Casella Waste Systems, Inc.

Good day, and thank you for standing by. Welcome to the Casella Waste Systems Incorporated first quarter 2023 conference call. 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'll need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To remove yourself from the queue, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Charles Woolhutter, Director of Investor Relations. Please go ahead, sir.

Thank you, Nona, and thank you, everyone, for joining us this morning. With us today are John Casella, Chairman and Chief Executive Officer at Casella Waste Systems, Ned Coletta, our President and Chief Financial Officer, Jason Meade, our Senior Vice President of Finance and Treasurer, and Sean Steeves, our Senior Vice President and Chief Operating Officer of Solid Waste Operations. Today we will be discussing our first quarter 2023 results, which 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. But first, 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 State 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 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.cosella.com under the heading Events and Presentations. And with that, I will now turn it over to John Casella, who will begin today's discussion.

Thanks, Charlie. And good morning, everyone. And thanks again for joining us this morning for our first quarter 2023 conference call. We're very happy to share with you our strong results to begin the year and the exciting announcement from earlier this week on the pending acquisition of select solid waste operations in adjacent markets. We are executing well against our key growth strategies and we look forward to our continued opportunity to grow the business from our expanding platform to further drive shareholder value. Before discussing the quarter results, I'd like to provide some strategic views on this announcement while Ned will go into the financials. The Northeast continues to be the focal point for our company with great opportunity to expand, continue to expand into the future. We also recognize the continued execution of our growth plan requires us to expand our existing footprint in a disciplined manner. In mid-2021, we grew our geographic region through an acquisition in Connecticut where we're performing well and have done a nice job integrating. The pending acquisition of GFL's solid waste operations in Pennsylvania, Maryland, and Delaware provides meaningful scale to grow from, including the ability to introduce our resource management solutions to our new customers. Further, these operations and markets fit our business profile very well. Across nine collection operations, transfer station, and a recycling facility, the business mix carries a low exposure to the economic cycle given the high concentration of residential subscription and commercial collection customers. This furthers our ability to remain nimble from an operating pricing and risk mitigation perspective. We estimate that approximately five to seven percent of the GFL operations we intend to acquire are tied to construction and demolition activity. This actually helps to blend down our consolidated C&D exposure. In addition to the business, we have several talented team members that have deep knowledge and experience through their careers with these operations and markets. This provides us with added confidence related to this successful transaction integration. We believe that the culmination of these factors will result in a high degree of risk mitigation, which will only help to support our ability to continue delivering long-term shareholder value. We look forward to welcoming our new team members and providing excellent service to our new customers and communities after we close the transaction. Now, moving on into our performance in the quarter, as reported yesterday's press release, we grew revenues by over 12% and adjusted a bit by over 11 in the quarter on a year-over-year basis. The results from our solid waste operations have put us into a strong position to start the year. In fact, solid waste adjusted abated margins expanded over 220 basis points year over year for the quarter. This is a true testament to the perseverance of our team to manage through an inflationary period. Our continued investment into cost-reducing operating initiatives coupled with focused pricing programs helped to drive performance in the quarter. Ongoing implementation of fleet automation Conversions, route optimization, onboard computers are delivering increased efficiencies and safety improvements. Sean and his team continue to make great strides in terms of improving our overall operations. From a pricing perspective, our year is off to a strong start, ahead of budgeted levels given persistent inflation with solid waste price up 8.8%. Likewise, our floating fuel cost recovery fee program is fully offsetting the volatility in fuel-related expenses. While recycling commodity prices have improved modestly from late last year, they're still down significantly from the first quarter of 2022 and presented a headwind for consolidated performance as we expected. That said, our risk mitigation strategies, such as our floating SRA fee, have helped to limit the negative financial impact. Overall, we are optimistic that our efforts within the first quarter will benefit our execution through the balance of the year. I'll provide a brief related to our key strategies and recent performance of the operations. An important element of our solid waste operations is our landfill assets and the focus we have on increasing returns through our operating programs and permitting initiatives. The reported price of the landfills increased to 10.9% year-over-year as we remain focused on offsetting inflation, including higher capital cost items at our disposal facilities and regulatory costs. As discussed in February during our fourth quarter 2022 earnings call, we experienced a timing shift in tonnages at our landfills with year-end 2022 volume decline being more than offset by activity levels in January to start the year. There has been a slight moderation in volumes from January. However, we reported positive volume growth in the first quarter. With respect to permitting, our McKean rail project is underway, and I'm pleased to share that Sam and his team recently received all of our our final solid waste permits, and in fact have received all of our permits for that development project. We can now turn our attention towards building the required offload infrastructure with rail operations at the site anticipated to come online in the spring of 2024. The ability to accept waste by rail at McKean is one of the larger development projects in our near-term pipeline. It increases our ability to drive further organic growth and internalization opportunities. The proximity of our rail served operation will be well positioned to serve our customers by providing increased disposal certainty and helping to meet their future needs with our safe, secure, and compliant outlet given the supply-demand imbalance of disposal capacity in the Northeast It's exciting to have all of the activity from a permitting standpoint, as I said, behind us. Sam and his team have done a terrific job of getting through that process on time, as expected. And we look forward to the construction of the infrastructure to bring that facility online, as I said, in the spring of 2024. On that collection side of the business, we're executing at a high level. Much like the strength of our disposal operation results and solid waste collection operations improved year over year. This is a direct result of the focus and agility across our team to stay ahead of cost inflation through cost reducing investments, operational initiatives, and pricing discipline. Sean and his team are driving costs out of the business and enhancing safety by making return driven investments to further increase our use of automated trucks route optimization capabilities, and onboard technology. Today, about 50% of our addressable collection fleet is automated, and 55% of our route trucks are equipped with onboard computers. Next, resource solutions. We take great pride in our commitment to environmental stewardship, and our business model promotes this through the services we provide. Recycling has been at the core of the company for decades, and fortunately, our SRA fee and other risk-mitigating features in our contracts have greatly limited the financial impact, which we expect will subside in coming quarters. We continue to invest in resource management offerings to help fulfill demand from our customers. Our approach is to ensure environmental and economic balance. We are currently in the process of installing new recycling equipment and technology at our Boston MERC. which is slated to, again, be operational by mid-year. This is a great example of an investment that will increase recycling volume throughput, enhance the quality of our end product, improve operating efficiencies, and result in a safer operating environment. Really excited that project is on time, on budget, and we expect to have it operational mid-year, as I said. And finally, I'd like to highlight our capital allocation and growth strategy. Our acquisition pipeline remains robust with about $500 million of addressable opportunities and annualized revenues just over the top of our current Northeast market footprint. As part of our diligence process related to the pending acquisition of the Mid-Atlantic Solid Waste Operations from GFL, we have identified opportunities in this market which nearly double the size of our current pipeline. This highlights the platform nature of these operations from which we can build from over time. Together with our near-term development project pipeline of waste by rail services at McKean and the increased recycling throughput at our Boston MRF, we see nice growth runway for organic and inorganic projects that meet our return criteria that will drive long-term shareholder value. And with that, I'll turn it over to Ned to walk through the financials.