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By the numbers
Q2 net income: $5.2M
Down 25.7% YoY, due to lower operating income based on higher depreciation and amortization expenses from aquisition growth.
Q2 adjusted EBITDA: $109.5M
Up 19.5% YoY
- Financial picture: During the company’s Q2 earnings call on Friday, CEO John Casella characterized the quarter as a time of “strong growth,” particularly due to stable performance across the company’s Northeast footprint and improved landfill tons compared to this time last year. Revenue growth for the quarter was mainly driven by the rollover impact from acquisitions and “sustained” collection and disposal price growth, he said.
- M&A: Casella completed six acquisitions in the first half of this year, representing over $90 million in annualized revenue. Three of those deals closed in Q2, totalling over $40 million in annualized revenues, said President Ned Coletta. The acquisition pipeline for 2025 has over $500 million of annualized revenue opportunities, he said. The company’s strategy is to solidify investments it’s made along the Eastern Seaboard, including the Mid-Atlantic, while also seeking new business in those regions, John Casella added.
- Mountain State Waste acquisition: Casella announced in July that it planned to acquire Mountain State Waste in West Virginia, which will add an incremental $30 million of annualized revenues after it closes. The acquisition will help broaden Casella's footprint in Pennsylvania, Ohio and Kentucky. The company’s West Virginia base and location near the college town of Morgantown “will give us a lot of growth,” John Casella said.
- Mid-Atlantic optimization hurdles: Labor costs in the Mid-Atlantic region are currently “hundreds of basis points higher” than in other regions where Casella operates, in part because “there’s a lack of automation and optimization of routes, and that won’t all get solved at once,” Coletta said. At the same time, truck delivery delays have further slowed optimization plans.
- Truck and route optimization: Casella expects about 55 more trucks to be delivered to the Mid-Atlantic region later in the year, 40 of which are automated, he said. Meanwhile, the company completed 11 other route optimization projects in the Eastern and Western regions that helped offset hurdles in the Mid-Atlantic, he said.
- Price: Solid waste pricing for the quarter was up 5% year over year, with 4.9% collection price growth and 5.8% disposal price growth.
- Volumes: Landfill volumes were up 9.5% year over year, driven in part by higher third-party MSW and C&D volumes due to the ongoing effects of the Brookhaven Landfill closure in New York. Casella also saw over 12% growth in internalized volumes.
- Resource Solutions: Resource Solutions revenues were up 10% year over year to about $95.8 million, with recycling and other processing revenue up 9.6%. Average commodity sales prices were down 16% from the previous year. However, higher volumes at Casella’s MRFs in Boston and Willimantic, Connecticut, helped offset that price impact, said CFO Brad Helgeson.
- Guidance adjustments: Casella increased its revenue guidance due to strong cash flow performance in the first half of the year and “increased confidence” in the second half, John Casella said. Revenue guidance is now between $1.82 billion and $1.84 billion, up from a range of $1.78 billion to $1.81 billion. However, the company revised down its net income estimates to a range of $8 million and $18 million instead of an earlier range of $10 million to $25 million.
