WCN - Earnings call transcript Q2 2021 | Waste Connections, Inc.

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Operator

Greetings and welcome to the Waste Connections' second quarter 2021 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 today, Thursday, August 5, 2021. to CEO conference of like Jackman, to now and President Waste would turn over the Worthing I Connections. Please go ahead.

Worthing Jackman

Perfect. our I third am by would to provide this and quarter. outlook for good I welcome an detailed CFO. year XXXX operator Anne discuss Mary to and full quarter to conference Thank everyone morning call outlook updated joined second results, a this the like Whitney, you to our morning. for the

These expected given adjusted to momentum our for has flow. potential us also outlook position outsized acquisitions Year-to-date, close signed release, trends full we another broad-based Oregon year deep $XXX of year-to-date margin in basis period, earnings margin and year acquisition later respectively, activity. annualized from of or to up with EBITDA solid drive points them quarter. As closed this drove and board XXX revenue pricing revenue, expansion expected XXXX these including and our expansion and year-over-year noted prior in primarily XX%, adjusted adjusted strength improvement across free the million to raise EBITDA result million, free the over and and cash $XXX of XX.X% waste of continuing in Revenue be have EBITDA, trends values. cash strength California, XX.X% margin year in flow of a over and the and second adjusted growth in adjusted Nevada the XX continued $XX total year. as million, approximately QX of adjusted commodity EBITDA franchise volume operations in recovered increased

growth year year, and throughout the weighted which to increased of to further record driving will year, seller see for this to rollover elevated provide the activity XXXX. the acquisition to more as dialogue closings into interest half and outlook second the be strong of most continue of upside related to amounts communicated expect our We

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

Mary Anne Whitney

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

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

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

Worthing Jackman

levels result almost XXX of Mary plus off higher growth our XX continued basis our reflecting as a about volume higher X.X%, and sequentially, Anne. to price of on in above the recovery began volumes or and outlook expectations strength points, pulls in the XX.X% returning landfill in about QX the quarter, QX waste points we exceeded points in up with expected of solid trends throughout you of tons In than roll as by the Thank primarily quarter, that second Total pricing X.X%, line core pricing was basis surcharges. levels. basis above noted retention once material with pre-pandemic again XX of plus price fuel

to our more in mostly our range X% QX ranged X.X% pricing regions. Our region about of a exclusive from in X.X% Western competitive to

to less arguably noteworthy the COVID-XX reopening were almost activity QX. to the the XX.X% year in led pandemic, Looking X.X% incremental have comparisons by ahead, in volumes in markets tougher in restrictions Canada, volumes be result the X% certain extended points when impacted about where the X,XXX volume outpacing where recovery the about where where year. this the been increases half improvement at QX most to range during QX and volume through to we regions are all in X.X% by Western place Volumes and have remarkably second of many including other for Canada. growth prior led approximately basis Reported of of regions strongest we offset pandemic of Also sequential All our in put of the the the reflected particularly cost were pricing was region, price of hit from a region, regions year those our sequential growth continue U.S. as and Central from impacted in sequential pressures. going hardest higher one positioned as in that regions QX. positive the is markets pandemic U.S. our Canada Northeast from strong, and were considering improvement QX our relatively QX many into reported during showed already

year-over-year, were XX% to second double pre-COVID-XX by XX% Landfill XX% up U.S., regions of all quarter tons about XX% special lines most back year-over-year In in revenue XX% by Commercial led over tons impacted on levels. XX%. pulls a on improvement, up showed increased Looking off tons increased up MSW by at almost in were year-over-year C&D year-over-year. collection pulls notably basis, more and our tons was up in XX% the up above and same-store waste results business the XX%, the markets, digits. Canada including year-over-year all up up Roll and Northeast.

activity As result levels the a a result, tons our landfill markets have to Northeast. the in region except of above levels delayed below Eastern all prior was returned in the pre-pandemic slightly as regions, reopening in of which

closely Looking results. more at

up all noted, were double As digit types year-over-year. waste percentages

pre-pandemic perhaps little due activity regions all tons from pull with QX. year-over-year, to propelled QX However, as was noteworthy the back up forward of outsized a special activity particularly waste XX% amount above to levels

commodities, at is landfill Looking QX renewable or gas commodities, revenues that from credits energy recycled recovery and RINs.

reflecting year-over-year E&P XX in basins. from RINs. a the gas XX% volumes QX, about basis and about of $XXX averaged across million tailwind or up $XX.X Higher about over recycling including basis OCC $X.XX. quarter, reflecting increases about points, up increased both our in up plastics multiple in corrugated and landfill were they collectively, again, waste pricing from XXX%. values, XXX and OCC, waste combined ton E&P XX and basis contributed sequentially old Recycling points points on And XX% for averaged of from by was pandemic impact. acquisitions, and resulting margin Prices driven to commodity per finally, revenue activity were of metals, Excluding containers revenue the which We higher second RIN QX activity. up also reported year-over-year, XX% both

Looking activity. at acquisition

what These million, to annualized full As contract approaching multiple our to of in our acquisitions pipeline market That selection year. we asset West XX our we which XXXX, to as would of already approach be core amount include creation given shareholders still interest well reflects the driving activity opportunities recognize for as average exclusive for and value potential importance expand transactions strategy of the we with outsized portfolio. seller have noted said, selective approximately and Coast revenue activity earlier, markets disciplined as signed the unique are acquisitions $XXX positioning. of closed franchise consider Moreover, an considerations. provide our record or to and our primarily we tax-related levels in continue for

I second for highlights in the Mary the heading a Now increased into for provide outlook the pass depth Anne to up will then like Q&A. the to QX. our financial to I outlook detailed and would call and to of before quarter year review more wrap

Mary Anne Whitney

up offset on Ex-fuel, fuel disposal XX up about reported In to waste Worthing. the expansion, the million completed $XX compensation margin was basis second and including you quarter, XX than about ago XXX as of diesel and higher Commodity-driven about which up increased accounted by a discretionary $XX quarter growth of XX.X% year basis for XX% points since $XX.X impacts XX a year-over-year, above than $XXX.X about our acquisitions rates ago our points XX basis the from was million $X.XXX revenue, and And earnings million of QX basis year points reconciled higher Thank basis of and finally, costs, points since points the account increase $XXX primarily in waste basis billion, year-over-year. incentive about at transfer in period values. due solid on as acquisitions XXX basis completed margin basis revenue Adjusted million medical our of from net XX.X% about points EBITDA point basis for basis Revenue revenue release was points margins impact almost we expenses. XX $XX.X year-over-year. solid million, outlook recovered higher more commodity a outlook dilution. from or net or points collection expected period above of in XX XX million expanded divestitures. contributed for

and the our operating Regarding to in-person environment, process and strength normalized discretionary expenses, expanding future other culture we our integral including more to activities begun sustaining bench returning we ahead training, of a of meetings growth. have consider

discretionary resulting not other activity we supplemental have challenging higher which COVID-XX-related implemented as support proactively These purposeful also adjustments cost combat from constraints. repeat typical year's did the or labor environment, majority more markets we the and year. largely levels, and this labor with along Given of costs, many incentives, wage anticipate costs replaced frontline in medical additions, wage last

of putting incremental I outlook through X% $XXX quarter third XX% free As cash noted our XXXX us will in revised of original our increases for already implemented from to flow We have QX flow and full track up approximately $X full costs, updated free year-over-year adjusted up for now outlook. address achieve to the year price outlook on XX.X% X%, adjusted XXXX revenue, our we or year. of our million approximately earlier, review higher delivered at the billion. outlook resulting price cash in these

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

significant trends, acquisitions that variant and close Our to outlook or the It the related economic expensing any result the period. no from the of a transaction Coronavirus. the or change items during additional as related including of COVID-XX underlying the assumes year impact excludes Delta impacts remainder also pandemic in from may during of of

be Looking to $X.XX estimated first at QX. Revenue billion. in is QX approximately

up Depreciation about from is of of the amortization amortization and to expense Interest rounded net rate is net be And to estimated including million with approximately solid current or We about $X.XX to tax generally some is expense, are XX.X%, and line variability. levels waste of Adjusted line QX basis plus OCC XX.X% to with finally, quarter million. income, EBITDA $XX.X trending subject X% diluted interest estimated pricing expected estimated in sequentially $XXX XX.X% and revenue, for about share, QX growth in RINs be with our is waste revenue, slightly million levels, commodity a higher. QX about estimated or be remain of values to points expect year-over-year of intangibles Recovered up taxes. in $XX of and approximately third QX. X%. effective price about E&P with per XX at volume revenue QX in of in

million basis adjusted year-over-year of in outlook initial our initial or which and in and is EBITDA up outlook. almost credit margin XX as year-over-year. of outlook. and in flow growth for XX reconciled $XX earnings $XXX billion and estimated drivers margin now XXX year-over-year our Turning basis the cash initial Adjusted inflationary to additional waste basis growth. points in closed with now Revenue and XX.X%, release. half comparisons. above being from expansion outlook primary reflects to spreads is full borrowing our $XX CapEx or provided outlook, volume price new million points year our above reduced approximately despite second updated pressures from At be margin solid expected an plus approximately continued EBITDA up for $X.XXX for commodity for recovered the $X to initial our acquisitions flexibility over XXXX spite facility, billion wage $X.X year now Moreover, or our of XX% up as is be higher initial outlook million, and approximately of Adjusted completed from over outlook, plus EBITDA the XXXX $X.XXX increased $XXX about EBITDA we our by million $XX billion XXXX guidance points continued to full is adjusted our year of our billion free outlook,, and XX.X% to be estimated tougher up year-to-date. values week, about borrowing compared million our full the $XX revenue million Last capacity now enhanced original

strength, activity balance above-average return shareholders. capital an increased positions increasing sheet this potential capacity, to of Our with for together us and acquisition

have repurchase and $XXX we our issuer dividends the to shareholders normal authorizing of up We annum. shares and of of to already X% repurchases share in process our returned outstanding course in the renewing are XXXX over through bid, per million

dividend call to continue let announcing Worthing some will Q&A. back per remarks our percentage share and in repurchases another We over in digit me approach cash for opportunistically share the increase turn now final before And October. anticipate to double

Worthing Jackman

drive activity broad-based a we expectations from Thank supportive you recovered commodity environment, strength Mary in of as macro reopening to ahead from tailwinds Anne. benefit values. including continues Again, results

the matter. and intentional of markets importance Quality We being have driving demonstrated about comparative and of about again retention once selective markets results. revenue across price

in extremely position the raise a pleased for be We our full are to to outlook year.

up XXXX unbudgeted margin set as through are and expansion proactive inflationary second continuing half increases the offset wage We for pressures. price of

track above pre-COVID-XX levels. free cash on for $X adjusted and flow approximately adjusted We are billion of margins back EBITDA

in double another Finally, in we open regularly turn for your questions. appreciate our increase remain to expect lines outlays now drive today. will and quarterly to Operator? over in acquisition in and We to this well-positioned to increase announce dividend cash up digit time growth XXXX for significant the percentage your I call October further beyond. potential operator

Operator

[Operator Instructions].

Please Our the of first is your with from RBC Markets. question proceed line Walter with Spracklin question. Capital

Walter Spracklin

everyone. morning Good much. very Thanks Yes.

Worthing Jackman

Hi. Good morning Walter.

Mary Anne Whitney

morning Hi. Walter. Good

Walter Spracklin

Yes.

a is, Is your on the But is pace own processing sellers? offer of pipeline. to acquisition is of I kind to it than your So acquisitions? and main are M&A being am here up the time your not driver the financial and zero and your clearly by And your companies is companies turn would I valuations Or competitors. consolidating you even up to that being leverage perhaps I capacity? add you curious are is now? like good it's just is how given good in as of gobbled of asking leverage is And more have sector kind more on activity question in how Obviously, And sector of now my or whether it reason acquisition stretch fast there what pace, the right your and leverage. done rapidly rapidly and it am integration availability rapid already acquired to prices? the just achieve

Worthing Jackman

state to businesses good the are lineage to that timing we says issues, question. XX%. And Look, the et Walter, will would like, folks of taxed that seeing balance at great and all tax the to mean rates. most a U.S., issues, spend is to lot all powder have companies seen In decision go leverage. have driven said $X by issues, on come stay our lot of when changes, years tax-driven cap are could the And maintain a like that in this, have billion we you determine flexibility of three I are that might year, to of right sudden the not there And the check a generation lot all and be checks XXX work. sheet. well, keep sellers driven theoretically family because always write These we gains have of sell. say of to right. I when the administration table. that's cap proceeds times to a now the cetera.. we These always be write wanted increase make something to that's gains to this that sold, but us old they recognize dry XX% of gains you why When a mean transition around over three-, are a we still capital California, that a give you four the after government potential would the their

considerations are in And so U.S. these for real people the

so a conversations. have tax-driven of lot And seen we

some conversations. lineage seen have We transition-driven

sellers We pandemic, through having the to business The in ahead. and requirements have up a exhausted were got the businesses struggles with some just increased above who are people back changes gone through levels. regulations around looking having keep pre-pandemic investment labor, gone

they know to come so time good And the to it's market. a

a sellers. things But right there's for that our of timing is in drive when model, again, sellers them. variety the So determine

Walter Spracklin

And or revenue that have how helpful opportunity, terms do you many cash of you on A as My some you if Okay. that question in I give gas flow in about to potentially energy numbers a facilities trend? Could Worthing. participating well. of a talk opportunities. lot us see appreciate be competitors of that now that would that opportunity. poised is color starting are even to follow-up your flavor little around and as landfill for bit

Worthing Jackman

in report more frankly, lot we And have from to year knowledge on the with about consistent the in within we current we have process been Obviously, North than got have Two we look, pivoting have in this. our we largest we network a said of now position working America are many for opportunities BTU high along it we got plant that along three have because for conversation. further others. And plants are regards a been right five And sustainability a our to published said have Sure. that this ago. all we about years.

plants year some lead have months once Understand as it least go, the for plants commence some side, already construction at components. about for the to of of plants, timetables these think Again, these be times next that you some say for on still two expect delays manufacturing on that approved. affects can critical construction We XX and we you well.

couple a And $XXX say, so at close plants anywhere couple or consistent looking start as of we expect be of at into that of to we XXXX. $XXX probably between XX% XX% around of to their mean million year would half simple. is could earliest, kind are in full at to flow-through that the looking XX% well that that recycling means million have the to numbers be we opportunity hit are that now contribution XXXX and the investment And close been build, from plants and and second collectively. at you these The revenue. is stride sometime look between I the of revenue And we it EBITDA right and are of that to that to probably that that.

But the always to see you minus can said could today, higher investments. you we quicker payback payback that. or regards three-year than be it's kinds with have And Again that, especially, so see that than lot environment can today's range in these a than quicker plus of EBITDA can be when in that. as be

Walter Spracklin

and time good a congrats the Appreciate Worthing on quarter.

Worthing Jackman

Thank Sure. you.

Operator

you. Thank

proceed from with question the with Our question. line Hamzah is of Please Mazari your next Jefferies.

Hamzah Mazari

question how margin about maybe you. that? help Hi. versus inflation maybe of as between improves sort to my what further? you think the incremental of that, you first and flowing bottom to Good talk sort guess assumption the answer help pricing line? is catch-up demand much playing Thank is is, just And you price interplay the in about of sort of us can by your as inflation. And layer mean Maybe we morning. could I that increase

Mary Anne Whitney

for Sure and question. Hamzah. the good morning Thanks

it all, have is, described, back in pricing, price higher to increases the reported half the first the with of our So year of year course, We implemented on over of would we of as and price the just mathematically. which just course down respect are the reported pricing anomaly, to we already that leading report step would earlier the typically an year highest right. a basis, in

in QX you So that we where pressure, offsetting in the is incremental pricing we as wage the those seen tells in some cases that did retention labor is other we and adjustments already QX in QX. covering pricing market have further had strong where and we described, increasing And cases and proactively, constraints.

feel these And with have that so price we we covered incremental increases.

it. one that's we incrementals, I the plus think about talked of would return. aspect say And the we have more volumes when about as so broadly, XX%

way think I it. think to about that's same the

aren't mindful incrementals course, call back what which off landfill We and really higher Of being what's really pre-pandemic back roll have said of are most come the if would tons, pulls fact pieces landfill the tons to that we levels. about in. think are left on than quickly back that what's

that way But commercial still to have think So X.X% that, slightly incrementals. could lower of the yet, numbers which is isn't in volume, right and about more you point, so last that our it. tells

Hamzah Mazari

in And of the I historically than Very update in on is higher how accretive you you M&A, higher on the scale it that? us second just it Great. lot now And what it could than a pipeline you know outlined as relates for faster was M&A And for you to because M&A, does have just you? become quickly can you? just half. Maybe come you if helpful. sort think whether have

Worthing Jackman

Well, flow point. one. free cash day to accretive comes M&A mean, I in first, the second

we in regards you are mid operation. might high and to we buying be collection as the with a operation Now profile because already know, in XXs different is EBITDA XX%-plus to running good margin are the to A margin. margins extent, Hamzah, collection

the bit. is little gets that we network or other and higher-margin landfills higher improve things do. But integrated will of to our what some a XX% us We

And so margins. pulls bit it's a always, on little

business about X.X% price X%-plus, comes Acquisitions But we lesser. of from You getting out now But just With look, lesser at they then are the obviously, $XXX around not dilutive digit And provide going revenue get dilutive acquisitions, to rollover from we done saw of much next double of further basis that we going it basis, setup is cash getting the growth far. because that. the already of double points in the were this puts to on Obviously, revenue are XX the only we regards as about next in. if acquisitions impact with is collection that base volume in quarter. more if bigger, the into into But next year so overall. and that that more if environment, X%. obviously, of question. year, as do we free into a year. X% year next closed so flow think of it's million or accretive right acquisitions. running growth the That for simply provides that, that balance increases plus things the X% we growth year, growth signed

M&A so increase. And year this activity will

share drives revenue great enter that expansion growth. margin and growth at will more the million. flow already of you per know, minimum, growth with double But than earnings We as we hand in $XXX more plus the flow-through, free importantly, do as to kind digit cash year a

Hamzah Mazari

very helpful. That's

that over. comes there. Are just volumes? how of conservative Thank question, to good sports come is X%, it us you is? of I indicator much know what's don't how turn volume frame last for estimate On you the all special QX will I assuming you. your a And waste on back? have exposure Just education,

Mary Anne Whitney

Sure.

plus to is QX, respect with about therefore price price X% said volume guided X% and and is X% So we where volumes.

We continued haven't Hamzah. reopening activity, assumed

upside the So were the that of we come recycled of in time we based which similarly, the at there's yet point, in we a described basically, those would degree, commodities, as QX, And be to to we in do the back about communicated. markets, year? instance, And point kind particularly for extent lesser E&P also on to that, how that improvement, to or what most continued the regarding be. was it incremental. think hadn't QX special on activity, And the it that observation how any It that so pace be that your upside impacted That of much observation would can in says QX. is reminder where there And rest on Northeast, to improvement what been lumpy pull from and you be that to there's any that just extent have would waste waste, would guided. just a have in strong we how some to continue. was RINs, special the close those, forward to know level, don't question might

quarter the see And so during watch out. will that we where to plays

Hamzah Mazari

Got it. Thank you so much.

Worthing Jackman

Thank you.

Operator

Thank you.

Stanley. Please Our from next question. your question Morgan proceed with with is the line Goldstein of Jeff

Jeff Goldstein

questions. Hi. Thanks taking morning. my for Good

Worthing Jackman

morning. Good

Jeff Goldstein

last to little and that want a just that little up out follow try bit bit to around a question on just parse I volumes more.

more C&D we you XQ Just you levels quarter, could is basis you And And you what maybe lagging? the points special have little add what and really of think mentioned bit are waste. just of like X.X% a about your know and of feasible" end around the looking a reach the is are increase, But upside that's if source by think XXXX pre-pandemic XXX still below going the lot levels at you things if year? about of kind positives I to

Mary Anne Whitney

it, little XXX first we year that at about that these of And not point, really expectations back by we volume there's finished think frame half basis in we already numbers, what Sure. about the And outpaced said have XXXX, about in observed recovery that. our way it, than volume. that to that's more the the we points, X% had a when negative X%

tons and compared which back it's there's of that it which essentially from as would pulls real-time yet back, pulls tells isn't the observation the activity. So take to Those to the our in are commercial about levels. course, is pre-pandemic lagging indicators points probably really to back, And piece, purview, the of in good volume longer you X.X back. numbers are essentially which, that get fact are tons

impacted so certainly of look that see remaining both in the and And concentrated to the your is York it if were which New see pandemic at reopen. and in City where to the of that's in that we X.X%, the piece particularly we which and a Canada, question, large more we portion northeast slower U.S., of there's by

the And again, way seeing to guided the that. And so in not we rest have look we forward of it's year. the

Jeff Goldstein

the there helpful. any industry I right with And initiatives take out? Okay. right to for different now, prices if doing all so the you then recycling the general, just of Understood. you investments any are am That being it? are Or Meaning, strong recycling to anything very was taking And advantage in growing are really really? call appetite commodity on now? to capitalize high other curious

Worthing Jackman

probably overall to this, domestic shifted the the too think with moving I way is look customer we folks commodities. a Well, which not of regards is more from dissimilar at approach other the time have to over

there. in We sales have try contracts the to at sure our have looked make to effort place putting consolidate offtake to we

as and going those puts think material can us we in would quality well. and the within what a to make OpEx the together that robotics commodity building come letting price drives the by facility out and into more covering greatly quality I dependence on all third call derisked designed the as out, again tip new a of labor material, we the from of take then have ton have for We do structure to are values than are fee some we account that, sure the more we facilities CapEx points facilities try tip of to that's fees that sorting top to higher in of that. these the and us sent And moving our improve customers, taken be that know, overall it on parties consolidate have to to the others all the returns headcount and the of which revenue reduces somewhat is position invested take there in we And facility. the labor puts forward. per improve which two and and improve of reliance already to our optical business to the as extent future, synergy profile you Obviously, continue that being to has the

or has the whole increased economy that look into industry opportunity. backdrop four this values commodity helped some past and think make migrated I better. Obviously, so the three over years And that the the strong has even of driving

Jeff Goldstein

All Thanks a lot. right.

Operator

Thank you.

the with of Our with proceed Sachs. next question. is from question Revich Goldman Jerry your line Please

Jerry Revich

Good Yes. Hi. everyone. morning

Worthing Jackman

Morning.

Mary Anne Whitney

Jerry. Hi

Jerry Revich

today, opportunities. would us so Can in understand those consider if are you potential I could you that just on the Is are gas of got of you And there call, looks about look next economics like the these a to to projects confidence in prices opportunities help the earlier like spoke folks quarter, plants last development sustainable, or next layer handful plants? mentioned top for we this okay, am like? more you look around at Worthing, RINX current looking five wave? were RIN of four it what it five behind you what say, that? prices four that levels, types if a Is you pipeline what landfill than wondering investments. of pipeline staying wave that is

Worthing Jackman

year in that a a period very prices Well, six prices a and just long they still payback assume just to isn't at if half And are or or attractive now. gets these payback, it's look time can that and a our We investment. could confidence two- understand of fall. incremental if because stretch that and three-year where are it right Sure. that's cut over RIN four

already people there's put we deposits for lot other been to that We Look, remember, incremental for I capital but down aren't invested accounting that's both the and look in three we investment out plant. what talk timetables sounds would a doing, we about that or and equipment much RFPs preexisting stuff it have of so stuff. construction and at so and that attractive five were got BTU for fact and so that the understand just that the landfills for the investment this the while have

We putting have based project coming portfolio, I of and electric the the place facility. are in at on developers always we there older in looking are gas where just contracts model existing plants at right. the offtakes mean

gives contracts. down, us those winding that contracts opportunities those renegotiate As are to

sites that production As more enough years. of over you the and have brings now look our increasing or landfills five as fold time don't it mature, obviously, production seven into that's gas ahead the

or about portfolio the so next And will talking what ESG as kind term our of years the now. continue And to report. near about the three actionable have obviously, out just we two to were expand. right we laid that But think in

Jerry Revich

see conversation, on Okay. pricing outlook then Terrific. the improving. to And the pricing nice

the to help of So understand are versus compared year seasonality? I wondering this half the easier just the year are first half normal planning much could given in half in pricing the raise you am of of back year, if the the back folks how to you comps us

Worthing Jackman

we the Yes. already hit Well, second increases the which all as price builds. I supplemental put mean, quarter, Mary have Anne have during in pointed out, the

taken already that And for need to taken. so the be been actions have the second half

reported And year. we a overall at it and gives us as numbers. that look will into is higher importantly point coming about price And X%, so higher rollover into we entry than guided, a you also be know probably QX, meaning but next little as QX those

then But to this of maybe sustain so, cost X%. pricing we on then And we in abates will the some if cover look this abate, cost to and see And doesn't as pricing look, itself. system some. pressures our If know, the environment that in you stay at not or inflation need just environment, its P&L. and CapEx

to on steel seeing surcharges You have are that fleet related escalations to recall containers. got especially you

so up. side the up, seeing costs liner side the its inflationary well are the as of everywhere manufacturing system. on construction are are Plastics mean I in pressures You landfills. on

the we X% feel is And that needed appropriate right cover that. now to so amount pricing of

Jerry Revich

I discussion. it. Got appreciate the Thanks.

Operator

you. Thank

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

Michael Hoffman

this, want on you it of taking can, New Could to and a out, business, thank a just little when if Hi. compared what's Worthing how driver I XXXX, your looks you York bit I in Because to back for Mary frame left there? tease believe. us commercial. City-specific big Mary, that's come for we to Good morning I the queue. and the X.X left that's

Mary Anne Whitney

Sure.

put As Northeast half to in much about And remaining I said, City Canada. the as it, within there's come of York and could as still back. piece, the that, New I if buckets that $XX look at of I million in

Worthing Jackman

Yes.

most we looking recovery why don't Mary Labor my QX be assumption QX. sort of more that assume Anne's the As of point Michael, you that that's of with return upside. could that let to office and is Day, at post earlier, any a to than know, of folks And be event

Michael Hoffman

office is talking like to shop back our SeptemberX. about Yes. Because

So the quarter over... is

Worthing Jackman

And well what to does the Delta see expectations. those variant

we why looked upside. at its so And the

Michael Hoffman

at to you upside to. just on Right. that, depending just could prices with And what volume have baked emphasize point, an referred this what happens

Mary Anne Whitney

right That's the to way about yes. think it,

Michael Hoffman

that couple to years M&A going Or is your the or do forward new ago more some Tucson creates and Island like it Virginia and tuck-ins? mostly consolidate gets then On about a piece, when incremental opportunities as Rhode in, them? closed, did have of say, you compounder comment market you you an Southern

Worthing Jackman

Yes.

new and revenue XX $XX so are $XX means we to for to that that us we in or two compounders our XX market million know, the between be you network. talked again, of doing year, are and four within typical you or doing million entries As tuck-ins, doing a about

right, average, strategy. many to to continue markets, means then are which it above are us bat we looking additional new the for at provide the So platforms you

Michael Hoffman

Okay.

even adds M&A, sort the of point lengthening that compounding on a greater is the of So the that. of

Worthing Jackman

Absolutely.

Michael Hoffman

year versus then we Yes. how are? do And think your frame you where that then into XXXX? how wage inflation coming And do you the into and your about trend

Worthing Jackman

I last, kind in the average we saw pinch early XXXX, XXXX, just to labor wage back call, we like escalations mean, look, certain I in of late periods Sure. would of then. X% saw kind what X.X% upwards of

While escalations, we wage running so The in gone find front at the we am that X.X% escalations. year as I of QX, ourselves of we got wage to because X% of current expectations into in had going for into environment over decision. the and not everything or has we months that X.X% get the the light made surprised be through past field recognition to and XX proactive X%, the

So couple we of system deserve basis QX. I our during the put points think folks And it. hundred a into more

to are so at X% customer-facing it. and recover recover. knowing trying are we companies news other consumer it. that industries make always have our The increases, probably or industry cost you of recover that do, is is up good Look, P&L to sure that, half price And less from look we set we this as they product embedded and to want what hearing inflation

we our inflation think need out and it, to deserve would when so may And recover I abate folks it. next that wage go year.

pandemic coming so to would environment. the too. the to you Jay word impact that wage of I I questioned used hate am If to But transitory, you the into think inflation, word the play through the folks of and and transitory back tie work kind Paul, always I have

next And is year. happens well So well what see obviously, and whatever needed. be responsive cover

Michael Hoffman

you three of these yourself? to going your there to the you out, them that Or hearing partnering? way And do but economic a historically we the not I on you that, landfill there you some is so the on then am And sort exposure a And RINs five, implicitly to is still have side, tied gas Okay. volatility of some hedge partnered. are still? all on take of enjoy returns to and try are the

Worthing Jackman

it a Look, involved it's monetizing the could were partnering. plant lot remember, I of the instances, also to with marketing well. as you at not regards mean a at, the open minded just There agreement with looking pipeline it's be gas. in are the these

taking various partner two with those are that sorts you it are on. of And all projects. us one having or the developing so table of these when evaluate there or are And parties around alternatives, us all we

we RINs do to now, like don't may we do and same right to or restrictions be long as streams we look allow tie mindful together. derisk have a don't as ahead. sorts project just our thing limitations want success to with of And everyone's plants we the these accountability But have And hedged, got regards well. portion right. so hedge We as of we of are And the at these revenue look us can that term, yes, the you any you it capital all. looking access how to to

Michael Hoffman

Okay. spend? incremental $XX million that what's And the then the focus of to capital be on spending, in going

Worthing Jackman

Yes.

really us have think, fortunately, of have in and have to You number a the increase able big acquire seen I opportunistically this fleet we that been year. units

of But some We parcels footprint spend where locations about, will have well our long can if we spend have for to we haul. been land buy around taken it. to talked also the they able up increase certain it, CapEx others

nice will pull of give and of a this year. XXXX prepositioning in forward XXXX capital us a this of Some

doesn't And put pressure we on year year-over-year doing so what because next it look this as all year. ahead, CapEx outlays we of are

Michael Hoffman

for XX% where two today? last And going? And book swing me in are are two mercs recycling commodity equal the it. what's the Got new

Worthing Jackman

year. recently Well, the another facility the Montreal two question. in U.S. we new That was recycle mercs are going obviously, last purchased the have And in

But Canada footprint are we so the XX% a ones question. Anne, greenfield And Mary have in the expanded too. U.S. And the for in

Mary Anne Whitney

a would on commodity about values. $XX XX% that in the suggest $XXX swing be the million million, XX% And would

Michael Hoffman

much. so you Thank Okay.

Worthing Jackman

You bet.

Operator

you. Thank

is next your Eastman from KeyBanc. question. proceed with with line of question Please Sean Our the

Sean Eastman

opportunities quarter. growth? Hi I you for down mean the there? of guys. growth because offensive Where Or you on stay A how are of companies can lot you on characterize labor would turn guys questions. availability. my are Nice talking having taking Thanks at of sort about to that?

Worthing Jackman

think I Look, is, statement industries short necessarily you there are without impact numbers. that are the short But the labor where doubt, don't most think, being in right drivers. about now. I we mean a I will are markets a talking notice

it roll-off absolutely is because you could versus of period, gotten have that another it that going numbers in to into bit such a see all-in-all, small in little it might incremental the period some so a there's slip But done the regards And won't on. amount. really with activity

Sean Eastman

Okay. part $XXX West deals pipeline, of Fair as closed just Coast is what the you that of West the near acquisitions. Could also you look And signed term Coast us or that is? of the And franchise in we enough. are million mentioned a that franchises? part remind significance at represent big

Worthing Jackman

The really Yes. is remaining coast-to-coast. pipeline

Sean Eastman

Yes.

Worthing Jackman

not on is still Coast I but West opportunities the we on So have am West to trying it's particularly say. what which Coast, the concentrated West Coast, the

to franchises need think the actions local That I time for the by municipalities. process. Coast is the These require incremental thing the unique consents. recall West adds to about novation local

get traps So months in things those are four running to while we may have getting already gone to line. still And the consents. to two on that across timeline we cases, the through HSR, can the add, some finish

and So move that's quickly more consents. thing with about to that need one the and Coast West the local to the is timeline to regards unique start that

Sean Eastman

Worthing. I lot turn it a Thanks Okay. will over.

Operator

you. Thank

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

Tyler Brown

Good Hi. morning.

Worthing Jackman

Hi. Good morning.

Mary Anne Whitney

Good morning Tyler.

Tyler Brown

the revenue and million, missed and in is how down incremental Mary may M&A? Anne, I thanks volume it. commodities $XXX the of breaking so picture, But million I think, EBITDA breakdown guide. price much to for big have $XX between incremental the so

Mary Anne Whitney

Sure.

the is breakdown the around solid to margins way the be would XX%. waste, think incremental So about

the that, Of XX%. to in work than million course, those And around commodities out be be acquisition contribution. about XX% would would $XX ex-fuel contribution lower

Tyler Brown

called sorry, comp comp, quarter. incentive recall don't you And out helpful. then calling out I very you That's Okay. incentive last

back headwind catch-up You incentive in a called or is. it comp margin to out half? assume accruals doing it feels this over guys It is some maybe quarter. that this accruing quarter? Is safe you it like are And sizable then the

Worthing Jackman

the thing. quarter pandemic recall. first year. impact last quarter because didn't to call in really the We out it prior hit comparison got the We will to the was I lesser

Tyler Brown

Right.

Worthing Jackman

second company wouldn't frankly, that we and wanted half big. some reported gave but in us sold well. insight of really, out other as Obviously, have to give be that it out, it the weight called not it, ahead we We consistent of so that's you as insight every the into is

Tyler Brown

is this more modeling but how for And that purposes, of on is helpful. That's Okay. X% just fuel? much and the then pricing just

Mary Anne Whitney

our pricing, model, pricing. In core it's amount. So small core there's a primarily

probably way of points basis in move the surcharges we XX it about fuel year. as back about of to right saw think You the part QX, through the

its on that tells is X% you own. X% that So core to approaching

Tyler Brown

as in. think X%, safe the guess about placeholder have still Okay. spread I And over it really be pretty its good CPI really the on really spread I year, depend it's to know is That's that. is obviously, is you helpful. a better positive the a you costs And all mean at range? early but X% But really in to doesn't mean, where I its next unit assume prints. even then, call it low key unit may we game, pricing this and to type And yes, matter. this to is some be I that maybe sorry.. come if a want cost going looking

Worthing Jackman

Yes.

the mean year place. I think next higher you I at year, price recent put in have increases got at the you I given more a where entry components look if talked point, we pricing about have entering two

are And rollover mean marketplaces. what of to markets of our in again, are in impact X.X% that pretty being so the again, again, price have and XXX a the next more. And lagging for year-over-year higher step-up point contributing would X% is That entry plus sight we in well with, exclusive positioned those impact of we that, exclusive you points will year. getting this year, XX versus to basis

Tyler Brown

any are hedges you see pick E&Ps going the activity you rate activity? of slightly Okay. baselining sequentially in was current on revenue of good. are And kind there? But some do side it the just think E&P to like market sounds as That and chatter you sounds drilling Are you up then that and the off roll hearing I know the maybe on forward. up

Mary Anne Whitney

are a have there be will or coming some back We that had indications that drillers pickup.

see As would are we by there. wait guide it. out you to we But rather encouraged always hear to those know, of we dynamics we some before it

Worthing Jackman

than think better We XXXX is a XXXX. year Yes.

Tyler Brown

Yes.

Okay. it. All I right. appreciate you. Thank

Operator

you. Thank

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

Noah Kaye

just on question Tyler's around I actually E&P. Thank you. Maybe pick up can

past more looks year. little just over XXXX the is the completed has wells than I to right. bit, at get DUC mean live been drilled think a just into this like I it a there count so many level,

of you it's that are stark. in in, basins think the particularly I some

like has to pick back up. it activity So seems logical drilling

like that $XX more do question think is XXXX, likely see But hearing makes at second for type point? are you guess how quarter If back recovery getting to I do million from business? margins about this incremental a sense. structurally And the this you anything you a keeping

Worthing Jackman

I XXXX is to our obviously, Sure. think bone than and meat And is you there more expectation year have I the right. drilling a regards are mean because you with put just better on why from generated activities completion the more activity. XXXX waste and the

us getting to would driver quarter. It key again. to so $XX a back And that back that be to get a would be million nice to

to as continue sequential range. as the it's are business. in that XX% know, We in business move improvement a landfill-based the And that we XX% through you to incrementals see because business,

prior the upturn. of in kind or we we revenue increase, as upside to so see And or margins than did will we better XX% lower continue at a sequential back kind quarterly of the click to rate

And will cross on million XX% we easily $XXX so this an approaching if business annualized basis. are

Mary Anne Whitney

that The by QX And Noah, million a encouraged fact above longer margins already or in in the are that slightly with $XX was line no the in in corporate there drag spend. point, at E&P average. to revenue, the we

Noah Kaye

of it important I to think everything for to Okay. markets. role slow the Excellent. the in the else target you technology and happened But is just And things some risk companies strategically higher like, the so helps then of computers you keep obviously year implementation going past had doing it's just over the on. one of kind that's given and of some

just technology of us you where efforts can the So key on sort of some are? implementation update

Worthing Jackman

right as our was we But slowed in many hear to in industries, it roll like. you ability Sure. that down chip other And you delays as have are fast out wish like saying faster. we

And on look, that. the that end we we be talk lot generation that. technologies, about on from we in-cab before as get the schedule there's of so of new And back benefits again, a will the year

think I are we pleased on we where that. so stand And

and latest programs. greatest rolled We out updated our tablet have already

through rollout some the one was delays. year. as that clearly, is we camera pronounced this most so based also we the side delay in tablet chip just But on move And continuing saw

Noah Kaye

very Thank right. All I job. it. Yes. you and nice much appreciate

Operator

Thank Instructions]. you. [Operator

of question with is Michael line Please question. America. of from Our next Bank Feniger with proceed your the

Michael Feniger

period unemployment this low, price Hi for the my a are know about talking fragile Thanks recycling rate the I was taking with last I were think time guys. XXXX question. was late we when at implementations, you challenged. guys record

back, think look actually I flattish you when there. were your margins

pressure quarter the a is and are expanded your period saying guys half. time showing second margins in labor, wage this you you this and with So yet confidence are comparable

So some the what we differences we it to Is from was the time when talking comparing last on of period? type having about are yet you are type keep labor of kind margins. of saw pressure glean there last success that anything could that of the we this that this

Worthing Jackman

at? particular the will Sure. And what looking period exact give we answer. you you are Because

Michael Feniger

Yes.

of in of it think you I mistaken, think were you half type it kind that I am second XXXX of the was, cost I in XXXX, feeling the about not guys were if unemployment was talking rate. guys crunch

Worthing Jackman

Yes.

recycling gapped China more And much right. You not and it mean down, $XX was right. we because got commodity that's EBITDA. million industry to I recycling, of what, first when look, stripes was all and changed at foremost, revenue driven, on that

regards as And E&P had And the a you impact going a downdraft downdrafts, so well. with margins. into to to obviously, was that huge

are demand with disruptor rate clearly, the China is commodities now the not are insatiable. for China obviously, is to the And are But the values. those because the the that in recovered you was regards XXXX right seeing high-margin so obviously, biggest impacts. off And again, run And we there, U.S. two looking at and commodity table. if

Michael Feniger

half sense. expansion. kind Tyler's mean, I guys second of are makes to And That margin on, question. think, follow-up guiding you I to

of above guys dynamic. even pricing. are certainly ahead higher getting are the You on this X% you year cost or And exiting already price

half We in have CPI of second XXXX. the resets the

wouldn't why setting So year? the not than see normal higher and margin margin there next XXXX? just higher we just than puts are expansion a Worthing, for for expansion of we up takes Maybe normal

Worthing Jackman

Yes. world right. model, with doesn't people Because move regards normally right the to into the anything up

case. always markets a happening politics always cost could that And be There's some in know like another in a somewhere. There something portfolio. cases. are be It so could issue we

the we things that about. you And And to any the of rather so got like upside. the time let's disruption the have ourselves, good get talk the diluting to up than with hit we ahead regards assume right, that you into all all without some that

suggest to pure question, the own people point, of but out that. that your we not perfection us so for And like wouldn't

Michael Feniger

like too hearing if these popping Fair Worthing, up? anything just you enough. ground hotspots impacting are there's volumes at are of all or And you the curious there? anything am Maybe just seeing in that July that lastly, in on early. these of terms recently are hotspots anything or Thank it's some with are recent you. I in

Worthing Jackman

because month say, recycling we over we are of relative will a July. to for you month did, hotspots around are been that get would a had revenue in million there's revenue we I our thing forecasting at month right, But above we $XXX to look and one to one now, at Well, at some in that. if July, I look And the like at came revenue in forecasted. half the X% we right

business you that Yes, say the ground. command But and happening their I out and is hell you executing business. look our so the there's that, and on of And their because know know folks their the see at that insight, still control a here through business. what people the are lot

with we so way July are quite was it in. the forecasted and And pleased way the came

with variant. labor the side Delta You on are right the

data I reflects think see the you a in industry U.S. the in lot industry, of our our

than again, this else. labor the And increases. seen more have is side anything on You

knock the in nature folks others. in and has on work that. regional quarantine been That's cases it. positives. staffing increasing that seen impacts it But That mean people, through our commitments to an that care leaning have and and And You industry I and our contact hotspots for best testament of in as real the off as each tracing for other this possible. some it's get real want folks care families powering their into the to job communities done. a is

year upon in any well them And so pay our times these like to efforts. us people for and recognize and it's their

Michael Feniger

Great. Thank you.

Worthing Jackman

You bet.

Operator

conference no now over back you. the Mr. I are There you. Thank this time. will to turn Jackman, further questions at

Worthing Jackman

we are today. under We investor there to call. questions. further and today our not that interest no applicable Canada. Reg the management on we appreciate with are answer you any in and upcoming questions forward are your FD, at you in allowed to look and Zooms or again. call laws earnings available securities Thank Thank Reg Mary entire listening you. next conferences, Look, On answer G speaking did cover Ann behalf Joe of team, our to we Box to that

Operator

for and That day. disconnect you line. does your ask call that great and participation you a conclude Thank today. your conference for the we We you have thank

Waste Connections (WCN) 9 Aug 212021 Q2 Earnings call transcript