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Casella Waste Systems Reports Record Growth Amid Challenges

Casella Waste Systems Reports Record Growth Amid Challenges

Casella Waste Systems ((CWST)) has held its Q2 earnings call. Read on for the main highlights of the call.

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Casella Waste Systems’ recent earnings call painted a picture of robust growth and strategic expansion, albeit with some challenges. The company reported record revenue growth, driven by successful acquisitions and organic growth, yet faced hurdles in the Mid-Atlantic region and pressures from rising labor costs and declining commodity prices.

Record Revenue and Growth in Q2 2025

Casella Waste Systems reported impressive Q2 2025 revenues of $465.3 million, marking a significant increase of $88.2 million or 23.4% year-over-year. This growth was fueled by $67.1 million from acquisitions and $21 million from organic growth, showcasing the company’s strategic expansion efforts.

Strong Performance in Solid Waste and Resource Solutions

The company’s solid waste segment saw a revenue increase of 27.1% year-over-year, with pricing up by 5%. Additionally, Resource Solutions revenues rose by 10.2%, highlighting the strength and resilience of Casella’s core business operations.

Successful Acquisitions and Expansion

Casella completed six acquisitions year-to-date, significantly boosting annualized revenues. The company also announced the pending acquisition of Mountain State Waste, expected to add $30 million in annualized revenues, further solidifying its growth trajectory.

Increased Full Year Revenue Guidance

Reflecting its strong performance and strategic acquisitions, Casella raised its full-year revenue guidance. This adjustment underscores the company’s confidence in its pricing strategies and acquisition activities.

Strong Cash Flow and Liquidity Position

Casella reported a record first-half adjusted free cash flow exceeding $70 million, maintaining strong liquidity with an undrawn $700 million revolver. This financial stability positions the company well for future investments and growth.

Mid-Atlantic Region Challenges

The company faced growing pains in the Mid-Atlantic region, with transition issues and truck delivery delays impacting synergy execution. These challenges highlight the complexities of regional expansions.

Labor Cost Pressures

Higher labor costs, particularly in the Mid-Atlantic region, have delayed the recognition of cost synergies. This issue poses a significant challenge to maintaining operational efficiency.

Decline in Adjusted EBITDA Margin

Despite revenue growth, Casella’s adjusted EBITDA margin decreased by 75 basis points year-over-year to 23.5%, primarily due to lower initial margins from recent acquisitions.

Soft Recycled Commodity Prices

The company reported a 16% year-over-year decline in average recycled commodity sales prices, with most commodities trading below their 5-year averages, impacting overall profitability.

Forward-Looking Guidance

Looking ahead, Casella Waste Systems remains optimistic, having raised its full-year revenue guidance to a midpoint of $1.83 billion. The company reaffirms its adjusted EBITDA and free cash flow guidance, driven by strong pricing and acquisition activity. The pending acquisition of Mountain State Waste is expected to contribute significantly to future growth.

In summary, Casella Waste Systems’ earnings call highlighted a quarter of strong growth and strategic acquisitions, despite facing challenges in certain regions and market segments. The company’s raised revenue guidance and continued expansion efforts reflect a positive outlook for the future.

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