Casella Waste Systems CEO Turns Trash Into Treasure Over Four Decades
John Casella, the Casella waste systems (CWST) CEO and Chairman, hard work, even when dirty, pays off. It could take some time, which he has been proving for 44 years.
69-year-old Casella turned the small garbage transport company his brother founded in the mid-1970s into a power plant valued at more than $ 3 billion. And it’s also a money machine, with gains that routinely outperform the S&P 500 annually.
It looks easy now. The company, based in rural Vermont, operates in six northeastern states. The company owns or operates nine landfill sites, 58 transfer stations and 49 collection points for solid waste and recycling. Not to mention four landfill gas energy plants and 20 recycling centers. Around 4 million tons of waste are currently picked up every year. And Casella turns all of this into an annual profit of more than $ 30 million a year.
But it was a tough drive to get there. And careful management was required. Casella’s takeaway food? Make sure you reward people who are willing to put in the work. His goal was to build his 2,500-strong team by rewarding commitment and “creating a culture of serving one another and then serving customers,” Casella told Investor’s Business Daily.
Get results like the CEO of Casella Waste
For many companies, going public is the end game. But it was only the beginning of Casella’s attempts – and the ultimate success. And success was far from guaranteed.
Casella Waste went public on October 29, 1997 at a price of $ 18 per share. However, the company struggled in many of its early years as a public company. Until 2009 the company was overwhelmed. It had too much debt and too many companies “outside of its core competency,” said Casella. Shares fell below $ 1 in 2009.
Some wrote off the company. But not Casella. Casella Waste has made progress over the past 10 years. The shares trade near $ 60 per share. That has increased by more than 700% in the last ten years. Amazingly, the stock outperformed the S&P 500 exponentially, rising only about 200% in that time. Sales have increased more than 70% in the last 10 years, a rare source of growth in a slow growing industry.
Now the company has “the highest market share in the northeast landfill market and thus the pricing power,” said Hamzah Mazari, an analyst at Jeffries. And more will come, he says.
“We believe there is more than $ 400 million (additional revenue) in their (acquisition) pipeline and only in their existing markets,” said Mazari. Including targets outside of its existing markets, Casella could consider potential revenue of $ 1 billion from future acquisitions.
See success where others see pain
The rewards are rich now. But it didn’t look like that 11 years ago.
Casella Waste’s share price crashed in March 2009. The company later survived a hostile takeover attempt led by an investor.
“When I was with Republic, I got a different email every week about how to get rid of trash,” said James O’Connor, a director of Casella Waste and former CEO of Republic services (RSG), a waste disposal company. “John explored too many of these areas.”
As the company reformed, “John took to the streets and met with big investors,” said O’Connor. “John is a good, calm communicator. He takes criticism well – he takes it to heart.” Casella listened and then refocused and restructured. He sold some businesses, replaced some people, and cleaned up the balance sheet.
Take a bigger chance
Casella looks natural now. But he wasn’t beginning to think he was in the trash business. He knew an opportunity when he saw one.
After high school, Casella rented ski resorts in Vermont for five years. He loved the job and the freedom to go skiing in the afternoon. But he saw a way to build something bigger.
In 1976, his younger brother Doug invited him to join the young Casella Waste Systems. It was a garbage haulage company with only one truck. Doug started the company the previous year. Although small, the young outfit immediately started innovating. In 1977, Casella said Doug “bought a cardboard baler and started the first recycling program” in the Vermont waste market.
But from then on, the older Casella took on a bigger role. He found ways to grow the company. Casella was President from 1993 to 2001. He has been CEO since 1993. This is a rare testimony. Talk about a leader who works even harder in difficult times.
“It is very rare for a CEO to make it to the end,” said Gregory Peters, an early investor in Casella Waste and a former board member who went from a tiny family business to a public company. “He’s loyal to his people and people will take to the mat for John.”
Tap your humble roots
Casella knows her way around hard work. His family settled in the small town of Rutland, Vt., In the early 1950s after leaving Yonkers, NY. His mother ran a motel and his father worked in construction.
The three children were expected to help out in both companies and continue their schoolwork. “We really understand what it is to work hard,” said Casella.
But he also says his parents didn’t levitate. “Our parents have always given us a lot more responsibility than our age deserves.”
After high school, Casella graduated from Bryant & Stratton College. He then attended Castleton University, where he received a BS in Business Education.
And then he went to work at the Killington Mountain Resort & Ski Area. He still remembers a great job. Casella took over the rental management in the morning and went skiing at noon. And he still had time to come back in the afternoon to check in guests.
Still, John’s property was in business. He knew he could do more.
Dumpster diving amid the challenge
Casella’s job is to help Casella Waste to succeed in spite of uninterrupted challenges. Waste management is subject to regulations. Cleaning costs and contractual disputes (Casella Waste has paid fines for aggressive contracts) arise. And then there are international recycling shipments, politically polluted landfill permits and more headaches.
That is not to be forgotten, big competitors like to take over Waste management (WM) and Waste connections (WCN). According to Casella, the contracts are no more aggressive than those of the competitors. And he says it’s an environmentally conscious company that “has reduced greenhouse gas emissions from all of its facilities and landfills by 50%”.
However, filling key positions is just as important as filling dumpsters. The company is recruiting former military personnel and recent high school graduates as mechanics and drivers. Casella Waste even built its own training center for commercial driver’s licenses. “We’ll provide this license and pay for the course when students serve us for a year after graduation,” said Casella.
Put people first
Difficult situations arise all the time in the industry. But usually people are the answer, says Casella. And that’s a long-term view of management.
Casella makes hardworking employees move up. Drivers who stay can quickly move up to higher wages. According to Casella, employees can be hired as rear loaders and then trained as front loaders. This leads to becoming a rollout driver (who picks up large containers from construction sites) and then a trainer for other drivers.
“They can go from $ 18 an hour to $ 35 an hour in five years,” Casella said. “We’re building career paths for every position in the company,” he said.
Find new growth
Casella could simply say that garbage is not a growth industry. But instead he finds solutions.
As of 2018, Casella Waste has completed 28 acquisitions, nine in 2020 alone. Now “they have overcapacity in a region where landfill capacity is very scarce,” noted Sean Eastman, analyst at KeyBanc Capital Markets. Casella also launched a new professional services division to “help customers meet their sustainability goals,” he said.
But he knows that good managers also know their place. The company headquarters keeps out of daily customer relationships. “We make sure we don’t take customer care off the field, because that’s where it belongs,” he said.
Garbage is relentless – pickups never stop. Sorting and recycling continues every day. A successful waste company must be relentless to pursue growth and innovation in equal measure. “We are on a journey; there is no destination,” said Casella.
Casella Waste Systems CEO Casella’s key
- CEO of Casella Waste Systems since 1993 (Chairman since 2001). The tiny family-run garbage collection company became a public company and one of Vermont’s largest employers.
- Overcome: Survived a hostile takeover attempt and major stock slump. He restructured Casella Waste after missteps in too many companies outside of the company’s core competencies.
- Lesson: Build a career path for each employee. “We are on a journey; there is no destination.”
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