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CW

CASELLA WASTE SYSTEMS INC (CWST)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 revenue rose 18.9% year-over-year to $427.5M, with Adjusted EBITDA up 15.6% to $95.0M; adjusted EPS increased 41.4% to $0.41, reflecting acquisition contribution and organic pricing leverage .
  • FY 2025 guidance introduced: revenue $1.775B–$1.805B, Adjusted EBITDA $410M–$425M, Adjusted FCF $165M–$180M, with ~5% solid waste pricing and flat to down ~1% volumes; base margin expansion targeted at ~50bp, offset by lower initial acquisition margins .
  • 2024 execution included +5.7% solid waste pricing, collection margin expansion >100bp in base business, and strong Resource Solutions performance (Boston MRF); offsets were softer landfill C&D/special waste volumes and incentive comp accrual headwind in Q4 .
  • Cash generation was robust: FY 2024 cash from operations $281.4M and Adjusted FCF $158.3M, aided by DSO improvements to 36 days; consolidated net leverage 2.54x at year-end .
  • Potential stock reaction catalysts: new FY25 guidance with organic and acquisition drivers, internalization ramp to landfills, Willimantic retrofit EBITDA uplift (~$4M), and active M&A pipeline with ~$170M FY25 revenue contribution assumed to date .

What Went Well and What Went Wrong

  • What Went Well
    • “Record” growth across revenue, Adjusted EBITDA, and Adjusted FCF in 2024; +23.1% FY revenue, +22.4% FY Adjusted EBITDA, +23.4% FY Adjusted FCF .
    • Base collection Adjusted EBITDA margins expanded >100bp on pricing (+6.5% collection price) and operating efficiency; Resource Solutions margins +270bp with strong Boston facility performance .
    • Q4 Adjusted EPS rose 41.4% YoY to $0.41 and adjusted net income +51.4%, aided by acquisitions and organic price/mix .
  • What Went Wrong
    • Landfill C&D and special waste volumes remained weak through 2024; landfill revenue declined despite price increases, as the company “held the line on price” to preserve airspace .
    • Q4 Adjusted EBITDA margin fell 60bp YoY to 22.2% due to ~125bp headwind from incentive comp accruals concentrated in Q4, partly offset by +55bp base margin expansion .
    • FY 2024 GAAP net income decreased 46.7% to $13.5M, impacted by Southbridge closure charge ($8.4M), higher acquisition expenses, depreciation/amortization, and interest expense .

Financial Results

MetricQ4 2023Q2 2024Q3 2024Q4 2024
Revenue ($USD Millions)$359.6 $377.2 $411.6 $427.5
GAAP Diluted EPS ($)$(0.03) $0.12 $0.10 $0.08
Adjusted Diluted EPS ($)$0.29 $0.22 $0.27 $0.41
Adjusted EBITDA ($USD Millions)$82.2 $91.6 $102.9 $95.0
Adjusted EBITDA Margin (%)22.8% 24.3% 25.0% 22.2%
Operating Income ($USD Millions)$13.4 $23.0 $24.4 $18.5

Segment revenue breakdown (Third-Party Revenues):

SegmentQ4 2023 ($USD Millions)Q4 2024 ($USD Millions)
Collection$214.7 $273.9
Disposal$63.1 $64.0
Landfill gas-to-energy$1.6 $1.8
Processing (Solid Waste ops)$2.6 $2.7
Resource Solutions: Processing$30.0 $32.5
Resource Solutions: National Accounts$47.5 $52.6
Total$359.6 $427.5

Key KPIs and balance sheet/cash flow:

KPIFY 2023FY 2024
Cash from Operations ($USD Millions)$233.1 $281.4
Adjusted Free Cash Flow ($USD Millions)$128.3 $158.3
Cash, Cash Equivalents & Restricted Cash ($USD Millions, end of period)$220.9 $383.3
Total Debt ($USD Millions, LT + current)$1,043.4 $1,133.3
Consolidated Net Leverage (bank covenants)—2.54x
DSO (days, consolidated at Dec 31)41 36

Notes:

  • Disposal revenue: price +3.2% YoY, volume −8.2% (Q4); landfill average price/ton +5.1%, mix shift away from lower-priced streams .
  • Solid waste price contribution: +$15.2M in Q4 (5.4% of segment; 4.2% of total company) .
  • Acquisition revenue contribution: +$50.1M in Q4 solid waste (17.8% of segment; 14.0% of total) .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY 2025N/A$1.775B–$1.805B Introduced
Net IncomeFY 2025N/A$10M–$25M Introduced
Adjusted EBITDAFY 2025N/A$410M–$425M Introduced
Net Cash from OpsFY 2025N/A$320M–$335M Introduced
Adjusted Free Cash FlowFY 2025N/A$165M–$180M Introduced
Capital ExpendituresFY 2025N/A~$215M (incl. ~$45M acquisition capex) Introduced
Solid Waste Pricing AssumptionFY 2025N/A~5% pricing; inflation ~4% Introduced
Volume Outlook (Solid Waste)FY 2025N/AFlat to down ~1% Introduced
Adj. EBITDA Margin OutlookFY 2025N/AFlat to +40bp; base +~50bp Introduced

Context — FY 2024 guidance changes:

  • Revenue raised to $1.520B–$1.550B (Q2) .
  • Adjusted EBITDA raised to $360M–$370M (Q2) .
  • Net income lowered to $15M–$25M (Q2), then to $10M–$20M (Q3) .
  • Net cash from ops lowered to $245M–$255M (Q2) .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3 2024)Current Period (Q4 2024)Trend
M&A pipeline and acquisitionsAcquired LMR & Whitetail; pipeline robust; financing raised liquidity 8 deals in 2024 (> $200M rev) + 3 YTD in 2025 (~$40M); pipeline “more intense” Accelerating activity
Collection automation & operating efficiencyQ2: automation/routing driving cost reductions; margins up in collection Hundreds of automation opportunities in Mid-Atlantic/Hudson Valley; labor and fleet savings; pipeline 3–5 years Multi-year margin tailwind
Landfill volumes (C&D/special)Volumes down; leachate costs; Southbridge closure charge Continued weakness; preserving price/airspace; expect improvement in 2025; internalization ramp (~120k tons/yr) Stabilizing with internalization
Recycling/Resource SolutionsEquipment upgrades drove pricing/throughput; strong segment margins Boston MRF outperformed; Willimantic retrofit complete; ~$4M EBITDA benefit in 2025 Positive execution
Pricing vs inflationAhead of inflation via programs Targeting ~100bp positive spread on ~4% inflation; ~5% pricing plan Maintaining spread
IT modernizationNot highlightedInvesting +10bp G&A in 2025; upgrading SoftPak (order-to-cash), customer portal; duplicative systems from acquisitions being consolidated Near-term cost headwind → scalability
Regulatory (PFAS)Risk factors noted PFAS treatment (RO, foam fractionation) pilots; solidification and disposal process described Proactive compliance
Regional trends (Brookhaven closure)Not highlightedBrookhaven C&D closure confirmed; early volume flow to CWST facilities; more improvement expected in 2025 Supportive for volumes

Management Commentary

  • “We finished the year strong, reporting records yet again across our key financial metrics in 2024, with growth of over 20% in revenues, Adjusted EBITDA and Adjusted Free Cash Flow” — John W. Casella, Chairman & CEO .
  • “Adjusted EBITDA was $95.0 million in the quarter… margins were 22.2%… approximately 125 basis points of margin headwind [from incentive compensation accrual]; margins across the rest of the base business were up 55 basis points” — CFO Brad Helgeson .
  • “We acquired eight businesses in 2024 with over $200 million in annualized revenue… three acquisitions and approximately $40 million in annualized revenues [in 2025 YTD]” — CEO .
  • “Willimantic… retrofit… we expect the facility to roughly double its processing speed… and… about a $4 million benefit year-over-year in 2025” — CFO/President .
  • “We are targeting approximately 50 basis points [base] margin expansion… partially offset by acquisitions contributing at lower initial margins” — CFO .

Q&A Highlights

  • M&A pipeline intensity and integration capacity: Management sees an “as active, if not more active” pipeline, focusing on tuck-ins across PA/MD/NY/MA; emphasizing integration resources across ops, HR, IT to sustain growth .
  • Eastern Massachusetts “Save That Stuff” synergy: Complementary hauling and processing footprint with Boston MRF; opportunity to internalize processing streams and optimize routes .
  • Brookhaven (NY) C&D closure impact: Confirmed closure; early tonnage increases at CWST facilities with expectation for further improvements during 2025 .
  • Internalization economics: Incremental landfill tons carry 50%–75% incremental margins, subject to trucking and capacity; internalization embedded in FY25 guidance .
  • Pricing/inflation and near-term weather: ~4% inflation assumption; targeting 50–100bp price/cost spread; no unusual Q1 weather impact versus historical patterns .

Estimates Context

  • Consensus EPS and revenue estimates from S&P Global for Q4 2024 were unavailable at time of analysis due to SPGI rate limit errors; therefore, we cannot present a beat/miss versus Street for Q4 2024. Values retrieved from S&P Global.*
  • Attempted retrieval: Primary EPS Consensus Mean, Revenue Consensus Mean, and # of estimates for Q4 2024 and adjacent quarters (error returned: “Daily Request Limit Exceeded”).

Key Takeaways for Investors

  • The quarter demonstrated resilient pricing power and ongoing integration benefits; despite landfill volume headwinds, adjusted EPS and EBITDA grew meaningfully, aided by acquisitions and operating improvements .
  • FY25 guidance embeds both organic drivers (~4% organic revenue) and ~11% acquisition rollover ($170M), with flat to slight margin expansion targeted despite IT investment and lower initial acquisition margins .
  • Internalization and landfill strategy should improve economics in 2025 as volumes normalize and more MSW is directed to owned landfills; incremental landfill ton margins of 50%–75% are compelling .
  • Resource Solutions remains a bright spot, with Boston MRF strength and Willimantic retrofit expected to add ~$4M EBITDA in 2025, partially offsetting disposal softness .
  • Balance sheet and liquidity are strong (cash $383M, net leverage 2.54x), supporting active M&A; DSO improvements show execution on working capital discipline .
  • Near-term trading: narrative likely revolves around confidence in FY25 margin plan, internalization progress, and realization of Willimantic uplift; watch landfill volumes (C&D/special) for recovery pace .
  • Medium-term thesis: densification via acquisitions, technology-enabled scalability (SoftPak upgrade and customer portal), and PFAS treatment capability could underpin durable margin expansion and cash generation .