Ponte Vedra, Fla.-based Advanced Disposal Services, Inc.’s revenues for the first quarter of 2017 were $347.4 million, up from $333.8 million in 2016. Meanwhile, Rutland, Vt.-based Casella Waste Systems Inc.’s revenues increased 6.7 percent from the same period in 2016 and its solid waste volumes decreased 1.5 percent, mainly due to a 6.4 percent decline in disposal volumes.
Here’s a breakdown of the earnings reports for both firms.
Advanced Disposal Sees YOY Improvement in Cash from Operations, Increase in Revenue
Advanced Disposal’s revenues for the first quarter of 2017 were $347.4 million compared with $333.8 million for the same 2016 period. Net loss during the first quarter 2017 was $7.0 million, compared with $14.3 million, for the first quarter of 2016. Adjusted EBITDA margins were 25.1 percent for the first quarter, which is slightly down from 26 percent from a year ago.
"Advanced Disposal remains committed to generating improving cash flow for our shareholders over time," said Advanced Disposal CEO Richard Burke in a statement. "We are pleased to see the significant year-over-year improvement in cash from operations as we continue to execute on our strategy. We are also excited that we were able to redeploy some of the cash generated during the quarter to enter into a new vertically integrated market by closing on the acquisition of CGS. CGS is an established operation in a secondary market that has developed an excellent reputation and provides us with a new platform to continue to grow our business."
Other highlights for the first quarter:
- Overall revenue increased by $13.6 million. The revenue increase was driven by acquisition growth of 1.8 percent due to the company’s purchase of CGS Services, Inc. The company also separately completed four tuck-in acquisitions during the first quarter, which helped continue strong pricing with average yield for the first quarter of 2.4 percent.
- Net loss improved $7.3 million from 2016, and adjusted EPITDA increased $0.4 million during the first quarter. Gains from pricing initiatives and higher recycling commodity rates were partially offset by net fuel costs, startup expenses related to the CGS acquisition and a severance charge.
- Cash from operating activities increased $41.3 million to $95.3 million for the first quarter, and adjusted free cash flow excluded realized losses on derivatives improved $13.4 million to $40.5 million.
- Internal revenue growth for the sale of recyclables was 1.1 percent, while collection saw a decrease of 2.1 percent and disposal saw a decline of 0.7. Internal revenue growth from volume was positive 1.7 percent in the first quarter of 2017.
- As a percent of revenue, operating expenses were 64.9 percent in the first quarter of 2017, as compared to 62.9 percent in the first quarter of 2016. Increased labor and related benefits and transfer and disposal costs drove the increase in operating expenses as a percent of revenue.
- Net cash provided by operating activities was $95.3 million, compared to $54 million in the first quarter of 2016.
- Free cash flow was $57.1 million in the first quarter of 2017, compared to $15.9 million in the first quarter of 2016.
Casella Waste Systems Sees 6.7 Percent Increase in Revenues, 1.5 Percent Decrease in Solid Waste Volumes
Casella’s revenues increased 6.7 percent, or 8.4 million, from the same period in 2016. This increase was mostly due to robust collection, disposal and recycling commodity pricing and the roll-over impact from the acquisition of three transfer stations in the second quarter of 2016. Net loss improved by $7.4 million to $0.2 million for the first quarter, compared to $7.6 million for the same period in 2016. Adjusted EBITDA was $23.1 million, up $3.9 million from a year ago.
"We had another strong quarter as we continued to execute well against our key management strategies and benefited from stronger recycled commodity pricing for fibers," said Casella Waste Systems Chairman and CEO John W. Casella in a statement. "We remain focused on creating shareholder value through increasing landfill returns, improving collection profitability, creating incremental value through resource solutions, improving returns in our recycling business and reducing leverage through strict capital discipline and debt repayment. The progress we have made on our strategies clearly drove positive financial results in the first quarter, with operating income up $4.6 million, operating income margins up 330 bps and consolidated net leverage down year-over-year."
Here are some other highlights from the firm’s results:
- Disciplined solid waste pricing programs continued to outpace internal inflation with overall solid waste pricing up 2.4 percent for the quarter. This was driven by strong landfill pricing (3.4 percent) and robust residential and commercial pricing (3.1 percent).
- Solid waste volumes were down 1.5 percent in the first quarter, mainly due to a 6.4 percent decline in disposal volumes. The disposal volumes were down because the company faced a tough YOY weather comparison and continued to ramp down volumes at its Southbridge landfill.
- Recycling commodity prices were up 22.6 percent from the fourth quarter of 2016 to the first quarter of 2017, which is mainly due to higher paper and cardboard pricing. Higher pricing coupled with the reshaping of the company’s recycling business model helped drive strong recycling performance in the first quarter.
- Operating income was $6.6 million for the first quarter, up from $4.6 million from the same period in 2016.
- Adjusted EBITDA was $23.1 million for the first quarter, up from $3.9 million from the same period in 2016, with growth mainly driven by improved performance in the company’s collection and recycling lines of business.
- Solid waste operations, which make up approximately 25 percent of the company’s business, dropped to 70.4 percent from 74 percent in 2016.
- Disposal capacity continues to tighten, but the company advanced 3.4 percent pricing in the first quarter.
- Net cash provided by operating activities was $10.7 million for the first quarter, up $9.0 million from the same period in 2016. Free cash flow was $1.1 million for the first quarter, compared to $8.3 million for the previous year.