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November 4, 2016
The final two publicly-traded solid waste firms announced third quarter earnings results with the themes reported matching what their peers had announced last week. Volumes are healthy and waste fundamentals continue to point in the right direction.
Advanced Disposal Services announced revenue for the three months ended September 30 of $360.6 million versus $361.3 million in the same period of the prior year.
Net income during the third quarter 2016 was $3.8 million versus a net loss of $5.5 million in the third quarter 2015. The company achieved quarterly adjusted EBITDA and adjusted EBITDA margins of $109.1 million and 30.3 percent, respectively, or an increase of $3.5 million and 110 basis points versus a year ago.
The improvements in net income, adjusted EBITDA, and adjusted EBITDA margins were led by strong pricing, with average yield for the quarter of 2.3 percent.
Additionally, revenue growth in the quarter from higher margin acquisitions continued to outpace divestitures, and net income benefited from a year-over-year reduction in losses related to fuel derivative contracts.
"Advanced Disposal has undergone transformational changes since our last earnings call, highlighted by completing an initial public offering and refinancing our debt structure," Advanced Disposal CEO Richard Burke said in a statement. "We are pleased to follow-up those transactions with strong third quarter results. Our team remains focused on safely providing an excellent customer service experience in the vertically integrated markets we serve. These efforts, coupled with disciplined pricing, controlling costs, and closing strategic tuck-in acquisitions continue to be the platform on which we drive earnings growth and improve returns on invested capital."
Casella beats estimates
Casella Waste Systems posted revenues of $151.1 million, up $4.9 million, from the same period in 2015, with revenue growth mainly driven by robust collection, disposal and recycling commodity pricing, the roll-over impact from the acquisition of three transfer stations in the second quarter, and higher volumes in the company's organics and customer solutions lines-of-business, partially offset by lower solid waste volumes, primarily associated with lower margin transportation volumes.
Net income attributable to common stockholders was $7.5 million compared to $2.3 million a year ago.
Operating income was $17.4 million for the quarter, up $4.7 million from the same period in 2015. Adjusted EBITDA was $37.1 million for the quarter, up $4.0 million from the same period in 2015. Meanwhile, free cash flow was $5.1 million in the quarter, as compared to $0.8 million for the same period in 2015.
The revenue results beat consensus estimates of $147.9 million. Adjusted EBITA was $3 million above estimates as well.
Casella also reported prices of 3.7 percent in collection and 2.2 percent in disposal. Price as a percent of total company was 2.3 percent. But volumes as a percentage of solid waste were down 1.5 percent and down 1.1 percent as a percentage of total company.
"We had another great quarter as we continued to execute well against our key management strategies," John W. Casella, Chairman and CEO of Casella Waste Systems, said in a statement. "Our team is focused on creating shareholder value through improving returns in our disposal line-of-business, driving higher profitability in our collection line-of-business, offsetting risk and improving returns in our recycling business, and reducing leverage through strict capital discipline and debt repayment."
Executive Director, Content & User Engagement, Waste360
David Bodamer is Executive Director of Content & User Engagement for Waste360 and NREI. Bodamer joined Waste360 in January 2014. He has been with NREI since September 2011 and has been covering the commercial real estate sector since 1999 for Retail Traffic, Commercial Property News and Shopping Centers Today. He also previously worked for Civil Engineering magazine. His writings on real estate have also appeared in REP. and the Wall Street Journal’s online real estate news site. He has won multiple awards from the National Association of Real Estate Editors and is a past finalist for a Jesse H. Neal Award.
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