Casella Waste Systems, Inc.

Good day, and thank you for standing by. Welcome to the Casella Waste Systems, Inc., Q4 2021 conference call. At this time, our 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'll need to press star 1 on your telephone. Please be advised the call is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to your host today, Joe Fusco. Sir, please begin.

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 Vice President of Finance. Today, we will be discussing our 2021 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 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 these 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. With that, I'll turn it over to John Casella, who will begin today's discussion.

Thanks, Joe, and good morning, everyone, and welcome to our fourth quarter 2021 conference call. We are very pleased with our results in the quarter as we finish the year strong and continue to execute well against our key strategies. Ed and Ned will provide color on the corner, but I would like to focus my comments on performance for 2021, our forward outlook, and our strategy. In August of 2017, we laid out our multi-year 2021 strategic plan. The plan included key strategies most relevant to driving shareholder value, along with a financial framework that provided measurable targets to track performance. As we exit 2021, I truly could not be prouder of what we have achieved. As a result of the hard work, focus, and discipline across the organization, we exceeded all key metrics of the 2021 plan. As an outcome, we grew the business meaningfully in 2021 through our pricing programs, operating initiatives, and growth strategy. For the year, revenues were up nearly 15%, adjusted EBITDA improved over 18%, and adjusted free cash flow increased roughly 38%. Our performance reflects continued strong operational execution within our base business combined with growth through acquisitions. During 2021, we closed on 10 acquisitions with $88 million of annualized revenues. In the first 45 days of 22, we've closed on five additional tuck-in acquisitions with approximately $4 million of annualized revenues that have a great strategic fit. As our momentum carries into 2022, we have a plan that aligns with our recently created 2024 strategic plan. The key strategies of the 2024 plan are very much consistent with those of the 2021 plan. They're as follows. Number one, increasing landfill returns. Number two, driving additional profitability in the collection operations. Third, creating incremental value through resource solutions. And the fourth, allocating capital to return-driven growth. To bolster our ability to execute against these core strategies, we're introducing the fifth, which is strengthening the key foundational pillars. The four foundational pillars are as follows. Number one are people. Number two are technology. sustainable growth strategy, and for our facilities. And quickly touching on the foundational pillars, from a people perspective, we understand the importance of reinforcing our core values. While investing in our culture and team with technical training programs for key frontline roles, leadership development, incentive compensation programs aligned with long-term goals, Great examples of our recent success here are our CDL school and career paths initiatives, which has helped to stabilize our workforce during a challenging labor market. As it relates to technology, we are making select investments that drive and support profitable growth. This is evident within our collection operations as we are making continued investment in route optimization, onboard computers, and automation programs that are driving margins. Execution against our key strategies is also supported by our Sustainable Growth Initiative. We have further integrated our sales, marketing, engagement, and customer care teams to drive better alignment across our sustainable service offerings as we seek to enhance profitability, retain key customers, and grow the business further in a manner that also enables our customers and society to meet the sustainability goals and needs. Finally, from a facilities perspective, we're prioritizing and allocating capital spend in a manner that meets our long-term safety, operational, and strategic needs while creating a more welcoming and accommodating experience for all of our people. I'll provide an update on the core strategies supported by the foundational pillars. Our landfill assets are positioned well to continue to help meet the disposal needs of a capacity-constrained Northeast. Our pricing programs are working well to offset cost inflation, and our operating programs, coupled with investment in innovative technology, are focused on further driving margin expansion. As we look out over the next few years, we believe there to be a positive backdrop to drive further value. We continue to focus on improving the blend of our customers to increase the quality of revenue at our sites. In fact, we are experiencing some nice sequential trends here through January of 2022 as it relates to continued improvement of our average price per ton. Landflow volumes remain lower than pre-pandemic levels by over 300,000 tons. This is primarily isolated to volumes in our New York facilities from and in around New York City. Our expectation in 22 is that we will only experience a modest recovery of these tonnages. We also continue to advance key permitting and expansion efforts, including focusing on developing future disposal capacity, such as our McKean Landfill Rail Project, which we are targeting to bring online in late 2023 or early 2024. We're also continuing to invest in sustainable infrastructure at our site. As an example, in 2022, we have budgeted to spend over $8 million in aggregate projects related to further reductions in greenhouse gas emissions, water management, and other environmental upgrades. Further from an RNG perspective, we have projects in landfills and in development at two of our landfills where a third party is making the capital investment As these projects come online over the next year, we will benefit from gas royalties. Moving to the collection business, our collection business continues to perform well. We are focused on several key areas, including pricing programs that offset inflation, improving operating efficiencies to drive margin expansion, service excellence, and continued investment into our people to drive employee attraction, retention, advancement, and engagement. From a pricing perspective, we advanced positive price in 2021 as cost inflation has increased. We have calibrated our 22 pricing programs accordingly, and in January, most of our 2022 budgeted pricing was executed. The early indicators are favorable in that there has been limited pushback from our customers. Pricing levels exceed our core cost inflation, and there's meaningful sequential improvement through January in our pricing. We will continue to monitor our costs and the inflationary environment throughout the year and take further action if needed. Next, resource solutions. Our recycling processing operations and our non-processing business units are performing extremely well. From a recycling perspective, our business model is economically and environmentally balanced. We have removed much of the risk related to recycling commodity market through our fee programs and contract structure. This has allowed us to generate acceptable returns that are more stable over time, which better position us to make continued return-driven capital investments into our recycling infrastructure. In 2022, we will complete an $18 million equipment upgrade at our Charlestown, Massachusetts recycling facility, which is one of the largest in the country. This significant investment ultimately strengthens our ability to continue to meet the sustainability needs of the greater Boston market. This upgrade will improve throughput, operating efficiencies, the quality of our end product, while driving higher margins. introduce proven technology, including several robotic machines on the line. In addition to this project, we're investing over a million dollars in other select robotics at other recycling facilities, which reflects our continued dedication to our sustainability services. We will continue to experience a great deal of positive momentum and growth related to our non-processing operations as well. We provide resource management services to larger, more complex customers with a wide array of sustainability needs. Now I'd like to highlight our capital allocation and growth strategy. As I mentioned, 2021 was another solid year of execution against our growth strategy. We completed 10 acquisitions in the year, as well as completing a refinancing of our credit facility, which positions us well for continued growth. 2022 is off to a nice start, and five tuck-in acquisitions that we have closed thus far in the year will integrate nicely with our existing operations. As always, we're focused on a seamless transition of our new customers and employees. We welcome all of them to the Casella team. Our pipeline remains strong. We're actively working on several opportunities in various states. Wrapping up. As part of our 2024 plan, we have established the target of adding greater than $30 million of annualized revenues through acquisition or development opportunities while maintaining leverage below 3.25 times. We've also maintained our goal of growing adjusted free cash flow by 10 to 15 percent per year. Our 2022 guidance aligns well with our 2024 plan and we anticipate continued execution against our key strategies. We're excited about the future as we see a pathway of continued growth that will drive further value. And with that, I'll turn it over to Ned. Thanks, John.