Casella Waste Systems Inc., a regional solid waste, recycling and resource management services company based in Rutland, Vermont, reported its financial results for the period ended Dec. 31, 2019. The company also provided guidance for the fiscal year ending Dec. 31, 2020.
Highlights of the fourth quarter included:
- Revenues were $193.6 million for the quarter, up $18.9 million, or up 10.8 percent, from the same period in 2018. Revenues were $743.3 million for the fiscal year, up $82.6 million, or 12.5 percent, from fiscal year 2018.
- Overall solid waste pricing for the quarter was up 5 percent, driven by robust collection pricing, up 4.8 percent, and strong landfill pricing, up 7.6 percent, from the same period in 2018.
- Net income was $9.1 million for the quarter, up $22.7 million from the same period in 2018. Net income was $31.7 million for the fiscal year, up $25.2 million from fiscal year 2018.
- Adjusted net income was $10.2 million for the quarter, up $6.1 million, or up 146.2 percent, from the same period in 2018. Adjusted net income was $40.6 million for the fiscal year, up $13.5 million, or up 49.6 percent, from fiscal year 2018.
- Adjusted EBITDA was $41.1 million for the quarter, up $7.3 million, or up 21.5 percent, from the same period in 2018. Adjusted EBITDA was $156.5 million for the fiscal year, up $18.5 million, or 13.4 percent, from fiscal year 2018.
- Net cash provided by operating activities was $116.8 million for the fiscal year, down $4 million, or 3.3 percent, from fiscal year 2018.
- Normalized free cash flow was $55.5 million for the fiscal year, up $8.4 million, or 17.9 percent, from fiscal year 2018.
“We had another great quarter and year, as we continued to execute well against our key strategies as part of our 2021 plan,” John Casella, chairman and CEO of Casella Waste Systems, says. “We remain focused on driving cash flow growth by increasing landfill returns, improving collection profitability, creating incremental value through resource solutions, using technology to drive profitable growth and efficiencies, and prudently allocating capital for strategic growth.
“During 2019, we continued to make substantial progress executing against our strategic growth initiative, as we acquired nine businesses with approximately $53 million of annualized revenues. And, in early 2020, we have started the year well, completing another two acquisitions with approximately $6 million of annualized revenues. We expect revenue growth of roughly 4.7 percent (or $35 million) in 2020 from the roll-over impact of acquisitions completed in 2019 and those already completed in early 2020. Our acquisition pipeline remains robust, and we believe that there is continued opportunity to drive additional cash flow growth across our footprint through the sustained execution against our disciplined acquisition strategy.
“Our solid waste pricing programs were ahead of budget again in the fourth quarter as we advanced 4.8 percent pricing in the collection line-of-business and 7.6 percent pricing at the landfills, with overall solid waste price increasing by 5 percent,” Casella says. “Solid waste volumes were down 0.9 percent in the quarter, with collection volumes down as we continued to focus on shedding unprofitable work and advancing pricing in excess of heightened inflation. Disposal volumes were down slightly on lower transportation and disposal work; however, landfill volumes were up 1.1 percent as we continued to ramp tons into our sites.
“As a company, we have spent the last 45 years working to develop an integrated resource management strategy that balances our customers' current solid waste collection, recycling, organics and disposal needs with a vision for the future through increased sustainability and resource management. We have worked extremely hard to develop and successfully implement leading resource initiatives, long before sustainability was in vogue. One such success is our innovative recycling business model. Our revenue share model and other risk management programs coupled with our investments in new processing technologies and our efforts to produce higher quality materials and manage processing costs with increased automation have allowed us to improve our recycling business's financial performance, mitigate commodity risk and maintain viable end-markets in a challenging pricing environment. These efforts have allowed our recycling program to remain both environmentally and economically sustainable through this historically low commodity pricing cycle.
“While we are actively working with many of our customers to reduce their waste footprint and drive higher resource recovery and diversion, landfills still serve as necessary elements of an integrated resource management strategy. There are still many materials that need to be landfilled—these are streams that cannot be recycled, beneficially reused or certain materials that have time-sensitive needs, such as debris from natural disasters. We strive to operate safe and environmentally sound disposal facilities while we work diligently to expand permits to maintain necessary disposal capacity to meet these on-going needs.
“Our team did a great job in 2019 meeting these goals as we received two important landfill permit expansions. In December 2019, we received a 2.7-million-cubic-yard expansion at our Hakes landfill located in New York, which will serve as an important multi-year bridge to the next phase of this landfill. And, in September 2019, we received a 13.7-million-cubic-yard expansion at our Waste USA landfill located in Vermont, which will create approximately 20 years of additional airspace at the current run-rate.
“Despite these great successes, we faced an unexpected setback at our North Country landfill located in New Hampshire in February 2020, when we learned from the New Hampshire Department of Environmental Services that it had decided to interpret the state’s public benefit statute in a manner that we believe was different than how it had consistently interpreted it in the past. As such, we decided to withdraw our airspace expansion permit application at this site, and we plan to quickly resubmit our application to address the department’s interpretation of the long-standing statute. As this step adds time to the process, we will need to ramp down volumes at the site in 2020 to maintain adequate near-term capacity.”
2020 outlook
As part of the earnings report, Casella outlined its expectations for 2020.
“Our 2020 budget is on track with the 2021 strategic plan that we first introduced in August 2017 and reflects continued execution of our key strategies with the goal of driving additional shareholder value," Casella says. “We expect strong growth again in 2020 despite our plan to slow volumes into our North Country landfill as we work to permit the next expansion airspace. We remain focused on pricing execution, driving core operating efficiency programs, ramping up tons at our landfills in New York, and our integration of acquisitions completed in 2019 and in early 2020.”
The company provided guidance for the fiscal year ending Dec. 31 by estimating results in the following ranges:
- Revenues between $800 million and $815 million (as compared to $743.3 million in fiscal year 2019);
- Net income between $35 million and $39 million (as compared to $31.7 million in fiscal year 2019);
- Adjusted EBITDA between $170 million and $174 million (as compared to $156.5 million in fiscal year 2019);
- Net cash provided by operating activities between $131 million and $135 million (as compared to $116.8 million in fiscal year 2019); and
- Normalized free cash flow between $60 million and $64 million (as compared to $55.5 million in fiscal year 2019).