Casella Waste Systems, Inc.

Ladies and gentlemen, thank you for standing by and welcome to the Casella Waste Systems, Inc. Q4 2020 conference call. At this time, all participants are in listen-only mode. After the speaker presentation, there will be a question-and-answer session. To ask a question during the session, you'll need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Joe Fusco, Price President Communications.

Please go ahead, sir. Thank you for joining us this morning and welcome. With us today are John Casella, Chairman and Chief Executive Officer of Casella Waste Systems, Ed Johnson, our President and Chief Operating Officer, Ned Coletta, our Senior Vice President and Chief Financial Officer, and Jason Mead, our Director of Finance. Today we will be discussing our 2020 fourth quarter and year-end results. These results were released yesterday afternoon. Along with a brief review of those results and an update on the company's activities and business environment, we will be answering your questions as well. But first, as you know, I am deeply compelled to remind everyone that various remarks that we may make about the company's future expectations, plans, and prospects constitute forward-looking statements for the purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by those forward-looking statements as a result of various important factors, including those discussed in the risk factors section of our most recent annual report on Form 10-K, which is on file with the SEC. In addition, any forward-looking statements represent our views only as of today and should not be relied upon as representing our views as of any subsequent date. While we may elect to update forward-looking statements at some point in the future, we specifically disclaim any obligation to do so even if our views change. These forward-looking statements should not be relied upon as representing our views as of any date subsequent to today. Also, during this call, we will be referring to non-GAAP financial measures. These non-GAAP measures are not prepared in accordance with generally accepted accounting principles. Reconciliations of the non-GAAP financial measures to the most directly comparable GAAP measures, to the extent they are available without unreasonable effort, are available in the appendix to our investor slide presentation, which is available in the investor section of our website at ir.casella.com. The older I get, the harder it is to breathe through that statement. But with that, I will turn it over to John Casella, who's a little older than me, will begin today's discussion.

Thanks, Joe. Good morning, everyone. Welcome to our fourth quarter 2020 conference call. We are obviously very pleased with our fourth quarter and 2020 results. This year was unprecedented, and our strong performance and execution highlights the resiliency of our business, along with the courage, dedication, and tenacity of our 2,500 employees. Many thanks again to the men and women on our front lines who performed at an exceptionally high level in providing safe and reliable service to our customers. Our success in 2020 is also credited to other teams across the company, including but certainly not limited to our safety, operating maintenance, sales, customer care, and back office personnel. As a company, we are organized and proactive from the onset of the pandemic. We ensured the continued safety of our workforce by adhering to CDC guidelines and state orders. At the same time, we worked with our customers to understand their changing service needs so that we could right-size our service levels and flex variable operating costs. These actions not only helped drive strong results for the year, but also safeguarded our ability to deliver our essential environmental services to our customers. Lower economic activity levels during the year resulted in a decline in solid waste volumes of $40.6 million as compared to 2019. This was primarily driven by lower disposal tonnages, lower volumes in the commercial and industrial collection lines of business. Despite this volume headwind and other COVID-related expenses in 2020, on a year-over-year basis, we grew consolidated revenues by 4.2%. improved adjusted EBITDA by 9.5%, while expanding margins by over 100 basis points, increased adjusted free cash flow by 24.7%, and further drove down our consolidated net leverage ratio. Notably, our 2020 adjusted EBITDA and adjusted free cash flow respectfully met and exceeded our initial 2020 guidance ranges as announced in February of last year. Despite solid waste volumes being down $40.6 million year over year, coupled with roughly $2.5 million of COVID-specific costs. During the year, we executed well against our key strategic initiatives. Operating pricing programs displayed very significant capital discipline in closed-end acquisitions. Next, I'll provide further details on the recent performance of our operations as well as our continued execution against our key strategies. Starting with disposal volumes, we're again down year over year due to the economic impacts of COVID. That said, similar to what we will highlight within the collection operations, there was sequential improvement in terms of volume recovery from the third quarter to the fourth quarter. Disposal volumes were down 8.7% In the fourth quarter, disposal volumes were down approximately 12% year over year. Volumes continued to slowly meter back towards normal seasonal levels. Our printing programs continued to work well and helped to partially offset the impact of lower tonnages in 2020. During the year, we also flexed select variable costs out of our disposal operations to adjust for lower volumes. while of course maintaining our high standards related to safety and compliance. We remain focused on key permitting efforts and furthering our relationships with our host communities as we provide essential resource management infrastructure and services to help meet society's environmental needs. Moving to the collection business. As expected, volumes were again down in the quarter year over year. However, we experienced a modest sequential volume recovery from the third quarter to the fourth quarter as some businesses came back online. Increased service intervals and roll-up activity continued to narrow the gap to normalize seasonal trends. In the fourth quarter, collection volumes were down 3% year-over-year as compared to down over 6% year-over-year in the third quarter. This marked a fairly substantial recovery since the second quarter where collection volumes were down over 10% year-over-year. Despite the continued volume headwind, we again increased adjusted EBITDA and margins year-over-year in the quarter. Our performance has been aided by continued investment in technology, automated trucks to better drive collection efficiency, route optimization, and real-time business intelligence. We remain focused on service excellence, operating initiatives, pricing programs, and acquisition integration. On to resource solutions. We continue to drive more value and synergies from resource solutions as we have worked to further integrate our recycling, organics, and customer solutions, sales, and back office teams. As our customers' sustainability needs grow, our resource solution team is well positioned to provide expertise and services required to achieve these goals. As with all other aspects of our business, we are focused on models that are economically and environmentally sustainable. Resource Solutions performed well in the quarter and on the year. For the year, revenues were up 9.9% year-over-year with growth within all three operations while improving adjusted EBITDA and expanding margins. Our recycling operation performed particularly well on the year. Our TIP fee and SRA fee programs have allowed us to offtake over 90% of the recycling commodity risk. We continue to make operational improvements through various initiatives while at the same time prioritizing safety on the processing lines. Our customer solutions and organics businesses continue to focus on driving value through low capital intensity business model while growing the business through the addition of profitable new customers, gaining share of wallet across new services with existing customers, and increasing vertical integration opportunities. Finally, I'll highlight our capital allocation and growth strategy. In 2020, we closed 10 acquisitions with approximately $22 million of annualized revenue, while our acquisition growth was somewhat modest in the year due to COVID-19 travel restrictions Our pipeline remains strong with over $400 million of annualized revenues and opportunities. We ended the year with over $300 million of liquidity, including $154 million in cash. We are poised to opportunistically put capital to work in a return-driven manner on deals with that strategic fit that will drive further free cash flow growth. Thus far in 2021, we have closed one tuck-in acquisition in western New York with approximately $4 million in annualized revenue. The collection operation will nicely complement our operations, and we welcome aboard the hardworking folks that are new to the Casella team. And with that, I'll turn it over to Ned to walk you through the financials.