CWST - Earnings call transcript Q2 2021 | Casella Waste Systems, Inc.

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Operator

Good day and thank you for standing by. Welcome to the Casella Waste Systems Second Quarter 2021 Earnings Conference. 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 hand the conference over to Joe Fusco, Vice President of Communications. ahead. go Please

Joe Fusco

and a for those our and must President questions materially us everyone Executive about this as of and Harbor and Private forward-looking the remind our Reform may that provisions Company’s various the released statements of SEC. morning, XXXX. in the of statements important discussing our discussed our Act Ned and Thank quarter Vice second file XXXX the well. results Senior on Vice XX-K, are and joining John results make activities we remarks those of for which But With President, on Actual that of Finance. including first, prospects report I President, Johnson, Ed were Safe today expectations, Waste be Financial the Factors the of answering Chief Operating factors, Mead, is and we Casella, results. welcome. from may section under afternoon. know, yesterday annual a everyone brief plans, Officer. Casella future an update Coletta, those Officer, result you most Chief with as purposes of constitute with Litigation the Systems; as Risk those business Form us Securities you various Chief Jason Along our forward-looking by Chairman indicated recent on differ Officer results will Today we review your These Company’s will be environment, and

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

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

John Casella

Thanks, Joe. Good morning welcome to XXXX our everyone call. quarter and second conference

our perform As evidenced results, team level. at a our continues to by high

period customers, executing increased sustainability this We to managed we our very the uptick variable prudently costs maintained economic activity. levels. service focus recovery we services well are growth, key reacting back and on business the of with against in our into the the quickly needs, At Through strategies. time, coming same

period of as expansion compared of XXXX. the hardest-hit XX% pandemic. compared the to we improved EBITDA which solid X% the volumes expected, grew were over revenues the the over period with As to was XX% up quarter, second and by in in In same margin second quarter XXXX over quarter adjusted our waste

We also continue free of year-to-date to growth XX%. drive improvement cash flow adjusted with

week this Connecticut-based earlier Willimantic announced we As acquired Paper. Waste

has with that our week you The Connecticut. I recycling are its the hardworking an of established this business joining men the as of to operation, I’ve details market we to to pleasure aboard into company This of run with XX,XXX would to that operations expand the into to cover to exciting dive acquisition service mention customers and Connecticut. of and great and customers. waste experience our Willimantic had the solid providing the team. integrated in with forward the presence some meet for services eastern you truly is look I all as welcome has decades provide like women I we well Before working

Tom of has operations. said, Connecticut. operations platform I a commercial it’s have taking roll-off-services, Casella and terrific consist municipal, and terrific residential, built great customers and their operations a done Tim men Collection that terrific a other of hard-working job really several of recycling include company care DeVivo As a have for of women number in and

transfer waste was Solid rail-served C&D processing. transfer, a and

and the working Willimantic stable tonnage will provide are operations to to volumes supply site. brief we execution rail a and recent long-term key I bring performance will review And related McKean internalize other in Casella against of to and we demand the Northeast, highlights. strategies Given look as now online. further into the our our dynamics landfill sources

City while our We area from recover. to it First, to disposal have third-party have of collection the slowest were volumes up accept quarter, transfer the of several operations many around back as York customers New waste online. been do the the in relates but as landfills our expected, The in volumes from fully and not second city are stations.

not of improved from We the sites From which levels, yet. was the a advanced we across lower back these are however, volumes, combined slightly sequential with X.X% pricing has into third-party in labor quarter, price our of landfill these impacting in activity some perspective, seeing trends resulted coming first quarter. a truckers as positive volumes shortages modest improvement

focus higher to on and We help and further disposal initiatives drive operational to assets. permitting value various across efforts our returns continue also

facing along volume opportunity this we’re emphasizing we’ve the other to our of being Moving to employees Ed today’s will we challenges through of I only company mitigate the also many operations we take trends. service our our through talk the an to price the this We about on labor prioritize XXXX in families. we’ve Throughout Ned of collection and working get history are provide pandemic performance created exceptional and we the and the is unprecedented environment. wanted business. what of another. and with the culture was how positioned customers, COVID-related seeing to supplied details evident. on a foremost In care to with recent not employees frontlines. but their of our each and did our only health gears, time keeping first especially safety to one protective the those guidelines people our and and customers, Not that but safe, helped of overall company, take

their increased XXXX across meant loyalty Labor a playing are frontline received. Day. and we our deserved also with While These and much bonus is organization. it’s actions special operators well around to hero’s well the recognize a employees hourly lot workforce, through dividends in This

pride our several significantly of improving trucks. our focused drivers, last also operational we’ve take the in that We the Over recognize years, team and quality on our great fleet. mechanics

easier application, highly the For very budgeting and allocation equipment all age, skill against has by automated truck prioritizing and across are more the execution our replaced, broader when be markets leads in employee to this set, creating average to ultimately area enhanced improved based the levels reliable broaden Ultimately more visibility automation provide each is fleet much employee downtime, morale the have lower fleet our multi-year fleet, innovation reduce operate, lower initiatives plan of of have pool and this resulted automation. the absolutely chassis to we enhanced that, in in helped in fleet, routes lower body pool the alignment to in inside Further, trucks those terrific. impacts retention. the process. mitigate is and for in factors and has trucks, and the standardization organization satisfaction turnover trucks applications where a labor to which the These driven we’ve a positively on which less capital maintenance, all technology in instance, productivity, safety invested labor within higher require

in areas coupled success challenges. helped Our limit operational have with other HR to labor these initiatives greatly

rates labor have significant labor to not experiencing shortages. of are not significant had levels – We and we drastically labor change

Next, our perform business, to business resource solutions well. very continues

with Our benefited operational have coupled prices. improved recycling recycling commodity processing higher operations performance from

upside prices SRA fees. have of tipping and shared portion fees, increase, rebates lower As our we customers commodity lowering higher a the with

programs, fee recycling risk our very risk of Our the us from exposure with well about mitigation XX% recycling protect on only commodity downside volumes.

to and that us well sustainable. and is both economically structure intended environmentally a So allowed as our is model risk-balanced working has create

on level of high are as well continue performing also operations a services we needs. management focus resource to have non-processing providing to sustainability-related Our who often customers large

the As alignment enhanced organization. combining solutions and to our customer across our organics back-office teams, bringing we and envision solutions recycling driving under value higher is operating which is sales resource

conversations our we’re year. We labor tax that I activity driving acceleration – the acquisition go that the the balance to the many would XXXX working factors of or highlight growth heat next We’ve had sellers last are over several like such could with Through challenges up. strategy. several to potential capital goes opportunities allocation further Finally, the months, into continues of and on productive certain that and pipeline. reform further as and believe

remains pipeline robust continue well are our against key well-positioned Wrapping sheet the grow to our is strategies. executing and Our to balance up, we business.

flow have Amongst raised July. drive we’ve for and free XXXX continued at Vermont We continue of entire had turn is business guidance. pipeline here over with and torrential we our month enthusiastic to to again to it cash are which ability growth. Ned. expect strength our the adjusted across we Further, I’ll downpour that, the And about acquisition what the

So Vermont. in it’s very green

Ned Coletta

and rain train horns. change $XXX.X Hopefully, in X.X% million everyone year-over-year million, year-over-year me a can by the second with Revenues were the $XX.X quarter XX.X% or acquisition over activity. hear the up driven

were of X.X%. price with volumes a roll-off and of the business up were from we is price year-over-year significant didn’t business. a XXXX line when line volumes of revenues of in XX%, up volumes acquisition sequential Revenues was impact have the business residential X.X% the slightly the up last in year-over-year. in waste and over over This X.X%, collection XX% as up X.X% XX.X% volumes X%, waste of up solid were commercial up line up with year. year-over-year quarter and XX.X% with COVID line X% The first down Solid growth with X.X% year-over-year up improvement business,

April roughly or last discussed another now up the basis. Revenues at we late close tons up recorded collection on year-over-year year-over-year. COVID. line pandemic. the services or the year, disposal suspended with or were we’ve have basis a Since levels of sitting reduced off over services during revenue that of industrial COVID-XX X.X%. were industrial due we and on recovered, – pricing revenue XX% have Landfill of any in of XX% the XX.X% were roughly recovery commercial up service Through landfill kept business we’re who volumes April, to reduced have even XX% we recovered commercial these and customers track a As shut XX.X%

tonnage landfill a higher result Almost year-over-year on mixed adjusted quarter, third-party levels. of on pricing New driver pricing. higher New quarter, this Resource However, year-over-year. for pre-COVID processing points trailing $XX.X up year-over-year, XX.X% were in EBITDA waste the million this mentioned the basis, as the and tons ton at XX.X% basis and revenues revenues in down commodity still the solutions and non-processing $XX roughly higher X% typically up our we’re margins that area. lower or Average per York with companies cardboard trucking commercial million recycling months higher and City move were greater State and XX landfills. EBITDA or metals is impact York was is plastics the in Adjusted and activity from XX.X% higher pricing, commodity to ton XX were all volumes. paper up XXX,XXX mainly of versus city negative prices And John year-over-year shortages per up $X.X

expansion a and points XX a drove basis to expansion. performance year-over-year positive points recycling positive the margin of our waste XX Solid contributed basis consolidated

and incentive programs, and performed integration, Our margin headwinds very compensation. acquisition core including with few pricing the business fuel, operating notable period outpacing a well overtime, in year-over-year efficiency healthcare,

However, it’s to were XXXX. these up that note QX year-over-year nature costs the to due unique of very important

these categories However, QX, from stable most were XXXX. of QX to

the in with million million Resource quarter, year-over-year both EBITDA and up $X $X.X year-over-year. adjusted in waste the up EBITDA Solid disposal million was adjusted up. quarter, was collection $X.X solutions million $XX.X

fees increased the during pricing rebates passed As and recycling fees, much intended discussed centers. our higher to processing of was processing through our as recycling SRA our the back lower management customers risk commodity lower or programs John earlier, quarter through

million of timing up roughly during as initiatives operating such but million continue prices revenues. down and results equity operations $X.X were commodity the higher the percentage XXX against driven quarter $X we the worked percentage key improve revenue team improved higher very with increase was and as to a quarter. and a year-over-year, $X.X basis cost million higher have categories of of However, by due as Cost collection $XX.X business operating hard of volumes and million General costs as differences points automation, up to and the our to optimization. as costs Many control a by has to well returned year-over-year and execute administrative accruals in performance. bonus route, did

valuation Given cash tax in approximately we tax remain the reversal XXXX, allowance our taxes the expect XXXX. will approximately an statement XX% year XXXX, at in however, of year provision in of fiscal income $X.X fiscal million fiscal

income from XXXX. in to share This provision the up $X.X $X.XX EPS. was increase quarter, Our tax a in million the resulted same in million year-over-year period per $X.X headwind

cash. approximately $XXX June we XX, of As had million of $XXX million of and debt

Willimantic X.XX on acquisition leverage consolidated was ratio June for net times Pro XX. of the XX. July closed as Our forma

times roughly approximately of with pro liquidity leverage Our X.XX million. was $XXX forma

and Adjusted year-over-year. our expenditures acquired we smart structure cash as synergies XX% cash to strategy to was up invest in is up mentioned, capital year-over-year. operating $XX.X provided Year-to-date capital our free by us million expenditures in newly million year-over-year, liabilities flow operations position up by changes flexibility Net million capital a investments were and million driven continue to planned in our or great higher grow through positive year-to-date million operating to efforts. year-to-date, drive John results $XX.X believe and was operating $X to activities continue and gives integration execute we at $XX.X assets As acquisitions. and growth $XX

the of also continue Landfill. development the in landfill X at expansion invest USA Phase Waste to We

XXXX. in we at that time. locked back ordered that we’ve expect this we’ve – of we the year, XXXX Much been expect We in to capital expansion complete expenditures pricing and this buying actually in

However, our skyrocketed pressures at steel have and as materials we have for recent experienced and certain inflationary construction prices dumpster landfills. purchases

We adjusting accordingly. trends our watching are and these closely pricing models

the combined our raised and visibility XXXX We year, of guidance year-to-date completed fiscal the our execution increased economic Willimantic solid already the this second our contribution including Given acquisitions expected trends with of for ranges our The remainder this time in modest year out stable updated with press laid economic year. assume through solid rebound continuing release waste environment ranges the guidance These in of a volumes. are a the yesterday. XXXX acquisition.

comparisons guidance acquisitions from to in volumes revenue quarter in more become the waste the XXXX. X.X% roughly challenging. up of third solid X.X% expect and We be fourth in up and The year-over-year X.X% the XXXX includes quarter completed as growth post-COVID already

Thank include any acquisitions However, to with yet as hand not completed. it always, And it I’ll be does that, you. over to Ed.

Ed Johnson

Good Ned. great morning, quarter. Thanks, everyone. Well, another

well was basis have of business. perform by side, knew XXX comp ops of of COVID. on We collection the percentage cost to continue in exceeded were to a reduced all even because lines quarter and though revenue very We plan going unusual consolidated last over we tough we of major points. of very QX we year as operationally a a

the of as business I continue internal segments. improvement on of go real-time we through of onboard a it our routing business. long-term the margin I use implement upgrade to So increase automation, collection systems, as The is thought talk and manage stat we be operating to two-year of computers, improved to reports track would to that beneficial level trends line

our having team their the the a the disposal difficult efficiency a forced people were COVID to unanticipated commercial homes. flex did line, cost the affected However, in last protect pandemic but overall quickly to sequester low cease our there and people comp no in were and of benefits couple traffic. were moved weights of to by job, great businesses asked and QX as was was year. and operating as significantly We

margins. to back boost a decrease more revenue of ops temporary year, XXX faster dropped than still reflects gave improvement. a which as is it long-term This and of our XXXX, compared cost percentage revenue as of point in a lost our went of up year, cost normalized QX from us Our a but basis last picture

made flex last year, points. have we reduce of COVID the XX% which QX additional see improving was costs XX landfill sensitive. efficiency. little basis operating years, full activity our compared volume very XXX revenue operations, basis the points. revenue tonnages, financially two by the still capability doing down but of fixed year, as we past are percentage down ops return, we percentage Landfill and cost a were costs have with reduced revenue to on high economic year, cost of substantial In effect of Over as progress managed the of to reducing prior volume what a as operations benefit operating some of and This to been have starting an ops with

Ontario the Sanders I give County a landfill, for led Johnson the has and there. and New to Mark biggest they’ve special in Our the work great want shout done York out charge Brian

cost biosolids well. remain solutions last Our in improvements year’s of XXX also QX group operations XXXX of includes group a XXX versus QX QX our fairly basis last points of This from of cumulative resulted of operations recycling year of through as volumes of areas points resource performed a revenue has in percentage a in reduction and and XXXX. these disruption. and Operational steady basis

to will on operational that improve efficiency. initiatives further continue We our work

that reduce processing recycling will per We costs. improve investing technological quality in and ton our both increase including are facilities, product innovations capacity,

vehicles. of integrated computers are our systems our camera onboard use We expanding and on collection

increasing automation steadily our level our are We collection residential line. of in

and issues heavy equipment collection to arise. and We efficiency equipment confidence they improved that are our pre-planned implementing initiatives continue and we reduce efficiency and facility long-term overall post good our to workplace have all real-time existing operations. and can completed environment that also we basis developed the operational plan equipment improve costs. in as we just of timely And Similarly, us These will quicken have attract to upgrade people. business to capital right-size on retain a plant long-term to response replace intelligence give operational the reports activities, a

to Willimantic this joined place As you with having the Casella hope week. Casella team welcome a closing that We that, employees to to you’re it find like to great I’d long comment, to start the we I Q&A. back would forward us turn and same fruitful operator to With to like work the and the be look as have. careers

Operator

[Operator from thank Our is Instructions] with first Jefferies. question And Hamzah you. Mazari

please. question, Your

Hamzah Mazari

of exposure so on just morning. Great, you mentioned get part you thank of pre-COVID first imply half? New to And guidance get as for above why have levels levels? would sort when on and be quickly a to pre-COVID guess back sense pricing Good much. that, How the volume. Do you can York on, you’re the you you your I second there? in year not question what’s of this

Ned Coletta

and Yes, I’ll lower, we’re construction want of so actually $X on side, the then now. And you Hamzah, than industrial the do roll-off minimis. so could. Yes, levels higher then And de of on revenues the on start pretty annualized commercial John, side, million you to... business, and we’re on first side; an collection line pre-COVID million, $X.X about right basis

John Casella

Hamzah, City around that X, expected think you July going aware until was and the should it so you’re rest just But if the opened of remember, and we sure to it, X. I was improve the I it July XXXX. open I’m of City didn’t say, well continue through to

Ned Coletta

Yes.

Hamzah Mazari

Right.

Ned Coletta

distances workforce. people we’re job volumes and that from expect help, some as of back, the with – our to is driver landfills something there. building And has and retaining we federal really of some to York far And programs doing roll haulers when third-party I the John seen moves interesting challenges. But of the very but seeing hiring the our some think to some we’re drivers shortage New a that described, and labor where, it great

our business directly bit So it today. is but people impacting a our not

Hamzah Mazari

pricing, guidance Got just expectations what’s your your it. on forward? on going pricing And in

Ned Coletta

Yes.

the three rest as we to and level X was it So, said, want be And we or a year. of for expect the lighter QX of – bit three rest of kind quarters that little we’re expect we for pricing the we we around of to year, expected, to QX X-ish to was the – be. kind mail than where

Hamzah Mazari

pipeline, talked transaction. like? it. What changed And hands. know the you the just the I Got look pipeline know current does on M&A about I Pennsylvania

right you just to up, of you be didn’t the do to I you think that’s in guys of of about be get guess near-term to view it is know normal. talk the as doing sized sort higher rate longer-term I but maybe going think any can that but consistent higher You Or forward? and going run the going now whether just you’ve the than than transactions forward? asset, pipeline going – deals level you’re

John Casella

of above this – done five taken a I million we of of think what have activity right there’s that to from acquired we’ve be seems we’re obviously $XX there do had bit laid and a of it and labor approach transactions out and the in we though, because lot a as so have conservative now, is a lot And always of a activity of activity. year. we lot revenue and we terms guidance issues, what

If quarter, you first weren’t activity you in we contemplation tax – us talk but from if seeing now. are the to the we and

people are of it thinking tax Some changes. in about terms really

lot pretty because to completed conservative will to just as consistent the target I but it changed X,XXX a Willimantic, the of there even M&A in be would be we second clearly standpoint, are think throughout over-performing side, And we So working of still the are on, from we that, happen think would talk year. that we And a from opportunities transactions ago, from going that has didn’t clearly not in seems an half though a that that the dramatically. there an indicated number year we M&A been awful an and had we’ve terms of if we of things still million us activity. We standpoint. on that though that have had – still we’re is have which – mix opportunities, a were there you

Hamzah Mazari

you. so over. Thank you Thank turn it much. Great. I’ll

John Casella

Hamzah. Thanks,

Ned Coletta

Hamzah. Thanks,

Operator

question next with Stifel. Michael comes from Our Hoffman

please. question, Your

Michael Hoffman

guys. Hi,

John Casella

Hey, Michael.

Michael Hoffman

every am a be So, service. reliable it quarter, must pretty pretty sure I that

John Casella

rely It on. those big through rainstorm a is. Even

Ned Coletta

Yes, certainly.

Michael Hoffman

Yes.

opening in presentation doing are And so, you been days. community there, you’ve these the community practicing the theater, for your remarks theater

Ed Johnson

He’s definitely community doing theater.

John Casella

life. whole my Since

Michael Hoffman

the you’ve bigger more things guidance interest us questions owned expense in things we are the what now looking business goodwill Can like on longtime so fair through serious a interest second that your the D&A, basis, of like those for family next like that at couple with So expense, half, has you that? and that, layered probably amount a intangibles, no help maybe things got SG&A?

Ned Coletta

Yes.

expense, right of take we interest structured So, expect tax the was up. Willimantic it we around able $XX basis year. million rest transaction, where for the are the a with And now to step

the So basis Michael there amortizable standpoint, airplane, goodwill near-term planning little both on will which be with a from is standpoint a standpoint from in higher that weighs the D&A, G&A good up and intangible to number. and actually I need and a step bit from tax tax quote

So, G&A...

John Casella

half We’ve year. the D&A in $XXX other got of million the the of the

Ned Coletta

Yes.

on me. case front in of that our think number I

Michael Hoffman

Say there. again. voices several were There that

John Casella

got D&A million $XXX we’ve to Michael, into. of on year, that the

Michael Hoffman

DNA Oh, million. $XXX is

All I right. that… Okay. mean I like

John Casella

Yes.

Michael Hoffman

to am somewhere that. the I million write then and $XXX $XXX SG&A, that of kind And land between probably is going million?

John Casella

– Yes. we detail that then include let So – are at Willimantic? me does and

half be $XXX will one be – It a $XXX million it’ll year. to will around range, million around so Michael. So one

Michael Hoffman

going so forward, forward is then, of last get And issue what’s the high we back tax That’s right. to all rate this valuation that it very because tax Okay, the year, get year right? helpful. but

Ned Coletta

Yes.

non-deductibility the has which for done of contributions many in been depreciation. there, tax We’ve income and with a very with taxes, it hasn’t at the energy but focus done effectively of and cash than it position our credits. haven’t work to that’s net effective other like, some and our we in a a do we’d because of loss with higher we’ve had done and – compensation we’ll years tax we’ve lot tax on more landfill a to with it managing has been operating little we’ve look like do gas lot statement much and a to actually be So rate charitable and done sitting but XX% of focus to some

because is normal from will strategy focus going provision it on a you’ll looking income a something point So the is this we the see from we’re standpoint, it statement. at on. And area, Michael, forward,

Michael Hoffman

XX% use or year? I next for should So XX%

Ned Coletta

XX%. use sorry, I’m

Michael Hoffman

Use XX%, okay.

Ned Coletta

Yes.

Michael Hoffman

All right, helpful. that’s And then...

Ned Coletta

on Its NOLs whatnot due up our XX.X%. And actual statement tax lower, is the just items. course, and because one more income of cash but rate that, point of non-deductible is like to

Michael Hoffman

it. Got

And on still that’s the XXXX? doing you’d really of bit, it a helpful. until very turnover you NOL Okay, think your kind doesn’t based little XXXX, stretch you on M&A, it

Ned Coletta

We’ve looking XXXX Yes. that with help us structure able to transactions very effectively later. to been we’re out, and or

Michael Hoffman

you the that’s have back Okay, but stronger is, operational if it’s I’m helpful if relative and guidance on being presumption then what visibility City. New July New issue This your July not a as been there. well. that is a would starting on so will, number? clearly critical been The fully raised York knew York muted little the had if had – City is more about X, little when – May a of a City, look X, to hypothetical, July is on on there you you But that’s that it. this New February muted That’s it’s and peers, would I to and of York higher if you year be some volume

John Casella

where two That’s our different...

Ned Coletta

a maybe us. don’t of right but we risk fine with recycling well, built a fair and now, we much as system think tailwind I that’s as to have we mentioned, very And share

to we’re return a recycling. nice what We’re achieve out and set doing in making we exactly

Michael Hoffman

Perfect. That helps, too.

you incremental either there from opportunities of uncouple a the credits. some it. talking is might value, have little landfill gas or some Can repositioning, for lots to about come talk company So maybe grabbing grand doing been you’re operations bit what that and including windfall the about, development

Ed Johnson

with Well, partner to as we parties plants. our you gas know third build

now of at R&D our toward most moving We’re sites.

opportunity, a model our the have of gas but we and share risk is basically sell them on our great the lot minimize upside. to We and then, and our capital

long-term conservative that model partner work we we estimates. and when somebody, starts with on a where very take upside So we

now, that conservative like RINs can. the market stay we make and we is want things right as RIN sure So as we we to because we share on spiking know so upside much

John Casella

bit I forward. grid. is don’t But a that a that going it able from gas standpoint. Michael, the opportunity, a think I get a that gas little an energy there facilities landfill those bit that an pipeline-ready moving going a there especially – dynamics the aren’t And is to opportunity, and to change that technology for bit from do is the is dynamics to opportunity innovation to There is change think create more

Michael Hoffman

Any that to a or might Right. cash sense what bump mean on in EBITDA?

John Casella

I this mean, wouldn’t in be a into that I but that don’t, this the time. positive, at think will point. I it’s point be it possibility that is putting could we I model I – something wouldn’t there it think – be at a

Michael Hoffman

accelerate development the into Okay, Willimantic help rail, fair has does McKean enough. play storyline? how this it McKean or does

John Casella

Yes, up facility does. McKean it and The operational. our surely bring certainly strategy to into Willimantic fits

early operational We’re bring to return got end we’ve get tons control operational. at puts we’re that of put up, expect But have in doing going the a through engineering process absolutely, McKean of XXXX. now. that very XXXX, tonnage toward it team the the maybe We up together, the and McKean, more to we helpful it a and make our because in make when sure necessary nice to it it’s

Michael Hoffman

as to of put have going the help that to in as state is fund you some So they... a spur

Ed Johnson

million $XX the not. will possibility. infrastructure, or once Yes. that not a we for for had sure pursue that We rail There I’m whether received grant is

times, – the of of we’re out a cars. going amount damage build to having the the it in facility very going to in and high fastest at level the turn to We’re terms least do

as high do. is paper what point got quality time. – very build So That’s exactly we’re out going to facility clean in it’s opportunity sheet an of at a this we’ve to

So there that really opportunity is us facility a for nice to build right.

Michael Hoffman

Okay, and you me, last the I manage you one think because – for need it just news flow. helps

perspective, got some landfill in shouldn’t the it’s New everybody papers interfere can put So You’ve it is with it, there you spill, the managed having stuff leachate so on and top of about the the second... Hampshire that development in understands? of

Ed Johnson

unacceptable. it’s from very it’s – I’d an disappointing standpoint, say, we it’s unfortunate operating and

I – as in and made sure a policy cleaned we’ve DES terms standpoint some and a out. over through said, made to that in been on some duplication to The to basin. of We’ll and as issue. certainly addition up from retention unacceptable it’s doesn’t changes looked changes work work the some at continue in particular. weekend something the personnel And went changes are that have into straightened a with We leachate happen. and That’s make have we issue well

retention basin, unacceptable. cleaned did an up been It into of, it’s been it care has and so... a So has it go taken

Michael Hoffman

to go not journal the river, one the it did may it which journalist was the suggest So trying – into have?

Ed Johnson

not That did Absolutely not. happen.

Michael Hoffman

All right.

Ed Johnson

No.

Michael Hoffman

But you... I point good of case think that’s clarification a in

Ed Johnson

Went retention Correct. basin. into

Michael Hoffman

very right, thank All you Nice much. quarter. it. Got

Ned Coletta

Michael. Thank you,

Ed Johnson

Michael. Thanks,

Operator

Our next question with James. comes from Tyler Brown Raymond

Ned Coletta

Tyler. Hi,

Tyler Brown

Hey, guys. morning good

Ned Coletta

morning. good Hey,

Tyler Brown

just feels guide. just of volume? and on real how million million M&A. M&A of But Ned, $XX how core the it’s maybe that and price quick the just that is Hey, increase It like much is incremental in in revenue, much to mostly $XX an of

Ned Coletta

the million side. $XX M&A on associated Yes. is with revenue

Tyler Brown

so... Okay,

Ned Coletta

Roughly, a to attached XX% it. margin

Tyler Brown

I on going Okay. ask Okay. EBITDA, the was to

a million of that So M&A? good is the chunk again there, $XX increases,

Ned Coletta

M&A, is $X million million is core... $X Yes.

Tyler Brown

Okay.

do, and So be like could I there you’re do can’t price you upside the mean, you like feel volume, tell restarts. maybe on conservative it maybe sounds being core I on like presumptuous here, being feels on still but there being – it conservative I’m – not you’re the

Ned Coletta

even QX to and Yes, we’re while slightly a both on on close right budget, tracking lighter now, mentioned, we’re as pretty price volume in our we ago, little volumes. and

conservative on track this well programs We’re can again. quarter efficiency and on we’re a tracking bit back hopefully, guidance we and come ahead during and – adjust little being operating probably

of to this in just ahead we’re far too think, trying ourselves not environment... get I

Tyler Brown

Sure.

Ned Coletta

gaining have margin of so been our a both we’ve we’ve lot – moving a a more stable a volumes real job as period, costs and and there. businesses in with complicated it’s changes profile usually cost are actually back some had And kind pieces, in there in and our standpoint dramatically, confidence changed we’re and from great controlling because and doing of volumes been ramping

Tyler Brown

you going back maybe but that there? takes on that, out XX in and there. again, touching the Can thought of a what basis there of and commodities margin was of So XX puts was the what lot on I parse are kind numbers that – improvement, were points

Ned Coletta

a It’s Yes. good question.

interesting. it’s So

points waste points Our XX from from and basis basis came up, recycling. XX XX points basis solid

fuel basis up did there such price – time, we system lower over up points, everyone in lower we – much was our XXX margin was fuel and over customers, healthcare there’s of that. basis had year headwinds get comp last to much labor, improvement. still all because for give some fuel, headwinds, incentive basis which But we XX period almost strange nice really that our points, but QX increase commodity how our XX a basis know don’t year-over-year, was to So great, back despite is up up but too. had you I points. XX time like these things detail lower points, And want

our kind core in contexts operate think very, well of the into business you that So second very you and take quarter. about

Tyler Brown

you you I’m interesting. look at but Very the it a margin looks back in great again, out going Interesting. at during half. like flattening to But not Yes. if then, may guidance the see be math and

John Casella

don’t know sure I about I’m that. about that. not

I think that. pretty you’re in good

Tyler Brown

Well, anyway. yes... anyway – But,

Ned Coletta

significantly little moving a beat maybe we’re think, point, to second with new guidance your have up the but hope to have being and raise the pieces year conservative the moved I a and ranges we them. on throughout year, acquisition We we

Tyler Brown

is an Can you just you paid And lastly and what there then Okay. disclose Willimantic. earnout? on

Ned Coletta

paid our There’s for disclosing are it. not what but we in not earnout, we

Tyler Brown

Okay. just And then lastly.

you hear did in? XXXX John, to rail So that or the you’re I right, talking – on McKean, late get XXXX

John Casella

That’s in at in plan. our is team’s plan this The correct. place. That’s point time. That our

We’re XXXX. moving of the be It or it forward early now. end XXXX will

Tyler Brown

hope C&D accepting bring start assume MSW of Holyoke? initially it out Willimantic with in would so a both And I and longer-term to

Ned Coletta

Yes. Exactly.

working be this move site the finalizing many know, we in pretty the are to the capital move environment, there. in plan have since out MSW like would things assets game build to Our and capability for permits do you to on C&D but And on early MSW design we’re to far. rail side, as

we’ll on his finalizing working through there it get we’re and So timeline. the of sense a design work the then

Tyler Brown

Thanks Okay. All the for right, so guys. time. much

Ned Coletta

Tyler. Thanks,

Tyler Brown

Yes.

Operator

question Eastman with from comes KeyBanc. Sean next our And

Sean Eastman

quarter. Hi, guys. Nice

Ned Coletta

Thanks.

Sean Eastman

Congrats Willimantic on the deal.

Ned Coletta

Thank you.

Sean Eastman

think are tightness wage driving you on is the labor momentum shortages, hand, on to Casella not but I that labor seen guys pipeline So the change in seeing you other said rates. acquisition hasn’t having one hand,

how I... So do

John Casella

No. No, that’s – I think that we said that now.

ago We’re – XXXX... of couple had substantial years we changes in XXXX, a

Sean Eastman

Yes.

John Casella

substantial activity our the had with substantial almost activity before the amount changes. XXXX of we and Sean. we pandemic, had We went through but labor rates that economic a XXXX, labor all

So we’re...

Ned Coletta

with serious think this. I that But not that, we’re I’m immune to

John Casella

No.

Ned Coletta

crisis It’s increasing some been places have have trying open intimate. have to some the to really, factor. really and from name us pay talked a think We slots they’re I rates, labor was for our and this both And a struggling think we safety companies you to treated but and us, employees, it I many. than has with and we we intention not where we culture John better standpoint from way have helped a

John Casella

built but the other Well, out CDL of of recruitment, built standpoint done HR we’ve schools, school. thing from people the also team is from high we’ve attracting our really we’re that only not we’ve

great Robinson we for each rate internal begin look changed and team a we to over sure but a a of more perspective programs from of drive that have from fact attract Obviously, whole means industry doing rates at our a hard in in the Kelley from that the operate, XX we a years. of of it the and put training in. people We’ve has I safety people out lot HR job really and markets reaching our competitive as couple work out the last making very standpoint. of done we’ve are that high to truck XX standpoint, think the from policy to to place school. in

of bulk that was ongoing us couple for the years of but a ago. ago, two years that’s So

Sean Eastman

Yes.

was Okay. That’s trying out. to what I flush

think I that’s...

John Casella

enough. Fair

Sean Eastman

Very helpful.

John Casella

Yes.

Sean Eastman

Very helpful.

John Casella

enough. Fair

Sean Eastman

we kind what half particular the you conservatism mentioned Okay. of could out Tyler’s conservatism is you it exit conservative really just there, acquisition clearly? to what Maybe potential on you need flushed as then of the margins And in a exactly second us a in you math refresh might be around normalization, little warrant half. strong bit in the first still continued but skills cost just maybe think

Ned Coletta

Yes.

So the comparisons in the get harder, half? much right, second

Sean Eastman

Yes.

Ned Coletta

because just exited conservative. factor with So XQ to being really of probably we’re manage on and we cost going to from I are it’s hand, into COVID something our when it’s of look not then just I bit enhancement. last think that’s QX team ourselves. day reacting But we’re get at, place, but operating trying and we those vantage year, the numbers. it’s keeping try an something margin to in great On point, biggest normalization And we’re got the we’re ahead quickly. a very point the every strongly QX and why eye We’ve first can where can another beat programs manage think and a we we to that’s add-in,

Sean Eastman

this Does enough. it platform, new kind in other element’s presence. does Yes, haven’t up is a of Since landfill, this just the And last a synergy establishes item mean on Fair for the maybe another... new on Okay. rail what interesting. it’s Willimantic. McKean geographic the hit I one me to we the pipeline. open

Ned Coletta

Yes. Really...

Sean Eastman

of... Bucket

Ned Coletta

terrific no and look a into forward and happening XXXX. Connecticut opportunities second are there a another too do it’s what’s Connecticut, the indeed that think Eastern Willimantic question to number and is that. platform associated we with the platform, the should It are the that about us there’s Sean, it. with of in Eastern and is of for year some marketplace activity I half also help reflective of into for momentum

Sean Eastman

Okay. Terrific.

guys. very color, helpful Another Thanks much.

Ned Coletta

it. Appreciate you. Thank

Operator

from And Thank you. Capital with Markets. our Leach Berenberg Alexander question next comes

Ned Coletta

Alex. Hey,

Alexander Leach

morning, Good guys.

Ned Coletta

morning. Good

John Casella

morning. Good

Alexander Leach

with back customers industrial of the to the are the so back what’s commercial some going the business online, coming these of so Why to late remaining XX% full-service on you get that And XX%? managed levels? guys with

Ned Coletta

Yes.

service scrub has we So everyone really did levels. still lower of who a good

going the it’s you just see We and the in the think a the I than Northeast is some being everywhere tourism-related. that of city. as businesses them of a slower replaced is didn’t bit with of country, well to I will come it still know out and at rest in little restaurant-related in this be survive still But companies some it period. And some back time is new think never unfortunately where

back back So at it’s that this lower the and a little when were level. associated normalized bit they come in run to we’ll – some assume and schools come we and that with whatnot fall, spring see they rates

it come never actually So will probably back.

done we’re You’ll point some it’s productive. gotten most here, replace We’ve and other on that ramp other work it some probably this volumes. at and back not customers back because tracking it with or of

Alexander Leach

it on Okay. growing then faster penetration business? Great. customer is side, still is And average. that you the update group fairing How us on an give could solutions customer the than

John Casella

Liza, for and doing that give business universities lot It to net the pretty or activity quarter. platform institutions no Jason, have A business of regard that? grow you overall dramatically with the growth a well. continue in growth of it’s to good question want you some actual second might will having a industrial to those team know you and sustainability universities. really that add or is. to as had colleges customers goals there. but great with whether those maybe terms doing really we’re Paul, that colleges customers, entire of are is terrific very quarter the probably will numbers book the the Jason job and Industrial

Jason Mead

of second in Little a in our X% but bit resource in I think, revenue had solutions which growth. to we’re revenue the to related comp quarter, we our the X% over primarily professional quarter, year-to-date, second operations, business. about solutions, growth is non-processing closer So easier customer services

performance strong there. really really, So

Ned Coletta

reduce the mentioned, really through. last the we’re there to and partnering and year And is vertically difference the with exciting on we that our the customers business a customers side, processing work everyone their to important really John trying asset-light this our well. it assets some team meaningful can on to is footprint ESG renewals. recycling as as the part way have goals, integrating gotten great in Because asset-light physical focus our of environmental it. new part organics and and is And we’ve of wins great that is really reorganize processing, make some part the and marketplace servicing we the because part asset asset And

ramping about. excited is newest our of we’re of lot super promise and line. customers University One and there is a that online It’s business in Boston this summer

Alexander Leach

Okay, Great. Thanks, guys.

Ned Coletta

you. Thank

John Casella

you. Thank

Operator

like any Casella showing in his the queue, to not I’m further questions I final And remarks. call you. for John to the back would turn Thank

John Casella

discussing look come to has earnings our with know. be Thank and you this Vermont, all everyone, for out finally We us thanks, XXXX glad quarter third operator, sun October. you to forward you, late in morning. in The joining will

three in I days think July we in had sunny total.

So enjoy weekend. the Thanks, great everything is Thanks. Have very a green. and day, again, everybody.

Operator

for conference with conclude And today. our Thank that, we for you participation. your

You may now disconnect.

Casella Waste Systems (CWST) 31 Jul 212021 Q2 Earnings call transcript