WCN - Earnings call transcript Q4 2018 | Waste Connections, Inc.

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Waste Connections Fourth 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].

conference recorded, this XXXX. February reminder, a is Thursday, being XX, As would the Waste President turn like Connections. over I to Jackman, conference now to Worthing of Please go ahead, sir.

Worthing Jackman

everyone morning. you, Ron joined fourth our morning's Unfortunately, this XXXX. Anne the results detailed Mary like our and of first Thank unable family our to appreciates senior Chairman a his and XXXX conference Ron CFO, the Whitney, good CEO morning an everyone's matter. provide for and several Okay. of sends team. to to and best. other by operator, members quarter welcome to management participate call our immediate I'm Mittelstaedt, outlook Board, to is concerns and discuss quarter medical this call full-year on member's this I'd both due and

noted a on XXXX in high note. release, our As finished earnings

acquisition waste expected As E&P waste financial better on results than and for expectations the organic growth, exceeded quarter contribution. solid fourth activity,

differentiated continues overcome reflect of acquisition us enabled results The our and to the elevated also to extremely for pace and percentage pressures execution. of commodity of We pricing was a waste basis benefits for the disciplined also adjusted values strength noteworthy points, certain culture, solid to XX basis in XX.X%. as expanded free in cost E&P year-over-year both up purposeful as pleased these recycled strategy, the and full-year which Increases results are points waste flow activity. XXXX EBITDA revenue X.X% precipitous increased continuing decline year. during adjusted with and was growth of our the cash activity XXX the

more volumes, and acquired million in XXXX. American quarter the EBITDA fourth than with with contribution E&P the margin growth in revenue basis expansion us Along of waste already brought of another high-single-digit upside. solid year, million any total revenue additional providing annualized acquisition or continued growth with this pricing acquisitions growth, XXXX $XXX revenue rollover in strong $XXX in positions further approximately XX waste Disposal for activity, points for Our adjusted to

We compounded rate XX% flow more and adjusted year. growth the free in have at over past per increased per continuing share expect than years the per several free cash flow adjusted a double-digit cash of share year upcoming

Our financial fund and flexibility to dividend, an acquisition opportunistic cash continues strong share repurchases. profile afford to the increasing outsized activity,

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

Mary Anne Whitney

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

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

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

Worthing Jackman

you, highest our a basis plus points in points at the of in time fourth for Anne. X.X%, first decade up year-over-year. and quarter, and pricing solid growth In by quarter, sequentially, positive outlook up exceeding turned XXXX. the for waste volumes the Thank reported basis fourth points the the was XXX our XX Mary price XXX growth solid In X.X% basis period was price waste volume high-end almost

intentional the expected of about more in As more differentiation in acquired region. and positive increases Reported waste QX more up logistics accounts for quality the growth recycling in and time began price implemented, the execution, an XX first period. average to in the X.X% quarters, and lower exclusive of since in model, the importantly, noted progressive and on we cost market our region X% our points revenue intense during high-end reflects prior western pressures were service again our QX, in shedding to the additional we address of headwinds markets to third-party as volume XXXX Once of and approximately our turned and in competitive retained from basis well range our pricing transaction. certain pricing for including above range fuel. focus strength our Volumes unsafe

growth this yet believe, be cautious to to on upside. being positive prudent with in continue anything volume environment We

the Canada we regions. regions, continue were most some anniversary to down improvement and notably year-over-year completed between our showing sequentially, southern shedding X% our X.X%, intentional as mostly while were driven the though across region volumes both those western was X.X% which our by and region in over in Looking up quarter,

believe points are underlying growth will basis due indicative XX continue reported results likely view Looking noted purposeful the increases starting XXXX poor quality to and effectiveness on at that year any of basis about reported as remaining XXXX, of a year. revenue early volumes of upside. our we volumes X.X% as flat down to the than we strategy, growth expect organic pricing to price with higher in to continue shedding be that led average year-over- in to expect underlying volumes a earlier, We about and we about

decreased X% Looking X.X% revenue at pull a revenue X%. In X.X% line per revenue per of basis, per business commercial per up about increases. the Canada per the by pulls In day approximately quarter Roll-off in fourth collection U.S. on results year-over-year due X.X%. pulls decreased day and about approximately increased same-store price about increased to pull. was pull and mostly revenue X.X% increased on higher revenue

in quarters recycling lower and revenue Mixed revenue decremental declined currently year's per increase between per began ton. or quarter, period decrease XX%, and prices in ease about costs, XXXX a from about margins easier X% XX% $X corrugated weakness. old about with several reflecting about year-over-year per in California, bit. tons about in from QX comps almost averaged as the in Recycling XX% changes than values from the and QX, Texas. MSW QX. OCC X% on approximately that and prior first ex-acquisitions in and the about of increases led about $X a led the sequentially. QX We Northeast recycling containers landfill X% QX. up zero fiber $XX XX% decrease prior revenue flow $XXX similar comparisons through million $XX or smallest prices year-over-year tougher to about to of to higher the year-ago due tonnage ton and an quarters sequentially to some a tons EBITDA was was of share in recent for about per X% from prices $XX combination year-over-year fourth believe resulting $X.XX and EPS down is by as down approximately increases million down paper excluding increased was of of processing X% down tons of ton XX% the which on waste OCC Special in in waste slight OCC by across markets C&D remain impact average million acquisitions of the quarter. on in about This from smaller last in about values down increases Solid Northeast averaged $X.X XX% and the were and in due

expect these the commodity around for full-year. to values levels We remain recycled

year. weakening from of and or prices XXXX. upside Looking increases in fourth said, cautious in newly resulting crude That have activity waste seasonal impact lower not the at in sequentially slightly E&P up waste quarter, revenue typically waste a activity, $XX year-over-year seen. a million activity outlook experienced for we we of E&P ramping be XX% in notable activity the down E&P QX any in late reflecting and reported decline our from in We've locations will we constructed levels remain

activity. another short, pipeline year Disposal we outsized still as activity strength year. businesses, continue Looking capital are And during continued acquisition in robust. and of which provides higher the in continues sellers to we well-positioned Reform, closed by relevant. remains at In of outsized the to of about in their the December during transactions. XXXX, essentially rates favorably of for we clarity contribution buying and the the we that noted with the XXXX. including activity, around is rollover result completed $XXX $X for outsized underlying back of XXXX be as XXXX, two billion million of previously shareholders opportunistically acquisitions Dialogue acquisition drivers and that factors American in that December of could a upcoming worth along we remain believe stock acquisitions, four years we continue $XXX believe, over to sellers over which years acquisitions reinvestment taxes review million In deployed That be note as Tax other announced acquisition active to acquisition in off returned deployment earlier, potential Coming completed earlier of sell-off.

outlook call Anne of fourth in-depth I'd like provide and the for financial I to will the to wrap-up heading pass to XXXX. the detailed more and into highlights review then Q&A. a quarter full-year Now before QX Mary

Mary Anne Whitney

the of the as due and acquisitions of net year about year-ago $X.XX higher growth period waste, to from up E&P contributed the revenue $XX.X estimated as the up total, completed solid you, and December. outlook revenue XX our the approximately million release $X.X EBITDA $XXX.X despite Thank million fourth EBITDA $XX.X well $XX expected above In or over for our was as quarter QX million in year-over-year acquisition over Adjusted was for than in and in quarter and million EBITDA from to closing $XX.X hit XX.X% American divestitures. an points billion, a organic with since million as about waste commodities basis outlook up Adjusted the In our percentage Worthing. was above our in line prior reconciled earnings of million $XX higher outlook QX period Disposal $XXX.X revenue on in about million. recycled about of contribution revenue in million period, year-over-year.

of contributing impact up Excluding basis QX were commodity the dilutive adjusted despite EBITDA recycled lower margins in impact the points period, margin the about in values. acquisitions XX of

prior basis expense on about XX full-year, the points from organic activity for year-over-year revenue, year-over-year. Depreciation amortization quarter down impact up period the price which of recycling. total period. QX. up in higher to from of the QX up from quarter year-ago and closed per to Looking in $X.XX was prior expense was borrowings gallon $XX.X $X.XX as Fuel and basis were margins averaged basis for spite in XX increased due period period. increased expense and about We the XX diesel Interest EBITDA about approximately the amortization depreciation X.X% strength the due revenue, points in year and the of million at over from year-ago point compared acquisitions expense million of points by waste to $X.X the up E&P XX% since led the to primarily growth $X.XX quarter fourth XX the basis sequentially was year

floating billion, agreement the credit approximately in $X.X earnings, However leverage higher rate, Debt was debt-to-EBITDA defined partially cash $X.X this interest which by about expense XX% Net almost outstanding of from interest earnings our ratio as period in in $X.X balances with million, was of quarter-end the balances. year-over-year. at up interest X.XX was offset and of million. increase was our $XXX times million million $XX.X year cash ended at invested

Adjusted fourth net XX.X% and diluted and net adjusted rate tax were quarter slightly respectively. than impact and for intangible acquisition-related primarily the expected. the share lower in was QX QX of effective income excludes per $X.XX in impairments. GAAP amortization other and income $X.XX items Our

in recycling was collection from or diluted As and about $XXX.X of approximately net impact noted QX. in million drag our earlier, $XX XXXX $X.XX the of share been year to than Adjusted for the higher XXXX. free adjusted was XXXX. income revenue flow XX.X% cash million XXXX to flow a per cash than first now full-year better due anticipated pulling expected -- into expected our the on outlook final some quarter will has and review of essentially the day activity I

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

items acquisitions the no during Our operating and the remainder from in assumes change may the and excludes impact the divestitures environment. close economic of year outlook any transaction-related also expensing during additional current It period. of or that

XXXX billion. be is to first in at estimated XXXX, the revenue $X.XXX Looking approximately full-year

about the XXXX approximately XX Adjusted XX flat. already release $X.XXX we growth basis the $XXX about revenue points volumes dilutive acquisition of approximately X.X%. in down basis to points or the expected of third-party. of in contribution waste is for approximately up million year-over-year expected essentially impact in are primarily points place XX operations earnings about Sanitation marine be includes the Department spite over Underlying as X.X% organic quality shedding volumes of York terminals rollover For from due of be contract margin reconciled to basis City This to a of revenue, solid our with with in impact of in of about year. billion EBITDA XX.X% expect poor price remaining New

or of XX.X%. we finalized XX.X%. we XXXX the do range could the XX.X% effective rates, with our they approved our that until effective of for at that XXXX, be associated in get indeed on our estimate December that between our rate Regarding release resulting from late thereabouts. tax proposed in believe rate to we effective timing Depending regulations, finalized tax could impact year. impact noted IRS during are June form tax anticipated tax regs and proposed The quarter-to-quarter proposed released Tax earnings not that and rate regulations current final the Act if final any If will the

rate tax period. and not to quarter first from regs our be proposed in the example, in impacted XX% is XXXX For be should these expected about

XX.X%. XX% effective QX full-year Excluding would regs, average effective through our for proposed these QX a rate about for rate of

adjusted for our proposed assumes flow However cash our regs free some is approximately be outlook tax the that is effective rate. XX.X% our To the form XX% the as regulations the as and already flow. of reflects been proposed million in of potential release in expected enacted full-year, reconciled guidance of $XXX earnings revenue. or midpoint impacts expected range has tax considered earlier in or from XXXX Adjusted about our to a cash be rate for free clear, noted

to $X.XX billion. to QX estimated approximately now in Turning is outlook our QX XXXX. for be Revenue

to marine additional XXXX. estimated about of quarter This pronounced amortization expense XX.X% point estimated amortization but half of in is Sanitation diluted to of timing be basis million, in adjusted impacts or revenue. when from about be to intangibles or in for winter be estimated year-over-year, of per QX which points million net $XX.X Interest to deals the impact the waste solid volume to shedding approximately the income contract, approximately Adjusted in of to the operation for and basis with points severe share XX.X% first about $X.XX the is the quarter X% due basis dilutive growth estimated terminal most be is negative weather range of that for interest of taxes. QX, purposeful and $XXX is be up EBITDA net conditions. of impact is XX Of expense million. margin of approximately to the XX down QX to in due of of York including amount price New about X% City XX revenue QX Department $XX expect in We acquisitions. is Depreciation of in the X.X% impact

is compensation. quarter. finally, to by Worthing equity-based call expected with first as before is to rate net about provision to final in And about related $X be period QX, earlier, some now, interest benefits the The non-controlling to And excess tax the effective me XX% about subject income a to associated the turn the estimated includes rate reduce to benefit effective Our in for over $XXX,XXX variability. for some noted tax let Q&A. million back remarks

Worthing Jackman

Okay, be over thank frequency Anne. positive incidents facing and even constraints possible Completing of challenges integral the and was to of noteworthy employees. accountability would consecutive another to low the Connections, of apart. overcoming our certain in of we many XX,XXX accomplish the XXth tireless dedicated margin year have shareholder and expansion, you, headwinds our and of been the acquisitions more further safety-related overcame recycling, the without margin pressures, the accomplishments us efforts would results that but Mary unemployment acquisitions, to in Waste At we not These everything reported environment truly sets is of believe drive that markets. outsized is year any what so ultimately reducing lower we when delivered remarkable XXXX we drive considering returns. year cost

to over your share we E&P up additional appreciate time growth. another for questions. lines adjusted would high-single-digit continuing waste this now activity, year the in cash I with Given were the Stacey? in call open double-digit the your appreciate And acquisitions waste provide I free revenue we the upside. and today. or operator further have to solid to again targeted per any volumes, turn increases adjusted into will in able of headwinds margin place, flow that already we growth greater overcome EBITDA XXXX, coming XXXX expansion, visibility

Operator

Instructions]. [Operator you. Thank

from Goldman Brian your with proceed question line question. comes Our Maguire of Sachs. first with Please

Brian Maguire

do sort some we but increase you the that can on items something XXXX become you days. expansions economics like morph of or things getting you're a seem hear picture of a Guys we'll company war do business thinking a sort of well. to guys how plastics, of tighter been or really good items just impact single has aside use use just operations Worthing, mood more good maybe aren't to But do encouraging or and just moved waste, news. on are over start-off, Hey, seems certainly that really to I use and packaging could the really the a is around morning, of do our more single Ron, could this going with plastics on to like lot these see consumable push outlook you year and or think just some about municipalities bigger kind to solution on Anne, more regulation trying impact landfills help probably just last recycling has sentiment Obviously great potentially be dependent increase of Mary XXXX all a guys that Europe your listening, impacting And put single to the And more, states landfill so if like for guys sort potentially shifting longer-term. Hope quarter of the any could you that. than hope has about question been government especially and into recyclability waste. war and of not -- recyclability it efforts a that? and the expect into but you a on the of you as lot of the obviously in that expansion your and part to of of in items consumer

Worthing Jackman

recovery at the Well, impact our well you is separation XXXX to facilities. of at Brian, I try I year to to go applaud what's before any recycling costs that trend. obviously of business. and the you stream and increased see bifurcation probably it you suggest XXXX and Obviously, source the growing going within because realizing at what notables when through clearly start improve you beyond count your have mean waste a source money. separation more do But our we helps folks also purity are to that and

you'd do do desires a But business. more, over the to in next the cost And so I'd intersection in to easily looking likely you near-term of anything in I maybe see have our notable this decade the so. out or increase intersecting recycle impact which within don't with reuse say think

not new are technologies but we improve in revolutionary. facilities? Now it's looking at our capabilities our to always Absolutely, processing that's evolutionary,

Brian Maguire

Okay, I appreciate color. the

M&A two you've done and years. Just your last over switching encouraging. deals of certainly lot you've the on Worthing the a gears actually guess I mentioned, comments environment

of wondering that year how integrating of the to we just need would XXXX you've Just that in what year front to versus do risk to you saw digesting be the we opportunities front and integrate see think forward with could more those effectively of in or be got you've you it balance got involved deals the something what and and already a where another this done them similar XXXX?

Worthing Jackman

but I Well hard gold the in teams. we predict are were obviously XXXX in amount companies some management to to first integration. your around question fantastic that with XXXX up it's These back acquired do plated ultimate

have that biggest In bigger the transactions the businesses. you the existing from teams the fact, down stayed running start the businesses if with that work we're way your transactions, with

said, to as required so, you relocate entities And operations. our heads side this very on few

-- we Disposal sit and happens. Bay hope integration down I in year stretched culture, purchased and so the Again, adoption led look company last with What XX% all. doing. you year our incident it's company of are at Bay don't don't almost than the Bay the I'd Disposal look I'd exiting Disposal say in irate think around a single wait, no on not so and in XXXX And moving our further they we we an integration at forward. how our bench reduction of initial

start support and It's we that grow buy that with and people with around. I do all we them with think them to believing that sudden and the none. business the I early business second jam think on a and other like team support can not jam hops not give the business flood acquired we a What on; we of is the develop is we immediately the to integrate and request. them way e-mails companies

say I'd XXXX. in from what two of in XXXX amount years way outsized the become no the could activity again we and the So in we And remain past do us well-positioned success done is XXXX year. precluding should another

Brian Maguire

great turn Okay, over Thanks. hear. I'll now. to it

Operator

Thank you.

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

Hamzah Mazari

on Good how morning, have as deals so similar capital just these question you. any managing on thank what you're done My M&A market is deals? well. valuations Could given returns to up to you on about on you've thoughts maybe talk private returns on in historically stepped the keep

Worthing Jackman

overinvest the take think from that years obviously at required and too have on And a on we're in overinvested Sure. the before years. business. basis, a mean to and And to over returns calls, benefit buying meaning high turn multiples with of so companies up that high very prior But a that's of quality initially things. as But sale. turn we we've quality the a returns combination up to with under combination past looking early inverse was the happens out if you're someone's or we valuations half in lower have had acquiring gone CapEx clearly it we of said couple cash-on-cash closing. if assets after post in a those invested I companies that means

in Obviously U.S. regards rate Tax what years immediate rates to expensing a flow with change initially couple and it that capital too. the more Law of lower cash obviously puts and cash pocket ago. flow in that's on deals in required of the are tax based how lower So the structured drove also accelerates our tax

we we that accelerate how seen change price, well a drives just haven't of that flow deduct returns. delivery those we purchase also so the major a cash fact as can quality target It's assets our IRRs. as other how And changes in the affect

Hamzah Mazari

it or guess incrementally are it follow-up just more is is And market strong, still GDP volumes is on the side your U.S. up. Great. strong, volume cautious like commentary I just the feels just conservatism; is a flat. question, the is underlying job pretty But consumer

So is of volume a commentary, comp or it just just any thoughts sort your disconnect any there? in issue

Mary Anne Whitney

we're disconnect come wouldn't had coming off strong volumes. I change volumes cautious any into because Last reported in by year years very every would QX. what pretty as that -- start row the No, discussed we say year and underlying seeing. we or which I on places reminding we continued not any the five in West always strong a basis of highlighted but shedding a Coast we've in in like after

quarters in I XXX Hamzah, on other basis by The note, points points cases. beaten to and guided the being would thing two in last that both almost XX volumes we've we've down basis to XXX by

that's what this hitting purposeful to volumes letting and change being and it's in we're be prudent into think We already to come about we as the weather clear already there. described shedding but be volumes So that we to of flat saw seeing we XXXX. year know the guide in January and course no upside we out have

Worthing Jackman

to in say it's underlying X% as range as and economy as we've basis. that and X% from Hamzah, Canadian to tongue we Yes, along I'd also dice generally point much can change and an you think economy out slice stuff X% on in U.S. can you the the want, you somewhere X% is saying I that been And all mean growth cheek.

is exclude positive. If nicely negatives, volume all you the

think always a careful to lead we and to message. So to I cautious let you and volumes mean to be But it's upside. got want exclude better be trying you what about be

Hamzah Mazari

it. Got

did specific you, most you sort impacting question, of Thank last tax I'll companies? you. guys is regs that Just are inversion that turn you to taxes because it over. The of for is proposed for this that a common or

Mary Anne Whitney

if United So question the limits promulgated on us impact about some deductibility which Hamzah interest they they include to get potential do proposed. answer the States in regs, proposed of as your could

and so to they we clear But mentioned they range that's why end midpoint think it's yet And them nothing's where include won't our of could to of be and guidance happened that prudent up. the again QX. impact in

Worthing Jackman

say all any could affects so cross-border operations. flowing company countries get intercompany across I'd companies this if financing. caught with in, multinational with It capital

Operator

you. Thank

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

Tyler Brown

Mary on our appreciate hey, But thoughts Anne, the Hey I Ron. QX guide.

of Sorry way Is excuse then that margins progresses. progression point early in you put most me of with the year the sounds the could but burdened year think change be like year it? as It progresses. right as in and the the EBITDA the on finer the you're rollover going a abates that to about guys M&A to

Mary Anne Whitney

QX Yes, full-year over Tyler. dilutive impact it's and point basis decreases to points in QX, XX points XX XX for the down QX, in follows: I margin XX basis cadence about but about basis to a XX in in as down QX. as steps it's QX and would about basis said and basis is by be that mostly That points the points about

So and overall XX between points the year. for be XX that works out basis to

Tyler Brown

this accrual? very Very Okay. Mary fluid book percent but I is know your then that helpful. is And for Anne, a as taxes of what cash expectation XX%

Mary Anne Whitney

as book the XX%. cash for expectation taxes a is and about percentage of so XX% Yes, between

Tyler Brown

that Okay. time go that goes higher? as change And does on? Will

Mary Anne Whitney

our flow a to $XXX,XXX expectations are guidance said clear around incorporates already be consideration we cash free taxes. As for in our

Worthing Jackman

does. It obviously

XX%, outlays the all go especially when at expensed. way fully when If expires of over XXXX migrating XX% above start XX% loans to years most the five obviously your prior depreciation you intersect XXXX starts out get you you CapEx XX%,

Tyler Brown

solid than say X.X% are points XX core you price. more question basis of is a margins healthy then guys conceptual this on very a to waste Okay. guiding And but

expansion Your to with are two larger pricing. XX take say basis high competitors points of to or give margin guiding two

you So any or is into sort unit too inflation it cost that disconnect I where broadly setup. think this some or Am conservative there? being reading have of much do differing the you're do you is, thoughts just

Worthing Jackman

Well, year in to we year to you as February able numbers our out the look there year dodge the put we're then and the can out speak that people's there don't you see driving and and how year outlook I look Look reinterpret companies things. Putting truth the All quarter and to addresses that lay provide all look entire during try we our quarter the it for outlook. and at unknowns, obviously experience at can move or try the do space. of We is there what as perceptions in upside themselves. out, we our through what's hit let more not to we in know re-crafting other we just at cushion for the to to Unknowns in of nice year. you'll proverbial. numbers enough just numbers if out out those is try

Tyler Brown

ratio spot two as Mary, structure And just today. optimal five can that's about talk then want Thanks. four you last mentioned you Okay, think view helpful. leverage where kind what Curious or of long-term? one you that your you debt-to-EBITDA one. I do capital

Mary Anne Whitney

were think place being certainly with in could very We're comfortable that we then the to to X.XX Sure. higher times than because range, the know is to sort of that take in a what opportunity to X we to what outsized times about ability leverage and staying good X.X deal know the be we that is up itself. to present and like turn a a dynamically we year an even we'll X.XX that range. is higher de-lever half within extent we or for But

Operator

you. Thank

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

Derek Spronck

good and for my Mary Thank taking Anne. you Worthing Hi, questions. morning

would Just tax effective Should XX% of changes, on flow the that differential changes. cash the assume be impact rate XX.X%? proposed the we from of tax the

Mary Anne Whitney

that's worry give in. Well, look impacts and factored why matter we is as a you said, guidance a we that cash tried GAAP really think cash We've that a bit GAAP and about really issue. less I to more flow already that. don't It's this says Derek, that free of

Derek Spronck

much it, wouldn't be wouldn't didn't that if is there there the of tailwind; through, come cash flow free correct? a technically of be much regulation So

Mary Anne Whitney

Yes, as can deliver the you factored know, into the in some we and visibility try how to that's come with $XXX,XXX. we think we what we on year

we'll we'd think So be we're at this guidance. and so give to when leave know at this we'll on it clearer is And that. helpful I able point, in call what's April, more

Derek Spronck

Okay great.

Worthing Jackman

we in Remember for over-delivering apologize XXXX.

-- right don't to raising honest let's start that So now. be just

Derek Spronck

what moving but under on in of I is opposite the overpromise the of deliver the XX-K. do It's to Okay. usually items just some

XX% that any or this will Is development your through risk it standard there Waste going business through you're or in expansion workforce is agreement indicated collective though? tied could is XXXX. You have just seeking landfills two that that also Connections a XX with be going of and the be bargaining those around for

Worthing Jackman

That's see the a all negotiating underlying and landfills; Unions with blocking or those have I'd got of and when of through all portfolio going earlier a you Obviously time. you'll multiple this expansions. through going every finished standard workforce fare and the such a case part of we're episodic prior of you say common. pull is have contracts already just out We of similar is ratios. This large when just couple waste solid tackling. company the business and as year large day-to-day

Mary Anne Whitney

regarding the and that's shorter the for we've that, of landfill is right a we the probably just been have the would a there been one which add, on I of lives another very anticipating literally Derek, largest closure. landfills one small number same market And with that years are where in

Derek Spronck

the it. And myself. Okay. XXXX XXXX XXXX that run in originally in be and as we that to regime more tax it ratio XX%. should here? about looks is a flow percent that think of or sustainable on but Got a to a and That's Is just how revenue was rate. around for of partly was one it like up largely the basis or cash scale is from XX.X%, due cash was economies leveraging Free shaping XX%, great. it then XX% around sustainable it the changes

Worthing Jackman

not to XXs. flow free will XXs for over cash probably own time; the us always will into conversions. coming EBITDA we've low don't That mid down the be Well, XX% go it said

that taxes down And go as to fully talk so we we before XXXX. time cash in expect as loans over obviously expires depreciation come as up,

obviously net of of the the move business collection lower that below combination look acquisitions profile know, transactions. you And soon. over business. time amount we free of basis our say we've will flow cash but side anywhere, flow, and on as not here which we It's how EBITDA as anything It's so of anytime taxes. that But performance conversion today, creates see our the as financial a we that of at and the the only again, we a course bringing free same EBITDA, of asset revenue. you that XX% down structure combination sit lowering we that again always is don't always impacts that's always cash And cash said a as for of XX-plus-percent combination intensive have that and looking

for now, a things drive XX% again long-term But consistently there a it that of XX%. enjoy So comparisons do can are long-term. number. we'll host other that us that not but that been We don't saying companies. some time model against for that's We've

Derek Spronck

You have be pretty though correct? good XXXX around looked in is should at visibility that and that that though level;

Worthing Jackman

visibility try we have to that. Yes, on

Derek Spronck

Okay. there. leave Thank you very I'll it much.

Operator

Thank you.

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

Noah Kaye

good morning. Hi,

EBITDA that to quick million just recycling about $XX million sort a right? headwind XXXX; and First XX% of this that year-over-year down is basket the so math $XX question continue, the on assuming is decrementals is for

Worthing Jackman

nominal. we're Once QX, here because was No, year-over-year. a past talking the QX comp I get toughest you it's thing mean that's mostly QX about

Noah Kaye

Okay.

-- the headwind, So we're full-year talking

Worthing Jackman

couple Couple of rise. million of million rise,

Noah Kaye

okay. of Couple million,

of earlier accrual then a had essentially low And cash very a tax off XXXX. to Okay. you piggyback just in question so

XXXX $XX headwind so year-over-year. You or looking basically at and cash taxes go you're million into a that's about

is that I is underlying free into in what read the that essentially a is fair flow So this double-digits; cash statement? growth

Mary Anne Whitney

point in out that over-delivered Again essentially did XXXX. we we

I do a underlying here, back growth you that so think you right. you're yes, do see showing nice beyond So out, what if we're that

a deliver be about coming flow. cash accrual over million XXXX and our big and the reported year-over-year to so $XX cash free basis, taxes have into on We will up we'll continue

is that fair. So

Noah Kaye

see past this a New York do and do urban medium-term think one. trend if plans markets. for LA commercial has press so And that had truck this then morning hauling and negative towards more in York I of City it Waste one around own to great. Connections And its you lot positive you've maybe been of the in Walk City a Okay New for after so move Waste your guess or in Connections? you far. last how generally, as experience franchising is

Worthing Jackman

a I in trend. LA don’t mean we West party see to the to No, relative late Coast. the most this markets as was

be at of in times of it's trucks makes low they York very quality they're equipment pick high the and environment, something of that each will on City, all New streets risk criss-crossing profile tight that is the positions just other just dozens the that of because operating financial too sense operators. street is for on can crowded in. the The many the day

it New in still as York so end, the other how to New trend LA, seen. of it structures remains And and York heels see follow sense be in makes markets. for this it a we But on to don't the

Operator

Thank you.

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

Michael Hoffman

Anne. Hi, Mary questions. Worthing taking Thanks and for my

XXXX, about If in continue waste the you X%? X% no in solid structural we in is growth to deals think organic and can between do

Worthing Jackman

X% and X% its Yes, been especially pricing this saying environment X.X-plus-percent. being of consistently tune we've CPI number; with this in

Michael Hoffman

take dilution that XXXX Okay. XXXX. it points recover XX of does to long in And deals? XX, from again deals no then How basis

Worthing Jackman

any impact But done don't it margins. point for point which acquisitions when on the that X.X% American basis year points as you large margins a because we've it's rare move of size if down needle it's you reported again do But comparative you depends coming about at basis XX of deal a now the that never acquisitions that's to then margins have if notable XXX right as revenue consolidated a no the obviously oriented, going the have influence on denominator forward. at in deals collection basis. see let’s -- transactions you're XXXX half what of XX then again then year, such the XXXX embedded got the jumping calculation margin economy you’re so have again in is. in at looking to typical large and when you again in basis But, points have how you've and the dilutive the of the coming basis year-over-year XX rollover would Again expansion a that then Recover. points looking no, XX wait albeit look be out is base at if you acquisitions the obviously up don't on

therefore last printed to a through deals see how as As expansion reported the year. move numbers less to Mary less start drag you in be we year begin as said, will Anne you year, lot anniversary relative the of did a the and you and margin higher

Michael Hoffman

Great. I business was line weakness, probably be see flat, you clear, just are no housing that trying consumer out. regional then to engaged? prospects weakness, no of to draw And remains

Mary Anne Whitney

quarters. year I again with earlier, consistent been And way. volumes for than to there's same the our nothing As the think prefer that delivering changed pretty guiding last that way the we'd then influence start would the two better volume We said and it's we've that's outlook. and communicating down

Worthing Jackman

know, you you underlying bill model, volume generally Michael, if a reported that business market the drive the fixed growth system have well a high such share that's of numbers. if is and this But going to economy tone

the business share grabbing, is we underlying servicing market markets Our operate in. not it's about about that

Michael Hoffman

Yes. specific wasn't volume. view. And my question was a about macro It about

going still housing, flattish I'm assuming seeing consumer you're You're business line of to you was what That's think see I and it's not not seeing the saying you're weakness, regional asking. be you engaged. weakness,

Worthing Jackman

of January saw at that confirm XXXX. fair all one in to least a statement. month all That's We

Michael Hoffman

just clarify something. just questions then more two And to Okay.

to doing in be double-digit right cash obviously pretty going way in to you've free share buyback you're active If got to right? think because about X%, you're the least average flow the per that growth at that's

Worthing Jackman

CAGR I past been flexibility what key been the play and for as as into and funding if proceed, growth. comes more deploy than forward. all than numbers de-levering to balance the just flow more acquisitions affect spitting the we high-teens driver denominator several need But got cash and sheet, the the we're because cash to capacity enough going large eventually numerator that had we've we're denominator numerator back flow to combination of in lower has per said, again acquisitions, out because the mean we've always you a numerator look got on Yes, higher years cash share you've free

Michael Hoffman

deploy collect an trash Great. once generate do you to Waste with about And capital you question, as the reasonable they is then return it clear last as for about just be they would completely long a it. on indifferent me the earlier what Connections

dock? changes whatever may it to control in So the you'll at out because react to a come loading slowly you'll be curve

Worthing Jackman

is drive, That's Michael. No changing here one around right. that

Operator

Instructions]. [Operator Thank you.

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

Chris Murray

folks. good morning Thanks,

Just guidance. maybe Michael's on bit free follow cash flow the on around a little question

the looks around year-over-year pieces to and couple to at start this. X% so of guess number I So a

that. or higher. all, is of high-single-digit your And kind sitting guess would've the What's I expected think First it target revenue drag then the expecting that growth first embedded of in about -- been in about the piece of you change? have second from leverage would tax cash. call I it you number million think $XXX

flow the going bought free of number up any have to you approach about that is change to start but flow that? we maybe historically number generation. cash there a to step as You're maybe Should in X% shares a expense? opportunity it thinking or mean free how X% that cash I back, like as buyback something

Worthing Jackman

That's everything's year know, $XXX,XXX. at growth on last probably January in $XX because that over again actually if about bank Again basis. it target means of $XXX,XXX you look We've $XXX that already of what in in apologized could the at XXXX it's a flow million. of have. million $XXX,XXX $XXX,XXX XXXX XXst. for a instead clear Xnd look on little $XXX be instead double-digit the But talking more at dollar giving the and possible. too of we early $XX free more looking and we delivered the again million or million December to free as XX% exactly change is cash cash we're flexibility Again you growth that's of flow, As

And makes. a the so makes of a difference that's difference a day what day of

focused So issue just That's that. when cleared. less on checks a of timing some we're

Mary Anne Whitney

that terms of other are things I have there possible the leverage And piece Worthing guess much are number said buybacks, so flexibility. more to a do we of regarding and and ability it the in as of

that cash in Worthing free dividend. will after of had cash. believe be the again million the best million in We so outsized over that's use exited guided flow, we activity and balance in the highest $XXX,XXX But period we're year $XXX to continue at to sub of $XXX and continue so as our and with to sheet XX on cash said M&A a

So firepower to we have year. ample did we do what last

Worthing Jackman

we $XX. and pick owner very can I to so we We around Xth in we ultimate Xth Yes, last our think Chris, market know, when we go be you as was average our the December patient year, look to buy. the repurchase February time are so the bought also, bought stock, of in price last year and

on overbuilding And we've again our and shareholders spent and to billion over leverage returned capital $X.XX we declined. deploying so M&A and acquisitions that to in addition

on is to a priced position just foremost so a the And capital stock this we opportunities fortunate dabble and in that the in larger long M&A down way. consistent whatever in then runway expectations because don't and the opportunity. now inflate reason slows the for our spots then again Obviously, that for our us be and seller in So market opportunistically, it strategically on appropriately and little cash. over to up. deal market cash We'll activity bit on we is pick and deploy feel step building first and sit

Chris Murray

Okay, sorry. enough. fair I'm

what expectation on $XXX,XXX -- was to tax guide? the your Just the change

Mary Anne Whitney

we've think that factored we cash tried the flow to changes GAAP is guide, that already say taxes. the this to what Again is matter in a we on and free

flow impact. it's free cash So not a

Chris Murray

All right, great thanks.

in we as mean about the the I shedding timing to number. think going price particularly some Just of back Canada, purposeful X.X%

down go a volume as zero -- you maybe the out be the anniversary we You flatten as little growth? to think price flatten to if even bit through a call that XXXX how the normalization got move thinking in of out that's you're number we got to number, that of a going about shedding and the step to should terms cadence

Mary Anne Whitney

in expect Chris, we away better when expected in in we continued on than really longer than go was is into took And that and volumes Canada, of note really that purposeful. XXXX right, is high put of started in said were price you Yes, last that have what we saw XXXX increases that that XXXX. lot during when late expected and should But you're to down. will all in that would because price earnest as stepping stuck year, to and and of we see that price price start QX you certainly a very you XXXX as

a basis the the the be to down QX it stepped over As to reported And XXXX higher when Worthing year. said QX that you that, higher that X.X% should would for that of expect even expect course higher and will XXXX. than full-year, then of than start in course and the in the follow we on pattern same exited I Canada particular already over we it guide than

Chris Murray

and be we will or on you are previously dilution where And about be the middle towards operational year. to to of just about that back assume the then projects? Okay, EBITDA I those first just call there volumes or want in. some fairly it year? just all of I of be the going we see margin but of to following-up should this enough. I to I we me, think And guess way spending confirm update that they sort All E&P right. we in half profiles should one had of one know the mentioned those expect as normalized anything you some on in last Or anything think that with and kind landfills that's we of margins some the should odd supposed start had are you're taking fair talked some just for start-up they CapEx should

Worthing Jackman

revenue schedule a all on dollar overall during doing right. the of speed of one. cost nature the business. it's the cover regards that and business, will will costs we're then that on to start because nominal It And timing, consolidated QX incremental flow Obviously ahead of size landfills But of the the cost, of our that because start initial comes you our obviously so exceeding depends its ramp through start as notice in but business crawl our ramp cost to we start become the in you lot seeing fixed higher. once one first won't for depends likely the that dollar compared

schedule right that still we because on Another probably project on that the ramping quarter it's our original third early we're so now that. and with on will that somewhat construction is start -- cautious in schedule

ones look that to of upside that So, the and on way that we say tried we're ramping the working we'll potential new being is again of either no, of the for and projects what as we've the guide other full-year. the just at look to

Operator

you. Thank

line proceed the with from of Sean question. comes Please with question next Our Capital KeyBanc your Eastman Markets.

Sean Eastman

or safety whether bit hoping turnover, things to get Hi guys. in I on was capacity terms sort and on and Thanks to was reported stayed XXXX? context and incidents, main these area fall. to taking like in the when update wage the labor relative perhaps my just inflation just goal for what things in get focus improved and you questions. maybe in little worsened or challenges the a of challenges those addressing some is an I perhaps guys check of have hoping

Mary Anne Whitney

Sure.

safety certainly down noted, to XXXX. start, of as did first with respect can I all to Worthing So come safety, continue in

with winter rate close paying was January and certainly it that safety severe weather in to our on and and decrease high-single-digit had in the saw dead impact We're in mindful QX. XXXX. incident You attention of certainly

labor. it and XXXX, increases seen that taken of terms market things like Xs change remain a those of said what that there. turnover, on communicated, -- sure look What we increases in little same on in increased our costs XX% done In was it we've as factored of be mitigated think between guidance of last of as turnover. that we But was range with we've it make worse are. course think that's where match that's the X.X% are we wage by things to at QX, really that And wage wasn't a pleased I our think and the constraints that XX% in that in maybe much and all QX, we year high that would than that the the real And about XX% P&L getting turnover. employee or a wage what and higher Haven't are that's we for employer X% have we've saw the given for our remained XXXX. is kind increase XXX(NYSE:K) some And into really appropriate been employees. muted we benefits our or benefits the and to choice about in are

Worthing Jackman

matching included outlook year-over-year. we're and higher that doing, points and contributions the our about that Mary Anne's XXX(K) we that's Yes, anticipate Sean, point about in basis to XX headwind

point just be So from XX deferring guided while a basis would folks we anticipating their obviously have XXX(K) to that XX a we're point basis full-year adjust margin of to again compensation for more increase I but eligible if that. participation increased expansion in the for anticipated and margins improvement been the contributions

Sean Eastman

a a going in just guys Really or was to close could kind I getting be added for are of get only of hoping that a pipeline that back added continuing mix this the of I versus there's of are helpful. M&A, And year? my targets to elevated to and indicating sense next in question sort I negotiations is was are environment out an sense you waste maybe this year. targets of advance integrated what to those non-solid stages, get are the hoping for assume collections

Worthing Jackman

existing meaning facilities most that as operations few integrated or there's and collection years, of that number entries But a that tuck our like into be internalized in could large market new our Again landfill. collection we've then are only either well. got couple a

waste sit right a now here oriented mix now. all standard solid as it's it's So right we and

Sean Eastman

private of to from an What deal off is, it. activity? Got I'm potential is environment could for to choke the idea just equity me, where there some what just risk elevated this this get for trying to Okay. acquisition And swoop in. lastly

Worthing Jackman

talked on we've whether would things you've EBITDA be a that about different I on or not flow. got call, mean as last obviously and episodically Well look, and it companies take come in PE-backed PE cash value

That's think we -- that sometimes all interruption Sometimes might get. don't we deals the fine. that’s get we and an

you never can overpaying. view recover always has Our been from

the mean obviously got here as the we're taking could growth companies that's risk. with debt we pursue are long But that. off fine the well, safe. I again banks sake, and view get at paid we've end potential interruption. always for We're So don't -- a know that is the growth equity

foolish here think we've And the not tempted game And in doing to long you've seen got so play be and that. the again record things. I track validates over XX-plus-years

Operator

[Operator you. questions Instructions]. time. are phone there further Mr. at Thank Jackman, no this

Worthing Jackman

did Well, team, allowed our I upcoming are to on answer you. direct appreciate of to Reg questions on management interest your listening G, further we're Anne that again. that you. and and Thank call FD, behalf Laws there and to entire the cover Thank great, today. thank we next any in are no in today available questions, If we answer Mary conferences you the investor forward speaking Canada. look under our not at with or we'll call. to earnings Securities you And Reg Applicable

Operator

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

Waste Connections (WCN) 14 Feb 192018 Q4 Earnings call transcript