Casella shares rise about 4% after Jana discloses stake, calls for improved profitability
Key Facts
Jana Partners disclosed a new investment in Casella Waste Systems, accompanied by demands to improve profit margins and returns on invested capital, according to Reuters. Scott Ostfeld outlined the activist investor's demands at a summit for active and passive investors in New York, Investing.com reported. Central to those demands, Jana wants Casella to publicly commit to an earnings before interest, taxes, depreciation and amortization margin of 27% by 2029. Its compensation demand calls for closer alignment between the company's pay and shareholder value, according to Reuters' report on the new investment. Ostfeld also urged Casella to hire a consulting firm specializing in performance improvement to help it catch up with its publicly traded peers.
Ostfeld raised the prospect of a takeover of Casella in his assessment of the company, saying it could be an "attractive acquisition target," Reuters reported. He based that assessment on the company's low valuation and strong position in the northeastern United States. Casella provides waste collection and disposal services, according to the description on its investor relations website. Its services also include waste transfer and recycling, as well as organics-related services, as part of its operations in the eastern United States. The company is headquartered in Rutland, Vermont, while Ostfeld cited its regional presence, alongside its low valuation, among the reasons for its potential appeal to buyers.
Jana's demands follow results showing revenue growth at Casella in the second quarter of 2026 alongside a decline in net income from the year-earlier period. Revenue totaled $543.7 million in the quarter, according to the company's earnings release filed with the U.S. Securities and Exchange Commission. That represented a year-on-year increase of 16.9%, according to the comparison Casella provided in its release on the period's performance. Net income was $3.8 million, compared with $5.2 million in the second quarter of 2025, according to the same release. The company reported adjusted earnings before interest, taxes, depreciation and amortization of $123.2 million in the second quarter of 2026, in results that preceded Jana's disclosure of its investment.
Casella's management attributed second-quarter revenue growth to a combination of acquisitions, pricing and business volumes, according to the earnings release. Those factors included acquisitions' contribution to the company's growth during the period, according to management's explanation of quarterly performance. Management also cited price increases for waste collection and disposal services among the quarter's revenue growth drivers. On activity volumes, Casella pointed to higher landfill volumes as another factor supporting revenue during the period. It added growth in its national accounts business to the performance drivers, alongside the acquisitions, price increases and higher landfill volumes listed in its second-quarter earnings release.
On costs, Casella's management said floating fuel recovery fees offset higher fuel costs during the second quarter, according to the earnings release. It said, however, that those fees weighed on its adjusted EBITDA margin. In trading on Tuesday, 20 October 2026, the company's shares quickly rose about 4% following Jana's disclosure of its investment, according to Investing.com. The move followed the disclosure of the investment accompanied by Ostfeld's demands on profitability, compensation and improvements in the company's operating performance. Casella did not immediately respond to Reuters' request for comment on Jana's move, according to the news agency, which reported the activist investor's demands and his assessment of the prospect of other parties acquiring the company.
Casella is scheduled to report its third-quarter 2026 results in November, according to the company's announcement on its investor relations website. The company set 9 November 2026 as the release date, with the announcement due after the market closes that day. A conference call to discuss the results will follow their release, according to the schedule Casella announced to investors for its next quarterly disclosure. The call will take place on 10 November 2026, the day after the third-quarter results are announced following the close of trading. The company set 10:00 a.m. U.S. Eastern Time as the start time for the earnings call, according to its announcement of the results release date and accompanying conference call arrangements.