Good day, ladies and gentlemen, and welcome to the Casella Waste Systems Second Quarter 2013 Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to introduce your host for today's conference, Joe Fusco. Sir, you may begin.

Thank you for joining us this morning, and welcome. With us today are John Casella, Chairman and Chief Executive Officer of Casella Waste Systems; Ed Johnson, our President and Chief Operating Officer; and Ned Coletta, our Senior Vice President and Chief Financial Officer. Today, we'll be discussing our fiscal year 2013 second quarter results. Those 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 statement 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, ir.casella.com. And now, I'll turn it over to John Casella, who will begin today's discussion.

Thanks, Joe. Good morning, and welcome to our fiscal year 2013 second quarter conference call. Our goal today is to discuss second quarter results and update you on our midterm strategy. I will start with a brief overview, Ned will take you through the numbers and then Ed will provide an overview of his game plan to improve operating performance in his new role. As we stated in our press release yesterday afternoon, second quarter was disappointing. What is particularly frustrating is that the operating and economic environment remains unpredictable, difficult and stagnant, often canceling out the impact of the hard work that we've been aggressively doing to put the company in a position to succeed. We have refinanced much of our balance sheet, cut our interest costs. We've realigned our business, eliminating millions of overhead. We sold Maine Energy, eliminating its drag on our cash flow. We've taken smart, aggressive steps in the areas of the business within our control every day, doing the things that we believe should allow us to harvest value from our assets, yet a stagnant, uncertain economy is creating headwinds. Difficult environment aside and despite our disappointing -- disappointment in the quarter, we keep working on a strategy that we laid out to get back to profitability. As announced yesterday afternoon, we made several important senior leadership changes. We promoted Ed Johnson to the role of a President and Chief Operating Officer, and Ned Coletta to the role of Chief Financial Officer. Paul Larkin left the company last Friday. The board and I have immense faith that Ed will provide new direction and an effective leadership to our operations. Ed's vision for the organization is to further the steps that we took this summer to simplify our business structure and move operational control to…

Thanks, John. Moving on to the quarter. Revenues in the second quarter were $120.3 million, down $9.6 million or 7.3% year-over-year. Solid waste revenues declined $4.1 million or 4% year-over-year, with the decline mainly driven by lower roll-off, Collection volumes and landfill volumes. Revenues in the Collection line of business were down $1.7 million year-over-year, with price down 0.1% and volumes down 4.3%. The decline was predominantly driven by weakness in, in the roll-off line of business. Roll-off revenues declined 12.9% year-over-year, with pricing down 4.6% and volumes down 10.1%, due to both a challenging construction market across the Northeast, lower work associated with the drilling sludges, and a tough comparison to the second quarter last year when we saw increased demand from Hurricane Irene and Tropical Storm Lee clean-up activity. Despite this weakness, our pricing programs in the commercial and residential lines of business remain on track with positive 1.9% pricing in the quarter. Revenues in the disposal line of business declined $1.9 million year-over-year or 5.5%, with price down 0.5% on lower special waste pricing, while MSW and C&D price per ton were both up roughly 4% year-over-year. Disposal tons were down 129,000 tons year-over-year, with special waste tons down 96,000 tons or 20% as a percentage of special waste tons. The decline in special waste volumes was driven by both the decline in drill cuttings out in the Western New York landfill site and a ramp down of the Western landfill closure project. Commodity price and volume in solid waste business were down $800,000 year-over-year on lower energy pricing and power production at Maine Energy and lower metals pricing at our scrap business. During the quarter, we recognized $1 million of additional revenue from 3 tuck-in acquisitions that John discussed. Recycling revenues declined $4.8 million or 34.6%…

Thanks, Ned, and good morning everyone. Ned has walked you through the financial results, I want to go through where we are today, what our thinking is on the guidance and where we are strategically from my point of view and how things are setting up for next fiscal year. During the quarter, we completed numerous strategic steps that we believe position us for success going forward. And from that standpoint, we're very happy to get some of these things behind us. Just to summarize, we cut our overhead structure significantly in August, we refinanced the second lien notes and we worked through a very complex sale of the Maine Energy plant. We also completed the construction and put into operation our water treatment facility in the Marcellus Shale field, and began expediting construction of an important transfer station in Westbrook, Maine to provide a home for the locally generated Maine Energy. We have also put ourselves in position to take what may be significant tonnage from the Hurricane Sandy aftermath in New York and New Jersey, but that remains a work in progress and nothing has been committed to us yet. All of this strategic activity resulted in various charges in the income statement made for a muddy picture. But even despite that, the core numbers were disappointing. Most of our issues are directly or indirectly related to volume at the landfills. On a consolidated basis, landfill volumes were down year-over-year by 10.5%. Last quarter, we talked about a decline in special waste volumes and we lowered our guidance based on volume trends seen in June and July results, assuming no recovery, but also assuming no further decline. However, special waste continued to decline, and what little C&D volumes we had left also declined, a lot of which was…

[Operator Instructions] Our first question comes from the line of Bill Fisher from Raymond James.

And congratulations on the promotions, Ed and Ned, just a couple of things. One on the -- you mentioned that CapEx is 51 5 -- $51.5 million for the year. How much is roughly the growth there you have, including Westbrook and some of the other things you're doing?

Yes. Bill, I might have to take this offline. I don't have a growth split in front of me, but roughly, we're investing $3.5 million in the Westbrook site, and we've invested several million dollars year-to-date in the water treatment facility, roughly...

Probably between $7 million to $8 million of that is growth, Bill.

Okay. And I guess, I know you haven't even started on next year. But I mean, with -- extensively, my point is will that number be likely coming down next year on the growth side or are there other things that fill that end?

Well, the only thing that we've talked about for next year would be the potential recycling facility. So that would be probably somewhere in the vicinity of $3 million to $4 million.

Okay. And then, just on that Marcellus, how much of the special waste is drill cuttings today of that tonnage of the last bit you've taken?

So today, we saw drill cuttings drop by roughly 55,000 tons year-over-year in the quarter. In the last few quarters, we've got about 25,000 tons per quarter, or roughly $700,000 of revenue per quarter. So we're running at a rate about $2.5 million to $3 million of revenue and a run rate of around 85,000 to 100,000 tons per year, and that's down for the run rate in fiscal '11 of close to 500,000 tons and roughly $12.5 million of revenue. And Bill, as you know, these tons are coming in at a good price point. The last tons through the gate coming in at a very high margin, so we've seen some big margin decline as these tons have come off.

Okay. And that new contract, is that a pretty small amount of tons, initially? Or how does that -- how do we to think about that?

Yes, it is a small amount of tons. It's only one -- this first contract that we've signed is fairly significant because it takes quite a while to put a master services agreement in place. We've done that now with Talisman, put that contract in place. And I think that it's the -- what we would characterize as the beginning of being able to demonstrate to folks that we have the capabilities to do that. But that particular contract is a small amount of tonnage, because there's only a small amount of wells that are currently in operation right now, Bill. Until we get back to $3.90 to $4 in MMBtu, were not going to see a lot of activity. Certainly the price is moving in that direction right now, but this initial contract that we have is a small amount of the tonnage.

Our next question comes from Scott Levine of JPMorgan.

So in the -- reading through the discussion of the revised guidance, it seems like the construction and demolitions volumes were maybe the bigger negative variance versus your prior expectations. We've all seen improvement and leading indicators in housing and what-have-you. I mean, maybe a little bit more color on the specific waste streams there. And given some of the improvement in some of these leading indicators -- I know that this business is seasonal, but should we be fairly confident that things should pick up within the next few quarters on the C&D side?

Yes, Scott. We were surprised in the quarter about the magnitude of the decline in the C&D volumes. We did not expect that slide to occur. It was a pronounced weakening from the first to second quarter. We did expect some of it, because we had the impact last year from Hurricane Irene and Tropical Storm Lee. But the softening was really something that we experienced in many, many divisions across the business. And we felt almost as if the regional economy began to freeze up in late summer into the fall with the political environment and what not. We -- looking forward the rest of our fiscal year, we've taken a conservative view on roll-off volumes. We are projecting them to be slightly down year-over-year. And as we discussed earlier, we have this one large solidification contract that's starting in December that will provide a number of poles and some positive benefits in the line of business.

And was the West notably weaker than the East in that regard? Or where -- did you see that freezing up pretty much across your entire footprint?

Yes. The West was definitely weaker. The East, because we have increasing capacity in a market that's shrinking, for a capacity, we're in a pretty good position there.

Yeah. And we're also in a different position from a landfill perspective, where the vast majority of the waste on the Eastern facilities is waste that we control, particularly. And somewhat the same thing with regard to the Vermont facility as well. A lot of that waste is internalized so we have a bit more of that waste on our vehicles.

Got it. And then, as a follow-up on Sandy, and I can appreciate that you're not really in a position to say much with regard to your impact specifically. But maybe if you could provide a little bit more color, I know you guys have been affected by storms and weather issues, if you will, over the last few years, help us maybe kind of understand the potential opportunity set here, and maybe what gives you the confidence to say this is something that could have lasting impact of -- I think you said 12, it's even 24 months, and maybe helping resolve some of the disposal volume issues within the region generally.

I think there's no question that at least from all of the information that we've seen that it's likely to be a 12 to 24 month recovery at least -- particularly when I look at not only the cleanup, but the rebuilding itself. What we've done is to, as I said in my earlier comments, we didn't have any transportation lanes or transfer stations in the affected area. So what we've done over the last 3 weeks is to put in place partnerships and arrangements with folks. And also to drive emergency permitting from a rail perspective to be able to put ourselves in the position to attract a portion of that waste. And significantly, we're -- there's the potential, and again, we have no commitment until this point in time, but we're trying to position ourselves to be in a position to take several thousand ton a day of the material.

Our next question comes from Al Kaschalk of Wedbush Securities.

Just to follow-up on the guidance. Could you just clarify with Maine Energy ceasing operations at the end of, I think it was December. Has that been incorporated or -- in the guidance or do we have a revision coming later this fiscal year?

No, that's been incorporated in the guidance.

Are you able to partial out what was included or if I missed it in that reconciliation?

Yes, Maine Energy...

No? To put in place.

Al, as we state earlier, Maine Energy was down $1.1 million year-over-year in EBITDA in the second quarter alone. So we expect to stop that bleeding through last half of the year.

Okay. So I guess the question that I'm trying to get out here is, the pricing and volume stories are clearly forecasting nightmares today, and then given the moving parts. But what I'm trying to understand is structurally, are there concerns on the volume side that you're not positioned for it to capture the growth that comes? Or are we still troughing on volume story?

Well, I'm not sure what you mean about the growth. You mean the growth that come...

I mean a year ago, we put in place and the pricing discipline, and I think that largely has been favorably received, and you've been able to capture positive pricing. With the latest changes here, it would seem like -- with 5 or 12 operational folks out the door, it seems as if either, I guess what I'm trying to get at is, are we -- do we have assets in place and markets where the volume story can recover and it's simply a timing issue?

Yes, I definitely think we do. I think we're well-positioned. I think one of the problems that you saw this quarter is that there was such a shortage of volume at the landfills that the collection companies tried to push boxes out at slightly lower pricing. That's why our pricing overall ended up flat or slightly negative, just to get tonnage to the landfills. And we're going to take a serious look at that practice because I don't think it makes that big of a difference at the landfills and it affects pricing in the market. We should be pricing leaders, and -- but we are definitely well positioned. We're #1 or #2 in almost all of the markets we operate in. So we're definitely well-positioned to pick up any growth in those markets, particularly when C&D material or activity returns.

Great. And if housing should and construction activity continues on its pace, that C&D volume should hit the landfills next fiscal year or should we see it sometime April, June timeframe?

In this market, it's -- the exact timing is very dependent on weather. So if we have a warm April like last year, we'd probably see it move up. But if we have a heavy winter, then you really count on it in the later spring and summer.

Okay, and then my final question, if I may, on the -- just on Sandy in particular. There's 2 components here that I see, and I'm just wondering if you can -- obviously, it would be nice to capture some of the cleanup work, but the second component of that is the -- is more of that C&D, which we just talked about. So how long until all the activity or volumes associated with the cleanup efforts do you think, how long until that's completed and whether you'll know something? And then secondly, I guess that on the recovery side, your point about construction activity will have to wait till next fiscal year, is that a fair way to handicap or to characterize the market, and then secondly, maybe handicap the volume?

Maybe I -- I think, with regard to the cleanup opportunity, the storm debris opportunity, we've been working on that for that about 3 weeks. We're hopeful that we'll have a clear indication of the tons that there are likely to see to our facilities by the end of the year -- by the end of December. Over the next couple of weeks, we should have a clear understanding of what kind of success we're likely to have with the emergency permitting, and additional permitting that we've put in place, and the relationships that we've put in place. So we should have a sense of that over the next couple of weeks in terms of what is likely to flow to our facilities from the activities that we've had over the last 3 weeks. And I think that we're beginning to see the housing market is beginning to come back. On that, I think that that's more of a general statement in North America than it is necessarily to the Northeast. So I think that the real question with the housing market coming back is, "Is that going to translate to the Northeast?" And we haven't seen that at this point, but certainly we're beginning to see very positive trends in the overall housing markets. So that should bode well for the Northeast as well.

Okay, thanks. And one clarification. The permitting of the volume process, is that being awarded by Army Corps or FEMA?

It's being awarded by Army Corps through OCC. OCC is a contractor for the Army Corps, and then, some of the counties are actually doing some of that themselves. New York City is obviously very much involved, and then some of the counties on Long Island are also handling it themselves. But primarily, it's the Army Corps, FEMA and OCC, which is a contractor that works for the Army Corps.

Our next question comes from Michael Hoffman of Wunderlich.

Can you remind us what -- of those sites that you have the ability to do rail, what would be the available capacity that you could take at those sites, if that -- if this all comes to fruition?

We have the McKean facility has a permit of 5,000 tons a day by rail or 1,000 ton a day by truck, and 5,000 ton a day by rail.

Okay. And none of the other sites...

The other sites are -- have capacity, Michael. So the Highland -- our Highland site in New York, we have, we're looking at an offload opportunity there that's a few miles from the landfill as well. So we're in the process of developing that option as well, so there's a potential that we could get rail to other Western New York facilities as well. That's in progress right now as well.

Okay. And then, so I've got a lot of reading on what OCC is doing, and the FEMA debris documentation and whether the Army Corps is -- they're actually relatively timely about this. I mean, it's a pretty straightforward paperwork so, one, are these permits in? And when were they submitted; and two, what has been their sort of their follow-up questions that would lead you to believe you -- the confidence that you should have visibility on this by the end of the month?

Well, we -- all of our permits have been submitted to OCC, both from a transloading standpoint, as well as the landfill. We're going -- we're in the process of going back and forth with them right now with additional requested information relative to health and safety plans, and other requests for information that they have. So I think that, as I said, we've been working on it now for 3 weeks, 4 weeks. And so we've got proposals in front of them, we've got our permits in front of them, we're going back and forth on that as we speak. And that's what gives me some confidence that we'll have an indication by the end of December as to what we're going to -- what we're potentially going to be able to access.

Okay. And then, I would suspect that, given the amount of tonnage we're talking about in total, that we would start to see dislocations across the sort of disposal network of low margin volumes, as the result -- because...

I can't -- I think that's exactly right. I mean, all of -- obviously with the amount of tonnage that the storm has created, it's going to create a positive uplift for the entire Northeast disposal capacity picture in that there's been so much overcapacity because of the economic reality in the downturn, obviously this is going to change those dynamics. I think the other thing that we -- some indication is that this may not be a onetime issue, too, from a hurricane perspective. And maybe some changing weather and patterns that probably not all that relevant. But nonetheless, I think that it will -- certainly, the storm is going to change the dynamics from a disposal capacity standpoint.

Well, all right, so following through on that thought process. So you displaced volume, it's got -- so people don't actually maybe take incrementally that much more tonnage and some -- in the whole network of landfill in the marketplace. But as it moves around, I would think market prices has to go up for that to be -- for all that to be absorbed. So I guess, I realize this is more Ouija board, but what's your thoughts about how much of that can be permitted as temporary?

It's really hard to say. I think a lot of it depends on what happens with the economy. I think if we end up seeing improvement from an economic standpoint, see improvement in the housing market, and we continue to move in a positive direction, it may have -- it may very well have in impact in terms of stability from a pricing standpoint going out into the future. But again, as you said, it's more Ouija board.

Okay, and then we've been reading that the FEMA contracts for debris removal are pretty attractive tip fees. Can you share with us what that 200 ton per day looks like versus your market rates are now?

No.

Okay. But they are better?

I think, I would say that it's consistent with average pricing at the landfills, slight positive.

Okay. And then Ned, in the press release, you broke out growth versus maintenance capital. So your incremental $3.5 million to be added to the $8.3 million that you've already spent the first half, and then that gets us to sort of the $11.8 million for the year out of the $51.5 million. Is that how to think about that?

Yes, I don't have the full year forecast broken out in growth and maintenance categories, Michael. But you're right, year-to-date, we had $6.3 million, and we're incurring roughly $3.5 million at Westbrook and some final construction cost at the water treatment plant. So it will be a little north of $10 million.

Okay, so yes, it was $8.3 million for the first half and $6.3 million for the quarter, so we add $3.5 million for Westbrook plus a little bit for the water treatment. Okay. And that's really where Bill's question is that that kind of $11 million number is probably coming down basically as John said earlier, that you're only looking at the $3 million or $4 million for growth for the Recycling operation. Is that the right way to think about that?

I think that's probably true. There's other one caveat, and that is if, in fact, we're successful in accessing the tonnage from a rail perspective, we will build out the rail siding at McKean, and that would be another $3 million to $4 million as well, Michael.

Okay, but that will be probably self-funded. :)

That's correct. We -- that's exactly right.

And then you have shared over the summer a series of tables about how to think about free cash flow in sort of a progression starting with the base off of 12, and that suggested the free cash of this year was going to be in the sort of low single-digits, and then would rise into the teens, to the low 20s in '14 and be in the mid-20s in '15. How did -- and Ed and Ned, how do you feel about that progression at this juncture?

Well, certainly, the big items that we've talked about over the summer, the G&A savings, the Southbridge ramp-up, that MERC closure and the second lien notes, they are still in -- they are still the same numbers. So that, we get the benefit, full year benefit of those next year, and then the Ogden put-or-pay probably 2 years away from seeing the benefit of that. So we do have some significant pre-cash flow drivers. And as you said, we did expend some extra capital this year on the Westbrook situation. We also have one of our most expensive sells under construction at Southbridge. That's just an odd situation that was where we have to move a lot of dirt, so we don’t expect a repeat of that type of fundamental construction or activity. So is that saying enough without answering your question?

Our next question comes from Corey Greendale of First Analysis.

[indiscernible] either one or for Cory. With natural gas prices still a bit below that level where you've mentioned that you'd see some recovery, how do we think about the timing as far as when this might cease to be year-over-year headwind, the decline in drill cuttings, Ed?

I think that it's not something obviously that we can control. So our whole strategy is to go out and find those tons. As Ed said earlier, looking at remediation companies, looking at trying to offset it, get a bigger share of that business that is out there from a remediation standpoint, the tuck-in acquisitions to get more tons on our trucks, to get to our facilities in the Western New York area. So I think that our sense is the strategies that were executing against are ones that we can control. We're not going to control what happens from a nat gas standpoint. Although nat gas pricing has been coming up, and certainly is moving in the right direction, it's not something that we can count on. It's not something that we can control.

Right. But assuming the prices stay...

If the price -- our sense is we're drilling restarts in a fairly significant way if we get to $4 in MMBtu. That's all indications that we have is that we should go back to the kind of tonnage that we're receiving in '11.

Okay. Okay, and one more. Talked about perhaps maybe a slowdown in some building activity. Would that indicate that a sale of GreenFiber is further away, less likely at this point?

No, I wouldn't say that. I mean, I think that on an overall basis, the housing market is beginning to improve around the country. So I think that it certainly has the -- if the housing market continues to improve, it should create an opportunity for us to further delever our balance sheet by monetizing GreenFiber. So we're seeing the beginning of improvement there. That business model has stabilized, the team's done a great job. So it's our sense that if the housing market continues to improve, it should be -- that would be helpful in terms of our ability to monetize it.

Would that perhaps be a 2013 -- a fiscal 2013 event, or [indiscernible] that more further out?

No, it's really hard to say. I mean, I would think that it's probably -- it would be towards the summer, end of '13. If again, the housing markets continue to improve, I think that's really the driving force. Improvement in the housing market should lend itself to an opportunity for us to divest. We'd certainly like to -- obviously, we'd like to do that as soon as we can. As I said though, the model is stabilized, the team has done a great job, and we're comfortable with where they are right now. And it's really a function of how quickly the market improves, housing market improves.

Our next question comes from Daniel Lawrence of Talara.

So what is the net debt at GreenFiber?

Hold on a second.

It's about $10 million -- $9 million, $10 million.

That was $11.4 million at October 31.

Okay, so given that and given that comparable billing product companies to GreenFiber trade anywhere between 1.5x, 3.5x enterprise value of sales, how much consideration have you given to IPO in GreenFiber obtaining a stake, and then finally getting value for an asset that the market's giving you 0 credit for, and based on those numbers, should you get at least $1 per share of incremental value to your current share price?

Well, we certainly thought about that, and we continue to think about it, Danny. But that there are a lot of considerations to an IPO. With the stock's control requirements, the things you have to do to the business to make it a public entity that are considerable expense that we'd have to consider. But certainly, that option isn't off the table.

Got it. And then secondly, from a strategic perspective, given the significant property in your asset base, how much consideration have you guys given to converting a portion of the business or all of the business, specifically the landfill assets to a real estate investment trust, given the significant valuation multiples REITs command relative to your current valuation?

Another potential thing, long-term. I don't think that's a short-term solution. We're not net taxpayers. We got to really walk through the mechanics of that to see if we're really creating any value short-term. But long-term, it's an idea to look at.

Our next question comes from Jeffrey Matthews of RAM Partners.

I just was interested in your comments about the organic issue. I think you mentioned in Massachusetts, what opportunities are there for you and what is the nature of the growth in that business?

Well, we -- about 1.5 years ago, we built with our partner the anaerobic digester on a farm in Rutland, Massachusetts. That digester handles manure from a 500-head dairy farm in addition to organics, primarily from commercial food processing operation. Some of it from colleges and universities, but the predominant amount of organics is going to the digester is from commercial organic process -- commercial food processing facilities. In -- both in Massachusetts and in Vermont, there's a ban on organics going in to landfill in 2014. That facility was pushed forward with our organics team as a potential solution for the future. What's happened this year in August, we filled the facility and we actually had to increase the size of the engines for power production because the amount of gas that we're actually producing at the digester. So that was the first of 3 digesters that were planned, and that model is beginning to prove out commercially. So we think that it potentially could be a solution for organics, both from a commercial standpoint in terms of food processing, but as well as a solution for colleges and universities that are really trying to move their sustainability footprint forward and want to see organics come out of the waste stream. In addition, obviously, as I said, there's a regulatory environment that also is calling for organics to come out in 2014.

Right. Does this -- is this -- expand outside of those 2 states? Does this go out of New England as well?

Yes, I think it does. I mean, I think that New York is looking at organics as well from a regulatory standpoint. I think there may be some activity in Connecticut as well. But clearly, in our footprint, 2 of the states have already got laws on the books in terms of trying to move organics out of landfill disposals. So that was the reason why 2 years ago, we've put in place -- we saw this coming -- we put in place the partnership with Agreen, and we operate that facility for them, as well as providing the organics to the facility as well. And the other 2 facilities are permitted, but we're still proving out the model from a commercial standpoint. And once that's done, then we'll make a determination in terms of going forward with the other facilities.

Our next question comes from John Zaro of Bourgeon.

Most of my questions have been answered. I just have 2 little sort of tiny ones. In relation to Sandy, I mean, I know that John, you've been doing a ton of work trying to get partners and various people. Is this the type of thing that once you get these permits, it's an announce-able type thing, or is it just part of day-to-day business? In other words, I'm assuming you already have some of these things approved, and it's just sort of getting it all approved, so that -- and you have a partner -- and you have partners...

Yes, it's really -- we have the permits. We're there, there. It's really a matter of getting a customer, and having the contract to take material, John, that's the issue that we're -- that's in progress right now.

So will you have partners, you have partners in New York that can haul?

Not haul, but places for transloading. We've got those relationships that we've put in place, and the question is whether we can attract waste to that partnership. That's what we're working on right now.

Okay, and is -- have they -- is most of the stuff that you're going to be hauling designate a special waste? Or theoretically you'd be hauling?

No, it would be storm debris. I mean, it would be designated as storm debris.

Okay. And then finally, the -- with the fall off that you guys have seen in the C&D and considering what we've seen in sort of housing and real estate coming back and things like this, is there any chance about what you guys are seeing is really that you guys are getting picked off a little by competitors?

No, we don't think that's the case. We still have a substantial market share in most of the markets we operate, and we're pretty aware of what our competitors are doing. It's just an overall volume decline.

So they're all seeing the same thing?

Yes.

Our next question comes from Robert Friedman of Premier Internation (sic) [International].

Just a real quick housekeeping question. Annual run rate of cash, interest expense I calculate probably around $36 million, $37 million, absent of maybe go forward issuances or redemptions. Am I in the ballpark there?

No, it's we -- it's roughly $32.5 million on the cash interest line. And it's going to be roughly $36.5 million on the income statement.

Our next question comes from Bruce Oren [ph], a private investor.

Will the strategic moves you made this quarter allow you to become profitable in the current environment? Or must conditions become more favorable for Casella to staunch this hemorrhaging of a red ink?

Yes. I think the moves have put us in a great position going into next fiscal year. And I think the whole company is looking forward to having all these strategic moves behind us, and benefiting from both the cash flow and reduced cost and improve profits for next year.

Our next question is a follow-up from Michael Hoffman of Wunderlich.

I just want to close a loop on that free cash flow question. So how -- I should think about free cash flow at this point as breakeven to slightly positive in '13, but all of what you thought would recapture in the stables from the summer that would add into that, x any upside that I see from long-term benefits of Sandy and the like. That's how to think about that?

Yes, the Ogden put-or-pay is the one thing that doesn't happen next year. And then there are -- and then it's minor things adding up, but there is a -- the remediation project that we have been disclosing for years, that may cash out next year. So that's why I can't really peg a number yet because we don't know the timing of that. That's about $3 million.

That's a positive?

No. That, that wouldn't be paid out next year. So that would be a negative. So as we get through the fourth quarter, that's when we'll give a lot more detailed guidance on the cash flow, but for next year, but the -- all the same prospects are still in place.

Okay. And then Ned, how should we think about the progression of the next 2 quarters as you're reporting? What do you want the message to be to the market about how to think about the trend line, is it a -- it gets better in 3Q versus 2Q? It gets worse and then gets better in 4Q? It's -- are they flat? How do you think about them?

Are you looking for -- Michael, as you know, we don't guide to the quarters. But our year is back end loaded.

We're saying you could do to have a headline that says you missed. So what's -- how do you want us to think about what those quarters should look like? You have $46 million or $47 million of EBITDA you want to do in the next half. How do I break that up?

Yes. We expect, generally, our third quarter to be roughly flat year-over-year, and we expect most of the benefit to occur in the fourth quarter. And it's because of the nature of a lot of line items Ed discussed, whether be the full benefit of the main closure, Southbridge ramping up, events like that, our water treatment plant. A lot of them we have currently forecasted late in the third quarter.

And at this time, I'm not showing any further questions from the phone lines. I'd like to turn the call back to management for any further remarks.

Thank you. Thanks, everyone, for your attention this morning. Our next earnings release and conference call will be in late February, when we'll report our third quarter fiscal year 2013 results. Thank you, everyone. Have a great day.

Ladies and gentlemen, thank you for participating in today's conference. This concludes today's program. You may all disconnect. Everyone, have a great day.