Casella Waste Systems, Inc.

Good day and thank you for standing by. Welcome to the Casella Waste Systems Q3 2023 Earnings Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. You are allowed to ask two questions and a follow-up. To ask a question during the session, you will need to press star 11 on your telephone, and you will then hear an automated message advising your hand is raised. To withdraw your question, 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 first speaker, Charlie Woodhutter, Director of Investor Relations, Casella Waste Systems. Please go ahead.

All right. Thank you, Amanda. Good morning, and thank you for joining us on the call today. With us are John Casella, Chairman and Chief Executive Officer of Casella Waste Systems, Ned Coletta, our President and Chief Financial Officer, Jason Mead, 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 third 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 happy to take your questions. But 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 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 factor section of our most recent annual report, on Form 10-K, which is unfollowed with 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, November 2nd, 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. Reconciliation 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 will be available in the investors section of our website at ir.cosella.com under the heading events and presentations. And with that, I'll now let John Casella begin our discussion.

Thanks, Charlie, and good morning, everyone, and thank you for joining us. Welcome to our third quarter 2023 conference call. I would like to begin by offering our sincere thoughts and prayers to everyone affected by the tragic events in Lewiston, Maine last week. It's a community that we're proud to serve, be a part of, and support in any way we can. This quarter marks a pivotal and exciting time in the company's history as we execute against our growth strategy. We closed on three acquisitions in the quarter, which were tuck-ins or adjacent markets across our northeast footprint, where we see lots of opportunity to fold these assets into our operating plans and grow our services. Included in this is Twin Bridges, which we completed on September 1. This is a great platform in the Albany, New York market with young assets, including a state-of-the-art recycling facility that provides greater capacity for us to continue to grow our resource solutions business around the region. I'm also pleased to report that our early results in the Mid-Atlantic are on track to hit or exceed pro forma. Operations and service are excellent, and we are quickly working to establish our culture and core values. We're building our sales pipeline and continue to work on acquisition opportunities in this market. Integration efforts are going well for all our acquisitions, and our nearly 900 new team members are all making this possible. Speaking of new members, last night we also announced the hiring of Brad Helveson as our new Chief Financial Officer, effective Monday, November 6th. Brad has been a very well respected finance executive in the solid waste industry over many years, and we believe that his experience, values, and leadership style fit very well with our company and our entire team. As you know, Ned has been instrumental to this company's success in many ways over the last 11 years as CFO. I'm both proud and excited for him to devote his complete attention to the president's role where he will continue helping to profitably grow this company and drive further shareholder value. Moving to the results reported in yesterday's press release, we grew both revenues and adjusted EBITDA by over 19% in the third quarter on a year-over-year basis along with strong adjusted free cash flow generation. This shows the excellent job that our team is doing to serve our customers and communities and deliver strong operating results in our core business while onboarding and integrating our recent acquisitions. We remain keenly focused on executing a high level over the remainder of this year and carrying this momentum into 2024. Above all, I'm very excited about the performance of the company in the larger platform that we are building. We are once again updating guidance for 2023 and remain very excited about the opportunities looking ahead. Now, a brief review related to our key strategies and recent performance of our operations. Our disposal assets are an important part of our overall solid waste strategy in the Northeast. We are focused on increasing returns across these assets. In doing so, we focused on improving the quality of our revenue and our operating programs. Our landfill price was up 7.4% in the quarter as we worked to stay ahead of higher capital cost items at our sites and ever-increasing regulatory compliance costs. For costs we can control, we continued to refine our operating programs for better productivity and efficiencies while keeping safety at the forefront. As we communicated last quarter, special wastes remain weak, but MSW and C&D, which together are the majority of the volumes we accept at our landfills, continue to track in line with budgeted and historic levels. Timing of special waste volumes can be choppy since most of these volumes are project-based and can be deferred into future periods when there is economic uncertainty. That said, we do have a solid special waste pipeline and have a few projects that just started in October. Despite the volume decline, we still drove 75 basis point of year-over-year margin expansion at our landfills in the third quarter. Our collection line of business. We posted another solid adjusted a bit of growth in underlying margin expansion in our core collection operations. This success is a direct result of Sean Steve's and his team's focus on executing our operating plans. The plan is concentrated around operating efficiency initiatives, flexible pricing programs focused on returns. Ongoing implementation of fleet automation and conversions, route optimization, and onboard computers are delivering increased efficiencies and commitment to safety improvements for our team members. From a pricing perspective, collecting price was up 7.6% in the third quarter, exceeding budgeted levels. Volumes were softer in the quarter as a result of our efforts to improve margins in the residential line of business. This shows the deliberate changes we're making for profitable growth. As always, we will continue to be nimble with our operating strategy and maintain a focus on returns. Resource solutions. We take great pride in providing our customers resource solutions that help them meet their sustainability and economic goals. As noted in our press release yesterday, our fully upgraded Boston recycling facility is back online and again making positive contributions. We are seeing increased productivity, throughput, and safety levels while increasing material recovery and quality on the back end. These early results are very exciting, and we look forward to this positive contribution over the remainder of the year. Our national accounts business has also been a positive area of growth. We continue to lend new contracts and have a plan to overlay our national account sales strategy across our mid-Atlantic region, where we see a lot of opportunity for further growth, potential targeting large commercial and industrial customers. Finally, I'd like to highlight our capital allocation and growth strategy. We remain focused on continuing to integrate our larger acquisitions completed over the last several months. but we'll also keep an eye on the opportunities that meet our return guidelines and review process. Our acquisition pipeline is robust at roughly $500 million of annualized revenue over the top of our Northeast operations, with approximately $400 million more around our Mid-Atlantic operations. On the organic side, our near-term development project pipeline is strong as well and provides a number of building blocks over the next several quarters including further contribution from our upgraded Boston MRF and the RNG projects that are commencing. Overall, we have a nice organic and inorganic growth runway that positions us well to drive long-term shareholder value. And with that, I'll turn it over to Ned for more details on the financials.