Financial Data and Key Metrics Changes - Revenues in the first quarter were $262.6 million, up $28.6 million or 12.2% year-over-year, with 2.5% from acquisitions and 9.7% from organic growth [124] - Adjusted EBITDA was $50.7 million in the quarter, up $5.1 million or 11.2% year-over-year, with $4.7 million of growth driven by improvements in the base business [11] - Solid waste adjusted EBITDA margins expanded over 220 basis points year-over-year for the quarter, reaching 25.4% [8][35] - Adjusted free cash flow started the year light at only $2.2 million, with capital expenditures up $5 million year-over-year [125] Business Line Data and Key Metrics Changes - Revenues in the collection line of business were up 17.1% year-over-year, with price up 8.9% and volume slightly down [34] - Revenues in the disposal line of business were up 19.3% year-over-year, with price up 9.3% and volumes up 6.4% [34] - Resource Solutions revenues were up 1.2% year-over-year, with 4% growth from acquisitions and 9.9% volume growth, but faced headwinds from lower commodity prices [34] Market Data and Key Metrics Changes - Commodity prices were down roughly 52% year-over-year, impacting the Resource Solutions segment [34] - The company reported a slight moderation in volumes from January, but overall, the first quarter showed a slight increase in volume [32][40] Company Strategy and Development Direction - The company is focused on expanding its footprint in the Northeast and Mid-Atlantic regions through strategic acquisitions, including the pending acquisition of GFL's solid waste operations [31][126] - The acquisition is expected to generate approximately $185 million in revenues and $43 million in EBITDA in the first 12 months, with $8 million in annual synergies expected within three years [126] - The company aims to enhance operational efficiencies through fleet automation and route optimization, with about 50% of the collection fleet automated [9][35] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving full-year adjusted free cash flow guidance of $119 million to $125 million, despite some timing variances [12] - The management noted that inflationary pressures are being managed effectively, with solid waste prices up 8.8% [122] - There is optimism regarding the execution of growth strategies and the potential for long-term shareholder value creation [121][117] Other Important Information - The company has a robust acquisition pipeline with about $500 million of addressable opportunities [33] - The Boston MRF facility is undergoing a retrofit, expected to improve performance significantly once operational [22][105] Q&A Session Summary Question: How will the company prioritize assets in the new Mid-Atlantic region post-acquisition? - Management indicated a balanced approach, focusing on both legacy Northeast markets and new Mid-Atlantic opportunities [15] Question: What is the outlook on volume performance and any potential slowdown? - Management noted slight softness at the end of the previous year but did not see significant concerns moving forward, with a slight increase in volume during the first quarter [40][41] Question: Can you elaborate on the cash tax shielding benefits from the GFL acquisition? - The acquisition is expected to yield over $130 million in cash tax savings over a multiyear period, enhancing the company's financial position [126][109] Question: What are the expected capital expenditures for the new footprint? - Initial investments are planned for the first year, but the fleet appears to be in good shape, minimizing significant capital impacts on free cash flow [82] Question: How does the company view the disposal capacity in Pennsylvania? - Management expressed confidence in the significant disposal capacity available in Pennsylvania, alleviating concerns about capacity constraints [85]

[PART I. FINANCIAL INFORMATION](index=2&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section provides the unaudited consolidated financial statements and management's discussion and analysis for Casella Waste Systems, Inc. [ITEM 1. FINANCIAL STATEMENTS](index=2&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) This section presents the unaudited consolidated financial statements for Casella Waste Systems, Inc. and its subsidiaries, including the balance sheets, statements of operations, comprehensive income, stockholders' equity, and cash flows, along with their accompanying notes [Consolidated Balance Sheets](index=2&type=section&id=Consolidated%20Balance%20Sheets) This section presents the company's financial position, detailing assets, liabilities, and stockholders' equity at specific dates | Metric | March 31, 2023 (Unaudited) ($M) | December 31, 2022 ($M) | | :-------------------------------------- | :------------------------------ | :--------------------- | | Total Current Assets | 187.8 | 207.5 | | Total Assets | 1,419.9 | 1,449.2 | | Total Current Liabilities | 145.1 | 177.6 | | Total Liabilities and Stockholders' Equity | 1,419.9 | 1,449.2 | - Total assets decreased from **$1,449.2 million** at December 31, 2022, to **$1,419.9 million** at March 31, 2023. Total current liabilities decreased from **$177.6 million** to **$145.1 million** over the same period[25](index=25&type=chunk)[27](index=27&type=chunk) [Consolidated Statements of Operations](index=4&type=section&id=Consolidated%20Statements%20of%20Operations) This section outlines the company's revenues, expenses, and net income over specific periods, reflecting operational performance | Metric | Three Months Ended March 31, 2023 ($M) | Three Months Ended March 31, 2022 ($M) | | :--------------------------- | :------------------------------------- | :------------------------------------- | | Revenues | 262.6 | 234.0 | | Operating Income | 10.3 | 10.2 | | Net Income | 3.5 | 4.2 | | Basic EPS | $0.07 | $0.08 | | Diluted EPS | $0.07 | $0.08 | - Revenues increased by **$28.6 million (12.2%)** year-over-year, from $234.0 million in Q1 2022 to $262.6 million in Q1 2023. Net income decreased by **$0.6 million (15.3%)** year-over-year, from $4.2 million in Q1 2022 to $3.5 million in Q1 2023[28](index=28&type=chunk) [Consolidated Statements of Comprehensive Income](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) This section details the company's total comprehensive income, including net income and other comprehensive income or loss components | Metric | Three Months Ended March 31, 2023 ($M) | Three Months Ended March 31, 2022 ($M) | | :-------------------------------------- | :------------------------------------- | :------------------------------------- | | Net Income | 3.5 | 4.2 | | Other comprehensive (loss) income, net of tax | (1.8) | 6.1 | | Comprehensive Income | 1.8 | 10.3 | - Comprehensive income significantly decreased from **$10.3 million** in Q1 2022 to **$1.8 million** in Q1 2023, primarily due to a shift from other comprehensive income of $6.1 million to an other comprehensive loss of $(1.8) million[8](index=8&type=chunk) [Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity) This section tracks changes in the company's equity accounts, including retained earnings and accumulated other comprehensive income | Metric | Balance, December 31, 2022 ($M) | Balance, March 31, 2023 ($M) | | :-------------------------------------- | :------------------------------ | :--------------------------- | | Total Stockholders' Equity | 497.9 | 501.7 | | Accumulated Other Comprehensive Income | 7.5 | 5.8 | - Total stockholders' equity increased from **$497.9 million** at December 31, 2022, to **$501.7 million** at March 31, 2023[10](index=10&type=chunk) [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This section reports the cash generated and used by the company across operating, investing, and financing activities | Metric | Three Months Ended March 31, 2023 ($M) | Three Months Ended March 31, 2022 ($M) | | :-------------------------------------- | :------------------------------------- | :------------------------------------- | | Net cash provided by operating activities | 16.1 | 24.7 | | Net cash used in investing activities | (17.7) | (62.5) | | Net cash (used in) provided by financing activities | (9.3) | 16.6 | | Net decrease in cash and cash equivalents | (10.9) | (21.2) | | Cash and cash equivalents, end of period | 60.2 | 12.6 | - Net cash provided by operating activities decreased by **$8.6 million (34.9%)** year-over-year. Net cash used in investing activities significantly decreased from **$(62.5) million** in Q1 2022 to **$(17.7) million** in Q1 2023, primarily due to lower acquisition spending[34](index=34&type=chunk) [Notes to Unaudited Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) This section provides detailed explanations and additional information supporting the figures presented in the consolidated financial statements - The financial statements are unaudited and prepared in accordance with GAAP and SEC rules, with management's estimates and assumptions affecting recognition and disclosure[63](index=63&type=chunk) [1. BASIS OF PRESENTATION](index=8&type=section&id=1.%20BASIS%20OF%20PRESENTATION) This note describes the accounting principles, estimates, and scope used in preparing the financial statements - The financial statements are prepared in accordance with GAAP and SEC rules, reflecting management's estimates and assumptions. The company is a regional, vertically integrated solid waste services company operating in seven states[63](index=63&type=chunk) - No material subsequent events occurred between March 31, 2023, and the filing date that would require recognition or disclosure[15](index=15&type=chunk) [2. ACCOUNTING CHANGES](index=9&type=section&id=2.%20ACCOUNTING%20CHANGES) This note details the adoption of new accounting standards and their impact on the company's financial reporting - The company adopted ASU No. 2020-04 (Reference Rate Reform) effective January 1, 2023, to ease the burden of applying GAAP to contracts and hedging relationships affected by the discontinuation of LIBOR[65](index=65&type=chunk) - Optional expedients were elected to maintain hedge effectiveness for interest rate derivative agreements transitioning from LIBOR to another reference rate prior to its planned discontinuation on July 1, 2023[65](index=65&type=chunk) [3. REVENUE RECOGNITION](index=9&type=section&id=3.%20REVENUE%20RECOGNITION) This note explains the company's policies for recognizing revenue from its various solid waste and resource renewal services - Revenues are primarily derived from solid waste collection and disposal services (landfill, transfer station, transportation, landfill gas-to-energy, processing) and resource-renewal operations (processing, National Accounts business)[16](index=16&type=chunk) Revenue by Source (Q1 2023) | Revenue Source (Q1 2023) | Eastern ($M) | Western ($M) | Resource Solutions ($M) | Total Revenues ($M) | | :----------------------- | :----------- | :----------- | :---------------------- | :------------------ | | Collection | 61.1 | 78.9 | — | 140.0 | | Landfill | 6.3 | 16.5 | — | 22.8 | | Transfer station | 14.0 | 10.0 | — | 24.0 | | Transportation | 1.2 | 3.6 | — | 4.8 | | Landfill gas-to-energy | 0.2 | 1.7 | — | 1.9 | | Processing | 1.1 | 0.5 | 22.8 | 24.4 | | National Accounts | — | — | 44.8 | 44.8 | | Total revenues | 83.9 | 111.0 | 67.7 | 262.6 | - Rebates to customers for recycled or organic materials, recorded as a reduction of revenues, amounted to **$6.6 million** in Q1 2023, up from $3.8 million in Q1 2022[67](index=67&type=chunk) [4. INTANGIBLE ASSETS](index=11&type=section&id=4.%20INTANGIBLE%20ASSETS) This note provides details on the company's intangible assets, including their carrying values and amortization expenses Intangible Assets Balance | Intangible Asset Type | Balance, December 31, 2022 ($M) | Balance, March 31, 2023 ($M) | | :-------------------- | :------------------------------ | :--------------------------- | | Not-to-Compete Covenants | 7.1 | 6.6 | | Customer Relationships | 81.0 | 78.0 | | Trade Names | 3.7 | 3.1 | | Total | 91.8 | 87.7 | - Intangible amortization expense was **$4.1 million** in Q1 2023, up from $3.8 million in Q1 2022[69](index=69&type=chunk) Estimated Future Amortization Expense | Fiscal Year Ending December 31 | Estimated Future Amortization Expense ($M) | | :----------------------------- | :----------------------------------------- | | 2023 | 12.1 | | 2024 | 15.5 | | 2025 | 14.4 | | 2026 | 12.7 | | 2027 | 11.3 | | Thereafter | 21.7 | [5. OTHER ACCRUED LIABILITIES](index=11&type=section&id=5.%20OTHER%20ACCRUED%20LIABILITIES) This note details various accrued liabilities, including self-insurance reserves and accrued capital expenditures Other Accrued Liabilities | Other Accrued Liabilities | March 31, 2023 ($M) | December 31, 2022 ($M) | | :------------------------ | :------------------ | :--------------------- | | Self insurance reserve | 7.7 | 7.4 | | Accrued capital expenditures | 4.0 | 10.8 | | Other accrued liabilities | 23.3 | 28.0 | | Total | 35.0 | 46.2 | - Total other accrued liabilities decreased from **$46.2 million** at December 31, 2022, to **$35.0 million** at March 31, 2023, primarily due to a decrease in accrued capital expenditures and other accrued liabilities[42](index=42&type=chunk) [6. ACCRUED FINAL CAPPING, CLOSURE AND POST CLOSURE](index=12&type=section&id=6.%20ACCRUED%20FINAL%20CAPPING,%20CLOSURE%20AND%20POST%20CLOSURE) This note explains the company's accruals for future landfill capping, closure, and post-closure costs - The company accrues for costs associated with final capping, closure, and post-closure of landfills, estimating future costs to determine expense per ton of waste[71](index=71&type=chunk) Accrued Final Capping, Closure and Post-Closure Liabilities | Metric | Three Months Ended March 31, 2023 ($M) | Three Months Ended March 31, 2022 ($M) | | :---------------------- | :------------------------------------- | :------------------------------------- | | Beginning balance | 113.7 | 86.9 | | Obligations incurred | 1.2 | 1.0 | | Accretion expense | 2.4 | 1.9 | | Obligations settled | (1.2) | (0.9) | | Ending balance | 116.2 | 88.8 | - Accrued final capping, closure, and post-closure liabilities increased from **$113.7 million** at the beginning of Q1 2023 to **$116.2 million** at the end of the period[43](index=43&type=chunk) [7. DEBT](index=13&type=section&id=7.%20DEBT) This note details the company's various debt instruments, including term loans, revolving credit facilities, and tax-exempt bonds Debt Instruments | Debt Instrument | March 31, 2023 ($M) | December 31, 2022 ($M) | | :---------------------------------- | :------------------ | :--------------------- | | Term Loan A Facility | 350.0 | 350.0 | | Revolving Credit Facility | — | 6.0 | | Tax-Exempt Bonds | 197.0 | 197.0 | | Finance leases | 48.8 | 49.8 | | Notes payable | 0.3 | 0.7 | | Principal amount of debt | 596.1 | 603.5 | | Debt less unamortized debt issuance costs | 586.8 | 594.0 | | Less—current maturities of debt | 9.3 | 9.0 | | Debt, less current portion | 577.6 | 585.0 | - The company entered into a commitment letter in April 2023 for secured bridge financing up to **$375 million** and a Term Loan A up to **$400 million** to fund the acquisition of GFL Subsidiaries for approximately **$525 million**[46](index=46&type=chunk) - The Amended and Restated Credit Agreement provides for a **$350 million** Term Loan Facility and a **$300 million** Revolving Credit Facility, maturing in December 2026[47](index=47&type=chunk) [8. COMMITMENTS AND CONTINGENCIES](index=15&type=section&id=8.%20COMMITMENTS%20AND%20CONTINGENCIES) This note outlines the company's legal proceedings, environmental remediation liabilities, and other significant commitments - The company is subject to various judicial and administrative proceedings, including environmental damage claims and permit-related actions, and accrues for legal proceedings when losses are probable and estimable[79](index=79&type=chunk) - An aggregate accrual of **$0.8 million** was recorded for outstanding legal proceedings as of March 31, 2023[79](index=79&type=chunk) - Environmental remediation liabilities are accrued when probable and reasonably estimable, with estimated costs inflated to payment time and discounted to present value using risk-free rates between 1.5% and 4.1%[53](index=53&type=chunk) Environmental Remediation Liabilities | Environmental Remediation Liabilities | March 31, 2023 ($M) | March 31, 2022 ($M) | | :------------------------------------ | :------------------ | :------------------ | | Beginning balance | 6.3 | 5.9 | | Accretion expense | 0.03 | 0.03 | | Obligations settled | (0.02) | (0.05) | | Ending balance | 6.3 | 5.9 | | Less: current portion | 1.1 | 0.3 | | Long-term portion | 5.2 | 5.6 | [9. STOCKHOLDERS' EQUITY](index=17&type=section&id=9.%20STOCKHOLDERS'%20EQUITY) This note details changes in stockholders' equity, including stock-based compensation and accumulated other comprehensive income - Under the 2016 Incentive Plan, **649 thousand** Class A common stock equivalents were available for future grant as of March 31, 2023[54](index=54&type=chunk) - Stock-based compensation expense for stock options was **$0.1 million** in Q1 2023, compared to $0.02 million in Q1 2022[85](index=85&type=chunk) Other Stock Awards Activity | Other Stock Awards Activity | Outstanding, Dec 31, 2022 | Granted | Vested | Forfeited | Outstanding, Mar 31, 2023 | Unvested, Mar 31, 2023 | | :-------------------------- | :------------------------ | :------ | :----- | :-------- | :------------------------ | :--------------------- | | Restricted Stock Awards, Units, Performance Units (1) | 169 | 89 | (50) | (2) | 206 | 365 | - Stock-based compensation expense related to restricted stock awards, restricted stock units, and performance stock units was **$1.8 million** in Q1 2023, down from $2.2 million in Q1 2022[58](index=58&type=chunk) - Total unrecognized stock-based compensation expense for outstanding restricted stock awards, units, and performance units was **$0.03 million**, **$6.0 million**, and **$8.0 million**, respectively, as of March 31, 2023[87](index=87&type=chunk) Accumulated Other Comprehensive Income, Net of Tax | Accumulated Other Comprehensive Income, Net of Tax | Balance, Dec 31, 2022 ($M) | Net Current-Period Other Comprehensive Loss, Net of Tax ($M) | Balance, Mar 31, 2023 ($M) | | :----------------------------------------------- | :------------------------- | :---------------------------------------------------------- | :------------------------- | | Interest Rate Swaps | 7.5 | (1.8) | 5.8 | [10. EARNINGS PER SHARE](index=19&type=section&id=10.%20EARNINGS%20PER%20SHARE) This note details the calculation of basic and diluted earnings per share, including the impact of potentially dilutive securities - Basic EPS is calculated by dividing net income by weighted average common shares outstanding, while diluted EPS includes potentially dilutive shares using the treasury stock method[60](index=60&type=chunk) Earnings Per Share Calculation | Metric | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :-------------------------------------- | :-------------------------------- | :-------------------------------- | | Net income | $3.5 M | $4.2 M | | Basic weighted average common shares outstanding | 51,770 thousand | 51,490 thousand | | Basic earnings per common share | $0.07 | $0.08 | | Diluted weighted average common shares outstanding | 51,869 thousand | 51,657 thousand | | Diluted earnings per common share | $0.07 | $0.08 | [11. OTHER ITEMS AND CHARGES](index=20&type=section&id=11.%20OTHER%20ITEMS%20AND%20CHARGES) This note outlines significant non-recurring or specific charges, such as those related to acquisition activities - Charges from acquisition activities were **$2.9 million** in Q1 2023, up from $2.0 million in Q1 2022, primarily for legal, consulting, and integration costs[89](index=89&type=chunk)[206](index=206&type=chunk) [12. FAIR VALUE OF FINANCIAL INSTRUMENTS](index=20&type=section&id=12.%20FAIR%20VALUE%20OF%20FINANCIAL%20INSTRUMENTS) This note describes the fair value measurement of financial instruments using a three-tier hierarchy - The company uses a three-tier fair value hierarchy (Level 1, 2, 3) for financial instruments, maximizing market prices and observable inputs[96](index=96&type=chunk) - Financial instruments include cash, receivables, restricted investment securities, interest rate derivatives, contingent consideration, payables, and debt[97](index=97&type=chunk) Fair Value of Financial Instruments (March 31, 2023) | Financial Instrument (March 31, 2023) | Level 1 ($M) | Level 2 ($M) | Level 3 ($M) | | :------------------------------------ | :----------- | :----------- | :----------- | | Restricted investment securities | 2.0 | — | — | | Interest rate swaps (assets) | — | 10.1 | — | | Contingent consideration (liabilities) | — | — | 0.4 | | Interest rate swaps (liabilities) | — | 0.7 | — | - The fair value of fixed rate debt was approximately **$186.8 million**, with a carrying value of $197.0 million as of March 31, 2023, classified as Level 2[99](index=99&type=chunk) [13. SEGMENT REPORTING](index=22&type=section&id=13.%20SEGMENT%20REPORTING) This note provides financial information by operating segment, including revenues, operating income, and assets - The company operates through two solid waste regional segments (Eastern and Western) and a Resource Solutions segment, with Corporate Entities covering administrative functions[101](index=101&type=chunk)[63](index=63&type=chunk) Segment Performance (Q1 2023) | Segment (Q1 2023) | Outside Revenues ($M) | Inter-company Revenues ($M) | Depreciation and Amortization ($M) | Operating Income (Loss) ($M) | Total Assets ($M) | | :---------------- | :-------------------- | :-------------------------- | :--------------------------------- | :--------------------------- | :---------------- | | Eastern | 83.9 | 19.4 | 11.9 | 2.1 | 364.9 | | Western | 111.0 | 36.6 | 17.7 | 12.4 | 744.1 | | Resource Solutions | 67.7 | 3.5 | 3.1 | (1.9) | 195.0 | | Corporate Entities | — | — | 0.8 | (2.4) | 115.9 | | Eliminations | — | (59.4) | — | — | — | | Total | 262.6 | — | 33.4 | 10.3 | 1,419.9 | Revenue by Service (Q1 2023) | Revenue by Service (Q1 2023) | Amount ($M) | Q1 2022 Amount ($M) | | :--------------------------- | :---------- | :------------------ | | Collection | 140.0 | 119.5 | | Disposal | 51.5 | 43.2 | | Power generation | 1.9 | 2.7 | | Processing (Solid Waste) | 1.6 | 1.8 | | Processing (Resource Solutions) | 22.8 | 27.4 | | National Accounts | 44.8 | 39.5 | | Total revenues | 262.6 | 234.0 | [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=23&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section provides management's perspective on the company's financial performance, condition, and future outlook, discussing revenues, operating expenses, segment results, liquidity, capital resources, and key operational factors - The company experienced revenue growth driven by price increases and acquisitions, but net income decreased due to higher operating expenses, interest expense, and acquisition-related charges[28](index=28&type=chunk)[110](index=110&type=chunk)[117](index=117&type=chunk)[120](index=120&type=chunk) [Company Overview](index=24&type=section&id=Company%20Overview) This section provides a brief introduction to Casella Waste Systems, Inc., outlining its business model and operational footprint - Casella Waste Systems, Inc. is a regional, vertically integrated solid waste services company providing collection, disposal, transfer, recycling, and organics services across seven northeastern states[107](index=107&type=chunk) - As of April 15, 2023, the company owned/operated 50 solid waste collection operations, 66 transfer stations, 26 recycling facilities, 8 Subtitle D landfills, 3 landfill gas-to-energy facilities, and 1 C&D landfill[107](index=107&type=chunk) [Results of Operations](index=24&type=section&id=Results%20of%20Operations) This section analyzes the company's financial performance, focusing on revenue drivers, operating expenses, and profitability [Revenues](index=24&type=section&id=Revenues) This section details the sources and changes in the company's revenue, including solid waste and resource solutions operations Revenue by Category | Revenue Category (Q1 2023) | Amount ($M) | % of Total | Q1 2022 Amount ($M) | % of Total | $ Change ($M) | | :------------------------- | :---------- | :--------- | :------------------ | :--------- | :------------ | | Collection | 140.0 | 53.3% | 119.5 | 51.1% | 20.5 | | Disposal | 51.5 | 19.6% | 43.2 | 18.4% | 8.3 | | Power | 1.9 | 0.7% | 2.7 | 1.1% | (0.8) | | Processing (Solid Waste) | 1.5 | 0.6% | 1.8 | 0.8% | (0.3) | | Solid waste operations | 194.9 | 74.2% | 167.2 | 71.4% | 27.7 | | Processing (Resource Solutions) | 22.9 | 8.7% | 27.3 | 11.7% | (4.4) | | National Accounts | 44.8 | 17.1% | 39.5 | 16.9% | 5.3 | | Resource Solutions operations | 67.7 | 25.8% | 66.8 | 28.6% | 0.9 | | Total revenues | 262.6 | 100.0% | 234.0 | 100.0% | 28.6 | Solid Waste Revenue Change Drivers (Q1 2023 vs Q1 2022) | Solid Waste Revenue Change Drivers (Q1 2023 vs Q1 2022) | Amount ($M) | % Growth | | :---------------------------------------------------- | :---------- | :------- | | Price | 14.7 | 8.8% | | Volume | 0.6 | 0.3% | | Surcharges and other fees | 10.3 | 6.3% | | Commodity price and volume | (1.0) | (0.6)% | | Acquisitions | 3.1 | 1.8% | | Total Solid Waste Revenues | 27.7 | 16.6% | - Resource Solutions revenues increased by **$0.9 million**, driven by higher processing volumes ($4.8M) and National Accounts business ($4.5M), but partially offset by lower recycled commodity pricing ($-11.1M)[115](index=115&type=chunk) [Operating Expenses](index=26&type=section&id=Operating%20Expenses) This section analyzes the components of operating expenses, including cost of operations, general and administration, and depreciation Operating Expense Summary | Operating Expense Category | Q1 2023 ($M) | % of Total Revenues | Q1 2022 ($M) | % of Total Revenues | $ Change ($M) | | :------------------------- | :----------- | :------------------ | :----------- | :------------------ | :------------ | | Cost of operations | 180.2 | 68.6% | 162.5 | 69.4% | 17.7 | | General and administration | 35.7 | 13.6% | 29.8 | 12.7% | 5.9 | | Depreciation and amortization | 33.4 | 12.7% | 29.4 | 12.6% | 4.0 | - Cost of operations increased by **$17.7 million**, primarily due to higher direct costs (hauling, transportation, disposal), maintenance and repair, direct operational costs (host community fees, accretion, leachate disposal), and fuel costs, driven by higher volumes, acquisitions, and inflation[117](index=117&type=chunk)[204](index=204&type=chunk) - General and administration expense increased by **$5.9 million**, mainly due to business growth, wage inflation, higher bad debt expense, and increased overhead costs[118](index=118&type=chunk)[205](index=205&type=chunk) - Depreciation and amortization expense increased by **$4.0 million**, attributed to acquisition activity, increased fleet investments, and higher landfill amortization due to increased volumes and cost assumption changes[119](index=119&type=chunk) [Expense from Acquisition Activities](index=29&type=section&id=Expense%20from%20Acquisition%20Activities) This section details the expenses incurred from acquisition-related activities, including legal and consulting fees - Acquisition-related expenses increased to **$2.9 million** in Q1 2023 from $2.0 million in Q1 2022, primarily for legal, consulting, and integration costs[206](index=206&type=chunk) [Other Expenses](index=29&type=section&id=Other%20Expenses) This section discusses other non-operating expenses, such as net interest expense, and their impact on financial results - Net interest expense increased by **$1.1 million** in Q1 2023 compared to the prior year, driven by rising interest rates and higher average debt balances from new bond issuances[120](index=120&type=chunk) [Provision for Income Taxes](index=29&type=section&id=Provision%20for%20Income%20Taxes) This section analyzes the company's income tax provision and effective tax rate, including factors influencing tax expense - The provision for income taxes decreased by **$0.2 million** in Q1 2023, with an effective tax rate of **18.2%** (compared to 18.6% in Q1 2022), influenced by equity compensation deductions[121](index=121&type=chunk) - The company expects to utilize all pre-2018 (**$5.8 million**) and post-2017 (**$46.5 million**) net operating losses in fiscal year 2023[122](index=122&type=chunk) [Segment Reporting](index=29&type=section&id=Segment%20Reporting) This section provides a detailed analysis of the financial performance of each operating segment, including revenue and operating income - Segment performance varied, with the Western region showing strong operating income growth driven by acquisitions and pricing, while Resource Solutions experienced a decline due to unfavorable commodity pricing[131](index=131&type=chunk)[140](index=140&type=chunk)[141](index=141&type=chunk) Segment Revenues | Segment (Revenues) | Q1 2023 ($M) | Q1 2022 ($M) | $ Change ($M) | | :----------------- | :----------- | :----------- | :------------ | | Eastern | 83.9 | 71.3 | 12.6 | | Western | 111.0 | 95.8 | 15.2 | | Resource Solutions | 67.7 | 66.9 | 0.8 | | Total revenues | 262.6 | 234.0 | 28.6 | Segment Operating Income (Loss) | Segment (Operating Income (Loss)) | Q1 2023 ($M) | Q1 2022 ($M) | $ Change ($M) | | :-------------------------------- | :----------- | :----------- | :------------ | | Eastern | 2.1 | (2.2) | 4.3 | | Western | 12.5 | 9.3 | 3.2 | | Resource Solutions | (1.9) | 3.7 | (5.6) | | Corporate Entities | (2.4) | (0.6) | (1.8) | | Total Operating Income | 10.3 | 10.2 | 0.1 | - Eastern Region operating income increased by **$4.3 million**, driven by revenue growth from favorable collection and disposal pricing, and higher surcharges, offsetting increased operating costs[131](index=131&type=chunk)[126](index=126&type=chunk)[127](index=127&type=chunk) - Western Region operating income increased by **$3.2 million**, primarily due to revenue growth from favorable pricing, higher disposal volumes, and acquisitions, despite increased operating costs[140](index=140&type=chunk)[129](index=129&type=chunk)[137](index=137&type=chunk) - Resource Solutions operating income decreased by **$5.6 million**, as revenue growth was more than offset by increased direct costs (hauling, transportation, disposal, processing diversion costs) and higher general and administration expenses[141](index=141&type=chunk)[142](index=142&type=chunk) - Corporate Entities operating loss increased by **$1.8 million**, mainly due to unallocated acquisition-related expenses[143](index=143&type=chunk) [Liquidity and Capital Resources](index=33&type=section&id=Liquidity%20and%20Capital%20Resources) This section assesses the company's ability to meet its short-term and long-term financial obligations and fund operations - The company has **$272.3 million** of undrawn capacity from its **$300.0 million** revolving credit facility as of March 31, 2023, to meet liquidity needs[144](index=144&type=chunk) - Working capital, net (current assets excluding cash minus current liabilities) increased by **$23.8 million**, from $(41.3) million at Dec 31, 2022, to $(17.5) million at March 31, 2023[146](index=146&type=chunk) Cash Flow Activity | Cash Flow Activity ($M) | Q1 2023 | Q1 2022 | $ Change | | :---------------------- | :------ | :------ | :------- | | Operating Activities | 16.1 | 24.7 | (8.6) | | Investing Activities | (17.7) | (62.5) | 44.8 | | Financing Activities | (9.3) | 16.6 | (25.9) | - Net cash provided by operating activities decreased by **$8.6 million**, primarily due to an unfavorable impact from changes in accrued expenses, contract liabilities, and accounts payable, partially offset by a favorable impact from accounts receivable[149](index=149&type=chunk) - Net cash used in investing activities decreased by **$44.8 million**, mainly due to lower acquisition payments (**$0.3 million** in Q1 2023 vs. $49.8 million in Q1 2022), partially offset by higher capital expenditures (**$17.9 million** in Q1 2023 vs. $12.9 million in Q1 2022)[150](index=150&type=chunk) - Net cash used in financing activities was **$(9.3) million**, a decrease of $25.9 million from Q1 2022, primarily due to debt borrowings in the prior year period for acquisition activity[151](index=151&type=chunk)[153](index=153&type=chunk) - The company was in compliance with all financial covenants (maximum consolidated net leverage ratio of **2.06** vs. 4.00, minimum interest coverage ratio of **10.85** vs. 3.00) under its Amended and Restated Credit Agreement as of March 31, 2023[154](index=154&type=chunk) - In April 2023, the company secured bridge financing and Term Loan A commitments to fund the **$525 million** acquisition of GFL Subsidiaries, expected to close by Q3 2023[157](index=157&type=chunk) [Inflation](index=38&type=section&id=Inflation) This section discusses the impact of inflationary cost increases on the company's operating margins and cash flows - Inflationary cost increases, particularly in fuel, labor, and capital items, have materially impacted operating margins and cash flows[159](index=159&type=chunk) - The company uses flexible pricing structures and cost recovery fees (e.g., E&E Fee) to mitigate inflation's impact, but competitive factors may require absorbing some cost increases[159](index=159&type=chunk) [Regional Economic Conditions](index=38&type=section&id=Regional%20Economic%20Conditions) This section addresses how regional economic downturns and other factors in the northeastern US affect the company's business - The company's business is susceptible to economic downturns and other regional factors (regulations, severe weather) in the northeastern United States[160](index=160&type=chunk) [Seasonality and Severe Weather](index=38&type=section&id=Seasonality%20and%20Severe%20Weather) This section describes the seasonal variations in waste volumes and the impact of severe weather on operations and revenues - Transfer and disposal revenues are historically higher in late spring, summer, and early fall, with lower waste volumes (especially C&D) in winter months in the northeastern US[161](index=161&type=chunk) - Inclement weather can adversely affect operations by increasing costs, delaying services, or reducing waste volumes, while severe weather can also favorably increase waste volumes in some cases[161](index=161&type=chunk) - The Resource Solutions segment's processing business typically sees increased fiber volumes from November to mid-January due to holiday retail activity[161](index=161&type=chunk) [Critical Accounting Estimates and Assumptions](index=39&type=section&id=Critical%20Accounting%20Estimates%20and%20Assumptions) This section highlights key accounting estimates and judgments that significantly impact the financial statements - Financial statements rely on management's ongoing estimates and judgments, which are based on historical experience and various reasonable factors, but actual results may differ under different assumptions[163](index=163&type=chunk) [New Accounting Pronouncements](index=39&type=section&id=New%20Accounting%20Pronouncements) This section refers to Note 2 for details on recently adopted or issued accounting standards - Refer to Note 2, Accounting Changes, for a description of new accounting standards that may affect the company[164](index=164&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=39&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company is exposed to market risks from fuel prices, commodity prices, and interest rates, and employs various strategies, including hedging and cost recovery programs, to mitigate these risks [Fuel Price Risk](index=39&type=section&id=Fuel%20Price%20Risk) This section discusses the company's exposure to fluctuating fuel prices and strategies to mitigate their impact on operating expenses - Fuel prices are unpredictable and fluctuate due to geopolitical events, supply/demand, and other factors, increasing operating expenses[166](index=166&type=chunk) - The company uses an energy and environmental fee (E&E Fee) with a fuel cost recovery program to offset diesel fuel price increases, though there is a timing lag in matching cost changes[166](index=166&type=chunk) - A **$0.50 per gallon** change in diesel fuel price would change direct fuel costs by approximately **$4.9 million** per year, offset by an estimated **$5.8 million** change in E&E Fees[174](index=174&type=chunk) Fuel Costs | Fuel Costs | Q1 2023 ($M) | % of Revenue | Q1 2022 ($M) | % of Revenue | | :--------- | :----------- | :----------- | :----------- | :----------- | | Total | 10.9 | 4.2% | 9.9 | 4.2% | [Commodity Price Risk](index=40&type=section&id=Commodity%20Price%20Risk) This section addresses the company's exposure to price fluctuations in recycled materials and mitigation strategies - The company markets various recycled materials (fibers, plastics, glass, metals) and mitigates price fluctuations through strategies like floating sustainability recycling adjustment fees (SRA Fees), revenue sharing, processing fees, and fixed-price contracts[168](index=168&type=chunk) - As of March 31, 2023, the company was not party to any commodity hedging agreements[168](index=168&type=chunk) [Interest Rate Risk](index=40&type=section&id=Interest%20Rate%20Risk) This section details the company's exposure to variable interest rates on debt and its use of derivative agreements to manage this risk - The company uses interest rate derivative agreements as cash flow hedges to reduce exposure to adverse movements in variable interest rates on long-term debt[169](index=169&type=chunk) - As of March 31, 2023, active interest rate derivative agreements had a total notional amount of **$190.0 million**, with forward starting agreements totaling **$60.0 million**[169](index=169&type=chunk) - The company had **$246.1 million** of fixed rate debt and **$160.0 million** of long-term debt exposed to interest rate risk as of March 31, 2023. A **100 basis point** change in the variable rate portion would change annual interest expense by approximately **$1.6 million**[169](index=169&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=41&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management, including the CEO and CFO, evaluated the effectiveness of disclosure controls and procedures, concluding they were effective as of March 31, 2023, with no material changes in internal controls over financial reporting during the quarter - Disclosure controls and procedures were evaluated and deemed effective at a reasonable assurance level as of March 31, 2023[179](index=179&type=chunk) - No material changes in internal control over financial reporting occurred during Q1 2023[179](index=179&type=chunk) [PART II. OTHER INFORMATION](index=42&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section includes disclosures on legal proceedings, risk factors, exhibits, and corporate signatures [ITEM 1. LEGAL PROCEEDINGS](index=42&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) This section refers to Note 8 for details on general legal proceedings and confirms no environmental matters with potential monetary sanctions of $1.0 million or more require separate disclosure - Information on general legal proceedings is provided in Note 8, Commitments and Contingencies[181](index=181&type=chunk) - No environmental matters involving governmental authorities with potential monetary sanctions of **$1.0 million** or more require disclosure[181](index=181&type=chunk) [ITEM 1A. RISK FACTORS](index=42&type=section&id=ITEM%201A.%20RISK%20FACTORS) The company's business is subject to various risks, as detailed in its Annual Report on Form 10-K for fiscal year 2022, which could materially affect its business, results of operations, financial condition, and liquidity - Key risks are identified in Item 1A, "Risk Factors" of the Annual Report on Form 10-K for fiscal year 2022[182](index=182&type=chunk) [ITEM 6. EXHIBITS](index=43&type=section&id=ITEM%206.%20EXHIBITS) This section lists the exhibits filed with the Form 10-Q, including employment agreements, certifications, and XBRL taxonomy documents for the financial statements - Exhibits include employment agreements, Section 302 and 906 certifications, and various Inline XBRL taxonomy documents for the consolidated financial statements[185](index=185&type=chunk)[186](index=186&type=chunk) [SIGNATURES](index=43&type=section&id=SIGNATURES) The report is duly signed on behalf of Casella Waste Systems, Inc. by its President and Chief Financial Officer, Edmond R. Coletta, and Vice President and Chief Accounting Officer, Kevin Drohan, on April 28, 2023 - The report was signed by Edmond R. Coletta (President and CFO) and Kevin Drohan (VP and Chief Accounting Officer) on April 28, 2023[188](index=188&type=chunk)[189](index=189&type=chunk)

Financial Data and Key Metrics Changes - The company reported revenues of $272.1 million for Q4 2022, an increase of $30.3 million or 12.5% year-over-year, with 3.6% driven by acquisitions and 8.9% from organic growth [87] - Adjusted EBITDA for the quarter was $56.2 million, up $4.8 million or 9.3% year-over-year [88] - Adjusted free cash flow for fiscal year 2022 was $111.2 million, an increase of $15.9 million or close to 17% year-over-year [36] Business Line Data and Key Metrics Changes - Solid waste revenues increased by 13.2% year-over-year, with pricing up 6.2% and acquisition growth of 2.2% [96] - Resource Solutions revenues were up 10.6% year-over-year, with 7.5% growth from acquisitions and 6.9% volume growth, but offset by a 21.5% decline in commodity prices [34] - Solid waste adjusted EBITDA was $51.3 million in the quarter, up $7.6 million year-over-year [97] Market Data and Key Metrics Changes - The average landfill price per ton increased by 6.7% year-over-year, helping to offset inflation and regulatory costs [84] - Commodity prices saw a significant decline, with average commodity revenue per ton down 67% year-over-year [34] - The company expects solid waste pricing to increase by 6% to 7% in fiscal year 2023 [37] Company Strategy and Development Direction - The company is focused on disciplined growth, with a strong balance sheet and low leverage, positioning itself well for future growth [3] - The McKean Landfill rail project is set to begin operations in 2024, providing a long-term disposal outlet for customers in the Northeast [4] - The company has a robust acquisition pipeline with over $500 million in identified opportunities and expects strong activity in 2023 [32] Management's Comments on Operating Environment and Future Outlook - Management noted that inflationary pressures were addressed through pricing programs, with solid waste pricing up 6.2% [8] - The company anticipates adjusted EBITDA growth of 8.5% to 10.9% year-over-year for 2023, with a slight margin expansion expected [11] - Management expressed confidence in the company's ability to navigate the current economic environment and achieve long-term growth targets [29] Other Important Information - The company has received credit rating upgrades from both Standard & Poor's and Moody's, reflecting improvements in its balance sheet [98] - The company has implemented a sustainability-linked loan feature to align its financial goals with sustainability objectives [5] - The company expects to incur cash flow headwinds in 2023 due to increased cash interest, taxes, and closure costs [38] Q&A Session Summary Question: Can you clarify the special bonuses included in the guidance? - Management confirmed that the special bonuses were included in the guidance [41] Question: What is the status of the $30 million under LOI? - Management indicated that the acquisition is in core collection and disposal and is expected to close by the end of Q2 [47] Question: Can you break down the individual business margins? - Management noted that fuel is a slight headwind for the next year, primarily in the first half, while pricing and operating programs are expected to drive margin improvements [66] Question: What are the expectations for commodity prices? - Management expects commodity prices to stabilize and potentially increase throughout the year, with a projected average of $78 per ton [146] Question: How is the permitting process for Hyland and Hakes facilities progressing? - Management reported that the permitting process is moving forward without significant issues [157]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ____________________________________________________ FORM 10-K ____________________________________________________ (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2022 Or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 000-23211 CAS ...

Casella Waste Systems, Inc. 1 Baird Global Industrial Conference November 8, 2022 Safe Harbor Statement Certain matters discussed in this press release, including, but not limited to, the statements regarding our intentions, beliefs or current expectations concerning, among other things, our financial performance; financial condition; operations and services; prospects; growth; strategies; anticipated impacts from future or completed acquisitions; and guidance for fiscal year 2022, are "forward-looking stat ...

Casella Waste Systems, Inc. (NASDAQ:CWST) Q3 2022 Earnings Conference Call October 28, 2022 10:00 AM ET Company Participants Charlie Wohlhuter - Director, Investor Relations John Casella - Chairman, CEO & Secretary Edmond Coletta - President & CFO Jason Mead - SVP, Finance & Treasurer Sean Steves - SVP & COO, Solid Waste Operations Conference Call Participants Sean Eastman - KeyBanc Capital Markets Patrick Brown - Raymond James & Associates Stephanie Moore - Jefferies Michael Hoffman - Stifel, Nicolaus & Co ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Delaware 03-0338873 (State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.) 25 Greens Hill Lane, Rutland, Vermont 05701 (Address of principal executive offices) (Zip Code) Securities registered pursuant to Section 12(b) of the Act: Title of each classTrading Symbol(s)Name of each exchange on which registered Class A common stock, $0.01 par value per share CWST The Nasdaq Stock Market LLC (Nasda ...

Casella Waste Systems, Inc. (NASDAQ:CWST) Q2 2022 Earnings Conference Call July 29, 2022 10:00 AM ET Company Participants Joseph Fusco – Vice President Charlie Wohlhuter – Director-Investor Relations John Casella – Chairman and Chief Executive Officer Ned Coletta – President and Chief Financial Officer Sean Steves – Senior Vice President and Chief Operating Officer, Solid Waste Operations Jason Mead – Senior Vice President of Finance and Treasurer Conference Call Participants Tyler Brown – Raymond James Mic ...

PART I [Financial Statements](index=2&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) Unaudited consolidated financial statements for Q2 2022 show total assets at **$1.37 billion**, revenues at **$283.7 million**, and net income at **$17.8 million**, with detailed notes on key accounting policies and segment performance Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2022 (Unaudited) | December 31, 2021 | | :--- | :--- | :--- | | **Total current assets** | $181,156 | $146,479 | | **Total assets** | $1,370,719 | $1,283,580 | | **Total current liabilities** | $163,014 | $152,193 | | **Total liabilities** | $913,153 | $861,123 | | **Total stockholders' equity** | $457,566 | $422,457 | Consolidated Statement of Operations Highlights (in thousands, except per share data) | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | **Revenues** | $283,666 | $215,875 | $517,693 | $405,406 | | **Operating income** | $31,719 | $21,946 | $41,887 | $33,955 | | **Net income** | $17,796 | $11,783 | $21,986 | $16,094 | | **Diluted earnings per common share** | $0.34 | $0.23 | $0.43 | $0.31 | Consolidated Statement of Cash Flows Highlights (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $92,251 | $79,013 | | **Net cash used in investing activities** | $(110,611) | $(61,147) | | **Net cash provided by (used in) financing activities** | $24,866 | $(5,031) | [Note 1: Basis of Presentation](index=8&type=section&id=1.%20BASIS%20OF%20PRESENTATION) The company operates as a regional, vertically integrated solid waste services company in seven northeastern U.S. states, managing operations through three segments: Eastern, Western, and Resource Solutions, with financial statements prepared under U.S. GAAP - The company provides integrated solid waste services in Vermont, New Hampshire, New York, Massachusetts, Connecticut, Maine, and Pennsylvania[23](index=23&type=chunk) - Operations are managed through two geographic solid waste segments (Eastern and Western) and one resource-renewal segment (Resource Solutions)[23](index=23&type=chunk) [Note 3: Revenue Recognition](index=9&type=section&id=3.%20REVENUE%20RECOGNITION) Total revenues for Q2 2022 increased to **$283.7 million** from **$215.9 million** in Q2 2021, with growth across all segments and collection services as the largest revenue source Revenues by Operating Segment (in thousands) | Segment | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | | :--- | :--- | :--- | | Eastern | $87,263 | $61,058 | | Western | $114,884 | $98,852 | | Resource Solutions | $81,519 | $55,965 | | **Total revenues** | **$283,666** | **$215,875** | - Accounts receivable, net, increased to **$108.3 million** as of June 30, 2022, from **$87.0 million** as of December 31, 2021, reflecting revenue growth[6](index=6&type=chunk)[33](index=33&type=chunk) [Note 4: Business Combinations](index=11&type=section&id=4.%20BUSINESS%20COMBINATIONS) In H1 2022, the company acquired eight businesses for **$58.9 million**, adding **$28.8 million** in goodwill, a significant increase from four businesses acquired for **$4.9 million** in H1 2021 Acquisition Summary (in thousands) | Metric | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | | **Total consideration** | $58,895 | $4,883 | | **Cash used in acquisitions** | $55,053 | $4,378 | | **Excess purchase price allocated to goodwill** | $28,761 | $1,757 | - Acquisitions in H1 2022 included a full-service collection business, a closed waste-to-energy facility being converted to a transfer station, and several tuck-in collection businesses[34](index=34&type=chunk) [Note 7: Debt](index=15&type=section&id=7.%20DEBT) Total principal debt increased to **$593.7 million** as of June 30, 2022, primarily due to a **$35.0 million** issuance of Vermont Bonds, with **$190.0 million** of debt hedged by interest rate swaps - In Q2 2022, the company issued **$35.0 million** of Vermont Economic Development Authority Solid Waste Disposal Revenue Bonds (Series 2022A-1) with a 5.00% interest rate, maturing in 2052[46](index=46&type=chunk) Debt Composition (in thousands) | Debt Instrument | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Term Loan Facility | $350,000 | $350,000 | | Tax-Exempt Bonds | $197,000 | $162,000 | | Finance leases & Notes payable | $46,662 | $50,570 | | **Total Principal Debt** | **$593,662** | **$562,570** | - As of June 30, 2022, the company had active interest rate derivative agreements with a total notional amount of **$190.0 million** to hedge variable rate debt[48](index=48&type=chunk) [Note 13: Segment Reporting](index=24&type=section&id=13.%20SEGMENT%20REPORTING) All operating segments reported year-over-year revenue growth for Q2 2022, with the Western region generating the highest outside revenues at **$114.9 million** and operating income at **$19.9 million**, while Resource Solutions saw the largest percentage revenue growth Segment Performance - Three Months Ended June 30, 2022 (in thousands) | Segment | Outside Revenues | Operating Income (loss) | Total Assets | | :--- | :--- | :--- | :--- | | Eastern | $87,263 | $6,150 | $362,942 | | Western | $114,884 | $19,897 | $697,252 | | Resource Solutions | $81,519 | $6,235 | $189,820 | | Corporate entities | $— | $(563) | $120,705 | [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=26&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management discusses a **31.4%** YoY revenue increase in Q2 2022 to **$283.7 million**, driven by acquisitions, pricing, and volumes, alongside rising operating costs due to inflation, while maintaining strong liquidity [Results of Operations](index=27&type=section&id=Results%20of%20Operations) Q2 2022 revenues increased by **$67.8 million** (**31.4%**) YoY, with solid waste up **26.4%** and Resource Solutions up **45.7%**, despite operating expenses rising due to inflation in fuel, labor, and third-party costs, leading to operating income growth to **$31.7 million** Solid Waste Revenues Growth Drivers (Q2 2022 vs Q2 2021) (in millions) | Driver | Amount (in millions) | % Growth Contribution | | :--- | :--- | :--- | | Price | $11.1 | 6.9% | | Volume | $2.6 | 1.6% | | Surcharges and other fees | $8.4 | 5.3% | | Acquisitions | $19.4 | 12.1% | | **Total Solid Waste Growth** | **$42.2** | **26.4%** | - Resource Solutions revenues grew by **$25.6 million** in Q2 2022, driven by acquisition activity (**$17.2 million**), higher non-processing revenues (**$5.9 million**), and favorable recycling commodity pricing (**$3.1 million**)[89](index=89&type=chunk) - Cost of operations as a percentage of revenues increased by **140 basis points** in Q2 2022 YoY, mainly due to higher fuel costs (**+200 bps**), third-party direct costs (**+90 bps**), and direct labor costs (**+10 bps**)[92](index=92&type=chunk) [Liquidity and Capital Resources](index=36&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity with **$271.8 million** available under its Revolving Credit Facility, with net cash from operations increasing to **$92.2 million** in H1 2022, while major cash uses included **$56.3 million** for acquisitions and **$54.9 million** for capital expenditures - The company has **$271.8 million** of undrawn capacity from its **$300.0 million** Revolving Credit Facility as of June 30, 2022[118](index=118&type=chunk) Summary of Cash Flow Activity (in millions) | Activity | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $92.2 | $79.0 | | Net cash used in investing activities | $(110.6) | $(61.1) | | Net cash provided by (used in) financing activities | $24.9 | $(5.0) | - Cash used for acquisitions increased significantly to **$56.3 million** in H1 2022 from **$5.5 million** in H1 2021, reflecting an active growth strategy[125](index=125&type=chunk) [Inflation](index=40&type=section&id=Inflation) Inflationary pressures, particularly in fuel and labor, materially affected operating margins and cash flows in H1 2022, but management believes flexible pricing, cost recovery fees, and efficiency programs help mitigate these impacts - Inflationary increases in costs, especially for fuel and labor, materially affected operating margins and cash flows during the first half of 2022[132](index=132&type=chunk) - The company utilizes flexible pricing, pass-through contract clauses, and an Energy and Environmental Fee (E&E Fee) to recover escalating costs[132](index=132&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=40&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company is exposed to market risks from interest rate volatility and commodity price fluctuations, managing interest rate risk on its variable-rate debt through derivative instruments, with **$190.0 million** of debt hedged as of June 30, 2022 - The company has interest rate risk related to approximately **$160.0 million** of unhedged variable-rate long-term debt as of June 30, 2022[139](index=139&type=chunk) - A hypothetical **100 basis point** increase in interest rates would change annual interest expense by approximately **$1.6 million**[139](index=139&type=chunk) - The company uses interest rate derivative agreements with a total notional amount of **$190.0 million** to hedge against adverse movements in interest rates[139](index=139&type=chunk) [Controls and Procedures](index=41&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of June 30, 2022, with no material changes to internal control over financial reporting during Q2 2022 - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of June 30, 2022[141](index=141&type=chunk) - No changes in internal control over financial reporting occurred during Q2 2022 that materially affected, or are reasonably likely to materially affect, internal controls[141](index=141&type=chunk) PART II [Legal Proceedings](index=42&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) The company is subject to various legal proceedings, including an ongoing appeal by the Conservation Law Foundation (CLF) against a landfill expansion permit, with an aggregate accrual of **$1.291 million** for outstanding legal proceedings as of June 30, 2022 - The company is defending against an appeal by the Conservation Law Foundation (CLF) regarding the expansion permit for the North Country Environmental Services, Inc. (NCES) landfill in Bethlehem, New Hampshire[54](index=54&type=chunk) - An aggregate accrual of **$1.291 million** has been recorded for outstanding legal proceedings as of June 30, 2022[52](index=52&type=chunk) [Risk Factors](index=43&type=section&id=ITEM%201A.%20RISK%20FACTORS) This section updates the company's risk factors, emphasizing significant risks from extensive and evolving government and environmental regulations, with potential negative impacts from non-compliance and recent changes to solid waste laws in Maine - The waste industry is subject to extensive government regulations, and non-compliance could lead to fines, penalties, and limits on the ability to operate and expand[146](index=146&type=chunk) - The company faces potential liability from environmental issues at acquired businesses and risks related to obtaining or renewing operating permits[146](index=146&type=chunk) - Recent changes in solid waste laws in the State of Maine may negatively impact operating results through lower revenues or increased costs[146](index=146&type=chunk)

Casella Waste Systems, Inc. 1 Investor Meetings May & June 2022 Safe Harbor Statement Certain matters discussed in this presentation, including, but not limited to, the statements regarding our intentions, beliefs or current expectations concerning, among other things, our financial performance; financial condition; operations and services; prospects; growth; strategies; anticipated impacts from future or completed acquisitions; and guidance for fiscal year 2022, are "forward-looking statements" intended to ...