Casella(CWST)2024-08-03 04:32Financial Data and Key Metrics Changes - Revenues in Q2 2024 were 87.5 million or 30.2% year-over-year, with 17.5 million from organic growth [11] - Adjusted EBITDA reached 19.4 million or 26.9% year-over-year, with adjusted EBITDA margins at 24.3%, down 60 basis points year-over-year [14] - Adjusted net income was 6.3 million compared to the prior year, primarily due to accelerated amortization of identifiable intangibles associated with acquisitions [16] Business Line Data and Key Metrics Changes - Solid Waste revenues increased by 35.1% year-over-year, with acquisition growth of 30.7% and price up 5.7%, while volumes decreased by 1.8% [11] - Resource Solutions revenues were up 15.4% year-over-year, with recycling and processing revenue up 31.1% and national accounts up 6.9% [13] - The average price per ton at landfills increased by 10.8% year-over-year, despite lower volumes [12] Market Data and Key Metrics Changes - MSW volumes into landfills were slightly down in the quarter and flat over the first half of the year, with continued weakness in C&D and special waste volumes [12] - The Northeast market is experiencing less reliance on construction activity, leading to a more stable volume trend compared to other regions [59] Company Strategy and Development Direction - The company announced the acquisition of LMR Disposal and Whitetail Disposal, enhancing growth in new markets and increasing density in existing ones [5] - The focus remains on long-term returns, with a disciplined approach to acquisitions and integration efforts [5][10] - The company is actively pursuing additional acquisitions across its 10-state footprint, with ongoing dialogues and diligence efforts [24] Management's Comments on Operating Environment and Future Outlook - Management expects the market to stabilize next year, despite current EBITDA and margin pressures due to lower C&D volumes [7] - The company is optimistic about maintaining growth momentum in the second half of the year, supported by strategic investments and acquisitions [6][10] - Inflationary pressures have been higher than anticipated, but the company is adjusting pricing strategies to mitigate these impacts [54] Other Important Information - The company has completed five acquisitions year-to-date, expected to contribute over 5 million in cash taxes for the year [16] Q&A Session Summary Question: Can you clarify the 10 million increase in EBITDA guidance is primarily attributable to acquisitions, with no significant core increase expected [31] Question: What is the revenue mix for the recently acquired companies? - The acquired companies do not have transfer assets, but there are opportunities for internalizing recyclables into existing facilities [33][34] Question: How does the recent large transaction by a competitor affect the market? - Management indicated that the transaction does not significantly impact their operations, as they were not receiving MSW from the involved parties [36] Question: What are the inflationary pressures and self-help initiatives in place? - Inflation has been stickier than expected, particularly in maintenance and landfill operations, but the company is adjusting pricing to offset these pressures [52][54] Question: How quickly can synergies from acquisitions be realized? - Synergies typically take a couple of years to fully materialize, with some immediate benefits expected within the first year [62] Question: What is the expected leverage ratio by year-end? - The pro forma leverage ratio is currently at 2.9x, with plans to maintain leverage around 3x or below over time [67]