RUTLAND, Vt.—Casella Waste Systems Inc. is selling its tire recycling business despite long-term commitments for its crumb rubber output as the company cuts its losses and keeps its solid waste operations.
In a further attempt to focus on its solid waste operations, Casella also has for sale its business units involving ash recycling, wood waste recycling, waste remediation and plastic recycling. The company expected to divest the assets over the next three months. Officials expect $50 million in proceeds from the sales.
"Our unequivocal focus is to build on our roots as a strong, integrated regional waste services franchise, shaping a company poised to generate stronger, more predictable financial performance," said CEO and President John W. Casella during an announcement in early March that also discussed the company's third-quarter earnings.
Casella has cut its pretax earnings expectations by more than half to $16 million. Casella's 2001 fiscal year ends April 30.
Casella already has sold its share in the cellulose insulation business purchased in the 1999 acquisition of KTI Inc., which lost $1 million in the first quarter of 2001.
In its third-quarter results, Casella reported a net income of $70,000 and revenue of $120.8 million.
The company has signed an agreement with an unnamed investor group to buy the tire recycling sector of the business. The deal is subject to the usual due diligence review.
"While the scrap tire recycling business possesses significant growth potential, clearly it is not consistent with our core traditional solid waste businesses," Mr. Casella said.
The decision comes even though Casella already sold its crumb rubber output for the next three years.