- Earnings call transcript Q3 2022

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Operator

Good day. Thank you for standing by. Welcome to Casella Waste Systems, Inc.'s Third Quarter 2022 Conference Call. [Operator Instructions]. Please be advised that today's conference is being recorded. to Wohlhuter, conference Director like speaker to now Charlie today, of would hand over the your I Investor Relations. sir. ahead, go Please

Charlie Wohlhuter

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

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

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

John Casella

Thanks, I Charlie. listening debut. hell this he's probably is sure Joe I'm as out morning know That's to of well. call a smiling as listening. there a he's the

execution, operational as So commodity I'm Strong great good third pricing the call. of of to to quarter course, another recent conference values. allowed well welcome outpace This recycling was programs us in proud our robust overall our everyone, quarter, as sharp XXXX inflation really morning, decline and and performance.

XX% We we carrying grew to period. expanded adjusted and the is ahead of in good EBITDA which third year-over-year looking same into while the margins, given in momentum balance grew Thus, quarter, the notable We accomplishment, have by 'XX XXXX. the revenues about environment. XX% by

same year. year-over-year At and for growth continue the the adjusted in flow cash fourth full We expect the free to we time, drive quarter growth. margin

year, against cash but which to operating only XX% capital execution also strategy. and flow per on multiyear We our achieve XX% performance discipline growth our our to continued are free track not of highlights goal adjusted our solid growth

growth price growth XX business, business organic year-to-date new driven been growth through and between and the this has balance acquisitions. driven have Roughly acquisitions customer inorganic core growth of core by The date our we of acquisitions. within our our through closed To been target higher We $XX million. on growth have revenue growth, XX% XX% of fuel $XX has within great with revenue, year, remaining by of with recovery million revenue fees. approximately outpacing annualized coupled

we and Our year. well. offset we higher fully quarter business perspective, for and so performing our expect leverage fuel the risk to ever. recovery model fuel are ended through remains prices we the of mitigation full the we program impact do Further, From a are lowest resilient our cost at --

we a per our this inbound of was up the measure improving also see quality review provide in our great up recycling we position and well the our will and helping the the expectation of remain on from and streams remain Ned cost risk perspective, Landfill sales brief will quarter, placed a are like positive close offset positioned. help I'd innovative price execution. out us tonnages landfill in cover more volume in year-over-year this X% through returns is strategically markets. revenue pressures X% quarter performance. we in quarter due regulatory From a our recycling positive heightened the in-market the landfill, on offset our all major focal a of will will year. improving pricing our reflects that were programs assets We I pricing mitigation ton, of but in combined -- We at of to We manage which headwinds global through volumes It and topic, the disposal focused the we our to recycling as have execution key all, inflationary strategies. growth posted also against average few the innovative point. have we with is most our costs.

of from XXXX, sustainable our quarter first programs a profile. first provides expected place, solution have online renewable Aside operational in which we gas is and a with pricing the the in strong return come to project,

another posted expansion We business. margin adjusted EBITDA collection quarter year-over-year and of budgeted growth the strong above levels. to Moving

We additional X%. nimble Our the solutions, budgeted improve our with resetting environment productivity to and In enable along action inflationary address by drive return-driven pricing price investment in collection this up was business technology the took over to performance. early programs. process, our fast year and quarter, us be

In also perspective, addition trucks while computers to fleet our onboard fee deploying pricing combating the driving inflation, automated higher positive work fuel recovered improved higher From in recovery operational margins. costs further our costs and fuel across is mitigating fully an program quarter. Sean's

safety of attraction growth and across We believe the efficiency. and enhancements improve service, retention, future. are investments into these We continue to profile, our operating employee collections sales making and return-driven runway a our we opportunity see fleet, will

Resource to our within on our This XXXX Solutions. our progress sustainability of the aspects is are collaboration strategy. Next how making our report, On a is sustainability highlighting -- and goals. demonstrates effort intertwined sustainability business we achieve and collaborative by all Tuesday, and published we many vision

there. increased their efficiencies. are facilities. Solutions invest But a business drive our as customers. The the doesn't Our Customers and ask solutions is a at continue reduce in key our stop we segment for focus we aim several balanced continue only Resource segment We're with environmental to positive quite results of that ways throughput operating to to to not for that safety, footprint. part technological recycling and making of but economical early focus environmentally upgrades

our to a to for we this their recycling is the visited materials trend customer performance In our support fact, has mitigation SRA by X We prices, and shifts you risk driving looking price Scope example it recycling positioned vast and fee reduce recent management. done customers. fantastic just believe exposure the large the know, and a With adjustment very regards of growing programs as recycling emissions several well recently job years implemented generating to commodity who recycling solid are majority This the opportunity, returns. one of forward sustainability commodity the solutions while I higher going the a financial creating is fee. with of ago team I to

to and our allocation I'd growth capital highlight strategy. Finally, like

on approach, returns. to continue fit executing through growth integration We have expected disciplined achieve our success our strategic to and against targeting follow-through strategy

service the weathered this, And values, paying the to core day to working the dedication in that, of and currently ensure Our the growing Ned a I'd I'm Clearly, before out. But work the opportunity business of performance annualized have thus continue and together pipeline of In we hard early $XXX hourly for out value up, company's LOI. team's take December, commitment a proud approximately apparent to way in revenues I'm $XX to our details special of recognize proud of like have the the with over serve. contributing service to entire we're worst far drive operating strategies. to robust, through and financials, employees currently the execution XXXX existing exceptionally our floor of recognition you remains identified on pandemic from thank They've our acquisitions. day on. great our team's acquisitions it as footprint tireless to in a under success. of in revenues our customers million to and very obviously Wrap of to by bonus over for team. our we is working of more key exceptional opportunities a which it Ned, are yours. and is we're million the our communities I that our moment against to Several turn

Edmond Coletta

Thanks, great and start during a We rising John, fuel the and backdrop team good like plan quarter. year-to-date prices. and high significant in morning, historically the commodity beat drop another despite to by also our I'd quarter of everyone. costs inflation, our for thanking rapidly the challenging

recycling and help as the Our programs efficiency on to Further, did prices. a well any John mentioned, we have to job the to ability our the inflation, at believe cost significant course is offsetting This that recovery nimble cost program. and environment. heightened in to dynamic plans economic pricing our accelerating great in eligible our management great realigning recycling point a an correct job done to worked risk in I time. fuel remain amazing this decline team moderate are in again our and once were as costs positioned environment offset testament commodity programs intended a customers execute ensuring

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

XX.X% volumes Solid disposal year-over-year. X% of and in up up price X%, our X.X%. line up year-over-year up up waste recovery year-over-year, were of of price cost the X.X%. line and collection the year-over-year, with business was X% slightly in price Revenues with up fees X.X%, business volumes up Revenues fuel XX% acquisition up revenues up. volumes up XX.X% X% growth up were X.X% pricing with and Landfill were

story. full the tell However, doesn't this

Resource to price we volume start Solutions of was year, as average over all are close the sites. Landfill price the at growth revenues up prices now the were this up quarter. year-to-date. third growth, and quarter. mix ton the commodity to per up year-over-year were up to Our a our in X% tons and X.X% improve up with X% fees our continued in processing offsetting slow acquisitions, lower the with X% X% XX%, other from XX.X% after

Our pricing. year-over-year were lower XX% lower on and plastics roughly lower and commodity paper metals pricing cardboard mixed prices down pricing,

commodity by through from impact EBITDA $XX.X year-over-year, weakness the declined roughly a fact, was over from April improvements point have million a quarter, in million high back the of Adjusted prices of up driven In $XX April in across with million our classes. and acquisitions. growth all little rollover derived base ton $XX.X million and $X XX.X% business hit in or a with the September XX%

up costs; XX Once the in the accrual. for said fuel have by million inflation from operational to hourly gains; Given headwind and point margin bonus fuel basis point in us year-over-year, XX covered fuel. a and basis point XX improvement quarter improvement hard a back bonus higher point to for program, earlier, bridging XX we John points plan to our office excluding headwind accrued our pricing headwind a and X.X% this items general quarter, our another so again, We fourth improvements include: in quarter. from XXXX, special price headwind in bonus recycling programs December. XX.X% cost up of on recovery offset an waste a $X.X sequential worked out quarter from basis the Further in pay of a commodity EBITDA strong exactly from strong from employees and special our solid basis improvement a volume basis that the the a XX margins prices; the quarter, million all performance early in X.X%, from accrue were for and plan with in XX plan $X.X net as onetime frontline acquisitions; basis this excel help environment. roughly third Adjusted inflation,

As began year. cost and the and fuel the experienced X fees prices during our during up quarter, months to catch to fuel began recovery with third the recovery peaked the first margin decline of under cost both

the basis industrial a continue and as down lower $XX.X XXX costs efficiency made in operations, and adjusted performance waste in the to of quarter of was MRFs. down were $XX.X quarter, mix the in basis collection but year-over-year changes organic as $XX.X Resource year-over-year, technology Solid Solutions strength most the by $X.X million have acquisition gain costs EBITDA up million points leverage up adjusted also higher a the to year-over-year EBITDA million revenue, and and by a in positive with due year-over-year, with Cost was was up up percentage points both administrative quarter driven revenues, increase in improvements activity. fuel of million percentage higher offset programs cost in difference. in $X.X quarter, on the of or General million million XX as and with $X.X recycling investments disposal. revenues we operations our

XX, million $XXX.X and of of of As we September of debt, million. $XXX.X had liquidity cash $XX.X million

X.XXx. consolidated Our was leverage ratio net

and interest was As historically John our mentioned, cash that's low X.X%. a approximately average level, rate

year-over-year, point maturity with of us to the XXXX. while continue at grow well to will year-to-date, in by XX% expenditures Adjusted negative is approximately environment, capital interest offset rising offset up grid in stability credit assets drop reached provided performance, of by -- great operating spread major more our than cash to positions facility, senior flow operating our on driven And activities, sheet and for this with mainly liabilities. also debt rate providing our pricing plus shape secured LIBOR $X.X a cash the in with and rates X.XXX%. free our changes in X.XXx, million and we've debt fixed balance million our on lowest partially $XX.X was interest leverage January net Our higher by next on higher now by improved

guidance pricing our revenue, reaffirmed initiatives, cash by cost from mainly provided have net fees adjusted the As efficiency this increased guidance our stated ranges flow from execution programs, for the guidance year operating in fuel third the We net ranges afternoon, our time EBITDA and yesterday positive our recent contribution continued free and our year, cost increased offset due fiscal range. to press and we excellent release mature income, cash XXXX adjusted our operating stronger-than-planned against acquisitions. recovery activities

we December, $X headwind prices of another fourth recycling have commodity part a XX% September quarter. ranges, million updated As in our through contemplated from guidance in will about the that decline resulting

higher operations, year, to and including for partially investments buying. efficiencies higher just continued expenditures newly in operating capital acquired investments net by growth be for on contracts new We capital things activities investments our by offset customers, operating expect additional cash to higher and provided accelerate we're inflation the

Our internal X.X% is inflation X.X%. running rate of to at roughly currently

We expect for year increase EBITDA the year-over-year in with inflation, by fourth basis to this margins roughly improvements outpace more margin adjusted XXXX quarter. points significant XX fiscal

with XX% have we our inflation our advance last And turn and back Thank you. our of the doing further, mitigating great of discussed book it are price for I'll we great quarter, floating job cost to As of increases additional that, fees a if to questions. business, increases flexibility roughly operator risk. collection

Operator

[Operator Instructions].

from Eastman line comes the KeyBanc. with of first Our Sean question

Sean Eastman

before I look for the in some got on between leverage, ask be -- that I'll early here, the takes, of Maybe on Tyler the and puts the to thought quarter. the XXXX just Since EBITDA. operating on to preliminary team great. bridge key just compliments And would a recycling, those

Edmond Coletta

Yes. Great.

something Right think the the next I be the haven't in of place we fourth finished will roll nor would to from we the or looking year We building million recycling prices lot blocks a now, unless expect XXXX into year. guided you have there's budgeting really we'll quarter unexpected. our full for year, $XX year that roll But for headwind next ton where decrease, if to in about result EBITDA $XX are year, be for which $X recycling. a at, into forward a commodity a next

Our programs a doing offsetting are the working and nice great really job headwinds.

we'll our Some risk management look something acquired of newly our have place in advance. will to of and operations, and course, programs customers

on On things the than for excess our looking the year pricing together more X%, don't again X.X% next environment, in both year, likely seen where pricing We for XXXX, for on and side, we'll side, volume inflation of right outpace strategy see our commercial good side, pricing is. the programs the in and a the to there. depending side. are look the anything tailing inflation And on putting look residential, haven't We're now decline. greater volume we off construction just

year something So items into changes. stable coming we're information a And next see guidance next to early and more into there quarter. bridging on have looking we'll environment unless

Jason Mead

Ned, element to on And rollover maybe here just add bridge. on just M&A the the there one

and So see related million with completed about you rollover of in Sean, next million is this revenue dollars revenues. typical. of we've We'll $XX.X which year about $XX a know, acquisitions XX EBITDA, annualized couple to as million those of acquisitions year

those XX% to So margins XX% EBITDA acquisitions. on

well. as we get consolidated we first acquisitions see typically, levels acquisition our margin lower to margins as So those post up year

Edmond Coletta

be we'll bit Another end QX about I data get to XX We'll little stronger XX a a about gains margins XX of advancing is back earlier. to to XX, bridging to year margins with through year-over-year, basis thing But in and points, point, EBITDA on this up basis that exiting in points. XX went a with normal enhancement. than the next about points year there Jason, look one we'll items basis more points up little higher cadence margin year basis back QX. We're some XX

Sean Eastman

Okay. XX the is to sort of if A color how to curious, lot operating seem anything? on that just that efficiency I'm gathering there. momentum, be which price-led of XX, within much of gains, operating in versus leverage helpful growth

Edmond Coletta

the mean, our there's at look in onetime quarter, I stop Yes. if some always numbers. you

we So inflation, We advancement basis programs it's against had our had of an price and great of operating points to our one standpoint. hard from our both, basis core on but efficiency core almost XX operating we to and probably price beat to line. inflation, ahead separate of best quarters our points, core delivered bottom close the XX

mute seeing Now to those items seeing really with against on what that worked bridging there gains. But street that we're help is programs some and are positive. that, what of our we're the

Sean Eastman

Okay, one. one excellent. last And

Just flow. things lot rounding a -- maybe got that defined around cash we've with out lock, EBITDA of just free the but

Just elevated. out a are point elements. seems little to tax companies CapEx about more Anything Other there? talking interests,

Edmond Coletta

Yes.

in I lowest swaps. sheet, right XX% of rate we done both interest So now, mentioned our and And the really we've got nice our ever positions my have leverage we've through fixed balance through job company. a as a script rate that on and debt fixed,

expect rate higher in So for million of or a SOFR, like we'd move XXX LIBOR with roughly basis similar costs. interest point $X.X another

going little bit So see to a headwind of a there next we year. are

continue and more offset serve majority continues in, shareholders of the well, well federal into coming see XXXX. the we'll serve state tax more taxes NOL us where vast to we'll taxes. On and our to And side, position

You're right.

X% are I On is good continuing efficiencies rest the and great acquisitions the X% we on There we've to we're invest spend are about in on running completed. They're really accelerate of CapEx. won. higher to contracts then investments elevated. to operating side, say bit the And CapEx a things. we've And on inflation would

So year color on that specific we'll coming give and next into in more investments.

John Casella

aggressively. doing Also from Sean's the opportunity taking more just automation work standpoint, that an move that to

Edmond Coletta

Yes.

Operator

And our Brown with next Raymond question comes from Tyler James.

Patrick Brown

M&A on quick rollover. real Jason, the

million. think So I $XX.X said you

and that Solutions? how solid between split does Resource waste So

Jason Mead

Tyler. Thanks, question. Good Yes.

in Solutions So Resource of solid is the in year million split $X $XX.X and $X.X million, million the next waste. roughly

Patrick Brown

from a do want waste look total at different I think it quarter. little frankly, last help for QX actually And you slight But the saw back where what of bit. noticed little modeling we solid bit to Thanks was waste and if a that was it's Okay. go in there. than up deceleration I republic, X.X%, that I actually X.X% a kind to but pricing accelerated. your at the quarter, price

and be So some talk I'm in sure. takes can just puts curious, could there, not But mix there you I'm about there? any

Edmond Coletta

We a contracts We you're see right. we company. -- a CPI-linked deceleration. little did as Yes, lot have don't of a usually

strategy they saw fast gates CPI contracts then probably February, were really republic, And finish maybe we advance kind I very June through whereas the you're budgeting things linked spring. few we And XX we'll did have weeks, to acceleration if got for think the out aware. the summertime. had over And resets, some of a January, very year. some muni are pricing some had company, corrections to So strong large course or into waste in that QX, as -- start they out we the we as well programs, next next through settled few of as

year. think come bit It's This price for don't the it's start little in higher then anything we're I the year, June and through have climb in see to rollbacks decline cadence marketplace. done losing the saw way any to seeing down all it of to not we QX. pricing a earlier in or that. a bit what a like us year we've So then that atypical the price or big and little just It's

Patrick Brown

next year. mentioned because I -- you bigger X% picture to it, think I something And on here, order think looking you're still Right. bigger the of for X.X% the maybe

to we it going today, in as hanging at So it's be see there? flattish, still least it's somewhat

Edmond Coletta

Yes.

need inflation. on think I read get really good to we a

you pricing the now, strategy we're now. that setup around But next X businesses our is inflation flexibility disposal are correct our more know, have year. as fix into course right have a of contracts. had things great that. the better both on have But bit that Our next step core that can read just is linked highest we've little and weeks X.X%, And in X a running We working even increases. which and to a right X.X% we'll we we might we a on don't to price amount our through internal where to collection coming need through of book lot of

Patrick Brown

okay. And expected. Boston it but be Right, a talk coming big I then may unique? on the drove thought about project that of was just anything you than volume, a what there bit that? Was volume better little there? Can me, just Was and together? kind New in Just back York

John Casella

think is was drove disposal Tyler, we waste our nothing was It perspective, fees solid a our and that the Yes, bit advanced inflation. sites. And frankly, there a We've a which positive environment flatter volume was significant at quarter what with a fine. year-over-year from price volume really quarter I the in X% of that Northeast up and lot trends the in across saw volume the perspective. many in from year-over-year, quarter was a this was through okay just, in was appropriate disposal. of one-timer Collection that's little overall, as

right? little primarily continue trend through expect of kind to quarter, So barring see in unforeseen any always weather Tyler, we and fourth a which bit TBD, December, it is that was the landfills,

Patrick Brown

Right. Ned. okay. No, ahead, go helpful. that's Yes,

Edmond Coletta

a was economic in And collection overall business, makes commercial you environment about a as good had line the feel line lot of really business bright the the strength It spot well. well, which the summer of Tyler. of through as

Patrick Brown

congrats But on really Yes. the balance that's little And for for point big unclear. Congrats a I I'm a then sheet. know you. and all John on just of that. pride

-- next and grid to the but headwind will going So general the still in grid interest be It's your offset the I down on don't Or be next what's know up facility that? you that. thoughts think year? do will moving year, a

Edmond Coletta

will. it Yes,

year, XXX So just across the so, full million average let's I interest than that calculation, would million done we less in that which basis off take that. up moving but points enough, full not us really XXX of the say, year but grid, for then maybe haven't if LIBOR put expense. up, is that assume reduction $X the off that's $X.X And our the would against assume or

see low the So We're we money. could and keep we a smart business invest next to doing on in where lot headwind decisions year. some leverage make

Patrick Brown

this cost capital and And is then and my question, of last more access. about a conceptual of capital one, around

So million cash. have of you $XX I think

higher think But you when are pure have M&A? I the some liquidity by pricing going of how that? to you broad future you I on mostly you about approach Is of assumptions facility. M&A? financing it cost cash M&A, around this through How of are metered thoughts capital? thinking about just be plenty Or you are free your contemplating flow? just changing mean any

Edmond Coletta

Yes. great All questions.

the organization, we hurdle hurdle change of started to decline We our a if an small capital didn't when investments. you same larger So our cost our internal a internal M&A or M&A for flashed a back kept couple of ago as group or rates bit years tax either policy place. at as and changed little really rates

looked money there change interest premium to that does in Probably that rates hurdle things good we already hard we up to have a to risk So going you higher? to something enough now to and, go ensure are against we're transactions, Because as we've tried when foresee sometimes. and put to mean make not. it's at costs work that -- that creeping we've

we a tried really in good we've hitting for, of years, our we've several done the the shows track have think acquisitions conservative be proformas. last record I there, XX the of track So record and to

investing out flows. a you not And we going shift we're how and big there. or As very know, look we we're buying at businesses discounted build everything after-tax an cash disciplined return And unlevered be there's in on to money.

opportunity can I a I can see. probably the and lot And about the think better that in markets. we we John our definitely speak about than opportunity of that see pipeline

John Casella

Well, I question opportunities no think the that grow. that there's continue to

where if be which a think, actually, little competitive recession I we of are that bit multiples from anything, depending sitting from have what terms sheet. could the a we happens a balance the could a in standpoint, in capability with standpoint, upon contract positive

really really at it's opportunities are -- the really it So positively, significant. look

Patrick Brown

deals. XX Excellent.

have comments. guys You the been busy. Appreciate

Operator

Stephanie Our from question with next comes Jefferies. Moore

Stephanie Moore

general I maybe an that get and also last and your seeing really we was but update an the -- McKean the -- thoughts could maybe on thinking we get lower, in capacity online. consistently just just when grind and trends I update you on it expect that on where come to can think Northeast really

John Casella

and continue the to to It So out direction. but anyone -- added we in marketplace. is supply of probably demand is on little capacity market there's We're market. track. that the Capacity move I McKean to currently. in Northeast. think more adding that to than come continues see more the don't any being capacity the question imbalance to else Very the continues

We currently all way changes we McKean the forward the around. for that some rail is for made infrastructure. support to That permitting in going very real are nicely,

So but ramp up and ramping on operational. Early I to or be -- as up, full 'XX, 'XX don't going probably be probably But that and start that in to early we'll XXXX. we think capacity we'll we up it we're we're in get at to that, to anything ramp it'd like into it construction track expect 'XX. mid be

Edmond Coletta

of few advance initiatives continue really a key well. our And Yes. other to

about million from XXX,XXX to X.X permitting Hyland XXXX, miles XXXX. tons from Our at a tons permitting western landfill year. X is placed Hyland New York, to going We're a Hakes extremely to year landfill a going tons well, well. that's That in is year. away very a about landfill XX at million Hyland looking scheduled increase close takes in well very, is

couple we're So as next that working there's over come there of and out really years nice a complete impact some permitting we offline. on the sites have other will initiatives

Stephanie Moore

those to apparent even then several a and of planning benefits kind underway would XXXX? implementations? whether I that to follow-up be digital Great. expect initiatives fleet you it's see meaningful lion's or there more back-office helpful. XXXX, your Are just know share the Any we your ERP Or gains should color And margin your from of performance. here. kind of or automation some be in any starting have as tech to of you

Edmond Coletta

oftentimes then benefits. to the some you and we in biggest takes on year procurement what you're progress. start then making automation really When have But technology, probably step computing spending onboard initiatives. this really -- are lot our has a start a years can XXXX investing where of And and bit. some few a bit can nice are I It Sean our on more some of from you're we're Maybe doing you of benefits side. and in the yield coming XXXX, little a into Yes.

to procurement addition And business. in stream, and done across really the what we're like stream, digitization the catalogs and Coupa NetSuite more standardized or catalog-based digital using Coupa it's through digitally-linked driving So there simple of where the things increasing more increasing in more to and drive rebates through purchasing business, our procurement our per single-use getting through and are things cards we've the parts. payments containers like of power buying to

doing more service got we're And cycle being on streamline exciting. for So great to the there's and to going our a simplify order a which pilot lot launched what call and take management, We've we just frankly, done to back field. office us the to out. really in people what cash really make is of it's being that's costs work effective in nice that's our

done work about the digital initiatives side, got taking more today. our are some excited out pilot on fleet and XX served and today's Sean, we've age, in great reminds side, and us me, more day in the system the and people customers well. truck John customer our real But the dollars both are that really and been amazingly And demanding tools. we've we're from As operating our there same it running for in years service launch. an side And has we've

Sean Steves

and through Yes. do projects we a little do and automation year. we as the next on units of a technology so And we are conversion From plan end at booked more do that an standpoint, bit onboard this for of those year, to did computing escalate least the many trucks. -- next year perspective, as we from will next year to

Edmond Coletta

on what computers will for couple XX-plus about by through end make we're in that be just And us, of trucks? onboard you having next comments our could a today, computing. fleet XX% about does Yes, through about year. Sean, of the maybe percent of And the

Sean Steves

it a our to levels say. whether Yes. blocked we'll computers service service customer dumpster have or a out their put The night. that's capabilities, verification of -- of touches our that's picture have It us not to set return the to a allows that on for it is, may residential home have may forgotten bin the so slightly, onboard business. -- reps many profile nice, very gives It

have program. an overloaded us our pay in incentive early in opportunities markets almost that what We where nothing. those and up these the driver indicators dried programs, drivers with containers, allows to has paying we are found, are line to business And of that incentive we're revenue turnover

has waste So and been staffing big is concern. a the solid in industry

nice bucks. drivers, allowing put the tablets. more drivers with bluntly, paper that's love help And So not so to silver They it's just the the overwhelming. the to -- dealing few love a it a the more technology they love lining little make system. a They anymore,

Edmond Coletta

too, we've some had of others, is safety incidences great. weren't to and able great prove push cause incidences really liability the where And we're that to which we

Sean Steves

Yes, the well. as camera driver it's allows a behavior system system --

-- the camera cab, every with So camera driver. the there's in facing a

need yes, may on with if helps we exonerate coaching, are technique. mentioned, it some So as to then claims pointers their for we And commit. not they able that ourselves did Ned

John Casella

the we're for to side, in right work further fairly residential that have to opportunity fleet, automated. of on regard terms a now, doing the getting particularly still future the And automating we the with fully significant

So we still have there, opportunity some right? left

Edmond Coletta

pick couple can to end guys feel, return of process [Technical we're for soon. then phone, it we as buying to the out know, planned on automation, I a stop all I of probably In like out. you a not Yes. sure we're And competitive anytime John, plot it's years, going we'll companies with divisions. and We're next the then for of Difficulty]. highest through one each the for But -- year, said, the capital I our goal get but

work So in buy... we the future. that gives me when Usually plenty of

John Casella

Job security.

Edmond Coletta

Usually don't automation times, they the technology. a the And onboard conversion. security. have don't don't they when mom-and-pop, lot a buy have have They computing. the of Job

hand-service rear-load load recycling crop a always trucks. to and to load there's waste So side and containers convert to front new to convert automated of

Operator

Our next question comes from with Michael Stifel. Hoffman

Michael Hoffman

XQ. the What's on interest question interest rate where detailed XQ? quick your for XXXX we What's rate on very are for based So right now?

Edmond Coletta

Yes.

pull So for can XQ, it, I do Or have Jason? it. you

Jason Mead

Yes. X been X.X% cash or average, I -- so. like our has interest mean over the quarters, Michael, on rate roughly effective so last

it's of calculation that kind up front from the So fourth for modestly in of that in me, quarter, a but without having realm.

XX leverage As we pricing on the based lowest down our we our one September our earlier, pricing briefly in did hit in X.XXx credit facility. facility of on step levels at level to credit

a little think stat bit And as I the So has that's Ned helping here. well.

Edmond Coletta

Yes, it's statement, interest effective around income rate. think X.X%, I

Michael Hoffman

And when Because us share for constant good headwinds, Okay, that lot tailwinds, you growth. are engine miles-driven basis? a that M&A. helps. you or There's hour a doing then you're regards with with accounting fuel, to on volume been of

of So went consumed, fuel up. the price drove the that plus the fuel there's period, more cost out

that? think in fact, how, about So you

Edmond Coletta

good question. be We Really Yes. more should probably specific.

guide good during period. of the about points gave fuel I when for XX basis that So

our cost offset the our margin fuel, during newly So enhancement recovery we That acquired some was core basis not businesses. our fuel and quarter, businesses, just points. XX of fees had of in cost any

I fuel all in they're that us some acquisitions. guide don't that with almost those those months, XX a of companies. said get recovery about in levels of basis points programs have fee cases, takes had that fuel cost the it our if I bridging, seeing So year, into companies bad to we a inflation, not programs acquired kept from acquisitions. and In

Jason Mead

headwind, we you from full the base year our fourth in and point M&A environmental the relates to fee. quarter as year-to-date, by being if it's basis it and a fuel business, margin what which about And expect the the XX bifurcate offset don't then been is energy also

Michael Hoffman

but had miles, -- the there fuel. than the increased there's that, more so inside price total more spend volume just dollar And It's on core business of angle not cost the increase. drove on you a on you volume

spend You on to were you fuel anyway going more had volume. because more

Edmond Coletta

we're generally your And If to increases point. increases point point, good that because fuel right of there's variance. another large program. hasn't this materially program's in program the into hasn't a earlier I by component. mean That the and year offset it's the be year. customers core in Yes, our to driven a already the we're price fuel. now volume price been the at some of were could Most acquired big any increases, in offsetting meant with where the

Michael Hoffman

based a trending -- XQ right. so then all on have fuel headwind for in going listening, everybody to right it's be And Okay, you're clear to just for where margin now?

Edmond Coletta

our That's expectation.

part ahead basis points in behind a fees, slightly to year, and fuel like to it margin you're after with behind for bit can are is trailing rock a a Margins these about in drop We costs points. to have We be QX, XX aware, QX September we're well that anomaly estimating little we from saw the QX. of were about fee, estimating behind So of got trying a So XX little just the year. be behind on basis from a we're as in pickup. rocket the bit through full fuel. standpoint. recover July We're headwinds, we're This an right? ship all it's risen QX, like QX, in first margin

Michael Hoffman

is quarter a the in in anyway. hotel regions on a your season out then 'XX, mediocre Right. I news just tourism XQ some great this 'XX based volume, want season great tourism but you data on to do clarity have the had bring occupancy that was your states, of And we acknowledge I and quarter. to best the volume tourism the data, that. mean to pretty -- there

as driver So that's part of well. the

fare on. Just -- people so over their get skis don't its

John Casella

That's very fair, Michael.

Michael Hoffman

well positioned. you're And

are get a don't that great position have to we away. take volumes skis want running You over to we make it, sure of on, advantage but our

John Casella

Exactly.

Michael Hoffman

price, I from all moderating a were there was conference Disposal so and participants Northeast. Okay. a the recently panel at

the would One more could lot big XXXX. that I spot would that they in for Where And of much a ton. the the that transfer in reset -- thought is a pricing market Boston asked was was of burner the you north pricing yet upside at fully current them is And better? question, $XXX be room landfill the for answer operator. or -- are station? that

John Casella

they probably to think station transfer were say, disposal talking the -- that opposed about is Michael, there's I as I that would what pricing pricing.

So there's this ton probably But over a ton not $XXX $XXX seeing because is in I we're there time. think that stations. it point at a transfer opportunity more at

So it an opportunity it -- is think be going will I forward.

Edmond Coletta

transfer one environmental our step a to side. where energy end that with we Yes. waste job Jason of of lot do In on new QX. higher the help launched better pricing in side stations. side. in market It flowing, costs started a that. transfer late focus third-party on area on definitely transfer to on XXXX. year, the of fee big that's this QX, point, changes a But was there's lot up we in that We've again transporter there prices, and disposal just It's is need station inflation pieces where need point -- ours, into advancing does transporter effective we a bit moving a with to on the heightened your to created seen of

Michael Hoffman

to on Which X or a have handle you better 'XX? why momentum in price adds

Edmond Coletta

same same absolutely. will third-party customer the disposal customers, mean don't stats And looking the integrate pricing of But we're about that's price, story. muted the to book just I has looking full same tell reblend to last talk often because to landfill, at seemed X%. business waste, sometimes the is years difference we little between we're Yes, constantly bit more. vertically going type our which our a of few and

that's what customers. are good total marketplace indicator the we look by If divided real up revenues into making gone to X% the a total at to of a us in site attract price that making average that's our decisions of new and ton's tons, good you

are our internal blending the prices and at well. landfills own working the are at appropriate things We up rate

Michael Hoffman

on 'XX, a we are to 'XX? looks are pulling regards think how a the double-digit revenue than understand profit like? directionally. get bit can us in low back compounding to And -- little me to direction cash that give a double-digit And what guardrails, into just want about better having growth, with better free then there little Just double-digit Okay. single clarity about are in conversation you the Or high more and that's that digits? headwinds to

Edmond Coletta

are double on free low XX% as and we going digits blocks, headwind. mid yet. haven't we're think where -- revenues, we And we look high right cash on digits to in single growth finished EBITDA on are we digits to like that's But budgeting building because EBITDA, I of that's kind double see flow. the XX% now some -- at recycling basic

The back kind digits have other from single thing fees. fuel of, we that on is into here could you high seen pricing the pull some movement

making something profit side. for pull not the that's see us, EBITDA that a little on but growth back we could bit. that's against double-digit So revenues looking you have But are to

Michael Hoffman

scope then self-help then that the thought dollars Had the asked around far? over what you've and lastly And time self-help earlier. captured you you Okay, so would what what question was put if that do of helps. on

Edmond Coletta

us. And of lot a opportunity were up cadence enhancement next through a X-plus for technology in we if XX computing, we don't there, onboard about see Sean's we of have back-office across each end we opportunities franchise. in the of like earlier and efforts, great There's an automation initiatives pick that's years. to lot talking there's basis margin that can sight XX points So that, the year a

Michael Hoffman

up XX talking you to to incremental part... XX that is or that's And about being

Edmond Coletta

and offsetting you. part say mean out that that's we things we're those XX numbers. there, work will I that points on -- But price, always if some up can combination against are of hopefully, margins, self-help, No, of basis we beat that.

Michael Hoffman

just a comment than Okay. And anything I more would else. make then

up that's we've If the you about your half are second wake that. always pattern you -- other because in if first in narrows history, freak the is stronger price. to everybody out than you pricing this, the way that's years. XX in looks the had Nobody time it half, your this prior then But should been and at hyperinflation first

Edmond Coletta

external but we need on of to and No. we're conscious the going environment at some advance definitely in more And either, what's not price. we're whether really looking

Operator

Michael from of Feniger And question our America. comes of next Bank

Michael Feniger

quarter, the the cost X.X%, internal X.X%. inflation You highlighted in

are how do there And pieces some driving of of into that's moving about kind Just what of we think moving those the kind that? pieces XXXX?

Edmond Coletta

Great Yes. question.

basket, Jack is parts, price across costs, together hard things it and trending we doesn't at on every components a side. right expense of facilities separately. consistent because put inflation. So part And own our of wanted now. guy the support, separate the inflation, X.X% is -- we we are own to the repairs, across goes that operation business. aggregate outside The team, we of which have Water, include maintenance, way capital higher component Vande index But volume go fuel, of in just very side, inflation tires, look than our labor, our measuring this And our our to

inflationary outside much started costs spring as Our inflation is parts, on stabilized definitely good. that to stable, actually come down has into that. repairs, an maintenance, a tracking side. we are from and more a bit standpoint which labor underneath seen Labor this and is Facility bit summer, haven't early

Michael Feniger

Fair enough. it And touched I on know earlier. you

think of also CapEx a about have driving XXXX, CapEx, -- lot inflation we but guys growth you projects it when higher Just is there's ahead. some in

how bit it we a these intensity of projects? Just think 'XX is Just guys do does that? going higher about CapEx -- in as kind 'XX, the are you through

Edmond Coletta

Yes.

number of we've for now. a So been running years

work We've good on. exact but got really in online bringing into McKean, be putting And to to we'll that XXXX. we'll acquisitions that that an money revenues been looking we've for great that some $XX contracts XXXX been be to into and capital as keeping because to we're for and CapEx work. I then won lights a to from put our opportunities split we've well. be growing perspective. into million more doing at look yet, you got integration. work business coming the some new a investing long-term XX.X% invest to about money running we pure And lot If have we've and McKean then don't of drive value. synergies had shareholders of on, And where We've see we've XXXX will than put

Michael Feniger

Great.

maybe do lastly, collection business? -- of approaching the pricing up always of undercutting are that know like or earlier, kind Or the a in we're like ceiling is at their cost disposal, that inflation, any even starting this with some think it's there understandable got that? own feel Just And on with guys you to Do about I but the dealing just is there's asked point. it like guys everyone's type there ceiling against? you that? bump what How or you

Edmond Coletta

Yes.

business's look side, So And look Street. you and need that what high how just look to business the side, whether doing doing X.X% to our back or we fair inflation or waste get environmental really on side. that and do that And get customers, if labor it's ceiling. trying of price the at back the And to not to don't of it percentage think people as ceiling wallet. the the be a we of than the data our our establish a what just wallet, it are we're to We're a of back I Fed's frankly, wallet as you good job market. assessing a programs we whether need at a that a at consumer's less cost to, truck to get services to there's

Operator

with I have And with Brown follow-up Tyler Raymond a James.

Patrick Brown

next year? RNG $X million or Is maybe a $X Super million? material benefit it Is quickly.

John Casella

really. I right? material, I mean... characterize not as It's wouldn't it

Edmond Coletta

number, invest you one one total, in then coming we've MMBtus got facilities I in facilities. exact X.X probably RNG No. We'll And as online, have remembers, in online. did And probably but and have these we'll X coming to -- QX. the not in we'll give QX think QX capital the we everyone or million

for RINs. we royalties partners X know, that sales invested I capital, in have Charlie, get much? gas for and our you We And and how projects, those the across think

Charlie Wohlhuter

Yes.

we're million one contribution probably assuming come end price, year. of So revenue conservative the next DX first at just the kind be so pretty going $X.X RIN second then about of or is online of looking and will $X quarter, first Tyler, year, towards to assuming the one the the in

Patrick Brown

okay. helpful. That's Okay,

think work with I that. I can

Operator

I'm conference hand And questions to back further this Instructions]. the like [Operator at Casella showing for to time. I'd currently Mr. over remarks. closing no

John Casella

have everyone, Thank discussing a Thanks, We weekend. this our to fourth you. our and everyone and XXXX joining quarter XXXX everybody, morning. with earnings for Norma. great Thanks, look forward in guidance Thanks, us February.

Operator

This your Thank concludes today's for conference participation. you call.

a You wonderful may now have Everyone, day. disconnect.

Casella Waste Systems (CWST) 28 Oct 222022 Q3 Earnings call transcript