Casella reports profits, rising price environment

Casella Waste Systems Inc. has reported third-quarter revenue that is 22 percent higher compared with the third quarter of last year. The Rutland, Vermont-based company’s net income rose year on year by an even higher percentage—42.9 percent.

In an inflationary climate, Casella says it was able to create an “overall solid waste pricing” environment in the quarter, charging an average of 6.6 percent more for its services. That figure was “driven by collection pricing, up 7.2 percent, and disposal pricing, up 6 percent from the same period in 2021,” the firm says.

The profitable Casella results come on the heels of those released by Houston-based WM. That national waste and recycling company reported earnings that rose by 11 percent in this year’s third quarter compared with the third quarter of 2021.

Casella, a regional waste and recycling services provider in the Northeast, says it has acquired 13 businesses in the first nine months of 2022, with those firms having “approximately $48 million of annualized revenues.”

“We posted another strong quarter as our operating and pricing initiatives worked well to offset inflation and drive adjusted earnings before interest, taxes, depreciation and amortization [EBITDA] growth of 22 percent year over year in the quarter," CEO John W. Casella says.

He continues, “As expected, we expanded adjusted EBITDA margins in the third quarter despite significant declines in commodity prices, acquisition headwinds and the negative impact from the accrual of a special bonus we will pay in December to our hourly employees in recognition of their excellent work.”

On the recyclable commodities side, John Casella says he does not foresee improvement in this year’s final quarter, saying the company, in preparing its internal forecast, is predicting that “recycling commodity prices decline another 20 percent sequentially” in the upcoming quarter.

On the corporate growth front, he says, “On top of the strong organic growth in our core business, acquisitions remain a key part of our overall strategy. Our pipeline remains robust, and we are actively working to close several additional acquisitions in the next several quarters."

Looking ahead, Casella sounds an optimistic tone for this year’s fourth quarter, saying, “Given our strong operating execution year-to-date, the expected positive contribution of acquisitions completed this year and greater visibility through year-end, we are updating certain fiscal year 2022 guidance ranges for the third time this year.”

He continues, “These guidance ranges assume that the economy does not significantly change through the remainder of the year, inflation remains at current historically high levels, and recycling commodity prices decline another 20 percent sequentially. We expect our pricing, fuel cost recovery fees, and operating efficiency programs will allow us to outpace higher costs and drive margin expansion in the fourth quarter which sets us up well for 2023.”

Considering that variety of factors, Casella Waste has raised guidance for fiscal year 2022 by estimating full-year revenue between $1.065 billion and $1.080 billion (raised from a range of $1.035 billion to $1.05 billion); and net income between $53 million and $56 million (raised from a range of $50 million to $54 million).