Date of Call: May 1, 2026

Financials Results

  • Revenue: $457.3M, up 9.6% YOY
  • EPS: $0.20 per diluted share, up $0.01 YOY
  • Operating Margin: Adjusted EBITDA margin 21.2%, up approximately 50 basis points YOY

Guidance:

  • Revenue for 2026 increased to a range of $2.06B to $2.08B.
  • Adjusted EBITDA for 2026 increased to a range of $473M to $483M.
  • Adjusted free cash flow for 2026 increased to a range of $200M to $210M.
  • Adjusted EBITDA margins expected to be approximately 20%.
  • Expect ~14% adjusted free cash flow growth at the midpoint of guidance.

Business Commentary:

Revenue and Pricing Strategy:

  • Casella Waste Systems reported revenue of $457.3 million for Q1 2026, up 9.6% year-over-year.
  • Growth was driven by contributions from acquisitions and the base business with strong pricing across collection and disposal lines, specifically solid waste pricing up 5.1% overall.

Margin Expansion and Cost Management:

  • Adjusted EBITDA increased by 12.3% year-over-year, with a margin expansion of 50 basis points.
  • This was achieved through disciplined cost management, including a fuel recovery program that offset fuel costs, and ongoing efforts in route optimization and automation.

Acquisition Activity and Integration:

  • The company completed four acquisitions in 2026, adding approximately $150 million in annualized revenues, including the Star Waste acquisition which alone contributes $100 million.
  • The acquisitions align with the strategy of building density within existing markets and are expected to yield operational improvements over time.

Landfill and Disposal Capacity:

  • Landfill tons increased year-over-year, with C&D volumes up 13%.
  • The company is well-positioned for seasonal volume increases and has made significant progress in landfill expansions, such as the Hakes and Hyland landfills in New York.

National Accounts and Resource Solutions:

  • The Resource Solutions segment, particularly national accounts, showed strong growth with 20.7% increase in revenue.
  • This growth was driven by increased volume and pricing, despite lower commodity prices, highlighting the strength in national account sales.

Sentiment Analysis:

Overall Tone: Positive

  • Management expressed being "very pleased with our performance" and "delivered solid financial results and margin expansion that exceeded our budget." They noted "strong start" to the year, "broad-based momentum," "resiliency" in the quarter, beating budget, and expanding margins. Acquisition pipeline is "very strong" and they feel "very good about our execution year-to-date."

Q&A:

  • Question from Adam Bubes (Goldman Sachs): Should we be thinking about a period of outsized margin expansion over the next couple of years given the cost reduction plans?
    Response: Yes, management sees an above-brand margin improvement opportunity over the next 2 to 3 years, aiming for about 50 basis points of recurring annual expansion in the base business.

  • Question from Adam Bubes (Goldman Sachs): Can you explain how the Ontario landfill closure could be EBITDA neutral despite potential moving pieces?
    Response: Volumes will shift to lower-cost Hakes and Hyland landfills, offsetting operational and capital efficiencies; expected to be EBITDA neutral but improve operating income and net income post-closure.

  • Question from Adam Bubes (Goldman Sachs): What is the update on the landfill gas program timing and ramp?
    Response: Four projects are online; expecting several million dollars of EBITDA this year. Early shakedown phase with current output around 25,000 MMBtus per month at key sites.

  • Question from Trevor Romeo (William Blair): What is the margin profile and operating efficiency of Star Waste, and how did they integrate acquisitions?
    Response: Star Waste assumed to have ~20% EBITDA margin; management is bullish on growth opportunities within Casella's footprint. The company was well-integrated with strong systems and processes, presenting a nice platform for future growth.

  • Question from Trevor Romeo (William Blair): What are the synergy opportunities with Star Waste regarding disposal and internalization?
    Response: Initial synergies focus on route optimization using Casella's trucks to Star's transfer station. Long-term internalization opportunities exist, especially if additional landfill capacity is developed in New Hampshire.

  • Question from Trevor Romeo (William Blair): What are the incremental margins for the high-growth national accounts business?
    Response: National accounts has mid- to upper-single-digit EBITDA margins, which are lower than the overall company margin but accretive to EBITDA margin if pulled out, due to low capital investment and strong alignment with sales efforts.

  • Question from Tyler Brown (Raymond James): What drove the acceleration in landfill pricing from 2.5% last quarter to 4.3% this quarter?
    Response: Improved sales process discipline and management, plus easing of prior competitive pressure from a rail move out of New Jersey that had created downward pressure on pricing.

  • Question from Tyler Brown (Raymond James): How should we think about Q2 margins given seasonality and dilutive factors like acquisitions and fuel?
    Response: Q2 margins are typically better sequentially but face headwinds from fuel surcharges and dilutive acquisitions; base business is expected to be margin positive, but overall company margins may be slightly down YOY.

  • Question from Tyler Brown (Raymond James): How will the closure of Massachusetts ash landfills impact the market and Casella?
    Response: Ash must go to Subtitle D landfills, creating capacity demand. Casella sees value in handling these streams and has a rail option (McKean) that fits well, supporting long-term pricing power due to Northeast supply-demand imbalance.

  • Question from James Schumm (TD Cowen): What is the longer-term view on Northeast landfill pricing given rail moves and closures?
    Response: Landfill pricing has historically been mid-single digits; management is confident it can sustain those levels, supported by a positive supply-demand backdrop as in-market capacity is limited and rail alternatives are expensive.

  • Question from James Schumm (TD Cowen): What are the ultimate collection margins possible in the Mid-Atlantic without landfills?
    Response: Vertically integrated collection in the Northeast generates ~30% EBITDA margins. Mid-Atlantic margins are currently ~20% due to work needed on fleet, density, and routes; target is to improve toward 30% over time by building transfer assets and efficiency.

  • Question from Tami Zakaria (JPMorgan): How does acceleration in CPI impact your pricing, and is there a typical lag?
    Response: CPI impacts pricing, especially for municipal contracts, but 75% of collection is open market with flexible pricing. Management reacts dynamically to cost profiles and market conditions, not solely to CPI.

  • Question from Shlomo Rosenbaum (Stifel): What drove the improvement in third-party landfill pricing, and what is the risk of new rail competition?
    Response: Pricing improvement driven by better sales pipeline management and easing of prior rail competition pressure. New rail capacity faces significant capital and operational constraints, making it unlikely to disrupt the market cheaply, and existing rail is viewed as a defensive, not merchant, strategy.

  • Question from Shlomo Rosenbaum (Stifel): What drove the better-than-expected EBITDA margin expansion in the quarter?
    Response: Lower maintenance and equipment rental costs in the Mid-Atlantic due to successful truck deliveries and system integration, allowing cost synergies to materialize ahead of schedule.

  • Question from Shlomo Rosenbaum (Stifel): How were the cyclical volume indicators in the quarter?
    Response: Roll-off volumes were down slightly (~3%), potentially impacted more by weather than economy. C&D volumes were up 13%, while special waste volumes showed weakness, possibly due to weather or economic factors.

  • Question from Harold Antor (Jefferies): Will pricing remain consistent at ~5% for the rest of the year, and how is churn performing?
    Response: Pricing expected to remain consistent, supported by Mid-Atlantic system improvements enabling better pricing intelligence. Churn is improving; digital customer engagement (e-commerce) is the fastest-growing sales channel, now covering 60% of markets, expanding to 100% in Q3.

  • Question from William Grippin (Barclays): How are you balancing leverage versus further tuck-in M&A after the Star Waste acquisition?
    Response: Pro forma leverage is ~2.75x, providing capacity to potentially increase further, but management aims to maintain moderate leverage. With ~$500M in available liquidity, the pipeline is healthy and they remain opportunistic.