Casella Waste Systems, Inc. (NASDAQ:CWST) Q4 2023 Earnings Call Transcript

Casella Waste Systems, Inc. (NASDAQ:CWST) Q4 2023 Earnings Call Transcript February 16, 2024

Casella Waste Systems, Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Good day, and thank you for standing by. Welcome to the Casella Waste Systems Fourth Quarter 2023 Earnings Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your first speaker today, Charlie Wohlhuter, Director of Investor Relations. Please go ahead.

Charlie Wohlhuter: All right. Thank you, Victor. Good morning, and thank you for joining us on the call today. With us are John Casella, Chairman and Chief Executive Officer of Casella Waste Systems; Ned Coletta, our President; Brad Helgeson, our Chief Financial Officer; Jason Mead, our Senior Vice President of Finance and Treasurer; and Sean Steves, our Senior Vice President and Chief Operating Officer of Solid Waste Operations. Today, we will discuss our fourth quarter and full year 2023 results, which were released yesterday afternoon. After a review of these results and an update on the company’s activities and business environment, we will be happy to take your questions. But first, please note that various remarks we may make about the company’s future expectations, plans and prospects constitute forward-looking statements for the purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995.

Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in the Risk Factors section of our most recent 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, February 16, 2024. 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 included in the appendix of our investor slide presentation, which will be available in the Investors section of our website at ir.casella.com. And with that, I will now turn it over to John Casella to begin our discussion.

John Casella: Thanks, Charlie, and good morning, everyone, and welcome to our fourth quarter 2023 conference call. This was an exceptional year for the company and illustrates the success that we continue to have in terms of executing against our key strategies. I’m excited about the opportunities that lie ahead. First, we will highlight our performance for the year. Then I’ll pass it on to Brad and Ned, who provide more specific comments around our results and strategies. Our performance in 2023 reflects the successful investments we made across our business, deploying capital for return-driven growth. Our focus on our people and operations is helping us improve safety and turnover, while delevering exceptional service — delivering exceptional service and driving more productivity.

We’re also experiencing notable operating benefits from our Boston MRF following the full equipment upgrade this past summer. I’m also excited to announce that we have similar plans to fully upgrade the processing equipment at our Willimantic, Connecticut recycling facility later in 2024. We continue to invest in and further modernize our sustainability infrastructure. Our disciplined approach strikes the right balance between economic returns and providing benefits to the environment. As I noted in our press release yesterday, completing seven acquisitions was an exciting and notable achievement in 2023, given the size and the new markets we’ve entered. I’m very encouraged by the early results of our Mid-Atlantic region and other acquisitions that we completed in the year.

A real shout out to the Mid-Atlantic team to Kyle and his team who have done a terrific job of integration and bringing the Mid-Atlantic up to speed in terms of the Casella culture. The level of engagement of our new team members is really impressive, which helped facilitate the transition and integration process. It includes implementing our strategy, developing our sales approach and evaluating acquisition opportunities. Really like the growth runway we see ahead for the entire business. In 2023, our operating initiatives in our base business combined with our growth strategy allowed us to post double-digit growth across key financial metrics. Revenues were up over 16%, adjusted EBITDA growth topped 20% and for the second consecutive year, adjusted free cash flow growth was up 15%.

We expanded our adjusted EBITDA margins 70 basis points, which was an indication of the strength of our operating and pricing programs. We closed out the year on solid footing in Q4 with 17% adjusted EBITDA growth in our base business and over 200 basis points of margin expansion. As we look to 2024, we have a strong balance sheet, ample liquidity and are in an excellent position to support further growth in our business. I’d like to provide a few related comments on the execution of a few of our key strategies and some of the performance of our operations. As you know, a key part of our strategy is improving returns across our disposal assets and our operating programs have really made this possible. Despite volumes being down year-over-year in 2023, we were able to drive higher adjusted EBITDA.

This is a testament to our team and the focus on getting the right tons at the right price, improving the mix of our inbound streams, helping to drive our average landfill price per ton up 9.8% in a year and helping to offset the headwinds from lower disposal costs — lower disposal volumes, excuse me. We remain committed to expanding margins and drawing higher returns across our landfill assets. On the collection side of the business, I’m especially proud of what we’re doing to strengthen our employee base that is enabling us to be safer and more engaged team, resulting in higher returns in this line of business. Yes, ongoing technology investments like adding automated trucks, route optimization, software, onboard computers are driving safety and operating efficiencies higher, but the direct investments in our frontline team are equally as important and valuable.

Sean and that team have done a terrific job of supporting the field and really driving our cost of ops down. Over 200 students have graduated from our CDL School since starting the program. We’re seeing great outcomes, particularly in lower turnover rates among our graduates in our CDL program. While we’re only a couple of months into our new diesel technician program, 20 students have received their certificates so far and these people-focused initiatives promote greater stability and safety and quite frankly, the results show it. Our company-wide turnover rate is down nearly 20% year-over-year in 2023, while key safety metrics such as TRIR improved. As our execution against these key metrics improve, so often does the performance as a company.

Probably the most significant thing that I’m proud of is throughout the immense growth that we had in 2023, we were able to bring our turnover down and improve our safety record, a real tribute to the entire team. And finally, resource solutions. As I mentioned before, sustainability is woven into the framework of the company and is an area we continually strive to enhance. Similar to our upgraded Boston MRF which has delivered strong results over the back half of 2023, we are reviewing other facilities where we can improve operating efficiencies and materials recovery. Our next large upgrade, as I said, will be at our Willimantic MRF slated to begin in the second half of this year. Turning to our professional services business, hats off to Paul and Liza.

That entire team has done a terrific job of growing our revenues and looking at those opportunities. We won a significant additional business throughout 2023 and see lots of potential to continue to grow this business looking ahead. A key driver of this optimism is the potential of the new market entries that — what they present for more customers for us to win differentiating our service offerings. Again, a really exciting opportunity for us to really provide those services to those industrial customers in the Mid-Atlantic. Very excited about the opportunities that present themselves in front of us looking ahead. In wrapping up, exiting 2023, I have to say I am so proud of our entire team, our drivers, our mechanics, our division managers, particularly in those states, Vermont, New Hampshire, upstate New York, Pennsylvania, where our teams provided service in the midst of what was a catastrophic flooding.

I can talk about for a long time. Some of those divisions that didn’t have an operating center, yet they picked up their — they picked up their customers and took care of the communities that depend on us for service. So a big hats off to the entire service team. They did just a fabulous job in 2023. And when you look across the entire organization from finance, with Ned and Jason enhancing the capital structure to continue to grow the business, Shelley and Sam in permitting, compliance and legal, just absolute unbelievable performance for the year. HR, again, can’t say enough about Kelly and the HR team, onboarded 1,000 people in 2023. And probably most importantly, all of the management team has been able to come through core values training and have a real understanding of what it takes to manage at Casella.

An extremely exciting year. Very, very significant from a growth perspective, but equally as significant in our ability to bring down turnover and improve our safety record. And with that, I’ll turn it over to Brad to go through more specifics on the numbers.

Brad Helgeson: Okay. Thanks, John, and good morning, everyone. I’ve been with the company for a little over three months now and I’m really thrilled to be part of the team. Ned left some big shoes to fill, but obviously, he remains by my side. Moving on to the quarter. Revenues in the fourth quarter were $359.6 million, up $87.4 million or 32.1% year-over-year, with $71.7 million of the change driven by acquisition activity and $15.8 million of organic growth or 5.8%. Solid waste revenues were up 40.4% year-over-year with acquisition growth of 34.3%, price up 6.7% and volumes down 1.4%. Revenues in the collection line of business were up 54.8% year-over-year, with price up 7.2% and volumes down 2%. Volume declines were primarily a result of softness in temporary roll-off activity and customer churn, driven by our efforts to improve quality of revenue and margins in the residential line of business.

Revenues in the disposal line of business were up 8% year-over-year, with landfill pricing up 6.9%, landfill tons down 3.7%, reflecting softness in C&D volumes in the market, while MSW and special waste volumes were essentially flat. Resource solutions revenues were up 8.8% year-over-year with price up 5.2% across the segment and acquisitions contributing 3.8%. Price growth was driven by an increase of 81%, or $45 per ton in our average commodity revenue over the historically low prices of Q4 2022, though this was muted by lower shipping fees that adjust to share higher commodity prices with our customers. Stepping back, recycled commodity prices have ridden a roller coaster over the past two years, with a multi-year peak in the first half of 2022 and trough in the second half, followed by a moderation of volatility and sequential recovery in prices over the course of 2023.

Overall, commodity prices were a headwind on revenue for the year, but have now turned positive on a comparable year-over-year basis. But regardless of the direction of prices, the company’s model works to preserve returns on its investment in recycling through the cycle, sharing the commodity price risk with our customers via contract structures and our SRA Fee. The past two years served as a really good case study. National accounts revenue within resource solutions was up 4.2% year-over-year. Adjusted EBITDA was $82.2 million in the quarter, up $25.9 million or 46.1% year-over-year with $16.3 million of the change from acquisitions and $9.7 million or 17% from organic growth. At $295 million for the year, adjusted EBITDA came in at the middle of our guidance range has increased at Q3.

Solid waste adjusted EBITDA was $74.8 million in the quarter, up $23.5 million year-over-year with acquisition, strong pricing and operating efficiencies driving this growth. Resource solutions adjusted EBITDA was $7.4 million in the quarter, up $2.8 million year-over-year, driven by the benefits of the Boston MRF retrofit and higher commodity prices. Adjusted EBITDA margins were 22.8% for the quarter, which is a Casella record for the fourth quarter, up approximately 210 basis points year-over-year. Again, our pricing programs fully offset cost inflation in the quarter with consolidated price growth of 5.9%, providing 110 basis point spread over inflation which ran at 4.8%, excluding fuel. Inflation has been moderating, but flat sequentially in the quarter and, of course, remains elevated in historical terms.

In addition to the 110 basis points from net price, further year-over-year margin bridging items include 140 basis points from improved collection operating performance, reflecting labor and cost efficiencies from our operating programs, improved recycling processing performance, again driven by the Boston MRF retrofit and lower fuel expense, net of fuel recovery fees. These were offset by a 35 basis point headwind from lower landfill volumes and higher leachate costs and a 5 basis point headwind from acquisitions as the acquired businesses have come in at a slightly lower margin pre-synergies than the existing business. This represents a margin tailwind opportunity, of course, as we execute on our integration and synergy plans. Cost of operations in the quarter was up $54.8 million year-over-year, but down 120 basis points as a percentage of revenue as the company continues to outpace inflation on the revenue line and operate more efficiently as I’ve mentioned.

$50.1 million of the increase was from acquisitions. So on a same-store basis, cost of operations was down over 200 basis points as a percentage of revenue year-over-year, which is tremendous performance. General and administrative costs in the quarter were up $7.4 million year-over-year, but down 110 basis points as a percentage of revenue. $5.3 million of the increase was from acquisitions. The company is investing in the G&A line to support our growth, including adding a new region to manage our Mid-Atlantic operations. We expect to gain further leverage here over time as we grow. Depreciation and amortization costs were up $21.4 million year-over-year with $18.3 million of the increase resulting from the recent acquisition activity. As Ned explained last quarter, we expect heightened D&A for the first few years after each acquisition.

To put this in perspective, D&A associated with acquisitions was 25.5% of acquired revenues in the quarter as compared to 12.6% for the base business. The P&L included a unique non-recurring item in the fourth quarter that I’d like to take a moment to explain. A $3.9 million charge for an event at our Ontario County Landfill where a layer of soil slid down the veneer of a capped section of the landfill. Nobody was hurt and normal operations were never interrupted. The charge covered the write-off of costs related to the capping work and current period costs for cleanup. Engineering analysis is currently underway to determine root causes and responsibility for the event. Our effective tax rate was 31.4% for the full year as certain non-deductible expenses and discrete items pushed the rate above our statutory rate of approximately 27%.

Adjusted net income was $7.5 million in the quarter, down $2 million compared to prior year, with the accelerated D&A associated with acquisitions weighing on earnings. GAAP net loss was $1.8 million in the quarter, impacted by $5.2 million of expenses related to acquisitions and the $3.9 million landfill capping charge. Adjusted EPS was $0.13 in the quarter and $0.94 for the year. GAAP EPS was a loss of $0.03 in the quarter and earnings of $0.46 for the year. The company’s acquisition growth strategy is weighing on the bottom line in the near term, with costs incurred to pursue, execute and integrate acquisitions and accelerated D&A impacting earnings. But it’s building significant shareholder value for the long term and these acquisition-related P&L headwinds will become tailwinds in future years.

Adjusted free cash flow was $128.3 million for the full year 2023, up 15% year-over-year and in the middle of our increased guidance range at Q3. Net cash provided by operating activities was $233.1 million for the full year. This was driven by the improved operating performance, partially offset by the cost of higher debt to finance acquisitions and higher outflows from net changes in assets and liabilities. In that line, DSO was flat year-over-year at 34 days, but we faced a few headwinds from a working capital standpoint, including higher landfill capping costs. Relative to our expectations at Q3, capital expenditures ended up coming in a little lighter as we planned for the heaviest capital spending quarter in the company’s history. But delays in equipment deliveries pushed some spend into 2024, which is reflected in our guidance, which I’ll discuss shortly.

Going the other direction, cash costs for acquisition-related activities came in a bit higher. As of December 31, we had $1.05 billion of debt, $221 million of cash and available liquidity of $493 million. Our consolidated net leverage ratio for purposes of our bank covenants was 2.78 times. Our average cash interest rate was approximately 5% and we had fixed interest rates on over 75% of our debt, so the balance sheet is in great shape. Our liquidity and leverage profile will enable us to be opportunistic in continuing to execute on our robust M&A pipeline. As stated in our press release yesterday, we announced guidance for 2024 and those ranges and relevant underlying assumptions are laid out in our release. At the midpoints, the ranges reflect 18% growth in revenue year-over-year, 21% growth in adjusted EBITDA and 13% growth in free cash flow.

Our guidance ranges assume a stable economic environment, but reflect a slightly cautious outlook on C&D volumes. On the top line, our guidance includes $175 million or approximately 14% of acquisition rollover with approximately 4.5% overall organic growth at the midpoint. While we expect to be acquisitive again in 2024, our guidance does not reflect any further acquisition activity. Organically, in the solid waste business, we expect pricing of 5% to 6%, again ahead of inflation, which for us is still running at approximately 4.5%. We retained pricing flexibility across approximately 70% of our collection revenue, so we’re well positioned to respond to changing conditions if necessary as the year progresses. Solid waste volumes are expected to be flat to down 1%, with potential weakness in C&D volumes in the landfill and temporary roll-off businesses reflected in that estimate.

Bridging 2023 adjusted EBITDA to our guidance, approximately $40 million is acquisition rollover, $5 million is improved performance at the Boston MRF, net of the impact of downtime to retrofit the Willimantic MRF as John discussed earlier, and $10 million to $20 million is base business organic growth. Our adjusted EBITDA guidance reflects 30 basis points to 50 basis points of margin improvement in 2024. Bridging margin from 2023, acquisitions are expected to weigh on margins by approximately 10 basis points. The Boston MRF, net of Willimantic downtime, is expected to add approximately 10 basis points to 20 basis points and organic growth adds 30 basis points to 40 basis points in our guidance, with pricing leverage and our operating programs offset somewhat by softer volumes.

We expect free cash — adjusted free cash flow to grow consistently with our long-term rate of 10% to 15%. We anticipate another year of investing significantly in the business with capital expenditures of approximately $180 million, which includes approximately $20 million for the Willimantic MRF retrofit, $20 million of other non-recurring spend in connection with recent acquisitions and approximately $5 million to complete the initial start-up investment at the McKean Landfill rail project. In closing, this is an exciting time in the company’s history as our growth initiatives and operating programs are bearing real fruit and we’re well-positioned to continue this momentum into 2024. Now I’ll turn it over to Ned to add some further color on our strategic initiatives.

Ned Coletta: Thanks, Brad, and good morning, everyone. 2023 was an exciting year for Casella, as we’ve continued to execute extremely well against our long-term strategic plan. And this execution is clearly demonstrated in our financial results for the year. This growth was driven by continued execution against our operating efficiency programs, organic revenue growth and pricing initiatives, robust acquisition activity, key development projects and continued investment in our foundational pillars. As outlined by John earlier, we completed seven acquisitions in 2023 and acquired approximately $315 million of annualized revenues, including the expansion of our footprint into the Mid-Atlantic region. Completing the acquisitions was just the starting point and our team has worked very hard through late 2023 and into early 2024 to integrate the newly acquired businesses into our operations, systems and back office.

We’re tracking well against pro forma for each acquisition and expect to complete the remaining systems and back office integration work in the coming months. Kyle Larkin and our new Mid-Atlantic team are doing a great job executing against our operating plan, while working tirelessly on their critical integration efforts. The GFL team has been super helpful providing transition services and assisting us with successful migration off their systems and thank you to their entire team. Our western region team, led by Michael Stehman, has partnered extremely well with Scott Earl and the Twin Bridges team to quickly advance integration efforts to drive operating synergies and ensure top notch customer service through that acquired region. With the expansion of our operating footprint into the Mid-Atlantic in 2023, we have built our acquisition pipeline to over $800 million and we are positioned well to have another strong acquisition year in 2024.

On the development side, we continue to invest in return-driven sustainability infrastructure, including the full equipment upgrade on our Boston recycling facility completed in early Q3 ’23. As John mentioned, we’re tracking ahead of pro forma with the strong performance driven by higher revenues on additional material recovery, a 35% improvement in productivity that lowered our operating costs and increased our processing throughput. A big thank you to Bob Cappadona and Austin McKnight and the entire team for their excellent leadership managing through a very complex upgrade process. Our team also made great progress on the buildout of the rail offload infrastructure in McKean, Pennsylvania landfill and we expect the facility to be online in mid to late 2024.

In this first phase, we’re bringing online capacity offload up to 5,000 tons a day of containerized municipal solid waste soils and sludges. We expect this operation to ramp slowly over the next few years as this investment is less about near-term volumes and more about long-term risk management and flexibility as we want to ensure viable waste disposal outlets long term in the capacity-constrained northeast. Finally, we expect our first RNG project at our Juniper Ridge Landfill to be online in the first half of 2024. RKF or BP will own and operate the facility, while Casella generates a royalty stream from the sale of gas and RINs with zero capital investment. This facility will generate roughly 700,000 MMBTUs use per year. As we continue to grow as an organization, we’re laser-focused on maintaining our positive culture and value system by investing in and developing our people and ensuring that we have the right people in the right roles.

This has been quite an undertaking with our rapid growth. Over the last year, we’ve welcomed over a thousand new employees to Casella through acquisitions, organic growth and our team did an amazing job effectively onboarding these new team members. Further, we continue to make excellent progress on key technology efforts at Casella, including our program to automate our residential collection fleet, introduce onboard computing in our truck fleet and improve our customers’ experience with new digital tools. Sean Steves and the operating teams have done a topnotch job over the last year executing against our operating plan while implementing key operating initiatives. Through the end of 2023, we’ve automated 56% of our residential fleet with either automated side loader or carado trucks.

These efforts are making a positive impact on reducing our cost of service and enhancing our people’s safety in the field. The new Mid-Atlantic operations introduced a great additional opportunity to advance fleet automation with only 50% of the residential fleet automated today. We have deployed onboard computers in approximately 70% of our 1,400 truck fleet and we expect to make additional progress in 2024. The OBCs are enhancing our safety profile on the road, creating additional revenue opportunities, digitizing things like route sheets and automating important data collection used for our operations teams and our customer reporting. Kevin Drohan, our CAO, and Keith Landau, our new CIO effectively partnered to launch a new customer payment portal in 2023, marking an important step in our efforts to further digitize and improve our customer experience.

We plan to continue to invest in this key area of strategy to ensure our customers have the right tools in the coming years to manage their services and access key data intelligence. Looking to 2024, we believe we have a strong opportunity to continue to execute in the key areas to drive further shareholder value and profit growth. And with that, I’ll turn it over to the operator for questions today.

Operator: Thank you. And at this time, we’ll conduct a question-and-answer session. [Operator Instructions] Our first question comes from line of John Mazzoni from Wells Fargo. Your line is open.

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Q&A Session

John Mazzoni: Good morning. Maybe could we just touch on…

John Casella: Good morning.

John Mazzoni: Yes. Thanks, guys. Could you just quickly touch on some of the trends you’re seeing within the disposal line, specifically around the volumes? I think we’ve kind of understood a lot of the Northeast dynamics here. But as we think about pricing on that kind of line item, what are you seeing in terms of tipping fees and other types of kind of early indicators for ’24 and how should we kind of think about not only the cadence, but also any kind of step-downs or other types of items that might kind of impact the model? Thanks.

Ned Coletta: Yes. So overall, the same trends are going to continue in the Northeast. We’ve had sites closed, and we expect additional sites to permanently close over the coming years. But what’s happening and what’s happened over the last several months and into early ’24 is as certain sites approach the end of their life, they want to just fill them up and they might even hold price steady or look for additional volumes. And we see this a bit with one of the large construction and demo debris sites that’s going to close in the next year plus, and they’re kind of sprinting to the end of the line. As such, we’ve seen a little pressure on the construction and demo side of volumes, but things are stable to positive, both in MSW, contaminated soils.

On the pricing side, we’ve entered 2024 with a robust pricing plan at the landfills, kind of high-single digits again, and it’s been well received in the marketplace. These price increases are well justified. Our inflation continues to run high on the landfill development side, capping, closing, regulatory environment continues to get more and more complex, and we need to get those costs back to the marketplace. So that softness in C&D, it’s probably a little bit less about the economy in the Northeast than it is about just that rush for someone to close their site, get it buttoned up, and then you’ll see the other side of that with some additional tightening in the market coming in ’25.

John Casella: It clearly bodes well for the next three to five years in terms of how we’re looking at pricing for our disposal capacity. That disposal capacity is really worth more on a year-over-year basis. So, we’re pretty excited in terms of the position that we set over the next three to five years from a landfill pricing perspective. And also in addition to that, we also, as many people know, have invested the capital to make sure that our McKean facility is up and operational. We don’t anticipate significant ramping in 2024 at all, but the facility is up and will be up and operational at the end of this quarter.

John Mazzoni: Got it. Good color. Thank you. And maybe just a quick one on that inflationary kind of trend, it was helpful to kind of get that base rate. But as we think about the price cost spread in ’24, could you just outline some of the main drivers between kind of what you’re seeing on the inflation side and outside of kind of fleet, other types of kind of one-time items and also if you could quantify any potential kind of uptick or kind of tailwind from the commodity prices? And I think we kind of understand that you guys have less exposure on that side, but just anything in terms of kind of those inflationary buckets would be very helpful. Thanks.

Brad Helgeson: Yes, it’s Brad. So inflation remains stubbornly high. The company reported inflation north of 5% last year. We’ve seen that kind of trend down, but gradually in the fourth quarter, we were running just under 5% and looking at 4.5%. It really is across the board. We’re seeing particular — particularly stubborn inflation is in outside repairs. Ned alluded to this a second ago, the cost of relating to the landfills, those are up really across the board. Tires, that’s a notable one. Labor is probably pretty consistent with our overall inflation rate. So we’re not really taking a view at this point on further material moderating of that number. We kind of assume more or less where we are for the balance of the year.

Based on that inflation number, we’re targeting 5% to 6% price growth as we said earlier, that’s across collection and disposal in the solid waste business. So looking to plus or minus maintain that 100 basis point spread if we can. And commodities, you asked about commodities. And as you mentioned, our model is such that the commodity prices don’t impact us actually that much either way. But commodity prices look like they’re going to be up certainly year-over-year, and the beginning of the year is bearing that out so far.

John Mazzoni: Great. Thank you.

Operator: Thank you. [Operator Instructions] And our next question comes from the line of Tyler Brown from Raymond James. Your line is open.

Tyler Brown: Hey, good morning.

John Casella: Hey. Good morning, Tyler.

Tyler Brown: Hey, first off, Brad, great to hear your voice again on a conference call. But, hey, I just wanted to get a little bit more color on the veneer failure. So kind of a multi-part question. But one, John, have you had a slide like this before? Two, I may have missed it, but what was the determined root cause? Was it too much sludge or precipitation? And then three, it happened later in the quarter. So should we expect a spillover of expense into Q1?

John Casella: Let me — I’ll talk a little bit about the veneer failure. The veneer failure really was stopped by the transportation roads that we had in the facility. And again, as Brad said, no one was hurt. It was a non-issue. It was all done by third parties. We’re going through that from a practical standpoint with a third-party contractor, with the engineers to make a determination as to what caused it. It could very well be gas. There’s a couple of different perspectives at this point in time, Tyler, but we haven’t had the report yet. And we’ll obviously go through that in detail and try to make sure that we understand on a go-forward basis what additional steps we need to take to make sure that we preclude it from happening in the future. Maybe Brad, I think that we’re…