Castella Waste Systems, Inc reported 2nd quarter financial results today. Revenues increased by $7 million compared to the 2nd quarter of last year, rising 4.7 percent to come in at $157.5 million. Net income was down slightly compared to the 2nd quarter results last year, with earnings of $2.1 million or .08/share versus last year’s second quarter results of $2.8 million or .11/share.
John W. Casella, Chairman and CEO, issued the following comments on the results:
"Since the northeastern U.S. economy first began to slow in July 2006, we have taken steps to better position our business to perform well in this uncertain economic environment. We continue to execute well against factors that we can control by combining our successful cost reduction initiatives from the past 18 months with operating programs that enhance productivity and asset utilization."
"These efforts are currently offsetting economic pressures in our solid waste group, with performance in the quarter driven by increases in landfill volumes, improved operating performance of the hauling operations, and roll over impacts from the successful divestiture program of under-performing assets," Casella said.
"While it is difficult to fully assess the potential economic impacts from the financial market turmoil, the recession-resistant qualities of our integrated solid waste group will help our business maintain stability," Casella said.
"The global slowdown is negatively impacting recycling commodity pricing," Casella said. "However, our commodity risk mitigation programs are dampening pricing exposure through the use of hedging agreements, floor price contracts, and long-term supply contracts with customers."
A reputable stock market analysis firm thestreet.com criticizes Casella for their poor debt management. The following paragraph is taken from thestreet.com’s Casella (CWST) review dated 11/17/08.
“The debt-to-equity ratio is very high at 4.40 and currently higher than the industry average, implying that there is very poor management of debt levels within the company. To add to this, CWST has a quick ratio of 0.67, this demonstrates the lack of ability of the company to cover short-term liquidity needs.”
The implications of Casella’s poor financial status and debt management problems are far reaching.
Separate from Casella’s financial problems, environmental concerns continue to worsen at the Bethlehem landfill. October 15th tests results indicate Bromide in well 913M nearly doubled since tested September 15, (Bromide levels rose from 0.29 to 0.55 mg/l). October 15th results for welll 921U show no decrease from its alarmingly high bromide level of 1.1 mg/l.