Q4 2021 Casella Waste Systems Inc Earnings Call

February 18, 2022

Yeah.

Good day and thank you for standing by welcome to the Casella Waste Systems, Inc. Q4, 2021 conference call. At this time all participants are in a listen only mode.

After the Speakers' 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 the call is being recorded if you require any further assistance. Please press star zero I would now like to hand, the conference over to your host today, Joe Fosco, Sir please begin.

Thank you for joining us this morning, and welcome with US today are John Casella, Chairman and Chief Executive Officer of Casella waste systems, Ed Johnson, our President and Chief operating Officer Ned.

Ned Coletta, our senior Vice President and Chief Financial Officer, and Jason Mead, Our Vice President of Finance.

They we will be discussing our 2021 fourth quarter and year end results. These results were released yesterday afternoon.

Along with a brief review of those results and an update on the company's activities and business environment, we will be answering your questions as well, but first as you know I must remind everyone that various remarks that we may make about the company's future expectations plans and prospects constitute forward looking statement.

For the purposes of the Safe Harbor provisions under the private Securities Litigation Reform Act of $19 95.

Actual results may differ materially from those indicated by these forward looking statements as a result of various important factors.

<unk> those discussed in 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 <unk>.

Next to update forward looking statements at some point in the future.

We specifically disclaim any obligation 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 the call we will be referring to non-GAAP financial measures. These non-GAAP .

GAAP measures are not prepared in accordance 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 in the investors section of our website at.

<unk> dot to sell our dot com.

With that I'll turn it over to John Casella, who will begin today's discussion.

Thanks, Joe and good morning, everyone and welcome to our fourth quarter 2021 conference call.

We are very pleased with our results in the quarter as we finished the year strong and continued to execute well against our key strategies.

Ned will provide color on the corner.

With that I'd like to focus my comments on performance for 2021, our forward outlook and our strategy in August 2017, we laid out a multi year 2021 strategic plan.

The plan included key strategies, most relevant to driving shareholder value along with the financial framework that provided measurable targets to track performance as we exit 2021.

We really could not be prouder of what we have achieved.

As a result of the hard work focus and discipline across the organization, we exceeded all key metrics of the 2021 plan.

As an outcome we grew the business meaningfully in 2021 through our pricing programs operating initiatives and growth strategy.

For the year revenues were up nearly 15% adjusted EBITDA improved over 18% and adjusted free cash flow increased roughly 38%.

Our performance reflects continued strong operational execution within our base business combined with growth through acquisitions.

During 2021, we closed on 10 acquisitions with $88 million of annualized revenues in the first 45 days of 'twenty two we've closed.

Five additional tuck in acquisitions with approximately $4 million of annualized revenues that have a great strategic fit.

As our momentum carries into 2022, we have a plan that aligns with our recently created in 2024 strategic plan. The key strategies of the 2024 plan are very much consistent with those of the 2021 plan there.

There are as follows number one increasing landfill returns driving number two driving additional profitability in the collection operations.

Third creating incremental value through resource solutions in the fourth allocating capital to return driven growth to.

To bolster our ability to execute against these core strategies, we're introducing the fifth which is strengthening key foundational pillars. The four foundational pillars are as follows number one our people number two our technology three sustainable growth strategy and four.

For our facilities.

And quickly touching on the foundational pillars from a people perspective, we understand the importance of reinforcing our core values.

While investing in our culture and team with technical training programs for key frontline roles.

<unk> development incentive compensation programs aligned with long term goals great. Examples of our recent success here are our CDL schools and career paths initiatives, which has helped to stabilize our workforce during the challenging labor market.

As it relates to technology, we are making select investments that drive and support profitable growth. This is evident within our collection operations. As we are making continued investment in route optimization onboard computers and automation programs that are driving margins.

Execution against our key strategies is also supported by our sustainable growth initiatives. We are further integrated our sales marketing engagement and customer care teams to drive better alignment across our sustainable service offerings as we seek to enhance profitability retained key.

Customers and grow the business further in a manner that also enables our customers and society.

To meet the sustainability goals and needs finally from a facilities perspective, we're prioritizing and allocating capital spend in a manner that meets our long term safety operational and strategic needs, while creating a more welcoming and accommodating experience for all of our people.

I'll provide an update on our core strategy supported by the foundational pillars. Our landfill assets are positioned well to continue to help meet the disposal needs of a capacity constrained northeast our pricing programs are working well to offset cost inflation.

Our operating programs coupled with investment in innovative technology are focused on further driving margin expansion as we look out over the next few years, we believe there to be a positive backdrop to drive further value. We continue to focus on improving the blend of our customers to increase the quality of revenue.

At our sites in fact, we are experiencing some nice sequential trends here.

January of 2022 as it relates to continued improvement of our average price per ton.

Landfill volumes remained lower than pre pandemic levels by over 300000 tonnes. This is primarily isolated to volumes in our New York facilities from it in and around New York City, our expectation in 'twenty. Two is that we will only experienced a modest recovery of these tonnages. We also.

To advance key permitting and expansion efforts, including focusing on developing future disposal capacity such as our real landfill.

Rail our Mckean landfill rail project, which we are targeting to bring online in late 2023. Early 2024, we're also continuing to invest in sustainable infrastructure at our site.

As an example in 2022, we have budgeted to spend over $8 million in aggregate projects related to further reductions in greenhouse gas emissions water management and other environmental upgrades further from an R&D perspective, we have projects in landfills.

Development at two of our landfills, where a third party is making the capital investment.

As these projects come online over the next year, we will benefit from gas royalties moving.

Moving to the collection business our collection business continues to perform well we are focused on several key areas, including pricing programs that offset inflation.

Improving operating efficiencies to drive margin expansion service excellence and continued investment into our people to drive employee attraction retention advancement and engagement.

From a pricing perspective, we advanced positive price in 2021 as cost inflation has increased we have calibrated R 22 pricing programs Accordingly, and in January most of our 2022 budgeted pricing was executed.

Early indicators are favorable in that there has been limited pushback from our customers pricing levels exceed our core cost inflation and there's meaningful sequential improvement through January in our pricing, we will continue to monitor our cost and the inflationary environment throughout the year and take further action if needed.

Next resource solutions.

Our recycling processing operations and our non processing business units are performing extremely well from a recycling perspective, our business model is economically and environmentally balanced we haven't removed much of the risk related to recycling commodity market through our fee programs and contracts structured.

This has allowed us to generate acceptable returns.

That are more stable over time, which better position us to make continued return driven capital investments into our recycling infrastructure in.

In 2022, we will complete an $18 million equipment upgrades at our Charlestown, Massachusetts recycling facility, which is one of the largest in the country. This significant investment ultimately strengthens our ability to continue to meet the sustainability needs of the greater Boston market. This upgrade will improve.

Throughput operating efficiencies the quality of our end product, while driving higher margins. We will also introduce proven technology, including several several robotic machines on the line. In addition to this project we are investing over $1 billion in other select robotics and other recycling facilities.

Which reflects our continued dedication to our sustainability services.

We will continue to experience a great deal of positive momentum and growth related to our non processing operations as well here, we provide resource management services to larger more complex customers with a wide array of sustainability needs.

Now I'd like to highlight our capital allocation and growth strategy as I mentioned in 2000 22021 was another solid year of execution against our growth strategy. We completed 10 acquisitions in the year as well as completing a refinancing of our credit facility, which positions us well for continued growth 2002.

'twenty two is off to a nice start.

Tuck in acquisitions that we've closed thus far in the year, we will integrate nicely with our existing operations as always we're focused on a seamless transition of our new customers and employees. We welcome all of them to the <unk> team. Our pipeline remains strong were actively working on several opportunities in various stages.

Yeah.

Wrapping up as part of our 2024 plan, we have established a target of adding greater than $30 million of.

Annualized revenue through acquisition or development opportunities, while maintaining leverage below 325 times.

We've also maintained our goal of growing adjusted free cash flow by 10% to 15% per year.

Our 2022 guidance aligns well with our 2024 plan and we anticipate continued execution against our key strategies. We're excited about the future as we see a pathway of continued growth that will drive further value and with that I'll turn it over to Ned.

Sean.

Revenues in the fourth quarter were $241 8 million up $41 6 million or up 28% year over year with 11, 7% of the year over year change driven by acquisition activity and the remainder from organic growth solid waste revenues were up 18, 9% year over year.

With price up four 3% volumes up 2% and acquisition growth of 12% as expected our price growth improved again sequentially from the third to the fourth quarter.

Revenues in the collection line of business were up 18, 3% year over year with price up four 8% in volumes slightly up.

Revenues in the disposal line of business were up 19, 3% year over year with price up three 3% volumes up five 9% and the remainder acquisitions.

Landfill pricing was up 4% year over year with landfill tons up four 2% we.

We still have a negative basis to pre COVID-19 tonnage levels of roughly 300000 tonnes.

Resource solutions revenues were up 26, 4% year over year with eight 3% from higher recycling commodity prices 10, 7% from growth from acquisitions and the remainder from higher processing and non processing volume growth.

<unk> prices were up year over year at higher commodity higher cardboard mixed paper pricing higher metals pricing and higher plastics pricing. However from September 2021 through January 2022 commodity prices have dropped by roughly 30% with the decline driven by plastics and fiber price.

Okay.

Adjusted EBITDA was $51 4 million in the quarter up $8 8 million year over year and adjusted EBITDA margins were 21, 3% for the quarter flat year over year as acquisitions negatively impacted margins by 35 basis points and fuel cost.

Cost net of R. R.

Our E&E fee negatively impacted margins by 11 basis points.

So excluding our acquisition impacts adjusted EBITDA margins were up roughly 35 basis points year over year with our pricing programs and cost efficiency efforts offsetting the rising inflationary pressures.

Solid waste adjusted EBITDA was $43 7 million in the quarter up $5 million year over year with collection and disposal adjusted EBITDA, both up year over year.

Resource solutions adjusted EBITDA was $7 6 million in the quarter up $3 7 million year over year with improvements from recycling organics processing and non processing operations.

Cost of operations in the quarter was up $29 $6 million year over year, and up 80 basis points as a percentage of revenue with most of the increase driven by acquisition Ed will get into some additional details general and administrative costs in the quarter were up $3 $3 million year over year or two.

104 basis points as a percentage of revenues.

With the majority of that coming from changes in the timing of incentive compensation.

Depreciation and amortization costs were up $5 $6 million year over year, mainly due to higher depreciation on trucks related to our fleet plan higher amortization on higher landfill volumes and higher amortization of intangibles associated with acquisition activity.

Our income tax provision was $2 5 million in the quarter. This was actually up $56 million from the same period in 2020 as you May remember, we had a $55 million nonrecurring benefit to income taxes last year due to the reversal of evaluation allowance.

On December 22nd we completed an amendment and restatement of our senior secured credit facility with this refinancing we added five years of tenure to our credit facility reduced our pricing by 12 five basis points added $100 million of capacity to our revolver and created a LIBOR transition path.

Wei.

As of December 31, we had $562 $6 million of debt $33 $8 million of cash and liquidity of $305 8 million. Our consolidated net leverage ratio was 235 times.

Our balance sheet is in great shape and positions us very well to continue to grow into the future. While also providing stability in this rising interest rate environment with our fixed interest rates on approximately 72, 5% of our debt today.

Net cash provided by operating activities was $182 7 million for the fiscal year up $42 $8 million year over year, mainly driven by higher operating results and positive changes in our assets and liabilities year over year.

Adjusted free cash flow was $95 3 million for fiscal year, 2021, up $26 2 million or up 38% year over year.

As stated in our press release yesterday afternoon, we announced guidance for fiscal year 2022 by estimating results in the following ranges revenues $980 to $995 million adjusted EBITDA of $228 million to $232 million and adjusted free cash flow of 104 to one.

$108 million.

As we stated yesterday, our 2022 guidance ranges assume a stable economic environment continuing from the fourth quarter 2021 through the remainder of 2022.

In addition, our 2022 guidance includes $55 million of revenue growth from the rollover impact of acquisitions completed in 2021 and those already completed in early 2022. However, our guidance does not include the impact if any acquisitions to have yet to be completed.

Our pricing programs continued to increase sequentially from late 2021 into early 2022, and we expect solid waste pricing of $4, 5% to 5% in fiscal year 2022, we have already rolled out the vast majority of our planned pricing for 2022, and we have not experienced any more.

Meaning full pricing rollbacks, we believe that we have established an appropriate pricing plan for 2022 debt positions as well to offset inflationary headwinds, while still improving margins through our investments in technology and core operating programs. Our internal rate of inflation is currently running at roughly four.

1%, however, if our cost inflation increases further we have great flexibility to advance additional price increases.

70% of our collection book of business in.

In addition, our floating energy and environmental fee effectively offsets most of our fuel exposure.

Overall, we expect adjusted EBITDA to be up 12% to 14% year over year with roughly 40 basis points of margin expansion.

Given the timing of acquisition activity in 2021, and the expected year, one margin headwinds from these acquisitions as we complete the integration and drive synergies, we expect margins to be flat in Q1 and build throughout the rest of the year.

As John stated, we have several exciting resource solutions projects planned for 2022, including the full equipment upgrade to our Boston mass recycling facility and two renewable gas projects at our landfills, where a third party is making the capital investment and we will receive the gas royalties.

In addition, we expect that income statement tax provision of roughly 27% in 2022. However, our cash taxes are expected to remain at roughly $4 million. In 2022. In addition, we have roughly $99 million net.

Net operating losses remaining as of December 31.

With that I'll hand, it over to Ed. Thank you.

Thanks, Ned and good morning, everyone.

So we finished the year strong we're excited about our growth and our positioning going into 2022.

All of our operational improvement programs are building momentum and with 20% more revenue now in Q4, a year ago. There was more opportunity to apply these proven programs to new divisions.

Having said that I know everyone is focused on inflation pricing and our ability to maintain margins. So I'm going to concentrate my comments accordingly.

For the quarter on a consolidated basis cost of ops as a percentage of revenue increased 78 basis points and adjusted EBITDA margins were roughly flat ACA.

Acquisitions accounted for an 80 basis point increase in cost of ops as a percentage of revenue.

And negative 35 basis points and EBITDA margin.

The margin dilution on the pass through of higher fuel cost accounted for another 11 basis points headwind so cost of ops and EBITDA margins net of these items improved about 13, and 46 basis points respectively.

As I've discussed on prior calls acquisitions will generally hurt our margins for the first couple of years until we put it in our operating programs introduced technology improve equipment solutions for the services provided and execute on synergies. The Best example of this is our Rochester operation.

I looked at the financials for 2021 and margins for Rochester, now almost exactly the company average.

We accomplished this by implementing our best practices converting to the most efficient equipment to service that market and using our technology to streamline routes. So I'm very confident in our ability to execute but it takes a little time.

About half of our revenue comes from our collection operations and we had a great quarter from a bottomline perspective.

Cost of ops in this line of business increased 130 basis points as a percentage of revenue compared to Q4 last year, but acquisitions gave us a 146 basis points of headwind.

So the four 8% in price that we achieved in the quarter was enough to keep cost of ops on a same store basis on a positive trajectory.

Costs continue to rise and it is very important that we keep up with these increases with our pricing programs. We've done some work to identify and inflation factors specific to casella keep in mind that things like fuel and environmental cost inflation is passed to the customer and fees that do not factor in.

So our price down so looking at CPI isn't really a best the best indicator.

By tracking our internal Casella cost index, we can react quickly to protect our margin and as <unk> has mentioned a substantial portion of our collection pricing has opened a further price adjustments should our costs continue to decline.

And as John said, we have just completed our January customer pushback has been relatively muted and we remain confident in our ability to maintain core margins. We expect our various operating initiatives, which include increased automation and expansion of our use of onboard computers and.

Ongoing computer rated routing improvement projects will allow us to continue our margin improvement trends that we have attained over the past few years.

The disposal line of business, which includes our landfills and transfer station network.

So our cost of ops increased by 300 basis points. This Q4 versus the same period a year ago acquisitions.

Acquisitions accounted for about 182 basis points of this increase so on a same store basis. When we did some see some margin compression on rising costs and a pass through price increases to recover margin at the start of 2022.

The higher effect of acquisitions on our disposal margins relates to an intentional mix change change I'd like to talk about.

We have strategically acquired transfer stations in new markets that will eventually allow internalization into our existing landfills benefiting economies of scale and making the landfills more efficient.

These transfer stations, coupled with expanded permits at some of our landfills and increased utilization of the Mccain site are expected to accelerate contribution from this line of business over the next few years.

Our resource solutions is a totally different story as cost of ops improved by over 300 basis points on strong commodity prices and great execution on the business plan.

And our business model, we share revenue with our customers on the upside over a certain threshold, so higher commodities give us more revenue to spread over our operating costs.

Commodity prices fluctuate over time, and our fee structure is protected downside swings, but our real success in this line of business coming from efficiency improvements and the processing of material and whether it would be recyclables or biosolids every year. The solutions team recommends various improvements in processing tech.

Knowledge to improve our efficiency and this year, we're very excited about the coming upgrade at our flagship Charles town facility that John mentioned.

The team has done a great job, helping to design, new layout and a tight footprint to take advantage of the latest technology to improve throughput and increase the level of automation, reducing cost while increasing much needed capacity.

So I'm happy with the finish to a great year and look forward to continued progress in 2022 I wanted to take this opportunity to thank and congratulate all of the <unk> team on a job well done with that I'd like to turn it back to the operator to start the Q&A.

And thank you.

As a reminder to ask a question you will need to press star one on your telephone to withdraw your question press the pound key please standby we compile the Q&A roster.

And our first question comes from Sean Eastman from Keybanc capital markets. Your line is now open.

Hi, gentlemen, just wanted to start on the 2024 plan just at a high level it kind of sounds to me like.

Don't fix what Ain't broke kind of message around the.

2024 strategy it sounds like maybe the human capital is.

Bigger focus you jus the M&A target a little bit.

But is that kind of a fair characterization here I.

I think it was a very fair perspective shown I think.

Clearly over the last few years I think everyone is.

Got a focus on people in HR.

It's a much higher.

Higher priority.

Certainly.

Attracting drivers and mechanics retention.

We've got to do everything that we can as an industry to attract as many many people coming out of high school as we can that are not going on.

To call it so.

People in the technology facilities those those pillars.

Really help us.

To drive the overall performance of the business.

When we sat down to look at the strategic plan.

Our core strategies are working amazingly well.

Underneath those are sub strategies that we're focusing capital resources people resources. We also take a good hard look at our growth over the last few years, we've grown from 600 people to 3000 people in less than three years and as we look around to be successful for the next three years next 10 years we.

Really do believe we need some additional investment in key foundational elements and that's where that part of the plan has emerged and it does not like some radical shift their huge dollars. It's just kind of taking what we're doing codified in improving and really just making sure everyone's rowing in the same direction.

Okay got it very helpful.

The comments around the <unk>.

<unk>.

Mix shift associated with the transfer stations in the upcoming disposal capacity coming online.

Can you just sort of explain that in a little bit more of a simpler way in and how that dynamic how much of a margin tailwind that dynamic is over the coming years I just wanted to make sure I understand what you mean there.

Yes.

Happy to do that.

So if you look at our market everybody knows that disposal capacity is very limited and and things are shifting.

States like Massachusetts are looking to export all their waste, we're now down in Connecticut. They are struggling with our disposal plan.

So what youre going to see in the market over.

We're already seeing it and youre going to see it more over the next few years is a move towards.

Transfer stations, including rail transfer stations to get waste to the existing sites, because they're not permitting any new ones.

So the plan is we need to expand the existing sites. We do have a lot of permitted capacity at mckean as well.

And it's time to take advantage of that and to get it there we have to strategically place ourselves.

In the market, where the disposals were the disposal crisis is so that we have transfer stations to move that volume to these landfills.

Another example is this add is our investment in Buffalo New York.

<unk> purchased two transfer stations, there and it's about 40% to 50 miles away from our Highland landfill, there's a landfill in the Buffalo market that will be closing in the next several years. It takes four to 500000 tons a year at the same time, we're working on an expansion at our Highland landfill to take it from 400000 tons a year 10.

Tons, a year, so intentional moves like that of looking at markets that we'll be capacity constrained, adding assets like transfer stations that can allow us to vertically integrate and build our business and as Ed said, then they keen rail strategy or parts of what we're looking at intentionally over the next couple of years to drive create organic.

<unk> growth.

And then the idea there that you have.

Can drive a lot of that growth from disposal, which is higher margin.

Exactly and it gives us a platform for growth and integrated growth from recycling resource management to collecting waste to disposing of it. If you don't have a full set of solutions, it's hard to gain new customers, but it's hard to grow that base. So.

Finding ways to make sure we are secure and our ability to handle waste and recyclables over the long term is important to us.

Sorry, Andrew.

Your question about the margin effect, which is what I was trying to address.

So we have a timing issue here. So we've expanded in the transfer stations, which as everyone knows is not where the margin is the margin is at the landfills. So once we started internalizing that volume from these transfer stations into our landfills.

You see the margin effect for the company.

Gotcha, Okay, great Super helpful guys, I'll turn it over there.

Thanks Scott.

And thank you and if you are asking a question. We please ask that you limit yourself to one question and one follow up again Thats. One question one follow up and our next question comes from Tyler Brown from Raymond James Your line is now open.

Hey, good morning, guys good morning.

Good morning, Tyler, Hey, Hey, Thanks for some of the color on in the prepared remarks about pricing broadly, but can you just talk a little bit more about landfill pricing.

Look in 'twenty, two and even beyond that I know things have slowed a bit in 'twenty. One on the New York City dynamics. It doesn't really sound like those volumes are tightening up that quick. So can you just talk a little bit more specifically about the outlook longer term there.

Yes, it's interesting we've talked about this for a few quarters, where some sometimes statistics tell the story perfectly sometimes they don't and our reported landfill pricing stat.

And maybe not fully told the story it was 4% in Q4.

Is up from three 5% in Q1 'twenty one so it has been increasing its over 4% into January but probably more importantly, our average pricing stack with six over 6% in Q4 and increased into January and you've got a really.

The way, we calculate stats you talked about this last quarter same customer same site same type of waste how much we've changed it year over year, but were changing customers. We're changing mixes we're blending up our book of business, which is creating more profitability and that doesn't really show up in the price volume the way we haven't calculated the average stature is it better so we're excited.

The pricing plans for the year.

Got out to the street with most of it in collection and at the land sales and it's sticking and if we see additional opportunity to push price EBIT to cover more inflation or just advanced pricing in the market. We will look to do that again in 2022.

Okay.

Extremely helpful.

So I don't want to come back to the margins and the outlook I think youre looking and correct me, if I'm wrong, but maybe 40 basis points of improvement next year, but that is despite some dilution from layering in that M&A. So you talked about price exceeding inflation, but can you just talk about some of the broader puts and takes to margins is there anything.

It's kind of one timing that we should think about.

Yes, so if we look at if we look at 2021 just as a starting point our margins were up 75 basis points year over year.

Up strong in the first half of year second half of the year, a little bit more muted with more of the acquisition overhang for the full year. We added acquisition overhang of about 30 basis points. So when you net those two together our margins were up over 100 basis points for the full year and you start to get under the Hood of what drove that.

Big pieces.

As Ed said, our core investments and technology operating programs drove about 30 plus basis points recycling, our SRA fee. Those programs drove about 35 basis points, and then pricing drove 50% to 60 basis points and then Theres a couple of like one tiny things in other moving pieces, but those are at.

Big buckets as we enter this next year, Jason how much acquisitions overhang into 2020 Q yeah. Thanks, Matt. So in 2022, there is on the full year about a 25 basis point headwind as it relates to acquisitions completed in the first half of the year it'll be more dramatic at about 35 basis points in the first half.

22, and about 15 bps in the second half of the year rollover and as we look to the year, we expect recycling from the slowing from September through today to actually be.

Positive year over year in the first half of the year, but turned negative in the second half of the year unless something really changes, but no. Other really big moving pieces. We expect that same kind of 30 plus basis points from the core operating programs and we expect pricing to do the same thing 40 to 50 base.

This points of improvement.

Okay, Okay, and if I can squeeze one last one here real quick.

You talked about the Boston Murph upgrade so is that capital spend in the $15 million add back to free cash flow or is it not.

Second I may have missed it but.

It is not OK. That's helpful. So can you talk about what the $15 million is on the add back, which I think its waste USA, but I'm not sure and then secondly, and I may have missed it but when does the Boston murph come online or when the.

Retrofit is done and then how much of an EBITDA contribution is that once it's done.

Okay.

Yes.

Customer investment of $18 million, it's actually spread between 2021 and 2022.

About six or $7 million happened. This last year, we didn't add it back it's just in maintenance, what we call maintenance capital or recurring Capex.

The additional investment next year of 11 or $12 million in 2022, I'm sorry, it's just in our maintenance recurring capital that's not something we are adding back.

There really is only one category captain.

Capital that we're adding back this year and thats associated with the integration of acquisitions. So as we've explained in the past.

When we look at a pro forma for an acquisition and we buy a business in the first 18 months.

Over invest in that business to drive synergies to get into our systems to consolidate facilities and thats, what that $15 million is associated with and waste USA is done.

Very successful project three years into making the sellers than waste is being placed and that will not be.

Add back into the future.

Okay, and then EBITDA contribution.

Alright.

Yes.

It's several million dollars once it's all done, but we have to ramp additional customers to facility. So we're adding about 35% new capacity.

Two the facility by increasing throughput and being more efficient with less people.

So we're not just going to snap our fingers in 2022 and have more tons, but it will allow us to grow into that over a couple of years, So youll see less downtime less maintenance and theirs.

$1 million of benefits there, but in the year us being shut down for six to eight weeks and having to move recyclables all over in the northeast is going to suck up all those savings and then you look out over the next couple of years, we've got some really nice built in organic growth there to build that business and meet needs.

Okay, Great I'll hop back in the queue. Thanks.

Thank you.

Next question comes from Michael Hoffman from Stifel. Your line is now open.

Thank you very much.

Back on the landfill side.

I'd like to understand that.

The juxtaposition between scarcity value of the space. So you brought that up Ed versus.

There probably is some ceiling that gets triggered by with more.

Competitive transfer stations add rail so that optionality into rail, but why.

Why can't you get more price in the landfill now given the scarcity value.

Well I think we are getting quite a bit of price as we said earlier, Michael I mean, we ended Q4 with over 6% average price.

If you look back over the last couple of years Q Youll see from our reported pricing standpoint, we had periods of 6% to 7% and those who are related to some rollovers of long term contracts about one third of the tons going into our landfills comes from our trucks, one third from long term municipal.

On tracks and one third from commercial contracts and those municipal contracts are typically longer in nature three to five years and what we've seen is when we roll over those contracts, we can get larger increases and then within the term of the contracts they are a little bit lower.

The increase is sometimes our CPI indexes, sometimes they're set indexes. So you might see some periods of higher pricing some periods of pricing more at that 5% level as we look out over the next couple of years and that mix of our book of business.

That's particularly true when you have a really large contract and we have a couple of contracts Michael that are in that vein width.

300000 tons a year there is a there was a really nice.

Increase the price when that contract is renewed within its somewhat tied to inflation.

For the period of time as a contract until the renewal.

It would be appropriately adjusted.

Right Okay.

Wow.

I have a second question, but I'd like a follow up.

Boston renewed at like $94 for the burners, but the spot markets at a 120 right now and that rate of change there seems greater than you want to figure out what the how many how much cost to drive the interior facilities.

The rate of change you have been taking advantage of that sort.

Wonder if you could do more.

It's.

Given the scarcity value.

It's coming from.

I think it's a good question and it's something we're continually looking at.

You're asking where we can.

Address additional pricing and as you know transport is very complex right now, they're multiple shifts of where waste is going across the northeast as additional rail up into us and people struggle to move waste out in markets, where you have closing facilities and I think from our vantage point, we just.

Understand this is a long term opportunity and it's not just a one year opportunity. So.

This pricing is going to come for years into the future and.

I think from our vantage point, we're adding value, we're adding margin each year, we're adding returns at the sites and if we can course correct a little higher we will do so okay. Second question is offsetting some slight tuition I was just going to say Michael we're also offsetting substantial inflation at this point in time as well.

Fair enough and I do appreciate that I think that shouldn't be lost on anybody that the industry.

Has validated and you can.

React to this as well as you've reacted to other things and maintain the quality underlying cash conversion so do that.

The cash conversion. So you have enjoyed an NOL for a long time, we're starting to whittle into it and this is.

The benefit of really good success youre going to run out of this NOL.

Boy three years, how do we think about it for modeling.

Our free cash flow analysis, whats that step up.

Yes, so we are taking less bonus depreciation right now.

With that thought that will maintain more tax depreciation as Nols roll off Michael So you know as.

As you know bonus depreciation goes away in 2026, we're taking a lot of advantage, we are taking a little bit less advantaged today. So we can keep those tax assets in place. We've also as you well know we do almost all of our acquisitions as asset deals. So we can take this step up in valuation depreciate from a tax standpoint assets.

Well <unk> was at $3 38, 10 election deal, which was a stock deal we treat it as an asset deal from a book standpoint, which is really exciting because it also helps to improve our tax standpoint, but you are right probably by 2024.

Our NOL positions, mainly consumed and we're stepping into a more normalized cash tax pay and.

Youll see that step up this next year will be stepping up for about $1 million and $5 of cash taxes, and 21 4 million in 2022, and you will see a step up a few million dollars each year over the next several years and we will be working additional strategies to try to you.

Manage that over time.

But what I am hearing us talk about it and systems.

$5 million to $10 million out of 20 or $30 million.

You know it really depends on the year, but by 2024, if we're at like $10 billion of cash taxes Thats generally what is their what's in our models today.

But not.

20 or 30, okay.

Very helpful.

Thank you very much thank you Michael <unk> Michael.

And thank you and our next question comes from Hamzah <unk> from Jefferies.

Your line is now open.

Good morning. Thank you I may have missed this but could you.

Could you just remind us how much of the business as inflation indexed.

And how the resets work and then I think you had mentioned a specific.

Guastella inflation index, and maybe talk about how that plays into it and if thats already in the contract.

Yes, good question Hamzah nice to hear from you on.

Our book of business on our collection side, it's pretty unique as you know, we're only about 10% of our collection book of business, our municipal contracts about 25% of subscription residential agreements, where we have pricing flexibility about 35% is small commercial customers.

Where we have pricing flexibility.

About 15% is.

Temporary construction roll off and the remainder are long term industrial roll off contracts that typically has set escalators. So large degree of our book of business over 70%. We have a lot of pricing flexibility and then where we do have linked contracts about half of them are <unk>.

Linked in about half of them have set escalators and those CPI linked contracts.

They vary from CPI use to regional CPI to somewhere around the trash and garbage index, but given where CPI is on those should be nice tailwind this year.

As far as the cost index that we talked about earlier, it's interesting because you see these headline CPI numbers of seven 5% and then dig into our business or anyone in the trash business and its not perfectly reflective of what we do and you start to look at the components of that seven 5% and there are things like car.

Yes.

Other kind of categories that arent exactly related to our business. So we created our own internal CPI index looking at key categories to just make sure we take out any sort of price volume indicators and where our aggregate basket sitting at four 1% today, which is quite interesting because.

The Bureau of Labor statistics, trash and garbage indexes right at 4% in January So our internal index is sitting right on top of what the BLS is predicting for the in this industry.

Three as well.

Very very helpful and then just.

My last question and I'll turn it over is just on the <unk>.

I think you guys highlighted free cash flow growth starting to 15%.

Correct me if I'm wrong.

It seems like you've been growing over 10% free cash flow growth.

Certainly.

And so there's that and then it also feels like you have more self help on your solid waste margins.

So maybe talk about.

Maybe just flush that out or is that conservatism or maybe we're missing something else.

Yes Kate.

We have been growing at higher than 10% to 15% we've been growing closer to 20% for several years now and I guess, if you look at just core organic growth, we're growing more like 10 to 12 ish percent and then you add in acquisitions that accelerates, that's greater than the 15% and as we kind of.

At 10% to 15%, we're not really including acquisitions and as Michael mentioned, a few minutes ago, we're going to have a little headwind from cash taxes over the next number of years, so that will be not moderating significantly our growth rate will moderate a little bit. So I think we're really comfortable with that 10% to 15%.

And we will look to hopefully beat it with some acquisitions as well.

Got it thank you.

Hamzah.

And thank you and our next question comes from Michael Feniger from Bank of America. Your line is now open.

Hey, Ron thank.

Reason, why we're not seeing that that capital spend and the level of investment higher with where you guys are in the cycle.

Yes, we have a pretty unique investments happening in 2021, the largest of which was <unk>.

Getting opened its 25 year sell at waste USA.

The real unique one time investment for US usually open up an entire 25 year period like that so that was the data the reason.

I don't know Jason is there anything else, we're seeing there theres no kind of like major decline.

Got it.

Primarily waste USA year over year, I think if you look purely at our absolute capital less the capex that we add back related to acquisitions and waste USA last year in 2021, you actually see what we'll call our maintenance capex step up slightly year over year from about <unk>.

Nine 5% to 10, 5% so we are.

Maintaining a consistent level of spend year over year, if not slightly increasing yes, I think one other comment there and it goes to something really passionate about and put a lot of work into our fleet plan, our yellow iron plan and our facilities plan, you've got that planned out years into future Ed Yes.

And we have a lot of automation opportunity is still in the company. So.

I look forward to the efficiencies we gain through that fleet plan in the next few years.

Great and I apologize that you guys touched on this earlier.

You talked about with Honda.

4% of what you guys are seeing within your internal call that Ned what you're embedding for your guidance for cost inflation in 2022.

And do you have that easing at all in the second half because based on the margins, you're obviously likely see more operating leverage it looks like in the back half of the year, just curious how those dynamics kind of play out.

Yes, Youre right. We are that is in our model right now 4% cost inflation for 2022, we don't have any easing in the back half of the year. However, the negative overhang from acquisitions moderates through the year and that allows our pricing programs and our cost efficiency programs.

To add more margin through the last half of the year.

Makes sense and just to squeeze one last thing I know you guys were very early in restructuring the whole recycling model. So forgive me for asking this.

Do we think about the sensitivity to commodity price I believe you said earlier net that.

Fees were 35 basis points tailwind to margin in 2021, so I'm just trying to get a sense like what are we kind of thinking about for 2022, and how does that relate to movements. We see fiber prices. For example, thanks, everyone I'm going to give you like the two minute answer on that and if you walk in there.

Paul and I will explain in further sure.

At our recycling processing facilities, we put thresholds in place and they are equal to our fully loaded processing fees plus a margin and those thresholds are around let's say $100, a ton or maybe a little bit higher a little bit less and if commodity prices click over those thresholds we start to share.

Some of that additional commodity value with our customers, maybe 50 50 or a different formula if they click below that and we can sell let's say the average basket commodity or $70 a ton a customer would pay us a processing fee of 30, what happened in 2021 as we click through those thresholds for first time in four years. So we started to occur.

More money to our bottom line and we gave more back to our customers, but that 90% risk off take that we have room or below the thresholds shifted where we actually added more value from recycling, but we also took out a little bit more risk. So if you saw recycling commodity prices dropped through the floor.

Have some downside until we hit those thresholds once we get below the thresholds are customers and start taking on the risk dollar for dollar but above those we accretive some additional value in 2021.

Okay. I appreciate guys. Thanks for running through that with me. Thanks, Tim Yeah. Thank you.

And thank you.

And our next question comes from Alexander Leach Bamberg capital markets. Your line is now open.

Hi, guys. Thanks for taking my question just a quick one for me you mentioned.

One thing to improve our customer mix.

Corporate revenue could you dive into that a little bit more what sort of end markets or customers that include and what are the characteristics that makes revenue from them high quality.

So I think that.

There is there is a real opportunity.

From a.

Resource solutions standpoint in terms of meeting the needs of.

Our customers, particularly as it relates to colleges and universities industrial customers.

And.

So municipal customers for that matter in terms of.

Helping them to meet their sustainability goals and that's somewhat down the middle of the fairway in terms of improving we know where.

People are really trying to move the needle from a sustainability standpoint, and they understand that.

Costs associated with that and it gives us an opportunity to.

Hope solve that problem and.

And improve our book of business as well.

I don't know if you have anything to add.

Just kind of mentioned that there is an interesting trend over the past few years, where we used to.

Proposed to colleges and universities a sustainable solution.

A few years ago. They react just based on the cost at the end of the day in and not accept our proposal and in the past year or so we're starting to see quite a bit of success because the attitudes have changed.

The colleges and universities are much more focused on the overall intrinsic value of being sustainable and we've started having a lot of success.

It's the same thing from a manufacturing standpoint major manufacturers major industrial customers.

Seeing the same thing they are all trying to rethink their processes rethink their packaging if there Pat.

Packaging.

Et cetera, So there's just an awful lot of activity.

<unk>.

Is lending itself to.

Two higher margin customers and people that are obviously willing to pay for those.

Those type of services.

Okay, great. Thanks, guys.

Yeah.

You're welcome.

And thank you Andy.

Our next question comes from Tyler Brown from Raymond James Your line is now open.

Hey, Thank you for the follow up.

Hey, Tyler Hey, just this might be a hard question.

I'm going to ask it anyway, so it's a S R.

Yeah.

Yeah well.

The North sea.

Given that the northeastern market is and it is going to continue to be a long haul waste market and it sounds like it's probably going to become even more transfer centric with the build out of rail.

How do you how should we think about the long term solid waste margin profile versus your peers. So if there is say, let's just call. It low 30% margins are you structurally a couple of hundred basis points behind that or just any help on handicapping that.

Yes, but I don't know exactly the mix of our peers and their exact margins, but we do know and we.

Today, it's a negative hit to our margins were almost every ton we handle goes through a transfer station it gets transferred.

Distances to landfills or disposal sites, we have very few direct drive routes and thats not the case around the country. There are many more garbage trucks that pickup that businesses are households that go directly to disposal sites in the northeast it is flowing mainly through transfer stations, which.

Have a negative cash impact, but it has a negative margin impact.

And as Ed pointed out I mean, we saw it in our numbers. This year as we mixed slightly more transfer stations for our long term strategy it weighed on margins.

Good long term strategy, but it wasn't margin detractors.

Yeah, Okay, Alright, that's helpful.

Then my last one it sounds like you've finished up waste USA will we see that in your aerospace table in the 10-K.

Yes, it's in there already so okay.

We have permitted formidable so that's been permitted aerospace for the last couple of years. It just wasn't built now at scale waste is being placed and.

It's a really big deal for us because that was complex and tough permitting complex and tough construction cycle. So we're excited to be done.

Okay, all right I'll leave it at that thanks, guys.

Thanks, Tom.

Thank you and we have a follow up from Michael Hoffman from Stifel. Your line is now open.

So I promised you Tyler and I arent sitting in the same room and ganging up on you but.

I'm almost repeating my question.

Because of what he asked.

And by the way I think on a national basis, its about 40% of the volume goes direct calling the rest is long haul but.

But why can't you get.

Why can't you price that scarcity issue through given that.

If you control the game, even if it's a long haul you.

We control it.

Yes, it's a good question, but some of it is math too. So you made the reference earlier, we're transfer stations use a price of $50 $60, a tonne and getting 5% or 10, let's say, 5% or $60 was $3 a ton if I get $4.

Ton on a $100 right.

It's now down to a 4% increase so it improved my cash position and I have improved profitability, but I have a lower percentage stat and a bit of that's what's happening here Michael as these rates have climbed really quickly the percentage thats, maybe look a little bit worse, but the dollars for getting on the street are good they are printing.

You see that in our numbers for the year I mean, both from a EBITDA operating income and free cash flow standpoint.

Okay and then the last one for me would be how many of your landfills are below five years of life and you're in a development mode clearly Bethlehem is what elses.

Yeah.

I think Bethlehem is the only one.

So, Ontario, Scott plenty of life.

And then you've got the Highland and <unk> got the community agreement. So that's just going through the bureaucratic process in New York State.

Trains was politically there, but it's just it's just new Hampshire them are worried about.

It is new Hampshire, I think that probably the next one is Ontario, Ontario's probably five.

Seven seven years 2028, 2028, right now so.

We'll have an expansion there as well Michael.

Okay.

For him and then Ontario.

Keep in mind keep in mind, we did.

Getting approval and were in a.

Permitting process for the island now to move that facility and obviously, we've just brought in mccain's capacity to the model as well so.

Those two.

Factors Mckean is going to be great.

Long term facility for us as well as Thailand, moving that permit from 472 million tonnes a year.

Right and it shouldn't be lost on anybody in New York.

Community hosting agreement trigger so.

That's like.

Mt Everest to get the permit to everything else just bureaucratic.

That's right okay.

Yes.

Youre welcome.

Jim.

And thank you and I'm showing no further questions I would now like to turn the call back over to Mr. John Casella for closing remarks.

Thank you and thanks, everybody for joining US today, we look forward to discussing our first quarter 2022 earnings with you in April Thanks, everybody have a great day.

Thank you. This concludes today's conference call. Thank you for participating you may now disconnect.

[music].

Okay.

[music].

Good day, and thank you for standing by and welcome to the Casella Waste Systems, Inc. Q4, 2021 conference call. At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session to ask a question. During this session you will need to press star one on your telephone.

Please be advised the call is being recorded if you require any further assistance. Please press star zero I would now like to hand, the conference over to your host today, Joe Fosco, Sir please begin.

Ned Coletta, our senior Vice President and Chief Financial Officer, and Jason Mead, Our Vice President of Finance.

Today, we will be discussing our 2021 fourth quarter and year end results. These results were released yesterday afternoon.

For the purposes of the Safe Harbor provisions under the private Securities Litigation Reform Act of $19 95.

Actual results may differ materially from those indicated by these forward looking statements as a result of various important factors.

Next to update forward looking statements at some point in the future.

GAAP measures are not prepared in accordance 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.

In the investors section of our website at <unk>.

Our dot to sell our dot com.

With that I'll turn it over to John Casella, who will begin today's discussion.

Thanks, Joe and good morning, everyone and welcome to our fourth quarter 2021 conference call.

We are very pleased with our results in the quarter as we finished the year strong and continued to execute well against our key strategies, Ed and Ned will provide color on the corner.

With that I'd like to focus my comments on performance through 2021, our forward outlook and our strategy in August 2017, we laid out a multi year 2021 strategic plan.

Plan included a key strategies, most relevant to driving shareholder value along with our financial framework that provided measurable targets to track performance as we exit 2021, I truly could not be prouder of what we have achieved.

As a result of the hard work focus and discipline across the organization, we exceeded all key metrics of the 2021 plan.

As an outcome we grew the business meaningfully in 2021 through our pricing programs operating initiatives and growth strategy.

For the year revenues were up nearly 15% adjusted EBITDA improved over 18% and adjusted free cash flow increased roughly 38%.

Our performance reflects continued strong operational execution within our base business combined with growth through acquisitions.

During 2021, we closed on 10 acquisitions with $88 million.

The annualized revenues in the first 45 days of 'twenty two we've closed.

Five additional tuck in acquisitions with approximately $4 million of.

Of annualized revenues that have a great strategic fit.

Our momentum carries into 2022, we have a plan that aligns with our recently created 2024 strategic plan. The key strategies of the 2024 plan are very much consistent with those of the 2021 plan.

There are as follows number one increasing landfill returns driving number two driving additional profitability in the collection operations.

Third creating incremental value through resource solutions in the fourth allocating capital to return driven growth to bolster our ability to execute against these core strategies, we're introducing the fifth which is strengthening key foundational pillars. The <unk> Foundation.

Pillars are as follows number one our people number two our technology three sustainable growth strategy and for our facilities.

And quickly touching on the foundational pillars from a people perspective, we understand the importance of reinforcing our core values.

We are investing in our culture and team with technical training programs for key frontline roles.

Leadership development incentive compensation programs aligned with long term goals great. Examples of our recent success here are our CDL schools and career paths initiatives, which has helped to stabilize our workforce during the challenging labor market.

Customers and grow the business further in a manner that also enables our customers and society to.

To meet the sustainability goals and needs finally from a facility's perspective, we're prioritizing and allocating capital spend in a manner that meets our long term safety operational and strategic needs, while creating a more welcoming and accommodating experience for all of our people.

Our operating programs coupled with an investment in innovative technology are focused on further driving margin expansion.

As we look out over the next few years, we believe there to be a positive backdrop to drive further value. We continue to focus on improving the blend of our customers to increase the quality of revenue at our sites. In fact, we are experiencing some nice sequential trends here.

January of 2022 as it relates to continued improvement of our average price per ton.

Landfill volumes remained lower than pre pandemic levels by over 300000 tonnes. This is primarily isolated to volumes in our New York facilities from an in around New York City, our expectation in 'twenty. Two is that we will only experienced a modest recovery of these tonnages. We also.

To advance key permitting and expansion efforts, including focusing on developing future disposal capacity such as our real landfill.

Rail our Mckean landfill rail project, which we are targeting to bring online in late 2023. Early 2024, we're also continuing to invest in sustainable infrastructure at our site.

Our landfills, where third party is making the capital investment.

As these projects come online over the next year, we will benefit from gas royalties.

Moving to the collection business our collection business continues to perform well we are focused on several key areas, including pricing programs that offset inflation improve.

Improving operating efficiencies to drive margin expansion service excellence and continued investment into our people to drive employee attraction retention advancement and engagement.

The early indicators are favorable in that there has been limited pushback from our customers pricing levels exceed our core cost inflation is meaningful sequential improvement through January in our pricing, we will continue to monitor our cost and the inflationary environment throughout the year and take further action if needed.

Next resource solutions.

Our recycling processing operations and our non processing business units are performing extremely well from a recycling perspective, our business model is economically and environmentally balanced we have removed much of the risk related to recycling commodity market through our fee programs and contract structure.

This has allowed us to generate acceptable returns.

That are more stable over time, which better position us to make continued return driven capital investments into our recycling infrastructure.

In 2022, we will complete an $18 million equipment upgrade at our Charlestown, Massachusetts recycling facility, which is one of the largest in the country. This significant investment ultimately strengthens our ability to continue to meet the sustainability needs of the greater Boston market. This upgrade will improve.

<unk>, which reflects our continued dedication to our sustainability services.

'twenty two is off to a nice start and five tuck in acquisitions that we've closed thus far in the year will integrate nicely with our existing operations as always we're focused on a seamless transition of our new customers and employees. We welcome all of them to the <unk> team our pipeline remains strong were actively.

We are working on several opportunities in various stages.

Wrapping up as part of our 2024 plan, we have established a target of adding greater than $30 million of.

Annualized revenues through acquisition or development opportunities, while maintaining leverage below three five times. We are also maintaining our goal of growing adjusted free cash flow by 10% to 15% per year, our 2022 guidance aligns well with our 2024 plan and we.

Dissipate continued execution against our key strategies, we're excited about the future as we see a pathway of continued growth that will drive further value and with that I'll turn it over to Ned Thanks Chad.

Solid waste revenues were up 18, 9% year over year with price up four 3% volumes up 2% and acquisition growth of 12%.

As expected our price growth improved again sequentially from the third to the fourth quarter.

Revenues in the collection line of business were up 18, 3% year over year with price up four 8% in volumes slightly up.

Revenues in the disposal line of business were up 19, 3% year over year with price up three 3% volumes up five 9% and the remainder acquisitions.

Landfill pricing was up 4% year over year with landfill tons up four 2%.

We still have a negative basis to pre COVID-19 tonnage levels of roughly 300000 tonnes.

Resource solutions revenues were up 26, 4% year over year with eight 3% from higher recycling commodity prices 10, 7% from growth through acquisitions, and the remainder from higher processing and non processing volume growth.

<unk> prices were up year over year on higher commodity higher cardboard mixed paper pricing higher metals pricing and higher plastics pricing. However from September 2021 through January 2022 commodity prices have dropped by roughly 30% with the decline driven by plastics and fiber.

Sure.

Cost net of R. R.

Our E&E fee negatively impacted margins by 11 basis points.

Solid waste adjusted EBITDA was $43 7 million in the quarter up $5 million year over year with collection and disposal adjusted EBITDA, both up year over year.

Resource solutions, adjusted EBITDA was $7 6 million in the quarter up $3 $7 million year over year with improvements from recycling organics processing and non processing operations.

Cost of operations in the quarter was up $29 $6 million year over year, and up 80 basis points as a percentage of revenue with most of the increase driven by acquisitions and we'll get into some additional details general and administrative costs in the quarter up $3 $3 million year over year or two.

Out of 104 basis points as a percentage of revenues.

With the majority of that coming from changes in the timing of incentive compensation.

Depreciation and amortization costs were up $5 6 million year over year, mainly due to higher depreciation on trucks related to our fleet plan higher amortization on higher landfill volumes and higher amortization of intangibles associated with acquisition activity.

Our income tax provision was $2 $5 million in the quarter. This was actually up $56 million from the same period in 2020 as you May remember, we had a $55 million nonrecurring benefit to income taxes last year due to the reversal of evaluation allowance.

Wei <unk>.

As of December 31, we had $562 $6 million of debt $33 $8 million of cash and liquidity of $305 8 million. Our consolidated net leverage ratio was 235 times.

Our balance sheet is in great shape and position us very well to continue to grow into the future. While also providing stability in this rising interest rate environment with our fixed interest rates on approximately 72, 5% of our debt today.

Net cash provided by operating activities was $182 7 million for the fiscal year up $42 8 million year over year, mainly driven by higher operating results and positive changes in our assets and liabilities year over year.

Adjusted free cash flow was $95 3 million for fiscal year, 2021, up $26 2 million or up 38% year over year.

<unk> 8 million.

As we stated yesterday, our 2022 guidance ranges assume a stable economic environment continuing from the fourth quarter 2021 through the remainder of 2022.

Our pricing programs continued to increase sequentially from late 2021 into early 2022, and we expect solid waste pricing of four 5% to 5% in fiscal year 2022, we have already rolled out the vast majority of our planned pricing for 2022, and we have not experienced any mean.

Lingfield pricing rollbacks, we believe that we are establishing appropriate pricing plan for 2022 that positions us well to offset inflationary headwinds, while still improving margins through our investments in technology and core operating programs. Our internal rate of inflation is currently running at roughly $4.

1%, however, if our cost inflation increases further we have great flexibility to advance additional price increases roughly 70% of our collection book of business in.

In addition, our floating energy and environmental fee effectively offsets most of our fuel exposure.

Overall, we expect adjusted EBITDA to be up 12% to 14% year over year with roughly 40 basis points of margin expansion.

As John stated, we have several exciting resource solutions projects planned for 2022, including a full equipment upgrade to our Boston mass recycling facility and two renewable gas projects at our landfills, where a third party is making the capital investment and we will receive the gas royalties.

Sure.

Net operating losses remaining as of December 31.

With that I'll hand, it over to Ed. Thank you.

Thanks, Ned and good morning, everyone.

So we finished the year strong we are excited about our growth and our positioning going into 2022.

All of our operational improvement programs are building momentum and with 20% more revenue now in Q4, a year ago. There was more opportunities to apply these proven programs to new divisions.

Having said that I know everyone is focused on inflation pricing and our ability to maintain margins. So I'm going to concentrate my comments accordingly.

For the quarter on a consolidated basis cost of ops as a percentage of revenue increased 78 basis points and adjusted EBITDA margins were roughly flat Act.

Acquisitions accounted for an 80 basis point increase in cost of ops as a percentage of revenue.

Negative 35 basis points and EBITDA margin the margin dilution on the pass through of higher fuel cost accounted for another 11 basis points headwind so cost of ops and EBITDA margins net of these items improved about 13, and 46 basis points respectively.

As I've discussed on prior calls acquisitions will generally hurt our margins for the first couple of years until we put it in our operating programs introduced technology improve equipment solutions for the services provided and execute on the synergies. The Best example of this is our Rochester operation.

I looked at the financials for 2021 and margins for Rochester, now almost exactly the company average we accomplish this by implementing our best practices converting to the most efficient equipment to service that market and using our technology to streamline routes. So I am very confident in our ability to act.

Cute, but it takes a little time.

About half of our revenue comes from our collection operations and we had a great quarter from a bottom line perspective.

Cost of ops in this line of business increased to 130 basis points as a percentage of revenue compared to Q4 last year, but acquisitions gave us 146 basis points of headwind.

So the four 8% in price that we achieved in the quarter was enough to keep cost of ops on a same store basis on a positive trajectory.

Our price that so looking at CPI isn't really the best the best indicator.

Ongoing computer rated routing improvement projects will allow us to continue our margin improvement trends that we have attained over the past few years.

The disposal line of business, which includes our landfills and transfer station network.

So our cost of ops increased by 300 basis points. This Q4 versus the same period a year ago acquisitions.

The higher effective acquisitions on our disposal margins relates to an intentional mix change change I'd like to talk about.

Our resource solutions is a totally different story as cost of ops improved by over 300 basis points on strong commodity prices and great execution on the business plan.

And our business model, we share revenue with our customers on the upside over certain thresholds. So higher commodities gives us more revenue to spread over our operating costs.

Every year the solutions team recommend various improvements in processing technology to improve our efficiency and this year. We're very excited about the coming upgrade at our flagship Charles town facility that John mentioned.

The team has done a great job, helping to design, new layout and a tight footprint.

Take advantage of the latest technology to improve throughput and increase the level of automation, reducing cost while increasing much needed capacity.

And thank you.

As a reminder to ask a question you will need to press star one on your telephone so where Joe Your question press the pound key please standby we compile the Q&A roster.

And our first question comes from Sean Eastman from Keybanc capital markets. Your line is now open.

Hi, gentlemen, just wanted to start on the 2024 plan just at a high level.

Sounds to me like.

Fixed broke kind of message around the.

2024 strategy sounds like maybe the human capital is.

Bigger focus the M&A target a little bit.

But is that kind of a fair characterization here.

It was a very fair perspective shown I think.

Clearly over the last few years I think everyone has.

<unk> got a focus on people in HR.

It's a much higher priority.

Certainly.

Attracting drivers and mechanics retention.

We've got to do everything that we can as an industry to attract as many many people coming out of high school as we can that are not going on.

To call. It so the people the technology facilities those those pillars.

Really help us.

To drive the overall performance of the business.

When we sat down to look at the strategic plan.

Our core strategies are working amazingly well.

Underneath those there are some strategies that we're focusing capital resources people resources. We also take a good hard look at our growth over the last few years, we've grown from 600 people to 3000 people in less than three years and as we look around to be successful for the next three years next 10 years.

Really do believe we need some additional investment in key foundational elements and that's where that part of the plan has emerged and it does not like some radical shift there are huge dollars. This is kind of taking what we're doing codify and improving and really just making sure everyone's rowing in the same direction.

Okay got it very helpful.

The comments around the intentional mix shift associated with the transfer stations in the upcoming disposal capacity coming online.

Yes so.

Happy to do that.

So if you look at our market everybody knows the disposal capacity is very limited and and things are shifting.

States like Massachusetts are looking to export all their waste, we're now down in Connecticut. They are struggling with our disposal plan.

So youre going to see in the market over.

We're already seeing it and youre going to see it more over the next few years is a move towards.

Transfer stations, including rail transfer stations to get waste to the existing sites, because they're not permitting any new ones. So the plan is we need to expand the existing sites. We do have a lot of permitted capacity at mckean as well.

And it's time to take advantage of that and to get it there we have to strategically place ourselves.

In the market, where the disposal, where the disposal crisis is so that we have transfer stations to move that volume to these landfills and another example of this AD is our investment in Buffalo New York.

Purchased two transfer stations, there and it's about 40% to 50 miles away from our Highland landfill, there's a landfill in the Buffalo market that will be closing in the next several years. It takes four to 500000 tons a year at the same time, we're working on an expansion at our Highland landfill to take it from 400000 tons a year 10.

Tons, a year, so intentional moves like that of looking at markets that we'll be capacity constrained, adding assets like transfer stations that can allow us to vertically integrate and build our business and as Ed said, the nicotine rail strategy or parts of what we're looking at intentionally over the next couple of years to drive create organic.

Growth.

And then the idea there is that.

You can drive a lot of that growth from disposal, which is higher margin.

We are secure and our ability to handle waste and recyclables over the long term is important to us.

So youre really Andrew.

Your question about the margin effect, which is what I was trying to address was so we have a timing issue here. So we've expanded into transfer stations, which as everyone knows is not where the margin is the margin is at the landfills. So once we started internalizing that volume from those transfer stations into our landfills.

You see the margin effect for the company.

Gotcha, Okay, great Super helpful guys, I'll turn it over there.

Thanks, Sean.

Yes.

Thank you and if you are asking a question. We please ask that you limit yourself to one question and one follow up again Thats. One question one follow up and our next question comes from Tyler Brown from Raymond James Your line is now open.

Hey, good morning, guys.

Good morning, Good morning, Tyler, Hey, Hey, Thanks for some of the color on in the prepared remarks about pricing broadly, but can you just talk a little bit more about landfill pricing outlook in 'twenty, two and even beyond that.

Things have slowed a bit in 'twenty, one on the New York City dynamics. It doesn't really sound like those volumes are tightening up that quick. So can you just talk a little bit more specifically about the outlook longer term there.

Yes, it's interesting we've talked about this for a few quarters where some.

Sometimes statistics tell the story perfectly sometimes they don't and our reported landfill pricing stat.

As maybe not fully told a story it was 4% in Q4, which is up from three 5% in Q1 'twenty. One so it has been increasing its over 4% into January but probably more importantly, our average pricing stack with six over 6% in Q4.

Increased into January and you got a really.

The way, we calculate that we talked about this last quarter same customer same site same type of waste how much we've changed it year over year, but were changing customers. We're changing mixes we're blending up our book of business, which is creating more profitability and that doesn't really show up in the price volume. The way we have calculated the average SaaS or is it better. So we're excited with.

The pricing plans for the year, we've gone out to the street with most of it in collection and at the land sales and it's sticking and if we see additional opportunity to push price EBIT to cover more inflation or advanced pricing in the market. We will look to do that again in 2022.

Okay, that's extremely helpful.

It's kind of one timing that we should think about.

Yes, so if we look at if we look at 2021 just as a starting point our margins were up 75 basis points year over year.

Strong in the first half of the year second half of the year, a little bit more muted with more of the acquisition overhang for the full year. We added acquisition overhang of about 30 basis points. So when you net those two together our margins were up over 100 basis points for the full year and you start to get under the Hood of what drove that.

And big pieces.

That said, our core investments and technology operating programs drove about 30 plus basis points recycling, our SRA fee. Those programs drove about 35 basis points and then pricing drove 50 to 60 basis points and then Theres a couple of like one tiny things in other moving pieces, but those are that big.

Market as we enter this next year, Jason how much of acquisitions overhang until 2020 here yeah. Thanks, Matt. So in 2022, there is on a full year about a 25 basis point headwind as it relates to acquisitions completed in the.

First half of the year it'll be more dramatic at about 35 basis points in the first half of 'twenty, two and about 15 bps in the second half of the year rollover and as we look to the year, we expect recycling from the slowing from September through today to actually be.

Positive year over year in the first half of the year, but then negative in the second half of the year unless something really changes, but no other really big moving pieces. We expect that same kind of 30 plus basis points from the core operating programs and we expect pricing to do the same thing 40 to 50 base.

At this points of improvement okay.

Okay, Okay, and if I can squeeze one last one here real quick.

You talked about the Boston Murph upgrade so is that capital spend in the $15 million add back to free cash flow or is it not and secondly, I missed it but.

It is not OK. That's helpful. So can you talk about what the $15 million is on the add back, which I think its waste USA, but I'm not sure and then secondly, and.

I may have missed it but when does the Boston murph come online or when the rest.

The retrofit is done and then how much of an EBITDA contribution is that once it is done.

Okay.

Yes, the first Boston Mirth investing at $18 million is actually spread between 2021 and 2022.

About six or $7 million happened. This last year, we didn't add it back it's just in maintenance at what we call maintenance capital or recurring Capex.

The additional investment next year of 11 or $12 million in 2022, I'm sorry, it's just in our maintenance recurring capital that's not something we are adding back.

There really is only one category of capital that we're adding back this year and thats associated with the integration of acquisitions. So as we've explained in the past.

When we look at it pro forma for an acquisition and we buy a business in the first 18 months.

Over invest in that business to drive synergies to get into our systems to consolidate facilities and thats, what that $15 million is associated with and waste USA. It's done okay.

A very successful project three years in the making the sellers than waste is being placed and that will not be.

Add back into the future.

Okay, and then EBITDA contribution.

Yes.

It's several million dollars once it's all done, but we have to ramp additional customers set facility. So we're adding about 35% new capacity.

To the facility by increasing throughput and being more efficient with less people.

So we're not just going to snap our fingers in 2022 and have more tons, but it will allow us to grow into that over a couple of years, So youll see less downtime less maintenance and theirs.

Okay, Great I'll hop back in the queue. Thanks.

Thank you.

Our next question comes from Michael Hoffman from Stifel. Your line is now open.

Thank you very much.

Back on the landfill side.

I'd like to understand.

The juxtaposition between scarcity value of the space. So you brought that up Ed versus there probably is some ceiling that gets triggered by with more.

Competitive transfer stations add rail so that optionality into rail, but why.

Why can't you get more price in the landfill now given the scarcity value.

Well I think we are getting quite a bit of price as we said earlier, Michael I mean, we ended Q4 with over 6% average price.

If you look back over the last couple of years Q Youll see from our reported pricing standpoint, we had periods of 6% to 7% and those were related to some rollovers of long term contracts about one third of the tons going into our landfills comes from our trucks, one third from long term municipal.

That's particularly true when you have a really large contract and we have a couple of contracts Michael that are in that vein with.

300000 tons a year there is a there was a really nice.

Increase the price when that contract is renewed but then it's somewhat tied to inflation.

For the period of time as the contract until the renewal.

It would be appropriately adjusted right.

Alright, okay.

Well.

I have a second question, but I'd like a follow up.

Boston renewed at like $94 for the burners, but the spot market is at a 120 right now and that rate of change there seems greater than you want to figure out what how many how much cost to drive the interior facilities.

The rate of change you have been taking advantage of that sort I just wonder if you couldnt do more than that.

Given the scarcity value.

It's coming from.

I think it's a good question and it's something we're continually looking at.

<unk>, where we can.

Dressed additional pricing and as you know transport is very complex right now, they're multiple shifts of where waste is going across the northeast as additional rail opens up and people struggle to move waste out in markets, where you have closing facilities and I think from our vantage point, we just.

<unk>. This is a long term opportunity and it's not just a one year opportunity. So this pricing is going to come for years into the future and.

I think from our vantage point, we're adding value, we're adding margin each year, we're adding returns at the sites and if we can course correct a little higher we will do so okay. Second question is offsetting I'm sorry into tuition I was just going to say Michael We're also offsetting substantial inflation at this point in time as well.

Yes, fair enough and I do appreciate that I think that shouldn't be lost on anybody that the industry.

Has validated and you can.

React to this as well as you've reacted to other things.

Maintaining the quality underlying cash conversion so that.

The cash conversion. So you have enjoyed an NOL for a long time, we're starting to where the window. It in.

The benefit of really good success youre going to run out of this NOL probably three years.

How do we think about it for modeling.

Our free cash flow analysis, whats that step up.

Yes, so we are taking less bonus depreciation right now.

With that thought that will maintain more tax depreciation as Nols roll off Michael So as.

As you know bonus depreciation goes away in 2026, we're taking a lot of advantage for taking a little bit less advantaged today. So we can keep those tax assets in place. We've also as you well know we do almost all of our acquisitions as asset yields. So we can take this step up in valuation and depreciate from a tax standpoint the assets.

Well EMEA it was at $3 38, 10 election deal, which was a stock deal, but we treat it as an asset deal from a book standpoint, which is really exciting because it also helps to improve our tax standpoint, but you are right probably by 2024, our NOL positions mainly consumed in.

We're stepping into a more normalized cash tax pay.

And.

Youll see that step up this next year will be stepping up for about $1 million and $5 of cash taxes, and 21 4 million in 2022, and Alcs step up a few million dollars each year over the next several years and we will be working additional strategies to try to you.

<unk> managed that over time.

But what I'm hearing us talk about it as this is <unk>.

$5 million to $10 million out of 20 or $30 million.

Yes.

It really depends on the year, but by 2024, if we're at like $10 million of cash taxes, Thats generally what what's in our models today.

But not.

20 or 30, okay.

Very helpful.

Thank you very much thank you Michael.

And thank you and our next question comes from Hamzah <unk> from Jefferies.

Your line is now open.

Good morning. Thank you I may have missed this but could you.

Could you just remind us how much of the business as inflation indexed.

And how the resets work and then I think you had mentioned the specific.

Casella inflation index, and maybe talk about how that plays into it and if thats already in the contracts.

Yes, good question handset nice to hear from you.

Our book of business on our collection side, it's pretty unique as you know, we're only about 10% of our collection book of business, our municipal contracts about 25% of our subscription residential agreements, where we have pricing flexibility about 35% of small commercial customers.

Where we have pricing flexibility.

About 15% is.

Temporary construction roll off and then the remainder are long term industrial roll off contracts that typically has set escalators. So large degree of our book of business over 70%. We have a lot of pricing flexibility and then where we do have linked contracts about half of them are seep.

Linked in about half of them have set escalators and those CPI linked contracts.

They vary from CPI used to regional CPI to somewhere around the trash and garbage index, but given where CPI is should be nice tailwind this year.

As far as the cost index that we talked about earlier, it's interesting because you see these headline CPI numbers of seven 5% and then dig into our business or anyone in the SaaS business and it is not perfectly reflective of what we do and you start to look at the components of that seven 5% and there are things like <unk>.

Yes.

Other kind of categories that aren't exactly related to our business. So we created our own internal CPI index looking at key categories could you just make sure we take out any sort of price volume indicators and where our aggregate basket sitting at four 1% today, which is quite interesting because.

The Bureau of Labor statistics, trash and garbage indexes right at 4% in January So our internal index is sitting right on top of what the BLS is predicting for the in this industry.

Industry as well.

Very very helpful and then just.

My last question and I'll turn it over is just on the I think you guys highlighted free cash flow growth starting to 15%.

Yeah.

Correct me if I'm wrong.

It feels like you've been growing over 10% free cash flow growth.

Certainly.

And so there's that and then it also feels like you have more self help on your solid waste margins.

So maybe talk about.

Maybe just flush that out or does that conservatism or maybe we're missing something else.

Yes, good point, we have been growing higher than 10% to 15% we've been growing closer to 20% for several years now and I guess, if you look at just core organic growth, we're growing more like 10 to 12 ish percent and then you add in acquisitions that accelerates is created in the 15%.

And as we kind of guide that 10% to 15%, we're not really including acquisitions and as Michael mentioned, a few minutes ago, we are going to have a little headwind from cash taxes over the next number of years, so that will be not moderating significantly our growth rate will moderate a little fast. So I think we're really comfortable with that.

10% to 15% and we will look to hopefully beat it with some acquisitions as well.

Got it thank you.

Thank you Hamzah.

And thank you and our next question comes from Michael Feniger from Bank of America. Your line is now open.

Hey, Ron.

Thanks for taking my questions. You may have covered this Ned your Capex guide for 2022, I think is around 120 million Thats actually down from 2021, so with all the investment and growth opportunity any reason why we're not seeing that that capital spend and the level of investment higher with where you guys are.

In the cycle.

Yes, we have pretty unique investments happening in 2021, the largest of which was getting opened this 25 year sell at waste USA, which is a real unique one time investment for US we don't usually.

Open up an entire 25 year period like that so that was a data as a reason.

I don't know Jason is there anything else, we're seeing there theres no kind of like major declines in Qatar.

Category, primarily waste USA year over year, I think if you look purely at our absolute capital less the capex that we add back related to acquisitions and waste USA last year in 2021, you actually see what we'll call our maintenance capital step up slightly year over.

A year from about nine 5% to 10, 5%. So we are.

Maintaining a consistent level of spend year over year, if not slightly increasing yes, I think what other kind of comment there and it goes to something really passionate about and put a lot of work into our fleet plan or yellow iron plan and our facilities plan, you've got that planned out years into future Ed Yes.

And we have a lot of automation opportunity is still in the company. So.

Look forward to the efficiencies we gain through that fleet plan in the next few years.

Yes.

Great and I apologize that you guys touched on this earlier.

You talked about with Honda that 4% of what you guys are seeing within your internal cost is that what you're embedding for your guidance for cost inflation in 2022, and do you have that easing at all in the second half because based on the margins, you're obviously likely see more opera.

Getting leverage it looks like in the back half of the year, just curious how those dynamics kind of play out.

Yes, Youre right. We are that is in our model right now 4% cost inflation for 2022, we don't have any easing in the back half of the year. However, the negative overhang from acquisitions moderates through the year and allows our pricing programs and our cost efficiency programs.

To add more margin through the last half of the year.

Okay makes sense and just to squeeze one last in I know you guys were very early in restructuring our whole recycling model. So forgive me for asking this how do we think about the sensitivity to commodity price I believe you said earlier Ned that.

Fees were 35 basis points tailwind to margin in 2021, so I'm just trying to get a sense like what are we kind of thinking about for 2022, and how does that relate to movements, we see with fiber prices. For example, thanks, everyone I'm going to give you like the two minute answer on that and if you walk in there.

Call and I'll explain in further sure.

Additional commodity value with our customers, maybe 50 50 or a different formula if they click below that and we can sell let's say the average basket commodities for $70 a ton a customer would pay us a processing fee of 30, what happened in 2021 as we click through those thresholds for first time in four years. So we started to create more.

Our money to our bottom line and we gave more back to our customers, but that 90% risk off take that we have when we're below the thresholds shifted where we actually added more value from recycling, but we also took on a little bit more risk. So if you saw recycling commodity prices dropped through the floor, we would have some.

Downside until we hit those thresholds once we get below the thresholds are customers and start taking on the risk dollar for dollar but above those we accretive some additional value in 2021.

Okay. I appreciate guys. Thanks for running through that with me. Thanks, Tim Yeah. Thank you.

And thank you.

And our next question comes from Alexander <unk> from <unk>.

Amber capital markets. Your line is now open.

Hi, guys. Thanks for taking my question just a quick one for me you mentioned wanting to improve.

The mix to improve quality of revenue could you dive into that a little bit more what sort of end markets or customers.

And what are the characteristics that makes revenue from high quality.

So I think that.

There is there is a real opportunity.

From a.

Resource solutions standpoint in terms of meeting the needs of.

Our customers, particularly as it relates to colleges and universities industrial customers.

And.

So municipal customers for that matter in terms of.

Helping them to meet their sustainability goals.

Somewhat down in the middle of the fairway in terms of improving.

We know where.

People are really trying to move the needle from a sustainability standpoint, and they understand that.

<unk> costs associated with that and it gives us an opportunity to.

Help solve that problem and improve our book of business as well.

I don't know if you have anything to add.

Yes.

Going to mentioned that there is an interesting trend over the past few years, where we used to.

<unk> proposed to colleges and universities a sustainable solution.

And at the few years ago. They react just based on the cost at the end of the day in and not accept our proposal and in the past year or so we're starting to see quite a bit of success because the attitudes have changed.

The colleges and universities are much more focused on the overall intrinsic value of being sustainable and we've started having a lot of success.

It's the same thing from a manufacturing standpoint major manufacturers major industrial customers. We're seeing the same thing they are all trying to rethink their processes rethink their packaging if there Pat.

Packaging.

<unk> et cetera, So there's just an awful lot of activity.

<unk>.

Is lending itself to.

Two higher margin customers and people that are obviously willing to pay for those type of services.

Okay, great. Thanks, guys.

You're welcome.

And thank you and our next question comes from Tyler Brown from Raymond James Your line is now open.

Hey, Thank you for the follow up.

Hey, Tyler.

Hey, just this might be a hard question.

I'm going to ask it anyway.

<unk>.

Yeah well.

The North sea.

Given that the northeastern market is and it's going to continue to be a long haul waste market and it sounds like it's probably going to become even more transfer centric with the build out of rail I mean, how do you how should we think about the long term solid waste margin profile versus your peers. So if there is say, let's just call it low <unk>.

30% margins are you structurally a couple of hundred basis points behind that or just any help on handicapping that.

Yes, but I don't know exactly the mix of our peers and their exact margins, but we do know and we.

Today, it's a negative hit to our margins were almost every ton we handle it goes through a transfer station it gets transferred.

Our distances to landfills or disposal sites, we have very few direct drive routes and thats not the case around the country. There are many more garbage trucks that pickup that businesses are households that goes directly to disposal sites in the northeast it is flowing mainly through transfer stations, which it.

It doesn't have a negative cash impact, but it has a negative margin impact.

As Ed pointed out I mean, we saw it in our numbers. This year as we mixed slightly more to transfer stations for our long term strategy. It weighed on margins good long term strategy, but it wasn't margin detractor.

Yes.

Yeah, Okay, Alright, that's helpful.

Then my last one it sounds like you've finished up waste USA will we see that in your aerospace table in the 10-K.

Yes, it's in there already so.

We have permitted formidable so that's been permitted aerospace for the last couple of years. It just wasn't built now at scale waste is being placed in.

It's a really big deal for us because that was complex and tough permitting complex and tough construction cycle. So we're excited to be done.

Okay, all right I'll leave it at that thanks, guys.

Thank you.

No.

Thank you and we have a follow up from Michael Hoffman from Stifel. Your line is now open.

So I promised you Tyler and I arent sitting in the same room and ganging up on you but.

I'm almost repeating my question.

Because of what you asked.

And by the way I think on a national basis, its about 40% of the volume goes direct calling the rest is long haul but.

But why can't you get.

Why can't you price that scarcity issue through given that the.

If you control the game, even if it's a long haul.

Forward.

Yes, it's a good question, but some of it is math too. So you made the reference earlier, we're transfer stations use a price of $50 $60, a tonne and getting 5% or 10, let's say, 5% on $60 was $3 a ton if I get $4.

A ton on a 100 dollar gain right now.

Now down to a 4% increase so have improved my cash position and improved profitability, but I have a lower percentage stat and a bit of that's what's happening here Michael as these rates have climbed really quickly the percentage of SaaS, maybe look a little bit worse, but the dollars for getting on the street are good they are improving.

You see that in our numbers for the year I mean, both from an EBITDA operating income and free cash flow standpoint.

Okay, and then last one for me would be how many of your landfills are below five years of life when you're in a development mode.

Clearly Bethlehem is what elses.

I think Bethlehem is the only one.

Okay, So, Ontario, Scott plenty of life.

Yes.

And then you've got the island you got the community agreement. So that's just going through the bureaucratic process in New York State.

Transfers politically there.

It's just new Hampshire, then we're worried about.

It is new Hampshire, I think that probably the next one is Ontario, Ontario is probably five to seven seven years 2028 2028 right now so.

We'll have an expansion there as well Michael.

Okay.

And then Ontario.

But keep in mind keep in mind, we did.

Getting approval and we're in the permitting process for the island now to move that facility and obviously beyond.

Just brought in mccain's capacity to the model as well so.

Those two.

Factors Mckean is going to be a great.

Long term facility for us as well as island moving that permit from 472 million tonnes a year.

Right and it shouldn't be lost on anybody in New York.

Community host fee agreement trigger so.

That's like Mount Everest to get the permit everything else just as bureaucratic.

Okay correctly revenue yes.

Youre welcome.

Yes.

And thank you and I'm showing no further questions I would now like to turn the call back over to Mr. John Casella for closing remarks.

Thank you and thanks, everybody for joining US today, we look forward to discussing our first quarter 2022 earnings with you in April Thanks, everybody have a great day.

Thank you. This concludes today's conference call. Thank you for participating you may now disconnect.

Q4 2021 Casella Waste Systems Inc Earnings Call

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