RUTLAND, Vt. - Casella Waste (NASDAQ:CWST) Systems, Inc. (NASDAQ:CWST), a regional waste management services company, has announced a definitive agreement to acquire Royal Carting and Welsh Sanitation, along with related real estate assets. The transaction is anticipated to be finalized in the fourth quarter, pending customary closing conditions and regulatory approvals.
The acquisition will include two solid waste collection operations and two transfer stations located in New York’s Middle and Lower Hudson (NYSE:HUD) Valley regions and western Connecticut. This strategic move is set to expand Casella Waste's service territory into new markets adjacent to its current operations. The company expects the acquisition to produce over $90 million in annualized revenues, with a significant portion derived from commercial collection services. Additionally, the waste volumes are projected to be internalized into Casella’s existing landfills over time.
John W. Casella, Chairman and CEO of Casella Waste Systems, expressed confidence in the acquisition, citing the company’s 30-year working relationship with Royal and praising the Panichi family’s commitment to customer service and community support. Emil Panichi, Chairman of Royal, endorsed the acquisition, highlighting Casella's suitability to continue Royal's tradition of environmentally responsible service.
The integration of Royal is seen as an opportunity for organic growth for Casella Waste. The company also emphasized the importance of continuing Royal's legacy of excellent customer service and operational excellence, as well as providing new opportunities for Royal's employees.
Casella Waste Systems, Inc., headquartered in Rutland, Vermont, offers resource management services to various customer segments in the eastern United States, including solid waste collection and disposal, transfer, recycling, and organics services.
The forward-looking statements in the press release indicate Casella’s intentions and expectations regarding the acquisition's benefits and its impact on the company's future operations. However, these statements are subject to risks and uncertainties that could affect the actual outcomes.
This news is based on a press release statement from Casella Waste Systems, Inc.
In other recent news, Casella Waste Systems is set to record a $9 million charge in the third quarter of 2024 following the issuance of a landfill closure permit by the Massachusetts Department of Environmental Protection. This charge is expected to cover the costs of environmental monitoring and inspections post-closure. In financial developments, Casella Waste Systems reported a 30.2% increase in revenue for the second quarter of 2024, reaching $377.2 million, with adjusted EBITDA rising by 26.9% to $91.6 million. However, adjusted net income decreased to $12.5 million due to unexpected costs.
Analysts from Jefferies and Stifel maintain a Buy rating on Casella Waste, with Jefferies setting a price target at $124.00 and Stifel at $117. Deutsche Bank (ETR:DBKGn) retains a Hold rating but increased the price target to $114. The company's recent strategic investments, including a $20 million investment in Boston's Material Recovery Facility, and acquisitions in the Mid-Atlantic region, have been highlighted by analysts.
Casella Waste Systems has revised its revenue and EBITDA forecasts upwards by $40 million and $10 million, respectively, following two significant mergers and acquisitions in the mid-Atlantic region. Despite the revised forecasts, the company anticipates a decrease in solid waste volume of 1-2%, but expects solid waste price growth at the upper end of 5% to 6%. These are the recent developments for Casella Waste Systems.
InvestingPro Insights
As Casella Waste Systems, Inc. (NASDAQ:CWST) gears up to expand its operations through the strategic acquisition of Royal Carting and Welsh Sanitation, it's important for investors to consider the company's financial health and market position. Casella Waste Systems is currently trading at a high earnings multiple, which suggests that investors have high expectations for the company's future growth. This is corroborated by the company's significant revenue growth, with a 27.76% increase over the last twelve months as of Q2 2024. Additionally, Casella has been profitable over the last year, which aligns with analysts' predictions that the company will maintain profitability this year.
InvestingPro data shows that Casella Waste Systems has a market capitalization of $6.02 billion and is trading close to its 52-week high, at 95.33% of that peak. The company's P/E ratio stands at 178.66, reflecting investor confidence in its earnings potential. Moreover, with a Price/Book ratio of 5.8, the market acknowledges the company's asset value, even as it trades at a high valuation. Investors should note that Casella operates with a moderate level of debt, which, coupled with its liquid assets exceeding short-term obligations, suggests a stable financial footing for pursuing acquisitions like the one at hand.
For those seeking a deeper dive into Casella Waste Systems' prospects, InvestingPro offers additional insights. There are 14 more InvestingPro Tips available, which can provide a comprehensive outlook on the company's performance and valuation. For detailed analysis and further tips, visit https://www.investing.com/pro/CWST.
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