Casella Waste Systems, Inc.

Thank you for standing by, and welcome to the Casella Waste System Think Q1 2021 earnings. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star then 1 on your telephone. Please be advised that today's call is being recorded. If you require additional assistance, you may press star then 0 to reach an operator. I would now like to hand the call over to Joe Fusso, Vice President of Communications. Please go ahead.

Thank you this morning for joining us 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 Vice President of Finance. Today we will be discussing our 2021 first quarter results. These results were released yesterday afternoon. Along with a brief review of those results and an update on the company's activities and business environment, we will be answering your questions as well. But first, as you know, I must 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 the 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.cosella.com. And with that, I'll turn it over to John Casella, who will begin today's discussion.

Thanks, Joe. Good morning, everyone, and welcome to our first quarter 2021 conference call. Obviously, we're very pleased with our results and continued execution against our key strategies. We're real proud of the work that the entire team has done throughout the entire period of time with regard to the pandemic. Our management team continues to do a great job of taking care of our people. Obviously, our people are doing a great job taking care of our customers and the communities that we serve. Our performance really reflects a maintained focus and commitment by our teams on service excellence through this dynamic period. Over the past year, I've witnessed our culture strengthening even further across the organization, driving success related to both meeting the needs of our customers as well as executing against key operating metrics and goals. As expected in the quarter, we experienced lower economic activity levels compared to the first quarter of 2020, and as such, solid waste volumes declined 3.3 percent. Despite this headwind, consolidated revenues were up 3.6 percent and adjusted EBITDA improved 15.9 percent with margin expansion of 215 basis points year-over-year. At the same time, we grew adjusted free cash flow by $6.9 million year-over-year in the quarter through our strong operating performance, continued discipline, capital allocation, and working capital improvement. Although solid waste volumes were negative in the quarter, the progression from Q4 through April has been positive. The sequential trends and outlook indicate a continued recovery as part of the economic reopening across the Northeast. Some brief review of our key strategies. First, on disposal, while tonnage trends are improving, volumes were down in the first quarter. This was largely driven by lower landfill tons year over year as we experienced lower volumes from the greater New York City area into several of our sites. While we do not have collection operations in or around New York City, we do accept waste from third-party customers within its geography. As we know, the city has been one of the hardest hit areas in the country related to the pandemic and one of the slowest to reopen. That said, we have seen positive volume trends over the past several weeks related to business and construction activity levels beginning to come back online in a more robust manner. Also, as you probably know, the mayor announcement that we had yesterday, the mayor, de Blasio, announced yesterday that the city is going to reopen entirely on July 1, which is obviously going to be a positive. With the vaccine rollout and restrictions loosening, we expect to see continued improvement in volume levels throughout the year. Despite lower volumes, we have remained disciplined from a pricing perspective. We advanced 3.5 reported landfill price in the quarter. We also continue to focus on operating programs. Disposal adjusted EBITDA margin expansion improved as we flex certain variable costs in line with volumes without sacrificing safety or compliance. Overall, our disposal assets are well positioned within the capacity-constrained Northeast. Our pricing, operating, and permitting outlook remains positive. In the collection business, recent volume trends are also improving in the collection business, as we're experiencing increased commercial and roll-off service levels, closer to normal seasonal levels. Similar to disposal, sequential volume trends are on a positive trajectory. Over the last year, we have leveraged improved real-time business intelligence to better flex our variable costs, and we have continued to invest in further automation, route optimization, and technology in an effort to drive improved operating performance. We have improved collection, adjusted EBITDA margins for five consecutive quarters, and we are up 330 basis points since 2019. We've advanced collection price by 3.5% in the quarter, and as the economy continues to reopen across the Northeast, volumes improve, we will consider inflation across various categories, we will analyze further pricing opportunities over the balance of the year while continuing to enhance our operating programs. On resource solutions, if you recall, in January of last year, we combined our recycling, organics, and customer solutions businesses under resource solutions in an effort to better align cross-functional sales, operating, back office teams while strengthening our ability to attract, win, and retain profitable customers within this segment. This January, we took another step in further integrating these teams to drive increased synergies by creating processing and non-processing business unit groups within Resource Solutions. With this, we aim to drive better teamwork, improved organization across the sales team, and position our business to best meet the needs of our customers. Within processing are recycling and biosolids facilities where we receive inbound materials, process it, and produce an end product. Non-processing consists of brokerage and resource management services provided to large customers with broad sustainability needs. Resource Solutions' performance was strong in the quarter with adjusted EBITDA up $1.4 million year-over-year while expanding margins. Aside from strong financial performance, I'm proud of the work of Resource Solutions Team in regard to the recognition we received this March from Beckton Dickinson as its top global supplier and sustainability category for resource management services delivered to their manufacturing and distribution operations across North America. Finally, I would like to highlight our capital allocation and growth strategy. Our acquisition pipeline remains robust with over $400 million of addressable opportunities and annualized revenue over the top of our existing footprint in the Northeast. We are well positioned to continue to execute against our growth strategy in a disciplined manner given the strength of our balance sheet. We are focused on opportunistically putting this capital to work on deals that meet our criteria from a strategic fit and a financial return perspective. where we can drive higher levels of free cash flow and continue to grow the business. Wrapping up, we are executing well against our strategies as reflected by our continued performance in the first quarter against our 2021 plan. We expect continued strength across our solid waste and resource solutions operations and a paced reopening of the major cities across the Northeast. And with that, I'll turn it over to Ned. Thanks, John.