Casella Waste Systems, Inc. Announces Third Quarter 2024 Results and Recent Acquisition; Updates Fiscal Year 2024 Guidance
RUTLAND, Vt., Oct. 30, 2024 (GLOBE NEWSWIRE) -- Casella Waste Systems, Inc. (NASDAQ:CWST), a regional solid waste, recycling and resource management services company, today reported its financial results for the three and nine-month periods ended September 30, 2024.
Key Highlights:
Revenues were $411.6 million for the quarter, up $58.9 million, or up 16.7%, from the same period in 2023.
Solid waste pricing for the quarter was up 5.5% from the same period in 2023, driven by 6.1% collection price growth.
Net income was $5.8 million for the quarter, down $(12.4) million, or down (68.2)%, as compared to $18.2 million for the same period in 2023.
Adjusted EBITDA, a non-GAAP measure, was $102.9 million for the quarter, up $13.3 million, or up 14.9%, from the same period in 2023.
Net cash provided by operating activities was $171.6 million for the year-to-date period, up $13.8 million, or up 8.7%, as compared to $157.8 million for the same period in 2023.
Adjusted Free Cash Flow, a non-GAAP measure, was $98.8 million for the year-to-date period, as compared to $94.3 million for the same period in 2023.
Acquired six businesses year-to-date with over $200 million in aggregate annualized revenues, including Royal Carting and Welsh Sanitation (collectively, "Royal") on October 1, 2024.
"We posted another solid quarter of execution against our growth strategies across our business," said John W. Casella, Chairman and CEO of Casella Waste Systems, Inc. "The success of our operating plan, combined with our acquisition strategy, has allowed us to generate over $400 million in revenues and more than $100 million in Adjusted EBITDA in a quarter for the first time in the company's history. Our entire team deserves recognition for their continued execution and hard work, which puts us on track for another successful year."
"While we are executing well against our strategic plan, third quarter performance was mixed. Insurance expense accruals related to two discrete events impacted Adjusted EBITDA by over $3 million in the quarter, and we had a $2 million headwind from continued lower year-over-year landfill volumes, primarily construction and demolition materials, which we expect to abate next year. Together, these two items weighed on overall Adjusted EBITDA margins by 110 basis points," Casella said.
"Return-driven investments in truck automation and routing efficiencies across our collection fleet have reduced costs, while equipment upgrades at our recycling facilities have enhanced our ability to process more volumes at higher price points year-over-year," Casella said. "These operating strategies, together with our pricing programs, drove higher same store Adjusted EBITDA margins, up 130 basis points in our collection and up 90 basis points in our Resource Solutions lines of business."
"On October 1, we completed the acquisition of Royal, which is expected to generate over $90 million in annualized revenues and provides us entry into adjacent markets of New York's middle and lower Hudson Valley region," Casella said. "We are very excited to partner with a well-respected and established service provider that offers us opportunities for new customer growth and landfill volume internalization over time. As with all of our acquisitions, we would like to welcome our new team members and look forward to introducing our services to our new customers and communities."
"Looking forward, we have set ourselves up to continue capturing opportunities in our robust acquisition pipeline with our recent financings, including our equity offering and upsizing and extending our credit facility," Casella said. "These transactions significantly increased our liquidity and financial flexibility, which will enable us to be both disciplined and nimble as we aim to add further density to existing markets and chart growth into new ones."
For the quarter, revenues were $411.6 million, up $58.9 million, or up 16.7%, from the same period in 2023, with revenue growth mainly driven by: newly closed acquisitions along with the rollover impact from acquisitions closed in prior periods; strong collection and disposal pricing; and higher recycling commodity volumes and prices.
Operating income was $24.4 million for the quarter, down $(9.8) million, or down (28.7)%, from the same period in 2023 as a result of an $8.5 million charge at the Town of Southbridge, Massachusetts landfill ("Southbridge Landfill") to revise accrued post-closure monitoring costs following receipt of increased requirements contained in the final closure permit; higher expense from acquisition activities; and higher depreciation and amortization expenses related to recently closed acquisitions.
Net income was $5.8 million for the quarter, or $0.10 per diluted common share, down $(12.4) million, or down (68.2)%, as compared to net income of $18.2 million, or $0.31 per diluted common share, for the same period in 2023. Adjusted Net Income, a non-GAAP measure, was $15.9 million for the quarter, or $0.27 Adjusted Diluted Earnings Per Common Share, a non-GAAP measure, as compared to Adjusted Net Income of $20.1 million, or $0.35 Adjusted Diluted Earnings Per Common Share, for the same period in 2023. Adjusted EBITDA was $102.9 million for the quarter, up $13.3 million, or up 14.9%, from the same period in 2023, driven by acquisition contribution and 6.0% organic growth.
Please refer to "Non-GAAP Performance Measures" included in "Unaudited Reconciliation of Certain Non-GAAP Measures" below for additional information and reconciliations of Adjusted Net Income, Adjusted Diluted Earnings Per Common Share, Adjusted EBITDA and other non-GAAP performance measures to their most directly comparable GAAP measures.
Net cash provided by operating activities was $171.6 million for the year-to-date period, as compared to $157.8 million for the same period in 2023, with the year-over-year variance mainly attributable to growth in the business and unfavorable changes in working capital. Adjusted Free Cash Flow was $98.8 million for the year-to-date period, as compared to $94.3 million for the same period in 2023.
Please refer to "Non-GAAP Liquidity Measures" included in "Unaudited Reconciliation of Certain Non-GAAP Measures" below for additional information and reconciliation of Adjusted Free Cash Flow to its most directly comparable GAAP measure.
Fiscal Year 2024 Outlook
The Company reaffirmed guidance for the fiscal year ending December 31, 2024 ("fiscal year 2024") by estimating results in the following ranges:
Revenues between $1.520 billion and $1.550 billion;
Adjusted EBITDA between $360 million and $370 million;
Net cash provided by operating activities between $245 million and $255 million; and
Adjusted Free Cash Flow between $140 million and $150 million.
The Company revised guidance for fiscal year 2024 by estimating results in the following range:
Net income between $10 million and $20 million (lowered from a range of $15 million and $25 million).
The guidance ranges do not include the impact of any acquisitions that have not been completed. Adjusted EBITDA and Adjusted Free Cash Flow related to fiscal year 2024 are described in the Unaudited Reconciliation of Fiscal Year 2024 Outlook Non-GAAP Measures section of this press release. Net income and Net cash provided by operating activities are provided as the most directly comparable GAAP measures to Adjusted EBITDA and Adjusted Free Cash Flow, respectively, however these forward-looking estimates for fiscal year 2024 do not contemplate any unanticipated impacts.
Conference Call to Discuss Quarter
The Company will host a conference call to discuss these results on Thursday, October 31, 2024 at 10:00 a.m. Eastern Time. Individuals interested in participating in the call should register for the call by clicking here to obtain a dial in number and unique passcode. Alternatively, upon registration, the website linked above provides an option for the conference provider to call the registrant's phone line, enabling participation on the call.
The call will also be webcast; to listen, participants should visit the company's website at http://ir.casella.com and follow the appropriate link to the webcast. A replay of the call will be available on the Company's website and accessible using the same link.
About Casella Waste Systems, Inc.
Casella Waste Systems, Inc., headquartered in Rutland, Vermont, provides resource management expertise and services to residential, commercial, municipal, institutional and industrial customers, primarily in the areas of solid waste collection and disposal, transfer, recycling and organics services in the eastern United States. For further information, investors may contact Charlie Wohlhuter, Director of Investor Relations at (802) 772-2230; media may contact Jeff Weld, Vice President of Communications at (802) 772-2234; or visit the Company's website at http://www.casella.com.
Safe Harbor Statement
Certain matters discussed in this press release, including, but not limited to, the statements regarding our intentions, beliefs or current expectations concerning, among other things, our financial performance; financial condition; operations and services; prospects; growth; strategies; anticipated impacts from future or completed acquisitions; and guidance for fiscal year 2024, are "forward-looking statements" intended to qualify for the safe harbors from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements can generally be identified as such by the context of the statements, including words such as "believe," "expect," "anticipate," "plan," "may," "would," "intend," "estimate," "will," "guidance" and other similar expressions, whether in the negative or affirmative. These forward-looking statements are based on current expectations, estimates, forecasts and projections about the industry and markets in which the Company operates and management's beliefs and assumptions. The Company cannot guarantee that it actually will achieve the financial results, plans, intentions, expectations or guidance disclosed in the forward-looking statements made. Such forward-looking statements, and all phases of the Company's operations, involve a number of risks and uncertainties, any one or more of which could cause actual results to differ materially from those described in its forward-looking statements.
Such risks and uncertainties include or relate to, among other things, the following: the Company may be unable to adequately increase prices or drive operating efficiencies to adequately offset increased costs and inflationary pressures, including increased fuel prices and wages; it is difficult to determine the timing or future impact of a sustained economic slowdown that could negatively affect our operations and financial results; the closure of the Subtitle D landfill located in Southbridge, Massachusetts ("Southbridge Landfill") could result in material unexpected costs; the increasing focus on per - and polyfluoroalkyl substances ("PFAS") and other emerging contaminants, including the recent designation by the U.S. Environmental Protection Agency of two PFAS chemicals as hazardous substances under the Comprehensive Environmental Response, Compensation, and Liability Act, will likely lead to increased compliance and remediation costs and litigation risks; adverse weather conditions may negatively impact the Company's revenues and its operating margin; the Company may be unable to increase volumes at its landfills or improve its route profitability; the Company may be unable to reduce costs or increase pricing or volumes sufficiently to achieve estimated Adjusted EBITDA and other targets; landfill operations and permit status may be affected by factors outside the Company's control; the Company may be required to incur capital expenditures in excess of its estimates; the Company's insurance coverage and self-insurance reserves may be inadequate to cover all of its risk exposures; fluctuations in energy pricing or the commodity pricing of its recyclables may make it more difficult for the Company to predict its results of operations or meet its estimates; disruptions or limited access to domestic and global transportation could impact the Company's ability to sell recyclables into end markets; the Company may be unable to achieve its acquisition or development targets on favorable pricing or at all, including due to the failure to satisfy all closing conditions and to receive required regulatory approvals that may prevent closing of any announced transaction; the Company may not be able to successfully integrate and recognize the expected financial benefits from acquired businesses; and the Company may incur environmental charges or asset impairments in the future.
There are a number of other important risks and uncertainties that could cause the Company's actual results to differ materially from those indicated by such forward-looking statements. These additional risks and uncertainties include, without limitation, those detailed in Item 1A. "Risk Factors" in the Company's most recently filed Form 10-K, in Item 1A. "Risk Factors" in the Company's most recently filed Form 10-Q and in other filings that the Company may make with the Securities and Exchange Commission in the future.
The Company undertakes no obligation to update publicly any forward-looking statements whether as a result of new information, future events or otherwise, except as required by law.
Investors:
Charlie WohlhuterDirector of Investor Relations(802) 772-2230
Media:
Jeff WeldVice President of Communications(802) 772-2234http://www.casella.com
CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(In thousands, except for per share data)
Three Months EndedSeptember 30,
Nine Months EndedSeptember 30,
2024
2023
2024
2023
Revenues
$
411,627
$
352,735
$
1,129,797
$
904,975
Operating expenses:
Cost of operations
267,117
226,303
741,695
592,865
General and administration
47,030
41,177
138,547
112,721
Depreciation and amortization
59,174
47,736
168,549
116,095
Southbridge Landfill closure charge
8,477
70
8,477
276
Expense from acquisition activities
5,450
3,261
18,297
9,801
Legal settlement
—
—
—
6,150
387,248
318,547
1,075,565
837,908
Operating income
24,379
34,188
54,232
67,067
Other expense (income):
Interest expense, net
14,368
10,223
40,134
23,888
Loss from termination of bridge financing
—
—
—
8,191
Other income
(412
)
(225
)
(1,239
)
(1,019
)
Other expense, net
13,956
9,998
38,895
31,060
Income before income taxes
10,423
24,190
15,337
36,007
Provision for income taxes
4,652
6,018
6,677
8,797
Net income
$
5,771
$
18,172
$
8,660
$
27,210
Basic weighted average common shares outstanding
58,808
57,962
58,318
54,228
Basic earnings per common share
$
0.10
$
0.31
$
0.15
$
0.50
Diluted weighted average common shares outstanding
58,921
58,062
58,415
54,325
Diluted earnings per common share
$
0.10
$
0.31
$
0.15
$
0.50
CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS(In thousands)
September 30,2024
December 31,2023
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
$
518,977
$
220,912
Accounts receivable, net of allowance for credit losses
168,088
157,324
Other current assets
55,986
48,089
Total current assets
743,051
426,325
Property and equipment, net of accumulated depreciation and amortization
1,059,716
980,553
Operating lease right-of-use assets
102,445
100,844
Goodwill
907,876
735,670
Intangible assets, net of accumulated amortization
273,312
241,429
Other non-current assets
36,829
50,649
Total assets
$
3,123,229
$
2,535,470
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of debt
$
38,368
$
35,781
Current operating lease liabilities
10,492
9,039
Accounts payable
101,632
116,794
Current accrued final capping, closure and post-closure costs
15,991
10,773
Other accrued liabilities
124,771
106,471
Total current liabilities
291,254
278,858
Debt, less current portion
1,045,509
1,007,662
Operating lease liabilities, less current portion
68,601
66,074
Accrued final capping, closure and post-closure costs, less current portion
133,644
123,131
Other long-term liabilities
52,691
37,954
Total stockholders' equity
1,531,530
1,021,791
Total liabilities and stockholders' equity
$
3,123,229
$
2,535,470
CASELLA WASTE SYSTEMS, INC. AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(In thousands)
Nine Months EndedSeptember 30,
2024
2023
Cash Flows from Operating Activities:
Net income
$
8,660
$
27,210
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
168,549
116,095
Interest accretion on landfill and environmental remediation liabilities
8,758
7,470
Amortization of debt issuance costs
2,224
2,221
Stock-based compensation
7,433
6,699
Operating lease right-of-use assets expense
13,119
10,956
Disposition of assets, other items and charges, net
12,459
279
Loss from termination of bridge financing
—
8,191
Deferred income taxes
3,424
5,233
Changes in assets and liabilities, net of effects of acquisitions and divestitures
(53,032
)
(26,529
)
Net cash provided by operating activities
171,594
157,825
Cash Flows from Investing Activities:
Acquisitions, net of cash acquired
