Casella Waste Systems, Inc. (CWST) Q1 2010 Earnings Report, Transcript and Summary

Good day everyone, and welcome to the Casella Waste Systems first quarter fiscal year 2010 conference call. Today’s call is being recorded. At this time I’d like to turn the conference over to Mr. Joe Fusco. Please go ahead, sir.

Thank you for joining us this morning and welcome. With us today are John Casella, Chairman and Chief Executive Officer of Casella Waste Systems; Paul Larkin, our President and Chief Operating Officer; John Quinn, our Chief Financial Officer; and Jim Bohlig, our Chief Development Officer. Today we’ll be discussing our fiscal year 2010 first quarter results. These results were released yesterday afternoon. Along with a brief review of these results and an update on the company’s activities and business environment, we’ll be answering your questions as well. But first as you know I must remind everyone that various remarks that we may make about the company’s future expectations, plans and prospects constitute forward-looking statements for the purposes of the SEC’s Safe Harbor provisions. Actual results may differ materially from those indicated by those forward-looking statements as a result of various important factors, including those discussed in our prospectus and other SEC filings. 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 estimates change and therefore you should not rely on those forward-looking statements as representing our views as of any date subsequent to today. 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. A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures is available in the financial tables section of our earnings release which was distributed yesterday afternoon and is available in the Investors section of our website at casella.com. Now I’ll turn it over to John Casella who will begin today’s discussion. John?

Thanks, Joe, and good morning and welcome everyone to our fiscal year 2010 first quarter conference call. I’ll start with a brief strategic summary. John will take us through the numbers. Paul will run through an operating summary and as usual Jim will give an update on development activity. Our business continues to perform well through the economic downturn. The solid waste group is generating strong cash flows and the recycling group is benefiting from a moderate strengthening in commodity prices. Through the first three months of the fiscal year we are tracking well against our fiscal year 2010 guidance ranges. Revenues are slightly lower than planned, with landfill and transfer revenues weaker and recycling revenues stronger. We’re experiencing our normal sequential seasonal revenue growth from the fourth quarter to the first quarter in landfill volumes and roll out pulls, albeit at a lower starting base. Adjusted EBITDA for the quarter was $31.4 million, down from the same quarter last year but again tracking well against our guidance range. As projected, weakness in commodity recycling revenues made up a large part of the year-over-year adjustment and the EBITDA decline. Just as a brief overview on the quarter, we continued to make progress towards our goals of improving free cash flow. Free cash flow for the quarter was $5.1 million, up $12.7 million from the same quarter last year. In early July we executed a favorable debt refinancing in a very challenging market. In spite of the challenges from the market perspective, we received strong demand for both our notes offering as well as our term loan B because of the efforts obviously to bring in from an operating standpoint our fourth quarter has significant improvement over our third quarter. But operating efforts made by the entire company really boded well…

Thank you, John. Good morning. Before I begin I’d like to go over a few definitional changes we made in the Form 8-K and yesterday’s press release. I believe these changes will help investors to better understand our results and to allow for clearer comparisons across the industry and our peers. The first item is the notion of adjusted EBITDA. During our recent road show we found ourselves explaining to investors that accretion and depletion expense associated with our landfill operating leases are components of our cost of operations that are very similar to depreciation and amortization and need to be added back when determining cash flows. We also noted that some other companies in the industry add back accretion, although I believe that we may be the only company incurring depletion on landfill operating leases. So to make the numbers easier to understand we will be referring to adjusted EBITDA and will regularly adjust for these two items. In addition, if there are any unusual or non-recurring items in the future we may include those in the definition, but for this quarter we’re not calling out anything in that vein. In our press release yesterday we adjusted our guidance for this new definition. The numbers are consistent with the previous guidance so should not be considered a revision. A couple of other items of note. We’re using the definition of free cash flow that we discussed last quarter, namely cash flow from operations less capital expenditures, less payments from operating leases and assets acquired through financing leases. We’ve also broken up the revenue streams by our major line of businesses including the amount of recycling revenue that was included in the solid waste operations. In addition, we’ve broken out the pricing between core price which includes environmental fees from…

Thanks, John. Good morning. As mentioned, total company revenues declined 14% with solid waste revenues declining 12% year-over-year. On a tonnage basis, landfill volumes were down 8%. Landfill volumes increased sequentially from Q4 ’09 and were in line with normal seasonal trends. Roll off volumes remain challenging with continued weakness in the construction sector. We experienced a 14% decline year-over-year in pulls with weakness across all markets. Roll off pulls were also up sequentially from the fourth quarter but again in line with normal seasonal trends. Landfill pricing was flat in our central region and down year-over-year in our eastern and western regions, driven mainly by weak seen de-pricing and continued shifts in material mix to higher percentages of soils and beneficially used materials. MSW pricing was flat to slightly up in all regions. 3.2% of the solid waste revenue decline was a result of the reduction in fuel and oil recovery fees, and solid waste price increased 1.8% and has now improved year-over-year for five consecutive quarters. FCR’s revenues declined 28.8% year-over-year, driven mainly by declines in commodity pricing. Cost of operations for the first quarter were $90.6 million or 66.7% of revenues, an increase of 60 basis points as a percent of revenue over last year. We’ve been working to expand our major accounts business line which has high free cash flow but lower margins than the integrated solid waste business. During the quarter, the revenues in major accounts increased by 11.1%. However, this lower margin revenue compressed overall margins by 30 basis points. In addition with lower revenues year-over-year, we lost operating leverage in a number of fixed cost categories such as facilities, insurance, property tax rent and utilities. Solid waste operating margins benefited again this quarter from our continued focus on flexing labor to volumes while…

Thank you, Paul. A couple of quick comments on development issues. As you recall the Southbridge Recycling and Landfill Development Project continues its path forward. As you may recall last year the Board of Health issued a final site assignment determination, allowing us to convert to MSW and expanding ultimately to fill 105,000 tons per year. Both the Board and ourself have been working to overcome a appeal which is now in its final stages. Those appeal hearings were heard in August of 2009 and we believe that we’ll have a final decision on that appeal before the end of the calendar year. Upon that determination which we expect will be favorable, we expect [Mass DP] will issue an MSW permit and we will begin our landfill progression to 405,000 tons per year over the next two or three years in accordance with the Board of Health filings. This is in a market that continues to undergo some landfill removal, particularly at Falls River so we think our development project is timely and we will benefit from it over the next year or two. Second, the company as you may know has been participating with the Governor Baldacci sponsored task force to evaluate alternatives related to the main energy facility located in Biddeford, Maine, including the sale to the city of Biddeford. The task force is expected to report out by year end of this calendar year the results of these discussions and we have agreed to limit our comments to this and to allow the task force to do the speaking on behalf of all the parties. With regards to FCR, I would like to talk a little about commodity prices and some of the points that John and Paul went over. On a year-over-year basis, commodity prices were…

At this point in time, operator, I think we’d like to open it up for questions.

Thank you. (Operator Instructions) Your first question comes from Scott Levine - J.P. Morgan.

I think you characterized in the release and in your comments the seasonal activity or uptick, whatever you want to call it, as normal relative to prior years. I just wanted to confirm that that’s true. And without asking for quarterly guidance, which obviously you don’t give, if you could help us kind of understand if indeed the seasonality is typical. You know, maybe some thoughts with regard to how the quarters should play out. You know, any additional commentary you would be willing to give would be appreciated.

Sure. There’s no question and one of the things that we went back and took the time to really take a look at and understand was in fact did we see the normal seasonal uptick. We compared this seasonal uptick against last year and it’s very consistent in terms of the percentages, in terms of the uptick, although obviously at a much lower level in terms of overall growth revenue. So the answer to the question is yes, we saw our normal seasonal uptick for the quarter. And I think it’s clear that you know obvious it’s tracking as expected as well. Nothing significant either way but its certainly tracking as expected.

Would you characterize that pattern as a pleasant surprise versus what you expected heading into the summer months? Or were you expecting the usual seasonality?

You know to be honest with you I think that we were expecting that we would see some seasonal uptick. The real question obviously is you know we had no idea whether we would or not in the current economic environment. However, we did think that we would see a seasonal uptick and obviously we did, but at much lower volume levels because of the economic reality. We were not surprised to see the seasonal uptick. We expected that we would have some seasonal uptick.

But what you saw relative to your expectations in line [audio impairment].

Yes.

Turning to pricing, you know and positive territory for solid waste pricing which is good, could you comment on the competition, behavior of your third party customers within your various regions and is the easing of fuel prices or stability at a minimum maybe helping the competitive dynamic on the disposal side?

Yes, I think over time it will. I think it has to a degree. I think what we’re really seeing is you know more pressure from the C&D standpoint and MSW pricing flat if you will. I think as Paul indicated in his presentation from an operating standpoint, we also have put ourselves in a position with the new municipal contract to begin to look at our lower priced tonnage going into our, particularly our upstate New York facilities, to start to rationalize some of that lower cost tonnage over time. It will take time, Scott, but I think that the reality of what we’re seeing right now is we continue to see pressure on the C&D side, MSW remains somewhat flat and we’re changing you know but I think we have an opportunity to change the dynamics now with the new municipal contract over time. Again that will take months to see that impact as we’re able to push out the lower priced tonnage that we’re currently handling.

I think in the release as well you mentioned the intermediate term strategy with regard to the de-levering process. Would you help us frame some thoughts around timing here? I think Jim gave some milestones with regards to main energy and the task force there, but help us get a sense with regard to timing and some of the steps that might be first steps with regard to the program other than your free cash flow outlook.

It’s John Quinn speaking. I think one of the first steps, now that we’ve got the financing out of the way, is we’re going to do a review of all of our assets over the next month or so. That will probably take us really through the end of the year before we can start making decisions on that. What we’ll be looking at is where we have assets that are generating cash flow, where we have assets that are using cash and make an evaluation of those as to do we continue to develop them? Is there a payoff at the end? Do we sell them? Are they better in somebody else’s hands? Or do we just shut them down? So that’s the first step. Some of the other assets that we have, we have investments in what I would consider non-EBITDA contributing assets. If the market is right for those and the opportunity presents itself, we would probably rationalize those sometime in the next couple of years before our next major refinancing.

I think that it’s also just from a general perspective, Scott, it’s fair to say that we need to execute at all levels. We need to drive the profitable revenue growth. We need to take those assets that are in the portfolio that we get no credit for from an EBITDA standpoint, look at those assets, go through the asset review as John said and you know over that three to five year period of time we’re not going to be able obviously to de-lever in a 12 month period of time, but we should be able to pretty significantly impact our leverage over the next three years.

Your next question comes from Jonathan Ellis – BAS-ML.

I wanted to just first ask about pricing and you had mentioned the increase in the environmental fee and I know you had done a lot of work to implement some core rate hikes over the last few quarters. And so within that context I’m just trying to understand why you know we’ve seen core pricing trail off here a little bit. And what I mean by that is I think the last few quarters the price growth has been somewhere between 2.5, 3.5% and this quarter reported 1.8%. So can you just help us understand why you may have seen a deceleration in core pricing this quarter?

Sure, Jon, it’s John Quinn. I’ll take a shot and then Paul can add comments if he wants. But in terms of the solid waste group, the collection business is still performing well. It had 3% pricing just in that group. We saw some softness on the landfill side which is dragging down that average. And that is as John mentioned the MSW pricing is up year-over-year. We’ve seen C&D pricing up and we’ve seen a mix change because C&D volumes are off and because the MSW volumes are lower. Our soils business has been actually relatively stable, which is a lower priced business. That is driving down the average price in the landfill business. So it’s not so much a market dynamic because the MSW prices are holding up, but we are seeing a mix change in the landfill and in terms of where we proportionately have more of the soil jobs which are pulling down the average prices. And that’s dragging down the whole solid waste group. You know we put in the environmental fee. We’ve raised that twice this year. Customer acceptance has been pretty good. And we still feel pretty good about pricing on that side of the business.

There’s also, Jonathan, more opportunity with regard to the environmental fee because we have a larger portion of the revenue base that we can put that environmental fee to over the next couple of quarters. So we think that we’ll be able to continue the pricing program on a go forward basis and to continue that momentum. But as John said, the mix issue, lower prices from a C&D standpoint add to landfills. But we do see additional opportunities on a go forward basis. We also have the disconnect in terms of our surcharge being lower than our peers, too. That is another opportunity as we look to the future.

That’s your fuel surcharge?

Correct. Yes.

And our landfills and transfer stations, we have not implemented any of either of those programs yet. So there’s a little bit of runway there.

And then just on the tonnage, you had mentioned that landfill tonnage was down 8%. To be clear does that include everything? MSW and C&D and soil? And if so, what was just the MSW declines in the quarter?

That is all third party tons and just a second we do have that number. While John’s looking it up, one other thing to add relative to the price is that the way that we’re looking at those markets now, and they’ve been tough on price for awhile, that being the western market that John was alluding to earlier, with that new municipal contract that we’re bringing in in those 180,000 tons we are looking at it differently than we have in the past as well. Yes, it’s going to impact price but on an EBITDA margin basis for that market. With the other material that’s going to complement it we actually think that we foresee EBITDA margins increasing.

To be clear, that new contract will drag down your average pricing?

Yes.

Can you roughly quantify how much the drag is going to be once its fully up and running?

We can get back to you on that, Jonathan. I don’t have that handy.

If you don’t have the number on the MSW yet, one question I was just going to ask is on the collection side of the business. Can you talk a little bit about volume trends specifically in the front load part of the business?

We’re shifting a lot of our business from rear load to front load, first and foremost. We’ve been going at that now for about a year and we’re going to continue that through the course of this fiscal year and then beyond to convert the volumes over from rear load to front load. It’s a much more efficient system and delivers a much higher both EBIT and a bit of margin. So to try and break it out for you in terms of how much volume on the front load system, we couldn’t really do that for you right now.

Okay.

My point is it gets blurry because of the shift that we’re undertaking.

I understand. Maybe then just qualitatively, can you talk a little bit about in the commercial line have you seen any changes in terms of weight per container or service frequency in the last few months?

We’re changing that as well. That’s blurry also. We started that about a year-and-a-half ago. We went through a very rigorous program of upsizing all of our containers, probably right-sizing them is a better terminology for it, to balance our service with the customer requirements. So our actual container sizes are increasing across the board. And if we’re balancing the service correctly, our weight per container when we lift it should be up.

First off, in the recycling business when do your existing hedges for particularly for paper and metal products, I know there’s so much stagger but can you give us a sense when is there a concentration of roll-offs in those existing hedge contracts?

Well, probably the biggest roll-off right now going on in this quarter is the roll-off of aluminum because we’ve only been able to traditionally hedge those for about 12 months. So that impact was already [seen] in the quarter. So the balance of our hedges are longer term than that. They spread out over a lot of different periods. But I would say that our plan was that we would be in the position to recapture the market hedge as the market comes up. But if the market continues to respond, we believe we will in large measure be able to reposition ourselves before the bulk of those hedges come off. But they run roughly 12 to 24 months.

From a risk mitigation strategy I would say that the hedges were in place all along, so those were not new actions. And I think the actions we took in the last six months relative to going back to customers and getting them to participate in renegotiating the contract, therefore the answer to your question I think is pretty clearly from our mind that tip fees have been a major contributor to the expansion of our risk mitigation strategy and the results that we had hoped.

Jonathan, just to follow up on your question, the third party MSW tons were off 8.5%.

Your next question comes from Michael Hoffman - Wunderlich Securities, Inc.

I wanted to get inside the income statement a little bit. The [inaudible] seems to be awfully high as a percent of revenue if the volumes are down as much as they are. And I picked up something you said earlier in the commentary about at Pine Tree, maybe that in fact is the contributing factor, the weight at which you’re accelerating [inaudible] filling that. And if that is the case then how do you think about D&A going through the rest of the year?

Pine Tree is coming to the end of its life and as a true up on the depreciation where you’re trying to predict you know the tons into the landfill from the last six months of the year, so we’re basically making sure that we don’t have an issue there in Q2. I think you should see it turning more towards historical numbers, I guess would be the best way to answer your question.

Just to put it into perspective the consensus had you at 13% for D&A for the quarter and obviously you were at 14.4. So should we think of it as there’s you know a point-and-a-half in there for Pine Tree for this quarter, next quarter and then third and fourth you take that out?

John is going through the numbers right now.

Yes. Let me just look that up, Mike. Do you have any other questions while I’m looking it up?

You know I hate to belabor the price but just so we get sort of all of the machinations here, you gave a clear number that collection was up 3% and that’s across the permanent roll-offs and the commercial business. Presumptively your municipal business is tracking it’s a level of DPI, which pretty consistent with that on a look back basis but being 1.8% for the whole quarter means the landfill was down not just the C&D side but the MSW side.

No, the issue there is because of the amount of budge in the mix, Michael. The MSW pricing as we said was flat but the offset in the C&D pricing was down significantly, and the balance of that is mix in terms of a higher percentage of sludges, a higher percentage of beneficial use material coming into the facility at lower rates. Not MSW.

So to be very clear, you’re not lowering gate rates for MSW to get volume into the landfills?

No. So and even on the contract that we just [hit] market, we took it at a market rate, current market rate. So no, that’s not the case.

So if you were to blend out this mix issue and you know on an apples-to-apples, what do you think your pricing was in the quarter on an apples-to-apples basis in good old regular trash?

We don’t have the answer to that but we could certainly. I’m sorry. We do. It’s up about 1.5%, MSW’s up about 1.5%.

C&D was down 7.1. And the remainder as John said was a mix.

And Michael, we’re expecting the [inaudible] to drift down every quarter for the rest of the year to get back to full year. It’ll be close to what it was last year as a percent of revenue. It’s because of Pine Tree. It’s from front-end loading a little bit.

And so to repeat, you look at FY’09’s full year percent of rev and manage your quarters down to get to that as a full year number?

Yes.

And then the volume’s down 9% actually given it’s in the northeast and the economic pressure there, call that a pretty decent number on a relative basis to others that have reported, suggesting maybe there’s some pockets of strength in some parts of the business. And I get that you’re making a switch from rear-load to front-load and understanding the total tonnage, but even if you sort of aggregated everything together and weren’t looking at it so much on a container basis, is there some underlying strengthening? Or is that seasonality?

I think that it’s probably more seasonality that we’re feeling as opposed to a significant you know difference relative to the economic activity. I think one of the positive things is that we would characterize the economic activity as stable to slightly improving. But no real economic rebound and not even in pockets. I mean I think that we would just simply characterize it across the board, Michael, as stable, maybe slightly improving, but I think we’ve seen that stability for you know three to six months now. And we’ll continue to see the domestic market from a recycling standpoint is beginning to get better and that’s obviously a positive as well. You know the [OMV] just came out this week and you know it’s positive. And so I think that we’re beginning to see from a domestic standpoint where over the last four or five months there’s been much more activity from an export standpoint in the recycling business where now we’re beginning to see, I mean if there’s any beginning activity that we’re seeing it might be on the recycling side from a domestic standpoint. But I would characterize the solid waste business as stable to slightly improving, but really more stable. No real recovery that we can see.

As you look at your business model and your internal models, what quarter do you turn earnings positive?

Mike, I don’t think we’ve given quarterly guidance.

Your next question comes from William Fisher - Raymond James.

Just maybe John, you had mentioned you guys are going to be doing a review of some of the under performing or non-cash generating solid waste operations. Is the review scheduled to be kind of done by the end of this fiscal year? I guess I’m trying to get if you’d sell or divest something could you have a divestiture or whatever this year or would it be more likely in the next fiscal year?

I don’t know. It takes a while to execute a divestiture. The plan is to go out and get a good forecast from each of the locations and aggregate these at sort of weight shed type level and then review them with the various constituents and make sure that we have the right plan, the right strategy, the right people. And see if there’s something off there, then we have the right assets. Is it a question that we need to go and get the right assets to fix the market? If we can’t then we would make the decision okay what do we do with this, do we sell it or shut it down? You know one thing I’ve learned over my life is it’s a lot easier to buy than to sell. It takes a little bit longer to sell things. And so I think that by the end of the calendar year we should have a good view with respect to the red, yellow and green kind of list. And then we’ll make a decision then. We’ll see is this the right time to sell something and could we find the right buyers.

Actually on the CapEx you mentioned you’re converting to more front-loaders. I mean are you having to buy more front-end load trucks this year so I guess what I’m getting at is CapEx likely to be up a little bit this year relative to what it normally would be?

It’s already in there. What we have done is because of the economic reality we have a number, over 100 vehicles in surplus right now, and all vehicles that we purchased in this year’s CapEx program, Bill, are front-load trucks so that we can go forward with those conversions. So the vast majority of the trucks purchased this year will be front-loads.

And on a steady state as you move into the next fiscal year, could some of that come off a bit since you have the surplus, or not really?

We only see the investment in front loaders going into next year.

But if your question is CapEx going to be lower next year, the answer is no.

And then lastly, just for Jim on the recycling volumes I think you mentioned you hope they’d be or expect them to be flat to up for the year and they’re down 4. When you see like pricings continue to be up in August, do you get more recycling activity? Are more people pushing stuff out of the way stream and recycling? Or is it more a function of you just have some single stream facilities coming on line?

Again, it’s a layered effect. You have the effects of economic activity, which is a dampening effect. You have the effects of conversion which is an inflating effect. And you have the general effect with regards to the stimulus packages and those programs which have been aimed at trying to focus on curb and footprint. So net net, we expect to see slightly improving buying picture there. And the majority of that will be taken as a direct result of conversion into single stream across the footprint.

Your next question comes from Chris Smith - SCM Advisors LLC.

What was leverage coverage for the credit agreement this quarter? Do you disclose that?

That is in our Q which we will be filing later today.

So that will be disclosed there?

Yes. Let me see if I can find it while we’re looking.

Do you have an additional question, Chris, while John’s looking that up?

No. That was it.

We’ll try to get that before we end the call.

Your next question comes from [John Devour – Stone Tower]. [John Devour – Stone Tower]: What is your excess capacity in containers, I guess? Where are most of your excess container capacity at this point? What types?

You’re talking about types as in rear-load or front-load? [John Devour – Stone Tower]: Yes.

I would say probably the majority of excess capacity would be in roll-off containers. In terms of containers sitting where we’ve had the most fall-off obviously is in the C&D construction side of the business so we have a lot of roll-off containers sitting as opposed to the normal contraction of the commercial side of the business, you’re not taking containers in per se. Really what you’re doing is and somebody might have three times a week service, they go down to once a week service. So there’s not an inordinate amount of inventory in rear-load and front-load containers. We will have obviously rear-load containers from the conversions that we’ll be selling and monetizing, but that’s just a function more of the conversion than it is the economy. [John Devour – Stone Tower]: Is there a true secondary market for containers in general or is that kind of mythological? Is there actually a marketplace for?

There is, but in the current environment obviously it’s really, really difficult. Equipment, the value that you’re likely to get from an equipment sale is not significant particularly in the current environment. [John Devour – Stone Tower]: But your ability to procure secondhand containers, is that easy to do? Perhaps flick of a switch or is that kind of hard to do in general? Would you be less willing to buy containers painted the wrong color, etc., or would you be willing to buy used containers?

We normally don’t buy used containers. From a practical standpoint we’re not going to sell roll-off containers. We have a significant number of roll-off containers in inventory right now. At some point in time, the economy will come back and we’ll need those containers so we’re not in a position nor would we sell the roll-off containers, as an example, at this point in time. We would rid of as I said the rear-load containers because we wouldn’t need those on a go forward basis.

Just to clarify, the CapEx that’s required for those conversions is already in the FY plan. [John Devour – Stone Tower]: But generally speaking, if it’s an acquisition of any type of container you prefer to buy new versus secondary. Correct?

Yes.

There are obviously exceptions to that. You know we’ve bought used containers probably more on the compaction side, used compactors, refurbished compactors. So we do buy used equipment, not all new. But normally when you’re doing a conversion the conversion is all new equipment, new containers, new trucks.

Your next question comes from John Zaro - Bourgeon Capital.

Why did it take so long to look at the sites and decide what are the most profitable and what are the least profitable and ones you should work on getting rid of? I mean I’m assuming that you’ve done that all the way along, so?

We have you know done that review once, and we executed a strategy where we sold $22 million worth of assets in the Buffalo market a year ago, maybe a year-and-a-half ago now. I think you want to be really thoughtful in terms of going through and doing that review. At the same time there’s no question that we need to do that with a sense of urgency. I think it’s fair that we want to do that thoroughly but we want to do it as quickly as we can.

I mean I would assume that this review is coupled with the fact that you have had some interest from people on the outside but also have interest in other properties that you’ve been looking at anyway. And in addition to that probably to potentially help your stock.

That’s correct.

It’s John Quinn. I’ll just share with everybody our covenant compliance, total funded debt to bank defined EBITDA is 4.72 and the covenant maximum is 5.5 at the end of the quarter. Senior funded debt to the equivalent of bank EBITDA is 3.13 versus 3.65. And our interest coverage was 3.2 and the minimum was 2.5. Again you can find that in our Q later today.

And at this time I’ll turn the conference back to Mr. Casella for any additional remarks.

Thank you operator. In conclusion as evidenced by our performance over the last two quarters, we execute well against the factors that we can control. We’ve done a great job of offsetting the negative economic pressures with operating programs that improve productivity and asset utilization. We’re doing a good job. Our operating team is doing a great job of rethinking every aspect of the business model and really attacking that to bring more productivity and efficiency to everything that we’re doing. The sales team is doing a great job differentiating our services in the market with a unique resource renewal offering. These efforts are helping us to positively grow revenues. And now with the successful debt refinancing, we don’t have any major debt maturities until 2012. That gives us the necessary time and balance sheet capacity to continue to execute our long term strategy and de-lever our balance sheet. I’d like to thank everyone for your attention this morning. Our next earnings release and conference call will be in early December, when we’ll report our second quarter fiscal 2010 results. Thank you everyone and have a great day.

That concludes today’s conference. We thank you for your participation.