Casella surpasses $1B in revenues in 2022

Casella Waste Systems Inc., a Rutland, Vermont-based solid waste, recycling and resource management services company, has reported its financial results for the three- and twelve-month periods ending Dec. 31, 2022.

For the fourth quarter, revenues were $272.1 million, up $30.3 million, or up 12.5 percent, from the same period in 2021. This growth was mainly driven by:

• positive collection and disposal pricing;
• higher solid waste fuel cost recovery fees;
• the roll-over impact from acquisitions closed in fiscal year 2021, along with the impact of acquisitions closed in fiscal year 2022; and
• higher pricing, recycling processing fees and volume within the company’s Resource Solutions operating segment.

Net income was $8.4 million for the quarter, or 16 cents per diluted common share, down $0.7 million, or 7.9 percent, as compared with net income of $9.1 million, or 18 cents per diluted common share, for the same period in 2021.

Operating income was $17.2 million for the quarter, up $0.9 million, or up 5.5 percent, from the same period in 2021. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) was $56.2 million for the quarter, up $4.8 million, or up 9.3 percent, from the same period in 2021.

“We had another solid quarter and an exceptional year despite high inflation and a volatile period for recycling commodities,” says John W. Casella, chairman and CEO of Casella Waste Systems. “Continued execution against our long-term strategic plan resulted in surpassing both $1 billion in revenues and $100 million in adjusted free cash flow in fiscal year 2022 for the first time in the company’s history. Our team deserves tremendous recognition for these achievements and the resilience [showed] this past year positions us well for continued execution and for our next stage of growth.”

For fiscal year 2022, revenues were $1,085.1 million, up $195.9 million, or up 22 percent, from fiscal year 2021. Net income was $53.1 million, or $1.03 per diluted common share, for fiscal year 2022 as compared with net income of $41.1 million, or 80 cents per diluted common share, for fiscal year 2021.

Operating income was $95.4 million for fiscal year 2022, up $17.7 million from fiscal year 2021. Adjusted EBITDA was $245.2 million for fiscal year 2022, up $41.7 million from fiscal year 2021.

“Growth through acquisitions is an integral part of our strategy. In fiscal year 2022, we acquired 14 businesses with annualized revenues of approximately $51 million, of which we expect to recognize roughly $15.5 million of revenues in fiscal year 2023 from the rollover impact of acquisitions completed throughout 2022. We have a robust pipeline including a number of deals in the late stages, and we expect another year of strong execution against our growth strategy in 2023,” Casella says.

In 2023, the company expects revenues between $1.15 billion and $1.18 billion, net income between $56 million and $62 million and an adjusted EBITDA of between $266 million and $272 million.

Casella provides the following assumptions that are built into its outlook:

• The company expects revenue growth of between 6. percent and 8.7 percent in fiscal year 2023, including approximately 1.4 percent (or $15.5 million) of revenue growth from the roll-over impact of acquisitions completed during fiscal year 2022.
• The company has two potential acquisitions with approximately $30 million of annualized revenues under a letter of intent and expects to close on these transactions by the end of the second quarter. Fiscal year 2023 guidance does not include either of these potential acquisitions or the impact of any other acquisitions that have not yet been completed.
• In the solid waste business, revenue growth of between 9.7 percent and 11.2 percent, with price growth from 6 percent to 7 percent, volume growth from 0.5 percent to 1 percent and 1.3 percent growth from acquisitions completed during fiscal year 2022.
• In the Resource Solutions business, revenue growth of between 3.7 percent and 2.3 percent is expected, driven by 1.7 percent growth from acquisitions completed during fiscal year 2022 and positive price and volumes, mainly offset by lower recycling commodity prices.
• Capital expenditures of approximately $141 million, which includes approximately $18 million of nonrecurring capital associated with acquisition integration and approximately $10 million of capital associated with the first phase of the McKean landfill rail project.
• Net cash provided by operating activities will be negatively impacted in fiscal year 2023 as Casella plans to spend approximately $11 million on landfill capping, closure and post-losure expenditures to help reduce emissions and adhere to regulatory requirements.