The market expects Casella (CWST) to deliver flat earnings compared to the year-ago quarter on higher revenues when it reports results for the quarter ended December 2023. This widely-known consensus outlook is important in assessing the company's earnings picture, but a powerful factor that might influence its near-term stock price is how the actual results compare to these estimates.The earnings report, which is expected to be released on February 15, 2024, might help the stock move higher if these key nu ...

RUTLAND, Vt., Feb. 05, 2024 (GLOBE NEWSWIRE) -- Casella Waste Systems, Inc. (Nasdaq: CWST), a regional solid waste, recycling, and resource management services company, will release its financial results for the three months ended December 31, 2023, after the market closes on Thursday, February 15, 2024. The company will host a conference call to discuss these results on Friday, February 16, 2024, at 10:00 a.m. Eastern Time. Individuals interested in participating in the call should register by clicking her ...

Financial Data and Key Metrics Changes - Revenues in Q3 2023 were $352.7 million, an increase of $57.5 million or 19.5% year-over-year, with 18.9% of this change driven by acquisitions [50] - Adjusted EBITDA was $89.6 million, up $14.6 million year-over-year, with $14 million of the growth derived from acquisitions [24] - Adjusted EBITDA margins were 25.4% for the quarter, flat year-over-year, with consolidated price as a percentage of total revenues up 5.8% [25][26] Business Line Data and Key Metrics Changes - Solid waste revenues increased by 28.9% year-over-year, with pricing up 6.9% and volumes slightly down by 3.3% [50] - Collection line revenues were up 43% year-over-year, with pricing up 7.6% and volumes down 1.9% [50] - Disposal line revenues were up 0.3% year-over-year, with landfill pricing up 7.4% and landfill tons down 10.1% [51] Market Data and Key Metrics Changes - Special waste and contaminated soils volumes were down 35% year-over-year due to lower regional activity levels [51] - Resource Solutions revenues decreased by 5.9% year-over-year, with average commodity revenue per ton down approximately 28% [52] - The company expects special waste volumes to decline both sequentially and year-over-year in Q4 [52] Company Strategy and Development Direction - The company is focused on integrating recent acquisitions and enhancing operational efficiency through flexible pricing programs and ongoing fleet automation [46][49] - The acquisition pipeline remains robust, with approximately $500 million of annualized revenue from Northeast operations and $400 million from Mid-Atlantic operations [20] - The company aims to continue growing margins and cash flows into 2024, with expectations of 14% rollover revenue growth from acquisitions completed in 2023 [60] Management's Comments on Operating Environment and Future Outlook - Management noted that while special waste volumes have been weak, MSW and C&D volumes are tracking in line with budgeted and historic levels [8] - The company anticipates continued operating cash flow growth, although inflationary pressures on capital expenditures and higher interest rates may offset this growth [31] - Management expressed optimism about the performance of the company and the larger platform being built, with updated guidance for 2023 reflecting a conservative view of special waste for Q4 [43][58] Other Important Information - The company completed three acquisitions in the quarter, enhancing its operational footprint in the Northeast [41] - Adjusted free cash flow for the year-to-date through September was $96 million, up $14.3 million year-over-year [29] - The company has maintained significant liquidity and balance sheet flexibility to support M&A and organic development [57] Q&A Session Summary Question: Can you help us think about the different moving pieces from Q3 to Q4 that might be pushing margins ahead of the normal seasonal cadence? - Management noted that landfill tonnages had some of the largest days in October, indicating slight changes to business seasonality [33] Question: Can you walk me through if I'm missing any moving pieces regarding margins? - Management highlighted that operational efficiency programs are scheduled for next year, which could expand margins [34] Question: What is the status of the RNG facilities expected to come online? - Management indicated that the second project is delayed and expected to come online in the first half of 2024 [65] Question: Was weather an EBITDA headwind in the quarter? - Management stated that the impact was somewhat neutral, with more tons to the landfill from storm damage offset by a lack of commercial activity [66] Question: How do you view the interest rate environment and its impact on smaller regional players? - Management noted that smaller companies are facing challenges due to higher costs of capital, which may accelerate their desire to sell [124]

PART I [Financial Statements](index=2&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) Unaudited consolidated financial statements for Q3 2023 reflect significant asset and liability growth from acquisitions, with increased revenues but decreased net income Consolidated Balance Sheet Summary (in millions) | Balance Sheet Items | Sep 30, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | **Total Assets** | **$2,498.015** | **$1,449.215** | | Total Current Assets | $413.341 | $207.479 | | Goodwill | $737.150 | $274.458 | | **Total Liabilities** | **$1,467.148** | **$951.315** | | Total Current Liabilities | $253.184 | $177.600 | | Debt, less current portion | $1,012.169 | $585.015 | | **Total Stockholders' Equity** | **$1,030.867** | **$497.900** | Consolidated Statement of Operations Summary (in millions) | Income Statement Items | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :--- | :--- | :--- | | **Revenues** | **$904.975** | **$812.962** | | Operating Income | $67.067 | $78.175 | | **Net Income** | **$27.210** | **$44.658** | | Diluted EPS | $0.50 | $0.86 | Consolidated Statement of Cash Flows Summary (in millions) | Cash Flow Items | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $157.825 | $152.431 | | Net cash used in investing activities | $(937.156) | $(161.059) | | Net cash provided by financing activities | $929.998 | $22.753 | | **Net increase in cash and cash equivalents** | **$150.667** | **$14.125** | [Notes to Unaudited Consolidated Financial Statements](index=9&type=section&id=NOTES%20TO%20UNAUDITED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) The notes detail accounting policies, significant acquisitions like GFL and Twin Bridges, debt financing, and ongoing legal proceedings, including the adoption of new accounting standards - On June 30, 2023, the company acquired GFL Subsidiaries, forming the new Mid-Atlantic regional operating segment and expanding services into Delaware and Maryland, funded by new financing and an equity offering[108](index=108&type=chunk) - During the nine months ended September 30, 2023, the company acquired five businesses for total consideration of **$845.1 million**, a significant increase from the **$78.1 million** spent on twelve businesses in the same period of 2022[121](index=121&type=chunk)[21](index=21&type=chunk) - To fund acquisitions, the company completed a public offering of **6.1 million** shares of Class A common stock on June 16, 2023, resulting in net proceeds of **$496.2 million**[148](index=148&type=chunk)[26](index=26&type=chunk) - In June 2023, the company borrowed **$430.0 million** under a new 2023 Term Loan Facility to help fund the GFL Acquisition[131](index=131&type=chunk)[23](index=23&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=29&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) MD&A highlights revenue growth from acquisitions and pricing, increased operating expenses, decreased operating income, and strong liquidity maintained through financing activities [Results of Operations](index=30&type=section&id=Results%20of%20Operations) Results of operations show Q3 and YTD revenue growth driven by acquisitions and pricing, offset by volume declines, leading to increased operating expenses and decreased operating income Revenue by Service Type (in millions) | Service Type | Q3 2023 | Q3 2022 | YTD 2023 | YTD 2022 | | :--- | :--- | :--- | :--- | :--- | | Solid waste operations | $277.2 | $215.0 | $689.7 | $584.3 | | Resource Solutions operations | $75.5 | $80.3 | $215.3 | $228.7 | | **Total revenues** | **$352.7** | **$295.3** | **$905.0** | **$813.0** | Solid Waste Revenue Growth Drivers (Q3 2023 vs Q3 2022, in millions) | Driver | Amount | % Growth | | :--- | :--- | :--- | | Price | $14.9 | 6.9% | | Volume | $(7.2) | (3.3)% | | Surcharges and other fees | $(0.2) | (0.2)% | | Acquisitions | $54.7 | 25.5% | | **Total Solid Waste Revenue Change** | **$62.2** | **28.9%** | - Operating income decreased across several segments, with the Western region's operating income falling by **$1.9 million** quarterly, Resource Solutions seeing an **$11.6 million** year-to-date decline, and the Mid-Atlantic segment reporting a **$0.7 million** operating loss in its first quarter[86](index=86&type=chunk) - Cost of operations increased by **$36.0 million** in Q3 2023 compared to Q3 2022, driven by acquisitions, higher direct labor costs due to wage inflation, and increased maintenance and repair expenses[193](index=193&type=chunk)[195](index=195&type=chunk)[197](index=197&type=chunk) [Liquidity and Capital Resources](index=42&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity with substantial cash and credit availability, primarily funded by financing activities and acquisitions - The company maintains a strong liquidity position with **$219.1 million** in cash and equivalents and **$272.3 million** available under its Revolving Credit Facility as of September 30, 2023[15](index=15&type=chunk) Summary of Cash Flow Activity (Nine Months Ended Sep 30, in millions) | Cash Flow Activity | 2023 | 2022 | Change | | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | $157.8 | $152.4 | $5.4 | | Net cash used in investing activities | $(937.2) | $(161.1) | $(776.1) | | Net cash provided by financing activities | $930.0 | $22.8 | $907.2 | - Cash used in investing activities surged to **$937.2 million** year-to-date, primarily due to **$847.8 million** spent on acquisitions, a significant increase from **$74.0 million** in the prior-year period[21](index=21&type=chunk) - Financing activities provided **$930.0 million** in cash, mainly from a **$496.2 million** public stock offering and **$465.0 million** in proceeds from long-term borrowings, used to fund strategic acquisitions[22](index=22&type=chunk)[26](index=26&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=49&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company manages market risks from fuel prices, interest rates, and commodity prices through fees, revenue sharing, and derivative agreements - A **$0.40 per gallon** change in diesel fuel price is estimated to change annual direct fuel costs by approximately **$5.1 million**, which is expected to be almost fully offset by a corresponding **$5.2 million** change in E&E Fee revenue[40](index=40&type=chunk)[39](index=39&type=chunk) - A **$10 per ton** change in recycled material commodity prices is estimated to change annual operating income by approximately **$1.0 million**[43](index=43&type=chunk) - As of September 30, 2023, the company had approximately **$359.6 million** of variable-rate long-term debt, where a **100 basis point** change in the average interest rate would change annual interest expense by approximately **$3.6 million**[44](index=44&type=chunk) [Controls and Procedures](index=51&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management concluded that disclosure controls and procedures were effective as of September 30, 2023, with no material changes to internal controls - The CEO and CFO concluded that as of September 30, 2023, the company's disclosure controls and procedures were effective at the reasonable assurance level[45](index=45&type=chunk) - No material changes to the internal control over financial reporting occurred during the three months ended September 30, 2023[45](index=45&type=chunk) PART II [Legal Proceedings](index=52&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) The company reports no new legal proceedings involving governmental authorities with potential monetary sanctions of $1.0 million or more - The company has no environmental legal matters with potential sanctions of **$1.0 million** or more to disclose[48](index=48&type=chunk) [Risk Factors](index=52&type=section&id=ITEM%201A.%20RISK%20FACTORS) The company refers to existing risk factors from its 2022 Annual Report on Form 10-K, with no new material risks identified in this report - The company refers to the risk factors disclosed in its 2022 Annual Report on Form 10-K, indicating no material changes or additions during the quarter[49](index=49&type=chunk) [Other Information](index=52&type=section&id=ITEM%205.%20OTHER%20INFORMATION) This section discloses the adoption of Rule 10b5-1 trading arrangements by several directors and officers for tax-related equity award transactions Adoption of Rule 10b5-1 Trading Arrangements (Q3 2023) | Name (Title) | Action (Date) | Nature of Arrangement | | :--- | :--- | :--- | | John W. Casella (CEO) | Adoption (08/22/2023) | Sell-to-cover for equity awards | | Edmond R. Coletta (CFO) | Adoption (08/02/2023) | Sell-to-cover for equity awards | | Shelley E. Sayward (General Counsel) | Adoption (08/02/2023) | Sell-to-cover for equity awards | | Sean M. Steves (COO) | Adoption (08/02/2023) | Sell-to-cover for equity awards | | Kevin J. Drohan (CAO) | Adoption (08/02/2023) | Sell-to-cover for equity awards | | Paul J. Ligon (SVP) | Adoption (08/02/2023) | Sell-to-cover for equity awards | | Douglas R. Casella (Vice Chairman) | Adoption (08/20/2023) | Sell-to-cover for equity awards |

Casella Waste Systems, Inc. (NASDAQ:CWST) Q2 2023 Earnings Conference Call July 28, 2023 10:00 AM ET Company Participants Charlie Wohlhuter - Director, IR John Casella - Chairman and CEO Ned Coletta - President and CFO Jason Mead - SVP, Finance, and Treasurer Sean Steves - SVP and COO, Solid Waste Operations Conference Call Participants Tyler Brown - Raymond James Michael Hoffman - Stifel Sean Eastman - KeyBanc Capital Markets Stephanie Moore - Jefferies Operator Good day, and thank you for standing by. Wel ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023 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 CASELLA WASTE SYSTEMS, INC. (Exact name of registrant as specified in its charter) Delaware 03-0338873 (State or other juri ...

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 ...