2025 Margin Expansion and EBITDA Growth
Q: What are expectations for 2025 margin expansion and EBITDA growth?
A: The company anticipates above-trend margin expansion and 12%-15% EBITDA growth in 2025, driven by returning landfill volumes, operational efficiencies, and prior headwinds turning into tailwinds. Management expects normalization in the C&D market and contributions from acquisitions to bolster margins across all lines of business.

C&D Volumes and Brookhaven Closure
Q: How will Brookhaven closure impact C&D volumes in 2025?
A: The closure of the Brookhaven landfill on 12/31/24 has been a significant headwind, with C&D volumes down 150,000 tons year-to-date. The company expects 60%-70% of these volumes to return in 2025, positively impacting EBITDA. There are few alternative disposal options, so Casella anticipates these flows will largely come back.

Royal Acquisition and M&A Strategy
Q: Details on Royal acquisition and M&A strategy?
A: Casella acquired Royal, a $90 million revenue company with mid-teens EBITDA margin, aiming to increase it to mid-20s over two years through operational improvements and landfill internalization. The acquisition expands Casella's footprint into Westchester and Dutchess counties, offering significant strategic benefits and growth opportunities. M&A activity is expected to continue opportunistically, focusing on tuck-ins and integration of recent acquisitions.

Insurance Accruals Impact on Guidance
Q: How did insurance accruals affect Q3 results and guidance?
A: Unexpected insurance expense accruals related to two discrete events resulted in a $2 million headwind in Q3. These accruals largely offset contributions from the Royal acquisition, leading management to maintain their guidance range. The events are considered unusual, and the accruals may change up or down in the future.

Internalization Initiatives and McKean Ramp-Up
Q: Elaborate on internalization efforts and McKean's ramp-up?
A: Casella is enhancing internalization by purchasing additional tractors and trailers, establishing new transportation lanes, and planning to move waste to their McKean facility. They aim to internalize 100,000-125,000 tons via truck and transition waste from existing rail-served transfer stations over time. McKean's ramp-up will be gradual, focusing on higher-value MSW and sludges, contributing positively over the next year.

Cost Inflation and Pricing Strategy
Q: What are you seeing in cost inflation and pricing?
A: Cost inflation remains stubborn, running at 4%-5% across the cost stack. Management is budgeting with no easing in inflation for next year and plans to continue driving price improvements and operational efficiencies to offset these costs.

Post-Acquisition CAPEX in 2025
Q: Will post-acquisition capital spending drop in 2025?
A: Post-acquisition development capital spending could naturally roll off if acquisition activity slows, but actual spending will depend on how active the company is in deploying new capital. It's uncertain, as it hinges on future acquisition plans.

Synergy Realization from Prior Deals
Q: How are synergies from prior acquisitions progressing?
A: Casella is ahead of plan with Twin Bridges, capturing all synergies and reducing facilities by two. However, they're behind on the Mid-Atlantic assets from GFL due to complex transitions but now have better data visibility and are executing the plan. Delays in truck deliveries have also impacted synergies, but teams are working effectively to integrate acquisitions like Royal.

M&A Competition and Pipeline
Q: Are you facing more competition in M&A?
A: Casella does not anticipate significant additional competition in M&A. Many of their deals are based on long-term relationships, and less than 10% come through auction processes. The M&A pipeline remains strong, with a mix of tuck-ins and larger acquisitions, and they expect continued opportunities for growth.