Despite the continued economic downturn related to the COVID-19 pandemic, Casella Waste Systems Connections Inc. (CWST), performed well during the second quarter of 2020 despite declines in solid waste volumes amidst the company's strategic reductions in variable costs in response to the pandemic, according to today's company earnings call.
John W. Casella, the company's Chairman and CEO, said "overall our efforts have reduced the number of cases and reduced business interruption" on the company's August 4 earnings call, noting that “prudent cost regulations” helped maintain earnings growth despite the fact that "volumes were significantly impacted".
Adjusted EBITDA for Q2 2020 came in at $44.0 million which is up $3.6 million (8.9%) from $40.4 million in adjusted EBITDA that the company posted for Q2 2019. The company saw margin improvements across its businesses which in addition to cost cutting were partially a result of rising prices as overall solid waste pricing for Q2 2020 was up 4.4%, with collection pricing up 4.3%, and landfill pricing up 6.2%, from Q2 2019.
While company solid waste volumes were down 12.4% during the quarter amid the COVID-19 outbreak which has forced businesses to close, the company made gains by offloading unprofitable work pointing to "strong relationships with our customers" and the ability to reduce variable costs, according to Casella. The company said it was able to modify and suspend service levels in some cases and was able to modify routes.
Casella, speaking to the company's capital allocation and growth strategy, noted that despite the COVID-19 outbreak, they have "have closed on six acquisitions with $16 million of annualized revenues" and that "four of these acquisitions have closed since April" after the pandemic started. Pointing to further acquisitions in future, he noted that "our pipeline remains robust".
John Casella also noted he was "incredibly proud of the response of our employees" and announced the company was paying a one-time special bonus to front-line and hourly back-office employees.
Additional CWST Financial Highlights for Q2 2020:
- Revenue was $188.77 for Q2 2020, up $1.2 million (0.7%) reported for Q2 2019 ($187.5 million)
- Adjusted EBITDA was $44.0 million for Q2, up $3.6 million (8.9%) from Q2 2019.
- Overall solid waste pricing for Q2 2020 grew 4.4% compared to Q2 2019, while solid waste volumes were down -12.4% from Q2 2019
- Net cash provided by operating activities was $62.5 million for the year-to-date period, up 63.4% from Q2 2019.
- Normalized Free Cash Flow was $27.5 million for the year-to-date period ending Q2 2020, up $22.1 million from Q2 2019.