By the numbers
Q1 net loss: $4.1M
Compared to net income of $3.5 million for the same period in 2023
Solid waste pricing: up 5.5%
Driven by 6.2% collection price growth and 4% disposal price growth
- Financial picture: “We hit the ground running to begin 2024,” CEO John Casella said during a Friday earnings call, noting strong collection and disposal pricing and higher recycling commodity prices. The company is also growing revenue from rollover contributions for acquisitions it closed last year. It continues to integrate elements of its larger acquisitions while “realizing planned synergies” and making sure the transitions are smooth for customers and employees, Casella said.
- Landfill volumes: Solid waste volumes were down year over year, particularly C&D and special waste volumes. John Casella said C&D disposal dynamics are being influenced by the anticipated closure of a large landfill in the Northeast at the end of this year, and he anticipates the C&D disposal market will “readjust” following the closure. In the meantime, the lower tons are “not a sign we're experiencing weaker construction activity or a signal from the economy,” he said. Meanwhile, roll-off collection volumes were up 1.4% and commercial collection volumes were up about 1% in the quarter. Average price per ton at landfills was 13.3% in the quarter.
- McKean landfill updates: President Ned Coletta noted “excellent progress” on completing rail infrastructure improvements at the McKean Landfill in Pennsylvania, expected to be online by mid-2024. The company expects to soon offload up to 5,000 tons per day of containerized MSW, as well as soils and sledges. “We expect operations to ramp very slowly over the next few years, as this investment is less about near-term volumes and more about long-term risk management and flexibility,” he said. “We want to ensure viable waste disposal outlets long term in a capacity-constrained Northeast.”
- RNG deal updates: Casella says it is also on track to complete its first major RNG project at the Juniper Ridge Landfill in Maine. It’s expected to be online in mid-2024, with final commissioning expected in the “coming weeks,” Coletta said. Archaea/BP will own and operate the facility, while Casella is expected to earn profits from RINs and gas sales. Casella expects to work on another two to three RNG projects with third-party developers, which could be online in the second half of 2025, Coletta said.
- M&A plans: Casella has “exciting opportunities” for acquisitions in 2024. It currently has a pipeline of about $800 million worth of potential revenues across its footprint, John Casella said. When asked by an analyst about possible integration opportunities, Casella said the Mid-Atlantic region has “a tremendous amount of disposal capacity” and he sees possible “opportunities for us to continue to build the collection, recycling and transfer portion of the business.”
- Fleet and route improvements: Casella is implementing a series of fleet optimization strategies as part of a three-year plan to cut $4 million in costs. This year, it eliminated 14 trucks from its fleet through route optimizations, and it has ordered 17 automated trucks for delivery in 2025. Those new vehicles will replace between 25 and 30 rear loaders and will make routes safer and more productive for drivers, Coletta said. John Casella added that it is “still a bit of a struggle” to get new vehicles delivered in a timely fashion due to ongoing supply chain issues. However, the company has also been able to lower the overall age of its fleet as it acquires companies with relatively new vehicles, he said.
- PFAS opportunities: Casella sees new PFAS rules as a positive development for the industry because they offer more regulatory clarity and opportunities for future business. Casella has a reverse osmosis plant at the McKean landfill meant to take PFAS out of leachate, and it’s also working on a foam fractionation pilot program with the state of Vermont at its Waste USA facility. John Casella said that pilot has “seen significant positive results,” though the project is in early stages. “We're out in front from an innovation standpoint, trying to understand what kind of technology will take the PFAS out of our leachate on a go-forward basis,” he said.
