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 our local management teams. I will let him run through his thoughts on where he plans to take the organization, but I believe that this change will provide a much-needed coffer [ph] shift to improve accountability throughout organization and get us on track material to improve shareholder value. As everyone is most likely aware, during late September, we completed the refinancing of our 11% second lien notes due July 2014. This set of transformational transactions reduced our risk exposure to the capital markets, reduced our cash interest expense by roughly $9 million per year, improved our credit metrics by lowering leverage, gives us over 3 years before our next major debt maturity and increased our covenant flexibility. We now have the flexibility and run rate to execute our plan to delever the balance sheet to 3x leverage. On Friday afternoon, we completed the sale of Maine Energy to the City of Biddeford. This is an important step forward for the company. The sale has an immediate financial benefit. It will improve our adjusted EBITDA margin by roughly 70 basis points. It will improve operating income by $7.9 million and free cash flow by over $5.6 million per year from our fiscal year 2012 results. Equally as important, the sale and closure will reduce our risk exposure to volatile energy markets and eliminate one of the most capital-intensive, lowest returning assets. Our team did an excellent job getting this complicated transaction completed. We received our permit to build and operate the transfer station in Westbrook, Maine in September, and begin construction of the facility to transfer waste that was previously kept at Maine Energy to other company-owned or operated facilities, landfills. We expect to have Westbrook operational by late December to begin receiving waste from Maine Energy when it's permanently closed December 31. We are now working with the Maine BEP to modify our permit at the Juniper Ridge Landfill to allow us to take MSW directly to the landfill. Our current permit allows only us to take MSW and bypass our ash and residues from the waste-to-energy facility. We'll expect to have our first pre-public hearing in January and expect to have our decision by the end of the fiscal year. Now onto the Southbridge Landfill. We're in the process of increasing the annual permitted Southbridge Landfill from 300,000 tons per year to 405,000 tons per year. We submitted our permit application to Mass BEP in November, and we expect to receive a provisional permit by early January. Southbridge is a cornerstone asset in our plan to improve financial performance in Massachusetts. We are well-positioned to increase our market share and profitability as we expand operations at Southbridge in a declining airspace market as we continue to offer customers differentiated resource solutions such as Zero-Sort Recycling and organics offerings. In early November, we commenced operations at the CARES water treatment facility, located at McKean landfill. CARES is a joint venture between Casella and Altela, the technology company that designed and built the water treatment technology now in place at McKean. The treatment facility is designed to remove suspended solids and salts that are present in flowback water from hydrofrac-ing and produce water from natural gas production. We are currently in shakedown phase and we have forecasted for operations to be running at 40% capacity by mid to late December. Our early response in the market has been favorable. We have sourced volumes at an appropriate price point. Our challenges now are to get the facility running at capacity and to manage the logistics to efficiently move water through the facility. About a year ago, we moved a former regional vice president into a new role focused on reinvigorating our acquisition pipeline with the intent to densify current operations with tuck-ins and to increase landfill internalization. Without a focus acquisition strategy for the last several years, it took us a while to start to build relationships with the likely sellers in our markets. Fiscal year-to-date through early November, we've completed 3 tuck-in acquisitions in western New York, with total revenues of about $4 million, adjusted EBITDA of roughly $1.2 million for a purchase multiple of about 4.5x EBITDA. We believe that an effective hauling and transfer operation acquisition strategy is important to drive additional value from our existing asset base, especially at the landfills, where having more curb control and enhanced internalization to our landfill reduces volatility and improves financial performance. As everyone is aware, Hurricane Sandy caused massive devastation and destruction to several markets that are adjacent to our service area. While none of our operations were immediately impacted by the storm, the clean-up activity will impact the entire northeast disposal market for the next 12 to 24 months as the damages cleaned up and then the rebuilding starts. Since the storm, we have been actively working to secure permits and establish relationship with partners in the impacted area to source waste to our landfills. One of the challenges for Casella is that we did not have any existing transfer stations or transportation lanes established in the storm-damaged areas. We currently have roughly 200 tons per day flowing through our New York landfill via truck. More importantly, though, over the last several weeks, we have put in place emergency permits at both transfer stations as well as our landfills to handle what may be a significant tonnage at both our New York and Pennsylvania landfills by truck and rail. However, this is a work in progress and [indiscernible] is committed to us at this time. Now,, here is Ned with the numbers.

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% year-over-year, with the drop in Recycling commodity prices driving the decline. Most classes of commodities were down year-over-year with OCC down 39.4%, news down 54.6%, and mix containers down 23.3%. At the same time, Recycling tons were up 4.7% year-over-year on continued adoption of our Zero-Sort Recycling offerings. Major Accounts revenues declined $600,000 year-over-year, mainly on lost Oakleaf accounts. Adjusted EBITDA for the quarter was $24.4 million, down $6.1 million year-over-year. Adjusted EBITDA declined $1.1 million in the roll-off line-of-business due to lower net revenue per pole and lower volumes. Adjusted EBITDA was down $2 million in the disposal line of business with the Western New York landfills down $1.9 million due to lower drill cuttings and special waste volumes, the Western landfill down $600,000 as of ramp down volumes, and the Southbridge Landfill up $1.7 million in higher volumes year-over-year, given the permit increase in the fourth quarter last year. Adjusted EBITDA declined $1.1 million at Maine Energy with energy production down 17.5%, and energy prices down 12.5% as we ramp the facility down to ultimate closure. Adjusted EBITDA was down $2.3 million in our Recycling business due to lower commodity pricing. Our risk mitigation program softened this significant decline in commodity prices with adjusted EBITDA down roughly 40% of the decline in commodity revenues during the period. Partially offsetting these negative headwinds, G&A costs were down $2.1 million year-over-year as a result of the reduction in force at the corporate and regional offices completed in August. We recognized the $1.8 million one-time severance and restructuring charge in the second quarter as part of the August realignment. Cost of operations was $1.2 million lower, mainly due to lower Recycling purchase materials cost and the flexing of various variable costs in the business. However, cost of operations was up 430 basis points as a percentage of revenues on reduced operating leverage with lower revenues. As John discussed earlier, we repurchased $107.3 million of our 11% second lien notes on October 9th from the proceeds of our $46 million common stock offering, $125 million add-on to our senior subordinated notes, and borrowings on the senior secured revolver. Our interest costs were $11.7 million in the second quarter, and we expect interest cost to drop to approximately $9.2 million in the third quarter as a result of the refinancing. Cash interest costs are expected to drop roughly $8.9 million year-over-year to roughly $32.5 million after this refinancing event. We recognized a $9.7 million loss on debt extinguishment during the second quarter as part of the repurchases of second lien notes. The charge was for the write-off of unamortized original issuance discount on the notes, unamortized deferred financing cost, and a tender premium paid as part of the early repurchase. We expect to recognize an additional loss on debt extinguishment in the third quarter of $5.9 million for the mandatory redemption of the remaining $72.7 million of second lien notes that was completed on November 8. Because the redemption in second lien notes was not completed until November 8, we held $23.6 million of restricted cash from the offerings as of October 31. We subsequently used this cash as part of the final redemption of the remaining $72.7 million of second lien notes on November 8. The $72.7 million second lien notes are listed as the current maturity the balance sheet. In light of the refinancing of the second lien notes through a majority of equity proceeds at fixed-rate senior subordinated debt, we de-designated our $150 million of interest rate swaps scheduled to start in January 15 as cash flow hedges and recognized a noncash charge of $3.9 million during the second quarter. Any future changes in market valuation of the underlying derivative contract will be recognized as a noncash item on the income statement. Before handing the call back over to Ed, I'd like to run through of few modeling statistics. Total debt-to-EBITDA for October 31 was 4.99x against the maximum covenant level of 5.75x. The September amendment allowed us to net our restricted cash to exclude interim second lien debt. Total covenant debt was $469 million. We are currently estimating a $400,000 provision for income taxes in both the third and fourth quarters, and we are projecting capital expenditures for fiscal year '13 to be roughly $51.5 million, up from our original projections because of the unbudgeted buildout of the Westbrook transfer station and the acceleration of landfill cell development to handle the waste previously tipped at Maine Energy. And with that, I'll hand it over to Ed.

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 a result of lower tonnages coming from our own roll-off operations. Our roll-off pole dropped 6.2%, while the average ton per pole on a roll-off box company-wide dropped 5%, resulting in an overall 11% drop in tonnage that made it to our landfills. More importantly, as we need to look at a particular landfill to evaluate what that means on our profitability, the divisions feeding the New York landfill saw a more pronounced drop in the average tons per pole of 8.1%, and the total roll-off generated tonnage dropped 11.4%. So when we look at our numbers for the second quarter, we see pretty significant drops and a bit of contribution from the landfills and from the roll-off line of business on the Collection side. Volumes solved this problem, and the Hurricane Sandy debris is definitely going to lift the market. But it's a little hard for us to quantify at the time; we can't be sure how much we will get of this material. This leads us to our decision to lower guidance for fiscal 2013. Our guidance in this environment is difficult. We have decided the best approach is to lower the guidance based on what we know today, assuming only a small amount of the tons from Hurricane Sandy make it to our landfills and no lift in market pricing. Should we be successful in establishing railings from the East Coast to our site, significant volumes could materialize at several of our sites and a ripple-through effect could be material, but we're not prepared to build it into our guidance at this time. We detailed key negative variances from our last forecast to the current one in the press release. As we have previously disclosed, there are several factors that we expect will improve our results over the next couple of quarters and into fiscal 2014, including lower G&A costs, including 2 full quarters of cost savings from the August alignment -- realignment, permanent closure of the Maine Energy facility, which will -- we expect will occur in the third quarter, the anticipated expansion of the Southbridge Landfill annual permit by 105,000 tons per year expected in the third quarter, a contract to hold drilling sludge for solidification at several of our landfills; this is expected to affect both the roll-off line of business on the Collection side and the landfill volumes for special waste, and expected minor improvement of Recycling pricing from the second quarter with average commodity revenue per ton expected to improve by approximately 3%. This still leaves Recycling prices down 15% from last year. Two new facilities are expected to complete startup phases and move to normal operating levels during the third quarter; that's the operation that has commenced at the new McKean water treatment facility in early November, and our new organic facility at Grasslands in New York, which is completing the installation of its permanent processing equipment. Higher year-over-year power prices are expected as the company's landfill to gap energy facilities through the remainder of the fiscal year, and our results will benefit from the rollover impact of the 3 tuck-in acquisitions that Ned mentioned that we completed year-to-date. Keep in mind that our guidance reflects our best judgment about both the negative and positive influences that I just mentioned. That's part of what makes guidance particularly difficult at this time. That's where we are on a short-term view. We continue to be very excited about the long-term view as our strategic positioning continues to strengthen. Those of you that know the company are aware that there are several key sets of strategic assets with different long-term strategies in play, expected to substantially improve our returns on those assets in the future. In the Eastern region, we have a combination of Collection and disposal assets and key Recycling and organic assets that function well together. But our disposal cost structure has been at a competitive disadvantage for several years and this has resulted in lower margins. The long-term strategy is pretty clear and well on its way to fruition. Key elements are the sale and closure of MERC, reducing capacity in the market while eliminating a loss-making operations that became a significant cash flow drain for our long-term power contract started a couple of years ago. This sale closed last Friday and we're in the process of closing and decommissioning the plant. With MERC closing, it becomes imperative that we build a transfer station to maintain control of the volume. Years ago, Casella acquired and permitted the perfect site for that outside of Portland, and when we became confident that the MERC sale is on track, we pulled the trigger and started building. The Westbrook transfer station will be completed at the end of this month, and we plan to start moving tons to Westbrook in January. The Westbrook tons will initially go to our sites in nearby states, but our next step is to get a permit modification of the Juniper Ridge Landfill in Maine to allow MSW from Maine to be accepted directly into the site. Hearings on this matter are scheduled to begin next month. And -- but one thing to note is the reason the Juniper Ridge permit is important to us isn't the short-term picture, as we do have sufficient capacity elsewhere, but the long-term picture of handling the states waste disposal needs. On top of the MERC's closure strategy, the ramp up of Southbridge volumes is on track, and as our annual permit increase of 105,000 tons should be in place before the end of the third quarter. This remains the only increasing availability of airspace in a market with shrinking capacity. The next big item in the East is the Ogden put-or-pay that continues to the burden margins with the disposal agreement that is now over $30 per ton above market pricing on 86,000 tons per year. At the end of this month, we will be within 2 years of the expiration of that contract. To complete the picture in the East, we have to talk about our state-of-the-art Recycling processing center in Charlestown, and organics processing capabilities in Maine, and the initiatives in Massachusetts. The Zero-Sort plant continues to run at a near-capacity, and is handling material collected from as far away as Northern Maine. Our strategy is to add capacity next year in Maine, saving transportation costs and freeing up needed capacity in Charlestown. Volumes are anticipated to continue to climb as municipalities with low-recycling rates in the East come off long-term contracts and are faced with budget constraints and declining landfill capacity in the region. On the organic side, our biomass site in Maine continues to operate at full capacity, and our joint venture with Agreen, the dairy farm bio-digester site that combines organics with cow manure to produce electricity and fertilizer in Central Massachusetts, is proving to be a viable business model and the one potential partial solution to the growing organic disposal needs in the state. The Vermont market remains very solid. Our Vermont operations on the Collections side are strong, and we have 1 of only 2 landfills in the state, with over 80% of the volume coming from our own Collection operations. We enjoy good margins and strong cash flow from our operations here. The state is very progressive, and we are well-positioned to help with their transition to a greener environment, both with our experienced in organics and with available zero site -- Zero-Sort Recycling capacity that we put in place a year ago in Rutland. The New York market is where we have both challenges and opportunities. We invested substantially in landfill capacity in upstate New York, and did not have the opportunity to add Collection capacity, or what we call a curb control, before the financial markets collapsed a few years ago. So the sites are somewhat dependent on third-party, and in particular, special waste volumes. Any strategy we pursue in this region needs to focus on securing disposal volumes into the landfills. Some of the key strategies we are pursuing include further development of our oil and gas services support business. We mentioned that the water treatment plant is up and operating at McKean, and that it is well-positioned to support treatment needs at the existing Pennsylvania drill sites, and as a proven technology to support New York drilling if and when that opens up. In addition, we are starting our first drill-cutting solidification contract in the third quarter, which allows us to collect wet drill cuttings at the drill site and roll-off sludge boxes, bring them to our landfills and mix with dry waste material on solidifying process that used to take place at the drill sites, and take them into our [indiscernible] landfill cells. Drilling is at low levels at this time, but we are well-positioned to serve the oil and gas segment when gas prices rise to the point where drillers move back into the Marcellus. The important thing is that we continue to strengthen our relationships with the drillers by being a problem-solver for them. We have also begun to establish relationships with several remediation companies that operate in the Northeast. These companies often control the waste coming from cleanup sites, and the bulk of that material tends to be nonhazardous. Remediations jobs are scarce in the market right now, but the relationships are important long-term. The Hurricane Sandy situation is expediting our ability to learn and establish relationships on the East Coast to better position -- and be better positioned to obtain waste volumes by rail. Our hopes -- hope is that by learning the rail into business and by establishing good relationships with rail-served waste sites in the East, we put ourselves in a position to work for the long-term agreement that we justified building our siding -- rail siding at the McKean landfill. Acquisitions are a longer-term strategy to garner curb control for waste volumes. Opportunities are there, and we continue to pursue them, but we will remain disciplined on price. Now I'd like to make a comment that might seem a little more tactical than strategic, but nonetheless is extremely key to our success. I believe the success in the waste business is dependent on the strength of our local management teams and their ability to manage and develop our businesses in their market. They need to have the clear responsibility and authority to make the decisions in their market, but with that comes clear accountability. We've changed 5 of our regional managers in the past 12 months. I think we have very good teams in place right now and have complete confidence that they can succeed. I look forward to visiting each of our operating units over the next 60 days to talk about the unique challenges and opportunities in their market and their long-term plans. That concludes our overview of the quarter and strategy going forward. I'd like to now turn it back to the operator to open the lines for questions.

[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.