Release Date: August 02, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Casella Waste Systems Inc (CWST, Financial) achieved all-time highs in both revenue and adjusted EBITDA for the quarter, reflecting strong business performance.
- The company completed five acquisitions year-to-date, contributing over $100 million in annualized revenues, enhancing growth and market presence.
- The recycling operations posted strong results, with average commodity revenue per ton up 50% year-over-year, driven by the Boston MRF.
- Casella Waste Systems Inc (CWST) has a robust acquisition pipeline, indicating potential for further growth and expansion.
- The company is effectively managing inflationary pressures with flexible pricing strategies, maintaining a positive price/cost spread.
Negative Points
- Landfill volumes were down year-over-year, with continued weakness in C&D and special waste volumes, impacting overall performance.
- Higher operating costs, including leachate expenses due to wet weather, negatively affected margins in the quarter.
- Adjusted net income decreased by $6.3 million compared to the prior year, impacted by higher amortization of intangibles from acquisitions.
- Cash flow from operating activities was down year-over-year, affected by slower AR collections from recently acquired businesses.
- The effective tax rate was higher than the statutory rate, driven by non-deductible expenses and discrete items, impacting net income.
Q & A Highlights
Q: Can you clarify if the $3 million in leachate costs were due to systemic issues or recent flooding?
A: John Casella, CEO: The increased leachate costs were due to significant flooding in Vermont and parts of New Hampshire, Maine, and upstate New York, not systemic issues like PFAS.
Q: The EBITDA guidance increased by $10 million. Is this entirely due to acquisitions?
A: Bradford Helgeson, CFO: Yes, the $10 million increase in EBITDA guidance is primarily due to acquisitions, with contributions from deals closing on July 1 and August 1.
Q: Can you provide more details on the revenue mix and internalization plans for Whitetail and LMR acquisitions?
A: Edmond Coletta, President: Neither Whitetail nor LMR have transfer assets. The focus is on internalizing recyclables into our upgraded recycling facility in Pennsylvania. Short-term, no plans to internalize waste, but mid-term possibilities exist.
Q: How are inflationary pressures affecting your operations, and what measures are you taking to offset them?
A: Edmond Coletta, President: Inflation remains around 5%, with labor costs stabilizing. We're adjusting pricing strategies to match inflation trends and maintain margins.
Q: Are there any changes in acquisition target pricing or multiples?
A: John Casella, CEO: Multiples have remained full for the past 1.5 to 2 years, with no significant changes. The acquisition pipeline remains robust with numerous opportunities.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
