Casella(US:CWST)2021-10-29 18:30Financial Data and Key Metrics Changes - Revenues in Q3 2021 were $242 million, an increase of 19.4% year-over-year, with $39.3 million attributed to acquisition activity [30] - Adjusted EBITDA was $61.2 million, up 19.4% year-over-year, with EBITDA margins at 25.3%, flat year-over-year [35][36] - Adjusted free cash flow increased by 37.2% year-over-year to $82.3 million [44] Business Line Data and Key Metrics Changes - Solid waste revenues rose 16.7% year-over-year, driven by a 4.1% price increase and a 2.8% volume increase [30] - Resource solutions revenues increased by 27.6% year-over-year, with 12.3% from higher recycling commodity prices and 8.4% from acquisitions [34] - Collection line of business revenues were up 16.2% year-over-year, with prices up 4.6% [30] Market Data and Key Metrics Changes - Landfill tons were up 70 basis points year-over-year, but still down approximately 8% compared to pre-COVID levels [32] - The Northeast disposal capacity continues to tighten, providing opportunities for pricing advancements [15] - Labor constraints and lower economic activity in New York City impacted volume recovery [13][33] Company Strategy and Development Direction - The company is focused on strategic acquisitions and disciplined growth, having closed nine acquisitions in 2021 with $86 million of annualized revenue [11][24] - Continued investment in human resources and technology to mitigate labor challenges and improve operational efficiency [17][20] - The company raised its 2021 guidance for the third time, reflecting solid performance and growth expectations [28][46] Management's Comments on Operating Environment and Future Outlook - Management noted that the economic environment remains challenging, particularly in New York City, affecting volume recovery [13][70] - The company anticipates a modest rebound in solid waste volumes and pricing in Q4 2021 [47] - Management expressed confidence in the acquisition pipeline and the ability to execute growth strategies [24][84] Other Important Information - The company has implemented various operational technologies to enhance efficiency and predictive insights [62] - Adjusted EBITDA margins improved by 77 basis points year-over-year when excluding acquisition impacts and one-time costs [36] - The company is focused on succession planning and resource allocation to support future growth [29] Q&A Session Summary Question: What was the one-time operating cost that impacted margins? - The one-time operating cost was an accrual for potential landfill waste relocation, amounting to $750,000 [64] Question: Can you elaborate on the margin impacts from fuel and recycling? - Fuel negatively impacted margins by 26 basis points, while recycling positively contributed about 50 basis points [65] Question: What is the status of landfill tons compared to previous quarters? - The company is down 350,000 tons year-over-year, primarily in New York State, due to lower commercial activity [69] Question: How much of your book has an escalator tied to CPI? - Approximately 10% of collection revenues are tied to municipal contracts, with flexibility in pricing for the rest [74] Question: Can you comment on the M&A pipeline? - The company is comfortable with its robust M&A pipeline and has completed nine acquisitions in 2021, with more in the queue [84][86] Question: What are the expectations for volume recovery in New York City? - Volume recovery is uncertain, with management noting that many small businesses may not return, impacting overall activity [118]