Casella Waste Systems Inc at Raymond James Diversified Industrials Conference (Virtual) Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Tyler Brown - Raymond James - Analyst : I'm pretty sure you said you've got a great franchise in New England, yada yada yada, so on and so forth. So that was great. So let's just kick -- jump into the broader environment. So, it's been a really rough last 18 months. It's certainly been something. I think actually the last time we may have seen each other in person was actually back in 2020 at our big institutional conference down in Orlando, and a lot has really happened since then. So again, maybe let's just look at maybe the past six quarters and look at -- and I know COVID's certainly not over, but maybe look at what's happened over the last few quarters. And can you just talk a little bit about how the Company was really impacted early on? Maybe how you guys responded? And then how and what you look like coming out of COVID here?

Question: Tyler Brown - Raymond James - Analyst : Yes, fantastic. That's excellent. We've been trying to think, though, through some of the implications of maybe some of the things that may come out of COVID. And one of the things we've been thinking about with you guys in particular is you do have a fairly large rural mix of your book. Think about markets in Vermont, New Hampshire, Maine, upstate New York, et cetera. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 24, 2021 / 12:40PM, CWST.OQ - Casella Waste Systems Inc at Raymond James Diversified Industrials Conference (Virtual) So I know it's a little bit hard to say, but are you seeing -- if you just look at, say, the resi pools in those markets, are you just seeing those markets maybe tracking above where they were pre-COVID? And some basically habit changes from people in the population in the broader market?

Question: Tyler Brown - Raymond James - Analyst : Right. Something that we have seen, the housing market probably hasn't been super robust over the last decade. So probably a nice shot in the arm, I would say. But going back to it, Ned, so generally speaking, we're maybe slightly under par, if you were to think about zero being pre-COVID. You would say you are -- but you're probably within a couple percent, whether it's the small container of the landfill market at this point?

Question: Tyler Brown - Raymond James - Analyst : Okay. Okay. That's great. And then I know that there's a lot of talk about the delta variant and here in the South, like obviously, it is having a pretty big impact down here. I'm just curious what you are seeing right now specifically up in your markets. Are you seeing a backward movement at all? It seems like maybe vaccines are more prevalent up there, but just any broad thoughts about the current environment and what's going on here in Q3.

Question: Tyler Brown - Raymond James - Analyst : Okay. That's great. So I want to come back, though, to Ned, you talked about New York City. And I want to talk about this for just a little bit, because this has come up the last few quarters and it's frankly not something that I'm sure I even really appreciated even at the time. But how important are those New York City volumes to the overall northeastern waste shed? I know that you don't really haul there. But again, can you just talk about how the dramatic drop in those volumes had an impact on your landfill volumes, maybe down the system?

Question: Tyler Brown - Raymond James - Analyst : And so you talk about volume, but what about the pricing side in the waste shed? Because you have people like the burners, who are pretty desperate to stay full. They obviously had to take some action. So how did the pricing dynamic -- or how did it impact the pricing dynamic, I suppose?

Question: Tyler Brown - Raymond James - Analyst : Right.

Question: Tyler Brown - Raymond James - Analyst : Okay. Fantastic segue because I want to talk about this broader theme. I get this question a lot from investors and it's really around the durability of pricing here. So again, maybe give a little bit more color. You talked about some of the landfill assets in the market exiting. But how much -- what are the legs? And again, I use that word durability, but how should we think about pricing in that market over the next 5 or 10 years? Does it feel like we have this above average pricing opportunity? Or just any big thoughts there.

Question: Tyler Brown - Raymond James - Analyst : Great. And have there been -- just real quickly, to wrap this part up. But has there been any -- have there been any surprises? So sites that have gotten a life expansion that you weren't expecting? Or have you seen things come out quicker? Has it been pretty much as you expected?

Question: Tyler Brown - Raymond James - Analyst : Okay.

Question: Tyler Brown - Raymond James - Analyst : Okay. So let's talk about this because I want to spend these last 10 minutes, I want to talk about McKean and I want to talk about M&A. So, because at the end of the day, you're going to get into this progressive situation where the waste generation in the market is going to exceed the amount of end market disposal capacity. So I would think that the long range -- let's call it a gap-filler is going to be railing garbage, maybe into the upper Midwest or somewhere. So, first off (multiple speakers).

Question: Tyler Brown - Raymond James - Analyst : Exactly. Right, exactly. But that's the idea, right, that ultimately that garbage has to find a home and it's just going to have to move progressively further and further away? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 24, 2021 / 12:40PM, CWST.OQ - Casella Waste Systems Inc at Raymond James Diversified Industrials Conference (Virtual)

Question: Tyler Brown - Raymond James - Analyst : Okay. So we have this landfill in northern PA that today is taking very little. It has a fairly small permit, I think from a trucking perspective, but a large permit from rail. Is that right? So in your overall tonnage today, it's a very small piece.

Question: Tyler Brown - Raymond James - Analyst : So -- right. So there's a short line railroad that runs right along the landfill, correct? There's not a tremendous amount of infrastructure that's needed. I assume it is a siting and maybe some intermodal lift capacity. Is that what's needed (multiple speakers) maybe? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 24, 2021 / 12:40PM, CWST.OQ - Casella Waste Systems Inc at Raymond James Diversified Industrials Conference (Virtual)

Question: Tyler Brown - Raymond James - Analyst : Okay. Okay. So that's the [inbuilt]. So when we think about the CapEx outlay, is this something that we are going to see likely make its way into the budget in fiscal 2022 and fiscal 2023? Or is it sooner than that?

Question: Tyler Brown - Raymond James - Analyst : Right.

Question: Tyler Brown - Raymond James - Analyst : But when it's all said and done, does it feel like it's a small acquisition type of outlay?

Question: Tyler Brown - Raymond James - Analyst : And the beauty is, it's halfway between -- let's just call it the upper Midwest and Massachusetts. So it seems like it's very advantageously positioned geographically.

Question: Tyler Brown - Raymond James - Analyst : Okay. Great. So we've got a couple more minutes here. Just want to talk a little bit about the M&A side of the story. So you guys have talked about the $0.5 billion TAM in your market. How does it feel that that TAM ultimately has shaken out? I mean you've done some acquisitions. It's probably gotten bigger through some things that you weren't expecting maybe came up for sale. But big picture, in the sandbox today, I mean how much acquirable revenue do you still feel that is out there even after the last few years of, quite frankly, quite a bit of success on the M&A side?

Question: Tyler Brown - Raymond James - Analyst : And so just maybe to finish up here, I mean Willimantic was a -- let's just call it, not a massive step outside of your geographic footprint, but it was an extension of the footprint. So as you envision the next few years, there's -- we go back to these camouflage maps of your service, which is great map and I love it. There are white spaces in there. But how should we think about the footprint of Casella over the next couple of years? I mean, will we continue to see this continuous expansion, or is it mostly going to be focused inwardly on the sandbox today?