By the numbers
2022 net income: $53.1M
Q4 revenue: $272.13M
Up 12.5% year over year
Annualized revenue from 2022 acquisitions: $51M
Includes 14 acquisitions
2023 revenue guidance: between $1.15B-1.18B
- Economic outlook: During a Q4 earnings call on Friday, CEO John Casella applauded a “solid quarter and an exceptional year” despite headwinds from high inflation, high fuel prices and a period of dramatic decline in recycled commodity prices. The company’s fuel cost recovery program, which was able to offset about $27 million in increased costs for the year, and strong acquisition activity were among the high points, he said.
- Acquisitions: John Casella said the company expects to close on two acquisitions in Q2, with total annualized revenues of about $30 million. “We have a robust pipeline, including a number of deals in the late stages, and we expect another year of strong execution against our growth strategy in 2023," he said. Casella expects rollover impacts from the 14 acquisitions in 2022 could earn the company about $15.5 million in 2023.
- Pricing: Casella also credited “positive pricing strategies” for a stable quarter and said the company plans on another year of “robust pricing to stay ahead of inflation.” Solid waste revenues were up 13.2% year over year, with the price up 6.2%, President and CFO Ned Coletta said. Average landfill price per ton was up 7.4% in 2022, “helping us offset headwinds from cost, inflation and heightened regulatory costs,” Casella added.
- Disposal volumes: Solid waste volumes in Q4 were “slightly weaker than expected,” particularly from roll-offs, Coletta said, but are starting to rebound in Q1. Casella expects overall solid waste volume to stay flat or grow up to 1% in 2023.
- Infrastructure projects: John Casella previewed two renewable natura gas projects with third-party companies he expects will come online in Q2 and Q4 2023. The RNG projects “present no financial risk, as our partners invested 100% of the capital at our site,” and Casella will share in project revenues, he said. Casella also received several permits needed for rail infrastructure improvements at the McKean Landfill in Pennsylvania, which is on track to open in 2024.
- Resource solutions: Higher pricing, recycling processing fees and volume in Casella’s Resource Solutions segment also contributed to revenue growth in 2022, and that sector made up 26.2% of revenue in Q4. However, those gains were partly offset by lower solid waste volumes as well as lower recycling commodity prices and volumes.
- Sustainability: Casella amended its $650 million credit facility to connect the company’s borrowing costs to its progress toward meeting certain sustainability goals, such as lowering its Total Recordable Incident Rate and recycling or reusing more solid waste. “We believe the loan further strengthens our accountability,” Casella said.
- 2023 outlook: Casella estimates net income between $56 million and $62 million and adjusted EBITDA between $266 million and $272 million. It also expects revenue growth between 6.0% and 8.7%. Solid waste revenue could grow between 9.7% and 11.2% this year.
