We're on a march. Good morning, good morning. Oh, we're live. Okay, good morning, everybody. If you can all take your seats, we'll get started. I'm Michael Hoffman. I'm the President and CEO of the National Waste and Recycling Association. You sort of sit here and go, "I thought he retired." I did, but my longtime 25-year associate, Brian Butler, was very fortunate to be hired by our first panelist, Casella. Then Steve called me up and said if I could come out of retirement to do this. This is our 13th and over 14 years doing the Investor Summit. Safety is a paramount conversation in the waste industry. If something should happen and we have an alarm to go out, all of those exit signs, you can head to any of those. Find the staircase, which is right behind you. Go down, find the first exit out, and either go over to the Fontainebleau or out towards the parking lot. That's your safety. I want to thank our partners at Informa Markets, Waste360, Mark, Laura, and Julia for all the efforts they put in behind this to get us here. This is a jam-packed day. As all of you know me, we just go. I actually get two breaks this year because John McNamara from Stifel was going to do two out of the 14 panels. We're going to sit down, get going, and every 30 minutes for the next six hours. Hope you enjoy it. We'll talk at the end. All right. Hi, John. Morning, Michael. How are you doing, Ned? Good morning. We have Casella Waste up here with us, John Casella, CEO, Ned Coletta, President. Happy anniversary. Thank you. 50 years. Business has been in business for 50 years. If you go downstairs in the registration area, there is a Hall of Fame wall, and John is a Hall of Famer with his brother. There is a picture, I think it is from 50 years ago, the two of you together. No, no, no, no. Not quite? It was maybe 40 years ago. Oh, okay. Okay. It's a younger, skinnier version of him anyway, so just to put that in perspective. That's true. When you think of the 50 years and you sit here today and reflect on it, what stands out? That's a great question, Michael. I think that when you look back on 50 years, what are the consistent themes and what are the issues that give you sustainability as an organization? It's clearly about people. It's not about the trucks. It's not about containers. It's not about software. It's really about people and how you can create a culture where people want to come to work, enjoy each other, and really do what's necessary to provide the kind of service that the communities that we serve need and do that in a manner that's safe. We often say at the safety meetings, we're proud of our people because they provide that service as an asset to the community as opposed to a liability. It's clearly the most important factor. If your people are happy, your customers be happy, people and customers happy, your shareholders be happy. It is really clearly in that order in our view after 50 years. Culture is not something you just wake up and say we're doing. Culture is about living it. In fact, some would say that you know culture is right because you actually don't have to talk about it. In fact, that it becomes a way of life. How do you get that to happen? It's really a challenge for us, not so much for those folks who have been with us for 20 or 30 years, and there's a lot of them. When you grow in the way we are, we added 1,000 people last year. I often say it's a journey with no destination. You just have to keep working on it. You do have to keep communicating about the culture, what the expectations are. The core values really stand as the boundaries for people to act. If they're acting within the core values, then they can't do anything wrong. There may be a mistake, but if it's within the core values, it's a license, if you will, to act. With the growth that we've had, it's a challenge. It's a challenge to keep that culture. It's probably one of our biggest challenges. We talk about it. We train for it. We onboard people for it. It is a challenge when you grow in the way we are to keep that culture and not allow bureaucracy to creep in and the culture to be impacted. Right. One of the remarkable things we do along those lines, we host meetings, John and I, once a month with all of our new managers to sit down, talk about our value system. Remarkably, we actually interview every single manager coming into the company to make sure they align with how we want people to be treated, and they see the world the same way as us from a value system standpoint. I suspect at some point that will be harder to do, but we always make time to do it today because one bad choice leads to a lot of negative consequences. When I think of the 50 years, you've been there about a third of it. Yeah, 20 years. Yeah. In that 20 years, what have you seen as that journey? What are the things that stand out? I spend time on this for the room. We're a people business. It's a direct workforce, 80% to 85%. They're not really going into an office per se. They're getting into their depot, changing into a uniform, getting a truck, and then they're gone. You're not supervising them all day long. Creating that is like that's why I'm spending the energy on this. It's a great question. When I became CFO in December of 2012, John and I pivoted strategy at that point in time, and we had four major strategies. The first one was right people, right roles. That was all of our focus for 18 months. We really got back to the basics of what the company had done very successfully, having well-balanced teams in each of our local operations. We wanted entrepreneurial leaders. We wanted some level of independence. That allowed us and allows us today to really drive that culture and success down through the business. We really still focus on that today. What you mentioned, what you manage. One of the other things I was going to say, Michael, is that when you think about our business, the price of entry is to provide the service on time, safely, get that job done. The question is, what do you do as a while? What do you do above and beyond? How do you take care of your customers? What are the things that you can do that can set you apart in the marketplace? Our people are thinking about that constantly. We're encouraging them to think about that. What more can we do for our customers in terms of creating a differentiating factor? Okay. M&A has been a big part of the model. The very first time you were sitting on this stage at the Investor Summit, you were about $400 million in revenues. And today you're pushing towards $2 billion. Talk about a couple of things. The M&A strategy sort of was reinvigorated about six, seven years ago at a gradual pace, but really sort of has a point of acceleration. Are there gaps at this point when you think of the model, when you look at what you've got? Or are you in a position now of really truly focusing on execution? Yeah. If we flashback a couple of years ago, we were looking at our acquisition strategy. We were really focused on tuck-in acquisitions where we could overlay gaps in our map in the Northeast. We started to say to ourselves, we can't just be boxed in in this one marketplace. We need to have new nodes of growth into other market areas. About two years ago, we bought Pennsylvania, Maryland, and Delaware from GFL, and it opened up a whole new growth trajectory for us. We could start to look at new fill-in opportunities between the businesses we bought and also new adjacencies. From our vantage point today, there's even more opportunity than we've ever had as an organization to continue to fill in some gaps in the map, overlay with great tuck-ins, drive internalization, and look for adjacencies. As John always says, we're not looking for this opportunity to jump to California or Texas. That's not our strategy. We're looking for those adjacencies. Do we think of it as Virginia, West Virginia, Maryland is an obvious way to think about it? If you were. Clearly, we've indicated that our perspective is up and down the Eastern Seaboard is really the opportunities for the future. Not looking necessarily to travel across the country at this point in time. We've got tremendous opportunities over the top of the existing Northeast and Mid-Atlantic, and then plenty of opportunity heading south as well. Your original, what I'll call the legacy business, to frame it in the context of this big move out of New England, was really landfill disposal. You had a landfill and a post-collection strategy that makes you stand out because you're in low 20% of the market in where you operate. Your next move as an [inaudible] is emphasized around that disposal piece. Where's that balance? I think that it's a fair perspective that in the Northeast, the disposal capacity is a real factor from a competitive perspective in terms of the supply and demand equation. Not necessarily the case in the Mid-Atlantic. As Ned indicated, a great opportunity for us to expand, but it's a different market in terms of in that market, there's 12 disposal facilities, and we don't own a disposal facility. Collection operations can be very successful in that market. It's almost like being landfill neutral because you have options. Yes, exactly. What's remarkable is we actually make more free cash flow in our hauling businesses, in our recycling facilities than we even do in our landfills. They're very capital intensive. As we look into the Mid-Atlantic and other markets, as John said, we can be very successful converting cash and having high margins and creating value without the disposal capacity if you have the right market dynamics. Right. When you think about day-to-day operations, labor is always first and foremost because it goes back to your culture. It's about people. Can you talk a little bit about how you have approached that recruiting retention and that direct workforce? Sure. I mean, I think that we all, I mean, the whole transportation industry suffered through COVID. At a given point in time, we had hundreds of openings for drivers. That is when we, going back four years now, established the CDL school and really took a look at our policies that we had in place too because our policies from a driver standpoint caused for drivers to be 21 years before we could start and really inconsistent with the opportunity in terms of those individuals coming out of high school that were going on to the trade. We changed it to 18 years. We revamped our safety program. We really, at that point in time, really looked at career development for drivers, mechanics to fill those seats. The CDL school is approaching 350 or 370 grads at this point in time. This past year, we started our maintenance school. We have two bays, one for preventative maintenance, one for major repairs. That school is up and operational. We probably have 50-100 people through that school as well. We also, during that period, over the last four or five years, we've really looked at the HR department. Now we're revamping our training programs. Again, all training kind of went away during COVID, and we're bringing the training programs back at this point in time. It's going to pay huge dividends on a go-forward basis. We've cut our openings in half over the last few years, not without adding a lot of resources from an HR perspective because what happens is when a division is short on drivers, you've got the ops supervisor, maybe the ops manager, route supervisors out in trucks taking care of customers, and they're not doing their job. We have put HR people in the field to present and really get on all of the opportunities in terms of all of the applicants that we get immediately to bring them in and put them in front of the hiring managers quickly. A lot of water over the dam, a lot of resources. Ned reminds me in terms of the resources that we put into HR and into the schools, but it's paid huge dividends. The most important thing for our organization is to fill those seats. There is nothing more important than filling those seats because if you have a tremendous number of openings, both from a driver and a mechanic perspective, you are putting tremendous pressure on the entire organization. It is also putting tremendous pressure on safety as well. John, you forgot the most important part of that. We have our graduate number 300 sitting next to us from. Oh, that's exactly right. Yes. Yeah. That is true. I went through the Casella training program in December. I will share with you in the room and those of you in the services business, I do not know, I do not have a magic number on what the right size is of your company that you should do this. I would tell you two things out of the experience is I have a totally different appreciation for what it takes to drive one of these trucks because I drove for about 10 hours all over Vermont roads in snowstorms. We did send them up on the mountain to do a little work on the area. You get in a cab over and do that, and it changes your blood pressure. The other, you're changing people's lives. Yeah. I get a little emotional when I think about this, but you're changing people's lives. I'm going to tell the story and ask the question in the same breath. Your sourcing of this is internal people, generally speaking. It's helpers. You've gone down into that local operating level, and they've observed somebody who's got a great attendance record, a good work ethic, and you're giving them a shot at coming in and doing this. We had four people in the class and myself. Two of them were helper drivers. They were going to be fine. One of the gentlemen was in his 40s, had been a laborer his whole life. There's no question you changed this man's life. The question for you, though, is what's the retention rate of having done that internally versus you've gone out into the market and recruited somebody? It's pretty spectacular. I think when you provide that kind of opportunity for someone, and even with newer folks, if they get through the first year, they're in all likelihood going to be a 20 or 30-year employee, no question about it. It's a very different perspective that they have. You're really creating a career with no debt. We even talk about that in terms of some of the advertising that we're doing now, the power of hard work across the footprint, trying to attract as many people as we can coming out of high school. That turnover can be as much as 75% lower from graduates of the school. Holy smokes. I have to do a shameless plug for the National Waste and Recycling Association. We actually have a program that we're working with another organization where we can get your driver all the way through the, what I'd call that classroom side of it for about $600. You have to be a member. Join. All right, there's a shameless plug. Moving back into operations equipment. There was a period of COVID, shortage of everything. Where are we on your ability to fulsomely do your capital spending as you need to support your business through normal operating returns? It's still really challenging. It's a dance each year. We have a number of trucks we want to put on the road from an automation standpoint or rear load to front load conversions, and we can't get all of those trucks. Especially as we're buying businesses, we love the opportunity in the first couple of years to really move to automated side load trucks, Curotto trucks, front load. It typically takes us about three times as long as we'd like to get those trucks on the road. We run a lot of secondary routes where we use split body trucks to waste and recycling. It's very hard to get those vehicles, those bodies still. It can be as much as 15-18 months. There are not that many people actually make that anymore. Exactly. Is the backlog chassis or bodies? Both. Both. Bodies are a little harder. Bodies. Ned's right. Chassis are a little better. Because of the split body issue in that context? Just in general, we about 10 to 12 years ago really started to focus on two to three manufacturers and really standardizing our entire fleet. You can always find a truck, but whether it's to your spec and really meets your needs is a big question. We have built some new relief valves into our system with rental programs that meet our company specs that really help us to accelerate and flex faster. Okay. When you think about, you need the truck first, but are we okay on the container side? How's that? That's fine. We've got some great manufacturers that we work with that are positioned throughout our footprint. They all meet the same quality specs, and we can get containers rapidly. If you were delivering a message to the supply chain specifically in trucks and bodies, what would it be that might help them be able to be better able to service and supply the industry? Because this is not a unique comment. I've heard it a lot. I think they need to be more forward-looking. We've almost been in a crisis mode in a few of our states with the CARB regulations. Manufacturers have not taken some of these regulations as seriously as they need to, and they haven't met the thresholds for electric vehicles. We were innovators. We've bought a Mack electric truck, a Battle electric truck. We've been trying to work through these issues. In states like Massachusetts, New York, New Jersey, they've all been looking to electrify fleets quickly. We've been struggling in the last 12 months with this new hurdle where in certain instances, we can't even buy diesel trucks because the manufacturers haven't met the specifics. This is a wrinkle that I think everyone in the industry needs to be focused on where this is coming. The R&D, the cost points need to come down, and the regulators are definitely ahead of the industry. One of the other things I think has really come to the fore is co-collection in terms of split body units. I mean, more flexibility, more manufacturing capability there would be really helpful. Right now, in some cases, the lead time is, what, 18 months to 24 months on a split body to be able to get it on the chassis. More innovation, more movement, more manufacturer of co-collectors. To be clear, the split body plays a very good role in markets where there's a lot of windshield time between pickups, right? That's exactly right. That's the idea. Other rural markets, secondary, tertiary markets. It's a critical component because you don't want to go down that route with two different vehicles. I have to ask this question. One of the things that stunned me in the first few months that I took over this new role is the percentage of the population who has access to curbside recycling who does not believe that the recycling is real. The split body customer is sometimes the worst in that context because they go, "See, I told you they're putting them both in the same truck," and they kind of want to go back in the back and say, "See that little metal thing in the middle?" How are you dealing with that? I mean, I think clearly from an education perspective, the videos that we do, we'll show the videos, particularly in the communities that we're running split bodies because we'll get those calls. We'll run those advertisements where people can see the flap going back and forth. It really is an education process on getting with the community and staying engaged from an education standpoint. Right. I'm probably going to. You're right. There's still, I mean, it's kind of amazing today because we do such a good job as an industry from a recycling perspective that still we still have a lot of work to do from an education standpoint. Oh, it's huge. I'm probably going to do this all day long, so I apologize to the room. I'll shamelessly promote. If you're coming to the gala tonight, you're going to hear this really exciting announcement about a PSA and a licensing relationship we're going to have that will talk about batteries and battery recovery, but also really drive the message home about recycling is real. Yes. Regulatory. Let's talk about from a regulatory standpoint. You have this terrific disposal position. You had the vision, not without challenge, but the vision 16 years ago to see this coming, made real commitments financially to do it. You are in this enviable position in a marketplace. It is a market that is constantly under pressure up there. Talk a little bit about what is going on and where do you think the play sort of settles in the combination of predominantly New Hampshire and New York at this point. I think that it's clear that the regulatory environment is not getting easier. It's getting more difficult. I think that, unfortunately, people all want their waste picked up, but it seems like every permit that we go for to expand capacity and just to handle the same tons that we're handling for the next five years is getting harder and harder from a regulatory standpoint. Part of that is driven by social media, a very different atmosphere from a social media perspective with regard to permitting. It used to be we'd keep our head down and go through the process and we'd get our permits, notwithstanding the fact that we'd usually go through the courts. In New Hampshire, I think most of the permits that we had gotten went all the way to the Supreme Court. From a regulatory standpoint, it's a real challenge. I think that we're going through that process and our team's doing a great job. There's no question that it's a hugely challenging process. Some of the last permits that we got took seven years. Through the course of that process, millions of dollars in consulting, legal, and engineering, etc. At the end of the process, there's no guarantee that you're going to get a permit. It's a really challenging process, but our team's doing a great job of getting through it. We're going to add capacity to our Hyland facility. We're going to double that capacity probably in the next year or so. As you know, we brought McKean on. We have 30 million cubic yards of capacity there, which is a real safety valve for us in the Northeast for all of our facilities. Really excited about McKean up and operational. Ned, you may talk about a little bit of activity there in terms of additional tons going in, which is really helpful to get the team up to speed from an operating standpoint. Yeah. We've never looked at McKean as an opportunity to bring in a lot of new streams. As John said, it's really a defensive risk management move for us as we look at the risk in the Northeast. It's a double-edged sword. The complexity of permitting, the intensity, the desire of politicians and regulators to have less disposal capacity and really just ship waste to faraway places is both helpful and hard. It's one of the things that's allowed us to create a very valuable landfill position in the Northeast, but it's also challenging for us to keep these facilities, expand them, create new facilities. We do really well because we live in the market. We're involved, and John's very much involved in the politics and regulatory side. It is that huge challenge. You have states like Massachusetts who have decided, "We're just going to export most of our waste to far-off other locations." The externality of that discussion, I think, will continue to come up. Having that in-market capacity is really important and not just shipping the waste off 1,000 miles away to another community. Two questions out of that. One, it's about 4 million tons of annual disposal. When you're all done, you're still going to be at 4 million, even if New Hampshire gets closed or Ontario is closed and with the expansion at Ontario and what's happening in McKean. Yeah, we've got about 6 million tons today. We're filling probably about 3.5-4, depending on the year. Right. You are still going to be in a position to be able to absorb that and have the room to grow into it. Absolutely. Right. Okay. Let's just get that out on the table. This is now a little more philosophical. Massachusetts is unique. More states are doing this. Thinking about this, I'm going to export this problem, but it has an extraordinary compounding issue on a local cost of business. When does that rooster come home to rest and business wakes up and says, "Hey, this is a dumb policy because you've raised a number that was 1% or 2% of my costs, is now all of a sudden becoming 5% or 6%" Yeah. I mean, if you look at the CPI print and you look at the basket of where trash and waste services sits, it's like 40 basis points, so 4/10 of 1%. I think from our vantage point, we've always thought the economics would win. In many ways, it doesn't. I think for politicians, regulators, they really do see this vision with more waste being recycled, brought into circularity. We win every day when we focus on those topics. You don't win when you focus on the economics around landfilling. They're going to push down this burden onto their local economies and be damned. Yes. I think that's exactly right. I think, unfortunately, too many states are of a mindset that part of their waste management solution is to ship it out of state. I think we're a ways away from the economic burden of that really making a difference in terms of public sector. However, you're right. At some point in time, the pushback is going to come from business. I think the other thing that is really important is when we talk about that to governors and legislature, it's not only about the waste that's generated every day. It's about hurricanes. It's about floods. It's about being able to move that material. How do you respond? You've got to be able to respond in emergency. We've seen across the Northeast, in the last three or four years, significant emergencies where there's been thousands of tons of material that has to be moved and has to be moved in a timely manner. Otherwise, you've got another health issue. It's going to come home to roost. I think, maybe, as Ned said, maybe a little while before it does economically, but people are beginning to listen. All right. Very quickly, because we're coming to the end of our time, you're a cash compounder. How do I think about some of the things that are happening at a macro level right now and impacting in the very short term that cash compounding? As you look out and talk about what you think that compounding looks like on a consistent basis, who are you as a compounder? For the last decade, we've grown free cash flow, adjusted free cash flow, about 15%-20% per year. We day in, day out grow organically about 10%-12%. That 12%-20% plus comes from acquisition growth. That compounding is really important. We are hyper-focused on putting investments to work to have the right return profile from a cash standpoint. It's everything. It's replacing a truck to buying a business. We're always focused on that cash return. Okay. Last question. Race goes across the scale every single day. I think the industry is actually an economist to some degree because you can really measure fluctuations in the behavior of a marketplace. What is your read for now into the fifth month of 2025 about the economic environment in the patch that you work in? Yeah. It is always a little bit hard in the Northeast to get that read in the winter. We had a particularly rough winter this year with lots of ice, lots of snow, very cold. I know I was up there trying to do my CDL in the middle of it. Things were a little slow in the first quarter, especially on temporary roll-off. We saw even a little bit of weakness from a volume standpoint on the commercial side. Coming into April and May, volumes are strong across each segment of our business. We have not seen any major impacts from the tariff discussion or any sort of economic slowdown. There is a handful of customers that we've heard have been slowing down, but it's not an overall trend across our customer base at all. It's actually pretty positive right now. All right. We're at the end of our conversation. Thank you for making time for us. Happy 50th anniversary. Yeah. Thank you. Thanks for having us kick it off, as usual. You've been kicking it off for a decade. You're the opening act. They do a pretty good job too. Absolutely. Even in a town with 10,000 unemployed comedians. Thank you all. Thank you.