Casella Boasts Capital Allocation and Growth Strategy Following Robust Q2

 Casella Waste Systems, Inc. (NASDAQ: CWST)  saw a 31.4 percent revenue boost in Q2 2022 over the previous year as recycled commodity prices rise.

The Vermont-based waste services provider also cited the roll-over impact from acquisitions; positive collection and disposal pricing; higher solid waste fuel cost recovery fees; higher solid waste volumes for a positive Q2 2022.

"Our performance in the quarter was a product of our efforts in many areas, including strong operating initiatives focused on reducing our cost of service through productivity enhancements and further automation," John W. Casella, Chairman and CEO, commented. "At the same time, our pricing and fuel recovery fees work well to offset inflation. In fact, we fully offset higher fuel costs in the quarter and our continued execution against our growth strategy."

While the company did a "great job in overcoming pressures" through operating efficiency programs investment to further reduce costs, It aims to pass on heightened operating costs to it customer bases through our pricing programs and recovery fees.

Early adjustment of pricing programs contributed to a 6.9 percent increase in solid waste pricing in Q2, which was driven by a 7.7 percent rise in collection pricing and 5.7 percent growth in disposal from the previous year. 

Revenue for the quarter reached $283.7 million, up from $215 million, or 31.4 percent  with solid waste revenues up 26.4 percent year over year (YOY).

The company achieved a net income of $17.8 million for Q2, a 51 percent increase from 2021. Net cash provided by operating activities was $92.3 million,  up $13.2 million, or up 16.8%, from the previous year.

Landfill operations for the quarter showed positive volume and price increases following a "tough winter," according to Casella. Average landfill price per ton for Q2 was up 6 percent. Citing a strong Northeast economy, he said that the company expects volumes to reaming positive throughout the rest of 2022. 

As the first six months of 2022 comes to a close, Casella Waste Systems to date has acquired 11 businesses year-to-date which has resulted in nearly $47 million of annualized revenues. In addition to the focus on acquisition activity, the company is working to create a "balance model" with investments in its Environmental Solutions segment for "appropriate financial return."

Casella discussed investments focused on environmental stewardship and sustainability, first noting the ongoing update process at its Boston Zero-Sort recycling facility that includes new equipment to drive automation with robotic technology. The company expects the MRF to be fully operational with upgrades in the first quarter of 2023.

"This is nearly a $20 million investment that will drive higher throughput enhance and product quality and improve operating efficiency which positions us well to meet the needs of the Greater Boston market from a recycling standpoint," he commented.

The company also recently installed new robotics and sorting capabilities that are Ontario County recycling facility, with early results showing "strong efficiency gains." 

Following a strong operational execution in the first half of the year, Casella Waste Solutions updated its fiscal year 2022 guidance ranges for the second time.

“These guidance ranges assume a stable economic environment through the remainder of the year, including the current historically high inflationary environment," Casella said. "We expect our pricing, fuel cost recovery fees and operating efficiency programs to allow us to outpace higher costs and drive margin expansion year-over-year.”

2022 Highlights

Revenue: $283.7 million, up 31.4 percent YOY
Net income: $17.8 million, up 51 percent from 2021
Adjusted EBITDA: $68.5 million, up 31.4 percent
Net cash provided by operating activities: $92.3 million, up 16.8 percent
Adjusted Free Cash Flow: $46.2 million, up 22.9 percent

Full-Year Guidance

Revenue: $1.035 billion - $1.050 billion (from $1.005 billion to $1.020 billion)
Net income: $50 million - $54 million (from $48 million to $52 million);
Adjusted EBITDA: $238 million and $242 million (from $232 million to $236 million);
Net cash provided by operating activities: $208 million - $212 million (from $204 million to $208 million)
Adjusted Free Cash Flow: $106 million - $110 million (from $104 million to $108 million).