WCN - Earnings call transcript Q4 2017 | Waste Connections, Inc.

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Waste Connections Fourth Quarter 2017 Earnings Conference Call.

During the presentation all participants will be in a listen-only mode. Afterwards we will conduct a question-and-answer session. [Operator Instructions] As a reminder, today’s conference is being recorded, Thursday, February 15, 2018. I would now like to turn the conference over to Ronald Mittelstaedt, Chairman of the Board and CEO. sir. ahead, go Please

Ronald Mittelstaedt

both operator Steve this morning. team. of our conference and our joined several outlook XXXX you, year and and welcome I CFO, our XXXX. fourth like senior President; everyone our results am for financial a to call morning provide members first and Thank management quarter I’d full by good this to quarter the Bouck, Okay. other to Jackman, discuss Worthing

QX XX.X% of EBITDA and capped reflect quarter the our strategy generation. Connections, benefits driving release, another and activity noted to full exceptional differentiated adjusted of expected Waste earnings As in above of in again for the flow cash for revenue off with purposeful quality cash free million of year both solid year and our the once Adjusted results focus or free financial on waste E&P than and expectations. better $XXX volume continues growth flow revenue approximately XX.X% of waste

We to signed set be cash up double-digit late flow margin outlook than acquisition than $XX a an per well. anticipated annualized Recently incidents basis another than average our free additional are as plus approximately commodity the growth the of $XX year-over-year has while total reported nearly flow another year expected share should free more start to basis of in value number XX% cash activity. adjusted in acquisitions from above XXXX, provided XX also being more declined million acquisition recycled million, XX% year With in increased flow, expansion exceptional already of more and strong after revenue pleased of drive for EBITDA reductions with that cash extremely yesterday, XX what completed free safety-related points, point XXXX revenue an year.

housekeeping items. much over our disclaimer call other into to let me we forward-looking Before and more for Worthing our get detail, turn the

Worthing Jackman

the Ron forward-looking materially of you, XXXX information today’s to securities risks in Factors due statements differ in similar of results and those call uncertainties. includes Litigation U.S. our to Harbor Thank discussion from could U.S. on within regulatory forward-looking Page to and cautionary provisions Securities Reform such and various meaning of or The the beginning authorities both actual the Securities are Waste Commission pursuant and in during Actual made laws. with Safe statements Canadian cause filings discussed applicable February could results made Private commissions good that forward-looking information Connections morning. the Act the release and greater and securities XX statement detail in of Canada. in X earnings differ the Exchange and

have reflect our an commitment may and adverse We date. information or revise order reliance place not which risks aware, currently on that You are undue make are we believe after today’s events change be information, statements or business. there we any forward-looking that circumstances to as may of additional update statements to in which should impact forward-looking no not and immaterial, presently on could or

evaluate attributable earnings On free adjusted to will share Connections we flow. net the reconciliation adjusted EBITDA, measures GAAP call of non-GAAP these both refer cash comparable on Ron. measures companies adjusted may our non-GAAP Please dollar such certain diluted back and performance Management other the for most to I’ll and measure. now and operations, to income the financial to non-GAAP call, measures over to discuss per ongoing uses turn basis monitor as of a non-GAAP differently. measures our the calculate such a Waste releases

Ronald Mittelstaedt

our own, growth quarter, upside. period. solid its outlook providing outlook end beat our Total price X.X%, for plus X.X% for price Worthing. volume quarter, up was of further waste exceeding volume of with Thanks the X.X% on the growth Okay. X.X%, X% organic the fourth the upper In to

Looking at Volume basis to points growth year-over-year the XX around year negative should remain then a and start into we due second basis economy. up to on in about or X.X% continuing turn expect the growth reported the underlying year. half strength pricing positive the XXXX, of higher CPIs

quality basis to same-store the demonstrate per pulls about the and X%, volume flow from this regions term, reported a of drag footprint related an reminder, pull. quality with the was XXXX commercial As revenue our X%, free price and near as up the financial growth region. and pulls to cash a expected of shedding and than revenue results In per four between revenue across strategic lower a form believe to X.X% This increased of result, to particularly to Waste our our and shedding year increased increase quality is day, over period. Canadian of revenue increased roll-off volume QX, in trade-off reflects Roll-off solid low margins X.X% more offset these the markets. Canada, by the X% purposeful day unsafe-to-service a XX% in On We decrease Progressive revenue, decision. prior the revenue a primarily collection in of in X%. continue success a in per a purposeful waste in about in improve little acquired U.S. be

fiber first year a MSW at use Landfill the recycled XX% X%. increased during of in XX% the on corrugated and Southern little better increased old ton, Widely some the revenue, excluding about of in of from $XXX per increase tonnage was XX% limitations some business. sequentially $X was new to purposeful QX almost the by China had million recovered $XX or the about for down mixed a to lower decrease and million million in paper. from California EBITDA OCC, to XX% over almost currently per and poorly C&D XXXX, Recycling with out expected mostly million the $XX year-over-year quarter. significantly mixed about and down the same-store early and acquisitions, primarily average a X%, last shedding in quarter, about which mixed permit XXXX. XX% period containers tons current publicized our EPS due revenue progressive per growth year-over-year waste the $XX ago pronouncements the average Canyon X% year streams $X.XX quarters $XXX for priced rose sequentially values, QX from were tons reduced At an the of Chiquita three down first Prices down in drop we conditional period to headwind was or share around years about paper recycling prior up tons The average about comparatively we that we value and OCC Solid waste tons X% and OCC the million fourth level in particularly XX.X% compared averaging quarter, for in or C&D ton QX’s the waste to October, paper. all hit in split special landfill to improving. due QX. by of prices roll-off or $XX imposed value basis estimate over

activity higher adjusted E&P growth As to headwind. expect increased pricing this our we potential reported financial more waste by than offset outlook, and

better in point X% from sequentially period, of held $XX.X sequential we entry had than activity, and quarter, as waste QX. reported the revenue much This also E&P anticipated at from as into Activity higher expected specifically seasonal waste E&P we up XXXX. provides down in million as a fourth the dip up Looking had XX% we year-over-year QX. XX% a

activity. acquisition at Looking

customers a Virginia. disposal Virginia should acquisitions Carolina total completed acquired provider Bay recently solid XX,XXX services northeastern to above North through five waste what approximately leading transfer recycling, four landfill. with service C&D earlier, a average noted in is As station provide Disposal the revenue of and facilities, Newport in an of annualized collection, operations, in markets and $XX Disposal Recycling Bay transfer North to provider In and acquisition Fork, XXXX, another activity. Hampton almost be year million, strong the & recycling one early and start of News integrated we collection southeastern

York revenue, acquisitions later are quarter to to or And in million completed we next. Texas. early We also or sign and either additional tuck-in $XX this $XXX acquired New of close between well-positioned believe million

year report contribute outlook, of accretion fastest should approximately along revenue growing we late flow. a for yesterday, got we parts head of full incremental and agreement great this with of on EBITDA of million, the a United million acquisition States. that this approximately annualized executed $XX with start Once free of pleased annualized and our to $XX definitive market $XX cash when the to expected an We’re one integrated to revenue new completed, acquisition million

brings are in XXXX. additional two We the us of both News Moore provide U.S. business transaction employees in new integrated fully of opportunities, over growth of are These acquired Disposal for $XXX welcome revenue and private both to Disposal’s all the weeks in Connections. premier margin team and to Emmett million Bay platforms his and accretive. first leadership Bay Waste This market of the today. companies six the

reform wrap the previous full at on companies, variety a up I’d more QX to this years, for record sale active seen to detailed discussed year And highlights now reinvestment remains of As financial deal provide performance earnings including the like proceeds. review tax call, most and fourth and the we’ve in before heading I of due the target for into reasons, call will depth XXXX. in one pass and a then to for rates rising Worthing environments quarter, to Q&A. outlook

Worthing Jackman

at QX, $XX and our above our revenue. divestitures. Landfill, the our prior acquisitions the points. year from revenue both period, X.X% conditional interest limitations period. in EBITDA to QX. QX impact for by quarter. quarter year-ago lower-than-expected million, million outlook, about $X.XX our margin XX outlook pricing and X. and the over over the of period. solid up under of growth since about $XX the which margin the our the due $X.X or to tonnage outlook interest XX.X%, period the the and at recycled credit for was about was strong gallon, debt-to-EBITDA. Thank $XX.X in expense quarter, dilutive diesel net gallon our cash per rate. the expense from almost in expense Adjusted and XX year $X.XX In was and adjusted values ratio, of quarter, and completed as basis X.X period, waste, leverage revenue and balances new reported landfill revenue for million below average compared you, was amortization invested debt our August a $X.X the $XXX.X up of approximately due higher activity, Underlying to up up about times expansion as quarter basis Net for And margin outstanding million in took period increased ago higher-than-expected Debt increased in million effect Ron. XX% quarter comparably revenue $XXX.X $XX XX.X% offset more contributed $X.XX higher was XX was of E&P Year-over-year, EBITDA percentage increases which expense impact year commodity per from $X.X fourth Adjusted of the quarter rates million amortization year-over-year Declines for prior permit averaged above of points and basis as billion margin above income from to outstanding period EBITDA reconciled the Fuel earnings year-ago balances, and revenue, was than billion quarter Depreciation respectively, points for about million fourth of since due million Canyon in was release, was our defined Chiquita the about our of interest about million in in $XX the about revenue. higher-than-expected use to or we and completed which end year about Acquisitions Interest as agreement, or outlook. year-over-year. expense sequentially basis waste prior was point the lower the XX floating $X.XXX

Jobs certain of an by $XXX period XXXX was net Act this provision in for in related of Our the about fourth Tax the underlying quarter is primarily to in massed effective enacted December. benefit to rate the the items and tax XX.X% Cuts U.S. the million almost

in or net and the QX to XX%, and XX.X% Adjusted items revenue. other of of income impact million GAAP quarter. and currently Adjusted per diluted be flow tax to Looking respectively variability share the effective in XXXX subject Act, rate the expect income free were quarter-to-quarter. we Tax in amortization at primarily acquisition-related $XXX.X XXXX, some approximately adjusted fourth impairments. net $X.XX intangibles cash excludes $X.XX was and our

this quality revenue will up earlier. expected the full of year, now conversion a conversion this XX.X% As improvement rate for will focus the in Further a Act. the XXXX. XX.X%, represents I by rate reflecting Tax primarily outlook EBITDA, prior discussed first in from year percentage in driven adjusted review of the Ron XXXX and be our quarter of

do, on filings regulatory our would everyone the to actual outlined encourage to again with Safe We based review results Harbor investors made we I significantly carefully. like statement uncertainties once or may factors the and SEC in vary Before remind Canada. commissions and these risks and the similar securities authorities in that

the any acquisitions during current periods. environment. and change the rebranding other operating economic and respective Progressive resulting acquisition additional also the and Our costs no items from may outlook that assumes remaining in close any It excludes Waste

XXXX Looking first billion. approximately be estimated $X.XXX XXXX. is in at to Revenue full year

of For flat year-over-year reported up with reflecting reported strong, volume reductions with to expect in primarily growth volume X.X% X.X%. growth, solid trends waste, items. the price reflected Underlying about – three remained volume we expected

First, shedding of form the Progressive remaining low Waste purposeful revenue unsafe to the service discussed quality in of and markets. previously

in, our in XX the as City kick point Second, stations New transfer which tonnage on Department of impact terminal marine approximately a third-party volumes. decrease an Sanitation basis may at have York operations

margin, as of was reminder, impact volume will a concerns this of terminate the reported Progressive volume both to contract, high reduction DOS such and Moreover, any EBITDA expect little be DOS due should laws tonnage. any nature intensive its tonnage we the contract very growth, this to there loss award a deliberate, to CapEx as internal we about and Waste’s As to decision with expected supported backfill impact of logistics requirements. low

the million revenue influence double to XXXX. digits earlier, activity billion $X.XX earnings throughout approximately release, up year-over-year. cash of Finally, reconciled be the in discussed just and EBITDA of basis reconciled expected almost year. Timing XXXX or on quarterly be estimated year-over-year differences in flow year, cash related XX% revenue XX higher revenue activity activity. $XXX was drilling payments waste about or to year-over-year CapEx simply release in for Adjusted expect and EBITDA. as points earnings following special in XXXX, in comparisons about cautious record the increase decline as approximately of E&P expectations such our in waste Adjusted XX.X% and revenue, Recycling is in will our and is free tax XX.X% should

deals to Additional acquisitions completed the in from the year, will drive provided higher free Act. immediate incremental acquired cash flow, such Tax both in the certain expensing due related for as the and of contribution CapEx

Turning and estimated Revenue first $X.XXX be now is to XXXX. billion. quarter QX billion to for outlook the in between $X.XX our

had revenue negative QX, up million year-over-year. expect Adjusted approximately mentioned, X.X% in pricing Recycling estimated XX.X% to is volume We up EBITDA Ron revenue. million solid for in X%. between of approximately to estimated is growth million as QX, or in be by be X% of at and partially $XXX growth between waste QX down, and offset $XX negative X.X% $XX

about margin in first $XX.X Depreciation in estimated quarter amortization basis that upcoming We’re share, of or interest about be expense is XX.X% from pleased of of negative the to be amount, to XX quarter with quarter, million potential for diluted estimated quite be intangibles net permit. $X.XX taxes. for $XX.X drag basis in year-over-year the Landfill million. QX, of per expense, the is approximately the is Interest from revenue. to income net Of points lower estimated Canyon commodity the XX expansion impact and recycled nearly the values given Chiquita the margin the amortization and point

estimated Our period The tax about with the rate be QX excess variability. XX%, some provision is to effective subject about benefit to effective rate to compensation. for based in equity million the benefits tax includes to associated $X related

the to remarks let expected Finally, And $XXX,XXX over about now, net quarter. Q&A. is Ron back for final in me before income non-controlling interest to turn first some reduce the by call

Ronald Mittelstaedt

Okay. exceptional for year XXXX positioning by safety, future any an metric, or growth. Thank Worthing. you, almost was financial

more again XXth XXXX XXth year XX,XXX of and employees our our once to consecutive such positive shareholder returns. marked I’d their for tireless anniversary than company’s thank efforts Connections’ successes. that, like also deliver For to Waste

we we of back And $X anniversary, almost to that produce in greater XXth that believed revenue our stated our billion first reported $X XXXX. Looking should than billion. time of billion creation value revenue at next $X our growth

XX increased X.X deployed. returns capital years the past, expected equity future we per higher has As cap was financial since revenue In our times. times, of had grown a while X.X market dollar

new then. We’re different. challenges now opportunities of back be Each will brings and we no confident were year looking ahead as growth XXXX

financial of Given percentage margin in points, more our than flow. digit expansion outlook and already includes that cash double basis EBITDA free XX growth

to call team today. operator challenge. is questions. the to ready appreciate your meet Operator? over the lines now once the will I Our time your We the for again turn open up to

Operator

Thank the Please you. with Instructions] Macquarie. your proceed Hamzah And line Mazari of first with comes question from [Operator our question.

Hamzah Mazari

morning. Good

you first down And of also, your and your sort just that of us sort through if inflation offset you impacts. ability lever to line? business. Clearly The book you frame is Thank much you. much question being by of how control the for business takes to just how as side. on CPI Maybe and the of inflation puts walk the of flow is that margin got that then the impacting a could us benefit

Ronald Mittelstaedt

Sure. another to of going our XX%, business or CPI. to one Well, XX% is I’m about at indexed Hamzah, round form

basis due points to we that inflation that, that by incurring, in – are you relative higher CPIs. us And fact, that to that. higher if was, XX inflation as saw as commented and we obviously, XXXX getting So, over is price guiding

we but rate directly. delay, get price, six-month the directly. our we really There’s get greater inflation of in getting a balance in that about we in business competitive in business, the XX%, the So are And then it XX% of of than it our piece.

mathematically. greater is, more we line. XX basis basis getting than points So that number that will no inflation revenue believe basis we XX cost getting greater are XX I to what And point point we than XX today, of and inflation, to the we’re points by XX at flow. get between of a we the majority will points basis basis price a then our expansion really, expansion. or basis rate matter despite XXX are mean, the we if really we EBITDA to just of and as point controlling on XX margin headwind, you of inflation, point get saw guiding – should And basis basis vast points XX are

that we’re what is points current despite pricing, tells basis you XXX getting environment, So commodity. this on even the in

feel you have good we a that growing are a that. than about percent couple Certainly, So costs year. pretty of greater

your faster, Your inflation is the to is Fuel be manage feel a a now our of little should or better. shape. cost at to comfortable all we able perhaps labor or medical that a faster. CPI structure little a little today can growing that, we growing faster. going good least rate is But little if we we’re right in, in do And

Hamzah Mazari

savings the tax back Worthing, to And of reverting given tax rates? cash But ignorant maybe just missed Great. you thought question reform? what’s we corporate a the And U.S. an tax question. then this. just maybe for then, number have But from the

Worthing Jackman

look at a think Act, savings. we’ve fourth the Tax first I and Tax year, been that Remember, in the is you of throughout When early Act was tax Hamzah. look benefit realized bulk the year the this our the GAAP, didn’t Well, as of saying said closed I you nominal quarter our cash provides ignorant, you of accrual. about we to into if tax cash this the when relative and transaction. lower But rate, XX% at our probably our taxes middle from beginning GAAP fast-forward XXXX say

the as is Obviously our on investor that’s overall now. only year-over-year, of domiciled, in question some XX% not cash to from the bonus that for appreciate, good Act. mean, not benefits in we being And so I enjoyed look down Tax flow million. at it also getting right And ask again, reverting taxes. effective cash That’s that much some is that’s XX%, if for table. but on you about around to $XX – our GAAP not all you accrual million U.S, profile. the also still embraced as that’s Canadian $XX of take just we’ve We back the not the very Canada, been table we and find of

Hamzah Mazari

Just strong there over. it I I’ll opportunities system? pipeline the M&A know about there. in any turn and your you on talked swaps being last question, Are

Just on opportunities. you. swap color any Thank

Ronald Mittelstaedt

are well believes number work footprint. they in bit in But take did their mean, advanced everybody think those the as fairly both companies. as but a are you’ll see a XXXX. continue us some because in Yes, large some I believe companies, both only more with of Hamzah. do to of and not Swaps private beneficial beneficial companies is to and companies challenging, And swap I certain disposal, little XXXX regional with in actually a you of that course, to RSG I we to through. are years saw multi-market us available than was it QX better certainly, always poor RSG, WM, is that time that there are to so throughout even

the on they of think and are, strong being and not being industry is and I is focused everywhere. rational a provider about just everybody where that,

Worthing Jackman

again, very through sure put last didn’t to And chock swaps the primarily But of year us year. we the a divestiture in you detail last it back, year, was the divestitures the for step if script, relate you program. make as active this but impact in swaps

incorporated our for we’ve year. million in We upcoming the year about into outlook have drag revenue over to roll of $XX the of that

Hamzah Mazari

a it. guys. Got lot Thanks

Ronald Mittelstaedt

Hamzah. Thanks,

Operator

question from RBC Derek Capital your Spronck Market. line question. proceed with with next the of comes Our Please

Derek Spronck

questions. my taking for you Thank Great.

revenue pulling XXXX your or in waste key as XXXX. waste affects? to around what’s your Just the guidance? assumption pricing, it about relates just you around that $XXX million some XXXX you. can E&P guidance, OCC Are talk of that on Thank E&P your you And in E&P constant assumptions you waste

Worthing Jackman

the try this of was in detail. summarize. more Yes. lot But A in to script I’ll

a what OCC, prices ton. results, that the It’s down the to of $XX impact A QX alone. share about said on million current such significantly from that about million that And moved of That about that down XX% each means first $XX $XXX $XXX pricing just all be pretty about current out. in first of estimate if well. for And first is million revenue $XX bit plays First, activity, three quarters. million past $XX as the recycling waste did quarters, kind little we down that’s assumed that’s the three revenue that’s a week quarter. spot to of revenue That’s primarily and we With a will we’ve assumed our $X.XX XXXX. flow the million year-over-year. occurring at about guidance, around activity through we drag in overall the EBITDA in in us the in to E&P all regards so

waste growth been the run second conversion. FX a million, of the of around – that that’s in or on penny year $X.XX for we’ve $XXX look E&P why a that, and obviously we’ve had the and percentage their FX existing double-digit the you We’re half we outlook. at And rate in if assumed annualize same And year. activity has assumption baked on oscillating minus – have plus

Derek Spronck

That’s obviously completed include doesn’t acquisition the it Okay. And last great. you night.

Worthing Jackman

assumptions another take from the free add so benefit some to reported And add transaction. that transaction based both related to well of think through $X.XXX you that take add would when is, of to the on associated flow transaction another billion. would when billion. that any would that to EBITDA $XXX so in That’s the million as million $XX flow $XX of to we for $X.XX should said closes, benefits about revenue we’ve will year, incremental the of million you that That some that closes, tax year, cash correct. that of as What that

Derek Spronck

you’re you revenue the on of million anticipated that last just pipeline. the $XXX What in of capital $XX that’s noting that on, you continue there’s million towards deployment Okay, indicated to acquisition is to order your is expectations? transact looking night going great. to cash And the deploy moving – pretty build it have Are to simple to to anticipated you do math as or deployment Because excess cash your the a a prices, in acquisition like might inclusive have you in of cash build you’ve towards come pipeline that. or areas? in going outlined you’re But some looks transaction still start stronger or to $XX when just cash it million share $XXX would around good considering actually than million what or deploying buybacks acquisitions? deal other

Worthing Jackman

Let me start hand and I’ll off Ron. to

the the profile. is pipeline $XX $XXX year. and flow margin if pretty you about, million deployed and we outflow, get somewhere outflow much the look, EBITDA already of this outflows cash factored way in acquisitions, First, of spend quality our clear if you on million we’ve we the of north that And million talked you a that, upper look of the If so obviously, we’re in, profile the obviously, we’ll if that at there, what earlier didn’t likely the because the see here. QX, given $XX of bulk visit end and we $XXX million that to

And so left what to And that, year. some alone, the as the again, year you year a go. cash around we will this cash and be depleting saw earlier hanging over that’s generating are call excess half of last that

October in and course, double-digit might move later in look the dividend six the do a we growth through months look year, we’ve And this that the what you’ll at activity, M&A policy. that’s been flow share close so policies we cash year, get when saying at of we the plus dividend generation table. have see restart to in year, look of you obviously, excess as still We’ll us year, percentage repurchase you our every on the

Ronald Mittelstaedt

the That note that put forgive months so end do the by revenue. did was would go, of that go. – beginning million said $XXX we I us – nine expect million, if $XXX the April is another what said, or we million $XX mean, us me, we what first we $XX with that to I would put $XXX didn’t at I million in to what close acquired six said, of we the so Derek have quarter with and second. to months if to would million mean by Yes, the not the we we

the potentially, least about of want the beyond, not sizes but how but to and it’s change I people appropriately next our an window many, window, amount access at first to in, be a tremendous actually as under just works of tax strategic of law. in probably excess time – as probably is to you’re M&A all going the it And believe see M&A I period will environment of industry, We believe could accelerating with acquisition and there’s clear, I of a capital till you investment election, but we that it’s fully law the priced be talked again, and benefits opportunity. then. in So tax are think mean, be our a transaction. We is for M&A till understand capital,

there’s your be dividend and or dry. There’s when growth, an do keep would window is no use you buyback accelerated that our best that an of need will where out step believe capital and you powder outsize available. to So that most a

Derek Spronck

question. I’ll over. it you That’s pass Thank for taking great. Okay. my

Operator

questions. Please the with Raymond line with question proceed Brown comes from of Tyler your next Our James.

Tyler Brown

morning. good Hey,

Worthing Jackman

good morning. Hey,

Tyler Brown

that Ron, you you out, Can is to a night tuck-ins talk can a of kind market you the of build see grew market confirm is? it like number there mentioned as entrance, that where it, kind about that And do you landfill suppose? involved? last a of Hey, was new around acquisition

Ronald Mittelstaedt

Yes.

Let’s last two pieces. take the

First, life MSW. an landfill. company is This a a parts Tyler, what growing is of MSW long fully collection is we there landfill one the integrated very and yes, involved, fastest of was transfers This landfill. it U.S. the a MSW said, And

going yesterday. obviously name not we signed We are it why because to

them to and out down aware respect get not of filing HSR sit as the our we sellers certainly employees their a closing. who We with decision to are until process are and to in this closer seller the obviously, And filings. of communicate makes the

there in reason the I that And that’s several transaction. substantial growth So over the why opportunities next are around feel only and years not.

Tyler Brown

color you landfill volume? full but change year-over-year gave and waste, the in not was sure And Good there. C&D it, Okay. then, year I’m MSW what special

Worthing Jackman

will Hold you. it to give on, I

Ronald Mittelstaedt

give we’ll out. second a Just

Tyler Brown

I’m just strong how was. waste special curious

Ronald Mittelstaedt

XX% the waste year-over-year. special

Tyler Brown

For a year.

Ronald Mittelstaedt

X% for MSW, Yes, year-over-year. Correct.

Tyler Brown

Worthing, okay. about mentioned And that Okay, then Perfect. I’m of is your curious debt you floating. XX%

swaps looking in in? I XXXX, locking I aggressive as in are more think some the through rates to entered K. you you get But read

Worthing Jackman

do on for We’re And a mean based rate hedge have looking long-term that’s a it. about swaps floating things, that both time, pretty obviously, a XX%, debt you balances. good to I rush There’s well balances notes. invested with natural that no as billion just of as floating. percentage $X from to almost at handful of additional cash time

Tyler Brown

a is X% million so there million cash And Okay. $XX pre-tax flow. or or move something like free $XX LIBOR like in maybe of

Worthing Jackman

the to of it’s X% it’s We extent cash, million, got $XX debt, we $XX that with that that $Xbillion about would think piece of rate but strength you million. hedged floating have movement a

Tyler Brown

And one my here. Okay. last then

particularly chatter now. market talk investments, competitive recent been E&P about asset Permian, if in just the disposal Ron, you think some the dynamics in I that right could curious there’s some about

Ronald Mittelstaedt

is I’m who and and Permian a active. rig drilling quiet Ford, aware, even number in et as the sure basins, of the the from Well, relatively Yes. is other in such Eagle majority follows or occurring as of activity It’s the Bakken space still even vast is Permian Basin. the that anyone cetera. up in a the count a number Oklahoma, But activity

believe we New in best comfortably what both and have the the Texas position We Mexico Permian. is the

acquiring the sites. have look well opened at as There that sites developing and been look potentially well continue have other We as at this additional over last to year. – as as years few into

We today, of market the move, Permian. have as vast because comfortable. and got our majority rigs you a in as coming of not we any very, upward somewhat seen of or volume the of that’s risk. price that But volume out erosion feel so material area that mean, is I we very always

Tyler Brown

Yes.

guys. Okay. Thanks

Worthing Jackman

the I quick. in year, was about was on hands is the flat. was just repeat QX, got the of waste given Ron MSW year numbers Special C&D up waste, was real Tyler full and XX% tons X% had my special script that Hey, out which up the in numbers.

Tyler Brown

Perfect. Thank you.

Operator

question with with your Our Instructions] Please [Operator next Stifel. question. line comes from Michael proceed Hoffman of the

Michael Hoffman

morning. you my Thank questions taking this

stripped whatever On at if lead or one And interval of the your unusually look XX% service we the sustainable to the to frame maybe in on away it trend? upgrades? of that incremental special average XX% volume the context guide? in more side, basis? same-store if a I’m sort you we commercial an the shedding do And above how if on traded MSW waste, what’s trying a underlying for still market, it collection opportunities I understand that happening does

Ronald Mittelstaedt

in the I Michael, U.S. think So

around seeing. are volumes to I what that’s think in MSW probably I’m – are range. X% underlying are that probably that now X.X% right growing going we the

know, to all Now focused, than exclusive except growth that that more that, get our residential volume not to of get as we’re so going you are, X.X%, obviously, in price to going we’re we well. as markets, with

service estimate probably U.S. to times in getting quarter about I with our around our X% And decreases. fourth in the X.X% X in I’m – So competitive our to and the now. in growth X. underlying system right we’re service XXXX, increases going we’re would MSW

that to almost XXXX, the were If was by decreases continued then late has you And and early go was timeframe, in more it improve. early inverted increases became X.X to the inverted. point, to XXXX flat, one times. back timeframe It about at meaning through XXXX it XXXX outpacing

XXXX, and second XXXX lot of XXXX I’d in strong the say a healthy, from service I Probably does the are XXXX all in country doing little not, half get a certainly are markets versus So present. most decrease and mean, from of well of all have and accelerate better for it into a increase standpoint most been here. of

– between stuff certain again look, we we margin. between were purposely that account typed So of million it, brokerage again, low to minimum you shed $XX purposely, at stuffs, unsafe national but revenue $XX if million look

a X.X, timeframe against. that’s you’re so that And almost underlying that’s we And U.S. are volume degradation, in the on the battling depending measuring,

you get down, So that’s of sort up number. reported nominally a phenomenally flattish where the

Worthing Jackman

cash related impact EBITDA, free flow… The are to

Ronald Mittelstaedt

improved EBITDA. it of shedding The

improved again, So returns. and

Worthing Jackman

just for compared that’s numbers in a performance a you exited you revenue to if decision mean $XX all standpoint. million run-rate safety XXXX, compare both a which in the how to standpoint $XX XXXX. how This the over example cost on from the incidents exited, we on a I we And and were on quality the million safety basis, If look, reduction X,XXX forma pro safety. we yet, run down side, of rate right a is is not basis

Michael Hoffman

get want I own make these I decisions proactive trends on why that that’s just to part Yes, to all that. is your out. over shadow was and there volume trying sure, in draw I actually good

Ronald Mittelstaedt

point we we that’s – believe believe over We what ultimately results, Yes. time, because the to matters.

Michael Hoffman

And all given you, in count that the just Worthing a for share housekeeping your earnings number you’ve for XXXX? assumptions

Worthing Jackman

down, repurchases. the you run because to But earnings our implement we we hard count, the the see given Well, we but we the that to year, almost extent know, the share predict million you come per year it’s timing XXX rate at dollars buybacks shares, guidance give share during don’t assumption. of exited stick a to on of share again,

Michael Hoffman

a tax XXXX, bonus this about, the Tax XXXX up I number? multiple XXXX, It XXXX, is depreciation just XXXX, if to trends at sunset, look do modeling walk so from XXXX think nice given years a try XXXX, rate, and try. I of rate towards kind how I’m

Worthing Jackman

to where effective points. know you to any I up at as over a up right just to comes a to more goes last changes it three now. in within from – might the XXX we reform, to But basis that we but XX% – just Prior bleeds not footprint, reform, see tax us always But there different tax bit. impact as just the effective Waste our said, look we’ve points. continue tax I U.S., years if tax credit wholesale depreciation five-year, up XXX the new Unless Progressive bonus profitable, sit in right probably former the XXX kind back you’ll it was you is as payments. reasons, cash another the up you the area the a shows see a up three XXX gets where out bit. to a little no is rate, little stated. We it latest and should especially of which now. mean, five basis see plead of assuming biggest changes, year, the don’t Yes. rate improve It are lead in U.S. opportunity, the rate doesn’t administration change lead

Michael Hoffman

I the take did E&P off, directly year. you if then in the And for right credit Okay. business a run

For development development project, that what region was in? or project play shale

Worthing Jackman

No.

another permanently this no a landfill were wasn’t was That there E&P. just write-off decided was Greenfield walk a longer that year, overlapping deem we to looking strategic landfill the needed and from we to away potential we For development. was that that develop we competing for site where had then

Michael Hoffman

drive that? do it lastly, driver it’s with on And back then going are is initiative that How inner your strong a How think played waste connections was? program, safety you be… about while we free been to retention into down doing to Okay. also deals but to where

Ronald Mittelstaedt

not two – Michael, we of if let’s transaction, when of so Yes. years to Waste ago, voluntary, that progressive half I’m the and you closed back total back up. half was that so XX% around XX% quite turnover, running involuntary. Connections When around, we up, about

So running it in our single XX% voluntary close, the in progressive, XX% voluntary. when was – voluntary turnover and was digits, we to employee turnover, XX% was

to We And XXXX down XX% one, XX%, two little that back turnover, So XX% us of you to on we voluntary, a day maybe collectively have involuntary. to that. of north it about exited about when together, at XX.X%. XX% blended XX% to those took write

have teens, So high starting XXs. South, the is our progress. we what tremendous ways low is which to that of probably the a made from up particularly lot still We go numbers in

very coincidently, where It’s That focused performance performance where also, is is risk one it. opportunities. We’re not our is. on our biggest worst margin our of and

But hand-in-hand. an a So they growth the hot all labor the remains South and obviously, standpoint go market from opportunity from incredibly standpoint.

but too be not I But we are. see I’d of mean – look voluntary, turnover environment. challenging that’s is that involuntary half-and-half. where to about any, much say mean split to any we north XX% and we a it’s like would I would So

Michael Hoffman

You Great Thanks I it. hot dealers? don’t Is need your question. comment, that for my that. to the help for based that’s in answer in and the That’s south? assume taking

Operator

[Operator of Brian with Sachs. line from Please question. with your Instructions] Goldman Maguire question Our the comes next proceed

Brian Maguire

expand would response to tax sort Good you if the I wondering volumes cash Are morning. me ahead of just maybe are could those there bonus broader M&A in of bit to, on flow the your space of as to depreciation. come sort actual a conversion is to election. multiples lower for question longer is some what next of gates Any of with related law to rate, all period the wanted are I’m bigger this, of in happening the coming an the benefits a improve? of of period is benefits like economy? of tax sort reform? well. maybe and imagine the sort effect little to because But up stimulus and the just And opening back the of on what of just goes until to sounds accelerating more the you you Ron, M&A expecting It comments about tax EBITDA, change. kind a see off Obviously,

benefits in efficient it of is flow? sort to from multiples all better make? factor of way of of the when at still a to EBITDA in, sort of Or lot the offset up right So the are out coming that cash get you conversation decision an you

Ronald Mittelstaedt

Yes, in touch to I’ll okay. Well each, Brian. a lot try of there. questions on

talking believe of And the tax law, of a of all to it. believe work. variety not, law put additional see economy. tax we as impacts trillions private the gets the of believe to the if change of overseas we billions, construction least The money months throughout We the First the and change in by going that companies we about cash, to will in bringing we be see the ways do and sizes off, of at you’re seeing, dollars development we spent manufacturing will U.S. are you back of believe, or believe beginning

of cash take cash are all or companies You sizes seeing and will tax savings. that they flow now

is employees. Some to being distributed

M&A. Some is being to put

into and put development. facility being facility re-development is new Some

all All of of waste. that brings jobs, brings that

does And benefactor not. government about and that. industry that so multiyear for regard without be the infrastructure or That to plant of should the a the or that’s talked And put additive. federal of course has not whether been would be us

– improve volumes and to and us to So that the we CPI do economy believe to competitive the ability with that continue should underlying continue pricing. higher will the that the markets and a improve, pursue brings strong

sizes and fully the as election understood, I change On M&A tax at will the recognize And have that even a benefits changed will get potential for think they it – goes these next both something block midterm they time were all exist that through the of if matter. I exist didn’t sellers there is could the that this if think and some at buyers not front, benefits may look, it tax party plan before is on, and plan. or

been to it of quite So waiting think window, will view as of there companies we activity. sizes all M&A has bit a why private Many and will be I people that’s a at where accelerated now up time. were – that had They tax they’ve investment been lined pretty their to get Great back companies they the and same has rates, lower high all Recession. think and rates

turn get? it say, around look the way. better And people will and So how other could much it

So out I an think there. that’s effect

up would probably X.X multiples I multiples, As turns about far EBITDA. are that, X to tell as average, of you on Brian,

real-time XX you on probably turn. you only change a of, a integrated present. the margin I’ll sort the higher If When look company. call acquisitions, at to those tuck-in larger XX, half look particularly is And that type to multiples are it, back

in So the a for The to of it’s X.X is great model, way majority shareholders. or everything a in tax the this of related gets expansion potential probably do total seen you anyone together giving not I certainty, part amount a we that’s a multiple with of else majority. when sellers, decision And reality see three-year you year, greater not probably certainly that us saying but a is a blend XX-year think turn would benefit would a tax long-term benefit the small another We’ve then that. that time EBITDA. into

Worthing Jackman

And for related is out us, I of remember based would it expansion probably in say because the they assets investing business X.X it a how higher business because inverse. the invest quality multiple a get third their multiple on they’ll the in owners over of have blended their Brian, in works in way that to owners turn know

to and invested the we position your lot a in putting capital. for business, you If pay of catch-up under are

going to the that’s multiple. upfront So impact

an of the of saw So we’ve been deals as four, five of first asset we transactions years, I’d XX in the the last particularly that say seeing, the quality the quality that strip standpoint. over far the from many years out

Ronald Mittelstaedt

provides extent company, so in then inherited and the there out – the M&A and CapEx flow embedded free because that think just immediate there and it an expensing think we Brian, Correct I go you cash as the understand from we which this plan, comes P&L, nuances the are to yield of of and as growth are raises tax cash that tax target doing M&A. learning is flow others lastly, of goes are I into incentify CapEx a recent line, because so

year, that driver and see going I over a year is as So people you’re well. think next understand as that, the into to ensuing

Brian Maguire

up your markets, any thinking on to of see thinking pricing exclusive the competition was but industry. changes maybe, tax in being protected to just sort as response markets about bit That capital a the the do up on related want of bit changing expect little tax thanks. competitive competitive you in it I competitor’s reform? in trucks I’m and going an follow more know or a just around And returns better way? for little increase in I in market, Okay, to accordance, wouldn’t environment more adding behavior after-tax result a a the answer. great about

Ronald Mittelstaedt

want company a the position reality is I set but exclusive mean, private is the maintain I our that to public potential, price, certainly Brian. like it companies markets, have which that the it’s the to determine that attempt of is where as when said, think companies we we XX%-plus the get competitive always markets and set. why

And live private and financeable. on type margin on so that margin lower a XX%-plus bankable EBITDA public generally is a and company companies a much live and

which type extent they to good market whether news a is to benefit – sure of that taking is share the are, will put obtaining at better so private to so is the fight are that will seeing And and The strong through strong in benefit. incorporation I’m that for some pursue environment the themselves, economic some take environment pricing cash a business into market. new of whatever the the companies much new a easier have, of as themselves they there in GDP benefits flow business we for there but business. they then such

it. about be bigger But in concerned if I So your a concern. bigger economic have environment, we less were contractionary think more environment, I’m in question would a – a this

Worthing Jackman

business their before reform. cases for even run owners administration tax some In tax

So if really you’re flow already a business much rates doesn’t cash into the fact tax environment, pocket. in too that fall, operating put the administration your more

Brian Maguire

a thanks lot guys. Okay,

Operator

Oppenheimer. question. Please question from comes proceed Kaye line with Noah next of Our with your the

Noah Kaye

Thanks. I’ll quick. them keep

what was it little the for of FX U.S. XXXX. dollar this versus a on Just assumption, Canadian thinking tailwind you quarter, bit a do about

Worthing Jackman

be Again, we’re and trying here cautious $X.XX. say to around

Noah Kaye

guide of on $XXX then And the CapEx million. great. Okay

pretty year-over-year $XX still million as percentage fixed of So a sales. but

be flow your the could cash you higher? the free ROI? with prices internal So high if of I kind CapEx bonus number would guess depreciation, for so, what bit with potential see don’t buckets? excess all moving deploy there M&A, a main that you If may of Are

Worthing Jackman

could, flow higher it removed move of we move through take the year. CapEx mean free result saw and as mean, it Obviously, year last we as you would down that. cash I higher I the a

by but the that like the playing as let’s those of see high it’s and quick a at could a years So opportunities, dollar we’re could projects two-year specific couple those time one questions yes, year, we’re be let’s generally out right year early CapEx that have about just outlay ROI But now. started the the higher periods or in looking how to see opportunities go. we looking

that’s material So a any not in current one impact year.

Noah Kaye

thanks Okay, very much.

Operator

from Please question Greendale of proceed Analysis. with next question. Corey comes the Our with First line

Corey Greendale

Thanks. keep it Hi. quick. I’ll also

benefits. just On the the offset you more to headwinds a say about offsets. I expansion results, could But EBITDA of QX the margin the kind understand that little

your that EBITDA from I the trends the a expected If and guidance a guidance? perspective, the margin you just quarter so of positive look of it at beat given more have wasn’t on above kind some of why waste other better E&P of would more in

Worthing Jackman

You’ve we do our a got business. good pretty of forecasting job to remember,

And we’re quarterly so up guidance, a pushes basis a these by points that would by And to into forecasting account. have pulls period. and point and points been basis that margins XX XX on overcoming overcoming overcoming XX a basis from of from been Chiquita. giving taking after lot guiding headwind XX another probably the to crude recycling point XX XX XX headwind impact have from would basis to in And year-over-year,

basis higher to basis those XX headwinds got we of the things three basis up XX basis guided. from or for XXX XX points us than up So points points points you’ve report –

Corey Greendale

the assumed guidance. weighted in the E&P half double-digit first is that and just increase on Okay, revenue disproportionally year particularly the I QX? of the quickly the towards

Worthing Jackman

need see XX% table, back with getting the crude two versus to it disproportionate growth starts to a year-over-year basins think higher one, if the need in would back quarter the Well, back means highest gets which year-over-year in plus really or starting right, kind see QX, handle growth would $X.XX, more stabilizing above when the a about to of really to crude two $X.XX see starting particular. comes in growth. turn you growth you I first see could double-digit you with a percentage because starting see you But unless stays growth obviously again what the on, end E&P,

key So to call driver happen, we’ve be what I’ll to XX%-plus our then will if baked into that but that were not outlook. that growth, a

Corey Greendale

thank Understand, you. Yes.

Operator

Please with question AltaCorp with of the Our proceed Chris you comes Murray from Capital. next line question.

Chris Murray

Yes. Thanks guys, good morning.

XX% about intensity well seeing with any acquire? you rate that are take could think And acquisitions, tax thinking that other time those this that finally, million right pieces should a as on CapEx said about The But to that may be is then couple on is the maintain it be a that when I CapEx. might so question, going guess it change things other have are One, tax go-forward So the guys does right you guess, do. to in are now now there. of investments? of changes as questions. into $XXX And run internal my how for might happen that it I be just revenue, the of number might you number, mean, accelerate? I you that investments So ad take recycling, levels, issues the we there back as to how you’re marine? Should basis? I’ll to quality additional roughly impact guide call business as capital an to call need two leave business post attractive increase may you

feedback. get some Just

Worthing Jackman

say you outlays when X.X acquisitions, Chris off, assuming meaning purchase First or in acquired period year $XXX I’m not X, revenue? million over price

Chris Murray

Yes, I think forward. Right? $XXX million

Worthing Jackman

a Times year, obviously. four full for

$XXX a million From you of low-cost done government. almost can – standpoint like it both from it much earlier on tax reform, just You that so XXX% to how expensing, it’s depreciation quarter-on-quarter. the a It CapEx expense on change that of understand gets is annualize the doesn’t relative value loan pre-tax are your books.

watch free outer change of a yourself hit and up to So business dramatically try gap dramatically an huge the potentially wall you’re invest to game or you near-term down because how lay in because shouldn’t in cash year-over-year. your in if your here, flow that year and cash gap setting play you really capital up taxes you long out the your –

So to it’s our near-term expensing, accelerated think on based make I decisions appropriate. that’s don’t – particularly

can making more what capital. in the standpoint, focus get that we should in how you a business bonus employees are but Now, that depreciation at layout normal just of impact might I some on retention our investments into course Ron would from call to things not help loan

Chris Murray

kind on acquiring Okay. thoughts any number? line stop whether XX% M&A, about intensity was curious I the or on of like And not with just capital in

Ronald Mittelstaedt

Yes.

as tax would a – I think you M&A again, a would the the transaction more to reported provision see the of an the the code, there’s your the basis on concurrent And some see cash to drop. tax CapEx CapEx a immediate percentage there are it reported will, extension of Chris. revenue that I basis target. mean you on nuances new decline actually you with act, because that tax of do

come in you will do. more on basis, a reported So, that you M&A see that percentage to

Chris Murray

should we to expecting catch be on pipeline, no additional to Okay. CapEx that But up at the looking have hit your there’s assets?

Worthing Jackman

No, no there already. normal is

Ronald Mittelstaedt

is No. I I going regarding about provider charged broken does much And it if putting a the – And complex I more because down. question margin I them margin the recycling, was it and times, answer unfortunately. us, paradigm, is is that up? what’s was price attacking buy the and – the reality that times question. is I values it charged is and of I for just the takes While a small for the put fraction you was going that your that you’re more are believe a in differently, yes the question landfill, for is you time costs looking recyclables three a think the Yes, reality most is returns the it think forgive but part and was, your than most and asked make necessary of three going broken. question the actually to to ton but It’s solid because is process same time business of becomes and little everybody that a it overall to collect on make that recycling, The your the a waste. automated, think think specific commodity the landfill. shift recycling as to to at it capital think same as in model

So there’s a disconnect. massive

a model, factor. And mindset to major longer processing, into three change through, more private covers more of of on so get all on the fully all expenditure make believe, focused and business, are to and that. cost public it to change multiyear, where commercial to a business greater we model with multi-decade the and that commodity because companies I processing a then companies, that doing – that That the taken decades customer – the us as their that meaning volatility a for longer this many and are has to puts working I a it return is companies for charge allowing recycling exactly a business. regard of customer, expenditures a perhaps fee capital to be get the into and believe capital predictable municipal, or are

Chris Murray

Okay. No, thanks leave that’s it a great guys answer I’ll there.

Operator

Our with BMO. [Operator the Devin comes proceed with Dodge from question your Instruction] next of line question. Please

Devin Dodge

Good morning.

a for how easily or been rate How increases have of truckload costs. can on how along couple questions inflation? cost recently? pass And haul you Just quickly significant you the line

Ronald Mittelstaedt

so about Well, to your XX% business number in to of business, X-month to indexed. an inflation asked our potentially just – I’m was because inflation to that again one, is up – again earlier, to round delay, about cost that going is a there

And XX%, realtime to your where that other So next indexing the in you basis then relationship basically are answer question. it on it’s by depends contract. to a

used we certain And we fuels in recovery and related have material from transport now a surge you’re that’s a other our haul for contracts, a I’m between double-digit right where round of increase facilities, we line almost had to low going – what and you’re So charge recycling third-party. have asking and asking, we a our seen, few. is And four and directly mechanism. third-party when our also to transfer

not material So from a we that. impact seen have

Devin Dodge

feel their offering tax competitors is program, even substantially to pressure bonuses of bonus Okay, likely one your to to that’s be helpful. the though benefits less? And your offer any U.S. own tax do your employees you after changes,

Ronald Mittelstaedt

of companies other any taking we and savings and that that’s the comment We portion first beneficial. I the it off, front to our line are putting tax mean, particularly think Yes. employees. to a a

to in receive are they’re we sort because as that, thankfully receive of of receive, other domicile, our do larger public that and tax through basically, things U.S. our are the hour not the we we Act, of, our domicile having below going material which we One some some of lot benefit But did type that did such structure of benefit, commented, Tax not company, but is companies. and four an you a As different we benefit Canadian not said all really employees did really $XX we any rate. employees.

And our they a have captures of throughout to minimum some of be lowest of XXX that X% per on our in We system. this about the in a rate $XX system X% year. will to beginning hour employees increased

going be So to we’re doing that.

our Secondly, match are, for matching X% where the XXX(k) by we employee. be increasing are subset of employee about XX% dollar pretty going dollar which from is we a benefits on increase, that a first all to increase

increased is again, employees are not a we’ve place. then on we additional per by year, equipment. and about newer $XX $XX CapEx long-term looks about going we Act today, We And because fleet And allocate million, million million talked doing this $X are how X fleet Tax equipment, to as already here in and to benefit while of then January XXXX. to of lastly, our that it plan heavily on focused our and about based

between it for if is of means indefinitely, split facility update, and et shops, improvements that for remodels, types new it’s CapEx indefinitely So cetera. offices, expense in employees, field and our – probably all place then and offices roughly

impact impact effectively, you back all of system minims it, are that say, at got, one another benefit, although we and to XXXX. or going between CapEx way I’m XXXX de we almost the to and So our look between here when in pretty allocating cash

felt So a that that we things one-time permanent I these multi-year than cash were more doing smaller to relative and nature in singular. mean bonus

Worthing Jackman

– we talked CapEx you long XX.X% we some year, to CapEx year at created as earlier talked of revenue. about pulled of about in and I had of an last As playing CapEx, how this the end additional year this business as the last which we game, because percentage Ron of about opening still a the year, try CapEx to our put higher anticipated saw of run some

Devin Dodge

color. for Thank Okay, your thanks you.

Operator

this And showing further are questions no at we time. on audio lines the

Ronald Mittelstaedt

today. there and direct Worthing answer interest to on look if we did no appreciate to questions, in our behalf are any Regulation questions conferences your our Both that Mary further speaking available on at Okay. management team, FD listening and entire Whitney you, call. next to Thank of to call are not you Well, cover an and forward we or that allowed we’re under Regulation again, answer earnings with G. we upcoming our investor

Operator

participation this gentlemen, does for disconnect you and kindly such your today. call lines. thank for your Ladies as We the conference conclude and you

Waste Connections (WCN) 15 Feb 182017 Q4 Earnings call transcript