Casella Q2 results show dropoff from last year

Rutland, Vermont-based Casella Waste Systems Inc. has reported second quarter 2023 results that include a year-on-year revenue increase of 2.1 percent but a year-on-year decline in net income of about 69 percent.

The firm’s second quarter net income of $5.5 million was down by $12.3 million, or 69.2 percent, compared with a year ago.

On the merger and acquisition (M&A) front, Casella closed on the acquisition of designated operations from Canada-based GFL Environmental Inc. on June 30. The firm also signed an asset purchase agreement June 9 to obtain the assets of Albany, New York-based Consolidated Waste Services LLC and its affiliates branded as Twin Bridges.

“We executed well in the second quarter against our operating initiatives and growth strategies, which helped to drive meaningful adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) growth and margin expansion, despite significant recycling headwinds with commodity prices down 53 percent year over year," Casella Waste Systems Chair and CEO John W. Casella says.

“This is an exciting period of growth for our organization.”

Casella says the addition of the GFL assets is a great opportunity to expand its footprint into the Mid-Atlantic and provides a new geographic platform for long-term growth. "We are off to a great start servicing our new customers in Pennsylvania, Delaware, and Maryland," the CEO says.

“The business is performing well as we continue to focus on our core operating strategies. Our ongoing investments in adding automated trucks to our fleet, implementing route optimization software and installing onboard computers are driving value through safety and operating efficiencies.”

Inflationary conditions have met with a response from Casella Waste Systems, with the CEO saying the firm’s collection pricing has risen by 8.2 percent and overall solid waste pricing is up 7.7 percent in the second quarter, which has helped to offset cost inflation.

Looking ahead, Casella says, “We expect the strength in our solid waste line of business to continue over the remainder of this year and help drive consolidated margin expansion for the year.”

In its recycling sector, Casella says, “Upgrades at our Boston material recovery facility [MRF] are now complete, and the operation is expected to contribute positively to overall results in the second half of this year. We invested approximately $20 million into new, state-of-the-art recycling processing equipment and technology that aims to enhance material recovery and quality, while enhancing our safety profile and increasing throughput.”

In the second quarter, Casella Waste Systems garnered revenue of $289.6 million, up by $6.0 million, or 2.1 percent, compared with the second quarter of 2022. The firm says its revenue growth was mainly driven by: positive collection and disposal pricing, the rollover impact from acquisitions closed in prior periods along with a newly closed acquisition and higher sustainability recycling adjustment fees, partially offset by lower commodity prices and lower solid waste volumes.

This year’s second quarter for Casella Waste Systems also included several nonrecurring items, including a $6.2 million legal settlement charge in connection with a class action litigation matter relating to the Fair Labor Standards Act of 1938 and state wage and hours laws; an $8.2 million loss from termination of bridge financing for the secured and unsecured bridge loans associated with the financings of the acquisition of select operations from GFL and the pending acquisition of Twin Bridges; and other one-time costs.

"Given the expected contribution from acquisitions closed through the first half of this year and the expectation that our solid waste operations continue to perform at budget during the remainder of the year, we are updating our fiscal year 2023 guidance ranges that were first announced in mid-February and reaffirmed in April," John Casella says.

The company has changed its guidance for fiscal year 2023 in part by raising its predicted adjusted EBITDA figure from a range of $266 million to $272 million to a new range of between $289 million and $295 million.