Welcome to the 2024 Third Quarter Casella Waste Systems Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question and answer session. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Charlie Wohlhuter, Director of Investor Relations. Please go ahead.

All right. Thank you, Marvin. Good morning and thank you for joining us today. We'll be discussing our third quarter 2024 results, which were released yesterday afternoon. Here with me today are John Casella, Chairman and Chief Executive Officer of Casella Waste Systems, Ned Coletta, our President, Brad Helgeson, our Chief Financial Officer, and Sean Steves, our Senior Vice President and Chief Operating Officer of Solid Waste Operations. After a 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 be aware 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 recently filed Form 10-K and Form 10-Q, which are 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 on 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, October 31, 2024. Also during this call, we'll 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 our press release filed on Form 8-K with the SEC. And with that, I will now turn the call over to John Casella to begin today's discussion.

Thanks, Charlie. Good morning, everyone, and welcome to our third quarter 2024 conference call. Once again, it was a busy but very exciting quarter as we continue to execute against our strategic growth plan. I will review these highlights and provide comments on our results. Brad and Ned will then discuss details on the financials and our strategies. As we announced in our press release last night, we recently completed our sixth acquisition of the year, closing Royal on October 1. This is a company that we've known and respected for decades. They are focused on delivering excellent customer service, taking care of their team, and supporting their local communities, which is admirable and aligned with how we operate. I'd like to welcome all of our new team members to Casella and look forward to serving our new customers with the same outstanding customer service that has helped make Royal successful for nearly 70 years. As always, our initial focus is on integration, which I'm happy to share is going well at the three larger acquisitions we completed this year: LMR, Whitetail, and now Royal. With nearly 5,000 employees, I'm very excited about what the future holds. Shifting to our results for the third quarter. Revenue topped $400 million while we generated over $100 million of adjusted EBITDA for the first time in a quarter. These achievements reflect the power of the hard work at all levels and underscore the strong foundation of our company. Beginning with our landfills, volumes were down year-over-year. C&D tons remain the driver for almost the entire decline. Special waste was down marginally, and MSW tonnages were mostly flat in the quarter. While this presented a recent headwind, our strategy has not changed as we remain dedicated to preserving our valuable airspace for the long term. To this point, our average price per ton at our landfill increased over 7% year-over-year. And just recently, we received support from the State of Maine on the expansion of our Jupiter Ridge Landfill. This is a critical asset for the communities in Maine and will continue to provide a dedicated disposal outlook. Moving to the collection side, I am especially happy to report the strategic investments in our frontline operations are making positive impacts. Adjusted EBITDA margins were up 130 basis points in the quarter on a same-store basis. This is impressive and a testament to the strong operating program Sean Steves and his team have developed. With plans for continued automation, automated truck conversions, rollout of onboard computers, and leveraging Power BI tools, we see further opportunities across our base business and acquisitions for more value creation. These benefits also flow through to our recruiting efforts and employee safety and turnover trends as well. In some cases, these are at the best levels in the company's recorded history. Applications are strong, in both TRIR and turnover rates are moving lower. In Resource Solutions, we also posted strong results across both adjusted EBITDA growth and margins. On a same-store basis, margins were up 90 basis points year-over-year in the quarter. We worked very hard at making strategic investments that answer the demand for sustainable solutions while generating strong returns, and the broad-based strength in the results shows it. Beginning with our MRF results, we benefited from higher commodity prices. This provided a tailwind to our performance. However, this was only part of our success. The equipment upgrades at certain facilities have increased productivity, throughput, and safety levels, while material recovery and quality have also improved. Our Boston MRF is a great example of how technology can enhance our operations and is a blueprint we are applying to other facilities, namely our Willamette facility. This facility is offline now but is expected to be up and running early next year. Our national accounts business remains strong and is a very strong area of growth. We won new commercial, municipal, industrial businesses in the quarter, and now entry into the Hudson Valley with Royal provides opportunity to target commercial and institutional customers with a focus on sustainability, much like our strategy in the Mid-Atlantic. Speaking of sustainability, in late September, we published our 2024 Sustainability Report highlighting our vision and achievements in creating and sharing value with the customers and communities that we serve. Our sustainability strategy is deeply rooted in our company, from building our first MRF in the state of Vermont back in 1977 to further investments across our MRF network. Our Resource Solutions segment is one part of our focus. The other key areas are the resources we are devoting to our people and safety, training, recruitment, and retention. These investments support the backbone of our company and allow us to better serve our customers and communities. Finally, I'd like to emphasize the solid waste results our team has delivered. The strength of our base business positions us very well as I look forward, and the recent acquisitions we completed add to this foundation. I am looking forward to a strong finish in 2024 and a setup for 2025 and beyond. The outlook is very promising given the opportunities in front of us and our continued potential to grow the business. I will now pass it on to Brad to walk through the details from a financial standpoint.

Thanks, John, and good morning, everyone. Revenues in Q3 were $411.6 million, up $58.9 million or 16.7% year-over-year, with $37.5 million from acquisitions including rollover and $21.3 million from organic growth or 6%. Solid waste revenues were up 17.3% year-over-year, with acquisition growth of 13%, price up 5.5%, and volumes down 1%. Within solid waste, price in the collection line of business was up 6.1% and volume down 0.7%. In the front-load commercial business, price was up 7.5% and volume up 1.7%, while volume declines in the quarter were concentrated in residential and roll-off as we work to improve the quality of revenue and margins in those businesses. Revenues in the disposal line of business were up 1.7% year-over-year, with transfer revenue up 3.6% and landfill revenue down 1.5%. Landfill price growth of 4.6% was offset by lower volume of 6.1% in revenue terms. MSW tons into the landfills were essentially flat in the quarter year-to-date, but we saw continued weakness in C&D tons, down 16% year-over-year. As we have discussed, the C&D market is currently under pressure with the impending closure of a landfill site in the Metro New York market. We expect this dynamic to continue through the end of the year but it should abate in 2025. The average price per ton at the landfills was up 7.1% year-over-year, reflecting a mix shift away from lower price streams as we held the line on price in the face of volume pressure and prioritized preserving our valuable airspace. Resource Solutions revenues were up 14.5% year-over-year, with recycling and other processing revenue up 25.8% and national accounts up 8%. Within processing operations, price was up 7% driven by an increase of over 60% in average commodity revenue over Q3 last year. Of course, most of the benefit of these higher commodity prices is shared with our customers under our contract structures which were designed to mitigate risk. So the net benefit to our revenue was only $1.6 million in the quarter. We expect favorable year-over-year price comps to continue through year-end as recycled commodity markets remain firm and current prices are well above last year. Processing volume was up 13.9%, with higher recycling volumes benefited by production enhancements at the Boston MRF. Within national accounts revenue, price was up 1.1% and volume was up 7.2%. Acquisitions contributed 1.8% across the Resource Solutions segment. Adjusted EBITDA was $102.9 million in the quarter, up $13.3 million or 14.9% year-over-year, with $9.3 million from acquisitions including rollover and $4 million from organic growth. Adjusted EBITDA margins were 25% in the quarter, down 40 basis points year-over-year. Bridging the year-over-year change in EBITDA margin, a few specific headwinds drove the decline in the quarter. As noted in our press release, we incurred over $3 million of expense in the quarter related to two discrete insurance events which impacted margins by 80 basis points. Insurance events are part of our ongoing business, so we don't treat these as adjusted EBITDA add-backs, but the magnitude of these two events was certainly unusual and had a material impact on the quarter. In addition, lower year-over-year volume at the landfills, particularly C&D materials as we discussed, continued to weigh on results and impacted margins by another 30 basis points in the quarter. The rest of our business performed well and in line with plan. Our pricing programs continue to outpace inflation, and we benefited again from ongoing cost efficiencies in the collection business. On a same-store basis, adjusted EBITDA margins in the collection and Resource Solutions line of business were up 130 and 90 basis points respectively, so the underlying margin trend in our base business remains strong. The year-over-year benefit of higher production at the Boston MRF was essentially offset in the quarter by the shutdown of the Willimantic MRF for the retrofit and upgrade of that facility. We look forward to having both facilities operating at new higher levels of production in early 2025. Acquisitions were net neutral to the quarter on consolidated margins. Cost of operations were $267.1 million in the quarter, up $40.8 million year-over-year, with $25.8 million of the increase from acquisitions and $15 million in the base business. Excluding the impact of large insurance events that I mentioned, cost of operations were down 40 basis points in the quarter in the base business. Adjusted net income was $15.9 million in the quarter, down $4.2 million compared to the prior year, with the accelerated amortization of identifiable intangibles associated with recent acquisitions and higher net interest expense weighing on earnings. Intangible amortization was up $3.9 million year-over-year, while excess cash balances related to the company's financing activities in Q2 2023 resulted in higher interest income in the prior year period. GAAP net income was $5.8 million in the quarter, down $12.4 million compared to the prior year driven by an $8.5 million closure charge at the Southbridge Landfill as well as higher depreciation and amortization and acquisition-related expenses. The Southbridge charge resulted from the revision of accrued post-closure costs following the receipt of requirements contained in the final closure permit, including increased well monitoring and testing for emerging contaminants. These requirements were more onerous than previously expected and could not have been reasonably estimated prior to receipt of the final permit, which represented the official closure of the site and transition to the post-closure period. Our effective book tax rate was 44.6% in the quarter and is projected at approximately 42% for the full year as certain non-deductible expenses and discrete items push the rate above our statutory rate of approximately 27%, including state taxes. The reason this effective rate is higher than previous years is that a reduction in forecasted GAAP net income for 2024 driven by the items I mentioned magnifies the impact of permanent differences and discrete items on the rate. As a reminder, we expect to pay approximately $5 million in cash taxes this year. Net cash provided by operating activities was $171.6 million for the first nine months of 2024, up $13.8 million year-over-year. This increase was primarily driven by EBITDA growth and came notwithstanding higher cash outflows from net changes in assets and liabilities in the first half. Adjusted free cash flow was $98.8 million in the first nine months, up $4.4 million year-over-year with stronger operating cash flow partially offset by higher capital expenditures. As we announced in September, we completed two important financing transactions in Q3 raising over $500 million in equity and extending and upsizing our senior credit facility to $1.5 billion including increasing our revolver from $300 million to $700 million. These financings position us well for continuing to execute on our M&A and growth investment strategies. As of September 30, we had $1.1 billion of debt and $519 million of cash, and our consolidated net leverage ratio for the purposes of our bank covenants was 2.57x. We closed on the acquisition of Royal on October 1, and pro forma for that transaction, our bank covenant leverage was less than 2.5x, and we still have approximately $1 billion of potential financing capacity between excess cash and undrawn revolver. As we announced in our press release yesterday, we reaffirmed our guidance ranges for revenue, adjusted EBITDA, cash flow from operations, and adjusted free cash flow for 2024 and revised our guidance range for GAAP net income primarily to reflect the Southbridge Landfill closure charge. With acquisitions closed to date including Royal, we now expect to be at the high end of our guidance range for revenue. However, for adjusted EBITDA contribution of one quarter of Royal will be roughly offset by the unexpected insurance charges in Q3 that I mentioned, keeping anticipated results within the existing guidance ranges. Looking ahead to 2025, we are excited for another year of strong growth across revenue, adjusted EBITDA, and cash flow. As you build your models for next year, we expect approximately $125 million of rollover acquisition revenue primarily from Royal, Whitetail, and LMR. In the base business, we anticipate tailwinds from solid waste pricing of approximately 5%, improved landfill volumes year-over-year, the completion of the Willimantic MRF retrofit, and continued benefits from our operating programs and acquisition synergies driving margin improvement across all lines of business. Taking all this into account, we expect growth in the range of 12% to 15% on adjusted EBITDA and adjusted free cash flow growth in our long-term range of 10% to 15%. Of course, this outlook assumes no further acquisition activity. And with that, I'll turn it over to Ned.

Thanks, Brad. Good morning, everyone. As John said, we had another busy quarter with further execution against our growth strategy. With the purchase of Royal Carting on October 1, we completed our sixth acquisition year to date, bringing total acquired revenues to over $200 million on an annualized basis. We remain selective with our acquisitions focusing on opportunities to have the right cultural and the right strategic fit. We're excited to welcome the Royal team to Casella and believe that this adjacent market presents a unique opportunity to drive landfill internalization and organic sales growth. The early stages of integration are going well with efforts to integrate the back office, sales, and operations progressing according to our plans. From an operating perspective, we continue to execute well against our core programs, including automated truck conversions, route optimizations, and extra revenues generated through our onboard computing capacity. These efforts continue to boost safety, operating, and financial performance. Our recent acquisitions all present great opportunities to apply these same successful programs. Given the lingering softness in special waste and C&D landfill volumes, we focused efforts over the last several months on increasing landfill internalization across both newly acquired markets and markets entered over the last few years. Along this vein, we have purchased additional long-haul trucks and trailers and have established new transportation lanes from four markets to our New York landfills. With these moves, we expect to drive an incremental 120,000 tons per year of internalization. We are working on additional opportunities for 2025. Turning to our development projects, the first phase of investment in our rail-served McKean, Pennsylvania landfill is now complete. To date, we have received over 50 railcars and 6,400 tons of waste at McKean, allowing us to test equipment and processes. We are very excited about the future promise of the site. Currently, our infrastructure includes a gantry crane to offload boxes and over a mile of rail spur. We can offload roughly 5,000 tons per day of containerized solid waste, sludges, and special waste at the site. As previously discussed, this site provides a great long-term risk management measure to preserve our flexibility in the disposal-constrained Northeast. As such, this won't be a meaningful driver of near-term volume growth, and the site will be operated under the same return-driven focus that we apply across all opportunities. As Brad mentioned, during Q3, we began the full technology upgrade at the Willamantic, Connecticut recycling facility and we expect to have the project completed by Q1 of 2025. Taking the site offline is a negative drag for the second half of 2024. However, we expect the project to generate roughly $4 million of EBITDA in 2025. We continue to evaluate other opportunities to advance our circularity infrastructure. The RNG projects being developed by our partners are also progressing, albeit slowly. The RNG facility at our Juniper Ridge Landfill finally came online in the third quarter. Looking ahead, the three Waga-led projects continue to advance, with commercial operations expected to begin in late 2025. As a reminder, we have invested $0 in these projects and are receiving a royalty payment from the sale of gas and RINs, which we believe is the most appropriate risk-mitigating path for us. As we look ahead to late 2024 and into 2025, our M&A pipeline continues to be very active with roughly $600 million of revenues across a number of excellent opportunities in various stages of diligence. The strength of our balance sheet and our robust liquidity positions us well for continued return-focused growth. With that, I'd like to turn it back over to the operator for questions. Thank you.

Thank you. At this time, we will be conducting a question-and-answer session. Our first question comes from the line of Trevor Romeo of William Blair. Your line is now open.

First one, I just wanted to ask for a progress update on some of the landfill development and expansion initiatives. John, I think you mentioned the Juniper Ridge Landfill. Good to hear you received some support from the state there. Just wondering if you had thoughts on the size and expansion of what the timeline could look like there? And then on McKean, thanks for the update there towards the end. Just curious how that ramp could look like for tons as we head into 2025 and beyond?

The Juniper Ridge facility received its public benefits permit from Maine, and that's a very significant permit, very positive in terms of being able to provide additional capacity for a number of years. Keep in mind it's not necessarily to expand the facility in terms of total tons. It's really to bring the facility out for the next 10 years. So that capacity is really well received and it's going to give us the ability to continue to provide those services to all of our main customers, both commercial as well as municipal. So it's a great step in the right direction now. It's walking through the technical reviews of the additional permits that we need to go to an operating mode. So very positive move, great job by the entire team there. Our McKean facility, as Ned said in his opening statement, we really begun to shake it down. We've limited number of tons, around 1,000 to under 10,000 tons into the facility, but that's hundreds of containers and really it's given the team the opportunity to go through, test everything, run, and really begin to shake down the entire facility and give our people real experience from a rail perspective. So again, an exciting facility in place ready to go. But we don't anticipate a significant ramp-up early in the process. As Ned said, it will be more on the basis of need and as pricing continues to move in a positive direction.

Yes. And two other kind of positive points there. Today, we have three rail-served transfer stations that are moving waste to other sites. We'll look to transition those over time to McKean as appropriate. We've also brought on a really talented rail logistics professional onto this team, someone who has over 25 years of experience that's helping us work through the ramp-up there and siting an additional rail transfer station in the appropriate market, kind of Southern New Hampshire and Northern Massachusetts where we'll have needs over time. So this is a long-term strategy. We're excited about where we sit right now, but the team is coming together, and it's really progressing right where we want it to be.

And then just wanted to ask for maybe a little more detail on the Royal acquisition, one from a strategic perspective. Can you just talk about the importance of extending into the Middle and Lower Hudson Valley? And then from a financial perspective, just any thoughts on kind of the EBITDA you'd expect on that $90 million of revenue and any synergy potential? Thanks.

Yes. I will give you a little bit of perspective with regard to the strategic piece of Royal. Royal has been a small customer of ours for 30 years. We have had a relationship with them for 30 years. It's a spectacular company driven by the Panichi family and in place for 70 years. It's really an exciting opportunity for Casella in Westchester and Dutchess County, a great market area, very, very exciting. A great opportunity for us to advance our resource solutions offerings to all of those companies, both industrial, commercial, colleges and universities, and medical centers in terms of helping them meet their sustainability goals. So it's a very exciting area that we had no presence from a hauling standpoint. We did, as I said, take a little bit of waste from their transfer stations, but obviously now we will have the opportunity to internalize a lot more of it. So, there are significant relationships from a strategic standpoint with the county that we will continue as well. So it's strategically just a terrific fit. We're excited to have the entire team come on board. Very similar culture in terms of taking care of their people. The Panichi family really did a great job of taking care of their people and obviously the communities that they served as well. Can you walk through some of the financials, Ned?

On the financial side, it's a kind of a mid-teens EBITDA margin company. From our vantage point, though, as John said, there are a few things we can do over the course of two years to drive it to a mid-20s percent margin company. One is just focusing on core operating programs, the stuff we do great: route optimization, onboard computing, automation. Yes, there are some really great opportunities there.

A little more work for Sean.

A little more work for Sean. And then the other thing, as John mentioned, landfill internalization, we've got a game plan to move about a quarter of the tons that they generate into our sites over the next year plus, and that will be some real great value creation over that time period. Longer term, there are probably opportunities to internalize more, but in the near term about a quarter of the way. So these adjacent markets are excellent because we weren't there. We get that great internalization benefit, extend our footprint, and also from a sales standpoint, we've got a great playbook with larger institutional industrial customers that we think can create a lot of value.

That’s a great group of talented employees that all really come on board with us, and just really a very exciting transaction.

Thank you. One moment for our next question. Our next question comes from the line of Tyler Brown of Raymond James. Your line is now open.

Hey, Brad, I think you did a good job explaining the guide, but I just want to kind of be crystal clear. So effectively the slightly weaker Q3, again, we had these insurance accruals that were maybe unexpected, largely offset the Royal deal. So for all intents and purposes that is why the guide really doesn't change, just to be clear.

Yes, that's right. Just netting the two together, it just didn't result in a significant enough move to adjust the guidance range either way. But yes, essentially that's the punch line.

Okay. That's fair and helpful. I want to come back to the C&D issues. I know that these are not new. I think you mentioned it was a $2 million headwind in the quarter. I think it's been a headwind basically all year. So has that been as much as an $8 million to $10 million EBITDA drag? And does that site close on 12/31? And I get that you probably won't get it all back in year one, but won't that be a positive delta into next year or should be?

Yes. This has been a pretty significant drag throughout the year, Tyler. I mean, we're down close to 150,000 tons year to date on C&D, and this isn't like the construction demo market has weakened or something has permanently changed. As you laid out, there's a site on Long Island, Brookhaven Landfill, that's going to be permanently closed on 12/31/24. They're in the final stages where you need the volumes and the site to grade shape to get it permanently closed. So our expectation is the vast majority of that waste returns to us in 2025. But some of it did go to the other private site.

Yes, it would be 100% of it, but maybe 60%, 70% maybe.

Yes. But you're right. I mean, there aren't a lot of places to take it, and we expect those flows to return to our landfill.

And that 60%, 70% that maybe comes back, is that part of what's built into the 12% to 15% EBITDA growth for 25%? I mean, how much is in there I guess, if any?

Yes. That's encompassed in the 12% to 15% kind of high-level guidance. I mean, again, we are not at this point parsing through the specific growth associated with each driver, but that's reflected in the outlook overall. Yes. The cost inflation this is Brad. The cost inflation has been stubborn, I would call it, over the course of this year. So in the Q3, consistent I think with year-to-date, we've been running in that 4% to 5% to sort of mid-4s as an average across our cost stack, and kind of within that there are some areas where inflation remains a big issue and other areas where it's eased, but sort of that 4% to 5% is kind of overall. Looking ahead to next year, we certainly don't have a crystal ball, but we're budgeting assuming no easing. And so what we're going to have to do is continue to try and reduce costs in other ways and drive price.

Thank you. I'm showing no further questions at this time. I would now like to turn it back to John Casella for closing remarks.

Thank you. Thanks everybody for joining us this morning. Hope you all have a safe and fun Halloween. Look forward to discussing our Q4 2024 earnings in February. Thanks everybody. Have a great day.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.