Casella Waste Systems Reports Strong Q4 Results
Casella Waste Systems, Inc. (NASDAQ:CWST) reported its Q4 results, with both EPS and revenues of $0.21 and $241.8 million coming in better than the consensus estimates of $0.18 and $230.35 million, respectively.
These were a good set of results with the company maintaining margins amid high inflation and continuing to execute on its pricing strategy. Looking ahead, the company has permitted capacity in the Northeast which it expects to begin to bring online in 2023/24, as disposal capacity continues to be problematic for the region.
Management said it is increasing solid waste pricing by 4.5%-5% in 2022, which it believes will offset its internal inflation rate of around 4%. The company noted it has room to further increase pricing with around 70% of collection customers to combat an acceleration in inflation if necessary. As a result, it expects operational initiatives to drive approximately 40bp of EBITDA margin expansion in 2022.
The company expects full 2022-year revenues to range from $980 million to $995 million, compared to the consensus estimate of $970.4 million.
| Symbol | Price | %chg |
|---|---|---|
| 029960.KQ | 8900 | 0 |
| MHKI.JK | 91 | 0 |
| 9336.T | 2983 | 2.08 |
| 060150.KQ | 5040 | 0.89 |
Casella Waste Systems, Inc. (NASDAQ:CWST) Financial Performance Analysis
Casella Waste Systems, Inc. (NASDAQ:CWST) is a prominent player in the waste management services sector, focusing on collection, transfer, disposal, and recycling, primarily in the northeastern United States. The company faces stiff competition from other waste management firms such as Waste Connections, Inc., Clean Harbors, Inc., and Republic Services, Inc., which also offer similar environmental services.
In evaluating Casella's financial health, the Return on Invested Capital (ROIC) emerges as a crucial metric. Casella's ROIC stands at 1.85%, which falls significantly short of its Weighted Average Cost of Capital (WACC) of 8.20%. This discrepancy signals that Casella is not generating adequate returns to cover its cost of capital, posing potential concerns for investors.
On the other hand, Waste Connections, Inc. reports a ROIC of 3.53% and a WACC of 7.23%, leading to a ROIC to WACC ratio of 0.49. This comparison suggests that Waste Connections is more efficient in generating returns on its capital than Casella. Similarly, Clean Harbors, Inc. demonstrates superior performance with a ROIC of 8.20% against a WACC of 9.08%, yielding a ratio of 0.90.
Republic Services, Inc. excels with a ROIC of 8.96% and a WACC of 7.17%, resulting in a ROIC to WACC ratio of 1.25. This indicates that Republic Services is proficient in generating returns well above its cost of capital, indicating efficient capital utilization. Exponent, Inc. leads the pack with a ROIC of 14.27% and a WACC of 7.50%, achieving a ROIC to WACC ratio of 1.90, which underscores its robust financial performance.
