Casella Waste Systems Inc 2026 Q2 Earnings Call

Good morning, thank you for joining us on the call. Today, we'll be discussing our second quarter 2026 results, which were released yesterday afternoon. This morning, I'm joined by Ned Coletta, President and Chief Executive Officer of Casella Waste Systems, Brad Helgeson, our Chief Financial Officer, Damian Ribar, our Chief Operating Officer, and Jason Mead, our Senior Vice President of Finance and Treasurer. After a review of these results and an update on the company's activities and business environment, we'll be happy to take your questions. First, please note that various remarks we may make about the company's future expectations, plans, and prospects constitute forward-looking statements for the purpose of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995.

Actual results may differ materially from those indicated by those forward-looking statements as a result of various important factors, including those discussed in the Risk Factors section of our most recent Form 10-K, which is on file with the SEC. In addition, any forward-looking statements represent views only as of today and should not be relied upon as representing our views on any subsequent date. While we may elect to update forward-looking statements at some point in the future, we specifically disclaim any obligation to do so even if our views change. These forward-looking statements should not be relied upon as representing our views as of any date subsequent to today, August 7th, 2026. Also, during this call, we may be referring to non-GAAP financial measures. These non-GAAP measures are not prepared in accordance with generally accepted accounting principles.

Reconciliations of the non-GAAP financial measures to the most directly comparable GAAP measures, to the extent they are available without unreasonable effort, are included in our press release filed on Form 8-K with the SEC. With that, I'll turn it over to Ned Coletta to begin today's discussion.

Good morning, and thank you for joining us. I'd like to first welcome Damian Ribar, our new Executive Vice President and Chief Operating Officer. Damian is joining us on the call this morning. Damian brings over 30 years of solid waste industry operating and finance experience and is an excellent addition to our already strong senior management team. We are also joined by our new Vice President of Investor Relations and Finance, Henry Baby. Henry joins us after a 20-year career on the buy side, most recently as a small-cap generalist at William Blair. We are pleased with our performance in the second quarter. Our team executed well across the business, delivering solid financial performance while also advancing our key strategic initiatives. Our disciplined operating approach, strong pricing execution, higher landfill volumes, and continued acquisition activity drove positive results during the quarter.

Our solid results in the quarter reflect the consistency of our operating model, the effectiveness of our dynamic fuel recovery fees, and the continued focus of our teams on safety, execution, and customer service. Revenue for the quarter was $543.7 million, up 16.9% year-over-year. Growth was driven by contributions from acquisition and the base business, with strong pricing across our collection and disposal lines, volume growth at the landfills, and continued growth in our resource solutions segment. Pricing continues to perform well and remains a core driver of our positive results. Solid waste pricing was up 5.5% overall, including 5.8% in the collection line of business and 4.7% in the disposal line of business.

Equally as important, landfill tons were up 8.4% year-over-year in the quarter, reflecting the strength of our newly constituted post-collection sales team, internalization efforts, and our unique landfill asset positioning in the Northeast. From a volume perspective, the quarter played out largely as we expected, with higher disposal volumes mainly offsetting lower collection volumes as we continue to prioritize price and profitability in the collection line of business. Volume trends followed the normal seasonal uptick through July and into early August, and we are well-positioned as we move through the back half of the year. On the cost side, our fuel recovery program worked effectively in the quarter, with floating fees fully offsetting the dollar increase in fuel costs across the business. This continues to be an important component of our ability to manage risk and produce stable and predictable operating results.

As previously discussed, our fuel recovery program is designed to recover costs, and as such, we experienced roughly 40 basis points of margin headwind as recovery fees and fuel grossed up revenues and costs respectively. As we have emphasized, our focus remains on disciplined execution at the operating level. Our teams continue to make progress with route optimization, fleet efficiency, and automation, and we are seeing those efforts translate into results. Adjusted EBITDA of $123.2 million was up 12.5% year-over-year. Safety is our first core value at Casella, and we continue to invest in key initiatives across the business. These efforts have resulted in better safety performance with our key OSHA metric improving 34% year-over-year. A huge thank you to everyone on the team for their focus and discipline.

We continue to deploy the Lytx in-cab AI technology across our fleet. It's helping to drive safer behavior through real-time coaching. Further, our expanded triage program continues to reduce workers' compensation costs and claims. In the Mid-Atlantic region, we made significant progress on our integration efforts during the second quarter. As guided, we are on track to cut $5 million of operating costs in 2026 and another $10 million over the next two years. We completed the migration of our customers to our new lead to cash system and integrated customer payment portal in early May. Our team quickly pivoted to driving operational synergies through route consolidations and automated truck conversions. With these early efforts, we have already eliminated 13 routes and the related trucks and labor from the business. From a technology and efficiency standpoint, we're making great progress.

From a customer side, we continue to invest in key platforms to improve experience, including the launch of our new customer payment portal in April, the new Casella phone app in May, and the new casella.com website in July. Everyone should check out these in the iPhone store and online. These efforts are focused on improving customer experience through the development of robust e-commerce capabilities while also yielding cost efficiencies and enhancing our selling capabilities. We remain focused on reducing G&A costs. We are on track with our previously identified $15 million in targeted savings over the next three years. We expect these savings will come in three phases. With the first phase yielded in the second half of 2026, as we roll out credit card convenience fees.

The second phase will be yielded in 2027, as we eliminate the cost of redundant systems. The last phase, as we further automate back-office functions. Across these initiatives, we are focusing on AI-enabled tools and investing in data infrastructure to support this capability. Over time, we expect these investments to generate additional leverage across our back office, yielding efficiency gains throughout the business. I would also like to provide an update on our Hays Construction and Demolition Landfill in New York. We expect to receive a permit in the third quarter to expand our airspace at this site. With this permit expansion at our current run rates, we'll have roughly 20 years of valuable airspace at the site. In addition, we continue to make excellent progress on the expansion efforts at our Hyland, Juniper Ridge, and Clinton landfills.

Acquisitions remain an important component of our growth strategy. We've had a strong start to the year. We have completed five acquisitions so far in 2026, representing approximately $165 million of annualized revenues. We closed on one acquisition in early January, three on April 1st. Then one tuck-in, in Pennsylvania on July 1st. These transactions continue to align well with our strategy of building density and adding key transfer stations and recycling facilities within our existing operating footprint. Our teams are making good progress on integration with an early focus on safety, onboarding our new team members, and executing integration plans. At the same time, our acquisition pipeline remains strong. We have a number of tuck-in opportunities in later stages that fit well within our existing markets. Overall, we feel very good about our execution year-to-date and our outlook for the remainder of the year.

We're executing well against our core priorities, including improving our safety profile, pricing in excess of cost inflation, operational efficiency programs, yielding acquisition synergies, and delivering on new acquisitions. At the same time, we're continuing to invest in the business in a disciplined way, particularly in technology and long-term efficiencies. I want to thank our employees for their continued focus on safety, service, and customer execution. With that, I'll turn you over to Brad to walk through the financials in more detail.

Thanks, Ned. Good morning, everyone. Revenues in the second quarter were $543.7 million, up $78.4 million or 16.9% year-over-year, with $46.2 million from acquisitions, including rollover, and $32.2 million from same-store growth or 6.9%. Solid waste revenues were up 18.4% year-over-year, with price up 5.5% and volume down 0.6%. Within solid waste, price in the collection line of business was up 5.8% in the quarter, led by 7% price in roll-off and 7% price in front load commercial and volume was down 1.4%. Price in the disposal line of business was up 4.7%, including 4% third-party price at landfills and 5.1% at transfer stations. Landfill volumes overall were up 86,000 tonnes or 8.4% in the quarter, with internalized volume up 24,000 tonnes and third-party volume up 62,000 tonnes. Landfill activity was strong this spring, and we expect this to continue through the second half.