John Casella - Chairman, Chief Executive Officer Ed Johnson - President, Chief Operating Officer Ned Coletta - Senior Vice President, Chief Financial Officer Jason Mead - Director of Finance Joe Fusco - Vice President of Communications

Good morning ladies and gentlemen, and welcome to the Casella Waste Systems Inc., Q4 2019 Conference Call. At this time all participants are in a listen-only mode. [Operator Instructions]. As a reminder, this conference call is being recorded. I would now like to turn the conference over to Mr. Joe Fusco, Vice President of Communications. 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; Ed Johnson, our President and Chief Operating Officer; Ned Coletta, our Senior Vice President and Chief Financial Officer; and Jason Mead, our Director of Finance. Today we will be discussing our 2019 fourth quarter and year end results. These results were released yesterday afternoon. Along with a brief review of those results and an update on the company’s activities and business environment, we will 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 Safe Harbor Provisions under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by those forward-looking statements as a result of various important factors, including those discussed in the Risk Factors section of our most recent Annual Report on Form 10-K, which is on file with the SEC. In addition, any forward-looking statements represent our views only as of today and should not be relied upon as representing our views as of any subsequent date. While we may elect to update forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, even if our views change. These forward-looking statements should not be relied upon as representing our views as of any date subsequent to today. Also during the call, we will be referring to non-GAAP financial measures. These non-GAAP measures are not prepared in accordance with Generally Accepted Accounting Principles. Reconciliations of the non-GAAP financial measures to the most directly comparable GAAP measures, to the extent they are available without unreasonable effort, are available in the appendix to our Investor slide presentation, which is available in the Investors section of our website at ir.casella.com And with that, I’ll turn it over to John Casella who’ll begin today’s discussion. John.

Thanks Joe, and good morning everyone, and welcome to our fourth quarter 2019 conference call. We are pleased with our fourth quarter results and our results for 2019. This was another strong and exciting year as we continue to execute well against the key strategies of our 2021 plan. We meaningfully grew the business with nine acquisitions in the year, with approximately $53 million of annualized revenues. And as we announced yesterday, we’ve closed on two acquisitions thus far in 2020 with an estimated $6 million of annualized revenues, making a strong start to the year in terms of our continued execution against our acquisition strategy. Our success in 2019 is reflected within our numbers for the year. As we grew revenues by over 12%, increased adjusted EBITDA by over 13% and improved normalized free cash flow by nearly 18%, notably our 2019 revenue adjusted EBITDA, normalized free cash flow results met or exceeded our guidance ranges that were raised in October. These accomplishments for our team are perhaps even more impressive given that during fiscal year 2019 we experienced an $8 million adjusted EBITDA headwind related to the November 2018 closure of our Southbridge Landfill. So the rest of the business improved by over $26 million in the year, which emphasizes the strength within our solid waste, recycling, organics and our customer solutions businesses, coupled with the success of our acquisition strategy. In 2020 we will remain focused on executing against our 2021 plan. The five key strategies are consistent with that plan as announced in August 2017, which includes increasing landfill returns, driving additional profitability in the collection operations, creating incremental value through resource solutions, using technology to drive profitable growth and efficiently allocating capital to balance delivering with smart growth. Our first strategy in our 2021 plan…

Thanks John. Revenues in the fourth quarter were $193.6 million, up $18.9 million or 10.8% year-over-year with 7.4% of the increase driven by acquisition activity. Solid waste revenues were up $18.4 million year-over-year with price up 5%, volumes down 0.9%, and 9.9% growth from acquisitions. Revenues in the collection line of business were up $15.2 million year-over-year, with price up 4.8% across all lines of business. Volume is slightly down, risk recovery fee is up 2.2% and acquisitions up $10.9 million. Revenues in the disposal line of business were up $2.3 million year-over-year, despite the closure of the Southbridge Landfill in November of ‘18, which resulted in a $1.2 million negative year-over-year variance. The Landfill pricing environment remains very strong, and we increased reported landfill pricing by 7.6% year-over-year, and in addition we increased average price per ton at the landfills by 7.8% as we improved our mix of customers and volumes. Excluding the Southbridge Landfill closure, Landfill tons were up 3.1% year-over-year. Recycling revenues were down $700,000 year-over-year with $2.7 million lower commodity pricing, and $300,000 lower volumes, partially offset by $2.2 million higher third party tipping fees. In addition we also have higher intercompany processing fees. Commodity prices were down 38% year-over-year. This is mainly on lower OCC, lower mix paper, plastics and metals pricing. Pricing was also down 28% from the first quarter through the fourth quarter of 2019. Organics revenues were down $300,000 year-over-year on lower volumes as we continue to shed sledges that do not meet our lower tolerance for orders and management at our landfill sites and processing sites. Customer solutions revenues were up $2.2 million year-over-year due to several new multi-site retail customers and strong growth in our industrial services business. Adjusted EBITDA was $41.1 million in the quarter, up $7.3 million or…

Thanks Ned and good morning everyone. We finished the year strong. We continued to be a price leader in our market, our legacy businesses are performing well and we made considerable progress integrating our acquisitions during the quarter. Consolidated cost of ops as a percentage of revenue improved by almost 200 basis points over Q4 last year, driven both by price and by improved operating costs at the landfills and better performance at our recycling organics and resource solutions businesses. Our collection operations which generate about 50% of our revenue grew 18% over the same quarter last year, primarily through acquisitions. I have mentioned in the past that acquisitions tend to dilute our margins in the first year, as it takes time to get pricing where it should be and to increase the level of automation, appropriate to the operation. Given that margin headwind, we are really happy with the overall performance in the quarter. On a same store basis, excluding the acquisitions, we grew collection pricing by 4.8%, we’re slightly negative on volume and improved our overall variable margin contribution per driver hour, which is our key productivity metric by 1.5%. Recycling is a hot subject and I know that many industry participants are struggling in this low commodity price market, so I think it's worth repeating some of our comments from before. We, along with our customers in the northeast believe recycling is an integral part of a long term sustainable economy, and it's our obligation to provide our customers with the best possible outcome and keep the recycling model economically and environmentally sustainable. We continue to make investments to increase throughput and operating efficiency, as well as to produce cleaner products that will demand a higher relative price in the commodity markets. But we provide a service.…

[Operator Instructions] Your first question comes from the line of Tyler Brown with Raymond James.

Good morning guys.

Good morning Tyler.

Good morning Tyler.

Hey, so I’m little unclear on the North Country update. So to be clear, the decision to pull the permit expansion was based on a governmental interpretation issue. It wasn’t related to a vote, is that right?

No, that's exactly right Tyler. The agency interpreted the statute differently than they had in the past and we will take that into account and reapply based on the information that we've given. It’s a deviation from how they view that statute for you know my view, probably over 20 years. So we will we reapply with – you know in fairly short order.

Okay, so you do plan to resubmit and then in conjunction with I guess governmental approval, North Country does require a local vote.

No, it does not. We have approval. For this permit, we have approval. This is a permit that will give us probably four or five years of capacity. We have local approval for that. If we go on beyond that, we would need the local vote, but not for the permit that’s in front of – that will go back in front of the EC shortly.

Okay, okay, and so maybe at the 2020 tonnage levels, how many years does that side have? Does it have a handful, maybe four or five?

Yeah, I would say its four or five years.

Okay. And then obviously it's a pretty big drag, but where are those tons going? Are you going to try to internalize them elsewhere in the fleet?

Some of them certainly will be internalized to other facilities, some of them will go to third – some of the funds will go third party facilities, but we will internalize as much as we can within our system.

Yeah, we service roughly 150 towns and cities in the state of New Hampshire and having to move tonnages out of the state of New Hampshire is not easy, because you can take a state waste into Maine, you can't take it into Vermont. Massachusetts doesn't have capacities, so you’ll have to try to move it out New York, which could be as much as a 50% increase.

Wow! Okay, that’s helpful. And then Ned, so you mentioned that it's a $4.5 million EBITDA drag from North Country specifically, but then you also mentioned that there's a plus seven to eight from everything else. But I was wondering if you could parse that seven to eight between maybe Hakes, Chemung and pricing or just any flavor would be helpful.

It’s overall. Most of its just price and there's some extra time to New York as you know last year Chemung ran a little bit like, so we’ll ramp some tonnages to get that up to level. The rest of the sites are – well, should have pretty good year normal pricing operate efficiencies.

And there is no fundamental change in the North Eastern pricing dynamic. I mean it still feels very scarce capacity.

Yeah, I mean I think the supply and demand equation really hasn't changed Tyler for sure; it’s exactly right.

And then maybe Ned on the CapEx side, so you know I appreciate that you got a number of one – I’m going to call it one tiny CapEx items this year. Waste USA build out Southbridge capping and you have some other non-recurring items, but to maybe a little bit more clear, will the waste USA in the Southbridge spend basically be done in 2020 or does that also linger into ‘21 or ‘22?

So Southbridge is a combination of capping closure. The majority of it’s – they are some short term liabilities that will be worked down, about $14 million and we expect the majority of that to be done in the year. What we need is a good construction season to get all of the work done, that there's quite a few acres, so we'll be cap. And Waste USA, the major part of the excavation will be done in 2020 and then we’ll construct the South in 2021, and then we’ll be into the new expansion area.

Okay, and then so if I was to sum up those three, call it non-recurring items. I mean it is forty some million dollars out the in cash. Does that restrict your ability to do M&A or do you still feel like you have plenty of financial flexibility for good deals out there.

I think that way we would characterize it with you know significant availability from an acquisition standpoint in terms of the existing credit facility.

Okay, so not a limiting factor. And then maybe my last one, this is kind of in the same vein, but – and maybe that's a question for all three of you, but how do you feel from a bandwidth perspective, be it IT, be it human capital, financial capital. I mean all of the different limiting factors, how do you guys feel from a bandwidth perspective for future M&A?

You now I think that you saw us take a little bit of a pause in the third to fourth quarter Tyler in terms of acquisition. We did a lot of work in terms of really taking a look at the success that we've had from an acquisition standpoint. We’ve added people to HR, we’ve added people to IT. A few, not a lot of overhead, but certainly reflective on the work that we've done to integrate the businesses that we bought over the last 18 months or so. So, I think they we’re feeling good about where we are. We've got a few more resources that we're going to put in place from a development standpoint, but you know we think that back office, customer care, payables, the work that we did, that Ned did with the finance team to implement NetSuite is really paying dividends to us in terms of the back office. And we've added a few people both from an IT, as well as from an HR standpoint, because we've added about 600 employees in the last year – year and a half or so.

And maybe Ed, from an operational band with perspective, do you feel you have enough integration, call it manpower if you will.

Yeah, if you remember on the last quarter I talked about our expansion of our structures. So we now have a regional VP of Ops in the east and in the west, plus we’ve added resources at the home office to support the transitions. And we as John mentioned, we have one or two additions coming on and in the near future.

Okay, okay good. Ned, I really appreciate the bridge. I feel like maybe you've been asked that question before.

Thanks Tyler.

Thanks Tyler.

Your next question comes from the line of Hamzah Mazari with Jefferies.

Hi, this is John filling in for Hamzah.

Hey John.

Hey! Could you just comment on whether you think landfill pricing is at peak right now in your system and how much run away do you think is out there?

I think that we’ll continue to see you know a reflection of the supply and demand equation. So I think we're likely to continue to see fairly robust pricing because of the supply and demand equation. So I think it's fair to say that it will you know – I don't know that we would anticipate it being exactly as strong as it was in ‘19 on the go forward; maybe a little bit more modest, but still relatively in the same zip code.

Great! So I have one more question and then I’ll turn it over. Can you also comment on your margin target of 29% in the solid waste and how quickly you think you can get there? Also any execution risks we should be thinking about as well?

Yeah, so that's the one target in the 2021 plan that we’re probably tracking a little light against. We ended the year in solid waste at – sorry, I said it without the number – at around 26% and as you know we've had a couple of headwinds there for the last year, whether it be wage inflation or the south Bridge closure, some of the long haul transportation. We got back to improving margins in the fourth quarter. We had a great overall quarter of improving margins, but in solid waste our margins were up over 200 basis points, 210 basis points in the fourth quarter and we're looking at a year next year where we believe we'd anniversaried a lot of the fundamental changes we made from wage reset, transportation, third party disposals; we’ll get back to the cadence of 30 to 50 basis points of margin enhancement in solid waste. The North Country will weigh on that a little bit in the year, so we're probably – you know there's no reason we shouldn’t get to that destination, but we are tracking a little behind. I think we end 2021 closer to 27%-ish, 27.5%.

Got it. Thank you, that's very helpful.

Yeah.

Your next question comes from the line of Sean Eastman with KeyBanc Markets.

Gentlemen, thanks for taking my questions. I just wanted to go back to the North Country landfill setback. I just want to understand better the timeline of the resubmission process and just based on that, is it likely that this becomes a tailwind as we look into 2021?

I wouldn't anticipate it would be the tailwind through 2021 at this point, but we obviously we've got to go through the process. We're in the process of doing that now. We'll get the resubmission in as soon as we can, but I would not anticipate at this point it being an issue in 2021.

Okay, got it. And on the volume shedding, I just wanted to get some color on whether this was – you know this has been contemplated for some time based on you know the strategic initiatives or whether there's been any shifts of late in terms of competitive dynamics and you know any particular pieces of business.

We started a process early in ‘19 of reevaluating our customers on a profitability basis, particularly in the roll off line of business, but also the rest of the business, and simply readdressing customers that over time had eroding margins and so we started pushing price selectively to those customers or talking to them about how to change their operations, so that they could you know keep their costs the same, but not hurt our margins. And in that process there are customers that simply go to a competitor and that's okay, as long as we're keeping our price disciplined and we're keeping our profitability in place.

Got it. So no fully, sort of expected, kind of…

Yeah, exactly. No surprises, not at all.

Got it. And then just in trying to understand you know in the fourth quarter, you know again price growth ahead of internal budgeted expectations, you know just understanding the dynamic there, you know is it that the underlying inflationary environment was also higher than budgeted or…

You know, I think that it’s fair to say that you know the entire industry is feeling pressure from a wage standpoint, which you know in one sense is a positive for you know drivers mechanics, but you know the entire industry and the transportation industry is feeling a lot of wage inflation currently. Seeing inflation from a recycling standpoint, inflation from a disposal perspective, so there's a lot of inflation you know inherent in the business model at this point in time.

Yeah, and if you look at the year, we ended up solid waste at 5.1% overall price and we had budgeted around 4%, but we also ended up with you know about 75 basis points more inflation and it was on third party transportation, third party disposal and direct labor lines.

Got it, okay, that makes sense.

As we talked about in the fourth quarter, we started to really comp a lot of that and start to drop more to the bottom line again.

Yeah, okay, that makes sense. And then lastly from me you know, just given the bolstering of the HR and back office staffing, you know the leadership role additions, you know that’s a pretty material sort of EBITDA drag I guess from a year-over-year perspective in 2020. So I'm just wondering, you know considering those elements and then you know some of the efficiencies around the CRM and the ERP have yet to be harvested. You know how we're tracking over the next couple years relative to that 12% SG&A margin target.

Yeah, so we've made quite a bit of headway already as I talked about 80 basis points and it’s a combination of lots of different things. We’re gaining some scale on key roles, but we’re also gaining efficiency in the back office. In 2020 we’re focused on a couple of key technology initiatives. One is on the procurement side. As you know we’ve put a new ERP in place a year and a half ago and we are focused on digitizing, taking paper out, automating processes in 2020 and we hope to start to drive even more efficiency there and modernization of our systems. We haven't announced the target to the street, but this will be a self-funding initiative and we’ll generate you know margin benefit over the next two years. Our other major initiative is really looking at enhancing what we call our order to cash cycle from how customers interact with us to how we dispatch route trucks, onboard computing and we’re in a pilot phase, looking at some new technology there and this could have a really meaningful impact over time to make us easier to do business with and also enhance our ability to service our customers safely and efficiently. So it's exciting – a little early in that one to lay out a lot of dynamics, but from our standpoint we will continue to gain scale. As John was talking about, there’s some interesting growing pains when you grow as much as we have. We have grown 35% of our employees in the last two plus years and here is like the funny example; our payroll and benefits team. A very small, reports stuff through my team and we added 35% new employees, we hadn’t added a single hand in that group. So it’s almost like a step function. We need to add someone there to help support our employees and then you kind of grow into that role. So a little bit of that coming into 2020 where we’re adding key people to help us to continue to grow effectively.

Really helpful. Thanks for the time everyone.

Thank you.

Thank you.

Your next question comes from the line of Michael Hoffman with Stifel.

Thank you, John and Ned. How are you doing? You’re okay?

Yeah. [Cross Talk] I’m on crutches, but I’m… [Cross Talk]

And so we understand. I think there’s congratulations for you John, don’t you have another grandchild?

I do, I do, absolutely! Good question.

Congratulations! So to the business of trash, if we follow-up on the underlying inflation, could you actually quantify it as a percentage for some understanding of this, because you are getting terrific pricing. So what it sounds like is you’re doing 5% in landfill – solid waste pricing, but you're sitting here at 5.5% inflation; is that what I heard?

No, no, no, the opposite way. Yeah, well earlier in the year you know there were a few margin headwinds that were a little unfortunate. So you know at Ontario and the Southbridge comp, there are a few things like that that weighed on margins. Also as they brought in acquired businesses, they weighed on margins. So you know our direct programs are – pricing programs are outpacing inflation. If you just look at year-to-date, you know acquisitions alone in our first year are a little bit margin dilutive. They weighed on margin 60 basis points. You know Ontario weighed on 20 basis points and Southbridge 80 basis points. So you've got 160 basis points there and our margins were slightly backwards year-over-year, so all of our other pricing programs are outpacing inflation and markets, but we had a few of those you know unfortunate headwinds through the year. But I think you know we're setting up nicely for 2020 to outpace inflation.

Okay, so to that end I’m thinking about cadence. The first half of the year gets pretty good margin comparison, second half it’s a little tougher to net out for up 30 to 50 is what you're trying to get to?

Yeah, we were going to guide a little bit stronger than that, but with the North Country slow down to volume, just high margin business, that weighs on margins a little bit through the year.

Okay, and then John, just some clear understanding. Your answer to the North Country question, are you expecting it to be permitted and therefore online in ‘21 or we should assume on carrying this headwind, factoring it worse. Just that I still have $5 million of headwind into ’20, it stays in ‘21 and then it comes off.

You know I think that we're – you know I will hopefully to get through the process and you know have the facility operational by 2021.

Okay, alright. So this is $5 million and maybe a little…

The reason why we you know pushed back on tonnage is because I want to make sure it's – you know obviously there's – you know we’re going to get through the process Michael, but we think that we will get through the process and be able to you know minimize any impact to 2021.

Perfect! Okay, that helps. And then you have done a terrific job in price on the collection side. It feels like it's kind of settled into, you can sustain middle three’s landfill. You’re in this, still exploring sort of you know the market corrections given the disposal reduction. Where do you think it settles? It’s obviously – 7%, 8% is not sustainable, but where do you think it’s settled. If we’re taking out and trying to model out five or six years. Will you think about landfill being able to do it forward consistently once you kind of work through all of the market corrections?

Yeah, that's what we had in our internal models moving out the next several years. As you know we’ve been working through – if you look at our landfill book of business, about a third, a little more than a third of the tons going in are from around trucks. About a third are from long term municipal contracts, and about a third are from independent third parties, and everything on our own stocks we push through the intercompany pricing each year and we're pushing it through that 6% to 8% range. Third parties, we've moved more to shorter term contracts, so we can more perfectly reflect the constraints in the market and as we’ve been working through some of the longer term municipal contracts, you see some larger step-ups. So some of those larger step-up’s are also probably shading it above 5% a little bit right now, and I think we believe as we look forward to the next couple of years that that 4% to 5% range is sustainable.

Okay, that’s very helpful. And then, when do you think the market rate gets to a level where far distant assets become attractive and volume can move away from the market through trains and what have you. Is there a risk to that, that it causes a shifting in this pricing environment, because railing gets – it was accessible?

You know, I think we still have ways to go Mike. Well, I don't think that we're at the level where you know the capital intensity of rail and you know what those numbers look like in terms of the intensity, the amount of capital that has to be deployed to move that same thousand ton a day that you can move by truck. So I think that we've got a-ways to go before that's going to be effective. At some point in time you know it may very well be, but I think we're years away from you know it really being effective in terms of moving waste you know from a rail perspective; we’ve got ways to go.

It also depends on what state you’re in. So if you’re in New Jersey or Pennsylvania where you can't get overweight permits for tractor trailer trucks, it’s a little different story. So you’d see more rail transfer stations set up. If you're in New York State and you can get over overweight permit, it’s pretty effective to move the waste via truck. And our sites are well positioned for major population centers and we believe many of the moves are sustainable long term.

Okay, great. And then all the deal sites, so the pipeline is full and you're still active and theoretically you could absorb similar levels like you did a year ago. Is there any sense that the current election environment is spooking people to get things done in ‘20 to have certainty on their tax position or are we just seeing the…

I think it depends on the level of sophistication and the size of the company Michael, but for the most part I think that the drivers there are the inflation that all of the independents are feeling from a labor standpoint, you know from a disposal perspective as well as from recycling standpoint. The value disruption from a recycling standpoint is a big, big driver for a lot of the smaller companies. As is the labor, if they can find – the other thing that we've done is, we’ve changed our system. We’ve put training programs in place. Now we’re trying to hire people, trying to attract as many people coming out of high school that are not going on to college and give them a career. We are doing an awful lot of work there, and as we’ve said before, we beefed up HR to really – and we've been successful, we are filling – we filled the slots from a driver's standpoint. At one point in time we had 40 openings for drivers across the system, and so I think there's a tremendous amount of pressure on the independence because of wage inflation, recycling inflation and disposal inflation.

So would you say that your retention has going up or your current drivers is going down, whichever way you want to refer to it?

Yeah, retention is going up. I mean one of the things that we did was, with Kelly Robinson come in as our new VP of HR about two years ago now, but the first year he spent just doing career development. So if you come to work for Casella as a real load driver, we’ll train you is a rear load. If you do a good job and your safe, we’ll train you as a rollout driver, we’ll train you as a front load driver, we’ll train you as a swing driver and then you can become a trainer and there you can see how you can go from $18 to $35 an hour in a five year period of time, and really have a clear understanding of what your career could be at Casella. And it’s really paying dividends, because what we found was the majority of our turnover was in the first year and a lot of are accidents and safety issues are in the first year. So we're doing additional training and we're doing a lot of work to really impact the turnover. So it's – the programs are really beginning to work and take hold and the first thing that we were able to do with those programs was to fill a seat, and now it's about retention and bringing people skill sets up and allowing them to progress along that career path, so they can do a better job of taking care of their family.

Okay, thank you very much. I appreciate it.

Thank you, Michael.

Your next question comes from the line of Tyler Brown with Raymond James.

Hey guys, just a couple of quick follow-ups if I could. First off, there was no C&G tax credit benefit in Q4.

There is a very small one, so we use about 400 - I'm sorry, about 200,000 gallons per year, and so we had about $200,000 of benefit in Q4.

Okay, that's helpful. I just wanted to make sure there wasn't something there. Secondly, the – so Ned when you talk about resource solutions being a positive two to three, I'm assuming that's now including the recycling piece, because I would assume that there’s some recycling benefits rolling into ’20.

Yeah, and I kind of quickly made that comment. We’ve reorganized our internal teams to be more active where our recycling, our customer solutions and our organics groups are now under one leader and they have very common business plans and goals. So next year when you see our segment recording, you'll see the east and the west, the solid waste groups, the resource solutions group and then other corporate entities. And the 2 million to 3 million is mainly driven by recycling with a little bit of growth in organics and customer solutions.

Okay, that's what I thought. And then just lastly, I do want to come back to the seven to eight again on the disposal, the positive seven to eight which excludes North Country. But isn’t there a couple of million benefit from Ontario presumably not reoccurring. Again, we talked about Chemung, but it doesn't feel that there is a huge assumption in there from a price perspective. I could be wrong, but are you kind of thinking about landfill pricing moderating in ‘20.

Yeah, in our model we had it monitoring, we had it around 4% to 4.5%. And you're right, Ontario we had this little easier year-over-year comp. We ran some higher costs, operating costs in the first half of the year as we are addressing some gas issues at the site, and that's around $2 million of tailwind per say coming into 2020. Chemung, as we mentioned earlier, we got a permit increase several years ago, but we hadn’t exercised our option to get into that additional annual capacity, and we started to ramp it late in 2019, so we’ll fully ramp that this next year, so that'll be about $2 million to $3 million of benefit and the rest is just at various sites, good pricing, good operating discipline.

Okay, I appreciate it.

Good, thanks Tyler.

We do have a follow-up question from the line of Michael Hoffman with Stifel.

Sorry, I forgot to ask this interest rate question. Rates, basically the banks are practically giving money away to the garbage industry. Do you have an opportunity to meaningful lower your rates?

I'm not sure if we have an opportunity to meaningful lower rates. We did a great job in 2018. We refinanced our senior secured credit facility, a Term Loan B into a new revolver and a Term Loan A and we put our pricing grid in place. So as we get leverage out of business, our rates drop, and we are currently paying on that LIBOR plus-175, and we can step down in that grade all the way to L-plus 125. We’ll look at that, we're also looking at whether there is an opportunity to do a blend and extend their and improve our position. We’ve been active with tax exempt bonds and we expected to have some more in 2020, that will help fund growth and we think getting you know very low fixed rate there, they are extremely effective. So I don’t think there is a big step-down there Michael, because we've done such a nice job taking interest costs down, but we’ll look at it.

I mean, you are over five at this point, and while then get the multi-billion revenue companies and again money at 2.5%. Can’t you get this below five.

Yeah. So our revolver is still LBIOR plus -175, so I think that like 3.5%. We got some fixed swaps that puts it more like 4.25 as part of that money. Our tax exempt debt, everything we're doing today is sub 3% fixed. Some of that historic stock is more like 4.5% to 5%, so as those rollover, but they have non-call provisions in them. So generally we’ll look to work it down, but there is – you know there is not a big step down unexpected.

Okay, and then lastly what tax rate am I supposed to be using?

26% is our effective tax rate in 2020, though we’ll essentially Jason, we’ll have very little income state taxes, how much do we have in the model?

Correct. We are anticipating you know close to nothing.

Close to nothing.

Yes, we got a million dollar tax provision.

Million dollar tax provision in 2020 and then cash taxes should be around the same.

Okay, thanks. I appreciate it.

Thank you, Michael.

Yes, thank you guys.

I’m showing no further questions at this time. I would now like to turn the conference back over to Mr. John – I’m sorry, we did just have a question to come into queue.

We are done operator.

I’ll turn the call over back over to Mr. John Casella.

Thank you, operator, and thank you all for attending this morning. We look forward to discussing our first quarter 2020 earnings with all of you in early May. Thanks everyone. Have a great day!

Thank you for participating ladies and gentlemen. This concludes today's conference call. You may now disconnect.