- Business outlook: CEO John Casella congratulated the company for strong revenue growth and attributed the success to positive collection and disposal pricing, as well as higher solid waste fuel cost recovery fees. This helped reduce the impact of inflation, high fuel costs and low recycled commodity values. Other positive factors came from the roll-over impact from 2022 acquisitions. The company continues other cost-saving measures like fleet automation and route optimization technology, now available in about half of its trucks.
- GFL acquisition updates: Casella offered additional details on the acquisition of several GFL Environmental assets in Pennsylvania, Delaware and Maryland worth $525 million. President and CFO Ned Coletta said the company expects to generate about $8 million of incremental annual synergies within three years of the deal, mainly through landfill internalization and fleet automation. John Casella added that the company has “a lot of work to do from an integration standpoint.” A management team with specific expertise in the Mid-Atlantic will help the company ease into the new region, where the company sees “significant opportunity from a growth standpoint.”
- Other acquisitions: Casella completed the acquisition of a separate solid waste collection and transfer station company on April 3, which it says represents about $12 million of annualized revenues. Casella’s overall M&A pipeline has about $500 million of “addressable opportunities,” but the company has also identified other Mid-Atlantic opportunities. “This highlights the platform nature of these operations from which we can build over time.”
- Pricing and volumes: Casella said the year was “off to a strong start ahead of budgeted levels given persistent inflation” due in part to overall solid waste pricing going up 8.8% this quarter compared to Q1 2022. On the collection side, revenues were up 17.1% year over year with price of 8.9%, though volume was slightly down, Coletta said. Meanwhile, disposal revenues were up 19.3% year over year, with price up 9.3% and volumes up 6.4%.
- Recycling: Casella reported $67.7 million in revenue from its broader resource solutions segment, with commodity prices down 52% year over year. Coletta said prices are slowly rebounding — about 20% sequentially from December through March — but it still represents a headwind. A floating recycling fee has typically helped Casella limit these effects, but the company hasn’t yet implemented it for some recently acquired companies. Meanwhile, the company’s Boston MRF retrofit project is still scheduled to be completed in mid-2023.
- McKean Landfill: Casella has now received all the remaining permits it needed to complete rail infrastructure improvements at the McKean Landfill in Pennsylvania, which is on track to open in spring 2024. John Casella said the location will synergize well with the company’s recent deal with GFL in that state. “There's significant disposal capacity in Pennsylvania available,” he said.
Casella sees ‘significant’ Mid-Atlantic expansion opportunities after GFL deal
Casella offered more details on its pending acquisition of GFL assets in three new states, including plans to internalize volumes at its forthcoming McKean Landfill site in Pennsylvania.
- Q1 earnings results for major waste and recycling companies By Waste Dive Staff • Updated May 23, 2023
- Casella Waste to acquire $525M worth of GFL assets in 3 states By Cole Rosengren • April 24, 2023