CASELLA WASTE SYSTEMS INC Q4 FY2024 earnings call

• 2024 saw the company close 8 acquisitions with over $200 million in annualized revenue, and 2025 started with 3 acquisitions closing to date with approximately $40 million in annualized revenues.
• Revenues, adjusted EBITDA, and adjusted free cash flow grew by over 20% in 2024, marking three consecutive years of adjusted EBITDA growth of over 20%.
• Collection business had strong year, with year-over-year adjusted EBITDA margin expansion in the base business. Acquisition growth in collection has been significant, with acquired businesses initially having lower margins but potential to improve over time.
• Resource solutions had one of the best years, with the Boston recycling facility upgraded in 2023 performing well, and the Willimantic recycling facility upgraded and back online in early 2025.
• Focus on increasing internal tonnages in 2024 and continuing in 2025. The team is successful in onboarding acquisitions, with early focus on integrating new team members and operations.

Solid Waste: Collection business accounts for over 60% of consolidated revenues. In Q4, adjusted EBITDA grew, with year-over-year adjusted EBITDA margin expansion in the base collection business of over 100 basis points. Disposal business revenues had changes: transfer and transportation revenue up 5.8%, landfill revenue down 5%. MSW tons into landfills were up 4.8% in the quarter but special waste, C&D, and other tons were down 11.8% year-over-year. Resource Solutions: Recycling and other processing revenue up 8.1% and national accounts up 10.7% year-over-year. The Willimantic recycling facility came back online as scheduled in January, and is expected to roughly double processing speed initially after a shakeout period.

• Revenue guidance for 2025 is in the range of $1.775 to $1.805 billion, a 15% growth at the midpoint.
• Adjusted EBITDA guidance is in the range of $410 million to $425 million, a 16% growth at the midpoint.
• Adjusted free cash flow guidance is in the range of $165 million to $180 million.
• Solid waste business planning pricing of approximately 5%, with solid waste volumes expected to be flat to down 1%.
• Adjusted EBITDA guidance bridges with $30 million to $35 million from some acquisitions and approximately $25 million or 7% from base business organic growth at the midpoint. Capital expenditures are approximately $215 million, including upfront spend for recent acquisitions.

• Economic environment instability could impact business performance.
• Risk of not successfully integrating acquisitions, which could affect financial results.
• Volatility in landfill volumes, especially with softness in special waste and C&D volumes, and pressure on landfill airspace.
• Changes in tax policy could affect cash tax paying position.
• Regulatory and technical risks related to PFAS handling at landfills.

Q: Trevor Romeo asked about the M&A opportunity set, availability of targets, and competition for assets in 2025.

A: Ned Coletta said the pipeline is active, with a focus on strategic fit acquisitions, and the team is busy onboarding acquisitions and integrating them.

Q: Trevor Romeo asked about the acquisition in Eastern Massachusetts and synergy opportunities.

A: Ned Coletta said the acquired Save That Stuff is a good fit, with complementary hauling and processing capabilities.

Q: Tyler Brown asked about the Ontario landfill situation.

A: John Casella said they will move tons to other facilities and are prepared to close it out appropriately.

Q: Tyler Brown asked about internalization opportunities.

A: Ned Coletta said internalization benefits are in the 2025 numbers, with more opportunities being worked on.

Q: Adam Bubes asked about the expanded collection fleet automation opportunity.

A: Sean Steves and Ned Coletta discussed the large pipeline of cost of ops reduction opportunities in collection fleet automation.

Q: Adam Bubes asked about internalization economics.

A: Ned Coletta talked about incremental travel costs vs tip fee savings and incremental internalization opportunities.

Q: Adam Bubes asked about national accounts business growth.

A: John Casella and Ned Coletta discussed growth opportunities in national accounts, especially in industrial components.

Q: Brian Butler asked about price cost spread and inflation.

A: Brad Helgeson said they expect about 4% inflation and target a positive spread.

Q: Brian Butler asked about PFAS handling at landfills.

A: John Casella talked about PFAS handling technologies at facilities.

Q: Tony Vanqualt asked about potential large transformational M&A.

A: John Casella said they will continue with tuck-ins on the Eastern Seaboard but will consider large opportunities if they arise.