WCN - Earnings call transcript Q1 2018 | Waste Connections, Inc.

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Waste Connections First Quarter 2018 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, this conference is being recorded, Thursday, May 3, 2018. to conference like to now would turn over the Mr. I and Chairman of Mittelstaedt, CEO. the Ronald Board Please go ahead, sir.

Ronald Mittelstaedt

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

release, better and values the earnings the of expected across solid drove the As performance and growth year-over-year first our noted XXXX. in footprint. XX increased period majority in of for margins than waste price our both basis us E&P strong Adjusted decline in remainder of spite well activity precipitous waste operational and in points fiber the weather-related EBITDA the impacts quarter position recycled in

the adjusted original is recent strong and acquisitions, start our of $XXX believe outlook to to tracking million for we Given XXXX. flow year exceed cash free our

Regarding we've signed $XXX acquisitions total approximately what's additional of three for so activity, year-to-date, completed in XXXX. pipeline acquisitions far completed been including the revenue market million annualized new exceeds with potential entries, or and acquisition

our Finally, in $XX million buying the as of first anticipated, opportunistically resumed program share shares we repurchase back approximately quarter.

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

Worthing Jackman

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

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

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

Ronald Mittelstaedt

of attributed volume And footprint, region, per and roll-off in additional waste X.X%. approached secondary for outlook growth per growth reported sequential volume from day timing. across weather X.X%, estimated markets. Worthing. revenue of quarter, special increased prior tougher last Reported of And at our the was volume the the of should Canada sequentially to increase particularly which conditions XX in Canada, year abate former almost reported period. X.X%. approximate per rose Canyon first permitted growth shedding our U.S., increased was where pulls basis can points high X.X%. X% same-store of Landfill revenue X.X end volume was with more basis price rates lastly, On related points. Chiquita X.X% about be in Okay. by up improvement basis basis points in in plus reduced price X% in from pulls XXX overall Thank increases some an we XX conditions, price revenue and volumes basis you, and collection waste Purposeful exceeded quarter point exclusive in Northeast, In expectations. QX the negative QX X% purposeful to increased an the change weather price This shedding per price the XX while a overall increased X% the to revenue estimated of volumes Waste about mostly achieved day, about lower the than An less by across points in In retention X.X%. impact the QX. most pull roll-off and was attractive of and an pull. severe for and due points period, negative in delivering solid Net X% year QX, of Progressive our our a QX. of accounted revenue were these line items, Western volume primarily growth percentage XX commercial the of by period, In increase revenue basis offset in Total growth decrease both quality the our market,

conditional by year Chiquita our limitations difficult conditions footprint, the relative landfills, in period to prior decrease and across on the X.X%, QX approximately The same-store waste new our due tough rose over to several up Landfill primarily basis Southern X.X%. of tons MSW California. tons at waste slightly in Canyon C&D the special C&D tons at most permit Solid tons year-over-year and comparisons period. decreased weather our was increased tonnage use ago year imposed a landfill was in of X.X%,

reduction New limitations at this waste site. C&D Landfill the reduction tons Chiquita tonnage XX% resulted in in a special XX% Canyon and a in at

will acquisitions, the in QX continues. or down paper. XX% together in or remainder Recycling XX these than old due Prices about from year points $XX additional year's down OCC QX, which per Excluding sequential share were prices average average and provided up from At averaged off quarter, level down February. around and in cost, impacted XX% XX% compared by about period sequentially and around ton XX% recycled cost, mixed special currently $XX was trend We precipitous to basis OCC last from sequentially to for original in excluding our $XX incremental fiber lows in tonnages this drop recovered Mixed of relative could values, prices drag an earnings margin and values, quarter XX% XX% to the $X.XX drag million approximately fiber effectively the have OCC tons OCC, increased estimate in XX% current to and million by down almost XX% quarter. which prices especially This add revenue, compared share we corrugated or with year we in for year-over-year. $X.XX per anniversary ago paper in $XXX year-over-year paper recent August, recovery were mixed an these along more decline first reductions, in ago if per period. waste though the estimated the QX for earnings was in $XX the ton, C&D processing QX. recycling values since and the and second flat. about down recent QX's estimate overcome from per year declines averaged the outlook containers, declined recovered values, quarter with processing headwind EBITDA per be additional million first

from E&P into waste million E&P of expected we waste $XX.X year-over-year of we providing year. Activity QX. XX% little up had quarter, revenue rate X% a period, the reported remainder sequentially activity, faster in at up the the run ramped higher Looking first the in a than and

of year, recently on In Permian. growth beginning additional these likely our expand addition, to West the received XXXX. three half we've positioning least the within at permits later this second opportunities of asset construction permits providing We'll in commence new Texas two

processing market Disposal Bay what February. the basically for growth Arizona's At acquisitions We for for X% greater and the additional acquisition solid acquired year. annualized in Pinal Idaho, revenue valley a April, signed fast-growing Florida Carolina provider Central of between in amount close potential services exceeds This year-to-date, three earlier, that an Counties, level, growth the have Disposal, for transactions at transfer landfill acquisitions, transfer would Away solid two Florida, three completed operations. this since area clearly is an aggregate of the together total we transfer acquisition Maricopa in on May waste provider complements facility, tuck-ins Right a with our what's with Pima, recycling acquire pipeline revenue. recycling, and collection, smaller approximately Texas, to Phoenix approximately existing we X% and we've Tucson. as landfill. of entries visibility previously of Heart million a Nebraska, large entry completed of closed year-to-date. on of to the stations our municipal disposal And And, already or we definitive landfill the and million update market discussed operations, acquired or new waste including $XXX opportunities. March, Looking to In agreement we early future in above acquisitions XXXX. one X, average $XX In of June. been These consider a for in services collection, collection and a This market North to is and integrated mentioned activity of a we've waste in annualized solid expected completed municipal signed new consisting last and

repurchase $XX we between and full target is first repurchase a opportunistically start in share million. year our to This program, earlier, resumed of noted approximately buying the quarter. million shares $XXX As $XXX good of our back million

We activity. are to us free capital and more the while of flow fortunate will now, Q&A. outlook of to then provides wrap the with first in-depth I'd quarter funding to to profile increase that highlights detailed average the amount into a the And I our of up pass QX. provide cash call to generation an the Worthing financial shareholders, before above of acquisition return the financial review flexibility for and to like heading strength

Worthing Jackman

Thank period. revenue release, basis and the points which million divestitures. million expected to EBITDA in diesel margin earnings than Net from permit capital the due negative revenue for spite about higher for flow-through XX% the the in of an Acquisitions $X up $X.X the revenue completed XX $XX.X rates expense first the our was was gallon QX. of of our Fuel million basis percentage A contributed and debt-to-EBITDA. commodity increased quarter to XX% change prior-year ago Adjusted period in Within expenditure $X.XX per precipitous the year in or QX, a above from our million over $X.XX period reconciled $X.X of quarter, was which additional by million of from quarter-end waste to balances, $X.XX ago and QX plus defined from or our since activity. year-over-year was from up year-over-year $XX.X basis points credit expense was the at the by you, outlook. prior-year XX the outstanding and increased outlays floating in in increase expansion due the in expense In and for income in above Ron. In the driven $XXX.X values, the the net first enabled our million XX averaged billion, EBITDA ago per was X.X margin year period to and our since the QX use margins. million to quarter conditional overcome which decline outlook as high Landfill, depreciation a period. Depreciation quarter increased revenue over and $X.XX interest than estimated basis revenue interest $XX of as year-over-year Debt impacts. year $XX.X drag imposed $X.X respectively, expense year points Adjusted at about higher quarter, due point QX, almost amortization margin impact growth, Canyon revenue, invested from in billion, XX.X% we for about period about prior interest was a million the year-over-year was year-over-year. as XX% limitations million recycled more was period and sequentially expense margin of period E&P strong XXX was incremental solid about about basis waste, Chiquita increased up weather-related about in recycling the gallon, to on improvement was adjusted new EBITDA of in margin X.X% pricing majority XX revenue. approximately up points from rate, in us about the $XX.X to in attributed ratio, leverage flow-through of Interest compared period. agreement, cash times as and

Our was which included or effective than prior the $X.X period. basis tax XX.X% is the period provision the effective rate The for our the outlook higher to with points for XX down million benefit million related for first from compensation, EPS. tax excess to to tax year $X.X benefit equity-based period or the about impact quarter associated $X.XX rate

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

Given our recent start cash $XXX for outlook flow the of second year for the I our tracking and to XXXX. million now our quarter. free review outlook adjusted exceed to acquisitions, strong original is will

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

acquisitions change the close related operating to also that QX be economic any acquisition outlook Our additional approximately during It Revenue environment. estimated any remaining in Waste may no assumes current the in costs the costs and resulting $X.XXX to and period. billion. rebranding from is Progressive excludes

$XX.X% in for We given solid have growth of in This typical margin many the X% spite QX pricing be ramp volume upcoming seasonal QX expected amount, lingering QX weather approximately an to Adjusted to headwinds, expense be reflects million and impacts year-over-year. predominantly Depreciation those recycled is expect of waste revenue. for throughout the XX to quarter, about to second about the of estimated similar we first commodity amortization revenue. quarter that experienced in expense is year-over-year expansion with amortization from or April the geographies. declines in in is $XX.X intangibles of $XXX million. to the per XX.X% share interest basis quarter be net EBITDA or diluted to point quarter in about taxes. in estimated in losses $XX.X in estimated expected winter delayed $X.XX those to million be approximately estimated of income markets Interest is net similar QX about margin that be Of of

as Ron before earlier, Finally, now, our some Q&A. to variability. And remarks rate QX, the me be effective some call tax over in for turn is to final subject XX% back to let estimated noted about

Ronald Mittelstaedt

significant with Okay. even of transactions an solid active to activity under signed growth Thank extremely another you, and to closed pleased Acquisition Again, spot an bright start or and E&P Worthing. with position Near-record waste bigger of year. enabled average dialog. overcome we is us our increased pipeline above year. already us waste and the the well recycling are the pricing headwinds remainder for activity amount have

resumption is Finally, with up our return repurchase capital program. of our of ratcheting share the

outlook for Operator? QX open appreciate for today. believe the We activity your until note the formally flow to close, it's we But operator will adjusted is full now outlook prices turn above acquisition our are set year. earnings up to wait again that to rise over cash release the call pleased to your original I for update time trending and beginning the to We $XXX with our questions. to this lines free recycling our million year. prudent to

Operator

line comes with Instructions] Brown Please the James. from [Operator Tyler of your you. first question with proceed Raymond And question. Thank our

Tyler Brown

morning, guys. Hey. Good

Worthing Jackman

Hey, Tyler.

Ronald Mittelstaedt

Hi, Tyler.

Tyler Brown

The revenue rata quarter. million nice to basically to the think Worthing, Hey, incremental guidance? But that the other I acquired is $XXX million year-to-date, of million want I it, Hey, just call should guide. in the effectively of sure it $XXX right. we right? $XX that pro million about of, make being $XXX Is have is share that of

Worthing Jackman

look assuming timing incremental With around And minus that that million likely million then cash June. the you'll guide, or the or would you flow through incremental cash get And say, $XX you contribute next of regards flow to as through guide, correct. so, some flow if that signed at that's revenue the this in on free for obviously EBITDA closes $XXX we yesterday million $XXX that. transaction and of the top plus

Tyler Brown

EBITDA a basis Okay. could And maybe then what be I'd on there, blended any think color high maybe margins XXs?

Worthing Jackman

The blended we've that's mix in first came about because landfill standpoint. own because does from so so in given one basis, the average comes corporate a three those or to the landfill. the in market, next margin a not with the the On disposal $XXX mid-XXs a set transactions. to neutral low landfills million at at right, in got close in It's that that

So right. when those blend you're you together

You plus into the of get or minus blend. kind XX%

Tyler Brown

the CPI reason you haulers Perfect. improving, of Okay. here, churn's the guidance. we how I in X% mean, I it pricing X.X% we're first should the as back guess, quite for Ron, look of full. remainder seeing like as what year? can't the low, obviously to ahead know same well north It's see is small half feels think the But about half the the think good. Any of that at then, first half. are pricing I here is And

Ronald Mittelstaedt

between the X. our I completed going and Tyler, remember, reason April that. for no is of price but to by I'm real estimate XX% Again, year No. mean, XX% to think increase

So in working you're a effectively your that fixed. unless churn of off material denominator change there's is

change would materially. it reason a not think there's So to

Worthing Jackman

denominator down moves the a It as little seasonal increases. bit

Ronald Mittelstaedt

but material the That's particularly not you're in, changes. is talking seasonal come revenue about right. in QX, If

Worthing Jackman

It doesn't matter.

Tyler Brown

Right. Right.

in CNG guessing a Was from the just And credit? then anything Okay. maybe be de tax there one. minimis. there it would last Perfect. I'm

Worthing Jackman

It's de minimis. It's a It's minimis. de couple million.

You're right.

Tyler Brown

Okay.

right. Perfect. Okay. Thanks, guys. All

Operator

of with your Please next proceed question. with Hamzah Our question Bank. Macquarie line from comes the Mazari

Hamzah Mazari

Hey. morning. Good Thank you.

The first well. as question on just is M&A

starting up buyback. You're the

You've going up maybe pipeline frame forward is deals are year. anything still maybe timing that done a into not just there in strong this of to buyback? record us or just Is – for maybe a because there activity read number the chunkier Or the the is deal ratcheting this as deals thing? you're

Ronald Mittelstaedt

Yeah. No, nothing read I mean, to Hamzah. number it. one, into

with very always two know, consistent, active you within here. that we we Xs couple up that it low significantly the with transaction very low have next buyback, ago leverage up the of where took years have from because to Progressive down the in we'll now, completed deal because comfortable we're into and our And we were really is. As the worked our leverage Xs very weeks leading resumed

we're deals, in. to to continuing add bringing Leverage As we're continuing EBITDA is drop.

been have balance cash sheet. only We utilizing on the

We on balance cash haven't used even sheet. the all the

leverage come based seeing And just down so, by cash turns than on EBITDA more of again, we're EBITDA quarter and per X.X flow.

we're very And everything that below be out to so leverage we are target. going we still there comfortable our with see

good to got the we again a the $XXX year. mean we're haven't really even it's guiding free So problem I that for to have. very million cash already of

opportunities. going pipeline plus read they're I've chunkier, that. years, back to translate, going to strong as in mean you the terms but, to XX we've but said, the That are into correct, be is as opportunities. nothing So far as in as XXXXs of doesn't late it seen probably can as Deals

two the there. no So between correlation

Hamzah Mazari

to a that. just And follow-up Yeah.

bidding been on is color I really there if these PE there deals, that's you're bidding you're now. against competition? maybe these no or on space competition that's chasing is when raised you know to, money the some changed deals has new you could As give the as

a quarter. of the this acquisitions lot on spent largest One competitors

as just of you're there's against high valuations sector? in curious sort so change And going any who are relatively in the if up

Ronald Mittelstaedt

really Hamzah, us Obviously, where is Generally, don't did ago Yeah. PE footprint years more to is certainly, out an Hamzah. they're probably X.X overpay. I generally, what to not there some lose. auctions. due has for mean deals. competition because deals and We a and no to real going we're as going know that they're we're increased two the in win really If material going XX Probably areas transaction going to bidding. do it's with they're we X I of change, puts not every our auction, doing Progressive, say to almost to

Most going to logical So say, going sole-source. in would of really are, sellers deals pay buyer. obviously we're I of to we're we do just what don't we a participate We're the to going much. sort somewhat pay. are And those while shop,

we that we competition materially years different haven't ago. what three in is than say So transaction do for seen

Hamzah Mazari

how cycle follow-up pretty question It's pretty if I'll to going maybe and just it fundamentals A think Great. I about But the about as are well year realize risks the understood, business Okay. could frame you a slowdown. sense group. just for the as coming over. view there? turn lags should Thank inflation, by you're you. rates, into strong forward. waste waste out. on higher any going But recession how a a risks of interest well it thinking higher any investors Is

Ronald Mittelstaedt

Interest Yeah. anywhere Well, the signs another would to one, on what We seeing around is I the years, contraction pause to is be a slowly. week this relative up expected I that moving Certainly, not is solid. we rising. eight to is us number Fed increase. just was indicate GDP corner. the any GDP are are volume last mean that that environment saw rising. rates mean, very The

franchise based disproportionately off that up higher, because the over It presence the our to basis points XXXX. XXXX the seen, of CPI July seen continues or U.S. year in Coast. the you've pricing so CPI or West I be for last is you've move solid. over environment well be in the that we'll getting bodes approaching prices XXXX, so As large of And We've because our think, Western benefited, the XXX

July, out into should something and unless pricing and remain which see XXXX So between strong, now XX away. is we collapses that can look days

strong. of visibility in bit space. Acquisition on mean So environment a is I price quite the

reasons talked that. for we've lot about As a of

change that tax reinvest view that strong. buyers. is there to is rates Rising sellers. help could Tax type in fear XXXX sellers a change in there all economy benefited has a the has proceeds that could of income. be window, interest they change fixed things. political perhaps after-tax change benefited sellers that The think I And

from window. a that repeatedly at And heard last sellers all we of there's types So week. WasteExpo

than very are which to of a in year obviously ago, any to a economy So market. a negative it. strong not signs commodities, space And extremely relative other Obviously, tight the I a think weakness we're is labor tough, strong. seeing leads

they manageable, exceeding seeing pressures, in time. price. I You're we're wage but are would say, at And with this wage our point our

So there, eight industry in were say eight be cylinders cylinder on really engine. would recycling if firing I'd all the an

So least eight. right seven of six now it's probably or at

Worthing Jackman

impact year But the seeing anniversaried. you're you of And overcome the fast forward XXXX, even it's all recycling. to this companies

Ronald Mittelstaedt

model And listened if call more with what said. could address low chance enough, thing a a fix the briefly. Republic I team probably a that a think if on not chance, yesterday, I it's and is their recycling long enough, thing. Yeah. mean the were you stays price I executive broken It's actually address. agree won't industry I to it this economic potentially, very good the otherwise

that view under a thankful what's and actually now strong umbrella. happening I'm very positive I So as it's thing,

Hamzah Mazari

you. Thank Great.

Operator

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

Derek Spronck

better being little generally is a towards strong. pretty CPI? just versus And more The the purposeful have bit tied Or are pricing Okay. a you How it pricing pricing to you environment do is revenue seems Thanks volume? increase broad-based? much environment right now? much. pricing Or so

Ronald Mittelstaedt

of those. Well, Derek, first say let's broad-based. is the that I attack off, would each pricing

revenue, question, tied to round, I revenue, XX% to and have, The we of CPI sort going a was first do index. part your how have CPI-based would tied say much the between we CPI? collection of I'm some XX% of particularly or to

it locked So as the July similar already it's pushing on that. CPI. and said basing footprint. We've that the that X.X%, large Pricing number got And Coast across West that our on in is to be we'll a towards we again to strong somewhat number and because XXXX, is be for pretty like broad-based. pricing mostly very we appears Canadian

our geographically fact, And had we regions exceeded the X.X%. volume some pricing achieved highest with probably that of albeit trade-off. In Canadian our footprint all

one So that it. there wasn't was below

So would having that tell broad-based a good I you're due this also if margin getting good environment, tell you you price in economic compression. I X% environment. probably GDP would environment, to not you're

Despite CNG margin seeing price, accounting you're and strong with getting changes this credits if I exclude compression. you think company. you're still other that recycling, in

So you in pushed of we environment it need to believe to really expansion we the be this mean, it north margin so X% will pushed first say get I we we be or and hard. cost hard.

Derek Spronck

from an price say level? your that level pushback are concern customer any some absolute where be there on your Is still are an providing absolute or will you're pricing services or there – you value a you're contract point rates reaching that would that providing still good pretty

Ronald Mittelstaedt

Derek. a amongst on there's is I XXX science. Pricing issue, X Well, it – through we look mean say a basis is local an is would again a brush. market-by-market broad million market not And Pricing that's P&Ls art. pricing I a a not customers. at

by but a region, where There are it's of increases. we number are as it we and price company for doing where see markets amalgamated very There different. number are brush are You doing the a broad increases. of a not customers not price

And based that competitive on are. your get structure. obviously tells your based we're that because there It's your issue. cost X% to on a positioning, to it's positioning. north on are based It's where of So we markets asset that's market-centric you well

in you is is price never reality XX%, raise look, customer the has same or That business. this it the you going X% so, And whether right. raise changed to cry,

think – a as do providing matter your service might adjustments what while. that, of X% worth believe you make we're there's But to we it providing, price customers well what those it percentage So are service, quality difficult. – and no but yes, whether we are X% a so I level is

so have something to that's we And through. battle

Derek Spronck

you great relates sort Landfill? It's about assets and/or you've your of your in Okay. how a and see particular the some in Could bit color. assets JED do the increases you that and And to area? it talk pricing the of landfill that What Heart just to Florida in implement ability of quickly. the collection Landfill bought, little capacity some

Ronald Mittelstaedt

of of I Orlando a serves of basically Florida market the Well, area Landfill Heart predominantly the Yeah. mean more that and market south is JED area. the Landfill where sort Ocala the market south which serves

it new out we came and is go there if Heart privately-owned internalize bought I opportunities, opportunity limb There not our We I pricing other opportunity is in per landfill. couldn't of The the our volumes are se. that MSW, one. say landfill municipal through JED MSW several but for believe, really very to believe Landfill. internalize buy very the pricing didn't this landfill, that the of We in the to the of a only, There So a Florida last market. some not remaining transaction it Progressive MSW landfills. only, privately-owned are was several one of Florida. on state the large, a C&D the I'll MSW for

a There We number and the asset, in view over we time is it. long-term. short it of so the opportunities believe as very consolidate. strategic a And both around to

strategic tell you. for asset what that's We footprint. our I think very a again would it's So

Derek Spronck

right. All great. Thanks, That's Okay. Ron.

Operator

proceed from Brian Please with comes Sachs. Our next question. Goldman Maguire question your with

Brian Maguire

Good morning, Hey. everyone.

Worthing Jackman

morning. Good Hey.

Ronald Mittelstaedt

Hi, Brian.

Brian Maguire

maybe recycling of remove trying with And you Ron, thing is structure and good you that started downside guys the your have and and can just those change already value you've heard mentioned, de-risk comments some business? longer-term. to how you have to earlier from getting both the business to upside about efforts to potentially payment a that Republic, we're have customers the as of you Is make Management there conversations tough could the done about about on going might We've with following about maybe your extent expectations that provide paid the those well going as types that. sense and this for from the and comments Waste Hey. how industry and success to any any on conversations, risk to be have and some going that maybe the forward. talk how are try for

Ronald Mittelstaedt

market just basis own we we collection, for expect containers a The a hauling put if price question them, it, we your yeah be, recycling there, think waste that let's to a – this customers also That's Brian, trucks of we above. we on sort well, with else, has a make infrastructure solid cost for at opportunity all I of structure host go an based is capital send said, can't yes I landfill. reasons. out – that the the should to it. mean not done side, what and to We Yeah. to of local look, the anyone capital landfill base we collection the because the industry cost for return. Well, and their price we garbage the collection return to their on speak don't you I might number the forget that our and recycling. think but, for if our and view answer we the about for one, industry has about need how based on on and associated the the we garbage The has of account upside

trucks allocating works let's that for $XXX And $X like then payment's think that recycling, us two, and something the $XXX one – that $XX, it that there's $X a it's is all that maybe and payment. return I to want we capital We don't return year And, our year landfill return. our same today the a use ton. a when it the home. work. I think or for next has doesn't processing there's don't garbage X$ when to use to so no send investors get call let's a that and send we commodity, or as a that get for and collect just our Let's we Well,

to got commodities are this So out volatility we've some of giving the business. very up take and high out of some the taking downside. when upside of the means That

they I like do much behind X.X%. in are not as you for we X% where a of opportunity. similar not you are us, margins we opportunity it's I that heard our an I mean Republic revenue, good being working in but things. that, say, on So, behind thing, would despite are Remember, them, that for us, tell

or you're industry, company years. is long. deal five, It years two but But make an as good basis issue one smaller it's on and correct. problem a seven, contracts in be to We a So a talking three, with. corrected a about not that this long-term much will XX can to many are percentage headway

of for let effectively, I to involve willing we we're the not and it where at And customers the biggest do it's is capital of return benefit has for customer our substantive because customer's that we ton is think something going commodity. cost practice years many we're But of our paid prefer the it, commodity bit really It's progress renegotiation. which processing we a of customer do us fee take a do risk have to to want as industry it industry the So structure and and ours. per exposure. we gives the that continuing make whatever the But can want have look, to I a the to quite to what sharing, on a would the the made mean that's not and And, some indefinitely. few outlay. over XXX% him determent willing that see a be I areas next that. is

Brian Maguire

and for Okay. Thanks there. thorough the the good answer color

was I I the than there but more think, stats Just heard weather couple switching And gears a prepared in you mentioned do. typically you I a bit, it pretty quick of you cite remarks. think

the if thumb XQ Any rule So in impact to overall as kind rough of what of weather that I you some carry have we on sounds been can of you're and like can expecting impact XQ in over. of well. expect think how to weather wonder summarize you kind XQ much might

Worthing Jackman

was because XX Sure. impact remember winter about harsh. What volumes the as in we not on point the in mentioned period Canada, of QX was in the basis estimated and U.S. parts many a year, last

year, In in very the year four Canada. the fact, you months winter. throughout tough winters was very a This first of saw mild it

dip Midwest. a Upper through saw the in You

You saw it go down the East Coast.

You saw four nor'easters hit various parts of country. the

got From the to point XX can we because certain volume I be only was overcame that was just of quantify – that and the probably you in we but the it's that of impact to the impact there And margin but have in of in into basis period QX. you've piece. a additional we estimate, in our anyway margin of XX the baked impact, geographies the numbers QX. didn't So for margin parts margin standpoint, that's to obviously, guided impact QX month in April XX majority going now

Brian Maguire

Okay.

obviously On be think fees. last tipping some on I pricing Just Chiquita one Canyon, bit, me. quite volumes I'd expect and a a drag it's from one offset over could by in time and it increase

of some Anything those from pricing. potentially contractually color on of recover reopen? for or sort lost their would wondering on of to somewhere how doing increase just keep have it, that but in price the some could to environment timing timing able – what's opportunities given pricing in that's being limited any paying that of kind capacity any be the for more when through Just you region stuff people or on put the volumes potentially available, maybe and

Ronald Mittelstaedt

I'm million the our under X Yeah. allowed take at up. [ph] permit vast from wound. going Well, has to tons taking first X off, went approximately Brian, been to Canyon – annually million. old Chiquita majority let lost me back being We to volumes of the

million late you're in fourth year. early quarter QX. why So last quarter, year it's differential about that seeing started ton a third a the it abating fully in That's

mean this So of QX it than last of tons year I'm XXX,XXX – about QX less around year. was in

purposely, vast we tons special lower that majority the higher waste million margin business that of wanted so out pushed priced that and MSW. was that C&D was lower the Now, price, we

the In that rates did both not MSW. and have we where addition, we gate raising for been steadily rates the have contracts,

On an where but we by offsetting basis fully material any not on are impact we basis. and correct. we are a means, were a you revenue EBITDA to revenue a making are So

Worthing Jackman

point, point you about to been price we in XX impact. we quarter. Chiquita last a working hard recall headwind Brian, just when basis we've year, current points get margin Yeah. estimated margin might was Ron's basis that first a point to higher And XX talked about the the

Ronald Mittelstaedt

Yeah.

really happening basis And mean of real-time last that been I price and has so happening QX on the on since is Brian. basis, year a

has that location. has I their volume are landfill As volume owners most couple of county, only that and far gone, a well, within to as cap. There's the at a them variety where of mean gone

in outside further towards has Empire, is into Inland So the they've county. Most the it the some seen benefit, of but of it gone facilities most into traveling Arizona. distances desert

answer is question. short further distances the it's traveling to so And your

Brian Maguire

Appreciate Okay. there. answer Thanks a the lot.

Operator

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

Noah Kaye

was question. basis industrials E&P from like think, we're even number continually but a seems like there's E&P. growth every of little the around left continued a period little bit positive to about in plays maybe the taking of here. still, run peak, where this of getting for much quarter, really below a seems very back on rate far Lots Thanks more. I kind so number come this XX% commentary of And still stronger a of it of a kind kind at bit

growth think Does the you are on potential expectations And to you be Just that? double-digit seeing right? time. Do still some wondering last are now? may that talk there about your what You feel what ground? upside

Worthing Jackman

We outlook to $XXX higher rate the from out. We'll out E&P the about into balance $XXX how see million now. million, revenue million QX Yeah. clip or us right probably into so, about meaning $XXX we were of for a Kind we at million run exit million puts QX baked our of in plays laid in that about outlook, rate the February increase When $XXX to year terms million. $XXX getting speed at of entering type talked of our $XX run year. back $XXX this million

million probably So $XX minus our above plus we're assumption. or running about prior

prior about reported the recycling. XXXX. $XXX right So you're from we in obviously some the weakness that's But being offset I peak. peak, revenue increased mean utilized prior of in about to million

mean yet XX% XX% dead running about Bakken And And wake the back the on. is so largest up. to so point we're to XX% – play. below your then, or our And I Bakken obviously was is that. still

Eagle Mexico, Louisiana Gulf Coast of its in XX% saw Bakken Ford, other up the peak yet the below right parts we some are prior probably fully Obviously, Gulf on is show now. still to So XXXX. of like running

those on now. So we're basin we basins where that away strip were right are ahead XXXX a running if active in basis, of you for actually

Noah Kaye

of That's we of our a rightfully pricing of I is kind headwind, weather right, getting volume, comments color. thought. And perhaps on little close stronger great all incremental than to we with think And on push price, XQ, Or a of just of in there's headline about negative cadence we'd you kind bit being so. maybe little volume focus mean at your lot a end then year? so But have do Maybe to for think back the sort timing some here X% some growth could that a half? X% in now? the X.X% the should bit volume of headline lower that stronger what

Worthing Jackman

snapback? heavily said, Because Well, early I in why a how that come high we above seasonal seasonal because saw of reasons the pop, average saw till the we the were March, late winter when you've by such those is, wait prolonged one that's really April, seen tremendous question think seasonal July, spring yet is winter, in impacted markets increase.

what how plays April to winter see seasonal see now that May, exited most May increase is April out let's has to markets. of that the affected – to got those really we so And

Noah Kaye

Yeah, the questions. thankfully so. Thanks for taking

Worthing Jackman

Sure.

Operator

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

Corey Greendale

ones. you. had quick Good a couple morning. I just Thank

said all, seems achieved region, all you're nature such expected, strong in of on you X.X% market? given number, on the you price that would've the times of which in result hard a exclusive markets. comment that said Ron, how a in – and on could – touched you've in of number the But Western First couple the like exclusive terms how higher did pickup more CPI I the price. you those a the And pushing sequential you absolute

Worthing Jackman

the not price some markets. recycling. of mean rate around certain in some obviously pricing some offset of but it's Worthing. Yeah. of in CPIs recycling. getting the the I'll just one. Yeah. with investment And increased municipalities in the we're the return Corey, also CapEx very with been impact markets, our have it's core proactive folks driven cases, impact of start of on to has in those the that And help trajectory declines I

Corey Greendale

I'll Worthing, a then, to ask fine. answer And Great. if you that's Ron and question wants Okay.

free I understand flow ahead pace. side, On you're the cash of

sort take way. look the and percentage, same in – the necessarily XXXX not it you doesn't that cadence it's of look If at

So sense obviously think us quarterly top but, cadence of mean I of you're to free just of I you it. on a give But expectations? the flow can set cash

Worthing Jackman

that CapEx last mean cash earlier you hit outflow of the bills, we had pulled the had year we is a I the Sure. what us into this year. overhang year, lot last but of

year And that as billion $X.X our so, number one, this clip running exit you'll itself see we CapEx now again is that or more. repeat

two, Number one. see number question that's So you a it's timing. of

reflected. If of you you note the accrued And dramatically. where see that's liabilities and down majority that are payables

cash of of And you you those dramatic tax If you that. look ahead mostly see comfortably if the are payments a in shift and at timing QX, QX running QX QX, million. annualize we're in $XXX

see million our in $XXX I that the be said course $XX that's million from not that's to $XXX we're and come tax as liabilities pulling good suggest the and capital on or guidance And $XX along, a in all You'll that we're of we've payables not million million. is of why to back reductions that the prepaid exceeding the working mean during there year. going

come saw relative year out this QX that So last But of you'll you'll to see a will see different into of variability year. that back QX. most you came again quarter-to-quarter what

Corey Greendale

sort that's prefer. is a that it. to true a quick answer to art? become of in a really that more one science I applying what's more looking about science, to your and not for trying and than give just of your I it free of at an just problem over this more the data of are quick Ron know one being some price art if And if you an and there But Got than to – industries. should of comment time and others technology industry science apply feels then But it numbers are across had view last

Ronald Mittelstaedt

an utilization utilization and greater use a as you The think, well. I data makes agree determine lot just still a of look, mean we the of how should picture greater we And Corey, I mean, better I I Well, with painter. know think it's paint – to to would where. I to art. data. of that do what data

to of gets ability this as should still to forward, by we market. would the be of determined And, a each improves. more our I X.X%. So and end market price in the the is data lot of we the and at your against had push our X.X% go pinpoint, about the spend scientific to positioning down think that our company. to, model And up time highest therefore, X% more we But since really again, opinion, that's a your in our day, inception next where way prices within as point I

is model. with model the So would outperforming that, I say the that data market

Corey Greendale

Got it. I appreciate the thoughts. Thanks.

Operator

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

Michael Hoffman

Thank you for and morning. questions taking my good

Ronald Mittelstaedt

morning. Good Sure.

Michael Hoffman

it XQ billion? the $X.XXX what's for where What's guidance played million that on you $X.XXX gross deal net? XQ the in to $XX million the billion, number how the went for you assumption gave in out $XX Worthing, for like

Worthing Jackman

get and the I'll answer question your to next that. Ask

Michael Hoffman

at Okay. pace. just on And then you're million this follow-on $XX very E&P, quickly, plus at to trending

trend, a any seasonal $XX surprised approach but maybe hit and then or the right, $XX $XX million quarter So dip, we we'd in million million shouldn't be that's given plus?

Worthing Jackman

$XX million that's how That's but out. could going be it suggesting it mean I damn We'll correct. $XX to plays million. to we see it's close – hit

Michael Hoffman

a focus. Ron, big clearly safety then, is And

the Can a been this. about You've of spent lot effort on had us trend? the culture – fix update to you

Ronald Mittelstaedt

us, the are mean, to huge we they and I excellent of believe of the know. as you because the are health is We incidents reduction treated tied is and safety they it employed. heavily that turnover, for of who of Sure. how are culture the is indicator an it's we – believe focus a yes, company Michael, hiring as

So to a employee matter be better, what. no empowered more tends safer

lower we're XX of not months employees company the point to the how diminishing the in Progressive rate getting it's a transaction to and return. indicator because opinion. to at perspective, when it look So don't a approaching quite return, point want getting our say XX% at at at closed of of is certainly improve To I look a we albeit peak. we're a an we Things because health of continue our it incident clip, we where, but to give you no ago, was their Michael, they're its

was six aren't that means XX that aware, every at those we injury a out at X.XX%. every the of recordable employees For months. about or will time have that XX Waste closed, a Connections, accident

XX XXX month. XX of an would every accident or So injury have out

We X.XX% to less range, about in so decreased pre-merger. our so, where side almost basically performance the than flat Progressive has approximately X.XX% it we we've little a blended bringing that XX%, XX%, Waste thereabout to reduced up about have or Connections right at because or a were stayed

of the of a incidents been over a off rolling average reduction of has peak a year it X,XXX X,XXX So incidents year. the over

So there has been substantive improvement.

Michael Hoffman

And levered labor how's labor been of people? turnover, ongoing into this challenge finding that given has

Ronald Mittelstaedt

and side, our been for variability. to about within Progressive running a running mean turnover turnover at provide a of voluntary. was that XX% number, former close, I Yeah. has was Again, now XX% X% quarters flat labor on the to pretty around four XX-plus-percent

that to got in that the of is voluntary. turnover XX% XX% footprint about have about XX% We and down to

basis. versus is if getting think high-single-digits and that's that voluntary at to we're very goal high healthy to way the to We the is get under people a is that of teens. that half a voluntary. to manageable. low least to of And XXs Our into are XX% that's our down particularly involuntary voluntarily get Then leaving target on down

– room be but despite tightening go tougher have to we So the of and we market to tougher continue labor there flat some to labor improvement. nominal

Michael Hoffman

all And defection-related I of ultimately into think price. issues leads that around

you your it had quarter did the number, market on of go rate you a more of with. you talk you It bigger like retain what went what too? you retained the with So can only price? Not about feels look retention to more like in

Ronald Mittelstaedt

comment, probably XX% has to with as about lot to Michael, retention. certainly, right. mean Yeah. business, has the is again to quality of XX% certainly or I in the anything. do thing of But no there's much economy, retention And service do first a other that health your the to retention our with as more worry

because out of franchise put nature what's of retention XXX% the business. get of You the

business guaranteed the the service where So to that economy again the continue is when private for to lower to allows on economy important. on focus getting for extremely their the other is But I and tend the the all improving a market XX% umbrella players don't live better us pricing we you because market so And of quality a growth they're in who health have through of the There allows of in which work is that. retention. healthy, higher margin, the the retention. at haulers growth provides think the

question, the So to was XX%. north your answer of retention

Michael Hoffman

said that a a add margin route were they'd privates. one to juncture, have saw this takeaway we to a at full talking buy or either they They was add into statement? collection. displace Okay. fundamentally customer. expo from in And you That, Would lower the customer to commercial

Ronald Mittelstaedt

Yeah.

capital It's small, they many at the a I at or think point in mean, are drives, inflection a their that mean they them business. of were their of consideration the strength of capital are I medium rates, I line catalysts. business things whether why right. large, to expo. and at where point, that's so in inflection one of those a taxes, interest drives sell

or for make coming were that pre-Great of So are statement XXXX well lot ahead but I a of of XXXX. company, certainly where in that every can't Recession out them they now

Michael Hoffman

All Okay. Worthing, time? did right. we you enough buy

Worthing Jackman

Oh, yeah.

about ago contribution is your XX first assumed acquisition in follow-up me about minutes $XX $XX We've million. divestiture about asked new the have impact could in is million and period your You question.

that net of $XX the so million. is And

does could close the it. June not transaction that potentially include month of we from that in contribute when a on depending yesterday we Now during saw any contribution

Michael Hoffman

Great. questions. taking Thanks for my

Ronald Mittelstaedt

you, Michael. Thank Sure.

Operator

further time. on And questions there the at are lines this presently phone no

Ronald Mittelstaedt

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

Operator

for that for and participation please thank lines. ask your does conclude conference the you that gentlemen, and disconnect your you today. We Ladies call

Waste Connections (WCN) 4 May 182018 Q1 Earnings call transcript