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CW

CASELLA WASTE SYSTEMS INC (CWST)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 was a record quarter: revenue $485.4M (+17.9% YoY), adjusted EBITDA $119.9M (+16.4% YoY), and GAAP diluted EPS $0.16 (vs $0.10 YoY); adjusted diluted EPS was $0.42 .
  • Management raised the lower end of FY25 guidance ranges for revenue ($1.830–$1.840B) and adjusted EBITDA ($415–$425M), while reaffirming net income, operating cash flow, and adjusted FCF ranges .
  • Consensus beat: S&P Global shows Q3 revenue and “Primary EPS” beats versus consensus; revenue $485.4M vs $476.3M*, EPS $0.42 vs $0.324* (company GAAP EPS was $0.16; S&P’s Primary EPS aligns with company’s adjusted diluted EPS) .
  • Catalysts: guidance raise, accelerating landfill internalization (total tons +11.7%, internalized volumes ~+20%), Mid-Atlantic integration progress with 60% automated trucks arriving and at least $5M savings targeted for 2026 .

What Went Well and What Went Wrong

What Went Well

  • Record performance across key metrics with strong same-store growth; CEO: “another quarter of record performance… driven by collection pricing, improved base business cost margins, and higher year-over-year landfill volumes” .
  • Landfill volumes and internalization: same-store landfill price +3%, total tons +11.7%, internalized volumes ~+20%; mitigated commodity headwinds via floating fees structures .
  • Raised FY25 guidance lower bounds on revenue and adjusted EBITDA; confidence in limited exposure to recycled commodity price volatility .

What Went Wrong

  • Adjusted EBITDA margin contracted ~30 bps YoY to 24.7% due to newly acquired businesses initially diluting margins by ~100 bps; base business margins expanded ~70 bps same-store .
  • Recycled commodity pricing was a headwind (average revenue per ton down 29% YoY), though net impact to revenue was limited (~$1M) due to risk-sharing contracts .
  • Mid-Atlantic integration remained an incremental drag (now ~10 bps vs ~100 bps last year); pricing actions there are constrained until systems are unified (target end of Q1 2026) .

Financial Results

Core financials vs prior quarters and company-reported actuals

MetricQ1 2025Q2 2025Q3 2025
Revenue ($USD Millions)$417.1 $465.3 $485.4
GAAP Diluted EPS ($)$(0.08) $0.08 $0.16
Adjusted Diluted EPS ($)$0.19 $0.36 $0.42
Adjusted EBITDA ($USD Millions)$86.4 $109.5 $119.9
Adjusted EBITDA Margin (%)20.7% 23.5% 24.7%

Estimates vs actuals (S&P Global)

MetricQ1 2025Q2 2025Q3 2025
Revenue Consensus Mean ($USD Millions)*403.36*454.02*476.32*
Revenue Actual ($USD Millions)$417.10 $465.33 $485.35
Primary EPS Consensus Mean ($)*0.103*0.327*0.324*
Primary EPS Actual ($)*0.19*0.36*0.42*

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

Segment and service mix (Third-Party Revenues)

Service Line ($USD Millions)Q3 2024Q3 2025
Collection$252.58 $314.05
Disposal$67.45 $73.45
Landfill Gas-to-Energy$1.65 $1.54
Processing (Solid Waste)$3.48 $3.14
Solid Waste Total$325.17 $392.17
Processing (Resource Solutions)$34.95 $33.20
National Accounts$51.51 $59.98
Resource Solutions Total$86.46 $93.18
Total Third-Party Revenues$411.63 $485.35

KPIs (Q3 2025)

KPIQ3 2025
Solid waste pricing growth+4.6%
Collection price growth+4.7%
Disposal price growth+4.6%
Landfill same-store price+3%
Landfill total tons+11.7%
Internalized landfill volumes~+20%
Resource Solutions: recycled commodity revenue/ton−29% YoY
National Accounts price / volume+4.3% / +8.6%
Net cash from operations (YTD)$233.2M
Adjusted Free Cash Flow (YTD)$119.5M

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($B)FY 2025$1.820–$1.840 (Q2 update) $1.830–$1.840 Raised lower end
Adjusted EBITDA ($M)FY 2025$410–$425 (reaffirmed Q2) $415–$425 Raised lower end
Net income ($M)FY 2025$8–$18 (Q2 update) $8–$18 Maintained
Net cash provided by operating activities ($M)FY 2025$325–$335 (Q2 update) $325–$335 Maintained
Adjusted Free Cash Flow ($M)FY 2025$170–$180 (Q2 update) $170–$180 Maintained

Note: Q1 2025 guidance was $1.775–$1.805B revenue, $410–$425M adj. EBITDA, $320–$335M cash from ops, $165–$180M adj. FCF .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3)Trend
AI/technology initiativesFocus on ERP/procurement and billing consolidation; integration pace a near-term headwind in Q2 .Foundational systems (billing, portals, app, communications tools) set groundwork for AI-driven efficiencies next year .Building foundation; AI efficiencies ahead.
Mid-Atlantic integrationHeadwind to margins and synergy timing in Q2 .~50% customer conversion; target end of Q1 2026; 60% automated trucks arriving; at least $5M savings in 2026 (ex-pricing lift) .Improving; tailwind expected in 2026.
Landfill volumes/internalizationQ1 landfill tons +3.9% ; Q2 stronger volumes YoY .Same-store price +3%; total tons +11.7%; ~+20% internalized volumes .Accelerating internalization.
Permitting (Highland & Hake’s, NY)—Highland: doubling annual permit (460k→1M tons) and ~60 years capacity; Hake’s: ~10+ years expansion; permits expected over next several quarters .Progressing; strategic capacity build.
Recycled commodity markets—Avg revenue/ton −29% YoY; floating fee structures limited net revenue impact (~$1M) .Headwind mitigated.
Tariffs/supply chain—Section 232 tariffs not affecting truck deliveries; supply chain disruptions easing; brands largely U.S.-made (Mack, Kenworth) .Easing; minimal impact.
Regulatory/legalPFAS risks highlighted in safe harbor .PFAS designation and compliance/remediation risks noted in Q3 safe harbor .Ongoing risk watch.

Management Commentary

  • CEO (John Casella): “We reported another quarter of record performance… execute on our operating plans and disciplined acquisition strategy… eight acquisitions representing approximately $105 million of annualized revenue” .
  • CFO (Brad Helgeson): “New acquisitions… diluted margins by 100 bps… base business expanded margins 70 bps… we can take acquired margins up 500–1,000 bps over time through synergies” .
  • President (Ned Coletta): “Mid-Atlantic… 43 trucks delivered since July 1; >60% automated; expect at least $5M of savings in 2026… multi-year opportunity is much larger” .
  • CEO on permitting: “We feel very confident… Highland and Hake’s permits expected over the next few quarters” .

Q&A Highlights

  • Margin trajectory and M&A impact: Acquisitions initially dilute margins (~100 bps in Q3), but the core business accreted ~70 bps; multi-year margin expansion from integration is expected .
  • Mid-Atlantic timeline: ~50% through customers; systems work by early Q1; full consolidation and pricing tools by end of Q1; savings do not yet include pricing benefits .
  • Landfill pricing and rail capacity: Same-store third-party landfill price +3%; rail-served capacity entering the market softened pricing versus prior years .
  • Tariffs/supply chain: No material impacts from Section 232; truck delivery timelines improving; standardized U.S.-made chassis reduce risk .
  • McKean rail facility: Gondola offloading upgrade on track for H1 2026; volumes expected to ramp with regional capacity closures and internalization .

Estimates Context

  • Q3 2025: Revenue $485.4M vs consensus $476.3M*; Primary EPS $0.42 vs $0.324* (company GAAP EPS $0.16; adjusted diluted EPS $0.42) .
  • Q2 2025: Revenue $465.3M vs $454.0M*; Primary EPS $0.36 vs $0.327* .
  • Q1 2025: Revenue $417.1M vs $403.4M*; Primary EPS $0.19 vs $0.103* .

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

Key Takeaways for Investors

  • Underlying core margin strength is intact; acquisitions diluted margins near term, but same-store margins expanded and integration roadmaps aim to recapture and exceed consolidated averages over time .
  • FY25 guidance raise (revenue and adjusted EBITDA lower bounds) underscores confidence in H2 operating momentum and limited commodity price exposure due to floating fees .
  • Landfill internalization and capacity build (Highland/Hake’s) are strategic drivers for 2026–2028, aligning with expected regional capacity closures and enhancing pricing power and margins .
  • Mid-Atlantic integration should pivot from drag to tailwind in 2026 with systems unification and automation-enabled routing efficiencies; at least $5M savings targeted (ex-pricing) .
  • Commodity recycling headwinds persist, but contract structures materially mitigate volatility; National Accounts growth (price +4.3%, volume +8.6%) supports Resource Solutions resilience .
  • Balance sheet capacity remains ample (cash ~$193M; undrawn $700M revolver; 2.34x net leverage), supporting robust M&A pipeline and disciplined growth .
  • CEO succession announced for end-2025; continuity and focus on pipeline development and integration rigor should sustain strategic execution .