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Casella Waste Systems ( CWST ) is a name I’ve been eyeing for a while. Since my last piece on the company in December 2024, maintaining a ‘hold’ rating on the stock, shares have fallen about 9% while theI'm an insurance Case Manager with a deep interest in investing. My investment philosophy is all about buying high quality stocks and great businesses. My favorite businesses are those led by disciplined capital allocators, earn exceptional returns on capital, and can compound their invested capital over lon ...

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• 1 Casella Waste Systems, Inc. Investor Presentation November 2025 Safe Harbor Statement Certain matters discussed in this presentation, 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 2025, are "forward-looking statements" intende ...

Revenue Growth - Total revenues for the three months ended September 30, 2025, were $485.4 million, a 17.9% increase from $411.6 million in the same period of 2024[120] - Solid waste revenues increased by $67.0 million, or 20.6%, for the three months ended September 30, 2025, compared to the same period in 2024, driven by acquisitions and price increases[121] - Collection revenues for the three months ended September 30, 2025, were $314.0 million, representing 64.7% of total revenues, up from $252.6 million, or 61.4%, in the same period of 2024[120] - The company completed eight acquisitions in the nine months ended September 30, 2025, contributing $175.9 million, or 19.9%, to solid waste revenues[121] - The Western segment saw a revenue increase of $93.7 million (23.2%) to $497.6 million for the nine months ended September 30, 2025, compared to $403.9 million in 2024[141] - Solid waste revenues in the Eastern region grew by $8.5 million (7.2%) for the three months and $20.3 million (6.1%) for the nine months ended September 30, 2025, primarily driven by acquisitions and higher collection pricing[143] - Solid waste revenues in the Western region increased by $32.2 million (22.5%) for the three months and $93.7 million (23.2%) for the nine months ended September 30, 2025, due to acquisitions and higher collection pricing[147] - Solid waste revenues in the Mid-Atlantic region increased by $26.4 million (40.7%) for the three months and $101.6 million (67.7%) for the nine months ended September 30, 2025, driven by acquisitions and higher collection pricing[150] - Resource Solutions revenues increased by $6.7 million (7.8%) for the three months and $22.4 million (9.1%) for the nine months ended September 30, 2025, primarily due to higher tipping fees and National Accounts business growth[153] Operating Expenses - Operating expenses for the three months ended September 30, 2025, were $315.3 million, accounting for 65.0% of total revenues, compared to $267.1 million, or 64.9%, in the same period of 2024[124] - General and administrative expenses increased to $57.3 million, or 11.8% of total revenues, for the three months ended September 30, 2025, from $47.0 million, or 11.4%, in the same period of 2024[124] - Depreciation and amortization expenses rose to $78.8 million, or 16.2% of total revenues, for the three months ended September 30, 2025, compared to $59.2 million, or 14.4%, in the same period of 2024[124] - Direct costs for the three months ended September 30, 2025, were $315.3 million, representing 65.0% of total revenues, an increase of $48.2 million (18.0%) from $267.1 million in 2024[126] - Direct labor costs increased to $76.9 million (15.8% of revenues) in Q3 2025, up $13.8 million (21.9%) from $63.1 million (15.3%) in Q3 2024[126] - General and administration expenses rose to $57.3 million (11.8% of revenues) in Q3 2025, an increase of $10.3 million (21.9%) from $47.0 million (11.4%) in Q3 2024[129] - Depreciation and amortization expense for the three months ended September 30, 2025, was $78.8 million, up $19.6 million (24.9%) from $59.2 million in the same period of 2024[132] - Inflationary cost increases have materially affected operating margins, but the company has implemented flexible pricing structures to recover certain costs[177] Income and Taxation - Operating income for the three months ended September 30, 2025, was $29.4 million, up $5.0 million or 20.5% from $24.4 million in 2024[142] - The provision for income taxes for the nine months ended September 30, 2025, was $4.3 million, a decrease of $2.4 million from $6.7 million in the same period of 2024[136] - The effective tax rate for the nine months ended September 30, 2025, was 29.1%, lower than the 43.5% effective rate for the same period in 2024[136] - Federal net operating losses carried forward to 2025 total $83.2 million, which can offset up to 80% of taxable income earned in a tax year[138] - The company projects to carry no pre-2018 net operating losses into 2025 due to changes in tax laws[138] Cash Flow and Financing - As of September 30, 2025, the company had $673.4 million available under its $700.0 million revolving credit facility and $192.7 million in cash and cash equivalents[161] - Net cash provided by operating activities increased by $61.6 million to $233.2 million for the nine months ended September 30, 2025, compared to $171.6 million for the same period in 2024[165] - The company acquired eight businesses in the nine months ended September 30, 2025, with cash consideration of $217.5 million, compared to five businesses acquired for $261.2 million in the same period of 2024[166] - Capital expenditures increased by $61.4 million in the nine months ended September 30, 2025, primarily due to acquisition activity and investments in fleet and facilities[167] - Net cash used in financing activities was $(19.1) million for the nine months ended September 30, 2025, a decrease of $530.2 million compared to the same period in 2024[168] - The company expects existing cash and cash equivalents, along with available cash flows, to be sufficient to fund operating activities and cash commitments for at least the next 12 months[161] - As of September 30, 2025, the company has an outstanding long-term debt of $800.0 million in term loan A and $700.0 million in revolving credit facility[171] - The maximum consolidated net leverage ratio is 2.34, well below the covenant requirement of 4.00, and the minimum interest coverage ratio is 7.54, exceeding the requirement of 3.00[172] - The company has $273.5 million in tax-exempt bonds, $86.9 million in finance leases, and $1.1 million in notes payable as of September 30, 2025[176] Operational Efficiency and Challenges - The company is focused on integrating acquired businesses to achieve expected benefits and enhance operational efficiency[114] - The company has implemented operating efficiency programs to improve productivity and reduce service costs[177] - The company’s operations are susceptible to regional economic conditions, including labor availability and severe weather, which can impact waste volumes and operational efficiency[179] - Seasonality affects the company’s revenues, with higher revenues typically seen in late spring, summer, and early fall months[180] - The company is subject to seasonal fluctuations, with lower revenues typically in late fall, winter, and early spring months[180] - Severe weather can adversely affect operations, potentially increasing costs and delaying waste collection and disposal[181] - Management's estimates and judgments in financial statements are based on historical experience and may differ from actual results[182]

Financial Data and Key Metrics Changes - Revenue for Q3 2025 was approximately $485 million, representing a year-over-year increase of 17.9% or $73.7 million, driven by solid waste pricing strength and acquisitions [5][10] - Adjusted EBITDA reached a record $120 million, up 16.4% year-over-year, with an adjusted EBITDA margin of 24.7%, down approximately 30 basis points year-over-year [5][12] - Year-to-date adjusted free cash flow totaled $119 million, up 21% year-over-year, supported by EBITDA growth and stronger working capital performance [5][15] - The company raised the lower end of its revenue and adjusted EBITDA guidance for 2025, increasing midpoints to $1.835 billion and $420 million, respectively [15] Business Line Data and Key Metrics Changes - Solid waste operations saw a revenue increase of 20.6% year-over-year, with pricing up 4.6% and volume essentially flat [10] - Resource solutions revenues increased by 7.8% year-over-year, although recycling and processing revenue decreased by 5% due to lower commodity prices [11] - The integration of Mid-Atlantic businesses is progressing well, with expectations for further gains in Q4 and into 2026 [6][19] Market Data and Key Metrics Changes - Landfill volumes increased by 11.7% year-over-year, with internalized volumes growing nearly 20% [10][19] - The average recycled commodity revenue per ton decreased by 29% year-over-year due to softer markets [11] - The company is working on expanding landfill capacity in New York, with permits expected in the coming quarters [19][102] Company Strategy and Development Direction - The company’s M&A strategy focuses on a balanced mix of smaller tuck-in acquisitions and larger opportunities to expand geographic footprint [6] - The company has an active acquisition pipeline representing approximately $500 million in annualized revenues [7] - The transition to a new Executive Chairman role for John W. Casella at the end of 2025, with Ned Coletta stepping into the CEO role, indicates a strategic leadership shift [8][9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving enhanced 2025 guidance, citing sustained operating and acquisition momentum [7] - The company anticipates another year of strong growth in 2026, with organic growth expected in the range of 4 to 5% and an additional 3% from rollover acquisition revenue [16] - Management highlighted the importance of integrating acquisitions quickly to realize margin expansion opportunities [30][95] Other Important Information - The company completed eight acquisitions year-to-date, adding approximately $105 million in annualized revenue, with a pending acquisition expected to close at the beginning of 2026 [6][21] - The company is focused on improving operational efficiencies through automation and system consolidation [20][41] Q&A Session Summary Question: Concerns about long-term margin trajectory - Management indicated that while margins are down slightly year-to-date, they expect significant multi-year margin expansion opportunities from acquisitions [30][32] Question: Clarification on synergy capture in the Mid-Atlantic - Management confirmed that the $5 million savings expected in 2026 does not include pricing or margin lift, as they are still in the budgeting process [36][38] Question: Internalization of landfill volumes - Management noted that internalization of volumes from acquisitions is a key focus and has been yielding positive results [48] Question: Timeline for Mid-Atlantic billing system - Management expects to complete the billing system integration by the end of Q1 2026, which will enable better pricing and operational efficiencies [66][68] Question: Pricing evolution in the Mid-Atlantic - Management stated that pricing strategies will evolve as they integrate systems and optimize routes, but it may take several years to fully realize the potential [80] Question: Impact of Mountain State Waste acquisition timing - Management clarified that the delay in the Mountain State Waste acquisition is due to normal regulatory processes and does not indicate any issues [83] Question: Confidence in landfill permitting processes - Management expressed confidence in successfully obtaining permits for landfill expansions, citing their strong track record in the Northeast [101][102]

Core Insights - Casella Waste Systems, Inc. (CWST) is a significant player in the waste removal services industry, offering waste collection, recycling, and disposal services [1] - The company reported an earnings per share (EPS) of $0.15 for the quarter, which was below the estimated $0.33, although it has a history of exceeding expectations in previous quarters [2][6] - CWST's revenue for the quarter was $485.4 million, surpassing the estimated $476.9 million, and showing a significant increase from $411.63 million in the same period last year [3][6] Financial Performance - The EPS of $0.15 fell short of the estimated $0.33, indicating a potential area of concern for investors [2][6] - Revenue exceeded expectations at $485.4 million, reflecting a positive trend in revenue performance [3][6] - The company achieved a revenue of $485.35 million in the third quarter, beating the Zacks Consensus Estimate by 1.66% [3] Valuation Metrics - CWST has a high price-to-earnings (P/E) ratio of approximately 344.49, indicating that investors are willing to pay a premium for its earnings [4] - The price-to-sales ratio is about 2.88, and the enterprise value to sales ratio is approximately 2.84, further reflecting the company's valuation relative to its sales [4] Financial Stability - The company maintains a low debt-to-equity ratio of approximately 0.07, suggesting strong financial health and low debt levels [5][6] - A current ratio of about 1.51 indicates that CWST has sufficient liquidity to cover its short-term liabilities [5][6]

Core Insights - Casella (CWST) reported quarterly earnings of $0.42 per share, exceeding the Zacks Consensus Estimate of $0.34 per share, and showing an increase from $0.27 per share a year ago, resulting in an earnings surprise of +23.53% [1] - The company achieved revenues of $485.35 million for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 1.66% and up from $411.63 million year-over-year [2] - Casella has consistently outperformed consensus EPS and revenue estimates over the last four quarters [2] Earnings Outlook - The sustainability of Casella's stock price movement will largely depend on management's commentary during the earnings call and future earnings expectations [3][4] - The current consensus EPS estimate for the upcoming quarter is $0.22 on revenues of $469.79 million, and for the current fiscal year, it is $1.05 on revenues of $1.83 billion [7] Industry Context - The Waste Removal Services industry, to which Casella belongs, is currently ranked in the bottom 28% of over 250 Zacks industries, indicating potential challenges for stock performance [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact Casella's stock performance [5]

Financial Performance - Revenues for Q3 2025 were $485.4 million, an increase of $73.7 million or 17.9% compared to Q3 2024[4] - Net income for Q3 2025 was $10.0 million, up $4.2 million or 73.0% from $5.8 million in Q3 2024[6] - Adjusted EBITDA for Q3 2025 was $119.9 million, an increase of $16.9 million or 16.4% from the same period in 2024[6] - Net income for the nine months ended September 30, 2025, was $10,382 thousand, up from $8,660 thousand in the same period of 2024, representing a growth of 19.8%[26] - Adjusted EBITDA for the nine months ended September 30, 2025, was $315,773 thousand, compared to $265,560 thousand in 2024, indicating an increase of 18.9%[28] - Adjusted net income for the nine months ended September 30, 2025, was $61,739 thousand, compared to $56,592 thousand in 2024, reflecting an increase of 9.6%[29] - Adjusted diluted earnings per common share for the nine months ended September 30, 2025, was $0.97, unchanged from the same period in 2024[29] Cash Flow and Guidance - Net cash provided by operating activities for the year-to-date period was $233.2 million, up $61.6 million or 35.9% from $171.6 million in the same period in 2024[9] - Adjusted Free Cash Flow for the nine months ended September 30 was $119.5 million, an increase of $20.7 million or 21.0% from $98.8 million in the same period in 2024[9] - The company raised the lower end of its 2025 revenue guidance from $1.820 billion to $1.830 billion, and Adjusted EBITDA guidance from $410 million to $415 million[17] - The company is reaffirming guidance for net income between $8 million and $18 million for fiscal year 2025[17] - Estimated Adjusted EBITDA for fiscal year 2025 is projected to be between $415,000,000 and $425,000,000, with net income estimated between $8,000,000 and $18,000,000[32] - Estimated Adjusted Free Cash Flow for fiscal year 2025 is projected to be between $170,000,000 and $180,000,000, based on net cash provided by operating activities of $325,000,000 to $335,000,000[32] Acquisitions and Capital Expenditures - The company completed eight acquisitions year-to-date, contributing approximately $105 million in annualized revenue, with an additional $30 million expected from the pending acquisition of Mountain State Waste[3] - The company incurred $217,501 thousand in acquisitions, net of cash acquired, for the nine months ended September 30, 2025, compared to $259,196 thousand in 2024[26] - Capital expenditures for the three months ended September 30, 2025, totaled $65,925,000, up from $51,461,000 in the same period in 2024, representing a 28.2% increase[35] - The company’s capital expenditures for the nine months ended September 30, 2025, were $187,803,000, compared to $126,361,000 for the same period in 2024, indicating a significant increase of 48.6%[35] - Acquisition capital expenditures for the three months ended September 30, 2025, were $11,597,000, compared to $12,830,000 in the same period in 2024[35] Operational Metrics - Solid waste pricing increased by 4.6% in Q3 2025, driven by 4.7% collection price growth and 4.6% disposal price growth[8] - Solid waste operations revenue increased by $67,005,000, or 20.6%, for the three months ended September 30, 2025, compared to the same period in 2024[34] - Total assets increased to $3,285,292 thousand as of September 30, 2025, compared to $3,230,068 thousand on December 31, 2024, reflecting a growth of approximately 1.7%[25] - Total current liabilities decreased to $296,505 thousand as of September 30, 2025, from $307,317 thousand on December 31, 2024, a decline of approximately 3.6%[25] Cash Flow Analysis - Cash flows from operating activities for the nine months ended September 30, 2025, totaled $233,213 thousand, up from $171,594 thousand in 2024, marking a rise of 36%[26] - The company reported a net cash decrease of $190,650 thousand in cash, cash equivalents, and restricted cash for the nine months ended September 30, 2025, compared to an increase of $298,065 thousand in 2024[26] - The company reported a net cash provided by operating activities of $93,565,000 for the three months ended September 30, 2025, compared to $91,813,000 for the same period in 2024[30] System Integration and Future Outlook - The company made steady progress on billing system integrations in acquired Mid-Atlantic businesses, positioning for improved performance in 2026[3] - The company expects to incur cash outlays related to the Southbridge Landfill closure, with total cash outlays expected to continue through the post-closure period[30]

Core Insights - Casella Waste Systems, Inc. reported record performance in key financial metrics for Q3 2025, driven by a disciplined acquisition strategy and strong organic growth [3][4][6] - The company completed eight acquisitions in 2025, contributing approximately $105 million in annualized revenue, with an additional $30 million expected from a pending acquisition [3][4] - Revenue for Q3 2025 reached $485.4 million, a 17.9% increase from Q3 2024, primarily due to acquisition impacts, price growth, and strong performance in the Resource Solutions segment [4][7] Financial Performance - Operating income for Q3 2025 was $29.4 million, up 20.5% from the same period in 2024, excluding a non-recurring landfill closure charge [5][6] - Net income for Q3 2025 was $10.0 million, a significant increase of 73.0% compared to Q3 2024, largely influenced by operating income factors [6][7] - Adjusted EBITDA for Q3 2025 was $119.9 million, reflecting a 16.4% increase year-over-year, driven by both acquisitions and organic growth [6][7] Cash Flow and Guidance - Net cash provided by operating activities for the year-to-date period was $233.2 million, a 35.9% increase from the same period in 2024 [9] - Adjusted Free Cash Flow for the nine months ended September 30 was $119.5 million, up 21.0% from the previous year [9] - The company raised the lower end of its revenue and Adjusted EBITDA guidance for fiscal year 2025, reflecting confidence in strong performance and limited exposure to recycled commodity price volatility [11][16] Acquisition Strategy - The company has positioned itself to capitalize on a robust acquisition pipeline, with ongoing integration efforts in the Mid-Atlantic region expected to enhance business performance [3][4] - The anticipated acquisition of Mountain State Waste is expected to add another $30 million in annualized revenue, further strengthening the company's market position [3][4] Market Position - Casella Waste Systems provides solid waste, recycling, and resource management services primarily in the eastern United States, serving a diverse customer base [17]