Casella’s Q2 results were met with a negative market reaction as investors focused on margin compression and integration challenges despite notable top-line growth. Management attributed revenue gains to recent acquisitions and solid organic growth, but acknowledged that integration issues in the Mid-Atlantic region, particularly delays in truck deliveries and system conversions, weighed on profitability. CEO John Casella cited these operational headwinds as "transitory," emphasizing ongoing execution against strategic plans and the strength of the company’s core business. The company also benefited from improved landfill and recycling facility performance, although higher costs in newly acquired regions impacted margins.
Is now the time to buy CWST? Find out in our full research report (it’s free).
Casella Waste Systems (CWST) Q2 CY2025 Highlights:
- Revenue: $465.3 million vs analyst estimates of $454.4 million (23.4% year-on-year growth, 2.4% beat)
- Adjusted EPS: $0.36 vs analyst estimates of $0.33 (10.1% beat)
- Adjusted EBITDA: $102.7 million vs analyst estimates of $111.9 million (22.1% margin, 8.1% miss)
- The company lifted its revenue guidance for the full year to $1.83 billion at the midpoint from $1.79 billion, a 2.2% increase
- EBITDA guidance for the full year is $417.5 million at the midpoint, below analyst estimates of $421.6 million
- Operating Margin: 4.1%, down from 6.1% in the same quarter last year
- Organic Revenue rose 3.2% year on year vs analyst estimates of 3.2% growth (4.9 basis point beat)
- Market Capitalization: $6.33 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Casella Waste Systems’s Q2 Earnings Call
- Patrick Tyler Brown (Raymond James) asked about the delayed synergy realization in the Mid-Atlantic and the anticipated pricing opportunity post-integration. President Edmond Coletta acknowledged slower progress, attributing it to system conversion and truck delays, but reaffirmed the long-term benefits.
- Adam Samuel Bubes (Goldman Sachs) questioned whether Mid-Atlantic integration challenges reflected cost increases or just slower synergy capture. Coletta clarified it was primarily delayed synergy realization, with automation and system upgrades expected to address issues over time.
- Trevor Romeo (William Blair) inquired about underlying volume trends, especially in landfills and cyclical businesses. COO Sean Steves and Coletta described volume stabilization and highlighted growth from internalization and improved transfer station logistics.
- James Joseph Schumm (TD Cowen) asked about the sequential dip in collection pricing and long-term capital intensity. CFO Brad Helgeson explained the pricing dip was due to business mix changes and noted that upfront capex for acquisitions impacts capital intensity in the short term.
- Stephanie Lynn Benjamin Moore (Jefferies) sought clarity on M&A strategy amid shifting regulatory environments and timing for McKean landfill upgrades. CEO John Casella said the company’s geographic focus remains unchanged and expects McKean upgrades to drive positive contributions in 2026.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will be watching (1) the pace of Mid-Atlantic region integration, specifically the rollout of automated trucks and system upgrades; (2) incremental margin gains from internalization and landfill optimization, particularly at McKean; and (3) the impact of newly completed and pending acquisitions on both revenue growth and operational efficiency. Progress on these fronts will be critical for sustained margin improvement and long-term growth.
Casella Waste Systems currently trades at $100, down from $108.72 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free).
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