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

Brad Helgeson: One additional point there. It’s the soil on top of a synthetic cap that slid down a slope, basically. So there was nothing exposed inside the landfill, no damage to the landfill itself, but it needed to be pulled down and then rebuilt.

Tyler Brown: Okay. No lingering cost?

John Casella: We don’t believe so at this point in time. That’s correct. We’re doing more evaluation, Tyler. But at this point in time, we don’t believe there’ll be any additional costs or any additional work that we’re going to need to do.

Tyler Brown: Okay. Okay, great. And then I got a few — it’s kind of another multi-part question on cash flow. So I think you mentioned that you only have $5 million slated for McKeen. So is that spend basically winding down at this point? Number two, there was a $6 million legal settlement payment that you’re expecting in ’24. What was that? And then three, when does the Southbridge and Potsdam remediation start to sunset? I know that’s a multi-part question. I’m sorry about that. But those are the questions.

Ned Coletta: So in regards to McKean, we are nearly wrapped with this first phase. We’ve put in almost a mile worth of spur track switches, a gantry crane offload infrastructure to take off containerized solid waste and containerized soils and sludges. So we’re building out the infrastructure to be able to turn on facility up to 5,000 tons a day to 6,000 tons a day. As I said earlier, we don’t expect to ramp rapidly. This is long-term risk management for the Northeast, as we look at the risk of other sites potentially closing over time. We’ll look to kind of slowly ramp this up. It’s not going to be material in our numbers in 2024. The $5 million kind of stepping into ’24 is just some of the remaining track work, a little bit more switch work, some of the heavy equipment showing up, articulated trucks with rail systems to take the containers up onto the working face of the landfill.

So it’s mainly wrapped up. If we were to ever invest to take construction demo waste at the landfill, we would have additional investments. At this point in time, it’s not really in the near-term game plan for our strategy at the site. The $6 million charge that we took back in, I think, the second quarter or — second quarter in relation to the fair labor standards action — class action lawsuit, that money we expect to go out the door in the first quarter of 2024. And what happened here was there was a class action lawyer who contested that certain of our employees worked through their DOT mandated lunch breaks. We had clear policies, clear standards in the organization that, that wasn’t supposed to ever happen. Our employees do truly need to take lunch breaks.

But in retrospect, our documentation, our systems maybe weren’t as great as they could have been for court of law. So we decided to settle with such attorney. And much of that money will go to our employees, our drivers, who were part of the class. So we’ve done a lot of introspection and change processes and procedures to ensure that our people truly are taking those breaks. And we have the right documentation placed into the future. So it’s a culmination of…

John Casella: Yes. And it’s also — Tyler, it’s also consistent. The class action attorneys really have targeted the industry.

Ned Coletta: Yes. This is not a Casella one-off situation, John. You’re right. So the Potsdam remediation is complete. There’s some kind of continuous monitoring into the future. But that Superfund site was fully cleaned up. The other joint parties made investments as well. We’re really at the end of that. Southbridge, you know, painfully, we’ve been working on the final closure approval with the state of Massachusetts for several of years now. The site’s in great shape. We’re ready to enter the post-closure phase. We’ve done vast majority of investment at the site to get it to that phase and we just haven’t gotten that final regulatory approval and we’re working hard to get that, Tyler.

Tyler Brown: Okay, great. Yes. Thank you so much. I know that was a multi-part question. Okay, I want to turn to New York. So I know you don’t haul in New York, but I’m just curious if you have any thoughts on the recent zone awards there. Do you think that that impacts you at all? And I know that while you don’t and you likely won’t haul in that market, would it ever make sense to possibly open rail access transfer station in that market to maybe help clear some of those tons to McKeen?