Caps milestone year of growth in 2023
VermontBiz Casella Waste Systems, Inc. (NASDAQ: CWST), a regional solid waste, recycling and resource management services company, today reported its financial results for the three and twelve month periods ended December 31, 2023. The Company also provided guidance for the fiscal year ending December 31, 2024 ("fiscal year 2024").
Highlights for the Three Months and Twelve Months Ended December 31, 2023:
- Revenues were $359.6 million for the quarter, up $87.4 million, or up 32.1%, from the same period in 2022. Revenues were $1.265 billion for the fiscal year ended December 31, 2023 ("fiscal year 2023"), up $179.5 million, or up 16.5%, from the fiscal year ended December 31, 2022 ("fiscal year 2022").
- Overall solid waste pricing for fiscal year 2023 was up 7.5% from fiscal year 2022, driven by 7.9% collection price growth and 6.9% disposal price growth.
- Net loss was $(1.8) million for the quarter, as compared to net income of $8.4 million for the same period in 2022. Net income was $25.4 million for fiscal year 2023, as compared to net income of $53.1 million in fiscal year 2022. Net (loss) income was impacted by several items in the quarter and fiscal year 2023. Please refer to the "Unaudited Reconciliation of Certain Non-GAAP Measures" section for additional information regarding these items.
- Adjusted EBITDA, a non-GAAP measure, was $82.2 million for the quarter, up $25.9 million, or up 46.1%, from the same period in 2022. Adjusted EBITDA was $294.6 million for fiscal year 2023, up $49.4 million, or up 20.1%, from fiscal year 2022.
- Net cash provided by operating activities was $233.1 million for fiscal year 2023, up $15.8 million, or up 7.3%, from fiscal year 2022.
- Adjusted Free Cash Flow, a non-GAAP measure, was $128.3 million for fiscal year 2023, up $17.1 million, or up 15.4%, from fiscal year 2022.
- Acquired seven businesses in fiscal year 2023 with approximately $315 million of annualized revenues.
“We had a strong quarter to close out a banner year, as we executed well against our long-term strategic plan and achieved double digit revenue, Adjusted EBITDA, and Adjusted Free Cash Flow growth in 2023," said John W. Casella, Chairman and CEO of Casella Waste Systems, Inc. “These results reflect the success of our operating initiatives paired with meaningful growth through acquisitions. This would not have been attainable without the steadfast commitment of our team, including over 1,000 new employees we welcomed to the company in 2023, whose impressive efforts have positioned us well for the future.”
"In 2023, we acquired seven businesses with approximately $315 million in annualized revenues, which marks our most significant level of growth since we introduced our disciplined capital allocation strategy several years ago. This was an exciting period of growth with both tuck-ins and new market entries, including the expansion of our footprint into the Mid-Atlantic region, which provides an attractive platform for future organic and inorganic value-creation opportunities. Our acquisition pipeline remains strong."
"A continued focus on our operating plans and return-driven investments has enabled us to mitigate costs through route automation and optimization. In addition to our operating initiatives, our flexible pricing programs resulted in 7.5% solid waste pricing in the year. We again have a comprehensive operating and pricing plan for fiscal year 2024 that we expect will help drive margin expansion for the year."
For the quarter, revenues were $359.6 million, up $87.4 million, or up 32.1%, from the same period in 2022, with revenue growth mainly driven by: newly closed acquisitions along with the roll-over impact from acquisitions closed in prior periods; positive collection and disposal pricing; and higher commodity prices, commodity volumes, and National Accounts revenue within our Resource Solutions operating segment; partially offset by lower solid waste volumes.
Net loss was $(1.8) million for the quarter, or $(0.03) per diluted common share, as compared to net income of $8.4 million, or $0.16 per diluted common share, for the same period in 2022. Adjusted Net Income, a non-GAAP measure, was $7.5 million for the quarter, or $0.13 Adjusted Diluted Earnings Per Common Share, a non-GAAP measure, as compared to Adjusted Net Income of $9.5 million, or $0.18 Adjusted Diluted Earnings Per Common Share, for the same period in 2022.
Operating income was $13.4 million for the quarter, down $(3.9) million from the same period in 2022, reflecting higher depreciation and amortization expense related to acquisition growth; $5.2 million in expenses from acquisition activities; and a $3.9 million charge related to a landfill capping veneer failure, which is undergoing an engineering analysis to determine root causes and responsibility of the event. Adjusted EBITDA was $82.2 million for the quarter, up $25.9 million, or up 46.1%, from the same period in 2022, with organic growth (excluding acquisitions) of 17.1%.
For fiscal year 2023, revenues were $1.265 billion, up $179.5 million, or up 16.5%, from fiscal year 2022.
Net income was $25.4 million, or $0.46 per diluted common share, for fiscal year 2023, as compared to net income of $53.1 million, or $1.03 per diluted common share, for fiscal year 2022. Adjusted Net Income was $51.7 million, or $0.94 Adjusted Diluted Earnings Per Common Share, for fiscal year 2023, as compared to Adjusted Net Income of $56.9 million, or $1.10 Adjusted Diluted Earnings Per Common Share, for fiscal year 2022.
Operating income was $80.4 million for fiscal year 2023, down $(15.0) million from fiscal year 2022. Adjusted EBITDA was $294.6 million for fiscal year 2023, up $49.4 million from fiscal year 2022.
Please refer to "Non-GAAP Performance Measures" included in "Unaudited Reconciliation of Certain Non-GAAP Measures" below for additional information and reconciliations of Adjusted Net Income, Adjusted Diluted Earnings Per Common Share, Adjusted EBITDA and other non-GAAP performance measures to their most directly comparable GAAP measures.
Net cash provided by operating activities was $233.1 million for fiscal year 2023, as compared to $217.3 million for fiscal year 2022. Adjusted Free Cash Flow was $128.3 million for fiscal year 2023, as compared to $111.2 million for fiscal year 2022.
Please refer to "Non-GAAP Liquidity Measures" included in "Unaudited Reconciliation of Certain Non-GAAP Measures" below for additional information and reconciliation of Adjusted Free Cash Flow to its most directly comparable GAAP measure.
Fiscal Year 2024 Outlook
"Our strong finish to 2023 positions us well for another year of significant growth in 2024. Our guidance ranges assume a stable economic environment through 2024 but reflect a cautious outlook for construction and demolition volumes," Casella said. "We expect approximately $175 million of revenue growth in fiscal year 2024 related to the roll over contribution of acquisitions closed in 2023. In addition, we expect to drive further margin expansion in 2024 through continued execution of our operating and pricing programs. We plan to continue upfront capital investment in recently acquired businesses to achieve targeted synergies or bring the assets up to the Company's standards while making further investments in our portfolio of development projects,” Casella said.
The Company provided guidance for fiscal year 2024 by estimating results in the following ranges:
- Revenues between $1.480 billion and $1.510 billion (as compared to $1.265 billion in fiscal year 2023);
- Net income between $35 million and $45 million (as compared to $25.4 million in fiscal year 2023);
- Adjusted EBITDA between $350 million and $360 million (as compared to $294.6 million in fiscal year 2023);
- Net cash provided by operating activities between $260 million and $270 million (as compared to $233.1 million in fiscal year 2023); and
- Adjusted Free Cash Flow between $140 million and $150 million (as compared to $128.3 million in fiscal year 2023).
Adjusted EBITDA and Adjusted Free Cash Flow related to fiscal year 2024 are described in the Unaudited Reconciliation of Fiscal Year 2024 Outlook Non-GAAP Measures section of this press release. Net income and Net cash provided by operating activities are provided as the most directly comparable GAAP measures to Adjusted EBITDA and Adjusted Free Cash Flow, respectively, however these forward-looking estimates for fiscal year 2024 do not contemplate any unanticipated impacts.
The Company provided the following assumptions that are built into its outlook.
- Overall, the Company expects revenue growth of between approximately 17% and 19% in fiscal year 2024, including approximately 14% (or $175 million) of revenue growth from the roll-over impact of acquisitions completed during fiscal year 2023.
- Does not include the impact of any acquisitions that have not yet been completed.
- In the Solid Waste business, revenue growth of between 21% and 23%, driven by roughly 17% growth from acquisitions completed during fiscal year 2023, price growth of 5.0% to 6.0%, and volume growth of 0.0% to down (1.0)%.
- In the Resource Solutions business, revenue growth of between 4% and 8%, driven by roughly 3% growth from acquisition rollover, higher recycling commodity prices, and positive price and volumes.
- Capital expenditures of approximately $180 million, which includes approximately $40 million of non-recurring capital associated with acquisitions and approximately $5 million of capital associated with the McKean Landfill rail project.
Conference Call to Discuss Quarter
The Company will host a conference call to discuss these results on Friday, February 16, 2024 at 10:00 a.m. Eastern Time. Individuals interested in participating in the call should register for the call by clicking here to obtain a dial in number and unique passcode. Alternatively, upon registration, the website linked above provides an option for the conference provider to call the registrant's phone line, enabling participation on the call.
The call will also be webcast; to listen, participants should visit the company’s website at http://ir.casella.com and follow the appropriate link to the webcast. A replay of the call will be available on the Company's website and accessible using the same link.
About Casella Waste Systems, Inc.
Casella Waste Systems, Inc., headquartered in Rutland, Vermont, provides resource management expertise and services to residential, commercial, municipal, institutional and industrial customers, primarily in the areas of solid waste collection and disposal, transfer, recycling and organics services in the eastern United States. For further information, investors may contact Charlie Wohlhuter, Director of Investor Relations at (802) 772-2230; media may contact Jeff Weld, Director of Communications at (802) 772-2234; or visit the Company’s website at http://www.casella.com.
