CWST - Earnings call transcript Q3 2019 | Casella Waste Systems, Inc.

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Operator

Ladies and gentlemen thank you for standing by. And welcome to the Casella Waste Systems Inc., Third Quarter 2019 Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation there will be a question-and-answer session [Operator Instructions].

I would now like to turn the call over to Mr. of President Vice Fusco, Communications. Joe Thank you.

Joe Fusco

President for welcome. of and you Officer Senior Casella Johnson, Vice this Coletta, Chief Officer; and Jason morning us today of Mead, our Ed Systems; Officer; us President With Waste Chief are our Finance. Executive Operating Ned Thank Chief joining and Financial John and and Chairman Casella, Director our

review discussing results along environment, be your will activities our those brief were with yesterday we quarter company’s These as XXXX questions an Today, results. we and and released afternoon a the answering update of results third well. will on be business and

and you of Securities remarks I make Litigation company’s Provisions may Safe those prospects a first, remind in important those everyone differ Report XXXX. statements plans may by Harbor the forward-looking Private the which indicated know, on results for the Factor Form Risk the including constitute that as the as statements, most under factors, forward-looking purposes file we of Reform XX-K, that various the section materially recent Actual SEC. with about of But on our expectations, Act must Annual various of those from is result discussed future

represent addition, upon should date. not of as as as our be representing forward-looking In any of statements subsequent any relied only views today and our views

any any to do forward-looking relied views update to forward-looking to date of future, some disclaim be should These point specifically at views today. not representing elect upon statements may we While subsequent our even obligation statements if change. as the we as so our in

our Accounting are non-GAAP accordance Generally financial with prepared at section non-GAAP the in extent our without website which the to the slide directly the available are call, in during we to unreasonable ir.casella.com Also, of Reconciliations appendix of in comparable to available be the most referring available the are not Principles. Investors measures non-GAAP effort, Investor they to presentation, financial measures, GAAP These measures. is measures will Accepted

it to Casella turn And discussion. with John begin I’ll today’s who’ll that, over

John Casella

good and our welcome to quarter call. Joe, Thanks and XXXX morning, conference everyone third

with We key of and and far execution our results in be continue our to XXXX. thus XXXX performance our pleased strategies with plan against

revenues bitter were up Our adjustment from XX.X%, and last quarter respectively third and a XX.X% year.

solid of XX Where strategy. core operational strong and programs. solutions and waste, we to eight million for of business recycling, focused in base Our advance highly on acquisition customer remain $XX have year-to-date, as pricing we business $XX grow million the approximately We with annual as businesses continue disciplined key our our acquisitions XXXX. exceeding through million acquired to target we revenues remains

the completed Four these in third acquisitions of were quarter.

revenue these X% rollover Given XXXX, the from in timing acquisitions growth we of a contribution in the impact. XXXX expect

an strategies to plan in as update would provide the our consistent plan, As were which like of analysis the August XXXX. I key five with XXXX past, on with a of

landfill strategy first Our increasing returns.

we are our price the and and find We to in the volumes key pricing enhance continuing operational execution, prices capacity new price landfills to to at higher permits. returns environment remains driving The advance sourcing programs, in our constraint at continue of Northeast. efforts through strong, success

regulatory scarcity heightened these As and of recognize costs inflation. value we assets the

higher also overall continue to our blends pricing X.X% pricing. same replacing price price returns. as are enhances Landfill was which the in and quarter the price up time, customers, lower up we we At advance with robust tonnages

ton As in landfill such was quarter. per price the our up X.X% average

various as Ontario the resolve our landfill in diligently the order the half Notably at operating made site issues costs moderated, first work through to quarter, of the we third improvements. year and

will are challenges our the and high us, operational continue behind ensure we these standards. at that to site pleased are We operating

is site Waste facility our received shareholder quarter, in and we returns. Vermont. third much drive investment critical will Vermont’s outlet of an USA the for important permit at the expansion landfill significant also our The In waste in continued

area will extending yards line the XX the approximately site cubic life the of XX acres, space, XX.X expansion, this increase by For which by disposal about roughly air should years. of provide million

have expansion years of remaining several the operational is building capital we over out expansion current long-term project large the for construction the footprint, for million necessary began we during plan area. to While capacity the years, invest several next area. within $XX This unique infrastructure construction a the new of we recently as

our business. The profitability is driving within our plan XXXX in further second hauling strategy

price to as did Our get inflation the details teams key job and into continue advanced further quarter initiatives. great X.X% during and a will the operational continued on we advance offsetting recycling costs ensure hauling operational levels our disposal labor acquired collection efforts operations. process to highest hard time, and compliance, drive operating have At working of that the our reduced to excellence through Ed safety same the increased efficiency. we integrate we're incidents service, to

third solutions. resource The value strategy through

improved adjusted risk and XX% even year-over-year with versus roughly taking the recycling commodity the programs, quarter we down prices For speaks third year. last the the efforts This from of in the team. quarter, off our EBITDA fourth certainly to consecutive success entire

which to helps which with back our We through intercompany risk fully us and allows recycling from that global recycling in coupled declines commodity a program, to us is commodity third-party on processing our the to have markets recycling volatility customer risk insulate offsetting contract a volumes. the pass built infrastructure SRA structure,

X, back year-to-date of have to in the on past our not EBITDA on and in over risk commodity improve appropriate of customers. remain impacted level, adjusted Processing the to XXXX The to city recycling forecasts With we recycling we a million Boston declines an XX% now materially $X track prices reset recycling of by XXXX. contract market commodity recycling July our Recycling

ensure party restructuring as the contamination generate that program education focused we fee appropriate our customer the further return will on continue to our on assets, legacy recycling overtime, We are on recycling improving third contracts of remaining base. in -- an we

materials. upgrade and solutions performed equipment growth EBITDA organics in $XXX,XXX will adjusted two of the that reduce projects The operating our customer improve completed team with and also combined very the recycling have over quarter. cost We outbound of well, quality

plan profitable our is technology using growth. and in XXXX The fourth drive to efficient strategy

We progress the against further existing and have we cost scale initiative, to of continue processes. are reduce better drive made our we pleased out this as with

early significantly allowed upgrades with us grown success integrate to We’ve While our our teams. business launch and the automated new back case the system sales enable through of office management related not XXXX purchasing been to simplified to we better acquisitions, leverage headcount. also customer system, to CRM has and have NetSuite, which care to and experienced our better add processes, we’ve which able us

enhancing our and customers, overall their to experience. continue to target our improving will responsiveness We

Moving to is for balanced the allocating in growth. final the on strategy XXXX which plans capital

eight in We’ve strategy. roughly We continue very well to revenue of XXXX expected quarter, of acquisition acquisitions solid acquisitions against the annualized waste assets with to and Albany, $XX million. Massachusetts that produce year-to-date most the of in execute announced roughly the previously York the annualized select during Of revenue. Cheshire, million was the $XX from significant the the markets completed Services completed New four are Republic

transitioned operation This first to had assets well in our the is great fit months. a through strategic two and

take and operations solid in waste will hard fully acquired and and businesses integrate fully given In to quarter, new with York. to transfer over will the recognize. integrate teams existing this expect businesses collection a size working three synergies New Our market its year and we operations. These entry, we well are acquisition also complement

and forward continuing look We their customers, employees excellent to provide to team. service hard to to their we working welcome our

and half, all we’re in and we’re a across we’ve generating over the completed look pleased well the acquisitions, that year say last we expected As pro tracking most forma revenues. are against to cases,

focus Now, it’s operation on targeted achieving we operational the synergies a integrate expand and our margins. as

we of well our continue and our success, selectively to One further initiatives, important flow focus outlined was we opportunistically mid-term are area across our remains our specifically that will XXXX long-term free opportunity the market in acquisition and on plan, there in positioned growth. our further is our XXXX, We to continue markets. not at building continued to drive business is our and grow look ahead pipeline $XXX areas, Looking that over underlies but believe is cash to strong, in team. near-term very all of the to opportunities adjacent million

ensuring of our all on markets, is in by Casella engaging choice investing the pass in our career the the with employer focused for employees, development employees. actively that development We’re programs, and

efforts Our other drivers of towards attracting targeted and roles, operational through and their retaining in well a and programs maintenance variety working early innings. are technicians

that more and rigorous flow, We process our recruitment improved of stronger timely have job with the candidates. quality has achieved coupled a applicant

our help we’re of Resources of on-boarding and Human process a apprentice With the creating also in team, training platform. robust the

the committed have train to drivers safety develop years service technicians, for that CDL Our who of to level goal us to and programs company. high is many with our and apprentice own levels enable

success have to will enhance The yield hubs our should established initial success have incidents operations across our A related Resources which training in the company. and great trainees We driver within several CDLs has attracting the reduce received having of we helped initial of trainees the number open and fill their lower positions and productivity. Human strategy turnover, program. are safety

in driving is continued displays key reflected strategies of additional our as against a value. execution goal tracking our guidance shareholder in XXXX XXXX, of updated and XXXX up with plan, Wrapping our well

acquisition pipeline strength continued tailwinds. a expect We waste, robust in solid and recycling

to over I'll Ned. that, with And it turn

Ned Coletta

$XXX.X were XX.X% up John. driven Revenues million acquisition everyone. with million, year-over-year, activity. $XX.X or the quarter by $XX.X of third or Thanks, morning, million XX.X% the increase Good in

XX.X% of XX% acquisitions. revenues were and up $XX.X up waste Solid revenues million price this percentage growth with a solid down as driven waste X.X%, from X.X%, volumes of year-over-year or

Revenues line with X.X% of all up Acquisitions $XX.X business, growth. fees and $XX.X across E&E fee. volume the recovery price and of SRA of up risk million down drove million up slightly in business year-over-year, this the mainly X.X% lines collection were

retention pricing our been levels offset growth appropriate customer business disciplined heightened across and inflation pricing well balancing to Our new working has operations. strategy with very

the $X.X very landfill increase strong, million environment our year-over-year. average which the mentioned, in X.X% and price million the volumes. by year-over-year of up customers were and $X.X improve we year-over-year, disposal XXXX, resulted mix of the pricing we line a by headwind. of in landfills the November the X.X% Southbridge pricing The Revenues And john as per as of despite in at closure increased Landfill business ton reported remains we Landfill

up in as the during construction X.X% tons the closure, our the Landfill price maintaining still year-over-year Southbridge Chemung One were unexpected we quarter the while pricing higher discipline. volumes ramp summer delays strict at Landfill months, was landfill. Excluding headwind

August We ramping the in not week we're of originally volumes but until so able last anticipated to do and September. September,

the has quarterly Given able our since be Chemung this delay permit permit to maximize in will not landfill XXXX, limitations.

presents impacts it opportunity While forecast XXXX increase a to our for this delay XXXX. in great volumes negatively

$X.X by offset if to quarter cardboard, and XX% down year-over-year of from plastics sequentially X% processing down were slightly Commodity on of million volumes. in second of million down cardboard. revenues lower mix mainly pricing, mix quarter, lower higher the $X.X third $XXX,XXX on were prices Recycling and pricing. paper, declines they higher paper metals with third-party commodity And fees in the year-over-year were quarter and

Our strong growth margin in and organics on due up several revenues were group’s up revenues $XXX,XXX group. retail solutions to the the customer million high year-over-year services volumes and new were multi-site industrial year-over-year $X.X higher customers

quarter EBITDA in year-over-year. year-over-year. $X in quarter, margins XX.X% points the Adjusted XX million $XX.X was basis down were Adjusted up million or the XX.X% EBITDA

quarter. quarter, last fourth third quarter, a into we slight you'll that then margins ramping layout in margin the remember, As but headwind the expected we did

third landfill XX acquisitions margins closure last Southbridge by we while months pressured basis and negatively work drive additional XX XX synergies. as in by the to points, operations The integrate in margins basis impacted completed quarter points,

the XXX items, year-over-year. two basis margins for these points excluding up remainder business of were So the

one note EBITDA was by the EBITDA disposal $X.X $X strong driven inflation. adjusted $XX.X is had headwind with And million of the higher costs volumes the and activity, to up waste operating partially a we Solid quarter, pricing, closure million year-over-year, year-over-year acquisition Landfill. in adjusted million by in offset thing Southbridge

EBITDA the strong So business. the rest was very in of factor ex. adjusted our that overall

with commodity was Recycling EBITDA lower up $XXX,XXX million prices. year-over-year adjusted $X.X

of solutions fees shipping on strategy. was EBITDA million Adjusted great to and had higher for the I with quarter, a execution fees, period. customers lower million $X said rebates volumes the up up in As strong quarter year-over-year XX% the other processing adjusted higher by Customer offset and year-over-year. EBITDA our segments in $X.X

across inflation sledge volumes, EBITDA The most And and up organics driven activity, pricing. and efforts reduce vehicle with of was million roughly higher of did Cost adjusted labor, increase by this disposal by acquisition of driven was operations a despite and outlets quarter $XX.X up $XX.X with had transportation strong to and direct year-over-year remainder the $XXX,XXX maintenance. of disposal million this team third-party group driving job optimizing very our year-over-year. internalization a the great

million down leverage percentage of technology acquisition XX G&A up and year-over-year, driven $X.X we to a year of by began as gain further five were year-over-year revenues $X was basis costs increase but points our million plan. our Roughly as activity from acquisition activity. this

amortization five Iron acquisition were and up Yellow period. year mainly million depreciation to our on Depreciation costs and the higher and year-over-year, trucks to plant equipment activity related and due during fleet $X.X

The company. defined third multiemployer the to cap quarter a our plan period income $XXX,XXX Southbridge from and completed is our incurred several transaction in activities Landfill. withdrawal have and costs recorded acquisition of incurred the unique charge and of we to from pension expense items. We close $X.X million plan. statement related to as This We only we ongoing from the multiemployer million included efforts benefit legal $X.X a

from we with pension a multiemployer and withdrawal step positive as financial the ongoing discount the to at liability. limited plan company, this exited for plan for stated withdrawal approximately XX% this risk the was the The associated plan

payment fourth and expect will the quarter $X.X in years. plus the million be next XX have payments over remaining made We to a cash the

was of during due quarter. mainly X.XX XX, our As acquisition ratio XXth, consolidated to XXXX, September activity from up This slightly the leverage is net June times.

acquisitions Our against grow total is that and of $XXX.X liquidity $XXX debt in this of capital through net to to million, continue investments. to a position execute us smart with strategy million. great roughly believe allow our We was structure

period was capital. offset free and cash explain normalized Net in flow $XX.X $XX.X flow shift down moment capital year. the our free cash million results compared cash which provided lower higher operating net due same to by million lower as was last million $XX.X in by higher year-over-year the expenditures. offering for with with Normalized $XX.X activities, Year-to-date year-over-year, down to working I'll million operating provided a activities cash

operating working cash three XXXX, timing an and in differences and of which operating amount. change investing not capital AR cash negative AP. timing This adoption ASC opportunity payments One, contracts to driven and differences X, activity landfill from change previously discussed of XXX we've of in the the statement factors. This positioning this lease outflows on with as by is received associated with shifted January only flows. on outflow financial on impacted mainly cash The statement cash

outflows a yard Landfill in associated Potsdam liability prudent closure. project at three former reduction to the with cash And a due remediation in scrap Southbridge and the

and our the our customer last into forecast expect recycling to strength of waste Over month, operations refreshed remainder through the in XXXX solid fiscal XXXX continue and we and XXXX. we solutions

Southbridge recognize quarter XXX disposal margins and by EBITDA anniversary -- and discussed, labor in previously EBITDA begin we as we basis adjusted to or inflation. comparisons points As for expect expand the fourth margins Landfill more to closure we easier

adjusted cash flow EBITDA As ranges ranges for raised for such, XXXX. and updated and normalized raised and guidance revenue the we tighten guidance have also our free

to quarter regain increase to flow $XX quarter, operating have fourth We sequentially mainly the historical DPO positive capital we expect due levels. working in as and results swings improved to free DSO in million normalize the and cash

And to I'll Ed. turn with that, over it Thanks.

Ed Johnson

making we're Ned, continue good to price, manageable morning, pace, a and was good work. progress and with lead in Operationally, integration we're strong of Thanks, industry very a the at acquisition but everyone. we our quarter, growing a this lot

our equipment our stabilization for to workforce. addition, clear are a In career innovative providing we're mechanics paths seeing fruit, drivers, bear because our of approach operators starting and of

slightly process primarily We through continue as process the Collection as prior generated or a grew low and operations year, Consolidated the volume of price, considerably slightly over QX flat percentage year, X.X% our to acquisitions. about better the towards managing customers to margin per of increasing but XX% revenue compared basis growing we're either discontinuing revenue, QX. improving our was X by as over points, XX% we last on cost of of pricing ops roughly relationship. negative --

is little our very improve. our landfill the performed XX% revenue The business, average among ton X.X%. contribution our but about price continue which per Ontario was the delay, metric in reported track. up of hour price was party well productivity line driver generates provided Ned margin mentioned key per quarter. of to on third X.X%, back Variable landfill this a headwind was up X.X% Overall volume up and which

As you can as imagine operations for percentage over basis XXX improved our the a cost of by points. of ops revenue landfill

in good ever disposal a pricing Northeast and the to this be to year. continue market and We look in we tightening a price forward leader continued finish to the strong

cost our little of of about ops Recycling overall and X% X% processing was revenue a than less improved year-over-year.

we upgrades And of two like our two are in equipment the about During highlight to that. marsh would completed there I quarter significant [ph]. points

recycling is like First, structure by despite of months, each pricing better of its contribution several business structure. fee new were partially and under EBITDA effectiveness our that contracts SRA the in pricing increased to XX partially our the Boston facilities, our over downtime of these past weeks This muni of renewed to in line due $XXX,XXX. due continued

More have the not higher importantly, market. in these increased only will demand capacity, producing products pricing ---- they two that are commodity cleaner

effective and our matter in keep And model You of system sustainable long We fee believe will upside. the integral customers in part might have the if it any we that we're and with economy sustainable. our ask the to best is provide we share an the recycling would place. possible run, why an obligation outcome

initial passing the labor the of disposal acquisitions in margin business. line lower of contribution the of through about compression significant and talked collection increases margin I cost quarter Last and the

price all the both quarter much it. We're we through focus yet, Our but operational a recover not this start than position in way there started to to ended better the and was those we margins quarter efficiency.

and the that will happy progress, comfortable disposal in operations labor and with I'm our have we margin So pretty QX. our on for recovered legacy

process wanted last not we as each time phase integration talk alike, why, determines but are acquisitions our margins phases I the acquisition of quarter, mentioned little the a all I to four they acquisitions that about the in follow takes. integration the first and bit dilute length the complexity to generally Clearly, year. for tend and of

admin integration the management to customer convert system, stuff. is systems. This route office phase the we payables, is first integrate billings The convert back our information all customer sheets, driver where related of

this structure includes service service have billing second integration, a every become companies efficient, more weak could Once is execute in accustomed on The operational become converting be we in such a with and operationally the the efficient of but to optimization other phase opportunity, any our as takes Many recycling route changes we include to significant changes not can with to time thoughtfully. customers and pricing. and and service, service the focus cut this pays long-term acquired our can then pricing market carts.

I takes as prudent then, plan four, We asset And implement to entails what our utilization time more this upfront, automation. replacement it opportunities front. phase will look to providing call carts, improve recycling equipment as for under but we for it such

dilute hard to-date. acquisitions track run, process, a in the on margins we very our the if work little are team they’ve where even done for So, happy and in commend we with the short we’re are

extend welcome to team Before I a want move members that I have our these joined new acquisitions. through us on, warm to

management you that and recognize with company. we each run integrate one the to is hope to making elements us we career year that adding talent you and the to business find last acquired need our the inclusion, both to long and your philosophy and The over capabilities, grow existing foundational as operational allows businesses. to of newly grow rewarding a of Our comment we’ve past I our is want enhancements been thing on well,

our service a our of of programs Vice the Regional Operations that year pricing improve improve Executive also ago, solid expansion. teams, improve nine and to sites We’ve oversee we improvements reporting Operational then and operational the President added waste Landfills to we addition our regional prospects at grow. added ability processes a metrics levels, In standardize operating operational of our several we monitor internal management, have Vice for now to run initiated and and in and long added President have improve replicate as to each to

our structure our and We demands of to will continue company we size improve the and the move the the dictates. as capabilities of market and tweak forward

like the to I’d start overview, question-and-answer that to turn session. operator With to back it the

Operator

from Sean Eastman [Operator line Instructions] first Capital with the Markets. question Your comes KeyBanc of

Unidentified Analyst

is Hamza guidance [ph] speaking Chemung Maybe came the Dean, that Sean. this question Thank revenue from takes than additional you. raise, expected. lower walk the quarter. the assets puts of the One the volumes I through congrats, and us main Landfill? in and slightly on for RSG was the Congrats on lower the had

Ned Coletta

up good look so Yes, Ned. Hamza this Chemung. question, Great we at is forecasted morning quarter, when we the had ramping

held got permit the we go handle expansion an had always and and to needs. know, a envisioned market tons community years tons to year. the option several help as you executing site volumes until to from from $XXX,XXX year a Southbridge XXXX at $XXX,XXX back As Landfill we other is a ago a step-up We the with

option executed that our construction getting where and and certification $X.X late results several and on year, million, late XXXX. we of cell that began weighed that to in by be successfully cell unfortunately, and our there September million expected in new new us delays to delays really we compared actually into into $X construction that brought about XXXX, We were this

little year. of So, this bit negative a

about in $XX you’re drove of million this And add right new year quarter million annualized million revenues and we roughly great of $X $XX or we which acquisitions about EBITDA. should some revenues, of the did

the increasing end of delay. push between the were we’re But those, both are ranges we to increase to the those so EBITDA lower and those able able not in range. flow tie ranges of free So our our cash Chemung of direct by because

tailwind new company. year has site though here great, up this the our at cell we’re now is the run great a rate some ramped into for coming great into the running next the team current positive and The Chemung, we’re gives is done job, with

Unidentified Analyst

then special special more are the on -- if wondering lot Okay waste, of the average? waste And pace about the to Thank the a footprint, of you. looked peers how the given national slower pipeline talking growth. I thank was Northeast you. relative waste special

Ned Coletta

you the things we break Northeast out And general, major of so haven't many I now, in our have seen remember Right are in to any projects. with there tight in sort sites think that sites and pricing are the And year. the we've bursting and for also at landfills later scene. trying months remember, running been manage as programs, in our the strong you summer to we're volumes

Last year landfills in And the XXXX, we some by to spend at late several key were And out moving had we've this contaminated able tons in to like waste waste. and the special soils lot of saved year, weren't year. market November money we space a more access of some of around. our really

special strong know, And to continue run waste. [inaudible]. don't in I We John

John Casella

also are sludge it’s opposite reducing of amount the of that Northeast mean the facilities at issue which as a you’re a are the to waste an in is from No, sludge. lot of experienced is Northeast. special I in sludge standpoint. the of across relates think one that is facilities I it the creating Most capacity problems being terms other their taking,

of you're on facilities were again issues. So pressure the there's of but sensitivity the sludge to because other taking a marketplace. odors, are of and lot facilities facilities and before, the reducing being Because, amount additional full put

becoming that's and more issue more for So an of municipalities.

them standpoint it's there, marketplace disposal from a working managed problematic to And, sludge sites. everyone the a demand pushing with special that’s well supply Because the been has the from price responsibility doing think I is, very a having by team the standpoint. is better our It is well. sludge facilities. an municipalities from issue and But those standpoint from control fairly the everyone manage municipalities. the from helping a odor for one it's to at of standpoint, at things conversations our back favorable the And practical waste situation an standpoint, that,

Unidentified Analyst

the That's long-term on walk congratulate hear. on the you. amplifications. and of And some the team was, to taken I execution to efforts just question last maybe Thank Maybe wanted SG&A place front. being the are the good through my

Ned Coletta

multiyear looking needed easier we've become ago Yes. back that job to more had points at A the back foundational and plan. comes with in the processes, really lot customers. to do it a technology couple systems looking We a years systems. in recognize number to the internally And efficient of the office. great of we back touch started our several and office. business And paper our And also amount around with for of we at key fundamental we done

upgraded you cloud. the As year’s we budget know, on on ERP in to time in time NetSuite financial one our

And operating to to Microsoft our put also care, We updated system customer our CRM new Dynamics. we which communicate. recently more sales in and a our allows management case effectively force teams

standpoint. drive a of to from in process We continue from we both here, technology standpoint areas. and a those each Because a really -- there's lot more opportunity

on focus side. scheduling technology and and and side we’ll of focus optimization in on have on dynamic in XXXX lot truck procurement a routing While the the

John Casella

we issue probably going Another years time, And, a ago XX And the came issue. I the we've be was Hamza, at company in there the mechanics. made investment was that to had is ago couple Kelly significant on the we opportunities have, and driver XX that started or for think XXXX did what drivers a recognition openings under XX a across for years really beyond board just XX Robinson two that now. and Kelly we probably HR. to

of work issues a safety and team pressure And, the happy entire you associated when with that whole drivers a I'm can costs going has to and out one increases puts turnover the from the hand what where from over, on it's that done help standpoint. drive organization, there's the and lay vacancy number to to kind to half and safety, turn it down count an costs on we do HR of well. have after standpoint, really standpoint, costs related we that as driver is for from you significant to a related year need

from a doing programs, do that job make all better going the on safety development, we're to training can difference. really career that a from basis forward So a a the go we standpoint are things

program So it's some going returns to significant exciting the in that's another future. have us for

Unidentified Analyst

to queue. Thank That’s you. return great I'll into hear, the

Ned Coletta

you. Thank

John Casella

welcome. You're

Operator

the Your next Brown Tyler comes from line of question with James. Raymond

Tyler Brown

Hey, good Can hear morning, guys. me? you

Ned Coletta

Yes, Tyler.

John Casella

can we Yes, Tyler.

Tyler Brown

just USA Waste start - Hey, to Okay. want I USA. on

expansion, it think spending we $X in year like about that talked think Will I it how million, some this next million do on is $XX congrats million capital you $X million but or there total. year, you're on like $XX looks development like cell be $X about that? million John, something or million, So $X

Ned Coletta

million Yes, be we're $XX around in budgeting. $XX next to or so year should still million

if bit it's this we'll more cell frankly, we that year, faster the are. a more work, the we a do new get work into next do done moving So better we can off can target. of And

Tyler Brown

Okay. obviously, unusual or an unusual then that's bigger And on lingering any Potsdam? will but there CapEx be item, picture, CapEx Southbridge

Ned Coletta

Potsdam a story. yes Potsdam, is great So

We some little may the was Potsdam, are when foresight there some to to of a and were during to issues put bit there this of completed, to be transaction and we flashing $X.X unique to able to that Escrow, that environmental Casella roughly able was to this the we’ve yielded complete those that's and sell year XXXX, one be million shares cash liability the XX,XXX thing offset project going there up. stock paid $X.X our at sellers million we period that were into clean back

we're offset, some chug just continues period modest to help that, So during that some some forward, Southbridge it well almost to over to of monitoring at we'll going along, of done next much a with be for will will finished we as have positive there, and year. the capping we've was closure five the And continue to CapEx move next how year, Southbridge but per that million Jason, expect capping won't next into year. six. like we or It down so work the se, liability

Jason Mead

through still I we little $X maybe million of that, would like closure. Yes, $X full and process. capping to funding think million Maybe million between say I need bit said or north you go to our even $X a

Ned Coletta

Yes. process. Budgeting

Tyler Brown

have Okay. largely point No, this then the issues been so at at And John, helpful. resolved? Ontario that's

John Casella

at we where get time to to standpoint, of from do they point to behind vast There's us still it a want majority be exactly us is Yes, Tyler, quality work have. absolutely. but this there in the to some

Tyler Brown

Okay. And then...

John Casella

comment would is behind it's a vast majority which with cost quarter, of that, indication to the in Ned’s us. we associated is Yes, budget the be that clear a

John Casella

Okay.

P&L so reoccur was this what presumption year. is won't My total impact rectifying situation it the that from And year? next

Ned Coletta

we're about at little this sitting three Yes, more maybe a year. than

Tyler Brown

right as at And benefit Okay. you rollover would on now, revenue X%. M&A expect of from then the

be is on to $X So synergies? $X I way million that's about as could EBITDA it $XX to or the about think million of million better that think right

Ned Coletta

Yes, in rollover ballpark. you're at million the from our to so for right looking million $X model year We're acquisitions. in $X next benefit from a

Tyler Brown

side, expect the Okay, Ed, this the through of so we digest. you on M&A should rap this move pause kind snake perfect. and John then And or a as

I think this cadence we year $XX up? should to you outlaid just million maybe will keep or that M&A expect continue the

John Casella

integration an year, our think in I standpoint, activity around that very fair arms robust we fourth bought clearly quarter. the still far what the of an -- Tyler, the and that's in I think fourth what a standpoint for from we quarter of we're do fourth really this a really process so pipeline, quarter. getting this to pause so little the from see year, integration going for the in it's We're probably but we're bought we that probably the bit digest to job say

as I pause wouldn't as it really cause I a much would.

close the of after, the standpoint, the the be that stuff that the rest on we're more year. to an focused that need focused going I the on what Certainly are have more integration of achieved the we're integrations I we pipeline we suspect to focus end for already -- in will. think acquisition from we've we we to it But through if going year.

Tyler Brown

helpful. that's Okay,

So, Ned, I want disposable to to come fleet. the back

So correct me be to fleet some in but I'm going there's moving next year. the pieces disposal if wrong,

be to good So pulling good Chemung But and would also North at material assume and is it ramps guy. that Country it be will as Hague. a back safe be you guy a should

Ned Coletta

think determined to it's be I right Yes, really now.

point very are years sites have remaining. Hague, those, out those getting we're as finished of permit less both long yet. there. new two close a term than permitted But haven't to We budgeting you that of capacity five

determine little to depending timing up see we looks and a construction timing upon how level site the it new XXXX receive that run depending ease same will really, Hague, next run so the construction cell into bit So of that on you we of as us And could volume, we this could when year. and the on what like. permit

years five probably a to little ease capacity. now, slightly volumes run a some we additional marketplace community six horizon XXXX. permitting if push a up And next and we can into that's our their bit tight right remaining with will strategy over and there. It's Country, lower complex North but price year five the

Tyler Brown

would And though, big meaningful from the Okay. Ontario And disposal EBITDA even year. excluding contribution. maybe you fleet contribution then, next picture expect just

Ned Coletta

expect the our I will don't rest headwinds these we any Ontario mean, except as franchise little about spot. we up across in some we've Country lower a franchise, issues. will we maybe of and ramp Chemung, lower. bit then North for And Hague out, comp as pricing positive year-over-year. continues as Yes, the a to do get into the volumes We talked better run have earlier, assets. better you a little see pointed there a year-over-year across of good resolved

potentially $X million So but generally feel sites, year-over-year. two we dollars those good at

Tyler Brown

my so plan, it one, just on And right. Okay. multiemployer I the did hear last

of multiemployer this balance As no liabilities point? now you at have sheet off

Ned Coletta

other of only agreements collective one. each where don't so this units. Yes, bargaining we are -- this And partying but And plans contribution we're teamsters is a was few those one the several to the multiemployer have with exposure. only defined

been this. we've liability off sheet growing. with business about actually this. roughly pretty it's we're associated balance $XX.X unit It excited was million where And a So

been people's we've picking other So liability. up

time exit flash we're as way XXXX So worked is this to and back and the negotiate in able in XXXX. to happened it

So excited. really We're it favorable. was

this. Our team job did a great negotiating

Tyler Brown

guys. time. Okay, the I appreciate perfect,

Ned Coletta

you. Thank

John Casella

Thank you.

Operator

comes of Michael Stifel. Your the with from next Hoffman line question

Michael Hoffman

a John you're hear on I today, the So working railroad rail horn. can

John Casella

XX Usually o'clock. at

Michael Hoffman

to kidding. Train, I can't believe. be you've got

of into moving your going think the accounting you positive that in credit rating XXXX? have had So, benefit with Ned, this I the year. landfill through do How

Ned Coletta

Complex accounting here. questions

a of we've elements and B for onto to how of of balance liabilities point, sheet liabilities. future one get those assets, your retirement accounting retirement So, landfill how reflected discount is And you was tenure then single liability. upon then credit years adjusted adjusted closure risk the a that lastXX free our based for used index future the the liabilities landfill high rate the yield

double high moved a lower rates interest rates which are as to So now will bring right we've your It are great. point B also, that discount or to down well. yield rate. And credit, is

of up and our math what is, retirement bit. few where a you'll accretion. But click see next slightly moves all happen you'll for budget finished haven't we liabilities sheet little So a higher amortization asset the year. will you'll see see actually and And lower slightly balance obligations

what moves potentially. it's right few And, little the you'll sheet it that net income line, EBITDA is line, a is in, no complexion at positive a say Michael, amortization. landfill the now and result to math the the move income result between offering in a again, operating but will Once regard balance to accretion but but the see expense all because change slightly shift hard slightly. will it difference done difference haven't a -- that yet I higher but no

get that know. I'll once And I'll math done let you we --

Michael Hoffman

the companies Coast. is or sledges, it Okay, about in couple PFAS is you there's are you have they commentary up thanks picking it's And then the of just odor? out for a an focused the a issue? mentioned issue Northwest sledges, in We're public are earlier odor PFAS taking that. stopped this West

John Casella

it's and marketplace. really component that I issue the land major that's the well certainly something the particularly but think application issue is more of that think to that as in is PFAS as I and an it -- odor other relates But the is odor.

Michael Hoffman

then… And Okay.

John Casella

because the wastewater landfill in I has odors the been that -- been to seen the plant Michael been the treatment has And from -- the problematic issues control we've the odor. so think to I have cases. at traveling facilities even have of majority we some Where think that

Michael Hoffman

helps. your what leverage acquisitions All this forma if ratio Ned, year be? into that an Okay. would pro the And EBITDA you right, then, all at

Ned Coletta

If them we of took our… out

Michael Hoffman

you pro -- them X. No, since no, them own put forma January

-- rate? the full What's what ratio. and leverage the EBITDA, had you So credit EBITDA you form did leverage and your

Ned Coletta

with don't I now you. I'm I am calculator have to sorry. follow that Mike going up

Michael Hoffman

clearly, But it's back it's less, down.

Ned Coletta

Yeah.

Michael Hoffman

Okay.

Ned Coletta

our be credit credit when you way actually acquisition, not at so on it sure you bring I'm is get point The time, works, an anything. agreement in clear full that to changed

upon credit additional take of months XX agreement, acquisition time an we you, approve at take you for pro have Xst I forma. most an So on September think on to you if point instance, they some that But of our debt. based EBITDA in allow

guess got leverage at our change anything don't I -- look ratio. that. I don't with I would I So it to think

Michael Hoffman

Okay. let does, Well, me it know. if

Ned Coletta

Yes.

Michael Hoffman

going to we And beat by your always then goal John, I a come this where looming have as ask year a you're into to year.

plan. you like are So close million to in ahead $XX is free to which a it of XXXX, looks likely be year in cash

plan like? So what's XXXX the look

John Casella

a board member. You sound like

Michael Hoffman

board your members. know I

John Casella

we'll Oh it -- comment think talking us about we've as I maybe right not, that. to get have a mean, premature I may XXXX, at for start too point that. Obviously, for may start you to where look really little to it's when comment, us done in it's budget may premature determination, XXXX. have now a time, get for that obviously And our appropriate that, about XXXX it's it's a at do, really to we Michael that we on lands. thinking make to to got a or --

Michael Hoffman

if Fair and and I million, enough. But make would $XXX there out that thought having blench? sitting were conversations you

John Casella

If you what?

Michael Hoffman

conversations $XXX and said make blench? was with I you having would I that people million,

John Casella

it's cash math. we much that it's, say that fair flow We that to as as to can. free think we're going I done haven't drive And,

that have can. demonstrated we the really over five I to wouldn't comment capability think obviously as years. last we're going to think I obviously $XXX do I the as but on much that we million, the drive

Ned Coletta

consistently, next you maybe got and a off cash flow XX% roll driving been that free same forward Yeah, to XX% we year year you know, and growth if us of and that start expect how as Michael, you to we've that gets that track. but see to that position, don't the roughly to XX% XX%

Michael Hoffman

close for that. a And lastly, close behind where region of are play little rate comes then disposal? a we into market was bit rail Yes, out that top to getting your

Ned Coletta

top we're the in capital we're contaminate are are as And with they few any C&D we’re or down even trying we to moving some solid a not see our considerable MSW the of -- you contaminated in know. intensive, marketplace soil we've and that there are municipal not marketplace are several to mode Close rail, containerize they C&D, or continue really happening those so moves maximize tests that in capacity. sales of done costly waste, amount

you new sites Northeast will be next the point the be capacity years the whether there close over long and that valve online, as to that that's five is for that additional is there because any going out, But relief comes a shot.

see I and continue market to are the those So your point view, more is to where higher our think you'll than from today. prices

I gives pricing landfill room a from us So standpoint. think

Michael Hoffman

And you have Holyoke which does have rail. a

in So future… play into maybe some McKean comes

Ned Coletta

that's that about to there's not connect from to option that's capacity option it have future I Michael, for no option opportunity in think standpoint level that that's for there's us drive I a think the in painful. question could care and standpoint an we an long-term of McKean us it continue operating the that. a we obviously a need. certainly, is we’ll is Holyoke, now. take right And that future. contract that McKean to at do Obviously, from long-term extent the to to an municipal

for standpoint, us we So, a from practical real it’s option need in if significant a the future it.

John Casella

I Ned. think, rail really a And standpoint. ways agree I would with, think away We're pricing I effective from from

Michael Hoffman

thank Okay, very you much.

Ned Coletta

Thank you, Michael.

John Casella

you. Thank welcome. You’re

Operator

of line Gabelli Your a Tony question comes next with Bancroft from Funds.

Tony Bancroft

and gentlemen, nice morning, work. Good

John Casella

Tony. Hey,

Tony Bancroft

you and of other margin you and that markets adjacent M&A, markets, outside the picture more in landfill Northeast in and on the some further maybe potentially change big some strong on balance along view how of expand versus Michael’s of maybe could Any areas, expanding, could maybe more your but markets. maybe sort you sort sort growth Certainly, big into Massachusetts, that? sheet, takes talk along puts piggybacking performance dynamics outsized with questions, with going on strong picture, differentials

John Casella

think sorry, that fair focused think Michael, got still we're I'm plan. I -- much very it's significantly I to Tony. Apologize. on that XXXX our we've that say

Tony Bancroft

take very I a that high as compliment.

John Casella

enough. Fair

XXXX. adjacent over on we Tony, got in look focused, still we're for come place the as significant focused plan, of that a XXXX on market. we've take we the at they Northeast and existing the executing opportunity opportunities certainly in will But strategy the own that to assets the we've we're top that think the I put

pressure I opportunities recycling we ago. we When think than thought. are there's, you half, what years labor originally had opportunity inflation inflation, a even more robust more a even that's inflation. what that again, had anticipated and the The look a at disposable and there two year out from standpoint, than

to example. if that and now continue already transaction, plan, Pennsylvania something going stay an but would the focused divest certainly stay market, But the at we're certainly in currently. to that Pennsylvania, were we're something that be in waste to Northeast, So from in, focused would to as on we on the the XXXX look be advanced interested we’ll opportunities come

we'll at as we’re on they our come, plan. really staying opportunities XXXX So, look focused but

Tony Bancroft

Sounds good. Thanks, John.

John Casella

Tony. Thanks,

Ned Coletta

Tony. Thanks,

Operator

this questions time. there And at no further are

John Casella

and XXXX Thank guidance of a with Thanks, Great, earnings morning. quarter you, to thanks, this forward us next XXXX for look February discussing fourth our our you operator. We in Have everyone, weekend. joining great year. everyone.

Operator

participation. Thank your this gentlemen, today's and for Ladies call. you concludes conference

now disconnect. may You

Casella Waste Systems (CWST) 1 Nov 192019 Q3 Earnings call transcript