UPDATE: Casella Waste Systems (CWST) Tops Q2 EPS by 7c

(Updated - July 29, 2016 11:24 AM EDT)

(Update corrects EPS figure and headline to show earnings beat and adds outlook.)

Casella Waste Systems (NASDAQ: CWST) reported Q2 EPS of $0.12, $0.07 better than the analyst estimate of $0.05. Revenue for the quarter came in at $144.7 million versus the consensus estimate of $145.37 million.

“We had another strong quarter as our team executed well against our key management strategies as the regional economy continued to strengthen,” said John W. Casella, chairman and CEO of Casella Waste Systems, Inc. “Our results clearly demonstrated this improvement, with operating income up $4.2 million and margins up 290 bps year-over-year in the second quarter.”

“Achievement of our strategies is clearly driving positive results, with residential and commercial collection pricing up 5.3% on our focused pricing programs,” Casella said. “Further, our efforts to reduce operating costs and drive efficiencies continue to gain traction across each line-of-business with cost of operations as a percentage of revenues down 290 bps year-over-year. Recycling operating income was up $0.9 million year-over-year as our efforts to reshape the recycling business model has improved financial performance in these low commodity markets and helped to mitigate commodity risk. Finally, we continue to expand profitable revenues through our innovative resource solutions offerings.”

“As expected, we did experience volume headwinds at the landfills during the quarter, with tons down 8.4% year-over-year, as the unseasonably warm northeast winter resulted in a pull-forward of volumes from the second quarter to the first quarter, our efforts to improve price at select sites has dampened volume growth, and energy related waste streams were down in the Marcellus,” Casella said. “With that said, landfill volumes year-to-date were up 51,000 tons, or 2.6%, year-over-year, with particular strength in construction and demolition volumes, which were up 124,000 tons year-over-year.”

“Over the last several months, we continued to redeem and repurchase our 7.75% Senior Subordinated Notes due 2019, with $39.4 million of these bonds being permanently retired through July 1, 2016,” Casella said. “Through our continued cash flow growth and debt repayment, we further reduced our consolidated leverage ratio during the second quarter. Going forward, we remain committed to reducing leverage and improving free cash flow generation by using excess cash to retire our highest cost debt.”

“In closing, I am very pleased with our financial and operational performance during the quarter, and believe that we are well positioned to continue to execute for the remainder of fiscal year 2016 and beyond,” Casella said.

Outlook

Given our strong pricing and operational efficiency performance year-to-date, the company is increasing its Adjusted EBITDA guidance for the year ending December 31, 2016 by estimating results in the following range:

• Adjusted EBITDA between $113 million and $116 million (increased from a range of $111 million to $115 million).
• The company reaffirms its Revenue and Free Cash Flow guidance for the year by estimating results in the following ranges:
• Revenues between $550 million and $560 million; and
• Free Cash Flow between $20 million and $24 million.

For earnings history and earnings-related data on Casella Waste Systems (CWST) click here.

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