Casella Waste Systems, Inc.

Good day and thank you for standing by. Welcome to the Casella Waste Management, Inc. second 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 this session, you will need to press star 11 on your telephone. You will then hear an automated message advising you that your hand is raised. To withdraw your question, you'll need to 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, Charlie Wood Hunter, Director of Investor Relations. Please go ahead.

All right. Thank you, Michelle. Good morning, and thank you, everyone, for joining. With us today are John Casella, Chairman and Chief Executive Officer of 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 second quarter 2023 results, which were released yesterday afternoon. After a brief review of those results and an update on the company's activities and business environment, we will be answering your questions. Please note that various remarks 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 Security 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, July 28, 2023. 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 our discussion.

Thanks, Charlie. Good morning, everyone, and thank you for joining us. Welcome to our second quarter 2023 conference call. Before I comment on the quarter, I'd like to take a moment and talk about the communities that were impacted by the severe flooding across our footprint earlier this month. I also like to recognize our team. Many of our people have been on the front lines helping our communities recover. Some of that damage, absolutely catastrophic in some areas. In Vermont, Waterbury, Weston, Montpelier, our Montpelier operation itself was under five feet of water. And hats off to the entire team there, Billy, Aaron, Pat, Mike, all of... The entire team did a hell of a job. They were up and operating within two days of being under five feet of water. One of the first businesses in Montpelier to get back up and operational. Also in Vermont, significant damage in Berlin, Londonderry, Barrie, and significant amount of damage in Ludlow as well. In New York, Clinton, Essex, and Franklin counties, along with other areas in upstate New York, communities in western Massachusetts, such as North Adams, and neighborhoods across our new markets in Pennsylvania, were all impacted significantly by the weather. Hats off to the priority response teams, the team that's put together by Sean Steeves, that takes assets, people, trucks, containers, from different areas of our footprint where they weren't impacted and brings those resources to the affected areas. And again, many of our people have worked tirelessly and selflessly to help the affected areas across our markets to restore conditions, remove debris, and get things back to normal. We've also done some fundraising as well, fundraising effort to help support those affected during very difficult times. So far, our relief fund has raised just under $100,000, $86,000, to help people who have experienced loss and hardship. Also, there's a spot on our homepage if anybody would like to donate to the relief fund. Again, I'm incredibly proud of the efforts of all of our people and the work that they've done to help people recover from what in many cases was catastrophic damage. Every bit as much damage as we had in a lot of cases, similar to Irene. Now, moving on to the performance for the quarter, we're pleased to share with you our continued strong results and updated outlook, which demonstrates our focus on operating performance, discipline growth, and driving shareholder value. We are executing well against our key strategies as reflected in the results. We also had several key announcements recently culminating with the acquisition of GFL's Mid-Atlantic operations on June 30th. Our entry into the Mid-Atlantic presents a great long-term opportunity to grow the business, expand our platform into adjacent markets. Over time, we look forward to the potential to continue to grow both organically and through acquisitions. Less than one month into the GFL-related acquisition operations and service are smooth, and we're highly focused on establishing the Casella's culture and core values. Once again, we welcome all of our new team members. As reported in yesterday's press release, we grew adjusted a bit by 5.5% year-over-year in the second quarter, expanded our margins 80 basis points, and grew adjusted free cash flow. Results from our solid waste operations once again shined this quarter on the hard work of our team. After a strong start to the year in the first quarter, solid waste adjusted EBITDA margins, expanded over 220 basis points year over year for the second consecutive quarter this year, and we're over 31% EBITDA margins in the second quarter. These results demonstrate the strong operating plan we have in place to drive productivity and higher returns while keeping safety front and center. Our ongoing investments in automated trucks, route optimization, onboard computers are adding value across many areas from safety to efficiencies. And our pricing programs complement these efforts with 7.7% percent price on solid waste in the quarter, helping to offset inflation. Recycling commodity prices remained well below last year's level, as we expected. While recycling prices were down 53% year over year in the second quarter, our risk mitigation programs are working well to limit the impact. We expect the headwind will ease moving through the rest of this year. At the onset of the year, we took a conservative outlook on recycling commodity prices and that remains intact. All said, the business is performing well as reflected in our updated guidance, and we look forward to carrying the strong momentum into the remainder of 2023. A brief review on related key strategies. We continue to be focused on increasing returns across our disposal assets. Improving the quality of revenue of inbound streams is a major focal point. We measure this through our average landfill price per ton, which was up nearly 10% in the quarter, to help us stay ahead of inflation across many categories, from daily operations to our capital spend on cell construction and machinery and heightened regulatory costs. Notably, we're also capping at several sites this year, which reflects our commitment to further lowering emissions and improving gas capture for renewable energy. On this topic, in mid-July, we announced the signing of an agreement with WAGA Energy to build and operate RNG facilities at three of our landfills. WAGA's proven track record and expertise in this field proves to us that they are a strong partner to lead the next stage of our RNG development projects. We expect RNG to be another opportunity for driving higher returns and sustainability across our landfills. On the collection line of business, In terms of the second quarter, great execution once again through leadership of Sean, Steve, and his team. We posted another strong quarter with both adjusted EBITDA growth and margin expansion in collection operations exceeding our budget in the quarter. As I highlighted, our cost reduction investments and operational initiatives improved several of our key operating metrics both sequentially and year over year. We accomplished this while maintaining a high level of service excellence. Looking ahead, our focus remains the same. As of the second quarter, 60% of our routed fleet have onboard computers, and over 50% of our addressable residential collection fleet is automated. This strategy is paying off, but we still have room for further operational enhancements and investments to drive higher returns. Resource solutions. Notably, as of mid-June, our fully upgraded Boston recycling facility is up and running. Recycling is a part of the core of this company, and this approximately $20 million investment represents a meaningful component of sustainability to many customers in the greater Boston area. The upgrades are expected to drive higher material throughput, enhance end product quality, and improve operating efficiency while advancing the safety profile of the facility. Like any investment we make, we balance environmental stewardship with economic returns to support the longevity of our programs and services. Our SRA and other risk mitigating features in our contracts are examples which have greatly limited the financial impact of current recycling prices. Including the Boston MRF, we expect positive contributions to our results from our recycling operations over the remainder of the year. Finally, I'd like to highlight our capital allocation and growth strategy. Following our recent debt and equity raises, the strength of our balance sheet positions us well to continue growing the business and driving further free cash flow growth. Our acquisition pipeline of about $500 million in annualized revenues over the top of the Northeast footprint, combined with approximately $400 million around our mid-Atlantic operation provides a great opportunity for us, and we will remain opportunistic in our approach. Aside from the GFL operations we acquired in June, we announced the pending acquisition of Twin Bridges in New York with approximately $70 million of annual revenues. The acquisition cleared HSR review on July 14th, currently being reviewed by the New York Attorney General's Office, and is targeted to close by the fourth quarter. Overall, we have a strong runway that positions us for continued growth and driving long-term shareholder value. We look forward to our continued ability to grow in a disciplined fashion. And with that, I'll turn it over to Ned for some more detail on the financials.