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DATE

Friday, May 1, 2026 at 10 a.m. ET

CALL PARTICIPANTS

  • President and Chief Executive Officer — Ned Coletta
  • Chief Financial Officer — Bradford Helgeson
  • Vice President of Finance and Investor Relations — Jason Mead

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TAKEAWAYS

  • Revenue -- $457.3 million, up 9.6%, consisting of $23.9 million from acquisitions and $16.2 million from same-store growth.
  • Solid Waste Pricing -- Up 5.1%, including 5.3% growth in collection, 6.5% in roll-off, and 6% in front-load commercial; disposal pricing increased 4.7% overall.
  • Volume -- Solid waste volume down 2.5%, partially offset by total landfill tons rising, with construction and demolition (C&D) volumes up 13% at landfills.
  • Resource Solutions Revenues -- Increased 8%; national accounts up 20.7%, while average recycled commodity revenue per ton fell 22%.
  • Adjusted EBITDA -- $97.1 million, growth of 12.3%, with $4.4 million from acquisitions and a margin of 21.2%, up 50 basis points.
  • Base Business Margin Expansion -- Expanded by 65 basis points excluding acquisitions completed in the last 12 months.
  • Safety Performance -- OSHA TRIR improved by 20%.
  • Acquisition Activity -- Four completed in 2026, including Star Waste (closed April 1) adding $100 million of annualized revenue; total acquired annualized revenue: approximately $150 million.
  • Adjusted Free Cash Flow -- $30.7 million, up 5%.
  • Capital Expenditures -- $50 million, $5.5 million lower, including $9.2 million in recent acquisitions.
  • Debt and Liquidity -- $1.16 billion in debt, $127 million in cash, and approximately $500 million of available liquidity; consolidated net leverage 2.29x, pro forma 2.75x post-acquisitions.
  • 2026 Guidance Updates -- Revenue range increased to $2.06 billion–$2.08 billion (up $90 million), adjusted EBITDA $473 million–$483 million (+$18 million), adjusted free cash flow $200 million–$210 million (+$5 million).
  • Integration Milestone -- Nearly all Mid-Atlantic customers migrated to the new system; $5 million in targeted 2026 cost cuts on track, with $10 million further expected by 2028.
  • G&A Initiatives -- $15 million in targeted G&A savings over three years, with phased implementation from late 2026 to 2028.
  • Permit Expansions -- Hakes landfill permit expected by Q3 2026; Hyland permit targeted by Q1 2027, aiming to more than double annual tonnage and add 60 years of capacity.

SUMMARY

Management increased full-year guidance for revenue, adjusted EBITDA, and adjusted free cash flow to reflect contributions from recent acquisitions, signaling confidence in operational execution and acquisition integration. The company highlighted completion of key Mid-Atlantic customer migrations that unlocks cost synergy realization and noted ongoing investments in digital customer engagement and AI-enabled back-office automation, which may position Casella Waste Systems (CWST +9.56%) for further operational efficiency gains. Discussion explicitly addressed strategic pricing flexibility across most of the collection portfolio, citing open market exposure for 75% of revenues and dynamic pricing actions in response to inflationary pressures. Management stated, We do see an above brand margin improvement opportunity over the next 2 to 3 years, I think that's a fair assumption. attributing this to expected Mid-Atlantic synergies and G&A reductions. Looking ahead, ongoing permitting and infrastructure efforts at landfills are expected to enhance in-market disposal capacity and support pricing power amid regional capacity constraints.

  • Management confirmed $3.6 million in revenue contribution from floating fee programs, offsetting rising fuel and commodity risk impacts.
  • The company completed two new landfill gas projects in the quarter, now operating four projects collectively providing "several million dollars of EBITDA" in 2026, though production remains in the shakedown stage right now.
  • Base business margin expansion was strongest in the quarter, while new acquisitions temporarily diluted EBITDA margin by 15 basis points.
  • Guidance did not raise expectations for base business performance, with further reevaluation deferred to later quarters.

INDUSTRY GLOSSARY

  • TRIR (Total Recordable Incident Rate): OSHA metric measuring workplace safety by tallying recordable workplace injuries per 200,000 hours worked.
  • Internalization: Strategy of directing waste volumes to company-owned disposal or recycling facilities to improve margin and operational control.
  • Floating Fees: Variable surcharges or credits designed to adjust customer pricing based on changes in underlying cost drivers, such as fuel or commodity prices.
  • Mid-Atlantic Synergies: Operating and cost advantages anticipated from integrating and consolidating recent Casella acquisitions in the Mid-Atlantic region.

Full Conference Call Transcript

Jason Mead: Good morning, and thank you for joining us on the call. Today, we'll be discussing our first quarter 2026 results, which were released yesterday afternoon. This morning, I'm joined by Ned Coletta, President and Chief Executive Officer of Casella Waste Systems; and Brad Helgeson, our Chief Financial Officer. After a review of these results and an update on the company's activities and business environment, we'll be happy to take your questions. But first, please note that various remarks we 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 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 on 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 any date subsequent to today, May 1, 2026.

Also during the call, we'll 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 efforts are included in our press release filed on Form 8-K with the SEC. And with that, I'll now turn it over to Ned to begin today's discussion.

Ned Coletta: Good morning, and thank you, everyone, for joining us today. We are very pleased with our performance in the first quarter and the strong start it provides for 2026. Our team executed well across the business, delivering solid financial results and margin expansion that exceeded our budget while also advancing our strategic priorities. We combine disciplined positive pricing, steady core operations and meaningful acquisition activity to position the business for a strong year. Importantly, the momentum we are seeing is broad-based. It reflects the consistency of our operating model and the continued focus of our teams on execution, safety and customer service. Revenues for the quarter were $457.3 million or up 9.6% year-over-year.

Growth was driven by contributions from acquisitions and the base business with strong pricing across our collection, in disposal lines and continued strength in our Resource Solutions segment, particularly in national accounts. Pricing continues to perform well and remains a core driver of our results. Solid waste pricing was up 5.1% overall, including 5.3% in the collection line of business and 4.7% in disposal. From a volume perspective, the quarter played out largely as we expected, with slightly negative volumes mainly due to the challenging winter weather across our footprint. Despite these headwinds, total landfill tons were up year-over-year, including increases in both MSW and C&D volumes with C&D volumes actually up 13% year-over-year to landfills.

These results reflect the strength of our sales pipeline, all of our internalization efforts over the last 1.5 years and our unique landfill asset positioning in the Northeast. Further, we are well positioned for the seasonal upswing in volumes that we see in the spring, and we've seen positive trends through April. On the cost side, our fuel recovery program worked effectively in the quarter with floating fees fully offsetting the increase in fuel costs across our business. This continues to be an important component of our ability to manage risk and produce stable and predictable operating results. As we've emphasized, our focus remains on disciplined execution to offering level.

Our teams continue to make progress on route optimization, fleet efficiency and automation, and we're seeing those efforts translate into our results. Adjusted EBITDA increased 12.3% year-over-year, and we delivered 50 basis points of margin expansion in the quarter. Safety is our first priority in our operations every day. And we continue to invest in safety initiatives, including the expansion of our Triage programs to minimize the cost associated with workers' compensation claims and the implementation of the Lytx in-cab AI technology across our entire fleet in 2026. The Lytx system is helping our drivers with real-time coaching to reduce unsafe behaviors. This leads to lower incidents and strengthens our overall safety culture.

These efforts have resulted in better safety performance with our key OSHA metric, TRIR, improving by 20% year-over-year. We have also attracted several excellent new leaders to Casella over the last several months, including Chris Rains as our new Chief Revenue Officer, joining in March. We're excited to have these accomplished executives join our team, adding key skills through our already strong leadership team. In the Mid-Atlantic, we've made significant progress on our integration efforts. We've migrated nearly all customers to our new lead-to-cash system and integrated customer payment portal and we are on track to complete the remaining migration by the end of next week.

This is an important milestone as it allows us to shift our focus from systems migration to the exciting work of recognizing operational synergies through route consolidations, automation and facility consolidations. As guided, we're on track to cut $5 million of operating costs in 2026 and another $10 million over the next 2 years. From a technology and efficiency standpoint, we continue to make steady progress. On the customer side, we've been investing in key platforms to improve customer experience, including the launch of our new payment portal last month and the planned rollout of the new Casella app in the second quarter. We also continue to develop our e-commerce capabilities.

These efforts are focused on improving the customer experience while also yielding cost efficiencies. At the same time, we remain focused on reducing G&A costs, and we are on track with our previously announced $15 million in targeted G&A savings over the next 3 years. As mentioned last quarter, these savings will come in three phases with the first phase yielding in the second half of 2026 as we implement credit card convenience fees. The second phase will come in 2027 as we eliminate redundant system costs and the last phase will come throughout '27 and '28 as we automate back-office functions and take out costs.

Across these initiatives, we're also focusing on AI-enabled tools in investing in data infrastructure to support further capabilities. Over time, we expect these investments to generate additional leverage across our back office and yield additional efficiency gains. We continue to make great permitting progress on our expansion efforts at the Hakes and Hyland landfills in New York. With the Hakes permit expected by the third quarter of 2026 and the Hyland permit expected by the first quarter of 2027. As we previously mentioned, we're working to more than double the annual permit at Hyland from 460,000 tons a year to 1 million tons a year, while also working to add 60 years of capacity.

At the Hakes, C&D landfill, we're permitting a 10-plus year expansion. Additionally, we completed the new rail transfer station at the McKean landfill in the last month, allowing us now to accept materials from both gondolas and intermodal containers, including internalized MSW volumes from Massachusetts later this year. Our McKean land flow is a great rail option for the Northeastern waste that does not have access to local disposal. As a reminder, about 30% of the waste that's generated in the Northeast needs to be exported given the lack of disposal capacity in our markets.

The McKean landfill is proximate to dense populations in the Northeast and is one of only a few rail surf landfills that can service the market given the capital intensity and logistical complexity. Acquisitions remain an important component of our growth strategy, and we've had a strong start to the year. We have completed four acquisitions so far in 2026, representing approximately $150 million of annualized revenues. This includes the Star Waste acquisition which closed on April 1 and adds approximately $100 million of annualized revenues. These transactions continue to align well with our strategy of building density within our existing footprint.

Star Waste is an excellent example of that approach with strong overlap in Massachusetts and clear opportunities for integration and operational improvements. Our teams are making great progress on integration with an early focus on safety, onboarding our new team members in aligning integration plans. At the same time, our acquisition pipeline remains very strong, and we have our number of tuck-in opportunities in later stages that fit well within our existing markets. Overall, we feel very good about our execution year-to-date, and we believe we have a solid outlook for the remainder of the year, including adjusted free cash flow growth of roughly 14% at the midpoint of guidance.

Our business proved its resiliency in the quarter as we beat our budget, expanded margins by 65 basis points in the base business and fully recovered rapidly rising fuel costs. I want to thank our employees for their continued focus on safety, service and execution. And with that, I'll turn it over to Brad to walk through the financials in more detail.

Bradford Helgeson: Thanks, Ned, and good morning, everyone. Revenues in the first quarter were $457.3 million, up $40.2 million, 9.6% year-over-year with $23.9 million from acquisitions, including rollover and $16.2 million from same-store growth or 3.9%. Solid waste revenues were up 10% year-over-year, with price up 5.1% and volume down 2.5%. Within solid waste, price in the collection line of business was up 5.3% in the quarter, led by 6.5% price at roll-off and 6% price in front load commercial. As a reminder, our reported price figure represents realized price net of rollbacks, not gross price increases and is more comparable to what several of our peers report as yield.

Collection volume was down 2.1%, with softer roll-off volumes in particular during a quarter of difficult weather. Price in the full line of business was up 4.7% including 4.3% third-party price at the landfills. Rental volumes overall were up 19,000 tons or 2.3% in the quarter, with internalize volume up 13,000 tons and third-party volume up 6,000 tons. The landfill business is strong coming out of the winter months, and we anticipate improved year-over-year third-party pricing in 2026 of 4% to 5%, consistent with our guidance expectation for 5% price growth overall in the solid waste business.

You'll note that we are providing additional detail in our press release starting this quarter to break out disposal pricing volume between landfills and transfer stations. These metrics transfer stations give visibility to disposal market trends generally across our footprint, but not represent significant EBITDA contribution on a line of business basis in the same way that landfills do. Resource Solutions revenues were up 8% year-over-year with recycling and other processing revenue down 2.7%, impacted by lower commodity prices and national accounts up 20.7%. Within Resource Solutions processing operations, our average recycled commodity revenue per ton was down 22% year-over-year though the market has stabilized, and we expect the negative year-over-year comparisons to moderate as we move through the year.

Notwithstanding market pressures, our contract structures share this risk with our customers by adjusting tip fees in down markets, so the net impact of lower commodity prices on our revenue was only about $1 million. Note that this full picture is not reflected in our processing price statistic because further offset is generated by our floating SRA fee, which shares risk with our collection customers at the curve and has passed back to the recycling facilities intercompany. Processing volume and revenue terms was up 6%. National Accounts continues to grow nicely with volume growth of 11.2% and price of 4.4%. It's worth noting the contribution of national accounts to our overall collection business.

As I mentioned, we reported a volume decline in third-party collection revenue in our solid waste business in the quarter, but this does not reflect the work that we do to service our national account sales with our own trucks, which is intercompany. Including this new business coming via national accounts, we would have added 1% to the collection volume statistic for the Solid Waste segment. We generated $3.6 million in additional revenue in the quarter from higher fees, including our floating fee programs for recycled commodity and fuel risk. As Ned mentioned, we successfully covered all of the increase in fuel costs in the quarter with minimal lag as diesel prices rose quickly.

Adjusted EBITDA was $97.1 million in the quarter, up $10.7 million or 12.3% year-over-year with $4.4 million of contribution from acquisitions, including rollover and over 7% organic growth. Adjusted EBITDA margin was 21.2% in the quarter, up approximately 50 basis points year-over-year overall. Bridging the year-over-year change in adjusted EBITDA margin, new acquisitions contributing at lower initial EBITDA margins than our overall business, diluted margins by 15 basis points in the quarter. The base business, excluding new acquisitions completed in the past 12 months, expanded margins on a same-store basis by 65 basis points. Recall, the privately held businesses that we acquire typically operate at lower margins, which can create short-term margin dilution.

As we integrate these businesses, capture synergies and apply our operating model, they become margin expansion opportunities over time, creating a regenerative benefit as we continue to execute on our acquisition strategy. Cost of operations were $308.9 million in the quarter, up $28.5 million year-over-year, with $17.2 million of the increase from acquisitions and $11.3 million in the base business including $1.9 million from higher fuel costs, which we covered with our fuel recovery program. General and administrative costs were $58.1 million in the quarter, up $1.6 million year-over-year.

As I said last quarter, 2026 will be a pivotal year as we laid the groundwork with better systems and process for becoming more efficient in our back office and generating better scale as we continue to grow transitioning to lower G&A as a percentage of revenue beginning in 2027. Depreciation and amortization costs were up $6.5 million year-over-year with $5 million resulting from acquisition activity in the past 12 months, including the amortization of acquired intangibles. Adjusted net income was $12.8 million in the quarter or $0.20 per diluted share, up $0.6 million and $0.01 per share.

GAAP net income was lower by $0.7 million in the quarter on higher acquisition expenses and additional costs associated with the organics facility closure in the quarter. Net cash provided by operating activities was $62.3 million in the quarter, up $12.1 million year-over-year or 24%, driven by EBITDA growth. DSO was 34 days at March 31. Adjusted free cash flow was $30.7 million, up 5% year-over-year.. Capital expenditures were $50 million, down $5.5 million year-over-year with $9.2 million of upfront investment in recent acquisitions. As of March 31, we had $1.16 billion of debt and $127 million of cash with our consolidated net leverage ratio for purposes of our bank comes at 2.29x.

On a pro forma basis for the acquisitions closed on April 1, including Star Waste, our leverage ticked up to approximately 2.75. We still have approximately $500 million in available liquidity, which will enable us to be opportunistic in continuing to execute on our growth strategy and robust acquisition pipeline. As laid out in our press release yesterday, we updated financial guidance for 2026 to reflect acquisitions closed to date.

We increased guidance for revenue to a range of $2.06 billion to $2.08 billion an increase of $90 million, adjusted EBITDA to a range of $473 million to $483 million, an increase of $18 million and adjusted free cash flow to a range of $200 million to $210 million, an increase of $5 million. As a reminder, we completed the acquisition of Mountain State Waste on January 1 and it was included in our original guidance for the full year. We completed three more acquisitions, including Star Waste on April 1, so this guidance revision reflects approximately $120 million of new annualized revenue for 9 months of the year.

Guidance further assumes adjusted EBITDA margins of approximately 20% and adjusted free cash flow with a typical conversion from EBITDA reflecting the incremental impact on net interest costs as we finance the transaction entirely with cash on hand and borrowing on our revolver. We have not yet increased our guidance for the base business after the first quarter. However, we are well positioned relative to our internal plan, and we'll reevaluate guidance in future quarters. With that, operator, would you please open the line for Q&A.

Operator: [Operator Instructions] And our first question comes from the line of Adam Bubes of Goldman Sachs.

Adam Bubes: I think you spoke about $30 million of cost reduction over 3 years between G&A and Mid-Atlantic synergies. I think that translates to something like 50 basis points of additional annual average margin expansion. I know there's always moving pieces and unanticipated bad guys. But all else equal, should we be thinking about a period of outsized margin expansion over the next couple ofyears?

Bradford Helgeson: It's Brad. Yes, I think you should. We've always talked about over time. And as you said, there are puts and takes in any given quarter or year. But, generally, we like to get 50 basis points of recurring margin expansion in the base business over time. Given the, I'll call it, pent-up synergy opportunity in the Mid-Atlantic, it's been delayed by certain factors and the opportunities we see to start to get to the G&A line as a percentage of revenue in a way that the company hasn't really been able to before. We do see an above brand margin improvement opportunity over the next 2 to 3 years, I think that's a fair assumption.

Adam Bubes: Great. And then you recently remarked, I think that the closure on Ontario could work out to be EBITDA neutral. Can you just talk about the moving pieces there? Presumably the closure could result in lost external tons and maybe longer transportation distances, but I think there are some offsets. So can you just help us think through the different moving pieces?

Ned Coletta: Yes, sure. And we'll work on additional information on this over the next several years. But right now, we plan to close the Ontario landfill in December 31, 2028. And as you're aware, we've been working on two important permit increases in New York for a number of years going on 5 to 6 years now. And the most important, Thailand, where we're moving the tonnage up from 460,000 tons to 1 million tons a year. Ontario does roughly 750,000 to 800,000 tons a year. Mainly MSW, but there are C&D volumes that go into the site.

So we will look as Ontario's winding down, we will look to shift volumes that were historically going into Ontario to both Hakes and Hyland and more and more of them into Hyland over that time period. And what's really important to note here is Ontario is our most expensive aerospace in the company to build and operate each year. And Hakes and Hyland represents some of the least expensive to build and operate each year. So we'll have it in capital efficiency, we'll have operating efficiency, and as you can do the simple math, it doesn't track ton per ton. But as we look at it from an EBITDA standpoint, we should be pretty neutral during that period.

On an operating income basis, we'll actually come out the other side with a benefit, it will improve both our operating income and net income as we close Ontario.

Adam Bubes: Great. And then last one for me. Can you just provide an update on where we are along the landfill gas program? I know you're not putting up dollars, but could still be a nice royalty stream. How are you thinking about the timing of the ramp there?

Ned Coletta: Yes. This has been an interesting journey. So the first thing to note, I think everyone on the line notices, but we should reinforce is that we chose many years ago to not develop and invest in RNG facilities ourselves. So we've chosen partners through selection processes to develop these sites and they've invested all of the capital to develop each of the sites and bring them online. We've had mixed results, frankly. It's taken far longer for these developers to develop projects and come online successfully. And it's frankly a bit of complexity as well.

As you know, managing the landfill and managing gas at the landfill appropriately within permit compliance doesn't always align with creating the best pipeline quality of gas. So we have four projects online today. We have our project at Juniper Ridge Maine, which is an RKMBP project. We have our project at North Country in New Hampshire. It's a Viridi project. And then we have two new projects that came online in Q1, both with Waga at our Chemung and Hyland landfills. And they're all kind of in shakedown stage right now, and they're generating -- we expect this year several million dollars of EBITDA from overall the portfolio of these assets.

There's a wide range of outcomes, and we'll be watching very closely over the next quarter or 2 quarters and getting additional information out to the Street. The Waga projects, in particular, appear to be operating very well in these early shakedown stages, but I think we're a little early to start calling the exact production levels of each of these. Just to give you a sense, like we're running 25,000 MMBtus a month at Chemung, Hyland, North Country right now in the shakedown phase, just to give you a sense of scale.

Operator: Our next question comes from the line of Trevor Romeo of William Blair.

Trevor Romeo: I wanted to ask maybe one or two on Star Waste. So it sounds like a good deal. I guess, $100 million of revenue, but how should we think about the current margin profile for that business? And then I think they had done something like 8 acquisitions in the last 4 years themselves. So what are your thoughts on where they are from an operating efficiency perspective and how they kind of integrated the deals that they had done?

Bradford Helgeson: Yes. Trevor, it's Brad. So our assumption for guidance purposes and external conversation is about 20% EBITDA margin. I mean it's broadly consistent with other acquisitions that we've acquired I think like with most or all of our acquisitions, we're going to seek to get those margins up materially over time. Given in particular, where Star fits into our existing business in the Greater Boston area, growth opportunities that unlocks for us, particularly on the south side of Boston, we're actually really bullish on the opportunity to improve that business within the Casella footprint over time.

Ned Coletta: And on your integration point, the entrepreneur who funded -- founded Star [indiscernible] really did things the right way, hit a great team. They invested heavily in systems and process and they were integrating these small tuck-ins as they went along. And we bought a great company who's operating extremely well, has a strong management team, as I said, is a nice platform for growth into the future. This is not a fix it one. Sometimes you buy companies that we spend quite a bit of time working on fixing things and having to overinvest to get them to a certain standard, this is backed by a great PE firm Clairvest, that is putting some excellent capital into it.

As an example, they just completed a great retrofit to their construction and demo processing facility, transfer station and processing facility and had state-of-the-art technology in the facility. So we're buying something that's a very nice platform and integrates well with our business.

Bradford Helgeson: Yes. And you mentioned recent acquisitions the company has made something that's somewhat unique with this acquisition is they have some potential future acquisitions in their pipeline that will flow into our efforts going forward.

Trevor Romeo: That's interesting. Okay. And maybe just a quick follow-up on Star again. I think you mentioned, I think the transfer station coming on in McKean could take volumes from Massachusetts now. So just in terms of kind of the disposal and maybe internalization opportunities with this deal, anything there or just maybe anything broadly on the synergy opportunities you could point out?

Ned Coletta: Yes. So in this first phase, we're looking at it as more of how do our trucks, Casella's trucks pre-acquisition route to their transfer station. can we take advantage of that from a route synergy standpoint. Initially, the materials from that transfer station will continue to go to third-party sites. They have attractive contracts with several third-party disposal sites. We'll look at that long term to see if there's an internalization opportunity. But that's not one of the first phases of synergy. If we're able to advance permits in New Hampshire over the next several years and develop additional landfill capacity in New Hampshire, it would be very strong vertical integration there.

Trevor Romeo: Yes. Okay. Great. If you don't mind, maybe one more quick one. Just on the national accounts business because I think obviously very strong growth there. I think that business has a sort of a margin mix impact. So if you think about that growing, call it, double the rate of the company. Maybe you could just remind us kind of the incremental margins on that business and whether that makes the 65 basis points of kind of base business margin you're talking about, maybe we keep them better on an underlying basis?

Bradford Helgeson: Yes, it's a good question. So we love that business. Obviously, as you alluded to, the growth profile, it's very little capital investment. It helps to drive business back across our solid waste segment to the extent that there are customers that are coming in to the national account sales effort that are serviced, ultimately by our own trucks. That's the kind of work that we love. Really, the solutions-based sales effort aligns really well with Casella and our strengths and our focus areas. So it's a great business. The only footnote, I guess, from a financial standpoint is low market because it's low capital and the nature of the business.

So on an EBITDA margin basis, it's mid-single digits, mid to upper single-digit EBITDA margin. So if you were to pull national accounts out that would be accretive to our EBITDA margin. But obviously, there are many other factors that lead us to think this is a great business that we want to push forward.

Operator: Our next question comes from the line of Tyler Brown of Raymond James.

Tyler Brown: I want to come back to the 4.3% landfill price number. I think that number last quarter was 2.5%. So that's a really nice acceleration. But can you kind of talk about what drove that acceleration? Was the issue more about last quarter being a bit lower? Or was it a more concerted effort this quarter? Just any color on that metric specifically?

Ned Coletta: Yes. So we're working hard to get more process and discipline around our sales efforts up and down the company and great new hire and Chris Rains. And about 1.5 years ago, our longtime lead of landfill sales stepped away, and that responsibility was kind of absorbed across a couple of other places. And we frankly didn't have enough management of pipeline, quality of revenue and what we're doing. And we rebuilt that through 2025, and we're working to further advance it now under Chris' leadership. So I think it's one part like -- we didn't get the job done as well as we could have gone it done. And two, frankly, for a little bit there.

There's a one rail move that was ramping up out of New Jersey that was putting a little downward pressure on the overall Northeastern environment, that rail move is full now as a third-party company is moving waste out of New Jersey out to Ohio really don't have a lot of excess capacity in that system. So they never directly took one of our customers, but generally probably a little bit of pressure on the overall environment as well.

Tyler Brown: Okay. Okay. That's helpful. And then quickly on Star. Just to be clear, they are not or at least not materially in heavily flow-controlled markets tied to the Massachusetts burner. So internalization could be an opportunity long term? I just want to understand that.

Ned Coletta: Yes. There is no flow control in those markets. But as with any major metropolitan market, traffic matters in the positioning of assets matter, so as Brad said earlier, we're really strong today, Boston, Boston North to the West, stars very strong to the south from the positioning of their hauling businesses. And it really gives us the opportunity to grow in those markets. We've had the strongest organic collection growth over the last decade in the Greater Boston market. And you kind of think about this from our sustainability, our resource solutions approach, the integration with our state-of-the-art recycling facility in that market, we've sold a lot of really premier customers, and we've grown share of wallet.

And we think we can kind of expand upon the success Star has had in a similar way over the next coming years.

Tyler Brown: Okay. Great. And then Brad, just to help us on Q2 margins. So I know that there's a normal step-up because it kind of unthaw, if you will, up in the Northeast. Revenue kind of takes a step up sequentially. But then you've got acquisitions that are dilutive by nature, fuel is dilutive by nature. Can you just give us any color on how we should think about margins either sequentially or year-over-year, just to kind of get us in the right spot.

Bradford Helgeson: Yes. So as you pointed out, sequentially, margins are much better in the second quarter and then advancing into the third quarter in our business, particularly given our geography. On a year-over-year basis, I mean you really mentioned the two main factors that we'll be dealing with this second quarter, which is fuel surcharges. I mean we'll see where fuel goes over the second quarter, but higher fuel costs that are covered by our recovery fees or, of course, margin dilutive and the acquisitions. So we'll see how the acquisitions impact things.

Another point I would make on the base business, just thinking about your modeling quarter-over-quarter is the synergies in the Mid-Atlantic and also actually the G&A savings that Ned had mentioned earlier, those will be more back-end loaded. So we'll start to see, as we've completed the consolidation of the Mid-Atlantic onto our system. We're going to start to see those benefits in the second quarter of the synergy realization, but that's really a Q3 and Q4 story more so -- and then the convenience fees that Ned mentioned are entirely back-end loaded. So Q2, we'll see where we end up. There are some headwinds as you mentioned.

But our focus is really on frankly, the third quarter and the fourth quarter for this year and then, of course, going into 2027.

Tyler Brown: Right. But if your kind of updated guidance is flattish on the margin line with the dilution. So is it -- is it crazy to think it could be slightly down in Q2 on a year-over-year basis, up sequentially though?

Bradford Helgeson: It's a really good question. That's not crazy to think that way.

Ned Coletta: But to be clear, the base business will be the positive acquisitions could weigh on it slightly negative. We weren't able to get fully under the hood on [ Star Waste ] and a [ DOJ ] process on the customers to wrap all of those things until really day 1, Tyler. We're digging in now and really looking at the progression of what we can do there. So as we said, probably little more overhang on margins of 20-ish percent to start with and look to improve from there.

Tyler Brown: Okay. I just want to make sure I had that. And then just last one, if I can, Ned. This is a bit of a periphery question, but I'm kind of curious about it. So I think in Massachusetts, there are a couple of larger landfills -- sorry, ash landfills that are set to close in coming years that are kind of related to some of the burners. How do you think that's going to play? And what do you think and how will they deal with that excess ash?

Ned Coletta: Yes. So it needs to go somewhere and it needs to go to Subtitle D landfill. So that will take up capacity in the marketplace is something that really hasn't been discussed. I can't get into a lot of details there, but we believe there's some real value working with some of our peers across the waste-to-energy business on certain of those streams, and it's an area that we've been actively engaged, and we think there's some value creation over time. And hopefully, we'll have more to report. But it's a great point. I think the easiest part of the point is those landfills are closing or filling up.

And that ash, the further you move it, the more expensive it gets, and we've got some great in-market solutions. Our McKean rail facility actually fits very, very well with some of the burn plants as well.

Bradford Helgeson: And Tyler, you mentioned Massachusetts landfills, but there's -- as a reminder, there's also a lot of ash that goes into the Brookhaven landfill on Long Island, which is going to be closing ash over the next few years.

Ned Coletta: Yes, that's as much as 400,000 tons a year that goes into that landfill today. And the Brookhaven landfill, that caused a little up when it was closing from a C&D standpoint, but it's still open for ash through the next 2 years and to be closed at that point in time. And there's still -- and we talk about this sometimes, it ebbs and flows. As we look out over the next 10 years, there's still a lot of disposals coming offline in the Northeast. And as you pointed out, some of these sites are just taking ash.

But at any point in time, you could go through a year period of time where you have a little bit more capacity like we did in 2025 of rail, then that fills up, people look to the next phase of sites closing. So I think the long-term horizon is still the same as we've been talking about for years. There's a supply-demand imbalance in these markets and our in-market capacity is very valuable and we'll continue to have pricing power.

Operator: Our next question comes from the line of Jim Schumm of TD Cowen.

James Schumm: So that's actually my question is I wanted you guys to address a little bit more the supply/demand situation in the Northeast because I think a lot of investors are solely focused on rail or hearing rail is moving waste out and maybe you look at some of the landfill pricing recently, which is sub-5%, which maybe is not that impressive to some folks. And there's a concern that landfill pricing is going to be depressed longer term. So I just wanted to get your views. We've talked about you've talked about a couple of moving parts. But like what is your longer-term view on your Northeast landfill pricing.

From time to time, you are going to see these rail projects move waste out. But when you guys look at the closures, what does that mean for pricing in 2027, 2028, 2029, can you get -- is it more mid-single digits? Can you get upper single digits at some point? Or like how are you guys thinking about that?

Ned Coletta: Yes. Thanks for the question. So if we look at the last decade plus, pricing at the landfills has generally been mid-single digits in its range from a couple of lows for us and in 2025, the highs as much as 8% or 9% during that time period. And it really depends. I mean, you need to look at the book of business. So some of our outside years also have a relationship with big large contracts that might be renewing in those periods, and there might be step-ups in those contracts. So they have a 5-year contract and the market continues to tighten over the 5 years, you might get some of those outsized pricing years around those resets.

But generally, we're kind of stacking up that mid-single digits. And I think we feel really confident that if we can price at those levels, we'll have a great economic outcome and returns for shareholders. I said it to Tyler a minute ago, and I feel the same way. If you look at all the sites that we'll be closing over the next decade, there's not enough space for all of this waste in the marketplace. So then you start to look at what are the alternatives. The best alternatives are in market, right, where you can use a truck, move the waste via long-haul trough to a landfill or to a waste-to-energy plant.

The more expensive solution both capital and operating costs is to move it via rail. It's far more expensive, but it's the only viable option as in-market capacity comes out. So we see that as a tailwind for us over the next number of years as well. Sites will be closing. We've got a great outlook on capacity. We have over 25 years at our sites today. We've got some important expansions in progress -- process that are working well, and we expect to land those in the next year. And we look at the backdrop, which should be positive over the next decade.

James Schumm: Okay. Great. And then I just wanted to ask you another question I get from investors a lot is you have this network of landfills in the Northeast and then you make this platform acquisition into the Mid-Atlantic and then you're growing west or southeast from there. But you don't really have any landfills in this -- in this area. So you kind of McKean in Pennsylvania, but what is the -- how should people think about your collection margins, what is the sort of the ultimate goal? I mean can you earn 30% margins without a landfill in Mid-Atlantic geography? Or is it more like should we be thinking more like 25%?

And I know that you guys have said it's closer to 20% right now, and let's think about 25%, I think, over the next couple of years. But longer term, is there upside to that 25% number?

Ned Coletta: Yes. So one of the things that's important to note is we use market-based pricing at all of our landfill or recycling facilities or transfer stations. So we charge our self market-based rates. So if you look at our collection business, say, in the Northeast, where it's vertically integrated, the margins produced by that collection business are apples-to-apples to Mid-Atlantic because we're charging intercompany market-based rates. And we generally generate about 30% EBITDA margins on our collection line of business. In the Mid-Atlantic today, our margins are roughly 20%. This is not because we don't have landfills. This is because we have work to do. This is a business that the quality of the truck fleet was lacking.

There wasn't enough density in certain parts, quality of revenue. And we've got strategies around each of these points, and we've laid out a plan for the next 3 years as we put more automated trucks in the fleet, collapse routes to add about $15 million of EBITDA to that market, which will translate to mid-20% margins. Having landfills is a great thing and having the vertical integration. But what also is important is having the right transfer assets. So you can get your trucks off the road, consolidate waste and then be able to look to multiple disposal options.

And much of our focus right now in the Mid-Atlantic is either on buying or developing the right transfer assets in that marketplace that will allow us to successfully continue to grow. And we've had some great progress here. We've bought an excellent transfer station last year in the third quarter. We're working on some additional opportunities. We have a new recycling facility we just bought on April 1. We're working on developing another recycling facility ourselves. So you'll look to see that margin progression come up and we do look at over time is apples-to-apples, and we'll be able to have the trajectory, hopefully, over the number of years to get the same 30% margin level.

Bradford Helgeson: Yes. And I just sort of add on to that is not air market is created equal, of course, from a disposal perspective. So having the security of disposal capacity in our markets in New England, let's say, upstate New York is incredibly strategically valuable. You contrast that with the Mid-Atlantic Eastern Pennsylvania will be a great example, there's plenty of landfill capacity down there. We like the landfill business. It would help margins. We wouldn't turn down the opportunity to own landfill there, but it's not a strategic imperative.

I think the focus, as Ned said, the focus down there is really going to be building out our transfer station network so that we can most efficiently access the disposal sites that are down there.

Operator: Our next question is Tami Zakaria of JPMorgan.

Tami Zakaria: Congrats on the nice results. We've seen the CPI tick up lately. So can you remind us how any acceleration in the headline CPI impacts your pricing maybe on the entire parts of the portfolio? And is there a typical lag?

Bradford Helgeson: Yes. So, hey, Tami, it's Brad. It does impact our pricing on some of our business. most notably, municipal contracts, that direct relationship between the contract pricing and the underlying inflation index. But as a reminder, 75% of our collection business is open market, meaning we just have service agreements directly with customers where pricing is wherever we want to set it and whatever the market will bear and whatever is appropriate given our underlying cost inflation. So I would say, directionally, it impacts us, but actually not necessarily directly because we have total flexibility to react to the circumstances.

Ned Coletta: But I think higher CPI prints in a certain way to do allow maybe a bit more pricing spread. But as Brad said, 70%, 75% of our book of business, we can price it well, and we've shown that amazing flexibility over time. Last year, we talked about this. We saw our price/cost spread narrow more than we wanted to in the first half of the year. And we came out on a select group of customers with a second set of price increases in the last half of the year. And we thought that was an important thing to do to get that spread back to where we believe it should be. So we're trying to be really dynamic.

But of course, the CPI print is something we're always looking at, but we're also looking at our own cost profile where we need to be.

Operator: Our next question comes from the line of Shlomo Rosenbaum of Stifel.

Shlomo Rosenbaum: Net, it was just echoing that it was really good to see that third-party landfill pricing stepping back up. And you talked about two factors, one of your own, just putting in more effort and ensuring appropriate pricing and getting good business. And the other one was rail. Just in terms of the impact over the last few quarters and then the turnaround, would you say that it was more a matter of turning around because the rail -- the competitor just kind of filled up already over there?

And the other aspect I want to just dig a little bit into is, do you have a sense in terms of the comparison between the rail pricing and what you're getting at your own kind of transfer stations and tipping at the landfills? Just at what point would it make more sense for someone else to add a lot more capital and just go ahead and add more capacity through rail. I guess what I'm trying to just get at is to understand the risk of kind of something just kind of popping up again? Or is it something that is unlikely because the amount of capital would be very expensive.

And right now, given the comparability of cost is not worth it?

Ned Coletta: Yes. Great questions. So I'll start off with your first question around the pricing in the quarter and the pricing trajectory at our landfills. As I mentioned earlier, I think it was one part kind of pipeline management and quality of revenue we are seeking and managing the customer base. And one part looking at certain rail roof that was ramping up out of New Jersey over the last several years that they gave some negative pricing pressure to the overall marketplace. If you look at -- there's only a few landfills that except railways from the Northeast or just railways in general.

And a few of them have some excess capacity, but they're very expensive to get to, and it takes a long time in a lot of rail exchanges. A few of them are a bit closer to the market and more reasonably cost. And if we look at both sides of that equation, one, the capacity to actually move more railcars each day out of certain transfer stations, and two, the actual capacity at these landfills against their daily permits, you're seeing both sides that have constraint today. And the last factor, and we heard about one of our competitors talked about this on their earnings call last week.

Generally, I would say the major companies who have rail service landfills, including Casella, we're not looking at these as merchant sites where we're looking to get the lowest cost waste. We're looking at these as long-term defensive strategies to take care of our own customers. And we talked -- we heard this one company talk about how the vast majority of their rail move was really tied to their own tons in New York, state in New York City and looking to gain certainty there of cost and certainty of disposal. And Casella looks at through the same lens and I know others do as well, where this isn't a merchant play to seek the bottom of the market.

This is very capital intensive, very costly move to material. So coming back to your point, this one competitor is ramping up capacity. They're at capacity today on the transfer side forming the trains and they're generally at capacity at the landfill side. So they're going to look to returns and pricing quality. They don't have room for a lot more tons. So I think through periods like this, what we do is we look at returns on our sites, and we're laser-focused on taking the right materials in at the right price and long-term return profiles because the scarcity is real, and you can't replicate any of these assets.

Shlomo Rosenbaum: Okay. Great. Then I just wanted a little bit more tactically in the quarter, you drove that large EBITDA margin outperformance. And even though in the beginning of the year, you were talking about there being more margin expansion in the second half of the year. And really drove pretty good margin expansion this quarter. And I was wondering what went better than expected just from an operational perspective, like what surprised you? Or where were you able to really execute better than you thought you would?

Bradford Helgeson: One example of where we did a little bit better than we expected and better year-over-year was on the maintenance side. So in the Mid-Atlantic, where, as Ned was talking about, where just on the cusp of completing our system integration and...

Ned Coletta: Next week, Brad. Next week.

Bradford Helgeson: Next week. There you go. To be in a position to execute on our synergy plan. But we've also -- as we've been working on that, we've received delivery of a large number of trucks into that market. And so the ongoing maintenance costs, equipment rental for us to keep trucks on the road to keep customer service. We no longer have a need for those. So that's just one example, not necessarily the old story, but that's been a nice tailwind for us.

Shlomo Rosenbaum: Okay. If I could just squeeze one more in. Would you mind just going over the volumes in terms of year-over-year growth along the various lines that are kind of cyclical. So the special ways to see indeed, the temporary poles, just the things that people are looking at to see where things are going cyclically.

Bradford Helgeson: Yes. So on the -- first off, on the collection side, the portion of our collection business that is most cyclically impacted is the roll-off business. The roll-off was down a little over 3% year-over-year. So that's something that we look at and point to for where the economy might be impacting us. In our case, I think it was probably more weather than it was economy, but that's an area we look at. On the landfills, we saw MSW stronger. We saw C&D stronger. C&D would be a potentially economically cyclical volume stream. One area where we did see relative weakness year-over-year, which impacted us on mix was special waste volumes.

So again, that's another area where we don't have perfect knowledge on whether that's weather, whether that's uncertainty given the fact that we're at war and projects not moving forward, hard to know exactly, but that's another area where we may have seen it.

Ned Coletta: Yes. In a particularly cold winter, though, many of those jobs, whether they be infrastructure jobs or the start major construction projects where you're digging out contaminated soils or even just industrial jobs where you're dredging out industrial lagoons and things like that, like they're just not happening at the same pace in the winter and not to blame the weather, but when it gets really cold, you're just not doing that work.

Operator: Our next question comes from the line of Harold Antor of Jefferies.

Harold Antor: This is Harold Antor on for Steph Moore. Just one for me. I guess just on the pricing front, I think you did 5.1% in the quarter and the guide at around 5%. So I guess, typically, 1Q is a high watermark. So I guess, will we expect I guess this implies kind of consistent pricing at these levels for the rest of the year. I guess what's kind of driving that? Do you expect second half pricing to ramp just given improvement in the Mid-Atlantic? Anything there? And I guess just on -- could you remind us how churn performed in the quarter? I think the industry has been seeing better churn metrics in the quarter.

So I just wanted to get a sense for what churn around for you guys and how that -- and if you're doing -- making any investments on the tech side that's improving that?

Bradford Helgeson: Yes. Hey, Harold, it's Brad. So we feel pretty good about the trend of pricing as we look forward to the end of the year. I guess a couple of points to highlight. One, and really, this is really a function of the price number that we report. We're not reporting the price increases that we go out with and then see that number erode as prices are rolled back over the course of the year. I mean that's a net number of rollbacks. So it's not one that all else being equal, should deteriorate over the course of the year. The other important point I think for us right now is the Mid-Atlantic.

So given where we are with systems consolidation, we've had very limited ability to assess pricing across the customer base, assess profitability and implement our pricing programs with the intelligence and specificity that we do in the rest of our business. So we would expect that to be a consistent tailwind over the course of the second half of this year and into next year on pricing.

As far as technology and Ned hinted at this in his prepared remarks, we're actually on the cusp of rolling out an app and really a different way of accessing the customer and meeting the customer where they want to do business, where they can pick up an app and sign up for service rather than picking up the phone.

Ned Coletta: Yes. In our digital customer engagement, e-commerce activities are right now across about 60% of our markets will be across 100% in the third quarter. And this is actually our fastest-growing sales channel, as you can imagine, and we're rejiggering our back office, our sales alignment to support the growth as well.

Operator: Our next question comes from the line of William Grippin of Barclays.

William Grippin: Great. I appreciate you squeezing me in. Just one quick one here. But given the Star Waste acquisition on April 1, and that was kind of a chunkier deal, could you just elaborate a little bit on how you're thinking about maybe balancing leverage versus further tuck-in M&A over the balance of the year and just your capacity to do that following Star Waste.

Bradford Helgeson: Yes. I mentioned in the prepared remarks that pro forma for Star and the other two acquisitions that we closed on April 1, we're at about 2.75 leverage. That has room to grow. We don't aspire to be highly levered. I think a key tenet of our capital allocation strategy and capital strategy generally has been to maintain moderate leverage to stay nimble and for risk management purposes. That all being said, at [ 275 ], we do have capacity to move down a bit higher. And for immediate quickly emerging opportunities, we have about $500 million of available liquidity. So we're not done. We're looking at a lot of attractive opportunities.

Our pipeline is healthy, and we'll see what we can cross over the course of the year.

Operator: I'm showing no further questions at this time. I will now turn it back to Ned Coletta for closing remarks.

Ned Coletta: Thank you, everyone, for joining us today. We look forward to speaking with you again in early August to discuss our second quarter results. Everyone, have a wonderful day and weekend. Thank you.

Operator: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.