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CW

CASELLA WASTE SYSTEMS INC (CWST)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 revenue grew 23.4% YoY to $465.3M, beating S&P Global consensus ($465.3M actual vs $454.0M*), while adjusted diluted EPS was $0.36 vs $0.327* consensus; GAAP diluted EPS was $0.08 as higher D&A from acquisitions weighed on GAAP earnings .
  • Adjusted EBITDA rose 19.5% YoY to $109.5M, but came in modestly below S&P Global EBITDA consensus ($109.5M company Adjusted EBITDA vs $111.9M* consensus; S&P standardized “actual” EBITDA recorded at $102.7M*) as acquisition mix and Mid-Atlantic integration timing pressured margins (23.5% vs 24.3% LY) .
  • FY25 guidance: revenue raised to $1.820–$1.840B; adjusted FCF floor lifted to $170–$180M; adjusted EBITDA reaffirmed at $410–$425M; net income range trimmed to $8–$18M, reflecting mix and amortization from acquisitions completed to date .
  • Key catalysts: improving landfill volumes (+9.5% YoY tons; internalization up 13%), execution on Mid-Atlantic ERP/fleet automation (55 trucks slated by late 2025), and the pending Mountain State Waste acquisition ($30M annualized revenue) expanding into WV; near-term watch items are Mid-Atlantic synergy pacing and labor cost intensity .

What Went Well and What Went Wrong

  • What Went Well

    • Organic pricing remained firm: solid waste price +5.0% YoY (collection +4.9%, disposal +5.8%), supporting 5.6% organic growth alongside acquisition rollover; CEO: “We delivered strong growth again…as we continue to execute on our operating plans and acquisition strategy” .
    • Landfill strength: total tons +9.5% YoY with internalized volumes up ~13%, flipping from last year’s headwinds; management sees continued opportunity to grow site volumes .
    • Resource Solutions execution: processing performance improved at upgraded Willimantic and Boston MRFs, offsetting a 16% YoY decline in commodity prices via floating fee contracts; segment revenue +10.2% YoY .

  • What Went Wrong

    • Margin pressure from acquisitions and integration timing: adjusted EBITDA margin 23.5% (−75 bps YoY) due to lower initial margins on acquired businesses and slower Mid-Atlantic synergy capture (ERP migration, delayed truck deliveries) .
    • GAAP earnings dilution: net income $5.2M (−25.7% YoY) as D&A from acquisition activity (intangibles amortization +$6.9M YoY) weighed; CFO highlighted acquisition-related D&A intensity vs base business .
    • Collection pricing mix optics: sequential dip (Q1 5.8% → Q2 4.9%) driven by business mix (more roll-off in Q2), not underlying price deceleration; roll-off pricing was tactically restrained during a softer spring start, with improvement exiting Q2 .

Financial Results

MetricQ2 2024Q4 2024Q1 2025Q2 2025Consensus (Q2 2025)
Revenues ($M)377.163 427.486 417.101 465.334 454.022*
GAAP Diluted EPS ($)0.12 0.08 (0.08) 0.08 0.3270*
Adjusted Diluted EPS ($)0.37 0.41 0.19 0.36 —
Operating Income ($M)23.018 18.529 3.143 19.272 —
Adjusted EBITDA ($M)91.615 94.997 86.413 109.506 111.852*
Adjusted EBITDA Margin (%)24.3% 22.2% 20.7% 23.5% —
Net Income ($M)7.006 4.876 (4.810) 5.208 —

Values with asterisks (*) retrieved from S&P Global.

Segment revenue mix (third-party revenue)

Segment ($M)Q2 2024Q2 2025
Solid Waste (third-party)293.945 373.624
Resource Solutions (third-party)83.218 91.710
• Processing (third-party)33.275 36.466
• National Accounts (third-party)49.943 55.244
Total Revenues377.163 465.334

KPIs and operating metrics

KPIPrior PeriodsCurrent Period
Solid waste price YoYQ1 2025: +5.6% Q2 2025: +5.0% (collection +4.9%, disposal +5.8%)
Landfill tons YoYQ1 2025: +3.9% Q2 2025: +9.5%; internalized ~+13%
Adjusted EBITDA marginQ2 2024: 24.3% ; Q1 2025: 20.7% Q2 2025: 23.5%
DSO (days)—34 days
Consolidated net leverage (bank covenant)—2.39x
YTD Net cash from ops ($M)—$139.6
YTD Adjusted FCF ($M)—$70.827

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenuesFY 2025$1.775–$1.805B $1.820–$1.840B Raised range
Net IncomeFY 2025$10–$25M $8–$18M Narrowed lower
Adjusted EBITDAFY 2025$410–$425M $410–$425M Maintained
Net Cash from OpsFY 2025$320–$335M $325–$335M Raised bottom
Adjusted Free Cash FlowFY 2025$165–$180M $170–$180M Raised bottom
Guidance scopeFY 2025Includes announced Q1 acquisitions Includes ~$90M H1 acquisitions; excludes pending Mountain State Waste Scope update

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4’24, Q1’25)Current Period (Q2’25)Trend
Mid-Atlantic integration & synergiesAcquisitions at initial margins at/below average; improvement opportunity ahead . Guidance reaffirmed; robust pipeline .Slower synergy timing due to ERP migration and truck delivery delays; plan intact; 55 additional trucks by late 2025; $5–$10M synergy over several years discussed .Improving in 2026 as systems/fleet normalize
Landfill volumes/internalizationAnticipated return to landfill volume growth in 2025 .Total tons +9.5% YoY; internalized volumes up ~13% .Positive inflection
Recycling commodity exposureQ4’24 benefited from higher recycling prices/volumes .Avg commodity prices −16% YoY; floating fees/contract structures limited revenue impact to ~−1.6% .Well-hedged
McKean Landfill rail strategyOngoing rail capital; strategic infrastructure build-out .~400 railcars processed; building transfer facility to accept gondolas (MSW/C&D/soils), targeting 2026 completion; selective commercial opening .Capacity ramp underway
Pricing & mixSolid waste price +5.6% in Q1 .Solid waste price +5.0%; sequential dip in collection price due to mix (more roll-off) vs underlying trend .Stable underlying pricing
Labor & cost inflation—Labor costs high; Mid-Atlantic labor intensity elevated pending automation/route optimization .Watch cost normalization
Tax legislation—Bonus depreciation to benefit future cash taxes; no 2025 benefit .Future cash tax tailwind

Management Commentary

  • “We delivered strong growth again in the second quarter across our key financial metrics…including six acquisitions completed in the first half of this year with over $90 million in annualized revenue.” — John W. Casella, Chairman & CEO .
  • “From a margin perspective, our recent acquisition activity…as well as the pace of synergy realization in the Mid-Atlantic, were a near-term headwind, but represent opportunities for margin expansion going forward.” — John W. Casella .
  • “Adjusted EBITDA was $109.5 million…with contribution from acquisitions…and organic growth.” — Company release .
  • “We raised our revenue guidance…reaffirmed our range on adjusted EBITDA…[and] raised the bottom end of…adjusted free cash flow and cash flow from operating activities.” — CFO .

Q&A Highlights

  • Mid-Atlantic synergy path: ERP migration from legacy GFL system to Casella’s platform plus delayed truck deliveries slowed synergies; management still expects $5–$10M of benefits over several years as routing/automation and back-office efficiencies are realized .
  • Mountain State Waste acquisition: attractive franchise-market exposure centered in Morgantown, WV, with assets spanning PA/WV and reach into OH/KY; viewed as a mini-platform for regional expansion .
  • Pricing optics: sequential dip in collection pricing tied to mix (greater roll-off exposure in Q2); underlying pricing in front-load commercial and residential remained strong .
  • Landfill/internalization: internalized volumes increased by ~55k tons (~13%) as transportation lanes and transfer-to-landfill flows were optimized; broader volumes stabilized with improving roll-off vs Q1 .
  • Capex cadence: capital intensity varies with landfill development and acquisition upgrades; upfront capex required to bring acquired assets to Casella standards .

Estimates Context

  • Revenue: Beat — $465.3M actual vs $454.0M* consensus .
  • Primary EPS: Beat — $0.36 actual vs $0.327* consensus .
  • EBITDA: Miss — Company Adjusted EBITDA $109.5M vs S&P Global consensus $111.9M*; S&P’s standardized actual printed at $102.7M* (methodology differs from company-adjusted) .

Values with asterisks (*) retrieved from S&P Global.

Key Takeaways for Investors

  • Organic pricing durability and a clear landfill volume recovery underpin top-line resilience and support FY revenue guidance raise despite integration friction in Mid-Atlantic .
  • Margin trajectory should improve as ERP conversions complete and 55 new trucks enable route optimization/automation; management frames 2026 as the more visible step-up year for synergy realization .
  • Resource Solutions’ fee structures continue to buffer recycling commodity volatility, enabling steady EBITDA even amidst a 16% YoY price decline .
  • McKean rail and the pending Mountain State Waste deal expand strategic optionality (internalization, select third-party) and geographic reach; execution milestones (transfer building completion, regulatory closing) are tangible catalysts into 2026 .
  • Watch list: adjusted EBITDA margin recapture vs acquisition mix headwind; labor cost normalization in Mid-Atlantic; cadence of truck deliveries; timing of ERP consolidation; and progress against synergy glidepath .
  • Cash generation tracking well (YTD CFO $139.6M; YTD adjusted FCF $70.8M); FY25 guidance lifts floor for CFO/FCF, supporting M&A capacity with leverage at 2.39x and undrawn $700M revolver .
  • Near-term trading setup: headline revenue/EPS beat and higher revenue/FCF guidance vs modest EBITDA miss (on S&P basis) and Mid-Atlantic integration overhang; updates on synergy pacing and Mountain State closing likely to drive sentiment near term .