Casella Waste Systems Inc., Rutland, Vermont, has announced its financial results for the first quarter of 2020. The company reported revenues were $182.9 million for the quarter, which was up $19.2 million, or 11.8 percent, from the same period in 2019.
“During the first quarter, we continued to execute well against our key long-term strategies as part of our 2021 plan,” says Casella chairman and CEO John Casella in a prepared statement. “Our solid waste pricing programs were ahead of budget as we advanced 5.2 percent pricing in the collection line-of-business and 10.1 percent pricing at the landfills, with overall solid waste price increasing by 5.8 percent. Solid waste volumes were down 2.7 percent in the quarter, as we continued to focus on shedding unprofitable work, advancing pricing in excess of inflation and we began to experience early negative volume impacts from COVID-19 as the shelter-in-place orders forced businesses to close and construction to come to a halt.”
- Overall solid waste pricing for the quarter was up 5.8 percent, driven by robust collection pricing, which was up 5.2 percent, and strong disposal pricing, up 7.7 percent, from the same period in 2019.
- Net income was $1 million for the quarter, up $2.7 million from the same period in 2019.
- Adjusted net income was $2.5 million for the quarter, up $3 million from the same period in 2019.
- Adjusted EBITDA was $33.5 million for the quarter, up $6.9 million, or up 25.9 percent, from the same period in 2019.
- Net cash provided by operating activities was $14.8 million for the quarter, up $10 million, or up 209.6 percent from the same period in 2019.
“We are really pleased with the results of our first quarter,” Casella said during the company’s earnings call. “This is another strong period as we continue to execute well against our key initiatives. Given the timing of stay-at-home orders and its economic impact across our operational footprint, we did not experience any material negative impacts in the first quarter. As reported in yesterday's press release, our first-quarter revenues and adjusted EBITDA were up 11.8 percent and 25.9 percent, respectively, from last year. We continue to execute well our disciplined growth strategy as we have closed four acquisitions thus far in 2020 with approximately $13 million of annualized revenues. This marks a strong start to the year against this initiative, which we are excited about the growth opportunity our pipeline presents.”
Response to COVID-19
Since the outbreak of COVID-19 in early March, Casella says the company’s No. 1 priority has been to keep employees and the communities it operates in safe and healthy.
“As a company, we've been diligent. Our experienced team has done a tremendous job ensuring the well-being of our employees while maintaining efforts in effectively servicing our customers,” said Casella. “Since the onset of the pandemic… we have taken the following five steps to ensure business continuity: number one, keeping our people safe and healthy; establishing plans to provide continuity of operations; number three, effectively transitioning back-office functions to work at home; open communications in creating flexibility for our customers; and flexing variable costs and freezing discretionary capital.”
Casella has experienced revenue declines in its commercial collection, roll-off collection and disposal arising from temporary closures and reduced services. To address the challenges of uncertainty around COVID-19, the company has taken the following steps to adjust its cost structure, maintain liquidity and increase cash flows:
- developed daily tracking tools to monitor any revenue or expense changes to ensure proactive management;
- downsized the workforce through the reduction of hours, reduction of overtime, furloughs and layoffs;
- actively flexed variable operating and general and administration costs;
- instituted a hiring freeze for all non-essential roles and frozen salary increases;
- increased cash on its balance sheet to $26.2 million at the end of Q1; and
- froze approximately $10 million of discretionary capital expenditures.
The company has chosen to withdraw its financial guidance for the fiscal year ending Dec. 31 because of the uncertainty of the impacts of the COVID-19 pandemic. Casella said, “We hope to have more visibility on key variables such as the lifting of the stay-at-home orders and the state of the economy when we announce our second-quarter results.”
According to Ned Coletta, Casella’s senior vice president and chief financial officer, the negative impact of COVID-19 is somewhat hidden in the year-over-year revenue change for the month of April because of the other positive growth drivers, including our strong positive pricing, new contracts we brought online and 7.2 percent growth from the rollover impact of acquisitions.
“While it's impossible to predict if we are at the bottom, we have seen several key indicators, such as commercial and industrial service level changes, the number of roll-off pulls and landfill tons, begin to stabilize and, in some cases, improve over the last several weeks. We have relied upon our business intelligence tools to track key indicators to allow us to proactively flex our cost structure to lower revenues,” said Coletta.