Casella(CWST) - 2022 Q4 - Earnings Call Transcript

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]