NASDAQ:CWST Casella Waste Systems Q3 2024 Earnings Report $116.75 -0.58 (-0.49%) Closing price 05/2/2025 04:00 PM EasternExtended Trading$117.00 +0.25 (+0.21%) As of 08:05 AM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. Earnings HistoryForecast Casella Waste Systems EPS ResultsActual EPS$0.27Consensus EPS $0.28Beat/MissMissed by -$0.01One Year Ago EPS$0.35Casella Waste Systems Revenue ResultsActual Revenue$411.63 millionExpected Revenue$412.59 millionBeat/MissMissed by -$960.00 thousandYoY Revenue Growth+16.70%Casella Waste Systems Announcement DetailsQuarterQ3 2024Date10/30/2024TimeAfter Market ClosesConference Call DateThursday, October 31, 2024Conference Call Time10:00AM ETConference Call ResourcesConference Call AudioConference Call TranscriptPress Release (8-K)Quarterly Report (10-Q)SEC FilingEarnings HistoryCompany ProfilePowered by Casella Waste Systems Q3 2024 Earnings Call TranscriptProvided by QuartrOctober 31, 2024 ShareLink copied to clipboard.There are 11 speakers on the call. Operator00:00:00Good day and thank you for standing by. 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. Operator00:00:28I would now like to hand the conference over to your first speaker today, Charlie Walhuter, Director of Investor Relations. Please go ahead. Speaker 100:00:35All right. Thank you, Marvin. Good morning and thank you for joining us today. We'll be discussing our Q3 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, Chief Financial Officer and Shawn Steeves, our Senior Vice President and Chief Operating Officer of Solid Waste Operations. Speaker 100:01:02After 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 ks 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 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. Speaker 100:02:05These 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 ks with the SEC. With that, I will now turn the call over to John Casella to begin today's discussion. Speaker 200:02:47Thanks, Charlie. Good morning, everyone, and welcome to our Q3 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. Speaker 200:03:11As we announced in our press release last night, we recently completed our 6th acquisition of the year closing Royal on October 1. This is a company that we've known and respected for decades. They're focused on delivering excellent customer service, taking care of their team and supporting their local communities are 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 3 larger acquisitions we completed this year, LMR, Whitetail and now Royal. Speaker 200:03:58With nearly 5,000 employees, I'm very excited about what the future holds. Shifting to our results for the Q3, revenue topped $400,000,000 while we generated over $100,000,000 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 and D tons remain the driver for almost the entire decline. Special waste was down marginally and MSW tonnages were mostly flat in the quarter. Speaker 200:04:40While this has 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. 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 outlet. Moving to the collection side, I'm especially happy to report the strategic investments in our frontline operations are making positive impacts. Speaker 200:05:20Adjusted EBITDA margins were up 130 basis points in the quarter on 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, 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. Speaker 200:06:10In 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've 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 benefit from higher commodity prices. Speaker 200:06:39This 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 for 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. Speaker 200:07:15Our national accounts business remains strong, and it's 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. Speaker 200:08:17These 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 and looking forward to a strong finish in 2024 and is set up 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'll now pass it on to Brad to walk through the details from a financial standpoint. Speaker 300:08:57Thanks, John, and good morning, everyone. Revenues in the Q3 were $411,600,000 up $58,900,000 or 16.7% year over year with $37,500,000 from acquisitions including rollover and $21,300,000 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 frontload 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. Speaker 300:09:54Revenues 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 and D tons down 16% year over year. As we've discussed, the C and D market is currently under pressure with the impending closure of 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. Speaker 300:10:39The 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 prioritize 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 price is shared with our customers under our contract structures which were designed to mitigate risk. So the net benefit to our revenue was only $1,600,000 in the quarter. Speaker 300:11:29We 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 MIRF. 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 $102,900,000 in the quarter, up $13,300,000 or 14.9 percent year over year with $9,300,000 from acquisitions including rollover and $4,000,000 from organic growth. Speaker 300:12:16Adjusted 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 $3,000,000 of expense in the quarter related to 2 discrete insurance events, which impacted margins by 80 basis points. Insurance events are part of our ongoing business, 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 land sales, particularly C and D materials as we've discussed, continued to weigh on results and impacted margins by another 30 basis points in the quarter. Speaker 200:13:04The rest Speaker 300:13:04of 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 Murph was essentially offset in the quarter by the shutdown of the Willimantic Murph for the retrofit and upgrade of that facility. Speaker 300:13:39We look forward to having both facilities operating at new higher levels of production in early 2025. Acquisitions were net neutral for the quarter on consolidated margins. Cost of operations were $267,100,000 in the quarter, up $40,800,000 year over year with $25,800,000 of the increase from acquisitions and $15,000,000 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 $15,900,000 in the quarter, down $4,200,000 compared to prior year with the accelerated amortization of identifiable intangibles associated with recent acquisitions and higher net interest expense weighing on earnings. Speaker 300:14:31Intangible amortization was up $3,900,000 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 $5,800,000 in the quarter, down $12,400,000 compared to prior year driven by $8,500,000 closure charge at the Southbridge Landfill as well as higher D and A 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 transitioned 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 nondeductible expenses and discrete items push the rate above our statutory rate of approximately 27% including state taxes. Speaker 300:15:45The 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 $5,000,000 in cash taxes this year. Net cash provided by operating activities was $171,600,000 for the 1st 9 months of 2024, up $13,800,000 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 $98,800,000 in the 1st 9 months, up $4,400,000 year over year with stronger operating cash flow partially offset by higher capital expenditures. Speaker 300:16:38As we announced in September, we completed 2 important financing transactions in Q3 raising over $500,000,000 in equity and extending and upsizing our senior credit facility to $1,500,000,000 including increasing our revolver from $300,000,000 to $700,000,000 These financings position us well for continuing to execute on our M and A and growth investment strategies. As of September 30, we had $1,100,000,000 of debt and $519,000,000 of cash and our consolidated net leverage ratio for purposes of our bank covenants was 2.57 times. We closed on the acquisition of Royal on October 1 and pro form a for that transaction, our bank covenant leverage was less than 2.5 times and we still have approximately $1,000,000,000 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 Southbridge landfill closure charge. With acquisitions close to date including Royal, we now expect to be at the high end of our guidance range for revenue. Speaker 300:17:59However, for adjusted EBITDA contribution of 1 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 $125,000,000 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%. Speaker 300:19:05Of course, this outlook assumes no further acquisition activity. And with that, I'll turn it over to Nick. Speaker 400:19:12Thanks, Brad. Good morning, everyone. As John said, we had another busy quarter with further execution against our growth strategy. With the purchase of Royal Karting on October 1, we completed our 6th acquisition year to date, bringing total acquired revenues to over $200,000,000 on an annualized basis. We remain selective with our acquisitions, focusing on opportunities to have the right cultural and the right strategic fit. Speaker 400:19:33We are excited to welcome the Royal team to Casella and believe that We are 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. Speaker 400:20:27Given the lingering softness in special waste and C and 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 4 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. Speaker 400:21:07The first phase of investment in our rail served McKean, Pennsylvania landfill is now complete. To date, we have received over 50 railcars in 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, flushes and special waste asset sites. Speaker 400:21:42As previously discussed, this site provides a great long term risk management to preserve our flexibility in the disposal constrained Northeast. As such, this won't be a meaningful driver of near term volume growth and this site will be operated under the same return driven focus that we apply across all opportunities. As Brad mentioned, during the Q3, we began the full technology and equipment upgrade at the Willamette, Connecticut recycling facility and we expect to have the project completed by the Q1 of 2025. Taking the site offline is a negative drag for the second half of twenty twenty four. However, we expect the project to generate roughly $4,000,000 of EBITDA in 2025. Speaker 400:22:26We 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 Q3. Looking ahead, the 3 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. Speaker 400:23:05As we look ahead to late 2024 and into 2025, our M and A pipeline continues to be very active with roughly $600,000,000 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. Operator00:23:34Thank you. At this time, we'll conduct the question and answer session. Our first question comes from the line of Trevor Romeo of William Blair. Your line is now open. Speaker 500:24:00Hi, good morning. Thanks so much for taking the questions. First one, I was 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. Speaker 500:24:16Just wondering if you had thoughts on kind of 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? Speaker 200:24:31The 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. Speaker 200:25:18It'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 amount of tons, 1,000, 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 really give our people real experience from a rail perspective. Speaker 200:26:03So again exciting facility in place ready to go. But it's really we don't anticipate a significant ramp up early in the process. As Nit said, it will be more on the basis of need and as pricing continues to move in a positive direction. Speaker 400:26:21Yes. And 2 other kind of positive points there. Today, we have 3 rail serve transfer stations that they're 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 on to the team, someone who has over 25 years of experience that's helping us to work through the ramp up there and siting an additional rail transfer station in the appropriate market, kind of Southern New Hampshire, Northern Mass markets where we'll have needs over time. Speaker 400:27:01So this is a long term strategy. We're excited about where we sit right now, but the team's coming together and it's really progressing right where we want it to be. Speaker 500:27:12That's great. Thank you both for that. 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 $90,000,000 of revenue and any synergy potential? Thanks. Speaker 300:27:34Yes. I'll give you Speaker 200:27:35a little bit of perspective with regards to the strategic piece of Royal. Royal has been a small customer of ours for 30 years. We've had a relationship with them for 30 years. It's a spectacular company driven by the niche family and in place for 70 years really an exciting opportunity for Casella in Westchester, Dutchess County, 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, medical centers in terms of helping them meet their sustainability goals. So it's a very exciting It's an area that we had no presence from a hauling standpoint. Speaker 200:28:24We did as I said take a little bit of waste from their transfer stations, but obviously now we'll have the opportunity to internalize a lot more of it. So and there is significant relationships from a strategic standpoint with the county which 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. Speaker 200:28:56The Panichi family really did a very great job of taking care of their people and obviously the communities that they served as well. Yes. Can you walk through some of the financials, Ned? Speaker 400:29:06On the financial side, it's kind of like a mid teens EBITDA margin company. From our vantage point though, as John said, there's a few things we can do over the course of 2 years to drive it to a mid-20s percent margin company. And one is just focusing on core operating programs, the stuff we do great, route optimization, onboard computing, automation. Yes, there's some really great opportunities there. Speaker 200:29:41A little more work for Sean. Speaker 400:29:42A little more work for Sean. And then the other thing as Sean 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, probably opportunity 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, extends our footprint. Speaker 400:30:14And also from a sales standpoint, we've got a great playbook with larger institutional industrial customers that we think can create Speaker 300:30:24a lot of value. Speaker 200:30:24Just a great group of talented employees that all really come on board with us and just really a very exciting transaction. Speaker 500:30:35Okay. That's all great. Thanks so much. Speaker 400:30:38You're welcome. Thank you. Operator00:30:40Thank 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. Speaker 600:30:52Hey, good morning guys. Speaker 400:30:54Good morning Tyler. Speaker 600:30:56Hey 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. Speaker 300:31:15Yes, that's right. Just netting the 2 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. Speaker 600:31:28Okay. That's fair and helpful. I want to come back to the C and D issues. I know that these are not new. I think you mentioned it was a $2,000,000 headwind in the quarter. Speaker 600:31:38I think it's been a headwind basically all year. So has that been as much as an $8,000,000 to $10,000,000 EBITDA drag? And does that site close on twelvethirty one? And I get that you probably won't get it all back in year 1, but won't that be a positive delta into next year or should be? Speaker 400:31:56Yes. 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 CNG. 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 Twelvethirty Onetwenty 4. Speaker 400:32:24They're in those final stages where you need the volumes in the site to grade shape, get it permanently closed. So the market will resolve coming into 2025. We're really confident as I talked about in my comments. We're also it's been hyper focused and just making sure internalization is where it needs to be. We have the right transportation lanes. Speaker 400:32:46When our 3rd party vendors can't support those lanes, we've been buying trucks and trailers and putting assets on the ground. And I think we probably should have focused on that a little bit more earlier in the year and pushing faster and harder. We push throughout the summer to do that, to also help with some of that headwind we've had. I don't think it's like a light switch on January 1, but we've seen the progress of getting back some of those construction and demo tons even now into the Q4. Some of our really great long term customers from the New York market who had a nice opportunity to go out to Long Island over the last year and have a good price reduction as the site was getting closed. Speaker 400:33:33We've been talking to them. They're slowly starting to ramp tons back to us into the 4th quarter. So we expect some positives there and coming into next year. Speaker 600:33:46Okay. Now super helpful. And I know you guys are going to put obviously a much finer point on 25, call it 90 days, but there are a lot of moving pieces here. So if I just think through some of these, I mean you've got organic growth, You've got Willimantic that goes from a negative to a positive. We just talked about C and D. Speaker 600:34:09Maybe McKean ramps up, though that's somewhat debatable. It sounds like you've got internalization opportunities. These insurance accruals don't recur. You got a big rollover impact of M and A. Speaker 100:34:21So there's a lot Speaker 600:34:21of things going on. I mean are some of those the key pieces to the bridge or is there anything else that I should be thinking about? Speaker 300:34:31Tyler, it's Brad. You hit on a lot of the key drivers. I mean, the way we think 2025 is shaping up over 2024. There's a lot that's lining up to position us well on a year over year basis and the biggest one is what you and Ned were just talking about is landfill volumes in that market returning to some form of normalcy. So the way I would think about it is kind of everything you talked about is encompassed in the high level EBITDA guidance that we gave. Speaker 300:35:03We're of course in our budget process right now. So we're going to work through that over the next month or 2 and going to have a much more refined view when we talk again in February. But we're feeling good about the year. Speaker 600:35:17Yes. Okay, perfect. My last one here, Ned. Can you kind of go back over all the internalization numbers? So I thought you said that you are buying some long haul tractors for something like 100,000, 125,000 tons via truck. Speaker 600:35:32But then you also mentioned that you've got 3 rail serve transfer stations that are sending waste elsewhere. So can you kind of just talk big picture because this could be a big and that's not I know it's probably not just a 25, it's a multiyear story. But can you just talk a little bit more about that and just maybe again put a little more shape around it? Thank you. Speaker 400:35:53Yes, sure. So we have bought additional tractors and trailers and we've established 4 new transportation lanes to hit our New York landfills from some major population centers where we weren't moving enough waste to internalize, think Rochester, Buffalo, Capital District. So that's ramping up as we speak into the 4th quarter and will be a positive benefit into next year. And as I also said, we do have 3 rail transfer stations today. We haven't flipped the switch and moved those tons to Midkeen yet. Speaker 400:36:30We will do some of that over time. But we are more focused on moving MSW and sludges into McKean. A lot of what's leaving via rail today from Casella's construction and demo debris and we feel like there are better outlets in other locations for that. So we're more focused on moving containerized MSW and special waste and sludges to McKean. We think that's the higher value creation over the long term for the site. Speaker 400:37:01So that's why you haven't seen us just go out and move those transfer stations to date. They're moving today to Ohio landfills that their effective T and D rates and it makes sense today. We will be looking at those sites and at potentially a new site as well to really start moving some of that containerized MSW in the next year year plus. Speaker 600:37:28Yes, perfect. Okay. Thank you so much. Speaker 400:37:31Thanks, Tyler. Operator00:37:34Thank you. We'll open for our next question. Our next question comes from the line of Adam Bubbaus of Goldman Sachs. Your line is now open. Speaker 700:37:46Hi, good morning. I was wondering if you could just provide a little more color on the insurance expense accruals related to the 2 discrete events. What is that exactly related to? And does that roll off next quarter? Speaker 400:38:02Yes. So we had a really tragic accident in one of our transfer stations where a third party truck hit 1 of our employees and caused some pretty significant injuries to our employees. He's alive, he's recovering. But with a workers' comp incident like this, we got hit with a full accrual even though much of this will be subrogated back over time to that third party's insurance provider. So really unfortunate in many ways, we're just thankful that our employees on demand and had to fight ahead of him, but it's on demand. Speaker 400:38:46The other is just kind of almost one part insurance, one part legal where we had at a third party transfer station municipality unloading a truck bumped such truck into a 3rd party. That third party was injured and we had to pick up a large accrual this quarter associated with that that we always thought was a GL claim and it's turning out to be an auto claim. So there's just 2 like really unusual claims that don't fit within the normal accruals of what we look at and they hit us unexpectedly in the quarter, but not something we normally would see. Speaker 700:39:31Understood. Speaker 300:39:32Yes. And just to finish off to your question about this is one time. There's a potential that the accrual could change up or down in the future, but this is our best estimate as of today. Speaker 700:39:46Got it. Understood. And hoping for the best for everyone involved there. And then on the 2025 outlook, there's a lot of moving pieces in terms of the margin bridge shifting from bad guys to good guys. When you think about Willimantic leachate headwinds this year, C and D volumes potentially returning. Speaker 700:40:11How are you thinking about the early puts and takes on potential for an outsized 2025 margin expansion year? Speaker 300:40:20Yes. I think thematically you're thinking about it the right way. I think it's premature for us to put a finer point on the margin bridge. But because of the things you mentioned, our expectation is that likely 2025 is looking like above trend in terms of margin expansion given the headwinds that we face this year. Speaker 700:40:44Got it. And then last one from me, really high level of M and A contribution flowing through the portfolio. Great to see that level of growth. Is it prudent to expect a pause here in M and A spend over the next couple of quarters as you integrate over $200,000,000 annualized revenues acquired this Operator00:41:07year? Speaker 400:41:09It's always opportunistic. So we have a number of transactions that we've been working to develop over years. And a few of them continue to move through the pipeline, not larger, but smaller tuck ins that will fit very well into existing markets, especially into the Mid Atlantic. So I think you should expect to see over the next 6 months continued focus on some tuck ins and just real accretive value. Our team is hyper focused on integration work though. Speaker 400:41:40That's where the money is made and that's the most important part. And we've added some great select resources to help us expand our capacity to do integration work more effectively, more rapidly. So we are focused in that area. I wouldn't say it's a full pause on acquisitions because there's definitely deals that are in the pipeline that continue to kind of move along. Speaker 200:42:07I think it's fair to say though that for the Q4, certainly a significant effort from an integration standpoint and only doing what is necessary for those transactions that are in the pipeline to continue to move them. But certainly from now through the end of the year, a real focus on the integration of the businesses that we've bought in 2024. Speaker 700:42:34Great. Thanks so much. Operator00:42:37Thank you. Thank you. We'll open it for our next question. Our next question comes from the line of Timna Tanners of Wolfe Research. Your line is now open. Speaker 800:42:51Hey, good morning. Good morning. Good morning. Good morning. One follow-up on the M and A I wanted to follow-up on the M and A discussion. Speaker 800:43:00I thought I heard in your preliminary remarks that you had by Carter. It sounded like you were implying up to $1,000,000,000 or so. I want to check-in that. If that were the case, would that be an amount up to which you wouldn't need to tap debt or equity markets to do any of those tuck ins or other deals up to that amount? Speaker 300:43:17Yes. The $1,000,000,000 was just the excess cash that we have on the balance sheet. So following the acquisition of Royal, we have about $300,000,000 left sitting on the balance sheet. We upsized our revolver as I mentioned and as we announced. So that's $700,000,000 So $300,000,000 plus $700,000,000 is the total between those 2. Speaker 300:43:38That isn't taking into account potential available liquidity given pro form a leverage. Obviously, that assumes that we would exhaust all of that liquidity that wouldn't necessarily be our approach. So, really it was just a kind of an overall sense for how much room we have. Speaker 800:43:59Okay. But is it safe to say that some of the smaller deals you would be able to absorb pretty easily then with your available liquidity? I didn't want to assume too much there. Speaker 200:44:07Yes, absolutely. Yes, absolutely. No question. Speaker 800:44:11Okay, helpful. And then also along those lines, I know a lot has been said about the election. I don't want to beat a dead horse there. But I think with regard to M and A, there's some thought that there may be some ease in FTC approach or replacement of that head. Is there has that changed much for you all in terms of how you look at M and A? Speaker 800:44:29Has that been a constraint? Speaker 200:44:31I don't think that it's going to change much. I mean, I think the real question is whether in terms of what direction it goes and if there are significant issues from a tax standpoint, it could have an impact from an M and A standpoint in terms of people's behavior. But from our perspective, it's not going to change much. I think the opportunities that we have, the things that we've been working on, keep in mind some of the development work that we're doing from an M and A standpoint goes on for a year or so before we're doing something from an M and A standpoint. So constantly building relationships, constantly talking with people. Speaker 200:45:10So our activity is not going Speaker 400:45:13to change, but behavior may be impacted in terms of which way the election goes. And bonus depreciation stepping down is a real impact to M and A and it has been. And I think as you're aware, Timna, we've been really effective on how we've bought companies. We've been able unlike Royal, for instance, it was an F reorg, which we bought the stock of the company, we're able to get asset treatment, step up basis, shield a lot of taxes. So we've been really effective on how we bought things. Speaker 400:45:44But stepping down next year from 60% bonus to 40%, changes to NPV value of the tax assets and brings in multiples for M and A. So I think that might be one way if the election plays out one way or the other that you could see M and A accelerate or maybe stay around the same levels. Speaker 800:46:09Got it. That's helpful color. Thank you again. Welcome. Operator00:46:14Thank you. We'll wait for our next question. Our next question comes from the line of Stephanie Moore of Jefferies. Your line is now open. Speaker 900:46:27Hi, good morning. Thank you. Speaker 200:46:29Good morning, Stephanie. Speaker 900:46:30Hi. I wanted to touch a little bit about the synergy realization from prior deals, maybe specifically if you wanted to touch on some of the deals last year, GSL and Twin Bridges. And then kind of what you've seen early on from the synergy capture or potential for synergy capture from deals announced this year? Thank you. Speaker 400:46:51So Twin Bridges, we are ahead of plan. We've had a really great job of capturing synergies both with collapsing routes and taking trucks off the road and also advancing some landfill internalization and collapsing facilities as well. We've been able to reduce the number of total facilities by 2 over the last year. So we're well ahead of our plans and achieved every synergy in our model already. The Mid Atlantic assets we acquired from GFL were behind our plans there and kind of netting neutral between the 2. Speaker 400:47:30And our biggest negative there being behind was just the complexity of the transition services. It's hard to buy assets out of another company and we didn't have enough visibility on our revenue book of business, collections associated with that and the like. Everything is on our systems now and we have much better data visibility and we're back to executing the plan and growing the business. So those 2, we're going to capture synergies in the Mid Atlantic and there's a lot of work to be done there. The other thing I'd point to in the Mid Atlantic and we had said this all along that automating trucks and moving from old rear loads to automated side load trucks is like a 5 or 6 year run for us where we have a lot of work to do over 200 trucks. Speaker 400:48:22And this year, our truck deliveries have been pretty significantly delayed. We primarily buy from Mack and Kenworth and we have about, let's say 30% of our truck deliveries have been delayed and might push into next year. And a number of those were in the Mid Atlantic as well, which is weighed on us getting some of those early synergy benefits and automation in that market. It's a little early with LMR, Whitetail and of course Royal, but the teams are executing very well on the ground in each of those acquisitions. The former owners have been extremely gracious, are working very, very hard to complete integration work and help us to be successful. Speaker 400:49:06We couldn't be more thankful. And that's the most important part, making sure teams are secure, we maintain employees, customers are maintained and that transition goes well. So with each of those acquisitions, you've got an A plus effort by the former owners making sure things are stable and running well. Speaker 900:49:31Great. That's helpful color. And then I just had one follow-up on the 2025 high level guidance. I think you called out margin expansion across all lines of business. So if you think about the margin drivers for next year, clearly the pricing commentary looks strong. Speaker 900:49:47So you see another year of pricing in excess of inflation and the benefit there. But what are the other major drivers as we think of next year? Thanks. Speaker 300:49:55Yes. It's the continued efforts of Sean and his team on reducing operating costs in the collection line of business. As both John and I commented in our prepared remarks, we're really seeing the as you kind of dig down to the next level below the consolidated numbers, we're seeing real benefits from those quarter after quarter in the collection line of business. Resource solutions of course, Willimantic Murph coming back on, we talked about that, and really having both Willimantic and Boston firing on all cylinders, pretty much from the beginning of 2025. That will be a nice margin tailwind. Speaker 300:50:34And again, maybe we're beating a dead horse here, but the real drag this year from a margin perspective has been the landfill business and specifically the C and D market. So with that, again, returning to some level of normalization, that should if we do nothing, that should be a nice margin tailwind. So we see opportunity across all lines of business for margin expansion. This year it's really been 2 out of the 3 and next year we expect landfill to participate as well. Speaker 900:51:12Understood. Thank you so much. Speaker 400:51:15Thank you, Alan. Operator00:51:17Thank you. We'll move for our next question. Our next question comes from the line of Brian Butler of Stifel. Your line is now open. Speaker 1000:51:29Good morning. Thanks for taking the question. Speaker 200:51:32Good morning, Brian. Speaker 400:51:32Good morning. Operator00:51:34The first one, can we go Speaker 1000:51:35back to the landfill closure and kind of that happening at the end of this year? I mean that 150,000 tons you're down. I mean what would keep that from coming back I guess? Is there really any other place for that volume to go? Speaker 900:51:52Well, Speaker 400:51:54a bit of it's gone to a competitive site on Long Island as well. Not to get too much into the weeds, but there's a little 2 private sites on Long Island, Brookhaven or the municipal site Brookhaven and their private site. And they've both been kind of battling it out over the last year with the closure of Brookhaven. So our expectation is vast majority of that waste returns to us in 2025, but some of it did go to the other private site. Speaker 200:52:21Yes, it would be 100% of it, but maybe 60%, 70% maybe. Speaker 400:52:25Yes. 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. Speaker 1000:52:35And that 60%, 70% that maybe comments 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? Speaker 300:52:48Yes. That's encompassed in the 12% to 15% kind of high level guidance. Again, we're not at this point parsing through the specific growth associated with each driver, but that's reflected in the outlook overall. Speaker 1000:53:04Okay. And then circle back again just on M and A. Maybe a little bit more color maybe on the $600,000,000 pipeline. What's kind of the makeup from a deal perspective on size? And then maybe just your thoughts on how competitive has the M and A market been? Speaker 1000:53:21I mean this has been a huge year in 2024. Is that carrying into 2025? Speaker 400:53:28Yes. So if we look at our pipeline, there's a great mix between sub-twenty $1,000,000 revenue companies that are really nice tuck ins to existing markets or adjacencies. There's a lot of focus there. And then there's a handful of adjacent markets that are a little bit larger like some of the transactions we've done over the last year. We continue to have a balance of party to party acquisitions where owners of companies we have direct discussions with and we come to a fair price and then some come through a banker led process as well. Speaker 400:54:10So we're not it's probably less than 10% of our deals are coming through an auction process still. So we're really effective on the street with the relationships that John's built over a lot of years. Another great pipeline for our growth is our national accounts group. So we've had a team for over 35 years that wins large multi site commercial or retail or industrial customers and some of them we service with our trucks, some we broker out to 3rd parties. And those 3rd party companies that we do business with, we get to know them over time. Speaker 400:54:51We form relationships and trust and it really helps with our pipeline development as well over time. Speaker 200:54:59Keep in mind that we stepped into the Mid Atlantic, which gives us a significant opportunity for additional tuck ins throughout the entire Mid Atlantic. And then stepping into Royal in Duchess and Westchester County, again, additional opportunities to continue to grow around that market area, both opportunities were new opportunities to Casella in the last year. So exciting, very exciting opportunities from a continued growth standpoint. As Ned said, some of those transactions are the 10, dollars 15,000,000 dollars 20,000,000 dollars 30,000,000 businesses that just will fit in very nicely and very exciting in terms of the future growth. Speaker 1000:55:46Okay, great color. And then last one for me just with the acquisition the post acquisition development capital spending, does that come down in 25%, now that we're kind of through the GFL assets in the Twin Bridges? Speaker 300:56:03Well, it's a sort of thing where if we were to stop acquisition activity that it would naturally roll off and that's going to be, but the reality is it's going to be a function of how active we are in deploying new capital. So it's no way of saying it's impossible to answer that, depends on how next year plays out from an acquisition standpoint. Speaker 1000:56:25Okay, great. Thanks for taking the questions. Speaker 400:56:28Thanks, Brian. Operator00:56:30Thank you. One moment for next question. Our next question comes from the line of Michael Feniger of Bank of America. Your line is now open. Speaker 500:56:49Yes. Hey, everyone. Thanks for squeezing me in. I'm just curious on some of the M and A. We've seen some public players announce some acquisitions in New York, in the Northeast market as well. Speaker 500:57:03I'm just curious if you're seeing more out there in competition in terms of your M and A pipeline. Is it getting more competitive to these assets? Or on the flip side, are we seeing some more discipline out there as we're starting to see some more announcements of the Northeast market from some of the public peers? Speaker 200:57:21I think that from our perspective we don't anticipate any significant additional competitive activities. As Ned said, we a lot of the transactions that we're doing are based on relationships that we've built for a lot of years in the marketplace and the presence that we've had in the Northeast for almost 50 years now. So certainly there will be deals, the larger deals are going to be competitive, they always are with other other companies. But for the most part, I don't think that we would characterize the market currently as seeing significantly additional competitive, no more so than what we've seen over the last year. Speaker 500:58:09Okay, great to know. And just I'm curious, I know there's a lot of noise in moving parts, but I'm just curious what you're seeing for your underlying cost inflation in the Q3 as you move into the Q4. Obviously, there's labor, there's a lot of moving pieces, but how you think that kind of sets up just bigger picture, what the cost budget kind of looks like for 2025? And how you're thinking about some of the pricing to offset that? Thanks everyone. Speaker 300:58:39Yes. 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. Speaker 300:59:22And so what we're going to have to do is continue to try and reduce costs in other ways and drive price. Operator00:59:34Thank you. I'm showing no further questions at this time. I would now like to turn it back to John Carcilla for closing remarks. Speaker 200:59:41Thank 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. Speaker 200:59:54Have a great day. Operator00:59:57Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallCasella Waste Systems Q3 202400:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsPress Release(8-K)Quarterly report(10-Q) Casella Waste Systems Earnings HeadlinesCasella Waste Systems, Inc. (CWST) Q1 2025 Earnings Call TranscriptMay 2 at 4:19 PM | seekingalpha.comEarnings To Watch: Casella Waste Systems Inc (CWST) Reports Q1 2025 ResultMay 2 at 11:30 AM | finance.yahoo.comThe Trump Dump is starting; Get out of stocks now?The first 365 days of the Trump presidency… Will be the best time to get rich in American history.May 5, 2025 | Paradigm Press (Ad)Casella Waste Systems (NASDAQ:CWST) Beats Expectations in Strong Q1May 2 at 11:30 AM | msn.comCasella Waste Systems, Inc. Announces First Quarter 2025 ResultsMay 1, 2025 | globenewswire.comCasella Waste Systems (CWST) Q1 Earnings Report Preview: What To Look ForApril 30, 2025 | msn.comSee More Casella Waste Systems Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like Casella Waste Systems? Sign up for Earnings360's daily newsletter to receive timely earnings updates on Casella Waste Systems and other key companies, straight to your email. Email Address About Casella Waste SystemsCasella Waste Systems (NASDAQ:CWST), together with its subsidiaries, operates as a vertically integrated solid waste services company in the United States. It offers resource management services primarily in the areas of solid waste collection and disposal, transfer, recycling, and organics services to residential, commercial, municipal, institutional, and industrial customers. The company provides non-hazardous solid waste services, including collections, transfer stations, recycling, and disposal operations. In addition, it markets materials, including fibers, corrugated cardboard, newsprint, plastics, glass, ferrous, and aluminum metals. 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There are 11 speakers on the call. Operator00:00:00Good day and thank you for standing by. 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. Operator00:00:28I would now like to hand the conference over to your first speaker today, Charlie Walhuter, Director of Investor Relations. Please go ahead. Speaker 100:00:35All right. Thank you, Marvin. Good morning and thank you for joining us today. We'll be discussing our Q3 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, Chief Financial Officer and Shawn Steeves, our Senior Vice President and Chief Operating Officer of Solid Waste Operations. Speaker 100:01:02After 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 ks 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 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. Speaker 100:02:05These 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 ks with the SEC. With that, I will now turn the call over to John Casella to begin today's discussion. Speaker 200:02:47Thanks, Charlie. Good morning, everyone, and welcome to our Q3 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. Speaker 200:03:11As we announced in our press release last night, we recently completed our 6th acquisition of the year closing Royal on October 1. This is a company that we've known and respected for decades. They're focused on delivering excellent customer service, taking care of their team and supporting their local communities are 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 3 larger acquisitions we completed this year, LMR, Whitetail and now Royal. Speaker 200:03:58With nearly 5,000 employees, I'm very excited about what the future holds. Shifting to our results for the Q3, revenue topped $400,000,000 while we generated over $100,000,000 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 and D tons remain the driver for almost the entire decline. Special waste was down marginally and MSW tonnages were mostly flat in the quarter. Speaker 200:04:40While this has 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. 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 outlet. Moving to the collection side, I'm especially happy to report the strategic investments in our frontline operations are making positive impacts. Speaker 200:05:20Adjusted EBITDA margins were up 130 basis points in the quarter on 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, 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. Speaker 200:06:10In 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've 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 benefit from higher commodity prices. Speaker 200:06:39This 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 for 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. Speaker 200:07:15Our national accounts business remains strong, and it's 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. Speaker 200:08:17These 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 and looking forward to a strong finish in 2024 and is set up 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'll now pass it on to Brad to walk through the details from a financial standpoint. Speaker 300:08:57Thanks, John, and good morning, everyone. Revenues in the Q3 were $411,600,000 up $58,900,000 or 16.7% year over year with $37,500,000 from acquisitions including rollover and $21,300,000 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 frontload 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. Speaker 300:09:54Revenues 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 and D tons down 16% year over year. As we've discussed, the C and D market is currently under pressure with the impending closure of 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. Speaker 300:10:39The 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 prioritize 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 price is shared with our customers under our contract structures which were designed to mitigate risk. So the net benefit to our revenue was only $1,600,000 in the quarter. Speaker 300:11:29We 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 MIRF. 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 $102,900,000 in the quarter, up $13,300,000 or 14.9 percent year over year with $9,300,000 from acquisitions including rollover and $4,000,000 from organic growth. Speaker 300:12:16Adjusted 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 $3,000,000 of expense in the quarter related to 2 discrete insurance events, which impacted margins by 80 basis points. Insurance events are part of our ongoing business, 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 land sales, particularly C and D materials as we've discussed, continued to weigh on results and impacted margins by another 30 basis points in the quarter. Speaker 200:13:04The rest Speaker 300:13:04of 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 Murph was essentially offset in the quarter by the shutdown of the Willimantic Murph for the retrofit and upgrade of that facility. Speaker 300:13:39We look forward to having both facilities operating at new higher levels of production in early 2025. Acquisitions were net neutral for the quarter on consolidated margins. Cost of operations were $267,100,000 in the quarter, up $40,800,000 year over year with $25,800,000 of the increase from acquisitions and $15,000,000 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 $15,900,000 in the quarter, down $4,200,000 compared to prior year with the accelerated amortization of identifiable intangibles associated with recent acquisitions and higher net interest expense weighing on earnings. Speaker 300:14:31Intangible amortization was up $3,900,000 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 $5,800,000 in the quarter, down $12,400,000 compared to prior year driven by $8,500,000 closure charge at the Southbridge Landfill as well as higher D and A 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 transitioned 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 nondeductible expenses and discrete items push the rate above our statutory rate of approximately 27% including state taxes. Speaker 300:15:45The 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 $5,000,000 in cash taxes this year. Net cash provided by operating activities was $171,600,000 for the 1st 9 months of 2024, up $13,800,000 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 $98,800,000 in the 1st 9 months, up $4,400,000 year over year with stronger operating cash flow partially offset by higher capital expenditures. Speaker 300:16:38As we announced in September, we completed 2 important financing transactions in Q3 raising over $500,000,000 in equity and extending and upsizing our senior credit facility to $1,500,000,000 including increasing our revolver from $300,000,000 to $700,000,000 These financings position us well for continuing to execute on our M and A and growth investment strategies. As of September 30, we had $1,100,000,000 of debt and $519,000,000 of cash and our consolidated net leverage ratio for purposes of our bank covenants was 2.57 times. We closed on the acquisition of Royal on October 1 and pro form a for that transaction, our bank covenant leverage was less than 2.5 times and we still have approximately $1,000,000,000 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 Southbridge landfill closure charge. With acquisitions close to date including Royal, we now expect to be at the high end of our guidance range for revenue. Speaker 300:17:59However, for adjusted EBITDA contribution of 1 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 $125,000,000 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%. Speaker 300:19:05Of course, this outlook assumes no further acquisition activity. And with that, I'll turn it over to Nick. Speaker 400:19:12Thanks, Brad. Good morning, everyone. As John said, we had another busy quarter with further execution against our growth strategy. With the purchase of Royal Karting on October 1, we completed our 6th acquisition year to date, bringing total acquired revenues to over $200,000,000 on an annualized basis. We remain selective with our acquisitions, focusing on opportunities to have the right cultural and the right strategic fit. Speaker 400:19:33We are excited to welcome the Royal team to Casella and believe that We are 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. Speaker 400:20:27Given the lingering softness in special waste and C and 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 4 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. Speaker 400:21:07The first phase of investment in our rail served McKean, Pennsylvania landfill is now complete. To date, we have received over 50 railcars in 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, flushes and special waste asset sites. Speaker 400:21:42As previously discussed, this site provides a great long term risk management to preserve our flexibility in the disposal constrained Northeast. As such, this won't be a meaningful driver of near term volume growth and this site will be operated under the same return driven focus that we apply across all opportunities. As Brad mentioned, during the Q3, we began the full technology and equipment upgrade at the Willamette, Connecticut recycling facility and we expect to have the project completed by the Q1 of 2025. Taking the site offline is a negative drag for the second half of twenty twenty four. However, we expect the project to generate roughly $4,000,000 of EBITDA in 2025. Speaker 400:22:26We 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 Q3. Looking ahead, the 3 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. Speaker 400:23:05As we look ahead to late 2024 and into 2025, our M and A pipeline continues to be very active with roughly $600,000,000 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. Operator00:23:34Thank you. At this time, we'll conduct the question and answer session. Our first question comes from the line of Trevor Romeo of William Blair. Your line is now open. Speaker 500:24:00Hi, good morning. Thanks so much for taking the questions. First one, I was 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. Speaker 500:24:16Just wondering if you had thoughts on kind of 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? Speaker 200:24:31The 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. Speaker 200:25:18It'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 amount of tons, 1,000, 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 really give our people real experience from a rail perspective. Speaker 200:26:03So again exciting facility in place ready to go. But it's really we don't anticipate a significant ramp up early in the process. As Nit said, it will be more on the basis of need and as pricing continues to move in a positive direction. Speaker 400:26:21Yes. And 2 other kind of positive points there. Today, we have 3 rail serve transfer stations that they're 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 on to the team, someone who has over 25 years of experience that's helping us to work through the ramp up there and siting an additional rail transfer station in the appropriate market, kind of Southern New Hampshire, Northern Mass markets where we'll have needs over time. Speaker 400:27:01So this is a long term strategy. We're excited about where we sit right now, but the team's coming together and it's really progressing right where we want it to be. Speaker 500:27:12That's great. Thank you both for that. 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 $90,000,000 of revenue and any synergy potential? Thanks. Speaker 300:27:34Yes. I'll give you Speaker 200:27:35a little bit of perspective with regards to the strategic piece of Royal. Royal has been a small customer of ours for 30 years. We've had a relationship with them for 30 years. It's a spectacular company driven by the niche family and in place for 70 years really an exciting opportunity for Casella in Westchester, Dutchess County, 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, medical centers in terms of helping them meet their sustainability goals. So it's a very exciting It's an area that we had no presence from a hauling standpoint. Speaker 200:28:24We did as I said take a little bit of waste from their transfer stations, but obviously now we'll have the opportunity to internalize a lot more of it. So and there is significant relationships from a strategic standpoint with the county which 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. Speaker 200:28:56The Panichi family really did a very great job of taking care of their people and obviously the communities that they served as well. Yes. Can you walk through some of the financials, Ned? Speaker 400:29:06On the financial side, it's kind of like a mid teens EBITDA margin company. From our vantage point though, as John said, there's a few things we can do over the course of 2 years to drive it to a mid-20s percent margin company. And one is just focusing on core operating programs, the stuff we do great, route optimization, onboard computing, automation. Yes, there's some really great opportunities there. Speaker 200:29:41A little more work for Sean. Speaker 400:29:42A little more work for Sean. And then the other thing as Sean 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, probably opportunity 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, extends our footprint. Speaker 400:30:14And also from a sales standpoint, we've got a great playbook with larger institutional industrial customers that we think can create Speaker 300:30:24a lot of value. Speaker 200:30:24Just a great group of talented employees that all really come on board with us and just really a very exciting transaction. Speaker 500:30:35Okay. That's all great. Thanks so much. Speaker 400:30:38You're welcome. Thank you. Operator00:30:40Thank 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. Speaker 600:30:52Hey, good morning guys. Speaker 400:30:54Good morning Tyler. Speaker 600:30:56Hey 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. Speaker 300:31:15Yes, that's right. Just netting the 2 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. Speaker 600:31:28Okay. That's fair and helpful. I want to come back to the C and D issues. I know that these are not new. I think you mentioned it was a $2,000,000 headwind in the quarter. Speaker 600:31:38I think it's been a headwind basically all year. So has that been as much as an $8,000,000 to $10,000,000 EBITDA drag? And does that site close on twelvethirty one? And I get that you probably won't get it all back in year 1, but won't that be a positive delta into next year or should be? Speaker 400:31:56Yes. 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 CNG. 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 Twelvethirty Onetwenty 4. Speaker 400:32:24They're in those final stages where you need the volumes in the site to grade shape, get it permanently closed. So the market will resolve coming into 2025. We're really confident as I talked about in my comments. We're also it's been hyper focused and just making sure internalization is where it needs to be. We have the right transportation lanes. Speaker 400:32:46When our 3rd party vendors can't support those lanes, we've been buying trucks and trailers and putting assets on the ground. And I think we probably should have focused on that a little bit more earlier in the year and pushing faster and harder. We push throughout the summer to do that, to also help with some of that headwind we've had. I don't think it's like a light switch on January 1, but we've seen the progress of getting back some of those construction and demo tons even now into the Q4. Some of our really great long term customers from the New York market who had a nice opportunity to go out to Long Island over the last year and have a good price reduction as the site was getting closed. Speaker 400:33:33We've been talking to them. They're slowly starting to ramp tons back to us into the 4th quarter. So we expect some positives there and coming into next year. Speaker 600:33:46Okay. Now super helpful. And I know you guys are going to put obviously a much finer point on 25, call it 90 days, but there are a lot of moving pieces here. So if I just think through some of these, I mean you've got organic growth, You've got Willimantic that goes from a negative to a positive. We just talked about C and D. Speaker 600:34:09Maybe McKean ramps up, though that's somewhat debatable. It sounds like you've got internalization opportunities. These insurance accruals don't recur. You got a big rollover impact of M and A. Speaker 100:34:21So there's a lot Speaker 600:34:21of things going on. I mean are some of those the key pieces to the bridge or is there anything else that I should be thinking about? Speaker 300:34:31Tyler, it's Brad. You hit on a lot of the key drivers. I mean, the way we think 2025 is shaping up over 2024. There's a lot that's lining up to position us well on a year over year basis and the biggest one is what you and Ned were just talking about is landfill volumes in that market returning to some form of normalcy. So the way I would think about it is kind of everything you talked about is encompassed in the high level EBITDA guidance that we gave. Speaker 300:35:03We're of course in our budget process right now. So we're going to work through that over the next month or 2 and going to have a much more refined view when we talk again in February. But we're feeling good about the year. Speaker 600:35:17Yes. Okay, perfect. My last one here, Ned. Can you kind of go back over all the internalization numbers? So I thought you said that you are buying some long haul tractors for something like 100,000, 125,000 tons via truck. Speaker 600:35:32But then you also mentioned that you've got 3 rail serve transfer stations that are sending waste elsewhere. So can you kind of just talk big picture because this could be a big and that's not I know it's probably not just a 25, it's a multiyear story. But can you just talk a little bit more about that and just maybe again put a little more shape around it? Thank you. Speaker 400:35:53Yes, sure. So we have bought additional tractors and trailers and we've established 4 new transportation lanes to hit our New York landfills from some major population centers where we weren't moving enough waste to internalize, think Rochester, Buffalo, Capital District. So that's ramping up as we speak into the 4th quarter and will be a positive benefit into next year. And as I also said, we do have 3 rail transfer stations today. We haven't flipped the switch and moved those tons to Midkeen yet. Speaker 400:36:30We will do some of that over time. But we are more focused on moving MSW and sludges into McKean. A lot of what's leaving via rail today from Casella's construction and demo debris and we feel like there are better outlets in other locations for that. So we're more focused on moving containerized MSW and special waste and sludges to McKean. We think that's the higher value creation over the long term for the site. Speaker 400:37:01So that's why you haven't seen us just go out and move those transfer stations to date. They're moving today to Ohio landfills that their effective T and D rates and it makes sense today. We will be looking at those sites and at potentially a new site as well to really start moving some of that containerized MSW in the next year year plus. Speaker 600:37:28Yes, perfect. Okay. Thank you so much. Speaker 400:37:31Thanks, Tyler. Operator00:37:34Thank you. We'll open for our next question. Our next question comes from the line of Adam Bubbaus of Goldman Sachs. Your line is now open. Speaker 700:37:46Hi, good morning. I was wondering if you could just provide a little more color on the insurance expense accruals related to the 2 discrete events. What is that exactly related to? And does that roll off next quarter? Speaker 400:38:02Yes. So we had a really tragic accident in one of our transfer stations where a third party truck hit 1 of our employees and caused some pretty significant injuries to our employees. He's alive, he's recovering. But with a workers' comp incident like this, we got hit with a full accrual even though much of this will be subrogated back over time to that third party's insurance provider. So really unfortunate in many ways, we're just thankful that our employees on demand and had to fight ahead of him, but it's on demand. Speaker 400:38:46The other is just kind of almost one part insurance, one part legal where we had at a third party transfer station municipality unloading a truck bumped such truck into a 3rd party. That third party was injured and we had to pick up a large accrual this quarter associated with that that we always thought was a GL claim and it's turning out to be an auto claim. So there's just 2 like really unusual claims that don't fit within the normal accruals of what we look at and they hit us unexpectedly in the quarter, but not something we normally would see. Speaker 700:39:31Understood. Speaker 300:39:32Yes. And just to finish off to your question about this is one time. There's a potential that the accrual could change up or down in the future, but this is our best estimate as of today. Speaker 700:39:46Got it. Understood. And hoping for the best for everyone involved there. And then on the 2025 outlook, there's a lot of moving pieces in terms of the margin bridge shifting from bad guys to good guys. When you think about Willimantic leachate headwinds this year, C and D volumes potentially returning. Speaker 700:40:11How are you thinking about the early puts and takes on potential for an outsized 2025 margin expansion year? Speaker 300:40:20Yes. I think thematically you're thinking about it the right way. I think it's premature for us to put a finer point on the margin bridge. But because of the things you mentioned, our expectation is that likely 2025 is looking like above trend in terms of margin expansion given the headwinds that we face this year. Speaker 700:40:44Got it. And then last one from me, really high level of M and A contribution flowing through the portfolio. Great to see that level of growth. Is it prudent to expect a pause here in M and A spend over the next couple of quarters as you integrate over $200,000,000 annualized revenues acquired this Operator00:41:07year? Speaker 400:41:09It's always opportunistic. So we have a number of transactions that we've been working to develop over years. And a few of them continue to move through the pipeline, not larger, but smaller tuck ins that will fit very well into existing markets, especially into the Mid Atlantic. So I think you should expect to see over the next 6 months continued focus on some tuck ins and just real accretive value. Our team is hyper focused on integration work though. Speaker 400:41:40That's where the money is made and that's the most important part. And we've added some great select resources to help us expand our capacity to do integration work more effectively, more rapidly. So we are focused in that area. I wouldn't say it's a full pause on acquisitions because there's definitely deals that are in the pipeline that continue to kind of move along. Speaker 200:42:07I think it's fair to say though that for the Q4, certainly a significant effort from an integration standpoint and only doing what is necessary for those transactions that are in the pipeline to continue to move them. But certainly from now through the end of the year, a real focus on the integration of the businesses that we've bought in 2024. Speaker 700:42:34Great. Thanks so much. Operator00:42:37Thank you. Thank you. We'll open it for our next question. Our next question comes from the line of Timna Tanners of Wolfe Research. Your line is now open. Speaker 800:42:51Hey, good morning. Good morning. Good morning. Good morning. One follow-up on the M and A I wanted to follow-up on the M and A discussion. Speaker 800:43:00I thought I heard in your preliminary remarks that you had by Carter. It sounded like you were implying up to $1,000,000,000 or so. I want to check-in that. If that were the case, would that be an amount up to which you wouldn't need to tap debt or equity markets to do any of those tuck ins or other deals up to that amount? Speaker 300:43:17Yes. The $1,000,000,000 was just the excess cash that we have on the balance sheet. So following the acquisition of Royal, we have about $300,000,000 left sitting on the balance sheet. We upsized our revolver as I mentioned and as we announced. So that's $700,000,000 So $300,000,000 plus $700,000,000 is the total between those 2. Speaker 300:43:38That isn't taking into account potential available liquidity given pro form a leverage. Obviously, that assumes that we would exhaust all of that liquidity that wouldn't necessarily be our approach. So, really it was just a kind of an overall sense for how much room we have. Speaker 800:43:59Okay. But is it safe to say that some of the smaller deals you would be able to absorb pretty easily then with your available liquidity? I didn't want to assume too much there. Speaker 200:44:07Yes, absolutely. Yes, absolutely. No question. Speaker 800:44:11Okay, helpful. And then also along those lines, I know a lot has been said about the election. I don't want to beat a dead horse there. But I think with regard to M and A, there's some thought that there may be some ease in FTC approach or replacement of that head. Is there has that changed much for you all in terms of how you look at M and A? Speaker 800:44:29Has that been a constraint? Speaker 200:44:31I don't think that it's going to change much. I mean, I think the real question is whether in terms of what direction it goes and if there are significant issues from a tax standpoint, it could have an impact from an M and A standpoint in terms of people's behavior. But from our perspective, it's not going to change much. I think the opportunities that we have, the things that we've been working on, keep in mind some of the development work that we're doing from an M and A standpoint goes on for a year or so before we're doing something from an M and A standpoint. So constantly building relationships, constantly talking with people. Speaker 200:45:10So our activity is not going Speaker 400:45:13to change, but behavior may be impacted in terms of which way the election goes. And bonus depreciation stepping down is a real impact to M and A and it has been. And I think as you're aware, Timna, we've been really effective on how we've bought companies. We've been able unlike Royal, for instance, it was an F reorg, which we bought the stock of the company, we're able to get asset treatment, step up basis, shield a lot of taxes. So we've been really effective on how we bought things. Speaker 400:45:44But stepping down next year from 60% bonus to 40%, changes to NPV value of the tax assets and brings in multiples for M and A. So I think that might be one way if the election plays out one way or the other that you could see M and A accelerate or maybe stay around the same levels. Speaker 800:46:09Got it. That's helpful color. Thank you again. Welcome. Operator00:46:14Thank you. We'll wait for our next question. Our next question comes from the line of Stephanie Moore of Jefferies. Your line is now open. Speaker 900:46:27Hi, good morning. Thank you. Speaker 200:46:29Good morning, Stephanie. Speaker 900:46:30Hi. I wanted to touch a little bit about the synergy realization from prior deals, maybe specifically if you wanted to touch on some of the deals last year, GSL and Twin Bridges. And then kind of what you've seen early on from the synergy capture or potential for synergy capture from deals announced this year? Thank you. Speaker 400:46:51So Twin Bridges, we are ahead of plan. We've had a really great job of capturing synergies both with collapsing routes and taking trucks off the road and also advancing some landfill internalization and collapsing facilities as well. We've been able to reduce the number of total facilities by 2 over the last year. So we're well ahead of our plans and achieved every synergy in our model already. The Mid Atlantic assets we acquired from GFL were behind our plans there and kind of netting neutral between the 2. Speaker 400:47:30And our biggest negative there being behind was just the complexity of the transition services. It's hard to buy assets out of another company and we didn't have enough visibility on our revenue book of business, collections associated with that and the like. Everything is on our systems now and we have much better data visibility and we're back to executing the plan and growing the business. So those 2, we're going to capture synergies in the Mid Atlantic and there's a lot of work to be done there. The other thing I'd point to in the Mid Atlantic and we had said this all along that automating trucks and moving from old rear loads to automated side load trucks is like a 5 or 6 year run for us where we have a lot of work to do over 200 trucks. Speaker 400:48:22And this year, our truck deliveries have been pretty significantly delayed. We primarily buy from Mack and Kenworth and we have about, let's say 30% of our truck deliveries have been delayed and might push into next year. And a number of those were in the Mid Atlantic as well, which is weighed on us getting some of those early synergy benefits and automation in that market. It's a little early with LMR, Whitetail and of course Royal, but the teams are executing very well on the ground in each of those acquisitions. The former owners have been extremely gracious, are working very, very hard to complete integration work and help us to be successful. Speaker 400:49:06We couldn't be more thankful. And that's the most important part, making sure teams are secure, we maintain employees, customers are maintained and that transition goes well. So with each of those acquisitions, you've got an A plus effort by the former owners making sure things are stable and running well. Speaker 900:49:31Great. That's helpful color. And then I just had one follow-up on the 2025 high level guidance. I think you called out margin expansion across all lines of business. So if you think about the margin drivers for next year, clearly the pricing commentary looks strong. Speaker 900:49:47So you see another year of pricing in excess of inflation and the benefit there. But what are the other major drivers as we think of next year? Thanks. Speaker 300:49:55Yes. It's the continued efforts of Sean and his team on reducing operating costs in the collection line of business. As both John and I commented in our prepared remarks, we're really seeing the as you kind of dig down to the next level below the consolidated numbers, we're seeing real benefits from those quarter after quarter in the collection line of business. Resource solutions of course, Willimantic Murph coming back on, we talked about that, and really having both Willimantic and Boston firing on all cylinders, pretty much from the beginning of 2025. That will be a nice margin tailwind. Speaker 300:50:34And again, maybe we're beating a dead horse here, but the real drag this year from a margin perspective has been the landfill business and specifically the C and D market. So with that, again, returning to some level of normalization, that should if we do nothing, that should be a nice margin tailwind. So we see opportunity across all lines of business for margin expansion. This year it's really been 2 out of the 3 and next year we expect landfill to participate as well. Speaker 900:51:12Understood. Thank you so much. Speaker 400:51:15Thank you, Alan. Operator00:51:17Thank you. We'll move for our next question. Our next question comes from the line of Brian Butler of Stifel. Your line is now open. Speaker 1000:51:29Good morning. Thanks for taking the question. Speaker 200:51:32Good morning, Brian. Speaker 400:51:32Good morning. Operator00:51:34The first one, can we go Speaker 1000:51:35back to the landfill closure and kind of that happening at the end of this year? I mean that 150,000 tons you're down. I mean what would keep that from coming back I guess? Is there really any other place for that volume to go? Speaker 900:51:52Well, Speaker 400:51:54a bit of it's gone to a competitive site on Long Island as well. Not to get too much into the weeds, but there's a little 2 private sites on Long Island, Brookhaven or the municipal site Brookhaven and their private site. And they've both been kind of battling it out over the last year with the closure of Brookhaven. So our expectation is vast majority of that waste returns to us in 2025, but some of it did go to the other private site. Speaker 200:52:21Yes, it would be 100% of it, but maybe 60%, 70% maybe. Speaker 400:52:25Yes. 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. Speaker 1000:52:35And that 60%, 70% that maybe comments 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? Speaker 300:52:48Yes. That's encompassed in the 12% to 15% kind of high level guidance. Again, we're not at this point parsing through the specific growth associated with each driver, but that's reflected in the outlook overall. Speaker 1000:53:04Okay. And then circle back again just on M and A. Maybe a little bit more color maybe on the $600,000,000 pipeline. What's kind of the makeup from a deal perspective on size? And then maybe just your thoughts on how competitive has the M and A market been? Speaker 1000:53:21I mean this has been a huge year in 2024. Is that carrying into 2025? Speaker 400:53:28Yes. So if we look at our pipeline, there's a great mix between sub-twenty $1,000,000 revenue companies that are really nice tuck ins to existing markets or adjacencies. There's a lot of focus there. And then there's a handful of adjacent markets that are a little bit larger like some of the transactions we've done over the last year. We continue to have a balance of party to party acquisitions where owners of companies we have direct discussions with and we come to a fair price and then some come through a banker led process as well. Speaker 400:54:10So we're not it's probably less than 10% of our deals are coming through an auction process still. So we're really effective on the street with the relationships that John's built over a lot of years. Another great pipeline for our growth is our national accounts group. So we've had a team for over 35 years that wins large multi site commercial or retail or industrial customers and some of them we service with our trucks, some we broker out to 3rd parties. And those 3rd party companies that we do business with, we get to know them over time. Speaker 400:54:51We form relationships and trust and it really helps with our pipeline development as well over time. Speaker 200:54:59Keep in mind that we stepped into the Mid Atlantic, which gives us a significant opportunity for additional tuck ins throughout the entire Mid Atlantic. And then stepping into Royal in Duchess and Westchester County, again, additional opportunities to continue to grow around that market area, both opportunities were new opportunities to Casella in the last year. So exciting, very exciting opportunities from a continued growth standpoint. As Ned said, some of those transactions are the 10, dollars 15,000,000 dollars 20,000,000 dollars 30,000,000 businesses that just will fit in very nicely and very exciting in terms of the future growth. Speaker 1000:55:46Okay, great color. And then last one for me just with the acquisition the post acquisition development capital spending, does that come down in 25%, now that we're kind of through the GFL assets in the Twin Bridges? Speaker 300:56:03Well, it's a sort of thing where if we were to stop acquisition activity that it would naturally roll off and that's going to be, but the reality is it's going to be a function of how active we are in deploying new capital. So it's no way of saying it's impossible to answer that, depends on how next year plays out from an acquisition standpoint. Speaker 1000:56:25Okay, great. Thanks for taking the questions. Speaker 400:56:28Thanks, Brian. Operator00:56:30Thank you. One moment for next question. Our next question comes from the line of Michael Feniger of Bank of America. Your line is now open. Speaker 500:56:49Yes. Hey, everyone. Thanks for squeezing me in. I'm just curious on some of the M and A. We've seen some public players announce some acquisitions in New York, in the Northeast market as well. Speaker 500:57:03I'm just curious if you're seeing more out there in competition in terms of your M and A pipeline. Is it getting more competitive to these assets? Or on the flip side, are we seeing some more discipline out there as we're starting to see some more announcements of the Northeast market from some of the public peers? Speaker 200:57:21I think that from our perspective we don't anticipate any significant additional competitive activities. As Ned said, we a lot of the transactions that we're doing are based on relationships that we've built for a lot of years in the marketplace and the presence that we've had in the Northeast for almost 50 years now. So certainly there will be deals, the larger deals are going to be competitive, they always are with other other companies. But for the most part, I don't think that we would characterize the market currently as seeing significantly additional competitive, no more so than what we've seen over the last year. Speaker 500:58:09Okay, great to know. And just I'm curious, I know there's a lot of noise in moving parts, but I'm just curious what you're seeing for your underlying cost inflation in the Q3 as you move into the Q4. Obviously, there's labor, there's a lot of moving pieces, but how you think that kind of sets up just bigger picture, what the cost budget kind of looks like for 2025? And how you're thinking about some of the pricing to offset that? Thanks everyone. Speaker 300:58:39Yes. 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. Speaker 300:59:22And so what we're going to have to do is continue to try and reduce costs in other ways and drive price. Operator00:59:34Thank you. I'm showing no further questions at this time. I would now like to turn it back to John Carcilla for closing remarks. Speaker 200:59:41Thank 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. Speaker 200:59:54Have a great day. Operator00:59:57Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.Read morePowered by