Casella Waste reports a loss in Q4 2023

Rutland, Vermont-based waste and recycling firm Casella Waste Systems Inc. has reported a net loss of $1.8 million for the fourth quarter of 2023. The company cites depreciation adjustments as the predominant cause of the net loss while also reporting an operating income of $13.4 million for the quarter.

The company’s earnings report shows a $54.6 million depreciation and amortization adjustment assigned to last year’s fourth quarter.

In comments accompanying the report, Casella Waste says it “believes that identifying the impact of certain items as adjustments provides more transparency and comparability across periods.”

The company further refers to the designation of $54.6 million from the income to the loss column as an “unaudited reconciliation of certain non-GAAP [generally accepted principles of accounting] measures.”

Other line items and footnotes in the Casella Waste fourth-quarter report refer to expenses or obligations associated with the Southbridge Landfill in Massachusetts, which closed in 2018, and a Casella landfill in Seneca, New York.

In the latter case, a Casella line item and footnote refer to a more than $3.8 million “landfill capping charge - veneer failure” that it says consists of the write-off of prior payments and “related operating expenses incurred to clean up the affected capping material” at the landfill. Casella Waste adds, “Engineering analysis is currently underway to determine root causes and responsibility for the event.”

In its operations, Casella Waste has reported revenue of $359.6 million for the fourth quarter of 2023, which it says is up $87.4 million, or 32 percent, compared with last year’s fourth quarter.

For the entire year, the regional waste firm says its revenue of $1.265 billion increased by nearly $180 million, or more than 16 percent, compared with 2022.

Despite the fourth quarter losses, Casella Waste finished 2023 with net income of $25.4 million, which represents a 52 percent drop compared with the more than $53 million it earned in 2022.

In comments accompanying the report, company board Chair and CEO John W. Casella does not refer to the depreciation and amortization adjustment accounting measures.

“We had a strong quarter to close out a banner year, as we executed well against our long-term strategic plan and achieved double-digit revenue,” Casella says. “These results reflect the success of our operating initiatives paired with meaningful growth through acquisitions,” he adds.

“In 2023, we acquired seven businesses with approximately $315 million in annualized revenues, which marks our most significant level of growth since we introduced our disciplined capital allocation strategy several years ago,” Casella continues.

“This was an exciting period of growth with both tuck-ins and new market entries, including the expansion of our footprint into the Mid-Atlantic region, which provides an attractive platform for future organic and inorganic value-creation opportunities,” the CEO says, adding, “Our acquisition pipeline remains strong.”

Regarding expected results this year, Casella remarks, “Our strong finish to 2023 positions us well for another year of significant growth in 2024. Our guidance ranges assume a stable economic environment through 2024 but reflect a cautious outlook for construction and demolition volumes.”

Casella Waste is predicting solid waste sector revenue growth of between 21 percent and 23 percent, which it says will be driven by an estimated 17 percent growth from acquisitions made in 2023.

In the company’s Resource Solutions business unit, it is forecasting revenue growth of from 4 percent to 8 percent, which it predicts will be driven by volume growth of 3 percent tied to acquisitions plus higher recycling commodity prices.

For 2024, Casella Waste foresees capital expenditures of approximately $180 million, which includes approximately $40 million tied to acquisitions and approximately $5 million associated with a rail access project at the McKean Landfill in Pennsylvania.

Casella concludes, “We plan to continue upfront capital investment in recently acquired businesses to achieve targeted synergies or bring the assets up to the company’s standards while making further investments in our portfolio of development projects.”