Earnings call transcript: Casella Waste Systems Q2 2025 shows robust growth

Casella Waste Systems reported strong financial results for Q2 2025, with revenues reaching $465.3 million, marking a 23.4% increase from the previous year. The company’s adjusted EBITDA rose to $109.5 million, though the adjusted EBITDA margin saw a slight decline. According to InvestingPro data, the company’s stock, currently trading at $89.89, has seen a 23.4% decline over the past six months, with current valuations suggesting the stock is slightly overvalued based on Fair Value analysis. Despite these positive results, Casella’s stock experienced a slight dip in aftermarket trading, reflecting broader market trends and investor caution.

Key Takeaways

• Casella achieved a 23.4% year-over-year revenue growth.
• Adjusted EBITDA increased by 19.5%, though margins slightly contracted.
• The company completed six acquisitions, expanding its market reach.
• Market reaction was muted with a minor post-market stock decline.

Company Performance

Casella Waste Systems demonstrated significant growth in Q2 2025, driven by strategic acquisitions and expanding operations into new markets such as Pennsylvania and West Virginia. The company completed six acquisitions, contributing to an annualized revenue increase of $90 million. With a current market capitalization of $5.7 billion and maintaining a moderate debt level with a debt-to-equity ratio of 0.8, the company appears well-positioned for its expansion strategy. The adjusted EBITDA margin decreased by 75 basis points, indicating some pressure on profitability, though InvestingPro analysis shows strong liquidity with a current ratio of 1.7, suggesting adequate financial flexibility for continued growth.

Financial Highlights

• Revenue: $465.3 million, up 23.4% year-over-year
• Adjusted EBITDA: $109.5 million, up 19.5% year-over-year
• Adjusted EBITDA margin: 23.5%, down 75 basis points
• Free cash flow: Over $70 million in the first half of the year

Outlook & Guidance

Casella has raised its full-year revenue guidance to a midpoint of $1.83 billion, reflecting confidence in its growth trajectory. The company anticipates achieving $5-10 million in synergies from its Mid-Atlantic operations over the next few years and expects margin expansion by 2026.

Executive Commentary

Ned, SVP and COO, stated, "We delivered another strong quarter of growth with solid performance across key financial metrics." CEO John W. Casella highlighted, "Our M&A pipeline remains full of targets that align perfectly with our strategy," underscoring the company’s focus on strategic acquisitions.

Risks and Challenges

• Integration challenges in the Mid-Atlantic region could affect operational efficiency.
• Higher labor costs in the Mid-Atlantic may pressure margins.
• Truck delivery delays are impacting route optimization efforts.
• Fluctuations in recycling commodity prices, which have decreased by 16% year-over-year, could impact revenue.

Casella Waste Systems remains focused on its acquisition strategy and organic growth, aiming to capitalize on opportunities in the waste management sector. Despite minor challenges, the company’s strong financial performance and strategic initiatives position it well for future growth. InvestingPro subscribers can access 8 additional exclusive ProTips and a comprehensive analysis of Casella’s financial health, which currently rates as ’FAIR’ based on multiple factors including growth, profitability, and cash flow metrics. The Pro Research Report, available for over 1,400 US stocks including CWST, provides deeper insights into the company’s valuation and growth prospects.

Full transcript - Casella Waste Systems Inc (CWST) Q2 2025:

Conference Call Operator: Good day and thank you for standing by. Welcome to the Casella Waste Systems, Inc. Q2 2025 conference call. At this time, all participants are in a listen-only mode. After the speaker’s presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 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 J. Butler, Vice President of Investor Relations. Please go ahead.

Brad/Bradford J. Helgeson, Chief Financial Officer, Casella Waste Systems: Thank you.

Unidentified Speaker, Casella Waste Systems: Good morning and thank you for joining us on the call today.

Brad/Bradford J. Helgeson, Chief Financial Officer, Casella Waste Systems: will be discussing our second quarter 2025.

Unidentified Speaker, Casella Waste Systems: Results which were released yesterday afternoon. This morning I’m joined with John W. Casella, Chairman and Chief Executive Officer of Casella Waste Systems, our President, Bradford J. Helgeson, our Chief Financial Officer, and Sean M. Steves, our Senior Vice President and Chief Operating Officer of Solid Waste Operations. After a review of these results and an update on the Company’s activities and business environment, we’ll be happy to take your questions. First, please note that various remarks we may 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 10-Q, 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 on any subsequent date. While we may elect 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 August 1, 2025. Also during this 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 8-K with the SEC. With that I will now turn over the call to John W.

Casella to begin our discussion.

John W. Casella, Chairman and Chief Executive Officer, Casella Waste Systems: John, thanks Brian, and good morning everyone. Welcome to our second quarter 2025 Casella Waste Systems conference call. In June, we proudly rang the NASDAQ opening bell to commemorate Casella’s 50th anniversary. This milestone marks our evolution from a single truck operation in Vermont to a leading provider of waste, recycling, and resource management services across the Northeast and now into the Mid Atlantic. Over five decades of growth, our dedicated team has consistently delivered exceptional service, industry leadership, all while staying true to our core values and working toward a cleaner, more sustainable future. I would like to sincerely thank all of our employees for their grit, hard work, and commitment every day. The celebration was not only a reflection of our past, but also a reaffirmation of our vision for the future.

It highlighted the strength of our culture, the resilience of our business model, and the deep trust we’ve built with our customers and communities. We’re incredibly proud of the legacy we’ve created and energized by the opportunities ahead.

Brad/Bradford J. Helgeson, Chief Financial Officer, Casella Waste Systems: Turning to the quarter, we delivered another.

John W. Casella, Chairman and Chief Executive Officer, Casella Waste Systems: Strong performance in Q2 with robust growth in both revenue and adjusted EBITDA. Year to date, we’ve achieved record first half adjusted free cash flow over $70 million, more than $30 million above the same period last year. These results reflect solid execution, meaningful contributions from our recent acquisitions. Pricing remains healthy with solid waste pricing up 5% year over year. We continue to execute well on our operating plans, driving meaningful margin improvement across our legacy business. This performance has been partially offset by some growing pains in the Mid Atlantic as we work through the transition to our systems and getting the acquired fleet up to our standards. We are executing on a plan to rapidly get this performance on track elsewhere.

Landfill volumes were up nicely year over year and our Resource Solutions segment continued to perform very well, driven by improved performance at our upgraded recycling facilities. We’ve now completed six acquisitions year to date, representing about $90 million in annualized revenues. We’re excited about the pending acquisition of Mountain State Waste, which will expand our footprint in Pennsylvania and also into West Virginia, adding another $30 million in annualized revenues.

Brad/Bradford J. Helgeson, Chief Financial Officer, Casella Waste Systems: Look forward to welcoming their employees.

John W. Casella, Chairman and Chief Executive Officer, Casella Waste Systems: Customers to the Casella family and integrating their operations into our broader network. Our M&A pipeline remains full of targets that align perfectly with our strategy, and our strong balance sheet positions us to continue to pursue and complete these deals opportunistically. Looking ahead, we raised our full year revenue guidance, reflecting on the continued strength of our core pricing and acquisition activity, and reaffirmed our adjusted EBITDA and adjusted free cash flow guidance ranges, representing another year of record financial results. With that, I’ll turn it over to Brad to walk through the financials in more detail.

Brad/Bradford J. Helgeson, Chief Financial Officer, Casella Waste Systems: Thanks, Sean. Good morning everyone. Revenues in the second quarter were $465.3 million, up $88.2 million or 23.4% year over year with $67.1 million from acquisitions including rollover and $21 million from organic growth, or 5.6%. Solid waste revenues were up 27.1% year over year with price up 5% and volume down 0.8%. Within solid waste, price in the collection line of business was up 4.9% in the quarter, led by 5.9%. Price in front load, commercial, and volume was down 1.2%. However, year over year, volume trends improved from the first quarter with indications of a stable economy in our markets. Price in the disposal line of business was up 5.8% and volume up 0.6% year over year. Results in the landfill business were strong with total tons up 9.5%, including higher third party MSW and C&D volumes and over 12% growth in internalized volumes.

We feel that we have meaningful opportunities to grow volumes further at our sites, but it’s safe to say that the persistent market headwinds that we experienced last year are behind us. We drove price 8.2% at the transfer stations with flat volume in the quarter. Resource Solutions revenues were up 10.2% year over year, with recycling and other processing revenue up 9.6% and national accounts up 10.6%. Within Resource Solutions processing operations, our average recycled commodity sales price was down 16% year over year, with softer markets across the board and most commodities now selling below 5 year averages. Notwithstanding market pressures, our contract structures share this risk with our customers by adjusting tip fees in down markets, so the net impact of lower prices on our revenue was just 1.6% or less than $1 million.

Processing volume in revenue terms was up 8.6%, driven by higher volumes at the Boston and Willimantic recycling facilities. Within national accounts, revenue price was up 5.9% and volume up 1.9%. Adjusted EBITDA was $109.5 million in the quarter, up $17.9 million or 19.5% year over year with contribution from acquisitions including rollover and organic growth. Adjusted EBITDA margin was 23.5% in the quarter, down approximately 75 basis points year over year. Bridging the year over year change in adjusted EBITDA margin, acquisitions contributing at lower initial margins than our overall business presented a headwind of 85 basis points. The base business on a same store basis expanded margins by 10 basis points.

Overall, with legacy footprint operations growing margins by over 100 basis points, with the Mid Atlantic region representing a near-term headwind as we continue to work through business integration and synergy execution impacted by ongoing system conversions and delays in truck deliveries. I should note that these headwinds are transitory and represent margin expansion opportunity in the future, which we expect to see in 2026. Cost of operations were $308.1 million in the quarter, up $64.3 million year over year, with $48.2 million of the increase from acquisitions and $16.1 million in the base business. General and administrative costs were $54.5 million in the quarter, up $7.3 million year over year. Depreciation and amortization costs were up $21.7 million year over year, with $16.1 million resulting from the recent acquisition activity, including the amortization of acquired intangibles.

As a reference, D&A associated with acquisitions was approximately 24% of acquired revenues in the quarter as compared to 15% of our base business. Adjusted net income was $23 million in the quarter, or $0.36 per diluted share, up $1.3 million and down $0.01 per share. GAAP net income was $5.2 million in the quarter, impacted by a $6.9 million increase in amortization of acquired intangibles. Net cash provided by operating activities was $139.6 million in the first six months of 2025, up $59.9 million year over year, driven by EBITDA growth and more normalized seasonal working capital flows as compared to 2024. DSO was 34 days, down two days from year end and four days year over year. Adjusted free cash flow was $70.8 million, a record for the first six months and representing approximately 40% of our full year guidance.

Capital expenditures were $121.9 million, up $47 million year over year, including $40 million of upfront one-time investment in recent acquisitions. As of June 30th, we had $1.16 billion of debt and $218 million of cash. Our consolidated net leverage ratio for purposes of our bank covenants was 2.39 times, and our $700 million revolver remained undrawn. Our liquidity and leverage profile will enable us to be optimistic in continuing to execute on our growth strategy and robust M&A pipeline. As announced in our press release yesterday, we updated some of our guidance ranges for 2025. We raised our revenue guidance to a midpoint of $1.83 billion in light of acquisition activity to date.

However, we reaffirmed our range on adjusted EBITDA as the contribution from our announced acquisition activity since establishing guidance has not yet exceeded the original range, and we remain cautious on the pace of synergy execution this year in the Mid Atlantic region. We also raised the bottom end of our ranges on adjusted EBITDA, adjusted free cash flow, and cash flow from operating activities based on the strength of cash flow year to date and our confidence in the second half regarding cash flow. I should note that we will not see a benefit from the recent tax legislation in 2025 as we would not have been a federal cash taxpayer in any event. However, the provisions of the tax bill, most significantly the reinstatement of bonus depreciation, will certainly benefit our tax position in the future, deferring and ultimately reducing our eventual federal cash tax burden.

With that, I’ll turn it over to Ned.

Ned, Senior Vice President and Chief Operating Officer, Casella Waste Systems: Thanks Brett and good morning everyone. As highlighted in our earnings release yesterday, we delivered another strong quarter of growth with solid performance across key financial metrics. Organic trends remained positive in the second quarter with solid waste pricing up 5% year over year and total company volumes up 30 basis points, with particular strength in Resource Solutions and landfill lines. Collection operations made meaningful improvements. We completed 11 routing projects that reduced both route days and driver headcount requirements. Operational productivity in our eastern and western regions remained strong with direct labor and overtime costs flat on a trailing 12 months basis. This helped to offset cost pressures in our Mid Atlantic region where labor costs are currently running hundreds of basis points higher than in other regions.

As John mentioned, truck delivery delays and system conversions in the Mid Atlantic had a domino impact in the quarter, delaying route optimization, automation, and other cost synergies from being recognized as quickly as expected. We do expect 55 additional trucks to deliver in late 2025 to the Mid Atlantic region, with nearly 40 of these trucks being automated in our Resource Solutions segment. Adjusted EBITDA increased $1.8 million in the second quarter, mainly driven by improved efficiencies at our recently upgraded Willimantic and Boston recycling processing facilities. This operational strength along with our floating processing and SRA fees more than offset the impact of weaker commodity prices which declined roughly $20 a ton or 16% year over year. Landfill volumes were up significantly with total volumes of 88,000 tons year over year or 9.5%, with increased internalization driving a 55,000 ton increase or roughly 13%.

We also continued to source more construction and demolition tons, mainly due to the previously announced competitor landfill closure on Long Island which had been a headwind throughout 2024. Since opening in mid 2024, our McKean landfill has successfully accepted over 400 rail cars and processed close to 2,000 containers of waste. We’re building out a new rail offload transfer building at the site to expand the range of materials that can be handled from the current containerized MSW to also include gondolas of MSW, C&D, and soils. We expect these upgrades to be completed in the first half of 2026, and at that time, we’ll work to drive additional internalization to the site and also selectively attract new customers and material streams.

We also continue to execute well against our acquisition strategy, as John mentioned, closing three additional deals in the second quarter, totaling over $40 million in annualized revenues. Additionally, we’re really excited about the agreement to acquire Mountain State Waste, which will expand our geographic footprint and add an incremental $30 million of annualized revenues after it closes. As we enter the second half of 2025, our acquisition pipeline remains robust, with over $500 million of annualized revenue opportunities. Our balance sheet remains strong, with leverage under 2.4 times and total liquidity of approximately $900 million. Our outlook for the remainder of 2025 remains positive, supported by continued execution of our acquisition strategy in a resilient, sustainable organic growth model. Our limited exposure to commodity prices and tariffs further reinforces our confidence in delivering consistent results. With that, I’ll turn it back to the operator for questions. Thank you.

Conference Call Operator: As a reminder to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q and A roster. Our first question comes from Tyler Brown with Raymond James. Your line is open.

Tyler Brown, Analyst, Raymond James: Hey, good morning, guys.

Brad/Bradford J. Helgeson, Chief Financial Officer, Casella Waste Systems: Can you all hear me? Sure can. Yeah.

John W. Casella, Chairman and Chief Executive Officer, Casella Waste Systems: Good morning, Tyler.

Unidentified Speaker, Casella Waste Systems: Hey, morning.

Tyler Brown, Analyst, Raymond James: Ned, can we just kind of start with the Mid Atlantic? It seems like maybe that group is lagging a little bit.

Brad/Bradford J. Helgeson, Chief Financial Officer, Casella Waste Systems: Maybe.

Tyler Brown, Analyst, Raymond James: Can you talk about some of the reasons why? I think you’re implementing an ERP there. Big picture, once that new system is in place, won’t there be a substantial pricing opportunity in that market in 2026? I was under the impression that pushing price was kind of, call it logistically difficult, and cash collections were kind of slow on that legacy system.

Ned, Senior Vice President and Chief Operating Officer, Casella Waste Systems: Yeah. Great question, Tyler. If we flash back in time, there’s always those moments where you make an R&D decision, and we maybe made one that’s been a little bit painful. When we acquired the businesses originally from GFL, we decided to actually stay in the same billing operating system they had been operating. It was more of an R&D decision for us to see how it would work and if it was something that would work for the rest of our business. Flash forward, it’s not a great system. There’s not great analytics, there’s not great routing capabilities. There’s a lot of issues. About nine months ago, eight months ago, we decided to move to our legacy billing system which stood the test of time. It’s been amazing. Called Soft-Pak, but upgrading to the latest version. We’re very rapidly doing so in the Mid Atlantic.

As I mentioned, it is a bit of a domino effect because not all those businesses are running in the exact same billing system today. We haven’t been able to move all newly acquired businesses onto that system. The truck delays just compound the whole thing where we haven’t been able to get automation routing synergies. We’re not feeling bad about our plans or our synergy expectations. It’s just taking longer. To your question about pricing, you’re 100% right about that. There’s not the same level of visibility around elasticity around pricing that we have in our legacy system. There is opportunity there as well.

Tyler Brown, Analyst, Raymond James: Okay, I’ll try to ask this question. We’ll see what you give me. What would you say the synergy adjusted EBITDA benefit could be from that group of assets in 2026? I mean, is this a couple million bucks or is this $10 million or more? Just any color?

Ned, Senior Vice President and Chief Operating Officer, Casella Waste Systems: Yeah. We haven’t fully built out our budget for next year and we’re still working through the steps here. On the routing side, this will come in over the course of a couple years, as you’re aware. We had said there was ultimately as much as $5 million, $6 million, $7 million of benefit over several years as we automate that fleet. On the back office side, there’s millions of dollars of benefit over, you know, I wouldn’t say it’s all at once, but as we get the systems issues resolved. You’re looking at $5 million to $10 million over a couple of years. We’ll give a better idea on the PAC when we get our budget pulled together.

Tyler Brown, Analyst, Raymond James: Okay, yeah, that’s very helpful. Can we turn to Mountain State? I’m just kind of curious about what some of the dynamics are in West Virginia. Is that a disposal neutral market? Can you internalize that through a transfer station? Just what’s the market structure there, and it looks like they have a really nice set of assets. Will that kind of serve as a mini platform in that region?

John W. Casella, Chairman and Chief Executive Officer, Casella Waste Systems: It will. You know, the majority of a good portion of the assets are in Pennsylvania. The expansion into West Virginia is through into Morgantown, which is a very, it’s a terrific MSA in West Virginia. A lot of growth there because of the university. It’s a secondary tertiary market that we’re similar, you know, similar to some.

Brad/Bradford J. Helgeson, Chief Financial Officer, Casella Waste Systems: Of our other markets.

John W. Casella, Chairman and Chief Executive Officer, Casella Waste Systems: I think that there is an opportunity for us to continue to build off of that platform. There are operations, we do go into Ohio and Kentucky with the West Virginia assets. There is an opportunity for us to add to that platform on a go forward basis.

Ned, Senior Vice President and Chief Operating Officer, Casella Waste Systems: Yeah, as you may be aware, it’s a franchise market. They have these lifetime franchise agreements that come with part of the acquisition. In those markets we would either be the sole provider or there might be several providers, but you have a franchise agreement where you’re picking up customers within a defined rate structure. It’s a very nice, well-run, profitable business with great assets.

Tyler Brown, Analyst, Raymond James: Yeah, definitely looks like it. My last one here, just Brad, this is a minutiae modeling question, but why did the interest expense guidance drop so much?

John W. Casella, Chairman and Chief Executive Officer, Casella Waste Systems: Was that.

Tyler Brown, Analyst, Raymond James: I mean, it doesn’t look like the debt balance really moved, and I’m doubting the coupon moved that much. Just what was going on there.

Brad/Bradford J. Helgeson, Chief Financial Officer, Casella Waste Systems: I think just as the year progresses, we’re just refining our view and letting some of the conservatism on that line out is really the bottom line. Okay.

Tyler Brown, Analyst, Raymond James: Yeah, I just wanted to go over that.

Brad/Bradford J. Helgeson, Chief Financial Officer, Casella Waste Systems: All right, thank you guys.

Ned, Senior Vice President and Chief Operating Officer, Casella Waste Systems: Thank you.

Conference Call Operator: Thank you. Our next question comes from Adam Samuel Bubes with Goldman Sachs Group. Your line is open.

Adam Samuel Bubes, Analyst, Goldman Sachs Group: Hi, good morning. Follow up on the Mid Atlantic dynamic. Just to put a finer point on it.

John W. Casella, Chairman and Chief Executive Officer, Casella Waste Systems: Is this a case where it’s.

Adam Samuel Bubes, Analyst, Goldman Sachs Group: Slower than expected synergy realization, or are we also realizing incremental costs in the Mid Atlantic year over year that’s impacting that margin bridge associated with integration?

Ned, Senior Vice President and Chief Operating Officer, Casella Waste Systems: It’s just slower synergy realization. We expect the trucks to deliver sooner, which would have allowed us to do more automation, taking other trucks’ labor off the road. As I mentioned with Tyler, we really are having to move back to a legacy Casella order to cash system with an upgrade. The system we took over from GFL just isn’t allowing us the flexibility to achieve our business model in the way we expected. It’s a little bit more of a delay there. Nothing.

John W. Casella, Chairman and Chief Executive Officer, Casella Waste Systems: The first half of the year, truck delivery was a significant issue. The majority, a good portion of the trucks that are coming in, the 55 that are coming in before the end of the year, a good portion of those go to the Mid Atlantic. That will allow Sean and his team to really go after some of the synergies that we weren’t able to capture.

Brad/Bradford J. Helgeson, Chief Financial Officer, Casella Waste Systems: Understood.

Adam Samuel Bubes, Analyst, Goldman Sachs Group: I think you closed on $40 million annualized revenues incremental into a quarter. Can you just expand on the details of those transactions in terms of geographic and business mix? Any other details?

Ned, Senior Vice President and Chief Operating Officer, Casella Waste Systems: Yeah, we don’t typically give out the names, but we had one acquisition that was into our western region. It’s an existing market. We’ll be able to develop tuck-in synergies with that. We’ll ultimately be able to consolidate routes. Good, solid acquisition. We had two other acquisitions in the Mid Atlantic. One is a very direct overlay which will have nice synergies over the next couple next year. Plus it’s in touch Delaware to Southern PA, and then a second acquisition in PA that is a bridge between two operations, sits right in between, has some overlay, but expands territory slightly. It’s all really nice fits and acquisitions we’ve been working on for a period of time and have good synergy value.

Adam Samuel Bubes, Analyst, Goldman Sachs Group: Thinking back to the second half of last year, I think you had some margin headwinds from insurance events, incentive comp, and lower landfill volumes were also a headwind. With landfill volumes having recovered now and lapping some of those headwinds from last year, is it fair to think margins could expand at or better than the sort of 50 basis points of underlying margin expansion trend? How should we think about the sequential margin expansion in the back half of the year?

Ned, Senior Vice President and Chief Operating Officer, Casella Waste Systems: Thanks.

Brad/Bradford J. Helgeson, Chief Financial Officer, Casella Waste Systems: Yeah, good question. Certainly, this is Brad, certainly the landfill business flipping from a headwind to a tailwind will be a nice, nice driver of margin expansion year over year in the second half. I would say though that the margins implied by the fact that we raised our revenue guidance, we held our guidance range on adjusted EBITDA. That implies slightly softer margins than we had expected for the second half. That’s really, again, not to keep harping on it, but it’s the Mid Atlantic. I think what we’re seeing is, you know, 50, 60 basis point of kind of same store margin improvement in the first half. The legacy operations have exceeded that, and then the Mid Atlantic was a bit of a drag.

I think the pace at which we can execute on the synergies, get trucks delivered, et cetera, that’s really going to tell the tale for the second half on margins. You have those different factors that are going to be impacting it. Great, thanks so much.

Conference Call Operator: Thank you. Our next question comes from Trevor Romeo with William Blair. Your line is open.

Trevor Romeo, Analyst, William Blair: Hey, good morning, guys. Thanks for taking the questions. I was just hoping you could maybe speak.

Conference Call Operator: Morning.

Trevor Romeo, Analyst, William Blair: Hoping you could speak to the volume performance in the quarter and the outlook. I think, Brad, you mentioned indications of stable economy in your markets and clearly some good trends in the landfill. You’ve also got some of the Brookhaven factors in your own internalization initiatives. Hoping you could maybe just talk to what you’re seeing in the cyclical areas of volume and help us parse out the underlying trends in your markets versus the more Casella specific trends.

Brad/Bradford J. Helgeson, Chief Financial Officer, Casella Waste Systems: Sure. Hey, Trevor, if you recall, in the first quarter we talked in particular about a really soft environment for roll off and at the time we weren’t really sure was that weather and it was a difficult weather quarter in the Northeast. Was it weather or was there some underlying economic weakness at play as well? That business has recovered nicely. I don’t think we’re seeing a booming economy by any respect, but things have stabilized. The year over year numbers from a volume perspective really across the board are stronger in the second quarter than they were in the first quarter. Ned mentioned something in his prepared remarks that I don’t want to necessarily let go unnoticed. Our volume overall across solid waste and Resource Solutions was actually positive year over year.

We tend to break up how we talk about volume between those two business lines, but overall, including recyclables, including our national accounts business, our collection business, and of course landfills, it’s actually a pretty good volume story.

Ned, Senior Vice President and Chief Operating Officer, Casella Waste Systems: Yeah. It doesn’t get reflected in our bonds, Brad, but it is important to note that a good degree of the volume increase at the landfills was internalized, you know, almost 60,000 tons. That really reflects, one, getting synergies derived from acquisitions that we’ve done over the last year as we’ve rolled off contracts, and also just our efforts over the last year to put new transportation lanes in place and ensure that transfer stations are getting to our landfills to create that value. Another strong quarter there by our team of getting that job done and delivering those benefits.

Trevor Romeo, Analyst, William Blair: Okay, thank you both. That’s really helpful there. Sorry, just wanted to go back one more time to, I guess, the Mid Atlantic. I think you talked about the systems and the fleet, I think in detail already. I think one comment I caught from Ned was labor running much hotter. If I look at your expense details, I think direct labor costs were up like 170 basis points year over year as a percentage of revenue. Maybe just a little more detail on what’s going in there. Is it primarily just not having the automated trucks yet or something else going on with labor there?

Ned, Senior Vice President and Chief Operating Officer, Casella Waste Systems: Yeah, so we’ve mentioned this a few times where the labor cost as a % of revenue or net revenue in the Mid Atlantic is much higher than our legacy hauling businesses in the Northeast. That’s because there’s a lack of automation, a lack of optimization of routes, and it won’t get all solved at once. This is going to take years to solve as we get new trucks into the fleet, as we look to automate certain municipal contracts. Right now we have a much higher degree of labor servicing the same revenue base in that market, which is a great opportunity. As we’ve mentioned a few times, we thought we’re going to yield that opportunity a little bit faster in 2025. Now with truck delays, it’s coming a little slower, but the opportunity is there.

We expect that to start coming down and we expect that to be a real tailwind into the future where we can start taking that labor out of that business model more broadly, across the business.

Brad/Bradford J. Helgeson, Chief Financial Officer, Casella Waste Systems: Trevor, we are seeing labor costs at sort of the upper end of our cost act from an inflation standpoint. Overall, we think we’re comfortably covering cost inflation with our pricing programs as we aim to do. Labor has been one of the higher running line items, candidly, from an inflation standpoint.

Conference Call Operator: Got it. All right, thank you all.

Brad/Bradford J. Helgeson, Chief Financial Officer, Casella Waste Systems: Really appreciate it.

Ned, Senior Vice President and Chief Operating Officer, Casella Waste Systems: Thank you.

Conference Call Operator: Thank you. Our next question comes from Jim Shum with TD Cowen. Your line is open. Hey, good morning. Thanks, guys. Just on the collection, pricing looks like a fairly significant dip in the second quarter. Sequentially, you went from 5.8% in Q1 to 4.9%, which seems pretty unusual. Quarter to quarter sequentially there. What’s driving that?

Brad/Bradford J. Helgeson, Chief Financial Officer, Casella Waste Systems: Hey, Jim, it’s Brad. Part of the issue is mix. Across the lines of business, front end commercial has been our strongest line of business. From a pricing standpoint, roll off has been the relative weakest. In the first quarter, there’s much less roll off activity than there is in the second quarter. The best I could explain it is it’s sort of a reweighting of the business line rather than a same store decline in pricing trends.

Ned, Senior Vice President and Chief Operating Officer, Casella Waste Systems: Yeah, we also had great pricing in the front load line of business in the part that Brad, you laid out, and very strong pricing in the residential line of business as well. Our pricing was a bit weaker in the roll-off, and as we exited the spring and volumes were a bit weaker than we expected, we didn’t test market last 50 as much as we may certain years. We were looking for those volumes, and it really isn’t into June, into July, that we really were able to start pushing price a bit more in the roll-off line of business. We’re starting to see that come more now.

Conference Call Operator: Okay, great, thanks. What’s the longer term outlook for Resource Solutions? Can this grow as quickly as solid waste, or does it become proportionally smaller over time?

John W. Casella, Chairman and Chief Executive Officer, Casella Waste Systems: I think that the evolution of Resource Solutions in terms of providing the services that our customers are looking for, whether it’s colleges and universities, municipalities, industrial customers, I think that the Resource Solutions part of the business, or materials management as we call it, is going to continue to grow at a fairly rapid pace. We have tremendous opportunity in the Mid Atlantic as an example. We’re just beginning to scratch the surface. We put the sales team in place. Obviously, we’re beginning to work that at this point in time. When you think about Mid Atlantic as an example from a Resource Solutions standpoint, we’ve got tremendous opportunities from an industrial standpoint to really add a lot of value to the business on a go forward. I think that we’re going to continue to see Resource Solutions grow, grow at a fairly rapid pace.

Conference Call Operator: Okay, got it. Thanks. If I could just squeeze one more in if you don’t mind.

Ned, Senior Vice President and Chief Operating Officer, Casella Waste Systems: Thank you.

Conference Call Operator: CapEx as a % of sales has sort of been running 12 to 13% over the past few years. It seems kind of high relative to maybe your landfill composition to me. How do you see that evolving over time? What’s the right sort of capital intensity? Where do we land in, I don’t know, three, four years?

Brad/Bradford J. Helgeson, Chief Financial Officer, Casella Waste Systems: Yeah, Jim, it’s going to go up and down. Of course, as you know, based on our schedule for landfill cell development, the collection business, just trucks and containers, that tends to be 6 to 7% of revenue. Landfill could bring that number up significantly depending on how busy the construction schedule is for a particular year. I’d also point out, kind of a unique factor given the relative significance of our acquisition activity, is that when we acquire businesses, we tend to, not in all cases, but generally we tend to have pretty significant upfront CapEx as we try and in one shot bring their asset base up to our standards in terms of the fleet, in terms of the facilities. Certainly that is a factor as well and one that, again, for us, given the relative importance of acquisition activity, is probably a bit different from our competitors.

Conference Call Operator: Understood. Great. Thanks for the answers, guys.

Brad/Bradford J. Helgeson, Chief Financial Officer, Casella Waste Systems: Appreciate it.

Conference Call Operator: Yep.

Brad/Bradford J. Helgeson, Chief Financial Officer, Casella Waste Systems: Welcome.

Conference Call Operator: Thank you. As a reminder to ask a question, please press Star 11 on your telephone. Again, that is Star 11 to ask a question. Our next question comes from Stephanie Lynn Benjamin Moore with Jefferies LLC. Your line is open.

Stephanie Lynn Benjamin Moore, Analyst, Jefferies LLC: Hi, good morning. Thank you.

John W. Casella, Chairman and Chief Executive Officer, Casella Waste Systems: Good morning.

Stephanie Lynn Benjamin Moore, Analyst, Jefferies LLC: I wanted to maybe touch on a bigger picture question here. Given the current administration does appear to be a bit more amenable to larger scale M&A, if that changes your acquisition strategy at all or if there’s anything you can call out from a pipeline standpoint. Thank you.

John W. Casella, Chairman and Chief Executive Officer, Casella Waste Systems: Yeah, I don’t think that it really changes our strategy at all, Stephanie. I think that we’ve indicated that we see great opportunity on the Eastern Seaboard. There are some larger companies there, but we’re still focused on solidifying the investment that we have in the Northeast, solidifying the investment that we’ve just made in the Mid Atlantic in terms of taking advantage of those platforms, continuing to add tuck ins to those platforms as well, and obviously looking for additional platforms down the Eastern Seaboard. I don’t think that it changes our strategy from an M&A standpoint at all.

Stephanie Lynn Benjamin Moore, Analyst, Jefferies LLC: Thank you. Appreciate it.

John W. Casella, Chairman and Chief Executive Officer, Casella Waste Systems: Certainly beneficial in terms of the tax, depreciation, et cetera. It’s very positive in terms of how we look at that with regard to the M&A activity on a go forward basis from a tax perspective. Very positive.

Stephanie Lynn Benjamin Moore, Analyst, Jefferies LLC: Excellent. I was hoping if maybe you could give us a bit more of an update on McKean. I know you called out some good investments and opportunities there, but as we think about just the timing of maybe some of those investments starting to come to fruition here and any potential impact we can expect to see over the course of the next 24 months or so. Thank you.

Ned, Senior Vice President and Chief Operating Officer, Casella Waste Systems: Yeah. McKean first became operational late last spring and we started off very slowly and we started to ramp the site more this spring. To date we’re only taking containerized MSW, so like in 12 high boxes. We offload gantry, train, run them up to the face of the landfill. Our permit at the site stipulates that if we’re going to offload any gondolas, so loose MSW, loose C&D, or contaminated soils, we need to do so inside a building. We’ve always had plans to add a transfer station, transfer building at the site. We had all the rail track outlaid to do that and we’re starting to build that building now. We expect that to be completed into the first quarter and that will allow us actually to complete some vertical integration initially with one of our transfer stations we’ll look to move there.

It also opens up some additional streams of waste from third parties that we may consider. As we’ve said for a long time, we’ve never opened McKean to just become a big third party commercial site. A lot of it is defense for the Northeast for the next five to ten years as there’s a lot of risk around disposal capacity. We want to make money at the site. We want to have great returns. Getting this building completed and ramping up volumes a bit more are all part of that strategy. We expect McKean to be a positive volume contributor through 2026 and we’ll let you know as we get that volume ramped up schedule together.

John W. Casella, Chairman and Chief Executive Officer, Casella Waste Systems: Yeah, I think it’s fair to say that is a really nice opportunity for us to open up McKean for some select customers. Two or three select customers that could be a base on a go forward basis. Particularly, as Ned said, after we get completion of the building, then we’ll be able to take the gondolas, which really opens up our opportunity. Meanwhile, the team has really done a great job of getting up to speed operationally. They’re moving the containers, they’re really getting the experience and the operating wherewithal to be able to perform at a high level there. We’re pretty excited about that. Once we’re able to broaden what we can take there with the building, it’s going to be a positive in 2026.

Brad/Bradford J. Helgeson, Chief Financial Officer, Casella Waste Systems: As a footnote to what Ned mentioned about the investment to bring on the capability to accept gondola waste, you’ll notice in the reconciliation of our guidance numbers in the press release this quarter, we have a line for McKean Rail that was a lot of spend. Last year hadn’t really factored into our forecasting for this year until we decided to add this capability. That’s why there’s that additional number in the reconciliation to free cash flow.

Stephanie Lynn Benjamin Moore, Analyst, Jefferies LLC: Understood. Thank you.

Brad/Bradford J. Helgeson, Chief Financial Officer, Casella Waste Systems: You’re welcome.

Conference Call Operator: Thank you. I’m showing no further questions at this time. I would now like to turn it back to John W. Casella for closing remarks.

John W. Casella, Chairman and Chief Executive Officer, Casella Waste Systems: Thanks everyone for joining us this morning and look forward to all of you joining us for a third quarter call in October. Thanks everybody and have a great day.

Conference Call Operator: This concludes today’s conference call. Thank you for participating. You may now disconnect.

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