Waste management company Casella (NASDAQ: CWST) reported Q1 CY2025 results exceeding the market’s revenue expectations, with sales up 22.3% year on year to $417.1 million. The company expects the full year’s revenue to be around $1.79 billion, close to analysts’ estimates. Its non-GAAP profit of $0.19 per share was 85% above analysts’ consensus estimates.
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Casella Waste Systems (CWST) Q1 CY2025 Highlights:
- Revenue: $417.1 million vs analyst estimates of $404.6 million (22.3% year-on-year growth, 3.1% beat)
- Adjusted EPS: $0.19 vs analyst estimates of $0.10 (85% beat)
- Adjusted EBITDA: $80.16 million vs analyst estimates of $83.98 million (19.2% margin, 4.5% miss)
- The company reconfirmed its revenue guidance for the full year of $1.79 billion at the midpoint
- EBITDA guidance for the full year is $417.5 million at the midpoint, in line with analyst expectations
- Operating Margin: 0.8%, down from 2% in the same quarter last year
- Free Cash Flow was $29.06 million, up from -$2.41 million in the same quarter last year
- Organic Revenue rose 3.1% year on year (2.1% in the same quarter last year)
- Market Capitalization: $7.21 billion
StockStory’s Take
Casella Waste Systems reported first quarter results that exceeded Wall Street’s revenue and non-GAAP profit expectations, driven by a combination of organic growth and the ongoing integration of several recent acquisitions. Management attributed the quarter’s performance to strong pricing in its solid waste segment, organic growth in landfill and resource solutions operations, and continued execution on cost-efficiency initiatives, despite challenging winter weather in the Northeast leading to volume softness in certain areas.
Looking ahead, Casella’s leadership reconfirmed its full-year guidance, emphasizing a robust M&A pipeline and ongoing operational improvements as the key drivers of future performance. CEO John Casella cited the company’s resilience to macroeconomic uncertainty and low exposure to tariffs, noting, “The nature of our solid waste business reduces the impact of economic swings and our domestic focus limits exposure to tariffs.” Management remains focused on disciplined acquisition strategy, internalization of volumes, and the further ramp-up of its recycling infrastructure.
Key Insights from Management’s Remarks
Casella’s management highlighted the impact of pricing discipline, acquisition integration, and operational efficiency on the latest quarter’s results, while also acknowledging some headwinds in waste volumes due to seasonal and economic factors.
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Solid waste pricing momentum: Casella achieved 5.8% price increases in its collection business, with pricing outpacing inflation and commercial customer pricing performing particularly well. Management noted that most pricing actions for the year were implemented early, supporting margin resilience.
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Landfill volume recovery: Landfill operations saw organic growth above 7%, with volume increases attributed to both recapturing construction and demolition (C&D) waste in New York and strategic improvements to internalize more waste. Management expects these trends to continue as market conditions normalize.
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Resource Solutions expansion: The Resource Solutions segment benefited from the ramp-up at the upgraded Willimantic recycling facility and double-digit organic growth in national accounts, fueled by new business wins in key customer segments.
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Acquisition integration progress: Casella closed four acquisitions year-to-date, with most integration benefits coming from operational synergies and densification of routes. Management cited a dedicated integrations team and ongoing IT upgrades as central to achieving further efficiency gains.
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Operational investments: The company continued converting its truck fleet to automation, with plans for 40 additional automated trucks in 2025, aiming to drive cost reductions and enhance route optimization. Management views these initiatives as key to sustaining margin expansion in legacy operations.
Drivers of Future Performance
Management’s outlook for the year is underpinned by continued pricing discipline, the successful integration of recent acquisitions, and investments in operational efficiencies, while closely monitoring macroeconomic and seasonal volume trends.
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M&A pipeline and integration: Casella plans to pursue additional acquisition opportunities in its core Northeast and Mid-Atlantic markets, with a $500 million revenue pipeline and sufficient liquidity to execute. Management expects these deals to further densify routes and improve margins.
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Internalization and infrastructure: Initiatives to internalize more waste into company-owned landfills and investments in recycling and automation technology are expected to drive incremental EBITDA and long-term competitive advantage.
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External risks: Management highlighted limited exposure to tariffs and macroeconomic swings but acknowledged that volume growth could be impacted by weather and regional construction activity. The team remains vigilant about cost inflation and vendor pricing.
Top Analyst Questions
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Adam Bubes (Goldman Sachs): Asked about the sustainability of landfill volume growth and capacity utilization. Management explained that about a third of volume gains were from recaptured C&D waste, with significant untapped capacity—especially at the McKean landfill—reserved as a long-term buffer.
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Trevor Romeo (William Blair): Inquired about the durability of above-budget pricing and integration synergies from acquisitions. Management stated most pricing is locked in early, with commercial collection outperforming, and integration teams delivering ahead of pro forma expectations, though IT system upgrades remain ongoing.
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James Schumm (TD Cowen): Sought clarification on the interplay between lower disposal volumes and higher landfill volumes. Casella attributed this to weak roll-off activity, especially in the Northeast, but noted landfill growth reflected both internalization efforts and recovering C&D markets.
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Stephanie Moore (Jefferies): Asked about the financial impact of internalizing waste after acquisitions. Management said benefits are acquisition-specific and phased in over time due to existing contracts and infrastructure constraints, making it challenging to generalize EBITDA impact per internalization percentage.
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Timna Tanners (Wolfe Research): Questioned why guidance was not raised despite a strong quarter and additional acquisition revenue. Management responded that it is too early in the year to adjust guidance, preferring to maintain a cautious stance amid continued macro uncertainty.
Catalysts in Upcoming Quarters
In the quarters ahead, the StockStory team will be focused on (1) the pace and efficiency of acquisition integration, particularly how well Casella converts new acquisitions into margin accretive operations, (2) the ramp-up and performance of automated fleet and recycling infrastructure upgrades, and (3) the sustainability of pricing power in the face of fluctuating waste volumes and external cost pressures. Execution on internalization initiatives and progress in the M&A pipeline will also be closely monitored.
Casella Waste Systems currently trades at a forward P/E ratio of 94.1×. In the wake of earnings, is it a buy or sell? Find out in our free research report.
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