CWST - Earnings call transcript Q3 2020 | Casella Waste Systems, Inc.

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Joe Fusco

Thank you for joining us this morning and welcome. With us today are John Casella, Chairman and Chief Executive Officer of Casella Waste Systems, Ed Johnson, our President and Chief Operating Officer, Ned Coletta, our Senior Vice President and Chief Financial Officer and Jason Mead, our Director of Finance. Today, we will be discussing our 2020 third quarter results. These results were released yesterday afternoon. Along with a brief review of those results and an update on the company's activities and business environment, we will be answering your questions as well.

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

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

update Accounting comparable representing during are over will discussion. it Investors our today's website the non-GAAP subsequent not of as turn forward-looking section effort, John at point not will presentation, measures non-GAAP of the Reconciliations as with obligation to the measures. some views our if any These most in in the extent to in available disclaim of are should measures slide elect future, specifically And that, available directly with the upon we investor do available I Accepted GAAP These Generally views is the Principles. which at to to in so unreasonable measures, financial financial they Casella, to without ir.casella.com. to appendix even begin to be change. date our who referring accordance call, statements be may we this prepared any statements our non-GAAP we forward-looking relied Also, are today. to will While

John Casella

has us by conference commitment women hard to dedicated acknowledging everyone times to our and we our well social essential of again, ensuring enabled remain provide services men the state these communities CDC start morning to that Safety well-being continue call. and relates of serve. paramount. call, today's on and environmental and it through XXXX Their as We customers the and work the our orders. Good Joe. guidelines would and workforce focused our our our thanking particularly like is Thanks workforce, to observant to I as safely unprecedented to as quarter third welcome frontline. highly

and Our have mitigation organized deliberate. measures our well and communications been

procedures, equipped teams have our adequately from meetings, implemented social PPE organization to work in-person we have and continuity. have as we the this, and cases related home business We number disinfecting of well across effective Through and nonessential with distancing, limited contract interruption. the standards travel racing, business minimized as

the onto quarter. Moving

As margins. down related expected, COVID due expanding volumes the by expenses, lower to X.X% coupled EBITDA year-over-year, waste year-over-year again, while volumes we were, with adjusted Despite improved COVID. solid

down flow cash execute free driving to response, further adjusted our improved the benefited the quarter. also consolidated We quarter against headwinds well performance operational teams despite net Overall, to service proactive our in COVID. our leverage related ratio. and The in customer sales, our initiatives while continue we strategic

and interval scaling while sustainability customers' needs variable to continue We service cost. meet our effectively

well expenses. We we week, to proceeds for announced as offering $XXX with recently growth Notably, opportunities execution completed and and business our equity are disciplined acquisition transaction our in gross opportunistically before This through acquisitions. positions a programs further continue million strategy. the pricing against in last discounts we underwriting executing an manner grow of us

and the to disposal sequential strategies. From back improvement of recent against a we our meter well highlight perspective, Next, continued see quarter, our our continue down represents I will as slowly in online. the the quarter second This were volumes to a key operations from COVID. again as execution volumes due performance

stable to year-over-year. quarter. September That down with fourth down modestly were volumes through the the landfill in tons tonnages of landfill X% slightly to than less expected year-over-year we remainder be fact, the In negative said, year, expect

related to flexing October operations received positive the costs we able safety our by yards disposal an modification increased On X, experiencing volumes, for programs offset without are focus of capacity. we DES six important New lower which have from additional compliance million our pricing years Although modification our the approximately disposal landfill. variable the The headwinds and sacrificing across site's impact cubic provide permit negative on North Country been will we standards. capacity to Hampshire permit X.X our and through our partially

resource than to We over are services we ability pleased commercial with communities Hampshire. more to XXX to residential forward provide management our New to in that and service continue XX,XXX outcome this the look in and we customers

Now to collection business. the

in were quarter. activity year-over-year again in quarter the levels the volumes third second commercial in customers, and across COVID's lower X% effect with volumes certain down expected, on compared Collection As the year-over-year to due year-over-year were economy. XX% the to down institutional down quarter,

our manner. of the a manner, align of the COVID. we programs, better enabled with operational enhancements on heightened trends disposal metrics and operations in and that operational the sequential our levels. scale of analyze our adjusted and more improved to related costs and variable service respond as to needs visibility effort in the collection meaningful through to level service focus to of effects out lower including customer result Despite experiencing volumes, rightsizing again, quarter collection proactive margin in over rollover driving pricing our to similar System ability cost initiatives a our quarter. intelligent key to headwinds, last with responsive business year the to response acquisitions we the us are in our third volume and experienced trends positive have and our volumes, This activity improved So a the year-over-year these coupled EBITDA business because

our teams. to remains is adjusted these recycling achieving enabling offerings, force sustainability our meet solutions on diligent executed from customer focus business. as January, very were the cohesiveness Resource along perspective operations sales our further our our a of back In comprised solutions drive value strong well, needs customers while Moving resources. and service margins and goals resource office strategy their in from been safety particular segment combined and processing time in through organics part recycling, same on The to is This businesses. solutions. focused the operations was and and of at to to EBITDA on has the improving our lines year-over-year. expertise and team again operational the performance quarter, improve continuing The

programs and fee SRA and our recycling risk fee passing tipping back customers. nimble are effectively commodity are to Our

year-over-year with activities customer Our solutions organics COVID. combined a adjusted growth even while to and performed well the year-to-date lower EBITDA have related businesses experiencing

like allocation growth and capital highlight Lastly, to strategy. our I would

well October. to execute continue We here through

strategic two We acquisitions. presence other, with three thus as the On the is a nice closed in million of New and acquisitions, our X, we with approximately completed of as operations integration. expand annualized that October Buffalo Greater market far an acquisitions Services Western Tracking build robust. have the Pinto pipeline market, nine In additional York vertical well in we two provides which tuck-ins Overall, in completed fit and to our our revenues. opportunity quarter, more XXXX, remains were tuck-in $XX

further well that, certainly I the to positioned free fit and over opportunistically strengthens businesses to to And the meaningfully turn return with Our business with acquire Ned. teams are grow right profile. our operating balance and and drive will equity The cash position recent right it sheet flow growth. the strategic

Ned Coletta

Thanks John. Good everyone. morning

to was $XXX to like drive proceeds common single growth continue to the of over we overview The a an on and to and Before This not find gross the equity to gain and smart debt. use coming million the larger stock operating smaller transaction. opportunistic to are to operators We leverage. Class discuss raise plan acquisition and million the we to We yielded development continue fess. density, quarter, completed to the raise, greater the X.X We we give targeted and private immediately I issued And focus A proceeds of one additional would week. equity internalization before we brief coming plan discounts capital as repay do acquiring of use plan not G&A months waste build to said. year. proceeds underwriting last and shares transaction

cash and will we drop of XXX% net against reduction September X.XX If netted our of our of or was $XXX.X consolidated times. As leverage debt leverage million X.XX had raise ratio equity debt XX, a XX, million at we our and September times. as $XX.X times, X.X the at of

the forma million In XX. addition, for $XXX September was of transaction, our pro available liquidity as

were change driven or million, $XXX.X by in the of Moving million year-over-year up with year-over-year $X.X the up quarter. to third acquisition the on X.X% activity. quarter Revenues X.X%

were X.X% year-over-year customers and reopened through Revenues X.X%. services, And had were price were We building and in price commercial to waste X.X% collection X.X%. acquisitions the continued the or rebounded up line quarter overall increased. had Collection and up various activity business from Solid growth from X.X% Northeast. across resumed acquisitions increased overall volumes slightly down our activity construction X.X% X%. revenues with and of growth X.X%. year-over-year in the up volumes down volumes economic We secondary mainly rural with projects markets rebound as third up

per up mainly existing COVID. was paper for was huge lines Given revenues X.X%. by in COVID only the the $XX.X costs and on million million Average tons X.X%, of partially X.X% were large solutions higher headwind by an $X driven X.X% the down customers. revenues Adjusted points lines mixed by quarter. we offset waste economic EBITDA negatively And several year-over-year down up were $X of or mainly quarter Customer year-over-year Resource XX.X% with and pricing. Recycling line basis mainly business. was year-over-year up our With million. EBITDA Revenues million $XX.X driven up X.X% adjusted of year-over-year. year-over-year Improving higher impacted XX% quarter. specific our lower headwinds to solutions were in EBITDA services new was were solid and for pricing, and projects quarter, the ton growth quarter, revenue had customers year-over-year, and contracted volumes $X.X commodity as up these cardboard given up with down year-over-year, during the Landfill this waste business September the in by disposal mainly landfill roughly year-over-year. margins were XX year-over-year both roughly was X.X%, pricing plastics the the were pricing industrial sequential in million this a X.X% improvements, new organics the pricing up by down XX.X% higher achievement, up had activity up X.X% construction solid commodity in we Also, were volumes. on translates at month. COVID of

driven the disposal EBITDA line higher line flat Almost last increase was solutions the all and costs cost year-over-year. was of completed $XX.X This operations the adjusted levels Cost up $X.X and of Solid revenue improved year-over-year was year-over-year. accruals in impact million period. Resource many million down EBITDA and as categories by in of flexed was third inflation of business by due administrative quarter, $X.X percentage lower related year. and a the higher quarter and $XXX,XXX our quarter, revenues. the collection revenue of as $XXX,XXX to $X.X General quarter team points year-over-year Roughly during XXXX bad a that with the of million XXXX. accruals was performance impacted adjusted $X.X performance. XXX of margins in timing driven was differences year-over-year, the business, million of debt as higher up we higher down acquisitions in was had waste up of effectively in and driven in negatively the in the bonus million million in rollover basis $X.X percentage positive anniversaried higher performance recycling increase headwinds activity acquisition the $X.X to costs early by to increase million the were

outstanding done quarter over receivable improving last the nine during job accounts the We months. our an have and

as the communication efforts. XX, created Our XX collections pandemic was and days XXXX. days and We collection days improved program. is December this had COVID September additional entered This during mature stable has pandemic, flexibility outstanding very the our customer outreach seven a we and and necessary. and our have XX.X from sales of credit with as nearly And positive down impact

federal However, down. programs that especially we noted taken quarter, wind conservative to midterm, the stance starting as the recoverability accounts have a last of now we stimulus are on

assets period to activities. unique And two statement. One of incurred as to income included litigation $X.X receivable. related driven on was the liabilities and $XX.X This to up million Southbridge higher acquisition expense at million operating $XXX.X $XXX,XXX great million million million in quarter the charge our our close incurred by we year-over-year, the site. Net resolve positive cash operating by activities we free year-over-year, settlement changes legal efforts Third cash the expense of $X.X the from Adjusted, was, $XX.X million items of $X up results outstanding was $XX.X management accounts provided year-to-date, during million including year-to-date, a $XX two, included of year-over-year. landfill. flow million and

our expenditures operating and We continued to quarter drive synergies the in newly invest at to operations integration planned during capital acquired efforts.

in we addition, In Stage the the expansion Waste X to continued Landfill. of at invest development USA landfill the

guidance in commercial XX% XX% season. basis, into yesterday since improving for year the on rest As in quarter ski and to additional We Roughly April is business businesses and of the performance another given in ranges collection COVID to have low when translates This markets release afternoon, turned and financial to a rural Northeast, were secondary noted year. of services remaining will the roughly through for our of XX% economy $X resume. return reduced suspended collection the experienced to year revenues. unclear across in our third that these of services, our early winter It a industrial the X.X% raised XX% of in late back fiscal estimate point seasonal restart million revenue when due COVID, areas roughly roughly the we will been or press or us on. October. stable strong visibility in a we the our of the the With

Our guidance of second the emerging. to of year remainder environment for assume modestly a for the wave is year stable declining as ranges increased the economic COVID

new Act that to cash plan set our quite proud strong this back order headwinds shutting December, free to reestablish we year-to-date. on the at adjusted, level back commercial However, generation contemplate pay significant despite We year. We money the our or back original in the the range great severe February. raised stay ranges importance a note do of are generation we to Please guidance XX place $X not down CARES home economic flow flow activity cash relapse we and COVID given million in flow XXXX original free cash to levels again. and our

some We quarter were in down expected landfill EBITDA have the be slightly quarter. that in will we had flat quarter, forecasted third lines receive that adjusted to year-over-year early to the fourth in fourth the as received

right to We across it also ramping Ed. to you. continue levels. are costs as expect certain is more COVID a back that, operating normalized ramp Thank Northeast. there to overhead hand I And now lot of With will cases uncertainty to

Ed Johnson

Thanks our will I procedures. quick everyone. update on start morning with Good Ned. COVID a

results, servicing continue we staying workforce that As excellent with disciplined March John very and we have to put are place into customers. operational indicated, practices and we our keeping in on-the-job our safe our

seen infection lower than areas, have spikes. weeks Although our have few we metropolitan markets most last the had in of rates larger

risk and the very remain there that, become changes team has I and on experienced ability in to new some we said us the the This diligent. returned of normal is know of their normal be early closer environment still operating our continue for Having in So the to Traffic to of stages adapt. we proud quarter. and our the has returned. pandemic that we

on disposal of the to as service. weights are back adjusted And side, is is either So container of within on lift commercial budget resumed a pounds per X% customers revenue per business have or to the to are cost closer operating the normal. and down within normal labor hours yard little and X% normalizing side. Pounds

commercial has the of returned. Some volume

margin. And adjusted basis with are from But EBITDA and as XX percentage roll-off a quite now pulls X.X%, only XXX improvement in are ago. the COVID as cost point a year basis down ops compared factors, improved of related last revenue year as even not these robust service suspensions. drove We QX to about of points as by a

recent are to track a circumstances. the carefully that so we can levels With respond continuing in pandemic, uptick we to operationally change in activity the

this Our from the landfills. major operating came of all lines improvement margins our improved largest quarter but business, in

even also operations operations and stats, XX%, achieved and percentage result by taken more that almost and are we of than had pricing As revenue our the this a from was X% both from of million, up $X from improved we around pretty efficient remarkable have very remained operational activities by points. volume, summer. enjoyed costs dry due less Collection to cost A place ops partially X%. due a power tonnage insensitive operating landfill was revenue would relatively tonnage which down of same. little The ton as half fact and the performed by management and to revenues but price reduced down more was COVID were of collection generated was than Average per X% to well. quick XXX if was basis our most a about

With impacts our COVID the strong we increase to inefficiencies. Pricing ferreting efforts out automation of more returned to stabilized, becoming remains at X.X%. and initial

processing resources back group due resource tons Thank our over operationally working from slight We to some year's budgets to your continuing operations be year despite increase virus. only also like we and processed. I attention had EBITDA our John. quarter but industrial as continuing look the and organics our will the it solutions national forward solutions few group, now benefited months. commodity which suspensions service XXXX for average strong last recycling accounts to Our The as the to next our a group you finishing through expectations to exceeded to on This group, turn and includes for would exceed in and well, higher well. prices another prices not higher balance both original budget of contribution the outstanding expectations

John Casella

Ed. Thanks

and are something for quite would to we out well to took personnel our times. through are just In of raised reflected for all open execution during of. Labor crisis that, against the operator, to challenging key we XXXX, Ned honor we we our with We strategies. a The special before And proud continued and bonus response questions. it employees. look collective guidance and effort our hard-working forward is Day, up in million As devoted finish these performing in frontline, great that paying $X.X hourly this to strong like team quarter, the our year

Operator

Instructions]. [Operator

from is question Stifel. Hoffman first Our of the line Michael of

Your line open. is

John Casella

Michael. morning Good

Michael Hoffman

well. Good morning. Hope is everybody

John Casella

We are.

Michael Hoffman

good, it down? was fall is foliage? it Is given How the

John Casella

It was It after was down. white. it was

Michael Hoffman

was open Well, might ski It white. my goodness. season Oh the soon.

John Casella

Yes.

Michael Hoffman

Ned, just on the my free up that correct? or Act. keep back trying writing, revisited I CARES flow was guide, talking to guide how the cash fast new paying you guide reflects with Is the were

Ned Coletta

Yes, it does.

Michael Hoffman

right. All Okay.

even? that actually the the the you original back neutral So net had to it's Act, think CARES Or that's way and it seems to it, because better guide right? about if than

Ned Coletta

Yes.

So the CARES we original no -- I didn't back then, was the for guide mean year, there know Act the about right.

even back not point in I at put against are that. guide we time, better in it did that But even contemplate back. we August to paying the we tracking So are because

Michael Hoffman

this XXXX repeating And can then of recession basis Okay. when and a Are talk kind we from lost an to forward, the growth same for the of amount point on business have and about it's taken sort or we commercial might pattern? this volume now back basically five annual to and stabilized years you XXXX, great to look play of and related four out, think through at trends it you XXXX.

Ned Coletta

can Yes. start then will in. and John I off hop

revenues, base, service a are about on X.X% basis. a X%, we at exactly revenue is from reductions. seeing this right of And now not customer commercial down So

rightsized. way. it's million and customers services or to cuts. with don't a happening except It And very similar, far and this in had step flex able by you basically are mean We in one I into certain effectively have too quickly happened we trucks not overnight, suspend costs and reduce instances. we reroute it different

John Casella

quickly. the the you that to some given us work really act IT I has has whole ability and team benefit the of think very IT finance of team and that the done the

We to are of understand up up keep We divisions and daily revenues a track down are on and standpoint. the basis. revenue what flexing are able from a going

can rightsizing revenues we the getting terms So out flex that business and more the the much cost of have. they actually for quickly in

really we the in some have over the play of last, has the quarters, the last two, So the three to probably standpoint that done come benefit last over of from particular. systems is work a couple years

Michael Hoffman

Okay.

were So February if incremental you what you going thought we it before And how your now had. incremental look margin in this, have your does January at about margin, have compare? we and we to knew

Ned Coletta

each say you new the when margin? incremental revenues dollar of for or So collection

Michael Hoffman

Right.

to of look If through it, to and that cost intensively. you incremental think January incremental We February? on the because gone you growth, structure. out in the like able did going do about the cost a on more you have operating business focus like pandemic, of crisis margins to leverage nothing Now get are to what this am better this come I assuming some of leaner you

Ned Coletta

have a you some are not at if of even we some right. been think fundamental to have because flex. to the his the I in done change. think am able we script have make ourselves we talked we where over landfills I about work have Ed of number sure perfect surprised I

Ed Johnson

and in terms are in dividends. that's really putting combination a automation to standpoint. in of Sean has in from efficiency, efficiencies the is paying operating bear that equipment place reroute, it programs place come with The of an Routing you been operating just everything put different, have

John Casella

It's up your dig what amazing are with you more new going into numbers really now to where develop come the efficiencies. and COVID in and can systems, you the when see we can we might We are IT case with.

Ned Coletta

vendors and soon a it around quarter, year. then road And we said plan number COVID CapEx, we accelerated as They projections, this when year. flow on arms capital as Curotto-Can a we our our right, a to have find to of to bunch the certain, million, getting got see I of get to cash buy from And might the we the but to of was immediately am froze our started Ed on $XX trucks road last not really if truck able late now. greater we actually just we our XXXX And call Yes. efficiency drive more part in could trucks are hit.

the starting are to of to are that's a we gain stuff But trying type long-term do We to drive little bit. efficiency.

Michael Hoffman

M&A, the frame would COVID of pipeline? fatigue Connections how question Okay. how would health interesting risk you of prospects the last handling Waste PPE? this invented intensity COVID be, It this would of you kind awareness And phrase, fatigue. and are be and then at on the employees, of

John Casella

strong, pipeline I that the think is really Michael.

all As the for COVID our another across you drivers, of created know, has issue footprint. independence

last a is pipeline little We a of people getting activity couple really months strong. over So low with bit of out. terms in saw

business think bit probably And month candidates, a development maybe out with begun increase in activity or has terms got little I the to potential from standpoint. last more. getting a activity six we weeks really being have over of meeting

to a and but And of are we of vaccine. COVID done. And think will thing certainly positioned begin our thing obviously about last million well are have not the out we So for is we we get thinking people a And with terms as notwithstanding I And over how of I our get cases we $X what management now, we go before the the the Northeast, are for discussing time, September, the now. this is of rest think setback. the weeks, over I that through improve that see that substantially a we I in that point couple to strong. of been need Day, course we And said, that with big that seeing. of, But last fact work up in little I hopefully we being across our bonus in were the almost our think everyone that proud protect to they up the that our recently have just think a good numbers especially to work frontline But I people do is the I pipeline what's we was, shape. in at we that's is have something next paid done then people bonus while done Labor have think that that holidays. COVID, and assuming right early employees. our don't are everyone seeing with hourly said bonus, year, in team our in put the to and That's to bit seeing of fatigue, the the people the team place has the fatigued little the assumption

Michael Hoffman

very winter. you much. Thank early Okay. Enjoy your

Ned Coletta

Thank you Michael.

John Casella

Thank you.

Operator

sir. you Thank

another line Brown have We question the from James. of Tyler from Raymond

Your open. line is

Ned Coletta

morning Good Tyler.

John Casella

morning Good Tyler.

Ed Johnson

Hi Tyler.

Tyler Brown

Hi.

you I obviously points XX basis really was internal total just, of down margin Ned, So mean expansion it I was impressive. had mean growth.

on and frontline incremental payments, I think go the on. think I of incremental million bad debt, COVID cost, John could I you just $X said

you me? were with all those guys, I So for bad So were the good really what of bridge just working for that that help you? build can mean guys

Ned Coletta

this our up, were looking have structure almost had down little over and at costs interesting this stuff creep from it's to perspective I because from we to start back cost medical into a bit little morning. was So We different time's QX were QX up some a like bit. a

through. So several It's shining programs. safety the It's excess performance. prior good in from But our our reducing turnover. of standpoint, core operating COVID the are It's we better normalize to maybe categories. things price cost existed of started it's that those it's inflation, it's price, to to same side, our start on

term different you And the things is in COVID there of income up XXXX. XX that like were long the that was it's are all show basis noise XX QX nice a quarter XXXX were headwind the in statement I and alone our margin So performing well margins. are yielding mean very bonus over and to QX same to saying, our investments the programs so things we and are they enhancements. our there, point of special as in

Tyler Brown

flexibility, you you so margins I we step feels talked you talked since big But margin about, picture, you forward? It have Or XXXX? think let's about in do close. talk about think mean, the back that in structurally be pushed ball as XXXX take a you are planning. like so And about you may

Ned Coletta

and finished now, as of of And ahead the business doing had, year. we at and and are XXXX budgeting changes we what turnover in then that for for as But moved XXXX, really We such transportation that haven't we have COVID. as there what lasting we the challenges we in those a differences [indiscernible] and the have had some look we and the our labor And some haven't have structurally guided we we were company through of done made. fundamental, year.

Our are in of inflation. pricing programs excess

So year, Maybe to we to XX expect up. not have XXX you points. to look as basis we do next margins

think are up pretty XXX that's we year-to-date. points I But spectacular. basis

For would year. success up next be basis points XX us,

Tyler Brown

Yes.

the impact XX% is it to in M&A talked just four. I go Okay. average That's the midpoint you a in a stuff bit looks decline. this, you are little XX% back about steps helpful. EBITDA down I looking that. I look like and for at There then sequentially guide some there. And But if historically, QX think about know your can nearly but on from sequential

a and there overhead bit is in I think you conservatism about landfill talked there? But of tons.

John Casella

go and the how ski service restaurants a is back I don't certainly what's is the trying because and big quarter. how through not a there I around there are that's they a be XXX%. to across you will with to of to will for social obviously going projecting put to there of going mean standpoint able going think think they what motels, is. even and from in support that happen does hell And come the restaurants, to in the way more no those detail. when know the Ned it, hotels, of They on mean, on a slopes are part We terms the is many hill Northeast. it, to come additional it's and people clearly out distance figure everything bit XXX% conservatism. which fourth going back about are commercial obviously But ski we business in now that

Ned Coletta

conservative pretty quarter in year. volumes a taking quarter. strong We fourth on are we last had view a fourth the And Yes.

were margin you year. enhancement we XXX year-over-year. huge up a know, quarter last basis As points had We

are not down X% But to developed have purposely volumes the that's conservative. a we overly are we looking as at assuming trying So at we midpoint. this, are be model

well as those as we as costs said, of second into up, the Ed from to that little are cost assuming fourth the fuel up, quarter the normalize traffic, trends to we productivity, continue assuming quarter. saw more are up, third We some with with medical OT

with continued we uncertainty, all on from vantage things. conservative. of a now, We have beat are a lot the right our point to being bit But

Tyler Brown

quick Okay. And question. Ed, I have a then got

lot But secondary So numbers volumes your guys I think in you difference or said at of a threw markets it, your metros And XX% is you it, call demonstrable a rural Boston? us. call in the revenue your markets. like of secondary in, see versus, did big

Ed Johnson

of what know period for have the on a very in back. the Certainly, mean and were and up the get side, rural short second time. Boston, their longer start we of or And places a we to a traffic Yes. to for Boston come affected question, renowned world And traffic many is when had like affected traffic of quarter. I were you in sudden, were seen Rochester the opened that hardly particular all streets absolutely. for collection time whereas the affected markets Rochester

Tyler Brown

I Atlanta. Yes. Ed, in live

the if look a the that, that all? So you give potential side. do M&A? some small of that has at been just haulers of that This has feels think that And my advantage lot converting vast a I be the But headwind took at on Or almost quickly last may like of one some real data, the money majority a M&A lifeline. impacted know haulers it traffic. you of, is PPP private

John Casella

it I but them don't But think right. maybe think getting certainly ready six a there different it them, put people any don't not helped some to people I lifeline,. one and of monetize -- is months. and Tyler, given That's their business, lot think that in the some I there But it's that question, reality has tired cases, off are getting a for changed, factors. certainly given is

does degree, to bit. a inevitable the to it little back order just You right. that business are will pushes think off To fix But it's in for And change. is bit. structurally all have I a the pushed you reality a

Tyler Brown

don't up okay, did to time. give want take you much Thanks. just, interesting. the I was I that's too I But time Yes. appreciate Okay. me.

Ned Coletta

Thank you Tyler.

John Casella

you. Thank

Ed Johnson

Thanks.

Operator

the do We question you. another from have Thank lined presenters.

We have Hamzah Mazari from Jefferies.

Your line open. is

You your please. question, may ask

Hamzah Mazari

you Hi. the think spoke I Good to margin about digit today. flow. Is cash morning. probably Thank you know for free you. My first of free right about impacts lot going flow a metric question M&A of that. cash sort is just guys? double around forward Timing just

not maybe are so a have You big NOLs, deal. taxes

I walk lot talked maybe just flow through know versus us the free about cash side So margins? you a

Ned Coletta

Yes. Thanks morning. Hamzah. Good

were XXXX our cash laid to on headwinds We and had years side some more. make an capital completely after, year sure year And with offset think down as on been payable well even work free accounts is XX% have have the This next the year, XX% our low we track as we to flow or or we amazing accounts back, there. well grow to that. So our goal just management and to working moving look a as we really trying to levels all a is few we these achievable. pieces, receivable. to that to historically plan do we goal out But year

we said are I the As CARES also, paying money. back

pattern of look as sure to normal we growth. we a possible year, trying into ensure make are that we as So to have next as

Hamzah Mazari

get your million sort into that you think does it. this pipeline of talk M&A. you are what Got seems changes maybe And against I about appetite as then collection been to guys could pipeline? bidding seeing talked waste-to-energy M&A? on adjacent competitive markets? terms your And didn't you have of And on that about dynamic in looking $XXX assets you in one player any like to past. It at has people the But

John Casella

top will the Pennsylvania, you that clearly I adjacent markets And look tremendous are of a Hamzah. infrastructure. over existing are to just with existing right. very, think close we the the we clearly, are at opportunity sitting infrastructure. the But that those are that markets

the market Wheelabrator, for in the factor. years. of I think Hill XX in And Tunnel marketplace acquisitions. has know bit the transaction that's been most competitor a the of We we But again, a another certainly that have players. for

So I think will do just fine.

Hamzah Mazari

your seasonal sort last kind exposure of of and that What the revenue to businesses skiing, resort just is all a that sort just of you the And question, clarification. areas, restaurant stuff? then referenced, of sort

Ned Coletta

a around It's or $X less. million year

Hamzah Mazari

Got you okay. much. got you, Thank Small, so it.

Ned Coletta

you. Thank

Operator

[Operator Instructions].

from KeyBanc. question from Eastman another line of Sean have the We

open. is line Your

Sean Eastman

work a Hi lot I hard sure that. guys. quarter. into went Nice of am

approach hurdle light offering, got the the on if in maybe the perspective. of a equity I rate Just of But of we have wondered acquisition I color from the pipeline. lot strength just

the guys highlighted hurdle very capital have You program. on rates strict

that? years of be maybe discussion. sits launch curious a how will the reflect relative Just then since years And ago? helpful out of couple the instance, those, to have that you where that's of terms the over market that you of could sort a this on if today changed And the done past for just maybe program deals pulling couple in capital,

John Casella

changed. time, in this I it really our think from point hasn't at perspective,

and terms years, to out have same the that been We financial we are last of the going couple for continue that discipline of Ned discipline has laid Sean. following the in with

this time. think at that any I in is changes point So don't there

market. to with that's as don't I the the Ned, margins market, one said the well As long through another been Hamzah working but the way that before, period we time I other said, as certainly we will, lot in we as a market people want think do a different as just bit if, know are competitor, that have and of of of maybe another think that fine. the walk have with we competitor And Wheelabrator a for in But little multiples. I in this

Ned Coletta

we unlevered always asset it every at nature an new work we or premiums everything after-tax through we work Yes. depends And profile or bidding on just opportunity the have. a risk the business. the are whether We same, when at returns to really buying look is. It's look on putting risk where

trying profile, So of XX% we how than returns. buy returns overlays. the many upon cases, And greater depending north we business looking it are risk XX% are to

year post are times You we X.X so. look and over last years paying EBITDA f the one couple or

So it changed. hasn't dramatically

ours We are drive trying assets where and and timeframe. to within nice synergies can we that a can two-year we find do fit some opportunities

we same been that we focus pretty successful area. So will continue doing in to the and

Sean Eastman

target this of also sort there. just then have context million you in out And helpful. $XX Super of of $XX Okay. offering, the revenue to deferred equity million annualized

On target? above right still forward, that a been the have You that go consistently. is

John Casella

for question mean, how it target, think financial at changing have years. going it looking range. we I before over you going Yes. of upper obviously, been standpoint. that of we we are And in are is. we to the change as We And of end asked a are to be that not the the that from towards couple a range terms

clearly, that $XX than in lower But that the we at think the it's at closer this to end we I So of the we the million likely see, would will time, I point it. range. will conservative don't view, be change

Ned Coletta

as It's don't range opportunistic, acquisition. Yes. We acquisitions guide XXX% And long either. you know. we don't budget

operating, on the a have side, of we are both have lot doors added got on the the a out resources, IT knocking pipeline. the lot side. we So finance in and we And

side. to tried development have We

have We and even up tried can we effective cadence our operating get synergies more from and position where to pick faster. ourselves HR into integration, people, be standpoint systems

we trying trying we over So can few are had of the learning and more lot and years, we and last convert we experiences a make improve more sure to effectively. keep

Sean Eastman

But XX% are number seem stimulus coming out from you talked of guys And a volume on volume that revenue. you. go last is, the Got the that with forward like one money in being me terms recovery something clear and it as doesn't on. conservative you big remaining about of

is then this than just and understand there, around So the in real a recovery? comment. feeling is what get to some like volume exactly sense get I is also risk trying to on just And inherent just context to the XX%, what on that what wanted for

Ned Coletta

Yes.

So I line was the talking commercial of business. specifically about

that's demo do construction there and a industrial So down, Jason, business, some Then back And are business been roll-off has had been some -- who you customers three were down. customers. has recently? our the places have probably Small, which landfills, hit. read the We to commercial

Jason Mead

XX%. About

Ned Coletta

XX%. XX%,

little Greater the don't the out run York markets. So But of customers some an and we that New and there. New and has We hasn't of we trucks bit area get rural are area as landfills that's of still other rebounded with as much secondary our do City just of lighter service at City. we some York volumes to north that

solid inside There we when and well. some of in a to lagging we as volume are X% it's small impact the overall X% at commercial. the So roll-off about just talk impacts waste, impact landfills and talking are not

Sean Eastman

clarity. compliments. helpful guys. Thanks That's super Okay. Again,

Ned Coletta

Thank you.

John Casella

Thank you.

Operator

sir. you, line. another from do have the Presenters, question we Thank

We Alexander Leach from Berenberg Capital. have

Your line open. is

question. your ask may You

Alexander Leach

for across been solutions? been how What's side, number But demand for has has existing the environment mentioned customers up in business you like wins. on new customer the everyone the else? customer And up holding additions I how held QX? flip a of demand in know then industrial for customer

Ned Coletta

large had services into our was existing the to is which area strategies, for in industrial I for the exactly week of So solutions the share in of will and it's last resource me this resource there. solutions customer solutions, one addition growing key Probably I customers, are in start dig largest of wallet. growth our interesting. Jason or

So that it trend was COVID. very nice to see continue through

been has working had and project a able on-site this through project. working customers little be with and be lower special our we work to these to bit because of Some

actually increased what was out nice then has And question, there. the backlog -- I our that's as industrial? look into And think was So the future. last it we

John Casella

was of part the last Yes. question, What the Alex?

Alexander Leach

solutions. been then part And was, QX? just in customer was about first like business the environment across the new what's part additions the customer for second Well,

Ned Coletta

Yes.

Sorry.

part. your So part. customer addition new customer The answered I solutions

and of those there reductions. new right we new business it's markets, a net We not coming business to at some secondary the into formation. have and side COVID additions But rural in formation hasn't is customers outstripped some But pace customer seen now seen commercial business. business the new new reductions. service outstrip have It actually still on and our the

John Casella

Yes.

nature. being residential in home, I think is roll-off from in of With terms people standpoint a remodeling, that that a seen an there of well. activity out, we pills increase clearly cleaning of have as things lot

where that's as probably we have also benefit seen area an some So well.

Alexander Leach

largely Thanks. on with that are Okay. Great. play give all increases pricing lower due more else then is concessions quickly, at struggling pandemic? a there? for the quarter? just to level this of who just there could Is pricing color commercial And bit customers Or you collection anything

Ned Coletta

really se. haven't pricing given per of just lot confessions We a It's more timing. the

get in programs pricing. our third through back to quarter So our we will quite dealt we do paused because pricing COVID, our with ahead And have base through customer the of that bit door business need early into a and we the in the got world quarter. of then first second reflect the real with we we out some of with our inflation then out quarter them COVID our and as pricing to and do

our long pricing disruption no third of, term. real It's just So a quarter. push is for and in second start there of some back dates we matter

John Casella

increase the majority of the the done Ned was said, done January. Majority first year quarter, our our though. pricing And in for of price as in was

Alexander Leach

Right.

Okay. Thanks guys.

Ned Coletta

Thank you.

Operator

further no line, the are questions There on presenters.

may You continue.

Ned Coletta

John. Back to you,

John Casella

morning. to our day. year. forward Have guidance and February great fourth our this joining a We for us XXXX earnings in discussing everybody everybody. quarter next Thanks of thanks Well, look XXXX you with

Operator

Ladies and this conference today's gentlemen, concludes call.

You joining Thank may for now us. you presenters. disconnect. Thank you,

Casella Waste Systems (CWST) 30 Oct 202020 Q3 Earnings call transcript