Casella(CWST) - 2025 Q2 - Quarterly Results

Executive Summary & Key Highlights Q2 2025 Financial Performance Overview Casella Waste Systems achieved strong revenue and adjusted EBITDA growth in Q2 2025, driven by acquisition contributions and organic growth, though GAAP net income and operating income decreased due to increased acquisition-related depreciation and amortization expenses Q2 2025 Key Financial Metrics (Year-over-Year) | Metric | Q2 2025 | Q2 2024 | Change Amount | Change Rate | Primary Drivers | | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue | $465.3M | $377.1M | +$88.2M | +23.4% | Acquisitions, sustained collection and disposal price increases, national account growth in Resource Solutions | | Operating Income | $19.3M | $23.0M | -$(3.7)M | -16.3% | Primarily due to increased acquisition-related depreciation and amortization expenses | | Net Income | $5.2M | $7.0M | -$(1.8)M | -25.7% | Driven by factors impacting operating income | | Adjusted Net Income | $23.0M | $21.7M | +$1.3M | +5.9% | | | Adjusted EBITDA | $109.5M | $91.6M | +$17.9M | +19.5% | Acquisition contributions and organic growth | | Solid Waste Pricing | +5.0% | - | - | - | Collection price growth of 4.9%, disposal price growth of 5.8% | Strategic Initiatives and Acquisitions The company completed six acquisitions in H1 2025 with over $90 million in annualized revenue and announced the upcoming Mountain State Waste acquisition, expanding its market share in Pennsylvania and West Virginia, which are key to growth and long-term profit expansion despite short-term margin pressure - Six acquisitions completed in H1 2025, with approximately $90 million in annualized revenue[3][8] - Upcoming acquisition of Mountain State Waste is expected to add an additional $30 million in annualized revenue and expand the company's presence in Pennsylvania and West Virginia[3][8] - Acquisition activities and the pace of realizing Mid-Atlantic synergies are near-term margin headwinds but represent opportunities for future margin expansion[3] H1 2025 Cash Flow Performance (Year-over-Year) | Metric | H1 2025 | H1 2024 | Change Amount | Primary Drivers | | :--- | :--- | :--- | :--- | :--- | | Net Cash from Operating Activities | $139.6M | $79.8M | +$59.9M | Acquisition contributions, organic growth, lower cash interest payments, reduced working capital outflow | | Adjusted Free Cash Flow | $70.8M | $39.5M | +$31.3M | | Financial Results - Second Quarter and Year-to-Date 2025 Consolidated Statements of Operations (GAAP) The company achieved significant revenue growth in Q2 and YTD 2025, but operating income and net income decreased year-over-year due to a substantial increase in acquisition-related depreciation and amortization expenses Key Consolidated Statements of Operations Data (in millions) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $465.3M | $377.2M | $882.4M | $718.2M | | Operating Income | $19.3M | $23.0M | $22.4M | $29.9M | | Net Income | $5.2M | $7.0M | $0.4M | $2.9M | | Diluted EPS | $0.08 | $0.12 | $0.01 | $0.05 | | Depreciation and Amortization | $77.0M | $55.3M | $148.5M | $109.4M | Consolidated Statements of Cash Flows (GAAP) In H1 2025, net cash from operating activities significantly increased, but cash outflows from investing activities also rose substantially, primarily due to acquisitions, resulting in a net decrease in cash, cash equivalents, and restricted cash Key Consolidated Statements of Cash Flows Data (H1 2025 vs H1 2024, in millions) | Metric | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $139.6M | $79.8M | | Net Cash Used in Investing Activities | $(296.4M) | $(73.0M) | | Net Cash Used in Financing Activities | $(8.8M) | $(18.3M) | | Net Decrease in Cash, Cash Equivalents, and Restricted Cash | $(165.5M) | $(11.5M) | | Cash, Cash Equivalents, and Restricted Cash, End of Period | $217.8M | $209.4M | | Acquisitions (net of cash acquired) | $(175.0M) | $1.3M | | Purchases of Property and Equipment | $(121.9M) | $(74.9M) | Non-GAAP Performance Measures The company reported non-GAAP performance measures such as Adjusted EBITDA, Adjusted Net Income, and Adjusted Diluted EPS to provide a clearer view of core operational performance, with these metrics growing in Q2 and H1 2025, reflecting the positive impact of acquisitions and organic growth Non-GAAP Performance Measures (Q2 2025 vs Q2 2024, in millions) | Metric | Q2 2025 | Q2 2024 | Change Amount | Change Rate | | :--- | :--- | :--- | :--- | :--- | | Adjusted EBITDA | $109.5M | $91.6M | +$17.9M | +19.5% | | Adjusted EBITDA as % of Revenue | 23.5% | 24.3% | -0.8% | | | Adjusted Operating Income | $44.9M | $43.1M | +$1.8M | +4.1% | | Adjusted Net Income | $23.0M | $21.7M | +$1.3M | +5.9% | | Adjusted Diluted EPS | $0.36 | $0.37 | -$(0.01) | -2.7% | Non-GAAP Performance Measures (H1 2025 vs H1 2024, in millions) | Metric | H1 2025 | H1 2024 | Change Amount | Change Rate | | :--- | :--- | :--- | :--- | :--- | | Adjusted EBITDA | $195.9M | $162.6M | +$33.3M | +20.5% | | Adjusted EBITDA as % of Revenue | 22.2% | 22.6% | -0.4% | | | Adjusted Operating Income | $73.0M | $67.5M | +$5.5M | +8.1% | | Adjusted Net Income | $35.1M | $30.4M | +$4.8M | +15.7% | | Adjusted Diluted EPS | $0.55 | $0.52 | +$0.03 | +5.8% | Non-GAAP Liquidity Measures Adjusted Free Cash Flow, a key non-GAAP measure of the company's core operating cash flow, significantly increased in H1 2025, indicating enhanced capacity for strategic acquisitions, growth investments, and debt repayment Adjusted Free Cash Flow (H1 2025 vs H1 2024, in millions) | Metric | H1 2025 | H1 2024 | Change Amount | Change Rate | | :--- | :--- | :--- | :--- | :--- | | Adjusted Free Cash Flow | $70.8M | $39.5M | +$31.3M | +79.3% | - The growth in Adjusted Free Cash Flow is primarily due to increased net cash from operating activities, adjusted for acquisition-related capital expenditures and expenses[9][31] Fiscal Year 2025 Outlook Updated Guidance Ranges The company raised its FY 2025 revenue and net cash from operating activities guidance, increased the lower end of its Adjusted Free Cash Flow guidance, and reaffirmed its Adjusted EBITDA range, reflecting strong H1 acquisition activity and cash flow performance Updated Fiscal Year 2025 Guidance Ranges | Metric | Original Guidance Range | New Guidance Range | Change | | :--- | :--- | :--- | :--- | | Revenue | $1.775B - $1.805B | $1.820B - $1.840B | Upward Revision | | Net Income | $10M - $25M | $8M - $18M | Upper Limit Lowered | | Net Cash from Operating Activities | $320M - $335M | $325M - $335M | Lower Limit Raised | | Adjusted Free Cash Flow | $165M - $180M | $170M - $180M | Lower Limit Raised | | Adjusted EBITDA | $410M - $425M | $410M - $425M | Reaffirmed | - The guidance ranges include acquisitions completed to date, such as $90 million in annualized revenue from H1 2025 acquisitions, but exclude uncompleted acquisitions (e.g., Mountain State Waste)[12] Reconciliation of Non-GAAP Outlook Measures The company provided projected reconciliation tables for FY 2025 Adjusted EBITDA to Net Income and Adjusted Free Cash Flow to Net Cash from Operating Activities, ensuring transparency for non-GAAP metrics Projected Fiscal Year 2025 Adjusted EBITDA Reconciliation (in thousands) | Metric | Projected Amount (in thousands) | | :--- | :--- | | Net Income | $8,000 - $18,000 | | Provision for Income Taxes | 4,000 - 9,000 | | Other Income | (2,000) | | Interest Expense, Net | 53,000 | | Acquisition-Related Expenses | 18,000 | | Depreciation and Landfill Amortization | 227,000 | | Amortization of Intangible Assets | 77,000 | | Accretion of Landfill Operating Lease Obligations | 11,000 | | Accretion of Interest on Landfill and Environmental Remediation Liabilities | 14,000 | | Adjusted EBITDA | $410,000 - $425,000 | Projected Fiscal Year 2025 Adjusted Free Cash Flow Reconciliation (in thousands) | Metric | Projected Amount (in thousands) | | :--- | :--- | | Net Cash from Operating Activities | $325,000 - $335,000 | | Capital Expenditures | (240,000) | | Acquisition Capital Expenditures | 60,000 | | Cash Paid for Acquisition Expenses | 18,000 | | McKean Landfill Rail Capital Expenditures | 7,000 | | Adjusted Free Cash Flow | $170,000 - $180,000 | Company Information About Casella Waste Systems, Inc. Casella Waste Systems, Inc. is a regional solid waste, recycling, and resource management services company headquartered in Rutland, Vermont, primarily serving various customers in the Eastern United States - The company is headquartered in Rutland, Vermont, primarily providing solid waste collection and disposal, transfer, recycling, and organics services in the Eastern United States[16] Conference Call Details The company will host a conference call on Friday, August 1, 2025, at 10:00 AM ET to discuss these results - The conference call will be held on Friday, August 1, 2025, at 10:00 AM ET[14] - Participants must register to receive dial-in numbers and a unique passcode, or listen via webcast at http://ir.casella.com[14](index=14&type=chunk)[15] Investor and Media Contacts Contact information for Brian J. Butler, Vice President of Investor Relations, and Jeff Weld, Vice President of Communications, is provided - Investor Contact: Brian J. Butler, CFA, at (802) 772-2264[23] - Media Contact: Jeff Weld, at (802) 772-2234[23] Risk Factors and Forward-Looking Statements This press release contains forward-looking statements protected by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, covering financial performance, operations, growth strategies, and FY 2025 guidance, though actual results may differ materially due to various risks and uncertainties - Forward-looking statements cover financial performance, financial condition, operations and services, outlook, growth, strategy, the anticipated impact of future or completed acquisitions, and Fiscal Year 2025 guidance[17] - Key risks and uncertainties include: inability to adequately increase pricing or operating efficiencies to offset rising costs and inflationary pressures; impacts of an economic slowdown; compliance and remediation costs and litigation risks related to PFAS and other emerging contaminants; adverse weather impacts; inability to grow landfill volumes or improve route profitability; failed acquisition integration; and fluctuations in energy or commodity prices[20] - The company undertakes no obligation to publicly update any forward-looking statements, except as required by law[22] Unaudited Financial Statements Condensed Consolidated Statements of Operations Provides condensed consolidated statements of operations for Q2 and H1 2025 and 2024, detailing revenue, expenses, operating income, net income, and earnings per share Condensed Consolidated Statements of Operations (Summary, in thousands) | Metric (in thousands) | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenue | 465,334 | 377,163 | 882,435 | 718,170 | | Operating Income | 19,272 | 23,018 | 22,416 | 29,853 | | Net Income | 5,208 | 7,006 | 398 | 2,889 | | Diluted EPS | 0.08 | 0.12 | 0.01 | 0.05 | Condensed Consolidated Balance Sheets Presents condensed consolidated balance sheets as of June 30, 2025, and December 31, 2024, showing the composition of the company's assets, liabilities, and stockholders' equity Condensed Consolidated Balance Sheets (Summary, in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $3,256,911 | $3,230,068 | | Total Liabilities | $1,702,728 | $1,612,229 | | Total Stockholders' Equity | $1,554,181 | $1,550,839 | | Cash, Cash Equivalents, and Restricted Cash | $217,772 | $383,303 | | Goodwill | $1,088,709 | $1,002,266 | Condensed Consolidated Statements of Cash Flows Provides condensed consolidated statements of cash flows for H1 2025 and 2024, detailing cash flows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows (Summary, in thousands) | Metric | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $139,648 | $79,781 | | Net Cash Used in Investing Activities | $(296,393) | $(72,976) | | Net Cash Used in Financing Activities | $(8,786) | $(18,270) | | Cash, Cash Equivalents, and Restricted Cash, End of Period | $217,772 | $209,447 | | Acquisitions, Net of Cash Acquired | $(175,018) | $1,296 | | Purchases of Property and Equipment | $(121,878) | $(74,900) | Reconciliation of Non-GAAP Measures Non-GAAP Performance Measures Reconciliation The company provided reconciliation tables for Net Income to Adjusted EBITDA, Adjusted Operating Income, Adjusted Net Income, and Adjusted Diluted EPS, detailing adjustment items and their impact on GAAP metrics - Non-GAAP performance measures, such as Adjusted EBITDA and Adjusted Net Income, aim to provide an understanding of core operational performance by adjusting for items like intangible asset amortization, acquisition-related expenses, and tax impacts[29][30] Non-GAAP Liquidity Measures Reconciliation The company provided reconciliation tables for Net Cash from Operating Activities to Adjusted Free Cash Flow, detailing the impact of capital expenditures and acquisition-related cash expenses on liquidity metrics - Non-GAAP liquidity measures, such as Adjusted Free Cash Flow, aim to measure cash flow generated from the company's core operations, available for strategic acquisitions, growth investments, and debt repayment[31] - Adjustment items include capital expenditures, cash paid for acquisition expenses, acquisition capital expenditures, and McKean landfill rail capital expenditures[31] Supplemental Data Tables Revenues by Service Type Provides a breakdown of revenues by service type (e.g., collection, disposal, processing, national accounts) for Q2 2025 and 2024, including total, intercompany, and third-party revenues Third-Party Revenues by Service Type (in thousands) | Service Type | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Solid Waste - Collection | $297,905 | $223,959 | | Solid Waste - Disposal | $71,579 | $65,123 | | Solid Waste - Landfill Gas-to-Energy | $1,556 | $1,983 | | Solid Waste - Processing | $2,584 | $2,880 | | Resource Solutions - Processing | $36,466 | $33,275 | | Resource Solutions - National Accounts | $55,244 | $49,943 | | Total Revenue | $465,334 | $377,163 | Components of Consolidated Revenue Growth Analyzes the components of revenue growth for Q2 2025, including price, volume, surcharges, commodity prices, and acquisition contributions for solid waste and resource solutions businesses Q2 2025 Components of Consolidated Revenue Growth (Year-over-Year, in thousands) | Growth Source | Amount (in thousands) | % of Related Business | % of Total Company | | :--- | :--- | :--- | :--- | | Solid Waste Price | $14,812 | 5.0% | 3.9% | | Solid Waste Volume | $(2,487) | (0.8)% | (0.7)% | | Solid Waste Acquisitions | $66,069 | 22.5% | 17.6% | | Resource Solutions Price | $2,463 | 3.0% | 0.7% | | Resource Solutions Volume | $3,822 | 4.6% | 1.0% | | Resource Solutions Acquisitions | $1,078 | 1.3% | 0.3% | | Total Company Growth | $88,171 | - | 23.4% | Components of Capital Expenditures Lists the components of capital expenditures for Q2 and H1 2025 and 2024, categorized into growth capital expenditures and replacement capital expenditures Components of Capital Expenditures (in thousands) | Category | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Growth Capital Expenditures | $20,098 | $9,959 | $47,532 | $20,876 | | - Acquisition Capital Expenditures | $13,317 | $6,571 | $38,659 | $12,659 | | - McKean Landfill Rail Capital Expenditures | $800 | $1,030 | $800 | $3,225 | | Replacement Capital Expenditures | $46,305 | $34,690 | $74,346 | $54,024 | | - Landfill Development | $5,122 | $13,606 | $7,262 | $17,808 | | - Vehicles, Machinery, Equipment, and Containers | $28,970 | $15,491 | $50,172 | $28,245 | | Total Capital Expenditures | $66,403 | $44,649 | $121,878 | $74,900 | - Growth capital expenditures include development projects, organic business growth, and integration costs for newly acquired businesses, while replacement capital expenditures cover landfill cell construction and equipment replacement[36]