Joe Fusco - VP John Casella - Chairman and CEO Paul Larkin - COO Jim Bohlig - CDO Richard Norris - CFO

Scott Levine - JPMorgan Eric Prouty - Canaccord Adams Alina Cellura - Citigroup

Good day and welcome everyone to the Casella Waste Systems, third quarter fiscal year 2008 financial results conference call. This call is being recorded. At this time, I would like to turn the call over to Mr. Joe Fusco. Please go ahead, sir.

Thank you for joining us this morning and welcome. We're joined today by John Casella, our Chairman and Chief Executive Officer; Paul Larkin, our Chief Operating Officer; Jim Bohlig, our Chief Development Officer; and Richard Norris, our Chief Financial Officer. Today we'll be discussing our third quarter fiscal year 2008 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 answer 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 table section of our earnings release, which was distributed yesterday afternoon and is available in the investor section of our website at casella.com. Now I will turn it over to John Casella who will begin today's discussion. John?

Thanks, Joe. Good morning, everyone and welcome to the fiscal year '08 third quarter conference call. Our purpose today as usual is to give you some insight into the third quarter results. I'm sure before I begin that everyone saw the announcement early in January regarding the reorganization of senior management. I'd like to take the time initially to welcome Paul as newest member of our team as our new President and Chief Operating Officer. As you know the management changes in January and will allow us to enhance our management attention on operational efficiency, while at the same time enabling continued development of the business opportunities beyond the traditional consumption model that meets the environmental sustainability needs of our customers today and tomorrow. Richard plans to go through the numbers as usual and certainly he has continued in his role as CFO during the search for his replacement. Also just an update in terms of the search, the CFO search is progressing very nicely we have several finalized candidates and I expect to have this completed during the fourth quarter. After Richard's summary Paul will run through some of his early observations, the first six of weeks his, really, I think a whirlwind tour throughout many of our operations since he came on Board on January 9th. I don't expect Paul to lay out specific goal, however, he would provide a general overview of the areas that he has targeted for improvement and we will provide a robust plan on our fourth quarter '08 conference call in June. And as usual, Jim will give an update on recycling and the development activities. Now, for the quarter results. Our third quarter results were driven by great commodity pricing and cost reductions. During the quarter we continued to execute well against the plan that we had laid out in the spring. Team was given a clear direction on improved operating efficiencies and harvesting cash flows from landfill initiatives, and they are executing well against these objectives. Our core focus remains the same; increase shareholders returns and generate positive free cash flow. We've made solid progress on two key metrics. Free cash flows improved $17.4 million year-over-year, and we've increased our return on net assets by 30 basis points year-over-year. Excluding the $1.2 million of non-recurring management reorganization charges that incurred during the quarter EBITDA was $27.5 million up $1.4 million or 5.4% over the same quarter last year. EBITDA margins contracted by 80 basis points mainly due to higher fuel costs and purchase material cost as a percentage of revenue. Excluding one-time reorganization charges operating income was $8.5 million down $600,000 or 6.6% over the same quarter last year. A bit higher depreciation and amortization cost, purchase materials and rising fuel costs were the main negative drivers on a year-over-year basis. Since our fuel charge is based on a trailing Department of Energy Diesel Index, it did not cover all of our increased fuel cost during the quarter and that made up a large portion of the $600,000 that we were off on a year-over-year basis. Year-to-date we've performed very well and have exceeded most of the aspects of the financial plan that we put in place last spring, including the $1.2 million of management reorganization charges we've grown EBITDA $9.3 million or 10.8% year-over-year. In addition, we've grown operating income $3.8 million or 11.7% over the last year and in light of that performance we've raised our EBITDA guidance from $114 million to $118 million to $118 million to $122 million for the full fiscal year. Now onto price and volume. There were three major factors that impacted price and volume during the quarter. The MTS facility and the volume strategy on closure projects Pine Tree landfill and the closure of Brockton and Hardwick landfills. During the second quarter we shifted from a continuous to a batch process at MTS soils processing facility and these changes resulted in lower volumes. The specific volume strategies at two landfill closure projects and Pine Tree, which is nearing final closure impacted solid waste price and volume statistics for the quarter and we expect that these projects continue to impact price and volume till they are completed. Excluding this impact, solid waste pricing was actually up 1.8% year-over-year including the surcharges. Solid waste volume was up 10 basis points year-over-year as well. Solid waste hauling and transfer pricing was up while landfill pricing was down. The main driver to negative landfill pricing mix was lower priced C&D tonnages at Pine Tree landfill and lower priced BUD materials. With softness in the regional economy during the past year we've chosen to be conservative with our pricing strategy. We are now beginning to test price elasticity in the market and expect to push more collection pricing into the spring. That's also a function of the efforts that Bill Hanley has made to really rethink reorganize our sales program and our sales management over the last year and half. Overall landfill tonnages were up 67,000 tons year-over-year at the active sites. MSW volumes were down at landfills while C&D volumes were up 105,000 tons year-over-year. As with the last several quarters, Pine Tree had a positive impact on volumes and a negative impact on price. The site has no annual capacity and will be permanently closed on December 31, '09 as such we placed about 57,000 tons of lower price waste at the site versus last year. The economy -- a little overview inside on the economy. The economy in the northeast remains quite soft, impacting seasonal and permanent collection volumes in the region. We believe the economic data from late fall and early winter suggest flatness to slight weakening of the economy. We felt that the brunt -- we do feel that the brunt of the downturn -- we did feel the brunt of the downturn last year and conditions now remain generally stable. The construction slowdown and soft economy continues to negatively impact our collection business with roll-off pulls down 4.2% year-over-year in the third quarter. The slowing rate of decline is also an indication of moderate stabilization. So in essence, we really do feel that we felt the majority of the impact from an economic downturn, as we've said historically, we tend to lead in the northeast into a downturn. And I think that we felt the brunt of that, as I said last year, and now we feel that things have remained basically stable. Recycling business performed well with EBITDA up $2.5 million year-over-year. EBITDA gains were driven by higher commodity prices and increased volumes. One of the most significant drivers in the quarter was a gain year-over-year in plastics pricing. Unlike fibers, most of our contracts for commingled containers including revenue shares that allow us to share in the positive price movements like we experienced with plastics this quarter. A little bit on the operating strategy, a brief overview of our execution against the operating strategy that we laid out in the spring. The plan focused on profitable revenue growth, cost reductions, and high return capital deployment to generate positive free cash flow and increase shareholder returns. This year we plan to be negative $1 million to positive $3 million of free cash flow, and next year our target is $10 million to $15 million of free cash flow. With the permitting successes in the fall at Hakes and Ontario landfills, we have final permit for roughly 450,000 tons of our targeted annual capacity increases. As I talked about on the last conference call, our goal is to ramp tonnages at Ontario and Hakes through fiscal '08, fiscal '09. To ensure that tonnage ramps are optimized, Bill Hanley, our Vice President, Sales, has built a robust prospecting tool to effectively source and price volumes to the expansions. As part of this development work, we've identified a large number of independent transfer stations across northeast as our sales team has not worked with in the past. And in fact, when we look at what we've done there, we've gone to the regulatory agencies to get all of the data information in terms of the movement of waste through transfer stations. And we've identified several hundred transfer stations than, in fact, we've not called on historically. And we believe that that will give us the opportunity to access the tonnage that we're looking for in terms of being able to ramp-up the success that we've had in terms of the permitting to-date. We believe the plan to ramp tonnages with contracted third-party volumes delivered to the size mix, great strategic sense. With this strategy we don't have to put additional capital into trucks or acquire new collection businesses. This strategy will also help us grow free cash flow margins and returns at a faster pace than the traditional vertical integration approach. As I've mentioned before, the underpinnings of our landfill development strategy is supply and demand of the annual capacity in the northeast. We're adding annual permitted capacity in the region that exports 9 million to 10 million tons of waste every year. A little bit of recap, during Paul's first six weeks, he has visited about 60% of our locations and gained a good understanding of how we're operating in each market. He is focused on improving our operating performance through a coordinated sales approach and continued cost rationalization. This fiscal year, our main focus is on restructuring of operation, procurement rationalization, operating cost reduction programs, and the divesture of non-performing assets for making good progress against our objective, to eliminate $6 million of cost from the business during fiscal '08 and '09. Today with the programs in place over the past nine months, we projected an annual savings of approximately $4.1 million against our goal of $6 million. Roughly $2.2 million of the $4.1 million of projected cost savings is in our fiscal '08 forecast, and the remainder will be recognized in fiscal '09. The restructuring of operations in Massachusetts, our main markets during the first quarter of fiscal '08, has worked out well with increased operating efficiency and the elimination of unnecessary overhead. We had originally projected an annual cost savings of $1.8. We now believe after everything has settled down that that cost savings will be $1.2 million, all recognized in fiscal '08. The strategic sourcing initiative with Mitchell Madison has also moved forward very well. At the end of last quarter, we had completed the RFP process on new service contracts in the areas of temporary labor, tires, fuel, legal services and engineering services. The total estimated savings from these categories is roughly $1.6 million per year. We've made great progress on our long haul transportation piece. We are negotiating new contracts with one vendor that will save roughly $800,000 per year. We're working with several other long haul transportation vendors and expect to have in addition all of those by next quarter. Of the $2.4 million of total project savings from the strategic sourcing initiatives, roughly $1 million is in our fiscal '08 forecast and the remainder is expected to be recognized in '09. On the operating front, we won us a great program in late January, which will have a positive environmental impact while having a positive economic impact. And I think the importance of that is truly to tie both of those issues together. It's a pretty easy decision when, in fact; we can do the right thing in terms of reducing our carbon footprint and do that in economic model that's also creating value as well. We're installing the OPS on-board, oil refining system in 800 trucks. We expect to have this completed by May 1st. The OPS system will virtually eliminate the need to change oil in our trucks eliminating $500,000 of the annual maintenance costs and eliminating the need for 45,000 gallons of oil each year. The investment will pay for itself in less than a year. Capital outlays for programs are included in our fiscal '08 forecast and the projected cost savings are expected to be recognized in fiscal year '09. This program is a great example of excellent work of our people are doing to reduce the environmental impact of our business consistent with our EPA Climate Leaders goal to reduce greenhouse gas emissions within an economic model that works very nicely. With the sale of Buffalo in October and Holliston in April, we substantially completed the 22 million of divestitures. We continue to analyze our business units to determine if there are any other divestitures or reorganizations throughout opportunities that will also increase shareholder value. With that I'll turn it over to Richard, who will take you through the numbers.

Thank you, John. For the quarter ended January 31, 2008, revenue increased $12.5 million to $141.4 million or 9.7%. Internal growth for the quarter reflects higher pricing across the hauling and transfer operations in the solid waste segment. However, landfill prices again showed a net decrease, including a slight decrease in MSW pricing. Our Pine Tree landfill, we have no daily limit but limited time remaining to fill it, so we're accepting some price decline there. As a result, average C&D prices saw a significant decrease by 14.5%. The price for other landfill material including bud and soils also dropped significantly, but again, this was mainly due to mix. The Pine Tree price decrease with C&D impacted our overall pricing negatively by 60 basis points. Our closure projects at Worcester and Colebrook, which are not included in our landfill statistics, benefited from a large volume increase at Worcester, albeit at lower prices. Without the closure projects, our total price increase would have improved by another 50 basis points. So to summarize the total impact of Pine Tree and the closure projects on price amounted to 110 basis points. On the volume side, hauling and transfer station volumes were up after taking the reduction in operations at MTS into account. The latter change decreased solid waste dollar volumes by 150 basis points. Total landfill volumes increased by 8%, the mix change of the landfills noted last quarter continued. MSW volumes were again down 6% this quarter, while C&D increased over 30%, as John mentioned, both at Hakes, where we've increased volume due to the new permit and at Pine Tree. FCR's volumes increased and commodity prices again moved significantly upwards including plastics. The fiber price increases were partially offset by the hedging program which was put in place to minimize volatility. So revenue for the quarter breaks down as follows; solid waste $98.8 million, FCR $34.2 million and other $8.4 million for total of $141.4 million. Gross margins were down year-over-year, 170 basis points. Despite the slightly higher transfer and hauling volumes, operating costs were lower as a percentage of revenues, especially direct labor and third party disposal costs. However, fuel prices were up substantially in the quarter which caused 100 basis points of the margin decline. The higher value of commodities year-over-year and consequently the higher payments to municipalities drove the purchase materials FCR higher. So, that as a percentage of revenue these costs were up 2.9%. Purchase material prices were again up 71% year-over-year. General administration costs decreased as a percentage of revenue year-over-year 10 basis points. Most categories of expenses were down as a percentage of revenue especially legal and bad debt. But compensation was up, the main factor being the cost associated with the management reorganization amounting to $1.2 million. Moving on to EBITDA; for the quarter EBITDA $26.3 million was up $200,000 versus the prior year. Excluding the management reorganization charges of $1.2 million, it was up $1.4 million or 5.4%. EBITDA breaks down as follows; solid waste, $18.5 million, FCR $7.9 million, and other was $17,000 loss for total of $26.3 million. Solid waste EBITDA was down from the prior year and margins decreased by 290 basis points. The main factor in the margin decline was fuel, which had a significant impact of 180 basis points, plus the management reorganization costs which negatively impacted solids waste margins by 120 basis points. For FCR, another great quarter, EBITDA improved by $2.5 million, the margin increased this quarter by 220 basis points to 22.7%. Average selling prices were again up this quarter as were volumes. Tons shipped were up 0.5%. The major factor in the EBITDA increase was the commodity price increases, including plastics which were a significant component this quarter. They were up from last quarter 11% and up 45% year-over-year. Depreciation and amortization expense, this was up $2.1 million year-over-year. Landfill amortization showed a large increase over the prior year, rising mainly from the higher amortization rates of Pine Tree, because of the shorter life agreed upon with the state but also from the higher volume to the other sites especially Hakes and Worcester partially offset by the closer of Hardwick. Income taxes, as I have explained previously the tax rate continues to be very volatile and difficult to predict, as was the case again this quarter because of the low level of pre-tax income. The tax provision is always computed on a year-to-date basis using year-end estimates of book and taxable income. So the provision for the quarter is adjusted to end up with the correct year-to-date amount. For the full year, we expect the tax provision, which will likely be a charged to be in a range of $2 million to $3 million depending on the level of book income or loss. For the quarter the net loss amounted to $4.6 million or $0.18 per common share, which result includes $0.08 per share related to the management reorganization charges, and the swing in the equity results. Moving on to the miscellaneous statistics internalization, the northeast region internalization was up due to more [fastening] volumes being delivered to the Maine Energy, higher internalization in the [Bela] market and the bio fuels. The western region benefited from higher volumes at Geneva and Auburn, as well as lower volumes at a couple of divisions, which are unable to internalize. Central was able to internalize more especially by Gobin transfer. The average interest rate for the quarter decreased to 7.96% including amortization of financing costs. Net of these expenses it was 7.7%. Availability on the revolver at January 31st, was $157 million after taking into account $44 million of LCs outstanding. At the end of the quarter our debt to EBITDA ratio calculated for the bank covenants was 4.2 times. During the quarter we've closed on two acquisitions at a purchase price of $1.1 million and EBITDA at multiple of less than three times. Free cash flow for the quarter showed a $1.2 million increase and improvement over last year due mainly to lower capital expenditures and the change in working capital. Although accounts receivable decreased, this was more than offset by lower accounts payable and lower capital expenditure accruals. Interest expense was up mainly due to the higher debt balance. Now a couple of comments on the outlook as you've seen we've revised our guidance for the year and we expect EBITDA to come in the $118 million to $122 million range, including the reorganization charges, revenue to be in the $570 million to $590 million range, and free cash flow from negative $1 million to positive $3 million. The forecast change in working capital is largely responsible for the free cash flow decrease from the covenants made last quarter. Free cash flow is highly sensitive to the change in working capital. US GreenFiber continues to suffer from the low housing starts, so that we're revising our share of equity losses from both and US GreenFiber and RecycleBank upwards to $5.9 million for the full year. And with that, I hand it over to you, Paul.

Thank you, Richard. Good morning and I am excited to be here this morning. I'm going to take you through a walk of my first six weeks with the company and prod inside on where we will focus our efforts regarding sales and improving our operating expense leverage in the upcoming quarters. I will characterize these observations into five selling and five operating expense initiatives, but first take you through how those observations were formulated. As John said, I have been out to approximately 60% of our sites in the first six weeks. These visits have been focused on me and our people, our field leaders, understanding our processes and how we are executing in each market. We reviewed our operating performance with the management teams in terms of EBITDA, operating profit, as well as their top sales parties and top expense reduction opportunities in the markets. Overall, these visits have been very productive and helping me understand where to take the business going forward. In a category of sales drivers, the first area of focus is going to be improving our operating margins in our underperforming markets, identify specifically why these markets are underperforming, developing comprehensive sales and operating plans, focused on improving margins and with a concerted effort on fix or sell approach with a heavy focus on fixing. Number two, continue to drive sales within our high performing markets by leveraging the existing sales and marketing tools we already have, while also augmenting those tools with a more comprehensive resource management selling strategy. That resource management selling strategy will focus on understanding our customers' waste stream requirements, and offering solutions to services that are more in line with a total environmental solution provider. Leveraging our leading recycling infrastructure. As a solution for our customers to not only think green but to become green. Educating our customers, regarding our advances with landfill gas to energy and other waste to resource transformation programs that Jim will speak to. Third, to continue to improve our customer service metrics our net promoter score. We have an opportunity to create a more robust program internal to our company, which will survey more customers and also survey them more frequently. We believe this will enable us to provide a deeper understanding of our own opportunities and become more agile in our responses. We are also introducing a more effective and timely business performance tracking tool for volume, revenue, gross margin and key operating expenses. Previously, these reviews were done on a monthly basis to the business process and system constraints. However, in partnership with our new CIOs, we're now receiving this information in a more timely manner improving our ability to respond to market trends. Finally, in regards to sales observations, we are sharpening our focus on landfill volumes selling opportunities across our markets and refining our revenue mining capabilities. As John said, we see an opportunity to more aggressively attract almost 8 million tons of waste coming out of these independently owned transfer stations just in the States of New York and Massachusetts alone, as examples of areas that we've not previously called upon. Under the category of operating expense leverage drivers, we have several ongoing pilots designed to improve our productivity and efficiency in a number of critical operating areas within our business. A brief recap is as follows; we're currently [impelling] a fleet routing software application in our Montpelier and Burlington markets. This routing optimization pilot targets a reduction in driver hours and we expect pilot results in late April 2008. We currently do not have a dynamic real time routing application. We are also piloting an on-board technology system within our vehicles and select markets to evaluate what we believe is a significant opportunity to improve the connectivity between our drivers, our customer service teams, and ultimately, our customers automating many administrator requirements while improving our customer service. We expect our pilot results in early April 2008. Also regarding our fleet, we're implementing a fleet maintenance management software package that will streamline all of our maintenance operations including purchasing and inventory processes, warranty claims, and recovery, while also enabling us to leverage and drive direct and indirect labor percentages. As previously mentioned by John, our Oil Purification System is underway. Based upon the success of this program to-date, we see an opportunity to expand this program to our off-road fleet and we are evaluating that savings opportunity now. We're pleased with the gains we've seen to standardize processes across our operations and we see continued opportunity, continued effort. We have reviewed all of our operations by line of business and by our key performance metrics to identify additional areas for improvement. We'll be conducting operating reviews across all of our locations, led by the managers of our top performing businesses, as well as other key employees and managers across the organization. These teams will identify processes and structures within those top performing locations that are facilitating and enabling that high level of performance. We will be contrasting these processes and structures to other operating units across the company in identifying replicable and sustainable processes that will standardize across our business. We see this as a significant opportunity to leverage the talent and knowledge and experience of our field management team in driving change within our business and I'm very excited to be a part of that. With that, I will turn it over to Jim.

Thanks, Paul. First, let me welcome Paul. I think that the design objectives that the Board and John had in terms of refocusing on the operations is evident in Paul's summary and it's been excellent 60 days since he has joined us, and certainly he is going to also enable me to be more focused on the retransformation part of our strategy. And particularly, the first focus which is to complete the landfill developments. So I will report on the balance of the development and on the operating efficiencies associated with FCR to complete the report to you. First, FCR had an excellent quarter as Richard suggested, both pricing and volume are up, indicative I think generally of a stronger and more robust recycling environment which is out there. Generally speaking, prices were very strong in plastics; PET was up 6%, almost 7%, natural HDPE up 11%, pigmented up 13.4%. We do believe plastics probably are at our reasonable ceiling at this level, so we don't expect this pricing to continue increasing incrementally, but we do expect it to be very stable as we go forward. Obviously, ONP and OCC have been steady to strong this quarter as well. This is good information because this is a period of the year that we generally, seasonally generate a lot of material. And we expect as the material generation falls, the pricing will probably stay where it is or slightly increase. Volume tons received and shipped were up, and the overall gross commodity pricing, which is on the neighborhood of $121 of ton is up 5% quarter-over-quarter, and higher on a year-over-year basis. From a development standpoint within FCR, our strategy is to convert and extend our existing contracts and to take advantage of the single-stream way which is out there, both from the cost standpoint as well as from the volume standpoint. This quarter we continue to negotiate with Stratford and Hartford with regards to single-stream conversions and our final contract negotiations. We also were selected this quarter for the Waukesha county three-year extension. And we're very proud about that negotiation, which was a competitive bid with a large number of strong competitors. We retained the business in regard to be continued partners of Waukesha as they continue to move their recycling programs forward. Cherry Hills had a very successful RecycleBank rollout, participations exceeded well above the plan that RecycleBank have and certainly that we had. And our Philadelphia capacity, recycling single-stream capacities add capacity, and we will be adding some additional capacity there, which is reflective generally of a very strong recycling market in [New Jersey]. As you know, we are in the process of converting [canned] into a single-stream and expect to have that in operation in June or July. And as I indicated earlier, in the weak of the strong demand for single-stream, we are now focused on ensuring that our costs are lowered, and that the volumes continue to be increased. And we think the single-stream conversion is a primary vehicle and channel to accomplish both of those goals. And you will see us being systematically targeting the various 25 material coverage facilities that we have up and down the Eastern Seaboard to realize these gains associated with those two strategies. Moving on to US Green -- to the development section first. As you know, a core piece of the overall strategy for the Company is to complete our landfill expansion permit strategy. The principal after receiving the permit expansion, Ontario, the principal site that we are focused on in Southbridge, we embarked on the Board House hearing this month. We had conducted six of those hearings. Nearly a 100% of the testimony was filed. There was a procedural area that the Board of Health did not notify a small one acre piece of land that was in a third community within the half mile procedural requirements. So we chose to be safe by procedurally re-filing for the application, which was done last week. The net effect of this is a delay to our schedule of about 21 days while we feel unfortunate about that, it was the right thing to do in terms of making sure that the public process picked a [tactary] item that was required. We now have all parties notified and we believe that the previous testimony, that will be filled and has been filled, there was a pre-filed testimony so that the scheduled delay will be minimum, probably less than 30 days as outlined. Some of you have seen articles in the local paper with regards to Southbridge. There is yet another one this morning. I think that at a time here where we're in the middle of hearings. We won't step in between the Board of Health and the Council, but I believe that the program is very stable. But the business development strategy the town has for expanding their industrial park, there are now some tension to put the road offer bid and the principal funding mechanism of that which is associated with the landfill expansion are all intact and that we expect to have the Board of Health hearings completed by the middle to the end of May, and to be moving nicely on our schedule there. Pine Tree landfill gas energy has been placed into operations and essentially on-schedule and we are selling power and receiving renewal energy credits there. We're in the kind of final innings of construction for the Highland landfill gas energy and we'll embark on the similar program for Clinton County beginning Q4 '08 this spring for construction of a similar plant there. Moving on to US GreenFiber, it's obvious that the housing market is in its bottom or still seeking the bottom. We expect that bottom to be reached sometime in calendar year '08 and for a recovery and any material fashion not to occur until mid or third quarter '09. That obviously is a troubled market and contractor sales are reflecting that, but despite that we've had a very strong retail market season. Our overall retail program was up 24%, and particularly driven by Home Depot, Menards and Lowes which are up over 30%. I think that’s important because it's indicative of the strength of the value of this brand relative to the greenhouse gas and the green part that is getting more traction everyday in the eyes of consumers. And I think that once the housing market finishes, it's correction US GreenFiber will regain it's trajectory and be a very strong performer in this overall market. With that I'll turn it back to John for his final comments.

Thanks, Jim. Actually before we go into Q&A, I'd just like to also talk about two changes to the Board of Directors. On February 28th, Randy Peeler resigned his Board seat and the Board of Directors approved the nomination of Michael Burke. First, I'd like to thank randy for his contribution to the Board of Directors over the last seven years and clearly from our perspective its absolute pleasure to work with Randy and the entire team at Berkshire Partners. I'd also like to welcome Michael Burke to the Board of Directors. Michael has an impressive track record in corporate finance and capital markets. His corporate finance experience as CFO for Intermagnetics General Corporation; publicly traded Medical Device Corporation and as a CFO for HbT, a private company that manufactured hydrogen fuel cells will be a valuable contribution to the Board. In addition, Michael's 20 plus year of capital markets banking experience at CIBC Oppenheimer in power technology, energy and electric utility industries will add a valuable perspective to our business strategy in renewables. With that I would like to open it up for questions.

(Operator Instructions) And we will take our first question from Scott Levine with JPMorgan. Scott Levine - JPMorgan: Good morning, guys.

Good morning, Scott, how are you. Scott Levine - JPMorgan: Very well, how are you?

Perfect. Scott Levine - JPMorgan: Okay. With regard to the solid waste pricing trends, the numbers look pretty good. Anecdotally it sounds like you guys are still seeing a rational environment or perhaps on the landfill side maybe seeing a little bit of a slowdown. Could you give a little bit more color regarding what you are seeing out of your competition, both larger and smaller players there? Is there any real change in the environment or is it kind of just a one quarter anomaly?

I think it's fair to say that we really haven't seen any change. I think that the discipline that has come into the industry remains. I think certainly that the function of where we go from an economic perspective out into the future, but certainly at this point in time I think we're not seeing any change there at all. I think from our own perspective, though, I think that we have a change that is ongoing and that is a really renewed focus on price and volume growth with Bill Hanley and Paul's efforts in terms of putting the database in place. Reconfiguring our sales force over the last year and a half, reconfiguring how we go to market. Also from a practical perspective we've also put the landfill sales transfer station landfill pricing initiatives also under Bill, so that we have that collectively now all tied together. So I think, Scott going into the future that should add some real value in terms of our overall pricing volume and also as we said when we went into the economic downturn in late '06 early '07. We really chose to be a little bit more conservative recognizing that we were going to have over million tons of additional capacity to ramp up. We've chosen to be a little bit more conservative there. So I think we will begin to look at that differently and test that as we go into the end of '08 into the beginning of '09. Scott Levine - JPMorgan: Got it, great. Then regarding your debt balances. Could you remind us what percentage of your total debt is at floating rates net of hedges and I think you said 7.7% was the normalized interest rate for the quarter. Just want to confirm that as well.

Yeah, the average interest rate net of the hedges was 7.7 -- net of the amortization of financing cost, cash cost was 7.7%. The amount floating is about $180 million when you ignore the colors and the interest rate swaps that we have in place. Scott Levine - JPMorgan: Got it, one last and then on the free cash flow you mentioned working capital kind of lowering the number a little bit. Could you give a little bit more specifics on what is on fiscal '08 on the working capital side?

Sure, as you appreciate the change in working capital is the change from the pervious fiscal year end and when we gave guidance, we basically were doing this on a projection and at April 30th, 2007 we ended up with large capital expenditure accruals, which as you'll appreciate did not have an impact on the 2007 free cash flow, because the accrual offsets the CapEx. But when that accrual gets paid out in the following period, free cash flow is negative impact because obviously that accrual gets turned into a cash outlay. And since we've reduced capital expenditures this year and we have no large landfill projects in the fourth quarter, we don't expect the same magnitude of accruals to be in place at the end of this current fiscal year in other words at April 30th, 2008. So really it's a timing payment issue if you like. Scott Levine - JPMorgan: Okay understood, thanks.

You're welcome.

(Operator Instructions) And our next question comes from Canaccord Adams, Eric Prouty. Eric Prouty - Canaccord Adams: Great, Thanks. Good quarter, guys. Maybe if you could just give a little more insight into the nice boost in recycling volumes, you mentioned the environment et cetera. Is RecycleBank having any impact on those volumes yet and what are you seeing from a community-to-community basis driving up those recycling volumes and is that sustainable going forward?

I think there are two legs just to respond to this in a general sense. There are two legs to the recycling program that are both -- I think material and important. First is that the introduction of the single stream program by itself, primarily because of the convenience and the simplicity for the consumer to load and meet their sustainable objective themselves personally is driving the volumes quite nicely. And so wherever we have rolled out a single stream program be it in Everett or South Bridge or for example Boston is now talking about 200,000 home single string rollout. We expect to see material improvement in volumes. Layered on top of that wherever that has been coupled with RecycleBank, we see a further improvement which is a material improvement over the single stream. And combined they can have anywhere from a doubling to a tripling effect in terms of both participation from historical numbers as well as total quantities. So, both those drivers are important. They are acting, they can often act together they can also act separately. And so as we look at this from a strategic rational in terms of how we are approaching it. We think single stream and particularly with the technology developments that we are moving on is going to lower our operating cost allow us to reduce the number of headcounts. We are going to bring a higher level of automation into the program. So, we welcome opportunities to be shifting say single stream both because it adds more volume as well as materially allow us to lower our operating cost. That coupled with a strong pricing environment I think underscores and provides a nice foundation for the good operating environment that we expect SCR to see for many quarters as the country continuous to tip and move towards a more sustainable future. Eric Prouty - Canaccord Adams: Great. And actually just a bit of an expansion on that, you said Philly was getting up to full capacity from a single stream you are putting in a few more inline if we look from an aggregate standpoint though. What would you believe that you are at across your single stream facilities from a capacity standpoint?

Well, I think we are early in the program in terms of harvesting the volume, so I'd rather characterize it that way. There is plenty of upside and plenty of opportunity both in terms of conversion from a dual stream to single stream and more importantly through mechanization and organization and improvements. So we think we're in the leading front edge of it relative to technology to actually improving operating efficiency. So I think we're early in the game and we've very robust interest in terms of how that will positively play out. Eric Prouty - Canaccord Adams: From a modeling standpoint, I can have a material impact on margins et cetera?

Yeah. I think there is no question that from a practical standpoint, when you take a facility from one shift there to two shifts, you're going to have a fairly dramatic impact in terms of the overall profitability. That's one of their drivers for our investment in single-stream technology. And I think when you look at that based on our platform of approximately 30 or 32 facilities, I mean I think there is 38 but there is probably 30 or 32 facilities. I think we've converted six -- we have six converted in total. So there is a substantial opportunity on a go forward basis, not to say anything about other additional opportunities that we'll look at as they come up in the marketplace itself.

I mean we are actively bidding on a large number of new opportunities that are servicing. We've been very successful aligned with the Waukesha announcement, we won the Oakland County. Michigan facility last quarter as we announced, I think we're winning out more than our fair share of these. And we think that market is robust and will continue across vast stretches of certainly the operating regions that we operate in. Eric Prouty - Canaccord Adams: Okay. And just final question again from a mechanical modeling standpoint. You're certain to bring some of this landfill gas-to-energy projects online, you're getting credits, you're selling electricity et cetera. How going forward is that going to impact the P&L? What line item does it fall in? How is revenue going to be recognized, etcetera?

I think what we will do there, Eric, is really come back in the fourth quarter call and give some real guidance or some real additional information relative to our landfill gas-to-energy, our programs. Keep in mind that we're just bringing the facilities up in operational. The Highland facility is not operational at this point in time. It's almost to an operating state, we're just about completed, but we will be in a position in the fourth quarter to give more specifics to answer the question in terms of the overall performance of the landfill gas-to-energy programs. Eric Prouty - Canaccord Adams: Okay. Great. Thank you.

You're welcome.

(Operator Instructions). And our next question comes from Leone Young with Citigroup. Alina Cellura - Citigroup: Hi. Good morning. It's actually Alina Cellura for Leone.

Hi, Alina. Alina Cellura - Citigroup: How are you doing?

Great. How are you? Alina Cellura - Citigroup: Good. If I missed it, I apologize. Did you actually break out what the fuel surcharge was?

We didn't. The fuel surcharge was about 1.2%. Alina Cellura - Citigroup: Okay. And, I mean other than Southbridge being just having some slight delays there, are most of the other landfill expansions sort of tracking as you expected?

Yes, they are. We talked about the slight delays also with Chemung last quarter, but everything else is moving forward very nicely from a development standpoint.

We finished Ontario, we finished Thailand and Hakes. So those three are all done and were completed early. So I think that we would characterize ourselves in pretty good shape here from that standpoint. Alina Cellura - Citigroup: And as far as Shimong goes, I mean is there any update there?

No really, I think that you'll find that the greenhouse gas issues in New York have brought some additional regulatory scrutiny to all landfill expansions. And I believe that while we've got a very nice little initial landfill model that we think is proprietary and unmatched in the industry, it's going to take a while for them to work through it. And as we reported, we expect to kind of 9 to 12 months delay as they digested looking at the landfills for the first time out of the legacy framework and with regards to new greenhouse gas initiatives and criteria. Alina Cellura - Citigroup: And with regard to the, that OPS oil refining system that you're putting on the trucks now, I believe that there are new engine requirements coming in -- I mean, 2010 or is this system compatible with those with that requirement in 2010?

The new engine requirements from what perspective -- Alina Cellura - Citigroup: I guess they're just --

Emissions, small emission standards? Alina Cellura - Citigroup: Yeah.

Yeah. The OPS system would be compatible with that, yes.

The OPS is internal oil lubrication system as opposed to the consumption on the field sides in really separate systems. Alina Cellura - Citigroup: Okay. Great.

The OPS system really is just cleaning, taking the contaminants out of the oil system that's all. Current station et cetera, other issues that cause [wear].

Great. Thank you.

You're welcome.

(Operator Instructions).

I get the closing?

It appears we have no further questions at this time. Now, Mr. Casella, I would like to turn the call back to you for any additional or closing remarks.

Great. Terrific. I'd just like to emphasize that we will continue to execute against the plan that we had laid out in the spring. Continued focus is to drive value by harvesting the value from the landfills, reducing our operating cost and utilizing capital efficiency. We're committed to increasing shareholder returns and generating positive free cash flow. Thanks again for your attention this morning. Our next earnings release and conference call will be in late June when we'll report our fourth quarter and full year numbers, as well as outline our expectations for fiscal year 2009. Thanks everyone, and have a great day.

Ladies and gentlemen that does conclude today's conference call. We thank you again for your participation. And have a great rest of your day.