12 Takeaways from Casella Waste’s Latest Financial Results

Casella Waste netted a profit of $943,000, or 3 cents per diluted share, compared with a net loss of $10.4 million, or 17 cents per diluted share, in the 2014 period.

Revenue rose 4.7 percent to $143.7 million from $137.3 million a year earlier, according to a news release.

The waste and recycling company still is in the red for the first half. The net loss for the first six months totaled $7.02 million, or 20 cents per diluted share, compared with nearly $24 million, or 50 cents per diluted share, a year earlier.

Revenue for the first half climbed 3.9 percent to $260.3 million from $250.5 million.

The company said its overall solid waste pricing increased 2.6 percent, driven mainly by strong residential and commercial collection, which advanced 4.3 percent.

Chairman and CEO John Casella’s take: “We had a strong quarter as our team continued to execute well against our key management strategies of increasing landfill returns, improving collection route profitability, creating incremental value through resource solutions, reducing financial and operational risks and improving our balance sheet.” He said landfill volumes rose by 4 percent from a year earlier, and collection line-of-business experienced 3.7 percent higher pricing.

The company moved to reduce its commodity pricing risk exposure by introducing a new sustainability/recycling adjustment (SRA) fee to its residential and commercial collection customers.

The company also bolstered its board of directors by hiring longtime waste industry executive James O’Connor.

Casella Waste is increasing its guidance for the year for revenue, now projected between $525 million and $535 million (from a previous range of $520 million to $530 million), while it maintains the current guidance for earnings before interest, taxes, depreciation and amortization (EBITDA) of between $103 million and $107 million.

At WasteExpo, the company said market conditions in the Northeast are shaping up well. Casella should benefit from a disposal supply contraction.

Casella Waste also has seen activist investor JCP Investment Management calling for three people it named to be placed on the Casella board, and that JCP has had numerous inquiries from potential buyers. Leone Young in her June Business Insights column said industry analysts have pegged Casella’s valuation on a takeover basis within a wide $5-$10 per share. Casella’s management had little comment on the situation at the WasteExpo Investor Summit, other than to say they would consider the proposed board members as part of the process, while noting that the company on its own had made significant progress during the past two years on a number of fronts.

St. Louis-based investment firm Stifel, Nicolaus & Co. Inc. reported prior to the announced results that consensus revenue is above its estimate. The firm also believes its likely Casella Waste will be in a proxy fight at its annual general meeting Nov. 6.