Casella Waste (CWST) Q3 2025: Acquisition-Driven Revenue Jumps 18% as Margin Expansion Regains Momentum
Casella Waste’s Q3 2025 results show the company’s acquisition engine accelerating, with organic growth and landfill internalization supporting margin improvement despite initial dilution from new deals. The Mid-Atlantic integration is now a tailwind, and leadership transition is underway, with a clear focus on operational leverage and disciplined capital deployment for 2026 and beyond.
Summary
- Acquisition Integration Drives Scale: Recent deals contributed materially but diluted margins, setting up future efficiency gains.
- Mid-Atlantic Segment Flips to Tailwind: Operational headwinds have abated, positioning the region to support margin expansion in 2026.
- Leadership Transition Signals Continuity: Incoming CEO emphasizes process, systems, and disciplined growth as margin levers strengthen.
Performance Analysis
Casella Waste’s third quarter results reflect a business model built on recurring solid waste services, landfill operations, and a growing resource solutions segment, with M&A as a core lever. Total revenue climbed nearly 18% year-over-year, with acquisitions providing the bulk of incremental growth, while organic gains of nearly 5% underscore underlying demand resilience. Solid waste, the company’s largest segment, saw pricing up 4.6% and landfill volumes up 11.7%, driven by both internalization—moving acquired or third-party waste into Casella-owned landfills—and increased third-party activity. Resource solutions, which includes recycling and national accounts, managed commodity price headwinds with contract structures that limit revenue downside.
Adjusted EBITDA rose 16%, with same-store margin expansion of 70 basis points in the core business offset by a 100 basis point dilution from newly acquired lower-margin businesses. The Mid-Atlantic region, previously a drag, now shows only a minimal margin headwind, with integration, automation, and new truck deliveries expected to drive $5 million in annualized savings in 2026. Free cash flow reached a record for the first nine months, and the balance sheet remains robust with net leverage at 2.34x and a fully undrawn revolver.
- Landfill Volume Internalization: Nearly 20% growth in internalized landfill volumes boosts profitability and reduces third-party disposal costs.
- Resource Solutions Resilience: Contractual fee structures offset recycling commodity price declines, limiting revenue impact to $1 million despite a 29% drop in average recycled commodity revenue per ton.
- Acquisition-Driven Growth: Eight acquisitions year-to-date added $105 million in annualized revenue, with another $30 million pending from Mountain State Waste.
Casella’s approach to M&A—acquiring lower-margin businesses and systematically lifting their profitability—remains intact, with the company confident that margin accretion will resume as integration progresses and operational synergies are realized.
Executive Commentary
"Our solid waste operations delivered strong performance with pricing and landfill volumes continuing to drive margin expansion on same store basis. Integration of the Mid-Atlantic businesses is progressing well with systems conversions and fleet optimization initiatives positioning the segment for further gains in Q4 and well into 2026."
John Casella, Chairman & Chief Executive Officer
"On the adjusted EBITDA line, we'll target 25 to 50 basis points of overall margin improvement, driven by pricing actions in excess of underlying cost inflation, operating enhancements in the Mid-Atlantic, including route synergies and automations... and the rollover contribution from acquisitions."
Brad Helgeson, Chief Financial Officer
Strategic Positioning
1. Acquisition Integration and Margin Expansion
Casella’s acquisition strategy remains the primary growth engine, with a disciplined approach to integrating new businesses. Newly acquired operations typically enter at sub-20% EBITDA margins compared to Casella’s 30% average, but management expects to lift these margins by 500 to 1000 basis points over time through process standardization, cost synergies, and internalization of volumes. The company’s robust pipeline, representing $500 million in annualized revenue, provides visibility and optionality for continued expansion.
2. Mid-Atlantic Turnaround and Systems Modernization
The Mid-Atlantic segment, previously a source of operational drag, is now positioned as a margin tailwind for 2026. Key to this turnaround is the migration of all acquired businesses onto Casella’s core billing and analytics systems. This enables targeted pricing, route consolidation, and rapid deployment of automated trucks—over 60% of new deliveries are automated—which together drive labor and maintenance savings. The company expects full systems integration by early Q1 2026, unlocking further efficiency and pricing levers.
3. Landfill Capacity and Permitting Pipeline
Casella is advancing major landfill expansion projects at Highland and Hakes in New York, aiming to double permitted capacity at Highland and add decades of life at both sites. These expansions are timed to coincide with expected regional landfill closures, positioning Casella to capture displaced volumes and increase internalization rates. The McKean rail facility upgrade will further support waste flows and operational flexibility in the Northeast.
4. Resource Solutions and Risk Management
Resource solutions—recycling, processing, and national accounts—remains resilient despite commodity price volatility, thanks to contractual risk-sharing mechanisms like floating processing and SRA (Sustainability Recycling Adjustment) fees. Upgrades at the Willimantic facility and strong national account growth offset recycling headwinds, and the company continues to invest in automation and technology to further stabilize and grow this segment.
5. Leadership Transition and Organizational Bench Strength
The transition from John Casella to Ned Coletta as CEO marks a generational handoff, with continuity in strategy and an emphasis on process improvement, systems modernization, and disciplined capital allocation. The company has strengthened its integration and corporate development teams, learning from recent challenges and reinforcing its M&A playbook for future scale.
Key Considerations
Casella’s Q3 demonstrates the company’s ability to drive profitable growth through disciplined M&A, operational leverage, and strategic capital deployment, even as integration of acquired businesses temporarily pressures reported margins.
Key Considerations:
- Acquisition Margin Drag Is Temporary: Recent deals initially dilute margins, but integration and internalization are expected to drive meaningful accretion over the next several years.
- Mid-Atlantic Integration Is a Key 2026 Lever: Systems conversion and automation will unlock both cost and pricing synergies, with $5 million in identified annual savings and more to come.
- Landfill Expansion Timing Aligns with Regional Closures: New York landfill expansions are set to come online as regional capacity exits, supporting future volume and pricing power.
- Resource Solutions Mitigates Commodity Volatility: Contractual fee structures limit the downside from recycling price swings, providing stability in a volatile market.
- Leadership Transition Emphasizes Process and Discipline: Incoming CEO Ned Coletta brings a focus on systems, analytics, and scalable integration, reinforcing Casella’s core strengths.
Risks
Casella’s growth model is exposed to integration execution risk, particularly as larger or more complex acquisitions are absorbed. Systems migrations, while progressing, could delay the realization of pricing and operational synergies if not completed on schedule. Regional landfill permitting remains subject to regulatory uncertainty, and commodity price swings in recycling, while mitigated, still pose some revenue volatility. The company’s ability to maintain disciplined capital allocation and avoid overextension as it scales will be critical for sustaining long-term returns.
Forward Outlook
For Q4 2025, Casella guided to:
- Seasonal revenue moderation due to acquisition anniversaries and typical year-end patterns
- Continued Mid-Atlantic integration progress and incremental margin contribution
For full-year 2025, management raised guidance midpoints for:
- Revenue to $1.835 billion
- Adjusted EBITDA to $420 million
Management highlighted several factors that will shape 2026:
- Organic growth of 4–5%, driven by solid waste pricing and landfill internalization
- Additional 3% revenue growth from acquisition rollovers, including Mountain State Waste
- Targeted 25–50 basis points of margin expansion, with Mid-Atlantic a net contributor
- Cash flow growth in the 10–15% range, in line with long-term targets
Takeaways
Casella is executing on a proven playbook of acquisition-driven scale, operational leverage, and disciplined integration, with near-term margin dilution offset by a visible path to accretion as systems, automation, and pricing levers are deployed.
- Acquisition Cadence Remains Robust: The company’s $500 million pipeline and strong balance sheet support further expansion, but integration discipline and margin lift are essential for value creation.
- Mid-Atlantic Is Now a Margin Tailwind: As systems conversion completes, the region will contribute to consolidated margin expansion in 2026 and beyond.
- Landfill Capacity and Internalization Are Strategic Moats: Timely permitting and capacity additions will enable Casella to capture displaced volumes and boost profitability as regional closures accelerate.
Conclusion
Casella Waste exits Q3 with accelerating revenue, a clear integration roadmap, and a leadership transition focused on operational discipline and scalable growth. Margin expansion is poised to resume as integration and automation initiatives gain traction, and the company’s M&A pipeline and landfill expansions provide long-term visibility for investors.
Industry Read-Through
Casella’s results underscore the importance of disciplined acquisition integration and operational leverage in the waste management sector, especially as regional landfill capacity tightens and recycling volatility persists. Competitors with robust internalization strategies and risk-mitigated recycling contracts are better positioned to weather commodity swings. The increasing use of automation and systems modernization is becoming a sector-wide differentiator for margin expansion. Landfill permitting and capacity management will remain a key battleground as Northeast markets face structural disposal constraints, with Casella’s timing providing a potential blueprint for regional peers.