the quarter, down 68.2 percent for the same period in 2023.

“While we are executing well against our strategic plan, third quarter performance was mixed,” says John W. Casella, chairman and CEO of Casella Waste Systems Inc. “Insurance expense accruals related to two discrete events impacted adjusted EBITDA [earnings before interest, taxes, depreciation and amortization] by over $3 million in the quarter, and we had a $2 million headwind from continued lower year-over-year landfill volumes, primarily construction and demolition materials, which we expect to abate next year. Together, these two items weighed on overall adjusted EBITDA margins by 100 basis points.”

Adjusted EBITDA was $102.9 million for the quarter, up 14.9 percent from the same period last year.

Solid waste pricing was up 5.5 percent for the quarter, driven by 6.1 percent collection price growth. Net cash provided by operating activities was $171.6 million for the year-to-date period, up 8.7 percent.

“We posted another solid quarter of execution against our growth strategies across our business,” Casella says. “The success of our operating plan, combined with our acquisition strategy, has allowed us to generate over $400 million in revenues and more than $100 million in adjusted EBITDA in a quarter for the first time in the company’s history. Our entire team deserves recognition for their continued execution and hard work, which put us on track for another successful year.”

Casella Waste has acquired six businesses so far this year with more than $200 million in aggregate annualized revenues, including Royal Carting and Welsh Sanitation. The acquisition of that New York-based waste removal company was finalized Oct. 1.

“[Royal] is expected to generate over $90 million in annualized revenues and provides us entry into adjacent markets of New York’s middle and lower Hudson Valley region,” Casella says. “We are very excited to partner with a well-respected service provider that offers us opportunities for new customer growth and landfill volume internalization over time.”

Casella has issued revised guidance for fiscal year 2024 by estimating net income between $10 million and $20 million, lowered from a range of $15 million and $25 million.

The company reaffirmed guidance for the fiscal year ending Dec. 31, by estimating revenues between $1.520 billion and $1.550 billion; adjusted EBITDA between $360 million and $370 million; net cash provided by operating activities between $245 million and $255 million; and adjusted free cash flow between $140 million and $150 million.