Summary of Casella Waste Systems (CWST) Conference Call - May 05, 2025 Company Overview - **Company**: Casella Waste Systems (CWST) - **Industry**: Waste Management and Recycling - **Key Personnel**: John Casella (CEO), Ned Coletta (President) Core Points and Arguments 1. **Company Culture and People Focus**: - The foundation of Casella's success over 50 years is its people and culture, emphasizing employee satisfaction as a driver for customer and shareholder happiness [10][12][40] - The company added 1,000 employees last year, highlighting the challenge of maintaining culture during rapid growth [12] 2. **Acquisition Strategy**: - The company has shifted focus from tuck-in acquisitions in the Northeast to exploring new growth areas, including Pennsylvania, Maryland, and Delaware [22][23] - Future growth opportunities are seen along the Eastern Seaboard, avoiding distant markets like California or Texas [25] 3. **Operational Efficiency**: - Casella's operations are heavily reliant on its direct workforce, with 80-85% of employees not working in an office environment [16] - The company has established a CDL school to address driver shortages, resulting in a significant reduction in job openings [30][32] 4. **Regulatory Challenges**: - The regulatory environment is becoming increasingly difficult, with lengthy permit processes and social media scrutiny impacting operations [60][61] - The company is focused on expanding its Highland facility to double its capacity, despite the challenges in obtaining permits [62] 5. **Market Dynamics**: - The company has observed a shift in waste management policies, with some states opting to export waste, which could lead to increased local costs in the future [70][73] - Casella's competitive advantage lies in its local disposal capacity, which is becoming more valuable as regulations tighten [66] 6. **Financial Performance**: - Casella has consistently grown free cash flow by 15-20% annually, with organic growth of 10-12% and additional growth from acquisitions [76] - The company remains optimistic about current market conditions, reporting strong volumes across all business segments despite a slow start to the year [80][81] Additional Important Insights - **Employee Retention**: Internal promotions from helper positions to drivers have shown a retention rate that is 75% lower compared to external hires, indicating the effectiveness of internal development programs [41] - **Supply Chain Issues**: The company faces challenges in acquiring new trucks and equipment due to supply chain constraints, with lead times extending up to 18 months for certain vehicles [43][50] - **Community Engagement**: Casella emphasizes the importance of educating communities about recycling processes, particularly in areas using split-body collection trucks [55][57] This summary encapsulates the key discussions and insights from the Casella Waste Systems conference call, highlighting the company's strategic focus, operational challenges, and market outlook.

PART I. FINANCIAL INFORMATION [ITEM 1. FINANCIAL STATEMENTS](index=2&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) The company reports a significant revenue increase to $417.1 million driven by acquisitions, alongside a wider net loss Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total current assets** | $491,699 | $613,305 | | **Goodwill** | $1,049,535 | $1,002,266 | | **Total assets** | $3,205,870 | $3,230,068 | | **Total current liabilities** | $251,388 | $307,317 | | **Debt, less current portion** | $1,115,411 | $1,090,632 | | **Total stockholders' equity** | $1,546,889 | $1,550,839 | Consolidated Statements of Operations Highlights (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | **Revenues** | $417,101 | $341,008 | | **Operating income** | $3,143 | $6,835 | | **Net loss** | $(4,810) | $(4,117) | | **Basic and diluted loss per share** | $(0.08) | $(0.07) | Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $50,123 | $7,679 | | **Net cash used in investing activities** | $(158,819) | $(30,057) | | **Net cash used in financing activities** | $(4,708) | $(9,077) | | **Net decrease in cash** | $(113,404) | $(31,455) | [Notes to Unaudited Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) Key disclosures include three business acquisitions for $103.5 million and a probable liability exceeding $1 million - In Q1 2025, the company acquired three businesses for a total cash consideration of **$103.5 million**, resulting in the recognition of **$46.8 million in goodwill**[34](index=34&type=chunk)[37](index=37&type=chunk) - The company recorded a **probable liability exceeding $1 million** for potential penalties related to a Letter of Deficiency from the NHDES[55](index=55&type=chunk) - The NHDES denied a permit for new landfill capacity, impacting **$12.7 million in capitalized project costs** as the company challenges the decision[56](index=56&type=chunk) - Certain operations were reclassified between regional segments, with prior period data restated for comparability[85](index=85&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=26&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Revenue grew 22.3% to $417.1 million, driven by acquisitions, while operating income declined due to higher costs [Results of Operations](index=27&type=section&id=Results%20of%20Operations) Revenue growth of $76.1 million was driven by acquisitions and pricing, offset by increased operating expenses Solid Waste Revenue Change Drivers (Q1 2025 vs. Q1 2024) | Driver | Amount (in millions) | % Growth | | :--- | :--- | :--- | | Price | $14.9 | 5.6% | | Volume | $(4.5) | (1.7)% | | Surcharges and other fees | $1.5 | 0.5% | | Acquisitions | $57.1 | 21.5% | | **Total Solid Waste Revenue Change** | **$69.0** | **25.9%** | Operating Expenses as a Percentage of Total Revenues | Expense Category | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Cost of operations | 67.2% | 67.7% | | General and administration | 13.5% | 13.0% | | Depreciation and amortization | 17.1% | 15.8% | - Depreciation and amortization expense **increased significantly by $17.5 million** year-over-year, primarily due to acquisitions and new investments[113](index=113&type=chunk) [Segment Reporting](index=31&type=section&id=Segment%20Reporting) The Mid-Atlantic region led revenue growth due to acquisitions, while the Corporate segment's loss widened Revenues by Reportable Operating Segment (in millions) | Segment | Q1 2025 | Q1 2024 | $ Change | | :--- | :--- | :--- | :--- | | Eastern | $104.7 | $100.2 | $4.5 | | Western | $152.3 | $123.6 | $28.7 | | Mid-Atlantic | $77.8 | $42.1 | $35.7 | | Resource Solutions | $82.3 | $75.1 | $7.2 | | **Total revenues** | **$417.1** | **$341.0** | **$76.1** | Operating Income (Loss) by Operating Segment (in millions) | Segment | Q1 2025 | Q1 2024 | $ Change | | :--- | :--- | :--- | :--- | | Eastern | $12.8 | $11.2 | $1.6 | | Western | $25.3 | $20.5 | $4.8 | | Mid-Atlantic | $(4.2) | $(3.7) | $(0.5) | | Resource Solutions | $5.0 | $4.4 | $0.6 | | Corporate Entities | $(35.8) | $(25.6) | $(10.2) | | **Total operating income** | **$3.1** | **$6.8** | **$(3.7)** | [Liquidity and Capital Resources](index=34&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity with $267.7 million in cash and increased operating cash flow - As of March 31, 2025, the company had **$267.7 million in cash** and **$675.4 million available** under its revolving credit facility[141](index=141&type=chunk) - Net cash provided by operating activities **increased by $42.4 million** year-over-year, reaching **$50.1 million** in Q1 2025[144](index=144&type=chunk)[145](index=145&type=chunk) - Cash used for acquisitions was **$103.6 million**, and capital expenditures increased to **$55.5 million** in Q1 2025[146](index=146&type=chunk)[147](index=147&type=chunk) - The company was in compliance with all financial covenants, with a consolidated net leverage ratio of **2.45** against a requirement of 4.00[151](index=151&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=39&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company manages market risks from fuel prices, commodity prices, and interest rates through various hedging strategies - A $0.40 per gallon change in diesel price is estimated to impact annual fuel costs by **$6.1 million**, partially offset by **$5.5 million** in fee revenue[165](index=165&type=chunk) - Recycled material commodity price fluctuations are mitigated through strategies like floating fees and revenue sharing[167](index=167&type=chunk) - Interest rate risk on variable-rate debt is managed using derivative instruments designated as cash flow hedges[169](index=169&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=41&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management concluded that disclosure controls and procedures were effective, with no material changes to internal controls - The CEO and CFO concluded that as of March 31, 2025, the company's disclosure controls and procedures were **effective** at the reasonable assurance level[171](index=171&type=chunk) - **No material changes** to the company's internal control over financial reporting occurred during the first quarter of 2025[172](index=172&type=chunk) PART II. OTHER INFORMATION [ITEM 1. LEGAL PROCEEDINGS](index=42&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) This section references Note 8 for legal proceeding details and sets a $1 million disclosure threshold for environmental sanctions - Information regarding legal proceedings is provided in **Note 8, Commitments and Contingencies**, within the financial statements section[175](index=175&type=chunk) - The company has set a disclosure threshold of **$1,000,000** for potential monetary sanctions in environmental proceedings[176](index=176&type=chunk) [ITEM 1A. RISK FACTORS](index=42&type=section&id=ITEM%201A.%20RISK%20FACTORS) No material changes to risk factors disclosed in the 2024 Annual Report on Form 10-K are reported - The company's business risks are identified in its 2024 Form 10-K, with **no material updates** reported for this quarter[177](index=177&type=chunk) [ITEM 5. OTHER INFORMATION](index=42&type=section&id=ITEM%205.%20OTHER%20INFORMATION) No directors or officers adopted or terminated Rule 10b5-1 trading arrangements during the quarter - **No directors or officers** adopted or terminated a Rule 10b5-1 trading arrangement during the three months ended March 31, 2025[178](index=178&type=chunk) [ITEM 6. EXHIBITS](index=43&type=section&id=ITEM%206.%20EXHIBITS) This section lists exhibits filed with the Form 10-Q, including a Guaranty Agreement and Sarbanes-Oxley certifications - Filed exhibits include a Guaranty Agreement and **CEO/CFO certifications** required by Sections 302 and 906 of the Sarbanes-Oxley Act[179](index=179&type=chunk)

Financial Data and Key Metrics Changes - Revenues in Q1 2025 were $417.1 million, an increase of $76.1 million or 22.3% year over year, with $57.3 million from acquisitions and $18.4 million from organic growth of 5.4% [13][20] - Adjusted EBITDA was $86.4 million, up $15.4 million or 21.7% year over year, with adjusted EBITDA margins at 20.7%, down 10 basis points year over year [16][20] - Adjusted net income was $12.2 million or $0.19 per diluted share, an increase of $3.5 million or about $0.04 per share [19] Business Line Data and Key Metrics Changes - Solid waste revenues increased by 25.9% year over year, with pricing up 5.6% and volume down 1.7% [13][14] - Collection pricing was up 5.8%, while volumes decreased by 1.7%, attributed to slower roll-off volumes during winter [9][14] - Resource Solutions revenues grew by 9.5% year over year, with national accounts up 10.9% [15][16] Market Data and Key Metrics Changes - Organic growth in the landfill business exceeded 7%, driven by both price and volume increases [8][9] - The average price per ton in the landfill business was up 4.8% in the quarter [15] - Commodity prices remained stable, with recent softness in the fiber market offset by strength in plastics and aluminum [15] Company Strategy and Development Direction - The company continues to focus on internalizing more of its own tons and executing its acquisition strategy, having closed four deals year to date with approximately $50 million in annualized revenues [10][25] - The active M&A pipeline is robust, with over $500 million in revenues in various stages of engagement [26] - The company aims to enhance operational efficiency through fleet automation and route optimization [23][25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the 2025 outlook, citing limited exposure to tariffs and a resilient business model [10][22] - The company is closely monitoring macroeconomic uncertainties but remains optimistic about future value creation opportunities [10][21] - Management noted that the challenging winter weather impacted roll-off volumes but expects a seasonal uptick as spring progresses [9][72] Other Important Information - The company was recognized on Forbes' 2025 America's Best Midsized Employers list, highlighting its commitment to core values and culture [7] - The company has a consolidated net leverage ratio of 2.45 times and maintains approximately $900 million of availability between excess cash and an undrawn revolver [21] Q&A Session Summary Question: How much of the landfill volume increase is due to lost construction and demolition volumes flowing back? - Management indicated that about one-third of the increase is from recapturing construction and demolition tons in the New York market, with two-thirds from efforts to internalize additional tons [30][31] Question: What is the unfilled annual landfill capacity today? - Management stated that they are running about 30% excess capacity, primarily in New York State, with opportunities to drive more volume to specific landfills [32][33] Question: Can you provide an update on the Juniper Ridge landfill gas plant ramp? - The Juniper Ridge project is online but operating at low production levels, with expectations for ramp-up throughout the year [36][38] Question: What is the expected EBITDA contribution from internalization? - Management noted that the impact of internalization on EBITDA is complex and varies by acquisition, making it difficult to provide a specific figure [75][76] Question: Why was the full year guidance not changed despite strong Q1 results? - Management explained that it is typical not to change guidance in the first quarter unless there are significant deviations from expectations [90][91]

Financial Data and Key Metrics Changes - Revenues in Q1 2025 were $417.1 million, an increase of $76.1 million or 22.3% year over year, with $57.3 million from acquisitions and $18.4 million from organic growth of 5.4% [14] - Adjusted EBITDA was $86.4 million, up $15.4 million or 21.7% year over year, with adjusted EBITDA margins at 20.7%, down 10 basis points year over year [17][18] - Adjusted net income was $12.2 million or $0.19 per diluted share, an increase of $3.5 million or about $0.04 per share [19] Business Line Data and Key Metrics Changes - Solid waste revenues increased by 25.9% year over year, with pricing up 5.6% and volume down 1.7% [14] - In the landfill business, organic growth exceeded 7% with positive contributions from both price and volume, where price was up 3.3% and tons up 3.9% [9][16] - Resource Solutions revenues were up 9.5% year over year, with national accounts up 10.9% [16] Market Data and Key Metrics Changes - Pricing momentum in the collection side of the solid waste business was positive at 5.8%, offsetting a volume decrease of 1.7% [10] - The average price per ton in the landfill business was up 4.8% in the quarter [16] - Commodity prices remained stable, with recent softness in the fiber market offset by strength in plastics and aluminum [17] Company Strategy and Development Direction - The company continues to execute its acquisition strategy, having closed four deals year to date with approximately $50 million in annualized revenues [11] - The active M&A pipeline is over $500 million in revenues in various stages of engagement, focusing on operational fit and margin improvement [25] - The company aims to internalize more of its own tons and is working on expanding fleet automation and improving employee retention [9][10] Management's Comments on Operating Environment and Future Outlook - Management remains confident in the 2025 outlook, seeing opportunities for future value creation despite macroeconomic uncertainties [11][21] - The company has low exposure to tariffs and is closely monitoring vendor pricing related to tariffs [22] - Management noted that the first quarter was a strong start to 2025, with operational strategies working well [11][12] Other Important Information - The company was recognized on Forbes' 2025 America's Best Midsized Employers list, highlighting its core values and culture [7] - The company has approximately $900 million of availability between excess cash and its undrawn revolver, positioning it well for future growth [21][90] Q&A Session Summary Question: How much of the landfill volume increase is due to lost construction and demolition volumes flowing back? - Management indicated that about a third of the increase is from recapturing construction and demolition tons in the New York market, with two-thirds related to efforts to internalize additional tons [30][31] Question: Can you provide an update on landfill capacity for internalization? - Management stated that they are running about 30% excess capacity, primarily in New York State, with opportunities to drive more volume to specific landfills [33][34] Question: What is the expected EBITDA contribution from internalization? - Management noted that the impact of internalization is acquisition-dependent and varies based on specific transactions [78] Question: Why was full-year guidance not changed despite strong Q1 results? - Management explained that it is typical not to change guidance in the first quarter unless there are significant deviations from expectations [99][100] Question: Is there any impact on acquisition candidates due to economic uncertainty? - Management reported no significant impact on M&A activity, maintaining steady engagement with potential candidates [102]

Core Insights - Casella (CWST) reported quarterly earnings of $0.19 per share, exceeding the Zacks Consensus Estimate of $0.11 per share, and compared to a loss of $0.01 per share a year ago, representing an earnings surprise of 72.73% [1] - The company posted revenues of $417.1 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 1.13%, and showing an increase from $341.01 million year-over-year [2] - Casella shares have increased approximately 11% since the beginning of the year, contrasting with a decline of -5.3% in the S&P 500 [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.43 on revenues of $457.68 million, and for the current fiscal year, it is $1.21 on revenues of $1.79 billion [7] - The estimate revisions trend for Casella is favorable, leading to a Zacks Rank 1 (Strong Buy) for the stock, indicating expected outperformance in the near future [6] Industry Context - The Waste Removal Services industry, to which Casella belongs, is currently ranked in the bottom 19% of over 250 Zacks industries, suggesting potential challenges ahead [8] - Another company in the same industry, Montrose Environmental (MEG), is expected to report a quarterly loss of $0.12 per share, reflecting a year-over-year change of -175%, with revenues projected at $167.97 million, an increase of 8.1% from the previous year [9][10]

Exhibit 99.1 FOR IMMEDIATE RELEASE CASELLA WASTE SYSTEMS, INC. ANNOUNCES FIRST QUARTER 2025 RESULTS RUTLAND, VERMONT (May 1, 2025) — Casella Waste Systems, Inc. (NASDAQ: CWST), a regional solid waste, recycling and resource management services company, today reported its financial results for the three-month period ended March 31, 2025. Key Highlights: "Acquisitions remain a key strategic priority, and year-to-date we have acquired four businesses with approximately $50 million in annualized revenue, includ ...

Core Insights - Casella Waste Systems, Inc. reported a strong first quarter for 2025, with revenue and Adjusted EBITDA both increasing over 20% year-over-year, indicating successful execution of operating and growth strategies [3][4] - The company maintained its guidance for the year despite economic uncertainties, highlighting confidence in its pricing programs and growth initiatives [3][12] - Acquisitions remain a strategic priority, with four businesses acquired year-to-date, contributing approximately $50 million in annualized revenue [3][4] Financial Performance - Revenues for Q1 2025 were $417.1 million, up $76.1 million or 22.3% from Q1 2024, driven by acquisitions, price growth, and strong performance in National Accounts [4][8] - Adjusted EBITDA for the quarter was $86.4 million, reflecting a 21.7% increase from the previous year, supported by both acquisition contributions and organic growth [7][8] - The net loss for the quarter was $(4.8) million, compared to $(4.1) million in Q1 2024, primarily due to higher depreciation and amortization expenses [6][8] Pricing and Volume Trends - Solid waste pricing increased by 5.6%, with collection pricing up 5.8% and disposal pricing up 5.5% during the quarter [3][8] - Collection volume experienced a slight decline of 1.7%, attributed to weakness in the roll-off business and lighter transfer station volumes, although landfill tons increased by 3.9% [3][8] Cash Flow and Liquidity - Net cash provided by operating activities was $50.1 million for the quarter, significantly up from $7.7 million in Q1 2024, driven by higher Adjusted EBITDA and lower cash interest payments [10][8] - Adjusted Free Cash Flow for the quarter was $29.1 million, a substantial increase from $(2.4) million in the same period last year [10][8] Fiscal Year 2025 Outlook - The company reaffirmed its fiscal year 2025 guidance, estimating revenues between $1.775 billion and $1.805 billion, with Adjusted EBITDA projected between $410 million and $425 million [17][12] - The guidance includes the impact of acquisitions completed to date but does not account for any uncompleted acquisitions [12][17]

For those looking to find strong Business Services stocks, it is prudent to search for companies in the group that are outperforming their peers. Is Casella (CWST) one of those stocks right now? A quick glance at the company's year-to-date performance in comparison to the rest of the Business Services sector should help us answer this question.Casella is a member of our Business Services group, which includes 270 different companies and currently sits at #5 in the Zacks Sector Rank. The Zacks Sector Rank ga ...

Industry Overview - The U.S. service sector exhibited strong momentum in Q1 2025, driven by economic stability and growth in non-manufacturing activities, particularly influenced by the AI revolution and demand for cost efficiency [1][4] - Multiple service industries, including transportation, retail, accommodation, and finance, showed resilience and healthy activity, highlighting the sector's role in economic stability [2] Economic Performance - The U.S. GDP grew by 2.8% in 2024, slightly below the 2.9% growth in 2023, with non-manufacturing activities remaining robust as indicated by the Services PMI staying above 50% for 55 out of 58 months [4] Sector-Specific Growth Drivers - Essential services like waste management saw steady demand, while risk mitigation and consulting services gained importance due to evolving regulations, leading to increased demand for specialized service providers [5] Earnings Forecasts for Waste Management Companies - **Casella Waste Systems (CWST)**: Expected Q1 2025 revenues of $412.4 million, a 20.9% year-over-year increase, with earnings estimated at 11 cents per share, indicating over 100% growth year-over-year. CWST has an Earnings ESP of +38.44% and a Zacks Rank of 1 [9] - **Waste Connections (WCN)**: Anticipated Q1 2025 revenues of $2.2 billion, reflecting a 7.1% year-over-year growth, with earnings estimated at $1.07 per share, a decline of 2.9% year-over-year. WCN has an Earnings ESP of +2.00% and a Zacks Rank of 3 [10][11] - **WM (Waste Management)**: Projected Q1 2025 revenues of $6.1 billion, an 18.2% year-over-year increase, with earnings estimated at $1.66 per share, a decline of 5.1% year-over-year. WM has an Earnings ESP of +1.87% and a Zacks Rank of 3 [12][13]

For those looking to find strong Business Services stocks, it is prudent to search for companies in the group that are outperforming their peers. Has Casella (CWST) been one of those stocks this year? By taking a look at the stock's year-to-date performance in comparison to its Business Services peers, we might be able to answer that question.Casella is a member of the Business Services sector. This group includes 272 individual stocks and currently holds a Zacks Sector Rank of #5. The Zacks Sector Rank gau ...