Q4 2020 Casella Waste Systems Inc Earnings Call
Ladies and gentlemen.
And thank you for standing by and welcome to the Casella Waste Systems, Inc. Q4, 2020 conference call. At this time all participants are in a listen only mode. After the speaker presentation there'll be a question and answer session to ask a question. During the session you will need to press star one on your telephone. Please be advised that today's conference is being recorded if you require any further.
Further assistance, please press star zero and I would now like to hand, the conference over to your Speaker today, Joe Fosco price President and Communications. Please go ahead Sir.
Thank you for joining us this morning, and welcome with US today are John Casella, Chairman and Chief Executive officer to sell away systems.
Ed Johnson, our president and.
Chief operating officer.
Ned Coletta, our senior Vice President and Chief Financial Officer, and Jason Mead, Our director of finance today, and we will be discussing our 2024th quarter and year end results. These results were released yesterday afternoon, along with a brief review of those results and.
Weighted on the company's activities and business environment, we'll be answering your questions as well, but first as you know I am deeply compelled to remind everyone that various remarks that we may make about the company's future expectations plans and prospects constitute forward looking statements for the purposes of the safe Harbor.
And enough divisions under the private Securities Litigation Reform Act of 1995 actual results may differ materially from those indicated by those forward looking statements as a result of various important factors, including those discussed and the risk factors section of our most recent annual report on form.
10-K, which is on file.
With the SEC. In addition, any forward looking statements represent our views only as of today and should not be relied upon as representing our views as of any subsequent date, while we may elect to update forward looking statements at some point and the future, we specifically disclaim any obligation.
And to do so even if our views change. These forward looking statements should not be relied upon as representing our views as of any date subsequent to today.
Also during this call we will be referring to non-GAAP financial measures. These non-GAAP measures are not prepared in accordance.
And with generally accepted accounting principles.
Reconciliations of the non-GAAP financial measures to the most directly comparable GAAP measures to the extent they are available without unreasonable effort are available in the appendix to our investor Slide presentation.
Which is available and the investors section of our website at IR.
Obligation at Casella Dot com the older I get the harder it is to breathe through that.
With that I will turn it over to John Casella.
Little older than me and.
A discussion.
And thanks, Joe.
Good morning, everyone and welcome to our fourth quarter 2020 conference.
We're obviously very pleased with our fourth quarter and 2020 results.
This year was unprecedented and our strong performance and execution highlights the resiliency of our business along with the courage dedication and tenacity over 2500 employees.
Many thanks again to the men and women on.
Since call it winds, who performed at an exceptionally high level and providing safe and reliable service to our customers are.
Our success in 2020 was also credited to other teams across the company, including but certainly not limited to our safety on.
Operating maintenance sales customer care and back office personnel.
As a company, we were organized and proactive from the onset of the pandemic.
We ensured the continued safety of our workforce by adhering to CDC guidelines and state orders at the same time, we worked with our customers to understand their changing service needs. So that we could right size our service levels.
<unk> and flex variable operating costs.
These actions not only helped drive strong results for the year, but also safeguard and our ability to deliver a central environmental services to our customers.
Lower economic activity levels during the year resulted in decline and solid waste volumes of 40.
$6 million as compared to 2019.
This was primarily driven by lower disposal tonnage as lower volumes and the commercial and industrial collection lines of business.
Despite this volume headwind and other COVID-19 related expenses and 2020 on a year over year basis, we grew consolidated.
Revenues by four 2% improved adjusted EBITDA by nine 5%, while expanding margins by over 100 basis points increased adjusted free cash flow by 24, 7% and further drove down our consolidated net leverage ratio, notably.
Notably our 2020, adjusted EBITDA and adjusted free cash flow respectfully met and exceeded our initial 2020 guidance ranges as announced in February of last year.
Despite solid waste volume is being down $46 million year over year, coupled with roughly $2.
And $5 million of Covid specific costs.
During the year, we executed well against our key strategies initiatives and strategic initiatives, sorry operating pricing programs on this.
Lee displayed very very significant capital discipline and closed 10 acquisitions.
Next I will provide further details on the recent performance of our operations as well as our continued execution against our key strategies.
Starting with disposal volumes.
Were again down.
Year over year due to the economic impacts of Covid that said similar to what.
We will highlight within our collection operations there was sequential improvement in terms of volume recovery from the third quarter to the fourth quarter disposal volumes were down eight 7% in the fourth quarter compared to the same period last year and the third quarter disposal volumes were down approximately.
<unk> 12 per cent year over year.
Volumes continued to slowly meter back towards normal seasonal levels.
Our pricing programs continued to work well and helped to partially offset the impact of lower tonnages in 2020 during the year. We also flex select variable costs out of our disposal off.
To adjust for lower volumes.
And of course, maintaining our high standards related to safety and compliance we remained focused on key permitting efforts and furthering our relationships with our host communities as we provide a central resource management infrastructure and services to help meet.
Operations and environmental needs.
Moving to the collection business as expected volumes were again down in the quarter year over year. However, we experienced a modest sequential volume recovery from the third quarter to the fourth quarter and some businesses came back online.
Increased service.
The set of rules and roll off activity continued to narrow the gap to normalized seasonal trends and the fourth quarter collection volumes were down 3% year over year as compared to down over 6% year over year in the third quarter. This marks a fairly substantial recovery since the second quarter where collection.
<unk> and volumes were down over 10% year over year.
Despite the continued volume headwinds, we again increased adjusted EBITDA.
And margins year over year in the quarter.
Our performance has been aided by continued investment and technology automated trucks.
To better drive collection efficiency route optimization and real time business intelligence remained focus on service excellence operating initiatives pricing programs and accurate acquisition integration.
On to resource solutions, we continue to drive more value and synergies.
And from resource solutions as we have worked to further integrate our recycling organics and customer solutions sales and back office teams as our customers' sustainability needs grow our resource solutions team is well positioned to provide expertise and services required to achieve these goals.
As with all other aspects of our business. We are focused on models that are economically and environmentally sustainable.
Resource solutions performed well and the quarter and on the year for the year revenues were up nine 9% year over year with growth within all three operations.
While improving adjusted EBITDA and expanding margins a recycling operation performed particularly well on the year, our tip fee and SRA fee programs have allowed us to offtake over 90% of the recycling commodity risk we continue to make operational improvements through various initiatives while at.
At the same time prioritizing safety on the processing lines.
And our customer solutions and organics businesses continued to focus on driving value through low capital intensity business model, while growing the business through the addition of profitable new customers gaining.
Gaining share of wallet.
Plus new services with existing customers and increasing vertical integration opportunities.
Finally, I'll highlight our capital allocation and growth strategy in 2020, we closed 10 acquisitions with approximately $22 million.
A annualized revenue, while our acquisition growth was somewhat modest in.
And it acquired due to COVID-19 travel restrictions our pipeline remains strong with over $400 million of annualized revenues and opportunities. We ended the year with over $300 million of liquidity, including $154 million and cash we're poised to opportunist.
Opportunistically put capital to work and a return driven manner on deals was that's strategic fit that will drive further free cash flow growth.
<unk>.
Thus far in 2021, we.
We have closed on.
More on tuck in acquisitions, and Western New York with approximately.
$4 million and annualized revenue.
And operation will nicely complement our operations and we welcome aboard the hardworking folks that are new to the casella team.
And with that I'll turn it over the net to walk you through the financials. Thanks.
Thanks, John revenues and the fourth quarter were $200 2 million.
Up $6 6 million or up three 4% year over year with two 2% and year over year change driven by acquisition activity.
Waste revenues were up 1% year over year with price up three 9%.
Two 7% growth from acquisitions and volumes down four six.
This is a sequential improvement from the third quarter when solid waste volumes were down eight 4% year over year.
Revenues and our collection line of business were up two 7% year over year with price up three 8% and volume is down 3%.
With roughly 70% of our business.
First and secondary and rural markets across the northeast, we have experienced a stable to improving economy since the low point of Covid and late April through mid October however, with the ramp up of Covid cases in November and December we had select commercial customers reduce their service levels. However, this impact.
<unk> submitted it was short lived and it was further offset by winter seasonal business is coming back on line.
By early February we're back to roughly the same levels at a run rate basis. As we were in October or said another way, we've recovered roughly 70% of the commercial and industrial collection.
With only and services on our <unk>.
Revenue basis that were reduced or suspended due to COVID-19.
Revenues in the disposal line of business were down three 3% year over year and the quarter with landfill pricing up five 6%.
Landfill tons were down 10, 5% year over year as economic.
Collectively and construction projects were both negatively impacted by COVID-19, and we also had some timing differences year over year at the end of this and at the permit ear.
Resource solutions revenues were up 11, 1% year over year with organics up six 2% on.
And the new contracted volumes and additional processing customer solutions up 5%, mainly driven by growth of our services, our existing customers and some new industrial customers as well and recycling revenues were up 29, 7%, mainly driven by higher commodity pricing and higher volumes our average.
On the revenue per ton was up 79% year over year and the quarter and this is on substantially higher cardboard and mixed paper pricing higher metals pricing, partially offset by lower plastics pricing.
Adjusted EBITDA was $42 6 million in the quarter up one and a half million.
Commodity 7% year over year, and adjusted EBITDA margins were 21, 3% and the quarter up 10 basis points improving.
Adjusted EBITDA was a huge achievement and a quarter given the COVID-19 headwinds, we saw solid waste volume is down $6 $9 million year over year translating to.
Or three or three and a half million dollar adjusted EBITDA headwind from Covid. In addition, we had and roughly $200000 of Covid specific costs during the quarter.
Solid waste adjusted EBITDA was $38 6 million and a quarter with collection adjusted EBITDA up and disposals.
And as those slightly down.
Resource solutions, adjusted EBITDA was $3 $9 million and the quarter up $900000 year over year with improvements in our recycling and organic segments.
Our cost of operations and the fourth quarter were up $2 $3 million year over year, but down 100.
A rough basis points as a percentage of revenues and our general and administrative costs and the fourth quarter up $2 $8 million year over year with roughly $2 $5 million with the increase driven by higher bonus and equity accruals due to timing differences year over year and.
And $900000 associated with severance.
And during the period.
As you May have noted from our press release, our fourth quarter had one very large unique item included we had a $55 million benefit to income taxes due to the reversal of a valuation allowance on the majority of our net operating loss carryforwards and other deferred.
10 tax assets, we determined that the majority of our deferred tax assets would be realized in the future given our significant cumulative consolidated income over the last three fiscal years.
As of December 31, we had $548 $4 million of debt a.
<unk> hundred $54 3 million of cash and liquidity of $327 $9 million, our consolidated net leverage ratio as defined by our credit facility was 276 times at December 31st However, if we net 100% of our cash against our debt our true leverage ratio.
Ratio was 218 times.
As John mentioned, we believe our capital structures and a great position and will allow us to execute efficiently against our strategy to grow through investments and acquisitions in the coming year.
Net cash provided by operating activities was 100.
And $39 $9 million year to date. This is up $23 $1 million year over year, and this was driven by higher operating results and positive changes and our assets and liabilities year over year, we did an outstanding job on our accounts receivable during the year with our day sales outstanding of $34.
Nine days at December 31, this is down $4 three days from last year, we entered the COVID-19 pandemic with a stable and mature credit and collections program and during the pandemic, we've improved our customer outreach and communications and created additional flexibility as needed.
However, as noted last quarter.
We have taken a conservative stance on the Recoverability of accounts midterm, especially now that the federal stimulus programs are starting to wind down on.
Bad debt accrual was up $800000 year over year.
Given the strong positive working capital management throughout 2020, we chose to repair entire cares.
Cares act payroll tax deferral of $5 million and December and we also accelerated payments to our vendors, bringing our days payable outstanding down by 15 days year over year.
Adjusted free cash flow was $69 $1 million for 2020 up $13 7 million or up.
At four 7% year over year, we continue to invest and planned capital expenditures at newly acquired operations during the quarter to drive operating synergies and integration efforts and we also continue to invest in the development of the phase six landfill expansion at our waste USA landfill.
20 as stated in our press release yesterday afternoon, we announced guidance for fiscal year 2020 by estimating results for revenues adjusted EBITDA and adjusted free cash flow you can read those in our earnings release.
As we pointed out on our earnings release, our guidance ranges assume a stable economic environment and no.
New severe impacts from Covid are large shutdowns.
Our 2021 guidance does include a one 5% revenue growth from the rollover of acquisitions completed in 2020 and those already completed in early 2021. However, our guidance does not include the impact of.
No and positions that had yet to be completed.
We have some specific guidance percentages in our press release as well that you can refer to.
One thing you will note in our press release is that given the reversal of our tax valuation allowance and fiscal 2020, we now expect income statement.
And he asks provision of roughly 30% and fiscal 2021, however, our cash tax cash and cash taxes are expected to remain at approximately $1 $5 million. In 2021. In addition, we had roughly $140 million of net operating losses remaining at December 31.
<unk>, which we expect will help us to minimize cash taxes for the next three to four years.
One question, we get quite often is can we just bridge simply our adjusted EBITDA year over year and looking at a simple bridge, we're expecting our collection adjusted EBITDA to be up 7% to 8 million.
Year over year, our disposal to be up 4% to $5 million year over year, our resource solutions to be up $1 million to $2 million year over year.
Roughly $2 $5 million and benefit from acquisitions and about $1 million to $2 million of headwinds mainly on the G&A side as we scale.
Calle G&A to new revenues and acquisitions and with that I'll pass it to Ed.
Thanks, Noah and good morning, everyone.
Operationally, we had a strong finish to the year and I continue to be impressed by the focus and discipline on our frontline workers and management.
Our ability to flex costs on lower revenue during the continued.
Continuing pandemic, while protecting our workforce and customers is testament to our culture and the quality of our people and I'm extremely grateful to the team for their hard work.
Consolidated cost of ops as a percentage of revenue improved by about 110 basis points over Q4 last year, which in turn.
<unk> was 206 basis points better than Q4 of the year before.
Driven by price and improved operating cost for the collection business at the landfills and at our resource solutions businesses.
For the full year, despite the early extra cost and reduced revenue from Covid consolidated cost of ops improved.
Improved 186 basis points.
Our collection operations, which generate over 50% of our revenue and.
<unk> cost of ops by 166 basis points, and the quarter and 163 basis points for the full year.
Proved our overall variable margin contribution.
And per driver hour, which is our key productivity metrics.
And by four 4% for the year.
Though all divisions performed well and I'm, particularly pleased with the maturing <unk> of our 2018 acquisitions, where we have succeeded and moving margins up the company averages and our.
Per our original pro forma expectations I have mentioned in the past that acquisitions tend to dilute our margins for a couple of years as it takes time to get pricing, where it should be and to increase the level of automation and appropriate to the operation.
The current results prove out our ability to transition the acquired companies to.
Our culture and our operating standards as we continue with our growth strategy. It is our goal to find ways to shorten this timeframe, but we are pleased with our execution.
Our resource solutions group had an outstanding year as well and also finished with a strong Q4 as you may recall this group was challenged.
And are ahead of last year with reorganizing our recycling organics and industrial solutions and major accounts segments into a more effective organization structured between processing and non processing activities.
Throw COVID-19 on top of that challenge and the results are even more impressive the group improved cost of ops for.
This provides 226 basis points and contributed an additional $4 million of adjusted EBITDA to the consolidated results.
Landfill ops, despite lower volume due to the pandemic continue to produce better margins through reduced cost tonnage was down from last year's fourth quarter.
The year of pinpoint 5% and.
And as I've pointed out in the past landfills are high fixed cost operations.
And do experienced margin squeeze when tonnage is down so its pretty significant as the cost of ops percentage improved by 80 basis points for the quarter.
For the full year, our landfills continued to hit their high operating.
Quarter to non metric and compliance standards, notably and New York Landfills showed market improvement from a year ago with reduced odor issues improved turn times for the trucks coming into the facilities and improved regulatory compliance all and all are great performance by the landfill team.
So I'll keep.
Operator, if we finished the year strong and are excited about the opportunities in front of us going into the new year and look forward to your questions I'd like to now turn it back to the operator to start the Q&A.
Yeah.
Thank you as a reminder to ask a question you will need to press star one on your telephone.
Your question comes from apologies.
And Keith to stay involved and some part of the Q&A roster.
Our first question comes from Sean Eastman with Keybanc capital markets. You May proceed with your question.
Hi, guys. Thanks, Good morning, and finished the year on thanks, Thanks for taking my questions.
I just wanted to start on on the guidance. So you guys made.
Keep it weird that you know you're kind of assuming.
Status quo sort of macro backdrop.
But just given the volume range.
And is fairly wide one to two 5%.
Is there some reopening sort of reflected at the high end.
And it.
How should we be thinking about it.
The range and just how you're building and.
Sort of reopening or lack thereof.
Yeah.
I think as everyone would say and as environmental paid up and unknown right.
We as I stated on the log.
We saw this really nice trend right from early May through late October and then we actually saw things going the other direction, where we saw and business owners and industrial customers reduced services.
In late November into December and now into February where we are right.
Right back to where we were in October so that is a positive but I think we're making a little day of a wider range and we typically do because we just don't know we're all very excited about this vaccine news, but the rollout appears to be slow across many of our market areas and something we pointed out last fiscal year is.
<unk> and dairy and more rural markets have really weathered the storm quite well and yes, we do have declines in volumes and some economic impact, but probably some of the larger impacts we have or had been and a major metropolitan areas. We don't hauling waste and New York City, but we have customers, who bring us waste to our land sales.
<unk> from the city and and Thats been probably the slowest to recover it today.
<unk>.
Okay, Gotcha, Alright, that's helpful and and.
On the dollar EBITDA bridge.
Always helpful and that's I appreciate that but as we look at it from a margin perspective the guidance.
Our sense 50 basis points of expansion and here I think that's consistent with sort of a preliminary expectation the message last quarter, but is there any other interesting elements to parse out there from a from a margin expansion perspective in terms of the moving pieces.
There's really not a lot more to it I think as.
And <unk>.
We expect our core pricing programs and our core operating programs to advance in 2021, and as you look back to 2020.
Something we get asked quite often are.
Are there margin improvements from Covid do you expect to roll into 'twenty.
And when he won or are you going to lose some of them and there's a lot of moving pieces here and we've seen and just a bunch of different ways and the best we can tell is in the year. We had about 100 basis points of headwinds from Covid on margins and we had about 100 basis points of help on margins from.
2000, and hit specific issues and things like <unk>.
Overtime and health care things like that to help and we feel like the patterns, we had coming into COVID-19. When we're expanding margins and we are outpacing inflation with things like dynamic route optimization automation and trucks and some.
Some of the other key initiatives are what will carry and margins into next year.
Got it and so maybe just drilling and on those sort of systems enhancements.
You know how much of the 110 basis points of expansion in 2020, and do you think those drove and maybe more importantly.
Coke.
And sort of juice is left and the tank on those on those programs as we think about the go forward.
So we did.
Quite a bit of automation and during the second half of 2020, and we have more automation and taking place and the first quarter of 'twenty one.
And so.
It's a.
A guess as to how much of that margin improvement from that but a good chunk of it at least the third.
The margin improvement was related to that and about 40% of our residential fleet, 40%, 45% automated today sits and over a.
John We go we have a line of opportunity.
Okay terrific. Thanks, guys I'll turn it over thank you.
Thanks, John.
Thank you. Our next question comes from Michael Hoffman with Stifel. You May proceed with your question.
So John and John has opened the door here I'm supposed to call you old timer now.
A long way.
I think so [laughter] well you could you could reflect.
And on Joe that way as well.
Hum.
That just reminds me of that dumb and dumber right.
[laughter].
The mere closing.
And new Haven.
How do you how would you.
Prognosticate, if you would the impact of 700000 tons coming out on on your assets to be disposal assets on their transfer station or landfill to be able to drive and another layer of pricing.
And I think that the.
And the indications are that thats going to happen in 2022.
I think that.
And it's it's really it could really be.
Another.
Another issue in terms of the supply and demand imbalances you know Michael.
Obviously, we're really well positioned.
We're doing more work with Mckean, we believe that we need to bring mckean on.
And it'll be a couple of year process to go through the process in terms of permitting additional permitting that we need to do and construction, but it's our view.
And I think.
Net capacity instead of being an option and it's probably going to be necessary and.
And in the future.
And I think there is there is other activity from a permitting standpoint that is questionable at this at this point and time in addition to the 700000 tons.
At mirror.
And there are other facilities that are questionable in terms of whether they're going to operate into the future and in the northeast. So I think that we're going to see we said this before and we're going to see the same kind of dynamics for the next three to five years.
And the northeast in terms of the imbalance.
Which.
Should.
Bode well for for our assets.
So is it reasonable and try and model of 5% to 6% price increase on disposal for awhile.
We don't see anything that disrupts that pattern, but were still in that place where.
These assets as you know are extremely capital intensive.
And the regulatory and environmental compliance issues and getting greater and we need to drive higher returns on invested capital each day sites. So that's our game plan and we don't see anything that disrupts it.
Okay, and then maybe on the interchange.
These two names I can't remember their Thailand are hakes and got the community vote came through on a pretty meaningful increase.
Ireland Ireland.
Well how's the progress on the D V P on that part.
I think that Oh.
And that progress is going well.
Michael I think the.
Biggest hurdle and our view was getting through the community and we had a unanimous vote.
And the community to move forward with the.
With the project from the from the select Board and then obviously, we won the referendum and.
Fairly.
And I'm very positive basis as well so that facility has the capability to go from 470000 tons 1 million tons, a year and we have you know a very.
Significant.
Additional development in terms of acreage and so we will have another.
And there's 100 acres.
And I'm sure and cash.
700 acres, yes, 107 acres of.
Potentially approvable capacity, so we're going to be there for a lot of years and that facility will be performing and a much higher level than it is today.
Okay.
You mentioned that service intervals were positive sequentially.
And your guidance and what's your assumption about the underlying service interval pattern.
Yes.
So we.
We do expect.
On volumes to be down a day in Q1 overall.
As a company because we didn't have a meaningful COVID-19 impacts in 2000 and Q1 of 2020, However, we expect.
Moderate to slightly positive.
And on recovery from Covid through the first quarter and into the second quarter and then we've modeled.
Kind of gates at 70% recovery. So that's 30 per cent that we lost early and Covid. We just don't see a pathway to that coming back on the collection side.
Roughly like $8 million to $9 million of revenues the remainder of the $40 million that John spoke to is in landfill volumes and some and.
Roll off collection business as well and once again, we've put a little bit of a wide range.
And that's on that because I think your guess is as good as ours of when that will come back or how long it will take.
So that's it's upside to the.
The opportunity depending on like if.
New York, finally wakes up and realize and they probably have to restart the economy the.
And all that volume and third party base that goes.
Range on Volvo coming out of the lower.
And New York, So start showing up that's all upside to the guidance.
Okay.
There is a part of it is upside so we do have a range there.
John.
And what's the range in and so.
And at the midpoint of our solid waste volume guidance year over year.
1.7, 75, and our range was was one to two and a half for Stan so some of that towards the upper and Michael and then some of it's additional upside.
Okay, Alright that helps and then.
Capital spending.
Were women and what some line of sight.
And so we're no longer have conversations about having to talk.
Talking about big chunky adjustments like waste USA.
For instance that the 13 men and then I wanted to just make sure the 10 million for south spreads to finalize that close and remediation is that in the 113 or is that coming through the cash flow statement somewhere else.
So south rages going through the statement of cash flows and it'll be a reduction and short term liabilities. So it would be a negative hit to working capital as we worked on the closure liability and we expect to.
Substantially complete South bridge this year, it's been a tough road with Iraq.
<unk> right now our plan is to have about 80% to 90% of that done in 2021.
But there is some things outside of our control waste.
Waste USA, we will complete that site and the development this year and it's about $13 million of capital to complete that 'twenty.
<unk> five year develops and project and.
And we won't call that out going forward.
So does this year, so thinking about modeling long term modeling and I can take 113, and pull 13 million out of it all things being equal and the next year, just just as a starting place.
Yes.
And then the cash flow from ops is 10 million better as a starting place all else being equal.
Yes, we don't see any major capping or closure activities I mean, there's always some that's routine but nothing like the south for each project. Okay. And then you spent about <unk> what it was.
And $3 million on deals.
Yields per the cash flow statement.
What's the basis of the $15 million and Capex for.
Related to M&A.
And is where the trucks that all the containers that all that you basically have to recapitalize the whole fleet and so on.
Our realized price here was 47 million for.
The revenue bonds.
You know quite a bit of that was related to acquisitions. We completed in late 2019. So we.
We look for about a year to 18 months. After you completed the acquisition of all of our enhancements to fleet integration those matters, we're putting them into.
And to that basket. So it wasn't it wasn't really all related to assets in 2020, and Furthermore, as you know Michael It takes 12 to 15 months to get a truck right now if you place an order and so some of those plans were put into motion upwards of a year earlier and the assets arrived in 2020.
Okay.
And then.
Lastly.
You have recently talked about there was about 100 million of active dialogue out of the 400 million for pipeline.
On the M&A standpoint, they've done poor that so I've got 96 million left of the active pipeline.
What.
And your sense of the probability of close and and timings and I get it's not in guidance, but.
Just so we have a feel for what we're looking at I.
And I think a good portion of that Michael obviously still and it works and I think that you know.
Good portion of that would be and the second half of the year.
Okay.
Terrific. Thank you very much. Thank you Michael Thanks, Michael Yeah old timer.
[laughter] and go live that down Joe.
Thank you and next question comes from Tyler Brown with Raymond James You May proceed with your question.
Hey, good morning, guys.
Hi, Tyler.
And I gotta be honest a lot of my questions have been answered and you guys have talked about quite a bit and stuff here, but I do have a conceptual question.
And and it may be a tough one to answer at this point, but net I thought you said that maybe 70% of your revenue is and rural or secondary markets.
Do you do you guys believe.
Keep that there is a real day urbanization trend and the northeast are you seen that Navy and your resi subscription market pick up and those rural markets are hot.
Is that just transitory or do you think there's something bigger afoot.
It's really hard to say at this point and time, Tyler, but theres no question that there's something afoot.
But to to be able to characterize that correctly I think it's a little bit early but what we can characterize is the movement of real estate in.
And the entire northeast, particularly around on the ski areas around on the vacation areas.
Pretty that hasn't moved and over a decade.
Believes is all sold at this point in time, so there's a lot of movement that we can see and feel from a real estate standpoint, which is impacting.
Positively volumes, but to to be able to characterize it I think it's still a little sooner or early but.
But certainly.
There's there.
There are significant and activity from a real estate standpoint that that supports the perspective that there is a movement.
Yeah, no definitely seems quite interesting and then.
And this might be a bit of a silly question as well or maybe bigger picture I guess, but if I recall back in the day you were.
Doing some E&P disposal activities and the Marcellus was that was that right.
And Thats correct, yes.
Gas prices have been on the move.
I think there are peaking over three $3 now I don't I don't know if you've seen any activity I don't know if rigs are repositioning there, but I'm. Just curious have you have you seen anything.
And there do you think that's an opportunity.
Just any broad thoughts there.
Yeah, it's definitely been a headwind to us for the last year and.
And you know activity is dramatically lower than it was in 2011, 2012, and we have not budgeted or forecasted and.
And have any of that and come back in in 2021. So to your point. If there is some additional activity there it could be a positive, but we're talking like millions of dollars not tens of millions of dollars of positive revenues.
You know it hasn't grown it's never been a huge part.
Our business.
And and it's primarily mckean.
Yeah, Okay. Okay. That's helpful well like I said most of my questions have been answered. So I appreciate the time. Thank you Tyler Thanks Tyler.
Thank you and as a reminder to ask a question you will need to press star one on your telephone our next question.
And it comes from Hamzah Mazar with Jefferies. You May proceed with your question.
Hey, good morning. Thank you I guess just start just a question on pricing.
Is there a difference between the low end and the high end of.
Pricing just price relief for our commercial customers on anything going on on the dispose.
Question died.
And that sort of equates to that range.
Yes.
It's always when we get a lot of our pricing rolling this time of the year in December January February and.
And.
You just don't know I think we have a lot of certainty and our pricing programs a lot of certainty.
And our market analysis, and how we run our pricing, but you could see some rollback. So that's why we create ranges just to make sure. We encompasses encompassed that the activity we've seen year to date has been positive.
We've seen good stability in the marketplace and as you know I mean, there's a lot.
A lot of disruption to every waste hauler, there's incremental cost with lower volumes with Covid, and then just inflationary elements and the northeastern market and the labor market.
Our pricing programs are where they need to be to.
Hum those changes and the environment, So we feel pretty.
Confident but that's why we do have the ranges for the year.
Gotcha, and then just you talked about flexing variable costs down and.
And you know margin expansion and 100 bps.
So I guess you saw in 2020, just any thoughts on incremental margins on hard to think about.
For the business today.
Do you want to happen and that's yeah.
Yeah. So you know as we're looking ahead for net this year and the years. After you know we've been trying to evaluate how much of a COVID-19 effect either positive or negative was last year, even though we had.
Significant margin improvement and I think our net pointed out pretty well as we dig into that and we see it as almost a wash I mean, there was a little higher and higher disposal cost per pickup on the resi side, but it's offset by lower tons per our pounds per yard on the commercial side.
All right. So a lot of what the margin improvement has been has been our operational initiatives and we continue with those initiatives. So we were pretty confident that we can continue to improve the margin I think we have I think we said, we had 50 basis points and yeah.
And and tacking on to that.
And interesting strategic point, but you didn't notice that our G&A as a percentage of revenue was up year over year and.
And when Covid hit we sat down and thought this through very clearly, we're investing and some very important and mid term.
Areas and the business, whether it be on the HR side or on the technology side that.
And your position us and our shareholders very well over the next several years and we did not cut those programs. We continue to invest in some areas. We are investing a little bit more to accelerate and we see some of those investments actually translating to improvements in the operating side like our new dynamic route optimization software is having.
Having a real impact on the ground taking out operating hours, but as we roll back into some of those revenues we lost from Covid as we grow other areas, where and get some scale back on G&A and it is definitely another area hamzah that we're going to gain margin.
Great. Thank you so much on turnover.
Thank you.
Thank you and I'm not showing any further questions. At this time I would now like to turn the call back over to John Casella for any further remarks.
Thanks, everyone for your attention this morning.
It reflected and our 2020 results and 2021 guidance we're.
You didn't really well against our key strategies and August 2017, we announced our 2021 plan and I'm proud to say we've achieved this plan one year early as such we're and the process of developing our 2024 plan and we'll look forward to provide an update later in the year. Thanks, everybody for joining.
Actually this morning, we look forward to discussing our first quarter 2021 and earnings with you and late April Thanks, everybody have a great day.
Yeah.
Thank you ladies and gentlemen. This concludes today's conference call. Thank you for participating you may now disconnect.
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