CWST - Earnings call transcript Q2 2024 | Casella Waste Systems, Inc.

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Charlie Wohlhuter

All right. Good morning, and thank you for joining us on the call today. Today, we will be discussing our second quarter 2024 results, which were released yesterday afternoon.

Here with me today are John Casella, Chairman and Chief Executive Officer of Casella Waste Systems.

John Casella

Hello, operator? Were you going to say something? No? Okay.

please. ahead, go Charlie, Sorry,

Charlie Wohlhuter

company's After We've John Chief Vice update expectations, Brad questions. But our will make Waste your and business please our and about these we may be Ned Officer; and Coletta, operations. prospects of various constitute Solid Financial factors, safe of aware XXXX. Actual forward-looking Form in Senior Operating result the results be on President; those and Reform environment, Private review to Sean filed of Chief forward-looking Helgeson, plans, Officer future from happy here. those and purposes statements activities which an these a a remarks of of XX-K company's and harbor Steves, of take as President first, Securities we that Form for our the statements on SEC. important results Act most the the our file XX-Q, materially with by the may recently differ provisions Factors including under section are discussed indicated the Risk Litigation various

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

to SEC. And measures, the press included today's that, call effort, non-GAAP discussion. I John update financial now representing future, our at our views These without as the over non-GAAP available accounting obligation accepted with extent with to directly the as forward-looking August they elect not will to point with will any Form release are in These financial measures comparable XXXX. Also of some measures today, are forward-looking subsequent Casella be most the X, accordance call, measures. are prepared on X-K our change. begin Reconciliations to generally views we may non-GAAP we do so, While be referring in to not we upon relied to turn filed in any disclaim to during the if specifically statements to even statements GAAP unreasonable this date should of principles.

John Casella

morning, everyone, will remarks quarter Charlie. our Ned continued call. and strategies. with Brad results. details second on and go Thanks, welcome more today's our and strategic into begin growth I on execution then and brief our highlighting to comments our conference Good financials XXXX will

in First, acquisition to afternoon, Disposal, with us valuable strongly operations begin I'd strategies. Yesterday our new excited we more to our our members strategy very welcome attractive joined offer core X These these from growth team step additional in company's of Casella, in that several and growth align major density immediately Mid-Atlantic and markets. executing continue existing. against Disposal in like another who LMR serving Whitetail the acquisitions. with collection our and new the our announced operating strategy growth new us recent to in companies customers markets We're

to We another on on have this our come May. business to a disciplined X who year; through reflect approach. acquisitions X I'd to X to welcome members ability tuck-in team grow in other have These all continue of and July provide board. like also our X acquisitions closed in the

Our across team on and core balanced remains opportunities. future focused integration efforts, and our business

reflects into and a EBITDA that highs building This dedication reached our basis. our our quarterly work adjusted -- Moving revenue to team all-time the team milestone and put business. both results, on hard of the has

first plans for second noted of the year. the press couple are weighed a unexpected performance the is in consistent of that with our year-to-date items quarter our there our half on release, While results

quarter, volumes the strategies a few were were, landfills. Looking second with present year-over-year. of the forward ahead, bit of of C&D down our a to but year. Shifting a positioned and Volumes are continued the headwind. we key momentum our special starting in waste our of lower tons to carry over performance MSW well the and growth operations, again, half stable to

result upcoming largely a However, end of third-party large the the a the closure this New C&D of of year. is York landfill at in

had begin shifted we into next and the will EBITDA this has more expected we steady been to in the factored that pressure It to margin strategy any has stress this year. and believe want I return a importantly, our More And year. way. market state guidance, not to our

are allowing in any to the focus. steadfast not long-term returns short-term and prioritizing We impacts sway

as the continue inbound at our improve approach to Our quality stream. landfills demonstrates average waste price of the we per ton this

of On line strategic investments side, show our business. the collection results continue positive returns in from this to

But investment In have expanded we team developed Steves skills it's Our human for enhancements and to mechanic training diesel that model fleet programs and starting frontline our safety job delivering the development proven with a approach, highly our team successful. around business, success. resource their basis team EBITDA performance. Sean frontline XXX efforts our with points his up a collaborative and CDL necessary and adjusted and is recruitment, set programs are operating strong route help our base year-over-year.

positively. From levels driving our a levels and productivity and plans cost are result, higher turnover employee fleet an onboard automation, metrics. are standpoint, As computer route operational trending safety conversion improving and operating

over of completed acquisitions We more. our there's model are last opportunity footprint this we've or ahead, deploying and the a across especially the runway year believe long with

execution we, is lot solutions, of performance of resource repeatable the involved, posted our again, part results is operations. once success. In our of recycling a segment, and this in While by led very coordination planning strong

while on year-over-year, commodity price in MRF the While shared was quarter. the steady balanced the XX% revenue our success our from reducing volatility. of with this ton our most average commodity of drove that Boston customers, given is up value Contribution returns per much model focuses

in of business of the this minute. which posted a bit services, a remains key side, quarter strategy growth differentiated I'd accounts of national also to superior the providing is highlight overall On like part something and a for our

National volume Waste fully accounts national is of reflective at offset when As you Solid strategy industrial dynamic Waste sales we've targeting growth decline. This volume and positive looking our commercial in not know, apparent some strategy is more our a of talked as larger, alone, Solid customers Waste the This are as about larger customers. the against we business are focused profitable positioned well we our executing and to of growing for this our strategy revenues Solid revenue where up, of Account we profitable strategy growth are some less remainder shedding. Wrapping are our and on year. compared

operating core programs Our are intact.

on has Our some to for more continue poised we turn pipeline our our runway I'll states, delivering acquisition -- footprint a project to value. And details financials. XX go through strategy with with development long growth, are go to offers expanded profitable to Brad operating combined that, over it the that some

Bradford Helgeson

Good X%. quarter from $XXX.X with were $XX.X acquisition up in million second from Revenues $XX.X or XX.X% Thanks, the and million, organic morning, year-over-year or rollover everyone. million growth John. $XX million

were growth was continued volume X.X% line XX.X% the XX.X%, up growth Solid and X% in up X.X% and and the of and up price were price Disposal C&D in of front offset the of of volumes and and Waste with Solid to special up up quarter XX.X%. in the the first year-over-year of was lower X.X%. MSW business we of acquisition Landfill half X.X% the X.X% collection price roll-off waste the were load saw volumes but commercial business volume margins quarter X.X% down by as with of slightly revenue revenue the residential In we down revenues essentially price was concentrated transfer landfill the in Waste, year-over-year while those flat down weakness volumes. line volume year, and worked into in volume down business, X.X%. Within up declines revenue landfills in up in businesses. Revenues X.X%, over and improve quality were X.X%.

currently we've the As York pursued certain pressure C&D discussed, the under New competitors market Metro as aggressively volumes. have market is in

and waste to landfills sales the it year, end XXXX. In per up the in away case XX.X% shift predict. at have of timing pressure expect the reflecting from processing national up the a prioritize was by We we is and align X.X%, over an difficult up continue but of volume but last operations, special driven of preserving in face increase thus, up priced solutions should valuable The pipeline, of a and streams average are over X.X%. recycling deep year. dynamic price as XX.X% project-based, revenues QX and price our XX% lower we through year-over-year, with accounts was inherently streams abate up other often airspace. Resource processing were price average ton Within to revenue XX.X% year-over-year, help waste in volumes, the revenue on mix commodity these this

commodity of benefit designed the course, this higher customers these our is risk. of contract benefit structures under Of shared prices our to with -- mitigate of most most

was So the only revenue benefit million. the in to $X.X quarter net our

MRF. rest EBITDA the Lower New accounts last volume England; over revenue, the decline costs resource with of acquisition the million million production points points remain in up the XXX markets weather year-over-year, $XX through $XX.X rollover. X.X%. separation from costs, headwinds higher year-over-year. by prices We second margin as in in current Boston CMD; the quarter. Adjusted was change solutions headwind. The higher enhancements expect performed half plan. leachate basis continue or represented few the basis with national $XX.X in drove the year-over-year EBITDA above XX.X% EBITDA and Within contributed of particularly our margins well commodity business Bridging was and volumes in was up volume comps quarter, favorable recycling margin, line at XXXX operating with X.X% quarter, price are the Acquisitions million were year-over-year XX.X% landfill of at down X.X% including in up landfills, a volume XX.X% the wet and XX segment. Adjusted to and was up across specific together well firm employee with recycled year. Processing benefited the

for unchanged. year-over-year, full from our and quarter year, with MRF to business. the quarter. Stepping contributed was higher for quarter, the growth again also are business. The the acquisitions back margins $X.X and margin increase outpace Our in consolidated the XX $XX benefited the efficiencies the million of to Cost million operations from is of ongoing in a quarter, of the adjusted outlook $XX.X inflation. modest as programs reflected cost points basis base EBITDA recycled and in pricing margins were expansion in we up commodity adjusted prices year-to-date, from Boston tailwind and million in up EBITDA from our million $X.X Acquisitions the continued collection approximately guidance,

a operations down of cost basis, was revenue same-store a as XX points of basis percentage on So, year-over-year.

rate GFL in million $X year, by at million was This but outflows net with from year-over-year, quarter of the while we certain last of operating $XX.X year. Net compared in cash rate pushed prior of $X.X is amortization was GFL with rate but and million charges on to XX the XXXX, slower and $X projected discrete effective in to comprises at timing identifiable the a June legal net the AR expect days pay compared net for XX% non-deductible first and income Mid-Atlantic. Overall, was million expenses changes in was prior days termination acquired former effective with XX% days, assets Intangible rate base the The X settlement XX%. [Indiscernible]. in collections the as statutory cash and taxes. Adjusted of XX.X% to approximately million financing $XX.X DSO quarter, our by quarter, million was million favorably acquisition-related first for quarter to income $X.X including provided year, Casella's the as higher approximately bridge weighing accelerated XX for associated than XX% items our year, of by and in up less months tax was acquisitions the from in over for $X above operations and the comparing impacted down higher revenue of driven the at the QX Our up rest the was associated businesses earnings. activities year-over-year. was XX expenditures, million which our liabilities, D&A AP for compared approximately $X.X acquired down acquisitions D&A the business. GAAP XX amortization cash intangibles to in at

$XX.X were cash in working certainly collections on data to of flow reminder, on higher onto the last flow capital carve-out I'll to year-to-date. Adjusted forward, reported first a as which than adjusted in expenditures represents nearly this but a control cash first and year represents just half year. and the customer $XX.X QX. was flow million GFL, a first cash compared the our businesses this our has XX% flow compared free As driven XXXX, less million the guidance not working that dynamics in We'll a the AR balance free was from by capital opportunity XX% generated months that AR half the drag until year-over-year. down in largely in I our X the systems, coming we been going note cash focus full completed transitioned of were discussed acquired so months, year-to-date which in

working capital the very are first number second we the standpoint. that considering cash heading movements However, in into believe half half from this a reflected well we year, flow positioned

cash million As million. of June of billion XX, $X.XX liquidity of and we $XXX of debt, had $XXX.X available

leverage Our for of X.XXx. bank consolidated purposes ratio our was covenants net

forma is Our now liquidity LMR $XXX million approximately $XX us and opportunistic funded leverage on on and on primarily leverage remaining Xx. with our of than including revolver million executing profile pipeline as Disposal, currently have our to in liquidity pro Whitetail hand. have less with M&A enabled cash be our We recent we drawn and acquisitions,

for the included from guidance and largely and expenditures. related our with collections reflect our the AR of higher on in revenue ranges cash acquisitions, to announced activities including on midpoints, a outlook closed. contribution reflecting by the due free million, release. We're the cost business to for their by are with expected these ranges the newly we provided EBITDA lowered Reconciliations in $XX metrics businesses. We We income by guidance conservative operating metrics to-date, our acquisitions. the we've yesterday, net acquired respectively, reaffirmed of guidance release and net anticipated updated for GAAP GAAP at financing contribution $XX adjusted flow developments million our cash acquisition-related primarily press and in raising to non-GAAP metrics, from offset press acquisitions adjusted As the our

volume underlying be softness guidance, roll-off Waste we as as Regarding continued key over volume customer down prioritize Solid in volumes as assumptions we residential expect reflecting now collection to well profitability to X% landfill volumes lower X%, growth. and

to Waste that be However, anticipated of remain Solid turn expectation range growth unchanged, upper that, year. And with organic X% our growth price Ned. assumptions to revenue the the over overall X% reflecting our I'll will in it for an of end

Ned Coletta

Thanks, Brad, and good morning, everyone.

release afternoon, Nearly of X region, offerings. acquired our this in Mid-Atlantic business yesterday acquisitions we've through over revenue mentioned expected opportunity in earnings our differentiated tremendous annualized are is million build grow contribute revenues. that we completed all our As to scale, to our of $XXX where further see service year-to-date

well-established sustainability us while services. organic resource industrial, demand community businesses to offerings. There Mid-Atlantic including multi-site our larger our customers at more in will facility, great and and Further, opportunities and markets recycling and well. Whitetail into further commercial building about fit these volumes business targeted a density, balanced acquisitions using our our of long-term adjacent internalize for the relationships and institutional same to These for heightened our building have residential, solutions secondary that drive through additional We customer operations acquired recycling who commercial, collection operations. with mix we're in are efficiencies bolt-on Mid-Atlantic strategy in which excited at time, approach and growth, the sales LMR is municipal help high-quality potential present are subscription, customers. industrial operational our

our and smooth near-term focus operations new customers is Casella As while ensure the and our systems integrating employees always, to a transition. to welcoming

early at active XXXX. XXXX us our for broadly opportunity acquisition lots remains acquisitions very M&A Looking in Ongoing potential late with efforts areas dialogues footprint. into diligence across well sets our in pipeline our and strategy, additional XX up strategic state of

We Turning loads Pennsylvania that received in conduct at to and rail-served us our nearly McKean, site quarter development our projects. the processes to landfill the Investment test equipment, second in test is our training. allowed complete. first

our provides flexibility And incremental any guidance. the to included in previously a forecast from our management in this long-term strategy not solid site the have preserve risk Northeast. site contribution as We discussed, or

at site economically facility are the As Willimantic approach adjusted of upgraded near-term focus a our that circularity margins across recycling to meaningful at won't kicked our we being our investments the consolidated and about sustainability example from the both performance volume operated be all the a equipment apply to strong technology growth, of return-driven We we half opportunities driver this be such, will that and this equipment Results under same recycling the demonstrate Boston upgrade of facility project continued is focus return-driven Connecticut of facility. An accretive and this ago, off and the clearly second and our weeks balanced. We're environmentally evaluating advance XXXX. EBITDA for to infrastructure. are planned other excited few and opportunities.

initial has third-party RNG the start-up facility delays partner landfill projects The Juniper Ridge this Our our faced are some that also moved date opening fall. back to progressing. from at

RINs, and of payment is for appropriate $X the sale path reminder, a the into which gas we As a risk-mitigating royalty receiving us. we're and have these projects, believe most from invested we

continue welcome Looking about I employees ahead, in advance to Casella. our value. And operator strong and led would turn our like the Like system. to on our profitable projects the shareholder it rest culture and with like and team, late operations I'd expected for very ourselves to back new Waga We're the We the our XXXX. that, of ahead X to continued value with growth drive John commercial opportunities again to pride excited questions. to

Operator

The Instructions] Brown with comes question Raymond from [Operator James. first Tyler

Tyler Brown

leachate. talk we maybe Can little million the about just $X start in bit a

So reading all flooding I've Vermont. the some articles been in about

assuming that because But clear, be I wasn't of to just issue. is costs that want systemically this the PFAS? So higher I'm leachate

John Casella

No, not X at Tyler. the on Clearly, wet facilities, weather affected of additional of volume of our because all. all

and Vermont in Less New -- more in Hampshire, So in Maine. Hampshire so at so New and flooding very bit a in... probably significant and Hampshire New significant Maine; bit and Vermont Vermont, into in a very

Ned Coletta

little too. New York in A

John Casella

well. as Yes. And Clinton a York, where New little County facility upstate

go little in that some the had. of cases also amount of we to facilities. wet because new further weather, facilities, transportation bit a in We had different because the to volumes additional So, and

Tyler Brown

And very if the EBITDA, on M&A think, at Brad, helpful. million I the guide front, so. moved you by obviously But are the just so will assuming then, contribute that's Yes, half. the I active -- back $XX up, in I'm Okay. look or which

Seems did about a some from million that's or not effectively commodity increase improving, huge prices the $XX know was all You leachate higher can maybe have Was core that increase? the But are like talk though or bridge I there there? cost. acquisitions just, in impact. you

Bradford Helgeson

more the all Yes, effectively guidance prior track or with acquisitions. from We're acquisition. less it's our on to

$XX purposes, X and contribution, than less the July and intents all X million closing and X. attributable acquisitions, August of on for think months' X a I entirely the you little the that's can assume So on to with X is closing deals

Tyler Brown

Okay. then And And expect just for modeling from 'XX. already M&A much a just we basically, revenue is from then, perspective, how much how 'XX? in should slated

Bradford Helgeson

So, for for the The it's year of in these of of million is the this acquisitions increase the just million acquisitions. those that $XXX about $XX announced, guidance we've annual revenue. essentially impact

or plus And rollover would be again, so Yeah. the would be the minus -- difference.

Tyler Brown

Yes.

Okay. Right.

already So, rolling have some 'XX. into

you and they are What bit recycling exposed they think it, yes, more a you the Ned, Do to you a Okay, have plan both assets? the touched to I -- just maybe but mix? waste? and talk Can collection? in little color can Do more a maybe revenue internalize about little landfill on -- LMR. little talk the you on transfer Whitetail strong

Ned Coletta

assets Pennsylvania them operations. Neither our across business from today. LMR a is border that's in Northwestern have the New transfer Jersey, Tyler. Thanks, just of

internalization down last significant a GFL business. The facility recyclables a bit that real of the getting towards It's Allentown, across commercial, in as municipal, into fast-growing segments. Some business and headed operate year business of adjacencies, area subscription, good very from residential, in upgrading has be opportunity the It's is more we're reputation high-quality very operations across the that process a well. Whitetail X we market Philadelphia in business. well-run to acquired well-mixed little markets, some been will those secondary service. overlap, a down towards recycling industrial

Short-term, extensions although mid-term, recycling once we either not to of in vertically a standpoint, could of looking internalize of that again, look integrate continuation started to to last we chose level McKean of As to. the if of are business, opportunity we a we're Pennsylvania. the look to more platform, to do overlap some strategy great we operation year. and of to them waste from them our so Both

Tyler Brown

dynamic last C&D Does that we or -- I'm a on one, there's if was prefect. by help any was situation Okay, thoughts Island think my transaction just of there? Long that hurt large there about peers. that there? curious any one should the or And that your just if announced competitive

John Casella

of the principals standpoint, practical we the in MSW that a any From really transaction. weren't from receiving

not it's -- any significance a So from not disposal a standpoint?

Ned Coletta

Covanta, out in were Island to ], [ And plants Yes. transaction, their to that the they the agreement facilities. very goes bringing Almost MSW C&D Ohio. all under Long long-term burn

demo that -- doesn't complexion was flows Northeast. construction that really the of the change So in

Operator

Brian And from our Stifel. next question comes with Butler

Brian Butler

year-to-date you on give a that? need On quarter? I till the or wait report to deals, could spend third you do

Ned Coletta

time. not laying we're It's something this out

amalgamation acquisitions. So, you'll our the all see third in quarter of Q,

Brian Butler

guess I of million rolling another up you think XXXX, million, should maybe margin of EBITDA that going you improving margins we Okay. you those those $XX the When kind way is, kind about the guidance to of how as into of integrate implied look an when think assets? so XX%. and ask at $XX

Bradford Helgeson

Brad. it's Brian, Yes.

increase pre some for and, put but out synergy And get the where are I those to synergies we of predominantly acquisitions, say margins we'll, time place look in in as strategies our up of the business to the work course, overlap. million that's XX%. the million, $XX would over not is probably $XX and possible, guidance entirely. So, operating of closer the

Brian Butler

And of business Okay. service decreases? the still you service seeing been intervals commercial the Have then, on maybe collection. side outpacing on

Ned Coletta

see to side the strength continuing the commercial absolutely of business. in we're Yes,

brightest in profile to differentiate gain entire do especially business the We our offerings higher the business, really end, business. collection today. It's quite new higher spot our We continue ourselves with increases have remains volume our and with strong across entire customers. price probably and

Brian Butler

about on be when rate tax. to about the way that only it in year? then, modeling. And one comes to 'XX tax What's rolling -- for you the $X last the might you NOLs cash but right rate next XX% maybe think kind think and one Okay. million of impacting tax over When talked 'XX, about being the

Bradford Helgeson

and Yes. our NOLs We're starting NOLs then into pre-XXXX law going roll year, to we're going XXXX tax to next our year. this use post up change

are federal perspective, cash a of than shield from tax. XX% a differently only cash little So, worked those that pre-XXXX the in bit they

to being shielded else but we'll equal, all next Again, that. for begin years pay cash after NOLs at probably low federal So, tax year, relatively by the primarily level. several a

Ned Coletta

But to on the income revert statement, the normalized. we'll more

Bradford Helgeson

Yes.

income So, XX% statement, on year. this the

our income perspective. down I XXXX. continues naturally watermark a kind book Exactly the of think come as pretax to to grow, be say XX%. that number statutory It's of should early But our where? rate too high will from for towards XX%

Brian Butler

great. get into queue. Okay, back I'll the

Operator

Revich comes question next Sachs. Goldman the And from Jerry with

Adam Bubes

this spread wondering and the the your continues for Is quarter I'm to Adam core Goldman versus M&A businesses? the legacy isolate like is Bubes the assets. possible quarter looks core Really price/cost be robust. sort Sachs. Hi, growth if versus operations strong margin pipeline of operations different looks it acquired trajectory with in to on this the acquired

Bradford Helgeson

over approach the with base Brad. basis in take it's for businesses, and consistent, price price/cost Adam, Hey intentionally XXX gradual pretty the points cautious spread has increases. been a business more the existing we acquired business. The In

call remarks really idea in base effect John the that the our acquisitions, the happening on of was collection I'll points is business. One in excluding in is issues, think the in good prepared gives his one-time second we've of quarter. the a basis XXX felt had margin up, underlying aside business setting programs I margin EBITDA trend So mentioned of year-over-year it, pricing number kind quarter in that's that the business, the the

that's of kind the So over puts as very in takes of and it. the come much top underlying the trend

Adam Bubes

the this should of it. you as do to Just the how in get Got volumes And year conceptually, offline? much landfill XXXX? expect outsized competitor XXXX back in volumes expect C&D comes then, lost we

Ned Coletta

go I ever outlets be less be dime, nothing Long Brookhaven will out vantage on the Island, there a to shifts capacity but from of our and will think point, market and to. at that

into who they shifted our fill get of customers we as site to to it long-term looking hope system. back So, some that to up, were our

transportation is complexity everything, and establish back. get transportation waste to lanes with that As the always

or a little now, the say base right volumes QX hopeful that those spring, So, to a ramps [ us return of it's it through headwind early but ]. do if we're in to

Adam Bubes

given And looks there Willimantic. then, up like we items some McKean, XQ, XQ XQ the unexpected XX should to as points seasonality other be be I is those normal one last be one on in basis pieces for margins. rolls It moving expecting with XQ, XXX could be know to ahead seasonality normal expense points versus basis margins in margins of off?

margin any puts So, sequential on the trajectory?

John Casella

seen then, that back, would factors business the going it. landfill. And margin have I we've the Seaboard, the collection you than quarter-to-quarter taking say historically. quarter Yes. "onetime I to had in there's trend. where is more overall, of a to a QX will to down we going of the less We a things relative going step point as shifting One of the X is business smoother made. QX, It's to trend second the have to But that geographically, the kind on is to that would relatively items" highlight. Eastern couple lead should those help mix sequential move seasonality then margin

are that So, think for plays this the about to out, really predict exactly how those probably quarter. of third kinds it's But quarter. for X you you as hard factors third for hard it. It's to this predict

Operator

comes And Jefferies. Stephanie the with next question Moore from

Stephanie Benjamin Moore

initiatives of of and the you in as you're self-help hoping the place was that likes helping that's to that of well know maybe seeing pressures? that as progressed, some touch the as other inflationary could pressures some has are maybe offset the year maintenance how on the trended bit labor a and you of you cost I that have some trends, repair,

Ned Coletta

Great.

beginning at decreasing. our been the the north So, trends, generally, stickier spring, of has than had predicted seeing inflation flattish And we're seeing roughly business. I through not the think in hang of little we X% we're a year. What inflation

attract our programs, in and a force organization bit We to are does training last a programs, be to tail off recruiting labor talent year there. And the great a our over helping seen fight the to bit little sticky. areas there plus, labor our we're doing try stability have are today. of to really everything we've that our But seen are some lower for and people seem quite lot

repairs. maintenance the tires, outside parts, side, On

inflation side, capital the on the side especially heightened the landfill everything landfills, we've into do On almost to with business. seen remain

starting And As spring, higher we inflation can through talked as of trends in the are bit of our a segments price of nimble an with through we're programs which times on a the look the these months pricing little they this year, X standpoint pricing than correct expected, past, a little about of as we've lot course and bit gets second spread to be half year. stronger more the organization. so, from a last advancing we and we at a that the hope we to business bit certain the

Stephanie Benjamin Moore

Great. to Appreciate color. business. the your switching then, recycling maybe And

go implemented go any kind You of recycling walked changes if have EPR to states of Northeast? given within f into I does a kind being maybe expansions, does, your was Or or you've you're certain -- effect potential just -- pretty robust if EPR in any in fact, recycling you've of business, effect? contemplated the in potential contemplating operations. investments if the curious

John Casella

couple a there. So, of things

think our the to Willimantic facility thing from Pennsylvania same in same our of what quality, we significant as retrofit We're more a doing that we'll we throughput. be similar invest doing Boston. Higher and infrastructure, the facility, to did with then in well. continue I practical the standpoint, in

to the invest continue So, in infrastructure. we'll

to somewhat the going in of As abreast be the that. standpoint, activity understands involved continue of bit and a a There's states will each side little business what help relations relations EPR we'll couple really trying of drivers are government there. in an is of stay the to now going state on And certainly, different. shape government to from what's be

Ned Coletta

would invested investment to Yes. recycled content. country XX-plus Legislation been I has policy EPR, the substantial public and standpoint, from there more years And think see a Casella in recycling significantly. has we across versus that like infrastructure of

states. bill years that seen the don't up setting a bottle systems So, recycling parallel of really lot yield over benefit. We've in

just versus creating new a on or tax additional really driving You're circularity. society sustainability

exciting. I recycled industry, in, from content more to is which what the the all is the have positive very point, a our investment we're So, could do. environment, on much movement impact really It additional trying vantage think

Operator

Alwy Bank. from Faiza question with next the Deutsche And comes

Faiza Alwy

about I generally. other if the impact have C&D landfill a from companies also closures. soar bunch curious volumes overlay, because the right? You've the talking about mentioned wanted of I'm a to ask So, volumes, is been there macro

So, impact with there in your and curious a macro well were seeing if you're just line as expectations? if essentially volumes

Ned Coletta

a predict, last we is and lot projects and there projects So, as predominantly XX business. where last the down see don't seen more it's bit a and sometimes initiate lot haven't in that funded big just timing contaminated be remains upon waiting probably just construction spending waste plus a construction. the for we we rely pipeline said, to hard that less -- out months. -- projects, seen months. They a when ebbs number robust the large projects, slow to X start the less can the a usually really on We're of all we a the busts projects special activity flows in see to We XX streams, are being bit With is showing Northeast. up there's Northeast And have steady. more soil bit little cleanup large infrastructure where a from boom and over construction our and little

the there. business our So started. of less consciously, I demolition remix not decade, of feels and and to some slowing exposure. But the have last just we've built-up have construction projects economy uncertainty of there earlier, tried over as to the is the some demand said It with economy, in some like those

we business in less today. our have So, hauling

our at We transfers. have less our landfills,

So, yes, see parts headwind, it's can a been we of a in much volatility trying we're that bit as definitely of you not it's that the but -- country. other as something

Faiza Alwy

about you you then of mentioned And that the mentioned Great. more sort given excited how just the sort M&A. of on -- initiatives, efficiency you're and

]. imagine on implement of how us some margins be on give we just the but might sense on and sales those move guide a you on Maybe those quickly the initiatives -- through the given initiatives can So EBITDA acquisitions, get can roll new what how within can you quickly M&A? and [ your of the

John Casella

really that of place place organizational their period run contracts come synergies agreements of in perspective, year et other cases, a over disposal those course. are In Notably, in there from standpoint are a have a couple of lot vendor time. to a There et from cetera, cetera.

to the it'll to of of in bit first the but takes synergies time the begin it be for months, X-year come period -- a majority -- in. you obviously a XX So see

Ned Coletta

could ability it'd that we year. track say want. weighing gotten ] and deploy through deliveries further the be truck the as And definitely But to we've synergies truck even of we're But, get our great as a delays will do purchased, of are to faster. our load start GFL market. our [ come efficiency mid-Atlantic, we It trucks, can the in assets we if trying nice our from last we in we've and model, to But with much opportunities. with to deliveries able points we're side be get along a time, businesses little But into automated on relationships. some we little some to be over got vendor more at on can

Operator

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

Michael Feniger

side, active it. the kind sense can such a Do on context be with I more Just helpful. mind is us And know think you touched it any would smaller of tuck-in you just this you where ends larger? you year? about, on an to pipeline, us the Ned, just of giving talk there leverage

Ned Coletta

Yes.

from will of existing the some million of different excellent platform vertical adjacencies that integration. or level to kind dollars So, drive even the several million additional of dollars tens expansion either many of opportunities spans markets of revenue maybe tuck-ins, in the to pipeline

So there's a wide mix of opportunities working that we're on.

always, As guide to completed acquisitions yet. never we haven't we

said next it's work of any potentially to few working It's the right As point. little on we're them. year on things early claim now this that cross to to success a earlier, of get but year, a there's into could later we always a lot

John Casella

just did. we No,

Ned Coletta

just did work months John. have of lot Yes, excellent. a really and good point, it's mean that I we Yes, too. of was

you where pro said forma, Brad, think, I

Bradford Helgeson

about pro we're forma. X.Xx Yes,

of because deal been We period it's to intend to of activity. mentioned, to below. That or for to the long very difficult have the of But, some be by powder leverage of we're pipeline. So, clear we'll M&A how keep keep up come over to But the over manage over it's next period going in a time, Xx the that as to plan. be the available short on a certainly remains area the sheet. intend time we going function where a may has leverage. used the powder, LMR go in year-end obviously, but dry of company we predict, close look We still time, It dry Whitetail. I balance and to some the

So, what's we're executing in good front a of keep position us. on to in

Michael Feniger

kind CapEx. this it That's that up Just acquisitions you kind I'm like on helpful. in as curious, I'm footprint of building you but you do with intensity, asking wondering mode, just guys guys is have of doing And for projects? feel your on guide directionally, going these growth XXXX, not a CapEx and out are

Bradford Helgeson

metric, alluded business I Brad, we're in business. the CapEx we're aside businesses. shifting And -- setting geographically, as so the of intensity some that it's isolate the And setting to actually CapEx should come down. predominantly aside, earlier, actually of of setting time, the this mix aside collection the I acquiring that non-GAAP changes the with we growing upfront -- the think it's over

And the less than capital so, much those landfills. intensity have

time, as CapEx metric your a see -- over So, you'll the whatever percentage revenue, chosen trend lower. of

Ned Coletta

businesses upgrades, pretty as things like areas that. to we can when get business we do And within to facility one we plan other our is of the buy try execute quickly fleet upgrades,

upgrades our as and we All our in always pro considered to try little financials. it always is well visibility a on on formas, those So, give are them heightened.

Michael Feniger

buckets some you that just that And into price do to we're cost the comp-wise is bps. your to and maintain it next lastly, maintain see a about more to picture, kind going a Or because because do start as we're cost that yet? profile XXX think little Perfect. seeing going not either see I you push you year, cost is you see spread, we -- starting you think to bit are versus XXXX? some bigger that? like talked Is have on looking maybe price I where of as just you -- it mean, deflation the trend you're that spread or maybe deflation actually at

Ned Coletta

Yes.

but programs months over budgeted. XX our been from bit the a the a a our had programs down materially but match are and than flexible this expected. and lucky course flexibility pricing we So, upon we that metric was I've last the And be cost nimble. the year our had later book higher CPI of and of a because has have some with -- linked we I'll in pricing pricing of little months, higher can last it's We regard. very not we contracts. came we good we're quarter, it, said correct inflation stable We're and slightly X in little early we we did been second did where third stable. They spring, than the corrections? And in hard just the repeat lot business, look really course took for thought And need we into and fees bit in quarter, in this any in earlier our metrics dependent really inflation did was the business late

expect increase that half now. year a So, spread right of the little we into to bit second the actually

Operator

Raymond next [Operator And comes Tyler Brown question with James. Instructions] the from

Tyler Brown

a cash of on question back around CapEx. little flow This kind bit add-backs. bit a the Michael's And it's to actually, is little goes

failure. like payment, back, but go the FLSA those Southbridge, get but year, you Maybe And the I of totally are some of cash veneer add fall mean, of down? add-backs them the of door. there, next shouldn't shouldn't I off, in most spend the kind the quantum backs acquisition start to So out they why McKean, those stays add

John Casella

the of some will listed add-backs. you mean, Those recur, I Yes. not certainly.

to that think CapEx. I is way the as post-acquisition the be continues grow, upfront company we making and continue we'll to we'll have capital acquisitive as categorize expenditures

number Where a year. sit be XXXX will be to it on for XXXX though the certainly, out in that acquisition this particular, would of in expect today, comes line than I function where was So, lower that materially we that activity.

that retrofit GFL and with is number. in Just Willimantic the MRF

chunkier it year than is we a number certainly expect this forward. going So, might

Tyler Brown

Yes. I'm brightest not guy. the

CapEx the of is of between what the outlays $XX and million from acquisition activities? acquisition $XX.X cash the difference million So,

Bradford Helgeson

yes. Oh,

little a So, definitional topic here.

are associated So, acquisition It's like said. the The P&L That's the cash the expense. like that things facilities acquisitions trucks. It's just outlays just MRF CapEx diligence, new for expenses, I outlay like due that. and cash is, with it rebranding, acquisitions Willimantic It's sounds. things as for the legal, that. so

Tyler Brown

John, of And there? is chance Okay. any that there Is a on reopening any of site? then, update there Southbridge,

John Casella

say Tyler. no, would I

and back I that think closed Southbridge. that have anticipate coming we're in out. at And anything would the process not site I

Tyler Brown

Okay.

Okay. Thought thing, then that maybe an And last point. at was Ned. one chance outside

seeing sounds But the I'm market So, competitors. really I via the from let's for like on increased, sounds any then are that those you're are curious on just fight But quite broader And just takeaway get it volumes about this a like impact internal lot at line a are impact price, But just ramping the rail? call tons. mean tons. bit. thoughts rail sounds if up holding question capacity again, in it any but you like of you're dynamic? it some asked seeing guys any it, your of I

Ned Coletta

Yes.

years as capacity several will what and across that I for be they there is to are the And So sites And linear, some aware, So, absolutely looking future. mean, there sites everyone several happen predict risk close. great it close you're in may next Northeast. right? several will comes well there out crystal market, the are ball, -- as of it will is in their the never in trying

Ohio up the to recent say U.S. And whether the or on competitors I Southern volumes So the there a coming in been of would to rail weighed of couple Northeast. that in capacity marketplace the ramping who have has are it past, Northeast, be the out in

losing of built look couple there's a why McKean. our stable tons. reason probably It's it we because been next coming doesn't risk years, of of much us capacity MSW affecting of out up the sites. very affecting you pricing. when not lot Now, at of has market, to our not really additional the the it's greatly But

So, we either. haven't it on growing been

John Casella

It's C&D. more than of more C&D impact MSW. a something

Ned Coletta

come open waste the But additional moving some Northeast. Yes. a future, it's out the of has looking to that has taken as bit definitely, of online, capacity It's tiny some been off of pressure look in could the upon system of term. still, of couple you years next near out depending and pressure lot over the a But stay the and there sites which be close.

Operator

Our next question comes Research. with from Timna Wolfe Tanners

Timna Tanners

So, detail. wanted just bit little a more

but script, bit after a new new strategies similar or little new customers, the larger anything that's was little look shedding, some just same. You for going industrial commercial the more in the pricing, bit and there a questions normal better bit there mix was and regarding if I And mix from improvements if maybe incremental know on that expanded and didn't on -- that? it's a about detail holding to little if on just continuing on the

John Casella

growth to are and clearly, a terms our of there, drive perspective -- the industrial to I waste there is services sustainability there's larger standpoint is There our solutions opportunity from in within nice providing of Mid-Atlantic a group accounts. some think trying those organizations. opportunity that, services the resource take Timna, into about organizations that recycling significant for their

opportunity significant for well really there in that, is is team Our Mid-Atlantic. positioned and the

a before, of from said Ned the Mid-Atlantic more natural as some and the change, of Brad, opposed as recycling is driven collection because standpoint think, being I to mix disposals.

There's substantial market. disposal overall of in amount that basis, very in we're Mid-Atlantic. capacity the an on So, comfortable

there's in are that that XX currently. think market facilities I

is natural bit because change a little of the to So, that. going mix

Ned Coletta

And you in volume for see subscription it segment. price the again traded residential this we quarter,

see to continue We in our density market. quality,

So improve to there. the profitability margins continue

point, are and like So, colleges that we decision-making But right John's industrial... it's in segment. like the large winning, to universities, institutional segments in

John Casella

Medical centers.

Ned Coletta

cost, make we're really right to with goals, they service. accounts consulting winning area low of to We're where have we really their the on some our complex winning and really and are plans, even to try win Medical like a process partnering services require team of one differentiated really these sustainability circularity well. and they're on not kind have change investments. approach centers, That's seeking that

Timna Tanners

a color. the M&A on price changes helpful looking -- they're the one targets up That's And then multiple potential want any quick want Okay. to for? what just follow you that the they in Are that question. and with to seeing

Bradford Helgeson

don't think I that there's changes. any

No where change least full been. that for would years characterize there. I last for, from have as full X.X change say, X things been have now, multiples Multiples years to wouldn't I it years. at real multiples think have been X years. But I X the a

much that still, the at. of there's we significant opportunity an the of is we the interesting our with lot that opportunities years. of last is even time There's very I it at very out seems like and the over thing that go pipeline, change one we're each X.X of for awful year, think the that have don't number opportunity And activity amount us in there. we've look had a terms still numbers is growth total that the significant. looking

Operator

for now John no questions would Casella over the like call show to time. the further I in at back queue closing remarks. this to I turn

John Casella

Thank discussing joining third great forward our quarter fall. morning. a weekend for weekend. to this us look Hope you a and and earnings XXXX everybody, you this Thanks, Thank you. great have have

Operator

Thank conference you participating. does call. This for conclude today's

now disconnect. may You

Casella Waste Systems (CWST) 2 Aug 242024 Q2 Earnings call transcript