garbage business is complicated stuff

Posted on by mcooper

Casella Waste Systems Inc.’s new operations chief believes the company’s future success depends on those closer to the customer.

Newly installed Chief Operating Officer Ed Johnson replaced Paul Larkin, who left the company amid the release of what the company called disappointing financial results. And the new COO is banking on the ability of local employees to do their jobs.

“I believe that success in the waste business is dependent on the strength of our local management teams and their ability to manage and develop our businesses in their markets,” Johnson said on his first conference call as COO.

“They need to have the clear responsibility and authority to make the decisions in their markets, but with that comes clear accountability,” he said.

Johnson had been chief financial officer at Rutland, Vt.-based Casella Waste since 2010, following a stint in the same position for Waste Services Inc. prior to that company’s purchase by Progressive Waste Solutions Inc.

He takes operational control of a firm that has been trying to turn the corner for years.

“What is particularly frustrating is that the operating and economic environment remains unpredictable, difficult and stagnant, often canceling out the impact of the hard work that we have been aggressively doing to put the company in a position to succeed,” CEO John W. Casella said on the same call.

“We’ve taken smart, aggressive steps in the areas of the business within our control every day, doing the things that we believe should allow us to harvest value from our assets. Yet a stagnant, uncertain economy is creating headwinds,” Casella said.

That’s where the leadership change comes in.

“The board and I have immense faith that Ed will provide new direction and effective leadership to our operations. Ed’s vision for the organization is to further the states that we took this summer to simplify our business structure and move operational control to our local management teams,” the CEO said.

News of the leadership change comes as Casella Waste reported a net loss attributable to common shareholders of $21 million, or 68 cents per common share, on revenue of $120.3 million for the company’s second fiscal quarter which ended Oct. 31. That compares with a net loss of $800,000, or 3 cents per share, on revenue of $129.9 million for the same quarter last year, the company said.

This quarter’s loss includes $1.8 million related to severance and reorganization changes, $9.7 million related to debt extinguishment, $3.9 million from what the company called “derivative instruments” and $100,000 in expenses related to its Maine Energy Recovery Company waste-to-energy plant.

Excluding one-time charges, the net loss would have been $5.7 million, or 18 cents per share, for the most recent quarter. Stock analysts had predicted a loss of 13 cents per share for the quarter, according to Yahoo Finance.

“I believe that this change will provide a much-needed cultural shift to improve accountability throughout the organization to get us on track,” Casella said.

The company also named Ned Coletta as chief financial officer and senior vice president. He previously was vice president of finance and investor relations.

Casella Waste, meanwhile, finalized sale of its Maine Energy Recovery Co. waste-to-energy plant to the city of Biddeford, Maine, on Nov. 30. Biddeford, which wants the site closed, will pay $6.65 million over 21 years. The community entered into a 10-year waste handling agreement with Casella Waste as well as a 10-year recycling deal.

The plant will be dismantled and waste directed to that site will go to other company landfills. CasellaWaste can continue to operate the incinerator for up to six months following the sale.

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