Q3 2025 Casella Waste Systems Inc Earnings Call

To press star 1, 1 on your telephone. You will then hear an automated message advising that your hand is raised to withdraw your question. Please press star 1, 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Brian Butler, VP of Investor Relations. Please go ahead.

Good morning, and thank you for joining us on the call.

We will be discussing our third quarter 2025 results, which were released yesterday afternoon. This morning, I'm joined by John Casella, chairman and chief executive of Casella Waste Systems, Ned Keta, our president.

Brad helgerson, our Chief Financial Officer and Sean, Steve's our senior vice president and Chief Operating Officer of Cella. Waste operations.

After a review of these results and an update on the company's activities and business environments will be happy to take your questions. But first, please note, that various remarks we make about the company's future expectations plans and Prospects

Constitute forward-looking statements for the purposes of the Safe Harbor. Provisions under the private Securities. Litigation Reform, Act of 1995, actual results May differ materially from those indicated by these forward-looking statements as a result of various important factors. Including those discussed, in the risk factors section of our most recent form 10q, which is on file with the FCC in addition. Any forward-looking statements represent our

Use only as of today and should not be relied upon as representing our views on any subsequent date.

While we may elect to update for looking statements, at some point in the future, we specifically, disclaim any obligation to do. So, if our views changed, these 4, looking statements should not be relied upon as representing our views as of any date, subsequent to today, October 31st 2025. Also during the call, we'll be referring to non-gaap financial measures. These non-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 included in our press release, filed on Form 8K, with the SEC with that. I'll turn it over to John.

Thanks Brian and good morning everyone. Uh, Welcome to our third quarter 2025 conference call. Uh,

In Q3 the cassella team worked hard stayed focused on executing our operating plans, delivering another strong quarter that reinforces our improved outlook for 2025.

I'm extremely proud of the team for once again, overcoming challenges and demonstrating the strength of our operating model and our strategic execution.

Revenue adjusted a bit were quarterly records at approximately 485 million and 120 million with year-over-year. Growth driven by continued Solid Waste, pricing strength, healthy landfill volumes and meaningful contributions from our acquisition program.

Year-to-date adjusted free cash flow totaled $119 million, up 21% year-over-year, supported by EBITDA growth and stronger working capital performance.

We remain on track to achieve our full year. Free cash flow guidance which was raised following our second quarter results.

Our Solid Waste operations, delivered, strong performance. With pricing and landfill volumes. Continue to drive margin expansion on the same store basis.

Integration of the Mid-Atlantic. Uh, businesses is progressing well with systems conversions and Fleet optimization initiatives positioning the segment for further, gains in Q4 and well into 2026. Our resource solution, segment continued to perform well, effectively, managing commodity price, headwinds with our risk management structures and overcoming third-party disruptions in the Boston Market.

We've completed 8 Acquisitions year to date adding approximately 105 million in annualized Revenue. We expect the Mountain State waste transaction to close at the beginning of 2026 contributing an additional 30 million of annualized revenues

Our m&a strategy remains focused on balanced, mix of smaller, tucking, Acquisitions and larger opportunities that expand our Geographic footprint, such as Mountain State, with an active pipeline representative, approximately 500 million in annualized revenues and a strong balance sheet. We are well, positioned to continue creating long-term shareholder value through discipline, strategic growth,

Sustained, operating and acquisition. Momentum provides a strong foundation for continued, growth and value Creation in 2026.

In Q3 we announced cassella sustainability leadership awards. Recognizing customers who exemplify the power of partnership and reducing waste, increasing Recycling, and advancing the circular economy. This year's recipients are Primo Brands Dartmouth College, the ark Oswego, and the University of Vermont Medical Center,

That showcases, what's possible when Innovation and collaboration come together, we celebrate their achievements along with the data dedication of our cassella team members, who worked alongside of them to build real world models of Economic and environmental sustainability for the future.

As announced in August, I'll be transitioning to Executive chairman role at the end of 2025 with Ned. Stepping into the CEO role.

It's difficult to fully Express, how proud I am of what this team is accomplished over the past 5 decades. I've had the privilege of working alongside some of the most dedicated, hardworking people in our industry. Together, we built cassella into an industry leader defined by our core values that continue to guide us.

Well, this is my final quarterly earnings call as CEO. I'll continue to serve as Chairman of the Board, supporting Casella's long-term strategy, stakeholder relationships, and the culture that makes this company so special. I'm deeply grateful for everyone who has been a part of this journey, and I'm excited.

Really for the next chapter under Ned's leadership. It's really exciting when we look back and

um,

the past 50 years and I could tell you how proud We Are of what what we have achieved over that 50 year period of time. But I'm even more excited about what is going to happen under Ned's leadership in the future with that, I'll turn it over to Brad to walk through the financials in more detail.

Thanks John.

Revenues in the third quarter were $485.4 million, up $73.7 million or 17.9% year-over-year, with $53.4 million from acquisitions including rollover, and $20.4 million from same-store growth or 4.9%.

Solid waste revenues were up 20.6% year-over-year, with price up 4.6% and volume essentially flat, down 0.1%.

Within Solid Waste, pricing The Collection. Line of business was up, 4.7% in the quarter led by 5.2% price in front load commercial and volume was essentially flat.

Year-over-year. Volume Trends continuing to improve as we move through the year with indications of a relatively stable economy in our markets

Priced in the disposal line of business was up 4.6%, and volume was flat year-over-year.

In the landfill business, we're strong, with same-store price up to 3% and total tons up 11.7%, including higher third-party MSW and C&D volumes, and nearly 20% growth in internalized volumes.

Resource Solutions revenues were up 7.8% year-over-year with Recycling and other processing Revenue down, 5% impacted by lower commodity prices, but national accounts up, 16 and 1.5%.

Within resource Solutions processing operations. Our average recycled commodity Revenue. Per ton was down 29% year-over-year with software, markets across the board and most Commodities selling below 5 year averages.

Not withstanding Market pressures. Our contract structures share this risk with our customers by adjusting tip fees and down markets. So the net impact of lower commodity prices. On our revenue is only about a million dollars processing processing volume. In Revenue terms was up 2 and a half percent driven by higher volumes at the will of Mantic recycling facility.

Within national accounts, Revenue price was up 4.3% and volume up 8.6%.

Above was $119.9 million in the quarter, up $16.9 million or 16.4% year-over-year.

With contributions from acquisitions, including rollover and 8% organic growth.

Adjusted IBA margin was 24.7% in the quarter, down approximately 30 basis points year-over-year.

In the year-over-year change and adjusted Eva down margin new acquisitions, contributing at lower initially Vidal margins than than our overall business. Diluted margins by 100 basis points in the quarter.

Expanded margins on a same-store basis by 70 basis points, with landfill volumes representing a 60 basis point tailwind and the rest of our operations, including the Mid-Atlantic region, growing margins by 10 basis points year-over-year.

As a reminder, when we acquire privately held companies they often have lower ibida. Margins, compared to Cassell's Consolidated average.

This can initially dilute our margins on a year-over-year comparative basis.

However, as we integrate these businesses, execute on synergies, and implement our operating practices and strategies, this becomes a margin expansion opportunity over time, which is regenerative as we continue to execute on our acquisition pipeline.

Cost of operations were 315.3 million in the quarter up 48.1 million year-over-year, with 39 million of the increase, from Acquisitions, or approximately, 74% of required revenue, and 9 million in the base business.

Excluding Acquisitions cost of operations were down 100 basis points as a percentage of Revenue on a same store basis.

General and administrative costs were $57.3 million in the quarter, up $10.2 million year-over-year.

As a percentage of revenue, GNA was up 40 basis points year-over-year, as we continue to invest in technology upgrades and integrate acquisitions.

We have a strategy in place to begin generating meaningful leverage on the GNA line as we grow. We expect this to become another driver of margin improvement in the future. More to come on this next quarter.

Depreciation and amortization costs were up. 19.709% of acquired intangibles.

Adjust net income was 26.6 million in the quarter or 42 cents per diluted share of 0.4 million and down 2 cents per share.

GAAP net income was up $4.2 million in the quarter, with the non-recurring Southridge landfill closure charge in the third quarter last year.

Net cash provided by operating activities, was 233.2 million in the first 9 months of 2025 up 61.6 million year-over-year, large EV dog.

DSO was essentially flat from June and year-end at 35 days.

Adjusted free cash flow was 119.5 Million year to date a record for the first 9 months and representing approximately 2/3 of our flow year guidance.

Capital expenditures were were 187.8 million up. 61.4 million year-over-year, including 54 million upfront. Investment in recent acquisition.

As of September 30, we had $1.16 billion of debt and $193 million of cash. Our net consolidated leverage ratio for purposes of our bank covenants was 2.34 times, and our $700 million revolver remained undrawn.

Our liquidity and leverage profile will enable us to be opportunistic in continuing to execute on our growth strategy and robust acquisition pipeline.

As announced in our press release yesterday, we raised the lower end of our revenue and adjusted debt guidance rate for 2025 in the midpoints to 1 1.835 billion and 420 million respectively.

Reflecting increased visibility and confidence in fully your results and underlying strength in the business.

Recall that we already raised the lower end and midpoints on our cash flow guidance metrics at Q2, and we remain well on track for those.

Looking ahead to 2026.

We anticipate another year of strong growth across Revenue, adjusted, EBA and cash flow.

As you build your models for next year, we expect overall organic growth in the range of 4 to 5%, primarily driven by Solid Waste pricing.

An incremental 3%, or $60 million, of rollover acquisition revenue, including contribution from Mountain State Waste, which we expect to close at the beginning of the year.

This puts total revenue growth, excluding future acquisition activities that haven't yet closed, in the range of 7 to 8%.

On the adjusted e. But down the line, we'll Target 25 to 50 basis points of overall margin Improvement, driven by pricing actions in excess of underlying cost inflation.

Operating enhancements in the Mid-Atlantic, including routes and energies, and automation enabled by truck deliveries, in the completion of our ongoing system consolidation.

From our operating programs elsewhere in the business and the rollover contribution from acquisitions.

Specifically in the Mid-Atlantic. We're currently working towards improvements of at least 500 on an annualized basis, which will contribute to our anticipated, overall margin Improvement.

This puts total adjusted via dog growth again before further acquisitions at roughly 9% to 10%.

In addition, we'll aim to generate leverage on this growth on the adjusted free. Cash flow line targeting growth in our typical long-term range of 10 to 15%.

And with that, I'll turn it over to net.

Thanks, Brad and good morning everyone. Thank you, John for your support, as well as I'm preparing to take on the CEO role on January 1st, by my account, this will be the 11th 10th quarterly conference call that you've LED as a CEO, what an incredible record for a legendary leader and mentor to all of us.

We are all excited for you to take on the next chapter of your career after 50 years at the helm of Casella. We look forward to your continued support and your new role as Executive Chairman.

As highlighted in earnings released yesterday, third quarter results, exceeded expectations for both revenue and adjusted Eva dot total revenues. Rose nearly 18% year-over-year driven by strong 4.9% organic growth and continued contributions from acquisitions.

Adjusted EBA reached $120 million in the quarter, up 16.4% year-over-year, with base margins before acquisitions expanding 70 basis points.

Year-over-year.

Is collection and Disposal operations, continue to perform well support by 4.6%. Pricing growth higher landfills, Lions driven by greater internalization and third-party activity and ongoing improvements within the Mid-Atlantic segment.

standfield volumes as Brad stated, we're up 11.7% year-over-year with roughly 1 quarter of the increase driven by better sales performance and the remainder from increased volume internalization

On the permitting front, we've made Solid progress on the expansion efforts that our hikes in Highland landfills in New York with permits expected. Over the next several quarters, we're working to more than double the annual permit. At Highland from 460,000 tons, a year to a million tons per year. And also add clothes to 60 years of capacity at current run rates at the hakes landfill, we're permitting, a 10-year or more expansion at perm. Run rates.

These expansions are important with the expected closures in New York over the next several years.

The McKean rail facility upgrade project which will enable Gondola offloading remains on track for completion in the first half of 2026.

Operationally, we completed multiple routing optimization projects during the quarter, reducing total route days by 10 and lowering driver headcount requirements, all the while maintaining service quality.

Our delayed truck orders in the Mid-Atlantic, have started to deliver with 43 trucks arriving since July 1st and another 37 trucks expected to deliver in the fourth quarter or into early 2026. Most importantly over, 60% of these trucks are automated, which will allow us to rapidly convert operating efficiencies and labor. Reductions, in addition, to the expected savings from lower maintenance costs and eliminating truck rentals.

The Mid-Atlantic integration automation optimization initiatives continue to advance. As Brad mentioned, we expect at least $5 million in savings by 2026, but the ultimate multi-year opportunity is much larger, and we're currently working to establish the cadence of these savings.

The resource solution, segment delivered year-over-year adjusted Eva, dog growth reflecting, strong, national accounts, performance and operational efficiencies from the upgraded willamantic, recycling facility.

These gains together with our resilient pricing structures, including the floating processing, and SRA fees, effectively mitigated the impact of weaker commodity prices.

Which could close in late Q4 or into 2026.

As Brad mentioned our balance sheet remains strong with total liquidity of roughly 866 million. Giving us ample flexibility to continue executing our strategic growth and investment initiatives.

Looking ahead to the remainder of 2025, our Outlook remains positive and we expect to finish the year strong supporting midpoint increases in both our 2025 revenue and adjusted ebitda guidance ranges. In addition, our early view of 2026 is positive with sustained pricing strength, the rollover acquisition growth and cost-savings initiatives positioning us for another strong year of cash, flow growth with that. I'll turn it back to the operator for questions. Thank you, thank you as a reminder, to ask a question. Please press star, 1 1 1 on your telephone and wait for your name, to be announced to withdraw your question. Please, press star 1 1 1, again please stand by. While we can call the Q&A roster,

And our first question comes from Tyler Brown of Raymond James. Your line is open. Hey, good morning, guys.

Good morning. Good morning.

Hey, John just congrats again for everything over the years. I know this may be your last call but I'm looking forward to to keeping in touch over. Uh,

In the future.

Absolutely. Um it looks forward to supporting the team on a go forward basis. So it's a, it's exciting. Very, very exciting. Yeah, I'm sure we'll see you around. Hey, um yeah Ned Brad. Hey conceptually. So there's seems to be some concerns maybe in the market about the longer term trajectory of margins for you guys. And I know that margins are down slightly year to date. There are a lot of moving pieces, but at a core level, again kind of say, excluding m&a is there any? Is there any reason to think that margins couldn't meaningfully agreed as time goes on again, just getting that unit, rev over unit cost spread. And then how would you characterize kind of a quote, unquote normal year? And then how should we think about the impact of of m&a on that algorithm?

Yeah, the Tyler, maybe I'll I'll uh I'll start off. This is Brad. Um, so so we don't we don't see anything that will challenge, you know what we've what we've executed and what we expect with margins over time? Um, you know, it's sort of taking a step back as we acquire businesses most of the collection businesses, you know, plus or minus. Every deal is different but those come in at roughly a 20% even dial marketing on that.

Our collection business, um, overall in Casella is closer to a 30% margin business. Um, so you know what we see when we, when we acquire businesses is there's significant multi-year margin expansion opportunity. And so it's sort of this kind of constant recycling where in the current period, acquisitions may weigh on our margins because the deals coming in are initially at a lower margin. But then that becomes a sort of fuel to the fire of, okay, as we implement our strategies and our operating programs and so forth.

We can take those margins up 500, maybe even a thousand basis points over the long term. So, that's the model.

And we don't see any reason why, um, you know, something would derail us from from those kind of basic economics. But the specifically Brad in the third quarter Acquisitions completed in the last 12 months weighed on our margins by 100 basis points. That's not concerning to us, as Brad said, I mean, it's expected. It's what we modeled it's, it's what we knew was coming. Um, but in a core business, we are created margins, 70 basis points and you know we did a great job converting on price. We did a great job executing on our sales funnel, uh, Sean and his broader team. Uh, continues to do great work on the ground. Operationally, um, we've got an amazing new safety leader. That's trying to sell a Jeff Martin that we're excited to have them.

On our team. He he's really making a positive early difference on our safety culture and advancing that in the right direction as well. So you know, the building blocks are there for us to continue to create margins and and to improve. Uh, it really comes down to a bit of the acquisition Cadence um and how much that dilutes the The Core Business.

Okay, and so, as we just to be clear, uh going back to the Q3 2025 sketch.

You're looking for 25 to 50 basis points next year, including M&A, is that right?

Mountain State waste. Yes. Okay. And to be clear, the 20 million of Louis are not in the 26th. Look? Yeah, correct.

Okay. And then also, just some clarification real quickly on the Synergy capture and Mid-Atlantic. So, I think you said $5 million, but to be clear, does that include any benefits from, call it, surgical pricing opportunities? I know that the old ERP may be limited that.

Yeah, Tyler it does not include any pricing or margin lift. Um we're pretty early. In our budgeting process this fall we we've just kicked things off Brad. Tried to give a early snapshot of some of what we're seeing. We're also running through our multi-year, strategic planning as well. So we really hope to kind of give some floating bricks, uh, building blocks into February along, the lines of the work we're doing specifically along synergies, operating initiatives, uh, some of the work in the back office as well and give, you know, a couple of year Horizon on what those buildings blocks look like and and how we expect them to come in over the next couple of years. Right now, probably a little bit of a conservative look, but we're so early in budgeting that, that would be hard to get ahead of that. Yeah. And then to put a little bit of finer point on the I said, if you have at least 5 million dollars of opportunity next year, that's really just what is right in front of

In terms of low hanging fruit, you know, when we get the truck deliveries, um, you know, the and and and complete the system conversion, the opportunities that we're going to be able to execute on relatively quickly, like within months of of the, of the of 2026 it as you said, it doesn't include. Um, you know, broader opportunities further synergies beyond that and broader opportunities just to run the business better when we're on 1 System.

Yeah. Okay. And then my last 1, so it kind of actually segues a little bit Ned to what you're talking about. And I know, maybe at heart, you're a bit of a scientist. So it's been a pretty interesting earning season. I mean, you know, I cover a lot of different things and we continue to hear whether it's Trucking even the aggregate business of all places. But there continues to be a lot of of use cases for AI. And I'm just curious how that story fits in at kaseya. It sounds like you guys are doing some longer term planning and I'm just curious if you if you see real world application there. If it's in the truck, the back office pricing maintenance, maybe all of the above but just net. Any, any broad thoughts? That would be really helpful. Thanks.

Yeah, good question. Um, as Brad mentioned. I mean we we have so much Focus right now on some foundational elements of our systems. We brought in a great new CIO 2 years ago who had been at Deloitte and waste management for for 20 years and we've been focused on some really simple things like a Billing System consolidation, um new payment portals for customers our our new app website e-commerce. There are some really foundational elements there, but as you know, a few years back, we we rolled out a great new Financial Erp. As a company, we rolled out a new procurement system. And around those stable platforms, we're looking for AI opportunities to really streamline uh, 1 of the areas where we're probably most excited about is we've put in some new Communications tools that can sell a over the last 6 months uh, albeit with with a couple small bumps in the road. But we're now at a point where the team can start to look at some of the automation features and AI features and that

System to help us, um, gain efficiencies and, um, I, I, I think we look to process first, and then there's a lot of automation to come into the future. But I think the next year plus for Casella is about these foundational, um, changes to systems and process innovation. And then we'll look to start to reap a lot of efficiencies from that point forward.

Yep. Interesting. Okay, thank you guys very much, and again, congrats, John.

Thank you.

Thank you.

And our next question comes from Trevor Romeo of William Blair. Your line is open.

Morning, guys. Thanks for taking the questions. And, um, I'll add my sincere congratulations to John and Ned here.

um,

Have left.

Yes, thanks for the question. It's a great Point. Brad made in a big focus of ours over the last of 12 plus months as a management team. Uh Beyond just operating synergies and Automation and back office synergies when we buy businesses, but many times, we have a great opportunity over the course of maybe even 2 to 3 years to internalize volumes many of the companies. We buy might have longer term contracts in place with third-party sites. And as they roll off, we look to optimize the system. Get the right transfer assets in place. The right, the right Transportation assets in place and see where it might fit in our landfill portfolio. So you really think some of that harvesting happening from Acquisitions that have been completed over the last couple of years and it's it's great value creation, and and very large in a creative as well. And um, something will continue to look to into the future.

Okay. Great thanks Ned. Um and then maybe just a a question. Appreciate your comments already kind of on the the Mid-Atlantic integration but just maybe on you know m&a and integration broadly I think we've gotten this question a couple times. Maybe you could talk about your sort of your corporate development and integration team as you've scaled as an organization and done more m&a over time. Have you grown the size of those teams or made any changes to the way they operate? And just anything you're learning from the current integration, you can apply going forward to

to be more, uh, more effective.

Yeah. Um, excellent question. Thank you. Uh, we've done quite a bit of work there. Um, if you flashback several years ago, we were very much decentralized in our approach from a diligent integration standpoint with Acquisitions. We've built a great team. Uh, we have several, um, amazing members of that team. Both from um, sourcing to diligence to integration work, we have a standardized, uh, collaborative tools that we use to helps us, to manage that process. And we really started to recognize a lot of best practices ways to manage, risk ways to gain efficiency in that process. As we've stood up the Standalone team, over the last several years, and it's increased our capability to complete deals and complete them successfully. And that's really the most important thing. Uh, John had talked a little bit about where he plans to be spending time. But 1 of the most important places is on that front end of the acquisition pipeline.

Um, John is just so well regarded and respected throughout the industry, and, you know, he'll be focusing a lot of time on that front end of the pipeline. And then we've got this amazing team stood up right behind him to focus on the diligence and integration efforts.

Okay, thanks so much. I'll turn it over. Congrats again.

Thank you.

Thank you.

And our next question comes from Adam Bubus of Goldman Sachs. Your line is open.

Hi, good morning. Uh, congrats Sean, what a run and, uh, congrats on that as well.

I I I think um you you say core margins are up, 70 basis points, UH 60 basis points, related to landfill volume. So that leaves around 10 basis points of sort of underlying margin expansion between the Core Business, including Mid-Atlantic, how do the Mid-Atlantic margins compared?

to this time versus last year and what sort of the true underlying solid waste margin expansion, excluding that Mid-Atlantic headwind.

Hey, Adam, it's Brad. I mean, the rate of change on the margins kind of year over year, is is really encouraging. So, last year, um, the Middle, Atlantic on a year-over-year, margin comparative basis, was a headwind of about 100 basis points, um you know this quarter it was 10 basis points. Um so we're really seeing things turn around there. I mean we're not as you've heard us talk about we're not nearly where we want to be and where we will be but um it's it's getting it's getting much better month after month.

We're going to see, we're going to see delivery of you know additional uh trucks to the end of the year which is going to be helpful as well. Yep. So a lot of lot of good things happening there.

M&a that sort of leads you to that 25 to 50 basis points.

Yeah. Um I I think it's it's fair to think about the Mid-Atlantic next year as a certainly a Tailwind on the year-over-year basis. Um for me with down margins um you know as net I'll hesitate from getting into too much detail because you know as Ned. Um alluded to we're we're just now in our budget process. Um, really drilling into the plan for not only the Middle Atlantic but the rest of the business. So um, you know it's difficult to to parse it um, real specifically. But but we feel good about 25 to 50 basis points of overall margin Improvement and middle end is being a contributor to that.

And then last one for me, uh, I might have missed it in the prepared remarks, but what was, uh, landfill pricing in the quarter? And rail-served capacity in the Northeast has had some impact on landfill pricing, uh, just based on adds and flows of capacity in the market. Is there scope for reacting and pricing off the current rate? And how do you think about the timing of that?

Yep. So, price in the landfills on a third-party basis was 3%, same store. So, that's same customer, same time.

Um, so, you know, it's it's a bit softer than it has been in in years in the past. I think rail capacity entering the market is, is certainly part of that.

Great. Thanks so much.

Thank you.

And our next question comes from James Shum of TDC. Your line is open.

Hey, good morning guys, nice quarter.

Good morning. Good morning. Thank you.

Can, can you just?

Help. Give us a little bit. Um,

More color on the timeline for the Mid-Atlantic.

Billing System. Like when do you think you're going to have this?

Fully resolved, uh, because my understanding is like, you can't really reap. You can't reap the pricing benefits, really until you get it all on 1 system and then figure out where you can price, right? So what's the timeline is it is it the end of the year or is it January? Is it and the q1 or is it later than that? Well, how should we be thinking about that?

Yeah, we're we're about 50% through all of the customers today and um actually next week we'll get through a big big uh, chunk as well. And and right now, conservatively the end of q1. It could be a little bit before that. Uh, so the systems work should be done. Uh, but by early q1 kind of January February. And then we've got a a a little bit more work to uh move on to our latest uh customer uh payment portal and that'll be the last step. And at that point in time that entire business unit in the Mid-Atlantic, will will be on the most modern version of Casella's, um, Billing System, uh, payment portal, and it will allow us to do many things. Um, 1 as you said, we'll be able to use our tried-and-true profitability tools for customers which will give us more visibility and where we focus. And, uh, to ensure that that we're really, uh, yielding, uh, uh, the

Returns that we need to on on each customer but we'll also be able to really rapidly start to gain synergies in that business. So um since certain of these businesses have been left on their own original billing systems, we haven't been able to consolidate across the 8 plus Acquisitions. We've done in the last year so we'll be able to rapidly consolidate routes. Take trucks off the road. And at the same time we have a lot of automated trucks showing up.

Into that region, which accelerates this even further. So, we laid out a conservative number for next year. But it it's, it's a, um, it will gain momentum, it's a flywheel to hook in momentum. We've done this many times before, our team is very, very good at this. This is not recreating anything. There's not technology risk. It's more just a matter of. We got to get the customers loaded into system, we've got to do some quality control work, get them onto the payment portal and then Sean and his team, get to work and start consolidating these businesses through the first half of uh 26.

Okay, great. Thanks for all that color, nut. And then I was just curious, were there any notable one-time unusual revenue benefits this quarter?

No. Okay. Cuz the guidance if I'm doing my math correctly, which may not be the case, is it seems to be implying Q4 revenues of about 467 million.

That seems to imply somewhat of a sharp drop-off in your annual growth rate. And just so I know, there's some seasonality in the fourth quarter, but it just seems like a fairly large slowdown relative to your historical performance.

So, I didn't know if that was conservatism or if there, I don't know, if this is there anything to to say there.

We start to comp a few Acquisitions that were made in Q3 of 24. So I don't know if that's part of what you're seeing. Uh, if you parse out organic and inorganic growth, that that might be and Brian can connect with you offline and walk through that. Yeah. Typically, what you would see, it's hard to tell exactly this seasonality because you're of Acquisitions that are are coming on, but weren't there in in the prior fourth quarter this year, that's a little bit different because, you know, and that

Pointed out, Royal, for example, um, we closed Royal, um, uh, October 1st 24th. Yeah, exactly. So, um, so Royal is, is in the numbers on a comparable, year-over-year basis in Q4. So, a little more of the seasonality is exposed if you will.

Yep. Yep, makes sense. Okay, I'll turn it back. Thanks a lot for the answers, guys. Thank you.

Thank you.

And our next question comes from William Griffin of Barclays. Your line is open.

Hey, good morning everybody. I appreciate the time and um good to hear, you know, progress uh on the Mid-Atlantic integration continues here. Um, appreciate all the caller that you've given on the Billing System, uh, implementation so far. Just curious if if you have sort of a preliminary view or look on, um, how we could expect, you know, pricing in that region to uh, evolve or or, or potentially accelerate in 2026, as you kind of get this, uh, system fully, uh, fully implemented.

You know, it may be a little early to...

I think we got to get into Data. So we've been doing more, just blanket based reasonable price increases across this customer base and the way we've run our business for many years is is really detailed analytics. We understand each customer? Um, if we're making an adequate return, um, making sure we're covering off the cost structure with that margin spread. And, and then trying to have Dynamic features in place like our energy and environmental fee to pass fuel risk back to the customer and environmental risk, we use

SRA fee to pass back, recycling, commodity risk, neither of those floating fees are in place uh, predominantly across that market. We have been introducing with new customers. So we've got work there to get the floating fees in place to to look at risk. And really, as I said a minute ago, we've got to get into our tried and true tools. We got to look at profitability and and there's a lot of work as we're integrating these routes to understand the true cost as well. Right now, the cost structure is a bit higher than it should be. So as that automation comes to the street as we get consolidation of routes. So this will be an iterative process, um, into 2026. And it, it may be, you know, several years to this entire picture is put together from pricing profitability and fees into that market. It's not something we're just going to pull a lever, you know, in Q2 and and and move everything and and certainly backward-looking. Um or you

We we've seen the Middle Atlantic has been somewhat of a drag on our overall pricing step. Um, so, you know, without talking about specifically, what we think the opportunity is going forward, we do know that, um, our inability to, uh, to put pricing forward in a lot of cases, has been a um, somewhat of a drag

Got it. And then um I just have 2, uh, quicker ones here. So I'll combine them. Um, I guess 1 I I noticed sounds like the timing of the Mountain State waste closure, uh, was was pushed out from 4 q to, to 1 Q. Just wondering if there's anything to note there and then, um, any impact on truck deliveries related to 232 tariffs. So sounds like those are on track but just wanted to check

We're uh, we're the majority of our uh equipment, uh, trucks Etc, uh, all manufactured in uh, North America. So we don't in, in in the United States. So we don't, we don't anticipate any any particular impacts there at all. Yeah, we're we're a Big Mac Kenworth company. That's our 2 primary Brands. If we've got some Peter bills, um, you know, they're very limited in scope. Um, and I know there are Peter belts looking to move capacity to the US manufacturing wise, but that's not a primary brand for us. Um, you know, the 1, uh, as Sean said, you know, we really have worked hard over the last decade to standardize our brand around 2 chassis and they're both American made. So we don't expect an impact there across the rest of the supply chain. We really haven't seen much if anything. There's a few very limited tariffs we've seen here or there. Um, we we've been tracking them very closely through our procurement team.

And pushing back and making sure that if it does come through an invoice, there's proper documentation, and we understand if it's real or not? Yeah. The other piece too is that towards the second half of this year.

The, um, disruption in the supply chain, in terms of delivery of trucks is really eased. And we're now getting all of the equipment that we need and then some. So, um, that whole issue has really gone away in the second half of the year, so we can get whatever we need from a equipment perspective, particularly trucks.

I appreciate that. John, Ned, congrats to you both, and happy Halloween, everybody.

Thank you. Thank you.

Thank you.

And our next question comes from Michelle Rosenbaum of Steveo. Your line is open.

Hi, thank you very much for taking my question, I just want to step back a little bit with the, the Mid-Atlantic, and it looks really great. That, you know, the eval margin drag going down from 85 basis points, last quarter to 10 basis points. This quarter should be done within whatever is 5 6 months. I just want to ask with you, I haven't gone through, you know, some pickups over there and and really leaning into the, uh, acquisition. Um,

Kind of a stride where do you feel you are in terms of being able to integrate these deals like a big deals come in. What would you say? Would be some, you know, key things that that you could step back and say, hey our execution is going to be better in the future versus what we saw. Now just, you know, anytime you go through things, it's a learning process, it's an iterative process and do you feel like you, you know, your capabilities have increased over the last, you know, year because

Was that, you know, not within the way that you built a team but just in terms of, you know, on the ground, keep a goodies and the Cadence of the way things should go.

Yeah, you know, there's 2 unique things in the Mid-Atlantic 1. Uh we bought assets extracted out of another company. Um, and and that's, that's different. We've done that 1 other time in the past and had wild success. This time, there's a little bit more complicated uh, with the transition Services agreement and lack of visibility. But more importantly, um, John and I stopped by a certain rule for a lot of years. In the company, every company we bought. We put onto our Billing System as fast as possible, and in admitted Atlantic, you know, we made a bad decision. I mean, that's what it is. We, we left it on its Billing System, we left it alone and we realized we just didn't have enough visibility. And at the time, it was the right decision because we really wanted to see um, what the AMCs platform could do and to see if it was something that we could leverage other parts of Casella. But it turned out to not have a lot of features that we need to run an effective business from prostituting analy.

Analytics to ease the extraction of data and analysis. So, we made the pivotal decision in, um, you know, 2025 to get onto our core tried-and-true system, and we've been running fast. And, you know, you gotta check things out. Sometimes, we made a tiny, I guess, you know, decision back then that has turned...

Learn coming out of that but uh clearly uh we're really excited about it. I think at this point in time too, another another factor is building bench strength. We're doing that internally now from an HR standpoint and we've got 10 cassella people in the Mid-Atlantic at this point in time. So we're very confident about where we're going in the Middle Atlantic. We're going to we're going to um close the gap in terms of margins. We're going to do everything that we set out to do. And yeah, there's some lessons learned. No question about it. We need to have a bigger bench strength to support the acquisition opportunities that we have. We've learned that we're doing it. So, you know, Ned's right there are a few Lessons Learned for sure? Yeah, but, but it's interesting, I mean, we've got an 80 plus Acquisitions in The Last 5 Years, 5 plus years. And, you know, we've yielded the synergies hit our models in every case, um, you know, once or twice it takes a little bit longer, but, but we do a really good job. We do a post-mortem on every deal. Um, we measure ourselves

We hold ourselves accountable, and we learn from it. It's actually something I would say is a real core strength of our team, and there should be a lot of investor confidence around this part of our growth strategy going forward. It's something we're good at, and we'll continue to drive a lot of value.

Okay, great. And then just going over those 2 landfills for your teeth in the permitting. You know, referring process. How confident are you on that that to get over the Finish Line? We're just hearing so many stories about like uh nightmares in terms of getting these things done. So I just want to ask, I think we are.

We feel very confident. I mean, I think that there's anyone who's developed capacity in the Northeast is cassella, over the last 25 years. I think our record goes without saying we're very confident in getting through the process. I think the biggest uh, you know, challenge with our Highland facility was making sure that we got through the host Community. We're through that obviously. And now we're, we're we're working on the deec permitting and expect to, as Ned said, probably in the next few quarters expect to have that permit in place, um, and the same thing with hakes as well. So, you know, the Northeast is a challenge from a disposal capacity standpoint, it continues to be a challenge. Um, it's not easy. Uh, certainly don't want to give you that impression but we're very confident that we're going to have success there. Yeah, and this is a big deal too bringing on this much.

Disposal capacity.

In the Northeast, versus having to rail a thousand miles away or 2,000 miles away, is a really big value creation point for shareholders. So, you know, we're excited to get through these processes. We're down to the last strokes. And, um, as John said, we're very confident. Can't predict the exact month or date, but we're close.

And can you just talk a little bit as the capacity comes on? Uh, is that increase your ability to internalize? Is it the fact that the other, um, um, landfills in the region are are running out of capacity. Like when would you start to see that, you know, start to increasingly, add value to, uh, your operations?

I think that it's uh, it's probably a, you know, end of 26/27, um, you know, time frame, I think, but a lot of that depends on how much disposal capacity comes out of the Northeast Market. You know, right now, uh, we have, uh, Ontario, uh, coming out at the end of 28th, it could change. There's also the potential of significantly more capacity closing in the Northeast as well. So when those um when those events happen, um, we're going to be in a position uh, with a capacity that we have to really take advantage of it. So you know, it's very hard to predict when that's going to happen. But um in all all indications are that we're going to be losing capacity in the Northeast not gaining capacity. Yeah. And within very exceptional of what capacity we're putting in,

In place, we're going to be losing capacity in the Northeast and within a very short distance of Highland and Hakes. There are three sites that will be closing in the next two to three years from the Buffalo Market to the Finger Lakes to the greater Albany Market. That whole tier of New York is losing significant landfill capacity over the next several years as we're ramping up these sites. So, um, our timing should be good. It's not a 26-game, but it'll be a great organic growth engine for us over the next couple of years.

Great. Thank you.

Thank you. You're welcome. Thank you.

And our next question comes from Tony bankroft of gabelli funds. Your line is open,

Good morning, gentlemen. Thank you for joining us today.

um,

My, uh, question is for more of a 30,000 ft bigger picture. You know, is this, you know, given all the...

Uh, serving power needs uh, for AI data centers, you know, uh, in the Northeast grid. How how do you see cassella, you know, landfilled of Gas Energy capacity again? This is sort of a longer term. I understand, this is a small portion of the business, but a bigger picture just sort of like your, you know, you figure it out to the client and capacity in Northeast longer term. You know, how, how do you see that impacting? Uh, your landfills with, uh, you know, energy energy, energy demand. Um, and also on on the waist side, the uh, you know, with the EMP uh, waste uh, you know, in the in the, in the Northeast as well. Um, just want to get your longer term View.

Sure. I mean, I think that we've taken the different tact, um, you know, from a strategic standpoint in terms of the, um, you know, the RNG facilities where, you know, we are basically selling our gas to RNG developers and really have taken, uh, a much different, uh, perspective about the long-term volatility of of, that aspect of the business. So we're going to be steady stream in terms of the value that we create uh the capital investment, whether it's the 35% million dollar investment is really being invested by Third parties. We're simply selling the gas so that's not going to really have a a significant positive or negative uh to cassella on a go forward basis. Tony, you know today.

That 1% of our IBA, our energy sales, both in landfill Gas Energy and in RNG. And as John said, we made a thousand percent of right. Strategic decision by not developing those facilities on our own, but we've got 3 new facilities coming online um, in the next few months. Um, our North Country facility in New Hampshire. We have a third party is ramping on RNG facility there and we have 2 wagon facilities. Coming online in New York Highland in Shamong. Um, we haven't modeled much for 2026 impacts for these but they could become more mature. Um, and, you know, there's a lot of really high quality, uh, methane. Coming off those landfills and, uh, you know, definitely be something. We'll we'll keep visibility on it. Be very creative, 100% margin. So it's, you know, exactly what you want with no investment. So, it'll be exciting to see those streams ramp up.

Great job, uh, Jen. Thanks so much.

Thank you. Thank you, Tony.

Thank you.

And our next question comes from Stephanie Moore of Jefferies. Your line is open.

Great. Good morning. Thank you.

I wanted to.

Good morning. I wanted to follow follow up on on mine. I know that you've said that, you know, you did have some plans to add a transfer station and, and do a little bit of building at that site, just to, um, to move forward with, with the with that asset. You could talk. If you could talk a little bit about, you know, any updates in terms of that building. Now timing and completion and then just general. Um,

General overall thoughts in terms of timing of those Investments. And then, you know, the ability to start to um, really push volumes through here over the next, you know, 24, 36 months, Etc. Thank you, sure. I think that, uh, you know, first of all, the facilities up operational were, you know, the entire team out there has gotten some great experience over the last, uh, you know, 6 months or so, in terms of handling, uh, different types of waste, uh, to the facility, we have not aggressively tried to um move ways to the facility. We're looking at internalizing some of our own rails served out of our Holio facility. We're looking also at our willamantic. Uh, but it's probably, you know, Q2 um, 26, uh, when we'll see begin to see a little bit of activity a little bit more activity, but again, a lot of it depends on what happens from a, um, disposal capacity standpoint. How much capacity comes out of the market and when, um, we also, you know, recognize,

Recognize that our, uh, facility at makeen also is the closest facility to the waste generation in Northeast as well, from a rail perspective. So our turn times are going to be good uh compared to some of the other uh Alternatives that are further away. So we're excited about it. Uh but again it's it's it's a a long longer term, you know, significant impact on a positive basis to the company.

Great. Well, I appreciate all the color today. Thank you, guys. Have a good weekend.

Thank you. And as a reminder, if you have a question, please press *1 1.

And our next question comes from James Sham. It's a follow-up from TD Cowen.

Hey, thanks, guys. Um, Stephanie just asked my question on McKean, but maybe coming at it from a different angle. So, like I know you've been sort of using this or reserving this as a strategic backup for Northeast volumes.

Um but I believe it's your largest permitted volume landfill. So, would you consider acquiring collection operations in Western PA or Cleveland and send those tons there?

Or could you use Mckeen's rail access to serve your Mid-Atlantic operations?

Yeah, thanks for the question. So the Pennsylvania is a state with a lot of land sales. Um so you got to really be pretty local to a landfill from a truck standpoint uh to have it make sense to bring in Vines and that that's why it's been a a slow site for the last decade as we brought in really just proximate waste into that site from the surrounding communities, in Pennsylvania, as we look at a opportunity to truck. It further in Pennsylvania, it gets complicated quickly because, uh, you can't get overweight permits in Pennsylvania over the road. So you're really only hauling like 2022, tons in a 53 foot trailer, so it makes it a little more costly. That's why the rail side of this is exciting. Uh, we continue to

Look at opportunities, both in the Northeast and in the Mid-Atlantic region for rails, serve, transfer stations, or, or even development opportunities, uh, to get those direct linkages. Uh, so that will be something we'll continue to do into the future. It it is more Capital intensive to move waste VIA Rail than via truck. So it's always our per preference to, you know, move it via truck versus rail, but if you can have the right linkage, the right long-term contracts or connection to cassella asset, uh, that could be a long-term value creator for for shareholders

Okay, great. Thank you very much. Thank you.

Thank you. I'm showing no further questions at this time. I'd like to turn it back to John cassella for closing remarks.

Uh, I'd like to thank everyone for joining us this morning. Um and Ned and Brad look forward to discussing our fourth quarter 2025 earnings and our 2026 guidance. Uh with everyone in February, have a great day, have a great Halloween and thanks everyone.

This concludes today's conference call, thank you for participating and you may now disconnect