Casella Waste Systems, Inc. (CWST) Income Statement

The 16.9% YoY growth in 2026Q2 builds on a 9.6% increase in 2026Q1, indicating sustained momentum. This appears to be fueled by the Mid-Atlantic expansion and continued price-over-volume strategy, though organic volume contributions remain unclear. Investors should monitor whether growth can persist as acquisition integration costs subside.

The 17.5 percentage point sequential jump in gross margin is unusual and suggests possible accounting adjustments or mix shifts, possibly related to recycling commodity prices or internalization rates. Despite the improvement, the average gross margin over the last four quarters is roughly 20%, still trailing national peers, implying structural cost disadvantages or a higher proportion of brokerage revenue. This warrants close scrutiny of segment profitability.

Despite a 18.9% sequential revenue increase, operating margin improved only modestly, suggesting that variable costs and integration expenses are absorbing the incremental revenue. The lack of consistent operating leverage is evident when comparing 2025Q3's 7.0% operating margin to 2026Q2's 3.7%, despite similar revenue levels. This implies that cost control and synergy realization are not yet fully offsetting acquisition-related drags.

The high and volatile COGS ratio, particularly in 2026Q1 at 84.6%, suggests that input costs such as fuel, labor, and third-party disposal fees are pressuring margins. SG&A data is missing for 2026Q2 and 2026Q1, which limits analysis, but when reported, it has ranged from $44.3M to $57.2M, showing no clear economies of scale. This cost structure implies that management's ability to pass through price increases is critical to margin recovery.