Casella Waste Systems, Inc.

Good day and thank you for standing by. Welcome to the Casella Waste Systems fourth quarter 2023 earnings 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 session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, 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 our first speaker today, Charlie Woolhutter, Director of Investor Relations. Please go ahead.

All right. Thank you, Victor. 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, Brad Helgeson, our 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 discuss our fourth quarter and full year 2023 results, which were released yesterday afternoon. After review of these results and an update on the company's activities and business environment, we will be happy to take your questions. But first, 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 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 in 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, February 16, 2024. 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 included in the appendix of our investor slide presentation, which will be available in the investor section of our website at ir.cosella.com. And with that, I will now turn it over to John Casale to begin our discussion.

Thanks, Charlie, and good morning, everyone, and welcome to our fourth quarter 2023 conference call. This was an exceptional year for the company and illustrates the success that we continue to have in terms of executing against our key strategies. I'm excited about the opportunities that lie ahead. First, we will highlight our performance for the year. Then I'll pass it on to Brad and Ned, who provide more specific comments around our results and strategies. Our performance in 2023 reflects the successful investments made across our business, deploying capital for return-driven growth. A focus on our people and operations is helping us improve safety and turnover while delivering exceptional service and driving more productivity. We're also experiencing notable operating benefits from our Boston MRF following the full equipment upgrade this past summer. I'm also excited to announce that we have similar plans to fully upgrade the processing equipment at our Willamette, Connecticut recycling facility later in 2024. We continue to invest in and further modernize our sustainability infrastructure. Our discipline approach strikes the right balance between economic returns and providing benefits to the environment. As I noted in our press release yesterday, completing seven acquisitions was an exciting and notable achievement in 2023, given the size and the new markets we've entered. I'm very encouraged by the early results of our Mid-Atlantic region and other acquisitions that we completed in the year. A real shout out to the Mid-Atlantic team, to Kyle and his team. They've done a terrific job of integration and bringing the Mid-Atlantic up to speed in terms of the Casella culture. The level of engagement of our new team members is really impressive. It helped facilitate the transition and integration process. It includes implementing our strategy, developing our sales approach, and evaluating acquisition opportunities. We really like the growth runway we see ahead for the entire business. In 2023, our operating initiatives in our base business, combined with our growth strategy, allowed us to post double-digit growth across key financial metrics. Revenues were up over 16%. Adjusted EBITDA growth topped 20%. And for the second consecutive year, adjusted free cash flow growth was up 15%. We expanded our adjusted EBITDA margins 70 basis points, which was an indication of the strength of our operating and pricing programs. We closed out the year on solid footing in Q4 with 17% adjusted EBITDA growth in our base business and over 200 basis points of margin expansion. As we look to 2024, we have a strong balance sheet, ample liquidity, and are in an excellent position to support further growth in our business. I'd like to provide a few related comments on the execution of a few of our key strategies and some of the performance of our operations. As you know, a key part of our strategy is improving returns across our disposal assets, and our operating programs have really made this possible. Despite volumes being down year over year in 2023, we were able to drive higher adjusted EBITDA. This is a testament to our team and the focus on getting the right tons at the right price, improving the mix of our inbound streams, helping to drive our average landfill price per ton up 9.8% in a year, and helping to offset the headwinds from lower disposal costs, lower disposal volumes, excuse me. We remain committed to expanding margins and drawing higher returns across our landfill assets. On the collection side of the business, I'm especially proud of what we're doing to strengthen our employee base that is enabling us to be a safer and more engaged team, resulting in higher returns in this line of business. Yes, ongoing technology investments like adding automated trucks, route optimization, software, onboard computers are driving safety and operating efficiencies higher, but the direct investment in our frontline team are equally as important and valuable. Sean and that team have done a terrific job of supporting the field and really driving our cost of ops down. Over 200 students have graduated from our CDL schools since starting the program. We're seeing great outcomes, particularly in lower turnover rates among our graduates in our CDL program. While we're only a couple months into our new diesel technician program, 20 students have received their certificates so far, and these people-focused initiatives promote greater stability and safety. And quite frankly, the results show it. Our company wide turnover rate is down nearly 20% year over year in 2023, while key safety metrics such as TRIR improved. As our execution against these key metrics improve, so often does the performance as a company. Probably the most significant thing that I'm proud of is throughout the immense growth that we had in 2023, we were able to bring our turnover down and improve our safety record, a real tribute to the entire team. And finally, resource solutions. As I mentioned before, sustainability is woven into the framework of the company and is an area we continually strive to enhance. Similar to our upgraded Boston MRF, which has delivered strong results over the back half of 2023, We are reviewing other facilities where we can improve operating efficiencies and materials recovery. Our next large upgrade, as I said, will be at our Willimantic MRF, slated to begin in the second half of this year. Turning to our professional services business, hats off to Paul and Liza. That entire team has done a terrific job of growing our revenues and looking at those opportunities. We've won a significant additional business throughout 2023. and see lots of potential to continue to grow this business looking ahead. A key driver of this optimism is the potential of the new market entries that what they present for more customers for us to win differentiating our service offerings. Again, a really exciting opportunity for us to really provide those services to those industrial customers in the Mid-Atlantic Uh, very excited about, uh, the opportunities that present themselves, uh, in front of us, uh, looking ahead and wrapping up, um, you know, exiting 2023. I have to say, um, I am so proud of our entire team, uh, our drivers, our mechanics, our division managers, um, particularly in those States, uh, Vermont, uh, New Hampshire, upstate New York, Pennsylvania, where. Our teams provided service in the midst of what was a catastrophic flooding. I can talk about for a long time some of those divisions that didn't have an operating center, yet they picked up their customers and took care of the communities that depend on us for service. So a big hats off to the entire service team. They did just a fabulous job in 2023. And when you look across the entire organization from finance with Ned and Jason enhancing the capital structure to continue to grow the business, Shelly and Sam in permitting compliance and legal, just an absolute unbelievable performance for the year. HR, again, can't say enough about Kelly and the HR team. onboarded 1,000 people in 2023, and probably most importantly, all of the management team has been able to come through Core Values training and have a real understanding of what it takes to manage at Casella. An extremely exciting year, very, very significant from a growth perspective, but equally as significant in our ability to bring down turnover and improve our safety record. And with that, I'll turn it over to Brad to go through more specifics on the numbers.