Casella Waste Systems plots growth path through new acquisitions

0
29


Casella Waste Systems recycling

Employees of Casella Waste Systems sort plastic recyclables at the Chittenden Solid Waste District’s ‘material recovery facility.’ Photo by Elizabeth Gribkoff/VTDigger

The Rutland-based Casella Waste Systems, one of the nation’s largest solid waste and recycling companies, has grown larger through acquisitions this year, and it’s planning more.
Casella Waste Systems in May completed the acquisition of three solid waste businesses with hauling, transfer and recycling operations in Maine, Massachusetts, and Vermont, the company said in a statement.

The company reported revenues of $163.7 million for the first quarter of 2019, an 11% increase over the first quarter of 2018. It said acquisitions were a big revenue driver, along with payments for collection and disposal, high volumes of recycling and organic materials, and an increase in recycling processing fees. More acquisitions are expected this year.

“We continue to make great progress with our acquisition efforts in 2019, and with these acquisitions we have acquired roughly $18.5 million of annualized revenues year-to-date,” Casella said in a statement. “Our acquisition pipeline remains robust with over $30 million of annual revenues under letter of intent that we expect to close by the end of the third quarter, and we continue to be focused on efforts to drive cash flow growth across our footprint through disciplined strategic growth.”

With 2,300 employees, Casella Waste Systems – one of only two publicly traded companies based in Vermont – is the fifth-largest vertically integrated solid waste and recycling company in the nation, according to industry publications. Together the five largest waste companies – Waste Management, Republic Services, Waste Connections, and Advanced Disposal Services – operate 542 active landfills in North America. Casella operates eight solid waste landfills, a construction and demolition landfill, and 18 recycling facilities, according to the industry publication Resource Recycling.

U.S. recycling companies took a hit from a 2017 Chinese program that banned the import of some recycled materials and imposed new standards for others. Casella Waste Systems said in its annual report that global demand for paper and cardboard products fell sharply as a result, with an 80% drop in prices for mixed paper recycling and 50% drop for cardboard. The company said its operating costs rose 21% from the year before as it shipped its recycling to new markets.

Casella has traditionally grown by acquisition, although during the economic downturn it stopped acquiring new businesses and put its energies into paying down its debt, said Vice President Joe Fusco. But it started up again recently, acquiring 10 businesses last year.

“We’re certainly taking advantage of the tailwinds of a good economy and putting our business in a position to have the capacity to grow,” Fusco said Wednesday. “We are in a position now where we’re performing very well; we have the capital to grow the business. We’ve started to have an acquisition strategy again.”

Casella did not disclose the terms of the deal it made in May with the three New England companies, D & E Rubbish Removal, Inc., Bin Dump’n Trash, and TAM, Inc. and its subsidiaries.

VTDigger’s business coverage is underwritten by:

Want to stay on top of the latest business news? Sign up here to get a weekly email on all of VTDigger’s reporting on local companies and economic trends. And check out our new Business section here.