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Edited Transcript of CWST earnings conference call or presentation 21-Feb-20 2:00pm GMT

Q4 2019 Casella Waste Systems Inc Earnings Call

RUTLAND Mar 2, 2020 (Thomson StreetEvents) -- Edited Transcript of Casella Waste Systems Inc earnings conference call or presentation Friday, February 21, 2020 at 2:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Edmond R. Coletta

Casella Waste Systems, Inc. - Senior VP, CFO & Treasurer

* Edwin D. Johnson

Casella Waste Systems, Inc. - President & COO

* Jason Mead

Casella Waste Systems, Inc. - Director of Finance

* John W. Casella

Casella Waste Systems, Inc. - Chairman, CEO & Secretary

* Joseph S. Fusco

Casella Waste Systems, Inc. - VP of Communications

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Conference Call Participants

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* Michael Edward Hoffman

Stifel, Nicolaus & Company, Incorporated, Research Division - MD & Group Head of Diversified Industrials Research

* Patrick Tyler Brown

Raymond James & Associates, Inc., Research Division - MD

* Sean D. Eastman

KeyBanc Capital Markets Inc., Research Division - Senior Equity Research Analyst

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Presentation

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Operator [1]

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Good morning, ladies and gentlemen, and welcome to the Casella Waste Systems, Inc. Q4 2019 Conference Call. (Operator Instructions) As a reminder, this conference call is being recorded.

I would now like to turn the conference over to Mr. Joe Fusco, Vice President of Communications. Please go ahead, sir.

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Joseph S. Fusco, Casella Waste Systems, Inc. - VP of Communications [2]

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Thank you for joining us this morning, and welcome. With us today are John Casella, Chairman and Chief Executive Officer of Casella Waste Systems; Ed Johnson, our President and Chief Operating Officer; Ned Coletta, our Senior Vice President and Chief Financial Officer; and Jason Mead, our Director of Finance.

Today, we will be discussing our 2019 fourth quarter and year-end results. These results were released yesterday afternoon. Along with a brief review of those results and an update on the company's activities and business environment, we will be answering your questions as well.

But first, as you know, I must remind everyone that various remarks that we may make about the company's future expectations, plans and prospects constitute forward-looking 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 those forward-looking statements as a result of various important factors, including those discussed in the Risk Factors section of our most recent annual report on Form 10-K, which is on file with the SEC.

In addition, any forward-looking statements represent our views only as of today and should not be relied upon as representing our views as of any subsequent date. While we may 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.

Also during this call, we will 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 available in the appendix to our investor slide presentation, which is available in the Investors section of our website at ir.casella.com.

And with that, I'll turn it over to John Casella, who'll begin today's discussion. John?

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John W. Casella, Casella Waste Systems, Inc. - Chairman, CEO & Secretary [3]

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Thanks, Joe, and good morning, everyone, and welcome to our fourth quarter 2019 conference call.

We're pleased with our fourth quarter results and our results for 2019. This was another strong and exciting year as we continued to execute well against the key strategies of our 2021 plan. We meaningfully grew the business with 9 acquisitions in the year with approximately $53 million of annualized revenues. And as we announced yesterday, we've closed on 2 acquisitions thus far in 2020, with an estimated $6 million of annualized revenues, making a strong start to the year in terms of our continued execution against our acquisition strategy.

Our success in 2019 is reflected within our numbers for the year as we grew revenues by over 12%, increased adjusted EBITDA by over 13% and improved normalized free cash flow by nearly 18%. Notably, our 2019 revenue, adjusted EBITDA, normalized free cash flow results met or exceeded our guidance ranges that were raised in October. These accomplishments for our team are perhaps even more impressive, given that during fiscal year 2019, we experienced an $8 million adjusted EBITDA headwind related to the November 2018 closure of our Southbridge landfill. So the rest of the business improved by over $26 million in the year, which emphasizes the strength within our solid waste, recycling, organics and our customer solutions businesses coupled with the success of our acquisition strategy.

In 2020, we will remain focused on executing against our 2021 plan. The 5 key strategies are consistent with that plan, as announced in August of 2017, which includes increasing landfill returns, driving additional profitability in the collection operations, creating incremental value through resource solutions, using technology to drive profitable growth and efficiently allocating capital to balance delevering with smart growth.

Our first strategy in our 2021 plan is increasing landfill returns. As a vertically integrated resource management company, we are highly focused on providing services to our customers that meet their needs and future environmental service needs. We continuously strive to help our customers meet their sustainability goals through increased resource recovery and diversion programs. We have developed leading recycling programs, and we are one of the most prominent organics companies in the Northeast.

That said, landfills also play a critical role within today's sustainability infrastructure. These necessary highly regulated sites not only provide safe, environmentally sound destinations for products and materials at the end of the consumption life cycle, but they also serve as outlets for various special waste and other time-sensitive materials, such as debris and cleanup from natural disasters.

We are proud of our long track record of developing and operating safe landfills that meet the needs of our customers while creating tremendous value for our host communities and other community stakeholders. While we continue to work to find higher and better uses for all of the materials in the waste stream, there's not a silver bullet solution that magically transforms waste into new products or resources. Landfills remain the safest, lowest greenhouse gas footprint and the most reliable means to dispose of waste today.

In 2019, our teams achieved 2 important landfill expansions that will allow us to continue to meet the needs of our customers. In 2019, we received a 2.7 million cubic yard expansion at our Hakes facility, which will provide roughly 5 years of additional capacity as we look to bridge to the next site -- next phase. And in September 2019, we received a 13.7 million cubic yard expansion at our Waste USA facility in Vermont. We started to work through the initial excavation phase, and we'll continue to do so in 2020. This expansion extends the life of the site by an estimated 20 years.

Despite these great successes, we faced an unexpected setback at our North Country Landfill located in New Hampshire 2 weeks ago. When we learned from the New Hampshire Department of Environmental Services that it decided to interpret the state's public benefit statute in a manner that we believe was different than how it had consistently interpreted in the past. Given this, we have withdrawn our airspace expansion permit, and we are working diligently to resubmit it to meet the requirements of this new interpretation of the long-established statute. This will result in us having to ramp down volumes to the site in 2020 as we have incorporated -- and we have incorporated this impact into our guidance.

Our second strategy in 2021 plan is driving further profitability within our hauling business. Ed will provide further details on our performance, key metrics and various initiatives, but we continue to execute well our pricing and operational strategies. We again advanced strong pricing 4.8% in the quarter as we are focused on offsetting continued labor, disposal and recycling cost inflation. Operational excellence is an important initiative as we aim to ensure that we have the highest levels of service compliance, reduced safety incidents and operating efficiency. Our teams also continue to work diligently in integrating acquisitions. We continue to recognize such follow-throughs as an important element in driving high free cash flow and additional shareholder value.

The third strategy in our 2021 plan is in creating incremental value through resource solutions. We improved recycling adjusted EBITDA by $4.6 million year-over-year in 2019 even with commodity prices down roughly 20% over the same period. This exemplifies the strength and success of our risk offtaking programs, which greatly mitigate our exposure to volatility and declines in the global recycling markets.

2019 was an exceptional year for the team as we reset 2 major recycling processing contracts, including in the city of Boston on July 1 as well as 2 completed equipment upgrade projects that target reducing operating costs through increased automation as well as, and probably most importantly, improving the quality of our outbound materials.

As we look to 2020 and beyond, we plan to continue to focus on partnering to build modernized, economically sustainable recycling programs. We plan to continue to make investments in recycling equipment, operating initiatives and customer education programs. We also plan to target further refinements to our contamination fee program, along with resetting our remaining legacy third-party contracts over time. Underlying all of this, we remain focused on generating an appropriate return on our recycling assets.

The Customer Solutions and Organics team also performed very well during the year with combined adjusted EBITDA growth of over $700,000 in 2019.

The fourth strategy in the 2021 plan is using technology to drive profitable and efficient growth. We continue to make great progress in leveraging our 2018 implementation of NetSuite. While we have grown the business considerably through acquisitions, we are realizing better scale through more streamlined purchasing processes. We plan to focus our efforts in 2020 to further digitizing and modernizing our procurement process.

As we drive better scale and work towards further reducing cost of existing processes, we also aim to continuously enhance our customer experience and our proactiveness and responsiveness to their needs. The recent upgrades to our CRM and early success related to our new case management system are meaningful in our ability to achieve these goals through better integration of our sales and customer care teams.

Moving to our final strategy in our 2021 plan, which is allocating capital to balance delevering with smart growth. We executed very well against this strategy in 2019. As part of our 2021 plan, we outlined a goal to acquire $20 million to $40 million per year of annualized revenue. In 2019, we again outpaced this target acquiring $53 million of annualized revenue through our disciplined approach.

Overall, we remain pleased with the performance of the acquisitions thus far. Our focus remains high on operational integration and achieving pro forma returns. As I have mentioned, we have completed 2 acquisitions so far in 2020 with approximately $6 million of annualized revenues. This is a strong start to the year as part of our growth strategy, and we are excited to welcome these new employees to our team and to provide a high level of service to our new customers.

In January, we acquired an industrial recycling processing facility in Albany, New York, which is a great complement to our September '19 market entry with the acquisition of select solid waste assets from Republic Services. In February, we acquired Daley & Sons, which is a great strategic fit to our Massachusetts collection operations.

Our near-term pipeline remains robust, and we are positioned well to continue to opportunistically grow the business and further drive free cash flow. We believe that there is over $400 million of acquisition opportunity in the midterm across our market areas, and we'll continue to selectively look at opportunities in adjacent markets.

One area that is not specifically outlined in our 2021 plan but is very important to our continued long-term success, underlies all of our initiatives, is the focus on further building our team. Over the past year, we've made significant progress and enhancements to our human resource programs. Our ongoing goals include being the preferred employer within the markets that we operate.

One of our key programs, career path, career development, we found early success by way of providing greater transparency of advancement opportunities within key roles such as drivers, technicians and operators. Such line of sight bolsters our ability to attract and retain quality employees, which will result in lower turnover, lower safety incidents, while simultaneously improving operational efficiencies and employee morale.

Further strengthening our efforts is a continued investment and dedication to improving recruiting, more rigorous and timely onboarding, employee engagement, along with training and development. As an example, we've developed and trained hubs across our operations that enable us to recruit and train our own CDL drivers and apprentice-level technicians. Ultimately, although our programs are early on, they are yielding benefits, including improved applicant flow, higher job candidates to cross key operational roles, a positive indicator that our programs are really beginning to work well.

Wrapping up, as reflected in our 2019 results and our 2020 guidance, we're tracking well against our 2021 plan, which displays continued execution of our key strategies with the goal of driving additional shareholder value.

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

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Edmond R. Coletta, Casella Waste Systems, Inc. - Senior VP, CFO & Treasurer [4]

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Thanks, John. Revenues in the fourth quarter were $193.6 million, up $18.9 million or 10.8% year-over-year, with 7.4% of the increase driven by acquisition activity. Solid waste revenues were up $18.4 million year-over-year with price up 5%, volumes down 0.9% and 9.9% growth from acquisitions. Revenues in the collection line of business were up $15.2 million year-over-year with price up 4.8% across all lines of business, volumes slightly down, risk recovery fees up 2.2% and acquisitions up $10.9 million.

Revenues in the disposal line of business were up $2.3 million year-over-year despite the closure of the Southbridge landfill in November of '18, which resulted in a $1.2 million negative year-over-year variance. The landfill pricing environment remains strong, and we increased reported landfill pricing by 7.6% year-over-year. And in addition, we increased average price per ton at the landfills by 7.8% as we improved our mix of customers and volumes. Excluding the Southbridge landfill closure, landfill tons were up 3.1% year-over-year.

Recycling revenues were down $700,000 year-over-year, with $2.7 million lower commodity pricing and $300,000 lower volumes partially offset by $2.2 million higher third-party shipping fees. In addition, we also had higher intercompany processing fees.

Commodity prices were down 38% year-over-year. This is mainly on lower OCC, lower mixed paper, plastics and metals pricing. Pricing was also down 28% from the first quarter through the fourth quarter of 2019. Organics revenues were down $300,000 year-over-year on lower volumes as we continue to shed sludges that do not meet our lower tolerance for odors and management at our landfill sites and processing sites. Customer Solutions revenues were up $2.2 million year-over-year due to several new multi-site retail customers and strong growth in our industrial services business.

Adjusted EBITDA was $41.1 million in the quarter, up $7.3 million or up 21% year-over-year. Adjusted EBITDA margins were 21.2% for the quarter, up 185 basis points year-over-year. We saw margin improvement across almost all lines of business. During the fourth quarter, we anniversaried the margin headwind from the closure of the Southbridge Landfill and began to recognize easier comps on disposal and labor inflation that we faced over the last 2 years.

Solid waste adjusted EBITDA was $39.3 million in the quarter, up $7.4 million year-over-year, mainly driven by strong pricing, higher landfill volumes and acquisition activity. Recycling adjusted EBITDA was flat year-over-year with $2.7 million lower commodity prices, mainly offset by higher third-party tipping fees and also intercompany tipping fees.

Adjusted EBITDA was $0.5 million in the other segment. This is down slightly year-over-year. This is mainly driven by lower project work through customer solutions. The Organics group was up slightly year-over-year. They did a great job during the period, optimizing disposal outlets and driving pricing in this tough sludge environment as we work to reduce these volumes into our landfills and other sites.

Cost of operations was up $9.2 million year-over-year and down 195 basis points as a percentage of revenues. Roughly $8.7 million of the increase was driven by acquisition activity, and most of the remainder was driven by inflation across direct labor, third-party disposal and vehicle maintenance.

General and administrative costs were up $2.9 million year-over-year and up 30 basis points as a percentage of revenue. Roughly $1.7 million of the increase was driven by acquisition activity. However, for fiscal 2019, G&A costs were 12.5% of revenues, and this is down roughly 80 basis points from fiscal 2017 as a direct result of our efforts to drive back-office efficiencies through our technology plan combined with the scale we continue to gain as we grow our revenues.

Depreciation and amortization costs were up $2.7 million year-over-year, mainly due to higher depreciation in trucks and equipment related to our fleet in Yellow Iron plant and acquisition activity.

The fourth quarter includes several unique items on the income statement. We had $600,000 of legal and transaction costs related to our ongoing efforts to cap and close the Southbridge landfill, and we incurred $450,000 of expense from acquisition activities.

As of December 31, 2019, our consolidated net leverage ratio was 3.07x. This is down from September 30 as we generated significant cash during the quarter and continue to grow EBITDA. Our consolidated funded debt net was $521.3 million, with liquidity of $152.1 million. In addition, we have fixed our interest rates on roughly 68% of our debt.

During the fourth quarter, we completed the remarketing of 2 of our existing solid waste industrial revenue bonds. On October 1, we remarketed our $11 million New Hampshire BFA senior unsecured bonds at a 2.950% fixed rate through the 2029 maturity date. And then on December 3, we remarketed $25 million of New York EFC senior unsecured bonds at 2 7/8% fixed rate for 10 years, both excellent rates for us going forward.

Net cash provided by operating activities was down $4 million year-over-year for the full year with higher operating results, offset mainly by the reduction in short-term liabilities. This negative change in working capital was mainly driven by $5.3 million negative through the adoption of ASC 842 on January 1, 2019. We've talked about this the last several quarters. This shifted payments on landfill operating lease contracts from an investing activity to an operating activity on the statement of cash flows. This change only impacted the financial statement positioning of the outflow.

We also had an $8.5 million negative impact associated with the reduction of accrued liabilities due to cash outflows from the Southbridge Landfill closure and the remediation project at a former scrapyard owned by one of our subsidiaries in Potsdam, New York. There was also a $9.5 million negative impact due to timing differences in cash outflows and inflows from accounts receivable, accounts payable and prepaids and other liabilities. Overall, normalized free cash flow is $55.5 million for fiscal 2019. This is up $8.4 million or 17.4% year-over-year.

As stated in our press release yesterday afternoon, we announced guidance for fiscal 2020 by estimating results in the following ranges: revenues between $800 million and $815 million or up 8.6% at the midpoint; adjusted EBITDA between $170 million and $174 million or up 9.9% at the midpoint; and normalized free cash flow between $60 million and $64 million or up $11.8 million at the midpoint. The 2020 guidance includes 4.7% revenue growth from the rollover impact of acquisitions completed in 2019 and those already completed in early 2020. However, our 2020 guidance does not include the impact from any acquisitions that have not yet been completed.

We expect adjusted EBITDA growth to be driven by the following factors in 2020. We expect our collection line of business to be up $5 million to $7 million of EBITDA, driven by robust pricing and partially offset by wage and disposal cost inflation. We expect all of our disposal sites, excluding North Country, to be up $7 million to $8 million, driven by robust pricing and some very limited volume growth. Oh, as John discussed, we expect our North Country Landfill to be down $4.5 million as we're slowing tonnages into the site.

Our Resource Solutions group -- Recycling, Organics and Customer Solutions, we expect to be up $2 million to $3 million as we continue to improve our revenue model, offtake risk and improve operational efficiencies. We expect roughly $6 million to $8 million of rollover benefit from acquisitions completed in 2019 in early 2020. And we expect a slight headwind of $2 million to $4 million, mainly from G&A growth and a few other factors in the business. Overall, we expect about 30 basis points of EBITDA margin expansion during the year.

Working capital and net cash provided by operating activities will be negatively impacted in 2020 as we plan to spend roughly $14 million on the final capping and closure at the Southbridge Landfill. We expect to substantially complete this work during 2020.

One other quick note, we have changed our segment reporting for 2020 with the Recycling, Organics and Customer Solutions groups now rolling up into the Resource Solutions segment. So we will have the Eastern region, Western region, Resource Solutions and corporate entities.

And with that, I'll turn it over to Ed. Thank you.

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Edwin D. Johnson, Casella Waste Systems, Inc. - President & COO [5]

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Thanks, Ned, and good morning, everyone. We finished the year strong. We continue to be a price leader in our markets. Our legacy businesses are performing well, and we made considerable progress integrating our acquisitions during the quarter consolidated cost of ops as a percentage of revenue improved by almost 200 basis points over Q4 last year, driven both by price and by improved operating cost at the landfills and better performance at our Recycling, Organics and Resource Solutions businesses.

Our collection operations, which generate about 50% of our revenue, grew 18% over the same quarter last year, primarily through acquisitions. I have mentioned in the past that acquisitions tend to dilute our margins in the first year as it takes time to get pricing where it should be and to increase the level of automation appropriate to the operation. Given that margin headwind, we're really happy with the overall performance in the quarter. On a same-store basis, excluding the acquisitions, we grew collection pricing by 4.8%, we're slightly negative on volume and improved our overall variable margin contribution per driver hour, which is our key productivity metric, by 1.5%.

Recycling is a hot subject, and I know that many industry participants are struggling in this low commodity price market, so I think it's worth repeating some of our comments from before. We, along with our customers in the Northeast, believe recycling is an integral part of a long-term sustainable economy, and it's our obligation to provide our customers with the best possible outcome and keep the recycling model economically and environmentally sustainable. We continue to make investments to increase throughput and operating efficiency as well as to produce cleaner products that will demand a higher relative price in the commodity markets.

But we provide a service, we do not take on the commodity risk and we look for an acceptable return on our investment. We have spent several years educating the market and transitioning our business model accordingly. And although there remain a few minor legacy contracts yet to roll off, we have effectively insulated ourselves from commodity risk, and our recycling operations are a positive contributor to our financial performance.

A quick update on our progress with integrating our acquisitions. In the Rochester market, where we acquired 4 collection operations and a transfer station in late 2018, we have completed the first 3 phases of our integration process. Management integration and back office system conversions were completed first, initial operational integration followed, including route optimization and service changes where appropriate, and more recently, the careful elevation of pricing to market rates. We are now entering phase 4, increasing the level of automation, and we see some significant opportunities. Our team in Rochester has worked very hard to get these things done, and I thank them for their exceptional effort.

We are also making progress with our more recent Albany, Western Mass, Southern Vermont acquisitions and integrating them with our Fort Edward and existing Southern Vermont operations. Phase 1 is complete, and we are well into phase 2 with a good management structure and a solid market area plan in place.

Last quarter, I mentioned the enhancements we've been making to our operational management capabilities, adding foundational elements to both run our existing businesses well and to integrate newly acquired businesses smoothly. We are making significant progress on further developing our operational processes and systems and are continuing to add resources where needed to expedite the integration of future acquisitions.

We've learned over the past 1.5 years where the pinch points are, and as we improve our processes, we will be able to realize synergies faster and increase our capacity to take on more in the future. We finished the year strong, and we're excited about the opportunities in front of us and look forward to your questions.

With that, I'd like to turn it back to the operator now to start the Q&A.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Your first question comes from the line of Tyler Brown with Raymond James.

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Patrick Tyler Brown, Raymond James & Associates, Inc., Research Division - MD [2]

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So I'm a little unclear on the North Country update. So to be clear, the decision to pull the permit expansion was based on a governmental interpretation issue. It wasn't related to a vote. Is that right?

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John W. Casella, Casella Waste Systems, Inc. - Chairman, CEO & Secretary [3]

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No. That's exactly right, Tyler. The agency interpreted the statute differently than they had in the past. And we will take that into account and reapply based on the information that we've given us. It's a deviation from how they've viewed that statute for, in my view, probably over 20 years. So we will reapply with -- in fairly short order.

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Patrick Tyler Brown, Raymond James & Associates, Inc., Research Division - MD [4]

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Okay. So you do plan to resubmit. And then in conjunction with, I guess, governmental approval, North Country does require a local vote?

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John W. Casella, Casella Waste Systems, Inc. - Chairman, CEO & Secretary [5]

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No, it does not. We do have approval. For this permit, we have approval. This is a permit that will give us probably 4 or 5 years of capacity. We have local approval for that. If we go on beyond that, we would need a local vote, but not with the permit that's in front of -- that will go back in front of the [EC] shortly.

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Patrick Tyler Brown, Raymond James & Associates, Inc., Research Division - MD [6]

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Okay. Okay. And so maybe at the 2020 tonnage levels, how many years does that site have? Does it have a handful, maybe 4 or 5?

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John W. Casella, Casella Waste Systems, Inc. - Chairman, CEO & Secretary [7]

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Yes. I would say it's 4 or 5 years.

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Patrick Tyler Brown, Raymond James & Associates, Inc., Research Division - MD [8]

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Okay. And then, obviously, it's a pretty big drag, but where are those tons going? Are you going to try to internalize them elsewhere in the fleet?

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John W. Casella, Casella Waste Systems, Inc. - Chairman, CEO & Secretary [9]

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Some of them certainly will be internalized to other facilities. Some of them will go to third -- some of the tons will go to third-party facilities. But we will internalize as much as we can within our system.

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Edmond R. Coletta, Casella Waste Systems, Inc. - Senior VP, CFO & Treasurer [10]

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Yes. We service roughly 150 towns and cities in the state of New Hampshire. And having to move tonnages out of state from New Hampshire is not easy because you can't take out-of-state waste into Maine. You can't take it into Vermont. Massachusetts doesn't have capacity. So you're left with trying to move it out to New York, which could be as much as a 50% increase.

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Patrick Tyler Brown, Raymond James & Associates, Inc., Research Division - MD [11]

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Wow. Okay. Okay. That's helpful. And then, Ned, so you mentioned that it's a $4.5 million EBITDA drag from North Country specifically. But then you also mentioned that there's a plus $7 million to $8 million from everything else. But I was wondering if you could parse that $7 million to $8 million between maybe Hakes, Chemung and pricing? Or just any flavor would be helpful.

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Edmond R. Coletta, Casella Waste Systems, Inc. - Senior VP, CFO & Treasurer [12]

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So overall, most of it is just price, and there's some extra tons in New York. As you know, last year, Chemung ran a little bit light, so we'll ramp some tonnages to get that up to level. The rest of the sites are looking to have a pretty good year, normal pricing, operating efficiencies.

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Patrick Tyler Brown, Raymond James & Associates, Inc., Research Division - MD [13]

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And there's no fundamental change in the Northeastern pricing dynamic. I mean it still feels very scarce capacity.

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John W. Casella, Casella Waste Systems, Inc. - Chairman, CEO & Secretary [14]

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Yes. I mean I think the supply and demand equation really hasn't changed, Tyler, for sure. That's exactly right.

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Patrick Tyler Brown, Raymond James & Associates, Inc., Research Division - MD [15]

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Okay. And then maybe, Ned, on the CapEx side. So I appreciate that you've got a number of one -- I'm going to call it onetimey CapEx items this year: Waste USA buildout, Southbridge capping, and you have some other nonrecurring items. But to be maybe a little bit more clear, will the Waste USA and the Southbridge spend basically be done in 2020? Or does that also linger into '21 or '22?

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Edmond R. Coletta, Casella Waste Systems, Inc. - Senior VP, CFO & Treasurer [16]

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So Southbridge is a combination of capping, closure, the majority of it's -- there are short-term liabilities that will be worked out, about $14 million. And we expect the majority of that to be done in the year. We need a good construction season to get all of the work done. There's quite a few acres that will be capped. And Waste USA, the major part of the excavation will be done in 2020, and then we'll construct the cell in 2021, and then we'll begin to the new expansion area.

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Patrick Tyler Brown, Raymond James & Associates, Inc., Research Division - MD [17]

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Okay. Okay. And then -- so if I was to sum up those 3, call it, nonrecurring items, I mean, that is $40-some-million out the door in cash. Does that restrict your ability to do M&A? Or do you still feel like you have plenty of financial flexibility for good deals out there?

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John W. Casella, Casella Waste Systems, Inc. - Chairman, CEO & Secretary [18]

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I think that we would characterize it with significant availability from an acquisition standpoint in terms of the existing credit facility.

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Patrick Tyler Brown, Raymond James & Associates, Inc., Research Division - MD [19]

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Okay. Okay. So not a limiting factor. And then maybe my last one, this is kind of in the same vein, but -- and maybe this is a question for all 3 of you. But how do you feel from a bandwidth perspective, be it IT, be it human capital, financial capital, I mean, all of the different limiting factors, how do you guys feel from a bandwidth perspective for future M&A?

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John W. Casella, Casella Waste Systems, Inc. - Chairman, CEO & Secretary [20]

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I think that you saw us take a little bit of a pause in the third to fourth quarter, Tyler, in terms of acquisition. We did a lot of work in terms of really taking a look at the success that we've had from an acquisition standpoint. We've added people to HR. We've added people to IT, a few, not a lot of overhead, but certainly reflective on the work that we've done to integrate the businesses that we've bought over the last 18 months or so.

So I think that we're feeling good about where we are. We've got a few more resources that we're going to put in place from a development standpoint. But we think that the back-office, customer care, payables, the work that we did, that Ned did with the finance team to implement NetSuite is really paying dividends to us in terms of the back office. And we've added a few people, both from an IT as well as from an HR standpoint because we've added about 600 employees in the last year, 1.5 years or so.

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Patrick Tyler Brown, Raymond James & Associates, Inc., Research Division - MD [21]

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And maybe, Ed, from an operational bandwidth perspective, do you feel you have enough integration, call it, manpower, if you will?

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Edwin D. Johnson, Casella Waste Systems, Inc. - President & COO [22]

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Yes. I mean if you remember on the last quarter, I talked about our expansion of our structure. So we now have a regional VP of Ops in the East and in the West. Plus, we've added resources at the home office to support the transitions. And we -- as John mentioned, we have 1 or 2 additions coming on in the near future.

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Patrick Tyler Brown, Raymond James & Associates, Inc., Research Division - MD [23]

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Okay. Okay. Good. Ned, I really appreciate the bridge, I feel like maybe you've been asked that question before.

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Operator [24]

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Your next question comes from the line of Hamzah Mazari with Jefferies.

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Unidentified Analyst, [25]

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This is [John] filling in for Hamzah. Could you just comment on whether you think landfill pricing is at peak right now in your system? And how much runway do you think is out there?

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John W. Casella, Casella Waste Systems, Inc. - Chairman, CEO & Secretary [26]

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I think that we'll continue to see a reflection of the supply and demand equation. So I think we're likely to continue to see fairly robust pricing because of the supply and demand equation. So I think it's fair to say that it will -- I don't know that we would anticipate it being exactly as strong as it was in '19 on a go-forward, maybe a little bit more modest, but so relatively in the same ZIP code.

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Unidentified Analyst, [27]

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Great. So I have one more question, and then I'll turn it over. Can you also comment on your margin target of 29% in the solid waste? And how quickly you think you can get there? Also, any execution risks we should be thinking about as well?

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Edmond R. Coletta, Casella Waste Systems, Inc. - Senior VP, CFO & Treasurer [28]

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Yes. So we -- that's the one target in the 2021 plan that we're probably tracking a little light against. We ended the year in solid waste at -- sorry, I should have prepped the number -- at 20 -- around 26%. And as you know, we've had a couple of headwinds there over the last year, whether it be wage inflation or the Southbridge closure, some of the long haul transportation.

We got back to improving margins in the fourth quarter. We had a great overall quarter of improving margins, but in solid waste, our margins were up over 200 basis points, 210 basis points in the fourth quarter. And we're looking at a year, next year, where we believe we've anniversaried a lot of the fundamental changes we made from wage reset, transportation, third-party disposals. We'll get back to the cadence of 30 to 50 basis points of margin enhancement in solid waste. North Country will weigh on that a little bit in the year. So we're probably -- there's no reason we shouldn't get to our destination, but we are tracking a little behind. I think we end 2021 closer to 27-ish percent, 27.5%.

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Operator [29]

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Your next question comes from the line of Sean Eastman with KeyBanc Capital Markets.

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Sean D. Eastman, KeyBanc Capital Markets Inc., Research Division - Senior Equity Research Analyst [30]

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I just wanted to go back to the North Country landfill setback. I just want to understand better the time line of the resubmission process. And just based on that, is it likely that this becomes a tailwind as we look into 2021?

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John W. Casella, Casella Waste Systems, Inc. - Chairman, CEO & Secretary [31]

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I wouldn't anticipate it would be a tailwind for 2021 at this point. But obviously, we've got to go through the process. We're in the process of doing that now. We'll get the resubmission in as soon as we can, but I would not anticipate at this point it being an issue in 2021.

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Sean D. Eastman, KeyBanc Capital Markets Inc., Research Division - Senior Equity Research Analyst [32]

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Okay. Got it. And on the volume shedding, I just wanted to get some color on whether this was -- this has been contemplated for some time based on the strategic initiatives or whether there's been any shifts of late in terms of competitive dynamics in any particular piece of the business.

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Edwin D. Johnson, Casella Waste Systems, Inc. - President & COO [33]

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So we started a process early in '19 of reevaluating our customers on a profitability basis, particularly in the roll-off line of business but also the rest of the business, and simply readdressing customers that over time had eroding margins. And so we started pushing price selectively to those customers. We are talking to them about how to change their operations so that they could keep their costs the same but not hurt our margins. And in that process, there are customers that simply go to a competitor, and that's okay as long as we're keeping our price discipline and we're keeping our profitability in place.

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Sean D. Eastman, KeyBanc Capital Markets Inc., Research Division - Senior Equity Research Analyst [34]

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Got it. So no fully sort of expected kind of...

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John W. Casella, Casella Waste Systems, Inc. - Chairman, CEO & Secretary [35]

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Yes, exactly. No surprises. None at all.

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Sean D. Eastman, KeyBanc Capital Markets Inc., Research Division - Senior Equity Research Analyst [36]

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Got it. Got it. And then just in trying to understand, in the fourth quarter, again, price growth ahead of internal budgeted expectations. Just understanding the dynamic there, is it that the underlying inflationary environment was also higher than budgeted? Or...

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John W. Casella, Casella Waste Systems, Inc. - Chairman, CEO & Secretary [37]

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No, I think it's fair to say that the entire industry is feeling pressure from a wage standpoint, which in one sense is a positive for drivers, mechanics. But the entire industry and the transportation industry is feeling a lot of wage inflation currently, seeing inflation from a recycling standpoint, inflation from a disposal perspective. So there's a lot of inflation inherent in the business model at this point in time.

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Edmond R. Coletta, Casella Waste Systems, Inc. - Senior VP, CFO & Treasurer [38]

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Yes. If you look at the year, we ended up solid waste at 5.1% overall price, and we had budgeted around 4%. But we also ended up with about 75 basis points more inflation, and it was on third-party transportation, third-party disposal and direct labor lines.

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Sean D. Eastman, KeyBanc Capital Markets Inc., Research Division - Senior Equity Research Analyst [39]

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Got it. Okay. That makes sense.

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Edmond R. Coletta, Casella Waste Systems, Inc. - Senior VP, CFO & Treasurer [40]

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As we talked about in the fourth quarter, we started to really comp a lot of that and start to drop more to the bottom line again.

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Sean D. Eastman, KeyBanc Capital Markets Inc., Research Division - Senior Equity Research Analyst [41]

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Yes. Okay. That makes sense. And then lastly from me, just given the bolstering of the HR and back-office staffing, the leadership role additions, it's a pretty material sort of EBITDA drag, I guess, from a year-over-year perspective in 2020. So I'm just wondering, considering those elements and then some of the efficiencies around the CRM and the ERP have yet to be harvested how we're tracking over the next couple of years relative to that 12% SG&A margin target.

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Edmond R. Coletta, Casella Waste Systems, Inc. - Senior VP, CFO & Treasurer [42]

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Yes. So we've made quite a bit of headway already, as I talked about, about 80 basis points. And it's a combination of a lot of different things. We're gaining some scale on key roles, but we're also gaining efficiency in the back office. In 2020, we're focused on a couple of key technology initiatives. One is on the procurement side. As you know, we put a new ERP in place 1.5 years ago. And we are focused on digitizing, taking paper out, automating processes in 2020, and we hope to start to drive even more efficiency there in modernization of our systems. We haven't announced a target to The Street, but this will be a self-funding initiative and will generate margin benefit over the next 2 years.

Other major initiative is really looking at enhancing what we call our order-to-cash cycle from how customers interact with us to how we dispatch, route trucks, onboard computing. And we're in a pilot phase, looking at some new technology there. And this could have a really meaningful impact over time to make us easier to do business with and also enhance our ability to service our customers safely and efficiently.

So it's exciting. A little early in that one to lay out a lot of dynamics. But from our standpoint, we will continue to gain scale. As John was talking about, there's some interesting growing pains when you grow as much as we have. We've grown 35% of our employees in the last 2-plus years. And here's a funny example, our payroll and benefits team, very small, reports up to my team. And we added 35% new employees, but we hadn't added a single head in that group. So it's almost like a step function. We need to add someone there to help support our employees, and then you kind of grow into that role. So there's a little bit of that coming into 2020, where we're adding key people to help us continue to grow effectively.

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Operator [43]

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Your next question comes from the line of Michael Hoffman with Stifel.

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Michael Edward Hoffman, Stifel, Nicolaus & Company, Incorporated, Research Division - MD & Group Head of Diversified Industrials Research [44]

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And I think there's congratulations for you, John. Didn't you have another grandchild?

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John W. Casella, Casella Waste Systems, Inc. - Chairman, CEO & Secretary [45]

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I do. I do, absolutely. No question.

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Michael Edward Hoffman, Stifel, Nicolaus & Company, Incorporated, Research Division - MD & Group Head of Diversified Industrials Research [46]

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Congratulations. So to the business of trash, if we follow up on the underlying inflation, could you actually quantify it as a percentage, just so I'm understanding this? Because you weren't getting terrific pricing. So what it sounds like is you're doing 5% in solid waste pricing, but you're sitting here at 5.5% inflation. Is that what I heard?

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Edmond R. Coletta, Casella Waste Systems, Inc. - Senior VP, CFO & Treasurer [47]

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No, no, no. The opposite way. Yes, so -- yes, well, earlier in the year, there were a few margin headwinds that were a little unfortunate. So at Ontario, the Southbridge comp, there are a few things like that, that weighed on margins. Also, as we brought in acquired businesses, they weighed on margins.

So our direct programs, our pricing programs are outpacing inflation. If you just look at year-to-date, acquisitions alone, first year, a little bit margin dilutive, they weighed on margin 60 basis points. Ontario weighed 20 basis points and Southbridge, 80 basis points. So you've got 160 basis points there. And our margins were slightly backwards year-over-year. So all of our other pricing programs are outpacing inflation in markets, but we had a few of those unfortunate headwinds through the year. But I think we're setting up nicely for 2020 to outpace inflation.

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Michael Edward Hoffman, Stifel, Nicolaus & Company, Incorporated, Research Division - MD & Group Head of Diversified Industrials Research [48]

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Okay. So to that end, thinking about cadence, the first half of the year gets pretty good margin comparison. Second half, it's a little tougher. To net out for up 30 to 50 is what you're trying to get to?

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Edmond R. Coletta, Casella Waste Systems, Inc. - Senior VP, CFO & Treasurer [49]

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Yes. And yes, we were going to guide a little bit stronger than that, but with the North Country slowdown of the volume in its high-margin business, that weighs on margins a little bit through the year.

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Michael Edward Hoffman, Stifel, Nicolaus & Company, Incorporated, Research Division - MD & Group Head of Diversified Industrials Research [50]

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Okay. And then, John, just so I'm clear understanding your answer to the North Country question. Are you expecting it to be permitted and therefore, online in '21? Or we should assume I'm carrying this headwind -- it's not getting any worse, it's just I still have $5 million of headwind into '20, it stays in '21 and then it comes off?

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John W. Casella, Casella Waste Systems, Inc. - Chairman, CEO & Secretary [51]

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I think that we're hopeful to get through the process and have the facility operational by 2021.

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Michael Edward Hoffman, Stifel, Nicolaus & Company, Incorporated, Research Division - MD & Group Head of Diversified Industrials Research [52]

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Okay. All right. So this is $5 million, maybe a little...

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John W. Casella, Casella Waste Systems, Inc. - Chairman, CEO & Secretary [53]

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And that's the reason why we've pushed back on tonnage is we want to make sure it's -- obviously, there's -- we've got to get through the process, Michael. So -- but we think that we will get through the process and be able to minimize any impact to 2021.

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Michael Edward Hoffman, Stifel, Nicolaus & Company, Incorporated, Research Division - MD & Group Head of Diversified Industrials Research [54]

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Perfect. Okay. That helps. And then you have done a terrific job in price on the collection side. It feels like it's kind of settled into, you can sustain middle 3s. Landfill, you're in this still exploring sort of the market corrections, given the disposal reduction. Where do you think it settles? It's -- obviously 7%, 8% is not sustainable. But where do you think you'll settle? If we're taking out and trying to model out 5, 6 years, do we think about landfill being able to do a 4% consistently once you kind of work through all of the market corrections?

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Edmond R. Coletta, Casella Waste Systems, Inc. - Senior VP, CFO & Treasurer [55]

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Yes, that's what we have in our internal models moving out to next several years. As you know, we've been working through -- if you look at our landfill book of business, about 1/3 -- a little more than 1/3 of the tonnage going in are from our own trucks. About 1/3 are from long-term municipal contracts. About 1/3 are from independent third parties. And everything on our own trucks, we push through intercompany pricing each year, and we're pushing it through to that 6% to 8% range.

Third parties, we've moved more to shorter-term contracts, so we can more perfectly reflect the constraints in the market. And as we've been working through some of the longer-term municipal contracts, you see some larger step-ups. So some of those larger step-ups are also probably shading at above 5% a little bit right now. And I think we believe, as we look forward to the next couple of years that, that 4% to 5% range is sustainable.

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Michael Edward Hoffman, Stifel, Nicolaus & Company, Incorporated, Research Division - MD & Group Head of Diversified Industrials Research [56]

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Okay. That's very helpful. And then when do you think the market rate gets to a level where these far distant assets become attractive and volume can move away from the market through trains and what have you, is there a risk to that, that it causes a shifting in this pricing environment because railing gets -- is accessible?

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John W. Casella, Casella Waste Systems, Inc. - Chairman, CEO & Secretary [57]

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So I think we still have a ways to go, Michael. I don't think that we're at the levels where -- the capital intensity of rail. And you know what those numbers look like in terms of the intensity and the amount of capital that has to be deployed to move that same 1,000 tons a day that you can move by truck. So I think that we've got a ways to go before that's going to be effective. At some point in time, it may very well be, but I think we're years away from it really being effective in terms of moving it, moving waste from a rail perspective. Still got a ways to go.

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Edmond R. Coletta, Casella Waste Systems, Inc. - Senior VP, CFO & Treasurer [58]

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It also depends on what state you're in. So if you're in New Jersey or Pennsylvania where you can't get overweight permits for trailer trucks...

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John W. Casella, Casella Waste Systems, Inc. - Chairman, CEO & Secretary [59]

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Yes. A different story, yes

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Edmond R. Coletta, Casella Waste Systems, Inc. - Senior VP, CFO & Treasurer [60]

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It's a little different story. So you've seen more rail transfer stations develop. If you're in New York State and you can get overweight permits, it's pretty effective to move the waste via truck. And our sites are well positioned for major population centers, and we believe many of the moves are sustainable long term.

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Michael Edward Hoffman, Stifel, Nicolaus & Company, Incorporated, Research Division - MD & Group Head of Diversified Industrials Research [61]

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Okay. Great. And then on the deal side, so the pipeline is full and you're still active, and theoretically, you could absorb similar levels like you did a year ago. Is there any sense that the current election environment is spooking people to get things done in '20 to have a certainty on their tax position? Or are we just seeing this -- the...

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John W. Casella, Casella Waste Systems, Inc. - Chairman, CEO & Secretary [62]

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I don't -- I think it depends on the level of sophistication and the size of the company, Michael. But for the most part, I think that the drivers there are the inflation that all of the independents are feeling from a labor standpoint, from a disposal perspective as well as from a recycling standpoint. The value and -- the value disruption from a recycling standpoint is a big, big driver for a lot of the smaller companies.

As is the labor. If they can find -- the other thing that we've done is we've changed our system. We've put training programs in place. We're -- now we're trying to hire people, trying to attract as many people coming out of high school that are not going on to college and give them a career. We're doing an awful lot of work there. And as we said before, we've beefed up HR to really -- and we've been successful. We're filling -- we filled the slots from a driver standpoint. And at one point in time, we had 40 openings for drivers across the system. And so there's a tremendous amount of pressure on the independents because of wage inflation, recycling inflation and disposal inflation.

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Michael Edward Hoffman, Stifel, Nicolaus & Company, Incorporated, Research Division - MD & Group Head of Diversified Industrials Research [63]

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And so would you say that your retention has gone up or your -- drivers has gone down, whichever way you want to refer to it?

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John W. Casella, Casella Waste Systems, Inc. - Chairman, CEO & Secretary [64]

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Yes. Retention is going up. I mean one of the things that we did was -- Kelley Robinson came in as our new VP of HR about 2 years ago now. But the first year, he spent just doing career development. So if you come to work for Casella as a rear-load driver, we'll train you as a rear-load driver. If you do a good job and you're safe, we'll train you as a roll-off driver, we'll train you as a front-load driver, we'll train you as a swing driver, and then you can become a trainer. And there, you can see how you can go from $18 to $35 an hour in a 5-year period of time and really have a clear understanding of what your career could be at Casella.

And it's really paying dividends because what we found was the majority of our turnover was in the first year. And a lot of our accidents and safety issues are in the first year. So we're doing additional training, and we're doing a lot of work to really impact the turnover. So it's a -- the programs are really beginning to work and take hold. And the first thing that we were able to do with those programs was to fill the seats. And now it's about retention and bringing people's skill sets up and allowing them to progress along that career path, so they can do a better job of taking care of their family.

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Operator [65]

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Your next question comes from the line of Tyler Brown with Raymond James.

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Patrick Tyler Brown, Raymond James & Associates, Inc., Research Division - MD [66]

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Just a couple of quick follow-ups, if I could. First off, there was no CNG tax credit benefit in Q4.

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Edmond R. Coletta, Casella Waste Systems, Inc. - Senior VP, CFO & Treasurer [67]

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There is a very small one. So we use about 400 -- I'm sorry, about 200,000 gallons per year. And so we had about $200,000 of benefit in Q4.

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Patrick Tyler Brown, Raymond James & Associates, Inc., Research Division - MD [68]

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Okay. That's helpful. I just want to make sure there wasn't something there. Secondly, the -- so Ned, when you talk about Resource Solutions being a positive $2 million to $3 million, I'm assuming that's now including the recycling piece. Because I would assume that there's some recycling benefits rolling into '20?

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Edmond R. Coletta, Casella Waste Systems, Inc. - Senior VP, CFO & Treasurer [69]

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Yes.

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John W. Casella, Casella Waste Systems, Inc. - Chairman, CEO & Secretary [70]

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Yes.

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Edmond R. Coletta, Casella Waste Systems, Inc. - Senior VP, CFO & Treasurer [71]

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Yes. And I kind of quickly made that comment. We've reorganized our internal teams to be more effective, where our recycling, our customer solutions and our organics groups are now under one leader. And they have very common business plans and goals. And so next year, when you see our segment reporting, you'll see the East and the West, the solid waste groups, the Resource Solutions group and then other corporate entities. And that $2 million to $3 million is mainly driven by recycling with a little bit of growth in organics and customer solutions.

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Patrick Tyler Brown, Raymond James & Associates, Inc., Research Division - MD [72]

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Okay. That's what I thought. And then just lastly, I do want to come back to the $7 million to $8 million again on the disposal, the positive $7 million to $8 million, which excludes North Country. But isn't there a couple million benefit from Ontario presumably not reoccurring? Again, we talked about Chemung, but it doesn't feel that there's a huge assumption in there from a price perspective. I could be wrong, but are you kind of thinking about landfill pricing moderating in '20?

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Edmond R. Coletta, Casella Waste Systems, Inc. - Senior VP, CFO & Treasurer [73]

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Yes, in our model, we have been moderating. We have it around 4%, 4.5%. And you're right. Ontario, we have a little easier year-over-year comp. We ran some higher costs, operating costs in the first half of the year as we were addressing some gas issues at the site. And that's around $2 million of tailwind per se coming into 2020. Chemung, as we mentioned earlier, we got a permit increase several years ago, but we hadn't exercised our option to get into that additional annual capacity, and we started to ramp it late in 2019. So we'll fully ramp that this next year. So that will be about $2 million to $3 million of benefit. And then rest is just at various sites through good pricing, good operating discipline.

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Operator [74]

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We do have a follow-up question from the line of Michael Hoffman with Stifel.

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Michael Edward Hoffman, Stifel, Nicolaus & Company, Incorporated, Research Division - MD & Group Head of Diversified Industrials Research [75]

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Sorry, I forgot to ask this interest rate question. Rates, basically, the banks are practically giving money away to the garbage industry. Do you have an opportunity to meaningfully lower your rates?

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Edmond R. Coletta, Casella Waste Systems, Inc. - Senior VP, CFO & Treasurer [76]

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I'm not sure if we have an opportunity to meaningfully lower rates. We did a great job in 2018. We refinanced our senior secured credit facility and term loan B into a new revolver and a term loan A. We put a pricing grid in place. So as we get leverage out of the business, our rates drop. And we're currently paying on that LIBOR plus 1.75%. And we can step down in that grid all the way to L plus 1.25%. We'll look at that.

We're also looking at whether there's an opportunity to do a blend and extend there and improve our position. We've been active with tax exempt bonds, and we expect to have some more in 2020. They'll help fund growth. And we've been getting very low fixed rates there, and they're extremely effective. So I don't think there's a big step down there, Michael, because we've done such a nice job taking interest costs down, but we'll look at it.

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Michael Edward Hoffman, Stifel, Nicolaus & Company, Incorporated, Research Division - MD & Group Head of Diversified Industrials Research [77]

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Well, I mean, you're over 5% at this point. And when I look at the multibillion-dollar revenue companies, and they're getting money at 2.5%. And can't you get this below 5%?

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Edmond R. Coletta, Casella Waste Systems, Inc. - Senior VP, CFO & Treasurer [78]

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Yes. So our revolver is LIBOR plus 1.75%, so that puts it at like 3.5%. We've got the fixed swaps, that puts it more like 4.25% for part of that money. Our tax-exempt debt, everything we're doing today, is sub-3% fixed. Some of the historic stuff is more like 4.5% to 5%. So as this roll over, but they have noncall provisions in them. So generally, we'll look to work it down, but there's not a big step down expected.

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Michael Edward Hoffman, Stifel, Nicolaus & Company, Incorporated, Research Division - MD & Group Head of Diversified Industrials Research [79]

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Okay. And then lastly, what tax rate am I supposed to be using?

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Edmond R. Coletta, Casella Waste Systems, Inc. - Senior VP, CFO & Treasurer [80]

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26% is our effective tax rate in 2020, though we'll essentially -- Jason, we'll have very little income statement taxes. How much do we have in the model?

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Jason Mead, Casella Waste Systems, Inc. - Director of Finance [81]

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Correct. We're anticipating close to nothing, yes. So we've got $1 million tax provision that...

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Edmond R. Coletta, Casella Waste Systems, Inc. - Senior VP, CFO & Treasurer [82]

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$1 million tax provision in 2020 and then cash taxes should be around the same.

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Operator [83]

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I'm showing no further questions at this time. I would now like to turn the conference back over to Mr. John Casella -- I'm sorry, we did just have a question to come into queue.

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Joseph S. Fusco, Casella Waste Systems, Inc. - VP of Communications [84]

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I think we're done.

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John W. Casella, Casella Waste Systems, Inc. - Chairman, CEO & Secretary [85]

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We're done, operator.

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Operator [86]

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I'll turn the call over back to Mr. John Casella.

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John W. Casella, Casella Waste Systems, Inc. - Chairman, CEO & Secretary [87]

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Thank you, operator, and thank you all for attending this morning. We look forward to discussing our first quarter 2020 earnings with all of you in early May. Thanks, everyone. Have a great day.

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Operator [88]

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Thank you for participating, ladies and gentlemen. This concludes today's conference call. You may now disconnect.