CASELLA WASTE SYSTEMS INC Q1 FY2025 earnings call

• Recognized team members: Three drivers in National Waste and Recycling Association's Driver of the Year program, Julia Potter named to Waste360's 40 Under 40, and Casella on Forbes 2025 Americas Best Midsized Employers list.
• Q1 results: Revenues, adjusted EBITDA, and adjusted free cash flow all up over 20% year-over-year. Overcame winter challenges in Northeast. Progress on fleet automation, onboard computing, landfill internalization, and employee retention.
• Resource Solutions: Willimantic recycling facility ramped up, National Accounts had strong organic growth of over 10%.
• M&A: Closed four deals YTD with ~$50 million in annualized revenues, active M&A pipeline full.

In the first quarter, Solid Waste revenues were up 25.9% year-over-year. Pricing in Solid Waste was up 5.6% with volumes slightly down (-1.7%). Within Solid Waste, the collection line of business had pricing up 5.8% and volumes down 1.7%, while the disposal line of business had price up 5.5% and volumes down 2.2%. The Landfill business reported organic growth exceeding 7% with prices up 3.3% and tons up 3.9%. Resource Solutions' revenues were up 9.5% year-over-year, with recycling and other processing revenue up 7.4% and National Accounts up 10.9%.

• Reaffirmed 2025 financial guidance. Organic growth expected to be 3%-5% top-line revenue. Confident in 2025 outlook despite tariff and macro uncertainties. Monitoring tariff impacts and in dialog with vendors.

• Tariff and macroeconomic uncertainties. Impact of weather (e.g., winter in Northeast) on volumes, specifically affecting roll-off and transfer station volumes.

Q: Nice to see the positive landfill volume trajectory in the quarter. Just wondering how much of that is the loss construction and demolition volumes flowing back to you 1Q versus 4Q? And is there still room for continued recovery there as we move through the balance of the year?

A: Yes. Thanks, Adam. Great question. So as you mentioned, we had a really nice first quarter. Last year, we had those negative headwinds coming from Long Island as that site closed and there was a little bit of competitive tension. But our rebound this year in the first quarter, about a third of it is us recapturing construction and demo tons in that New York market. About two-thirds is related to our efforts in 2024 to get new transportation lanes in place to internalize additional tons. And we've been working hard to set up a new strategic sales organization around landfill sales, special waste, and just taking a look in the mirror of what we can improve to become more effective on the sales side there. So it's just three. It wasn't just the market bounce-back and we sat back. We also, I think, as you know, we're working really hard in 2024 to make our own future as well.

Q: I had one on price, I think 5.6% for solid waste in the quarter. I think that was a little above your full year expectation. I guess are there any areas where you saw pricing stick a little bit better than you expected? And then thinking as we move throughout the rest of the year, is there any reason to think whether it's either mix or underlying environment or anything like that? Any reason you might see a deceleration from these levels in the next few quarters?

A: Hey, Trevor, it's Jason. I'll answer the question here. So our pricing in the first quarter was slightly ahead of budget. So off to a good start in the year. And as you know, I believe much of our pricing goes out early in the year, in January upwards of 70% of our budgeted price increases. So we're out the door with most of our pricing for the year and off to a great start. Our pricing guidance for the year is approximately 5%. That still holds true. Typically, we do see a little bit of moderation through the year with select pricing rollbacks across customers. But as you know, we have had a history of pricing in excess of our budgeted levels. However, as it stands today, our guidance is still 5% for the year, which is in excess of our cost inflation that we're experiencing. So we're getting a modest to moderate spread on that, which is nice. In terms of customer groupings, I would say that in the collection line of business, a strong start there from a commercial perspective, with pricing on the higher end of our expectations from a pricing perspective. Roll-off may be a little bit weaker given some softness across the volumes and that's something we'll continue to monitor through the year. Landfills, we've gone to market with budgeted pricing and we've hit the mark there.