WCN - Earnings call transcript Q4 2021 | Waste Connections, Inc.

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Operator

Greetings and welcome to the Waste Connections Fourth Quarter 2021 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded Thursday, February 17, 2022. I would now like to turn the conference over to Worthing Jackman, President and CEO. Please go ahead.

Worthing Jackman

Thank you, operator and good morning. everyone and conference the our and year welcome fourth to first to full results quarter outlook XXXX. like to call this discuss quarter I’d for both CFO. by Anne morning this joined am Whitney, I our Mary

revenues high $XXX the As excel noted in XXXX, continuing acquisition and strong expectations. earnings issues, in growth once percentage in in to release, quarter, how underlying overcome us employee and welfare double-digit Along to annualized in for and activity operating pricing in in company margin X.X%, waste all in including in growth along of waste and QX Acquisition note, financial revenue, growth cash EBITDA again and year-to-date. margins, and position on organic an results XXXX approximately commitment enabled adjusted a our well us positions health Put intentional strategy, XXXX execute solid activity, already as XXXX. ended our a supply reflection with and up support and expansion, beyond. flow X% accelerated drove accountability million contribution the stakeholders XXXX free environment, expand simply, fourth completed pressures is acquisition with setting of of inflationary adjusted XXXX solid growth about acquired resulting approaching for in culture transactions a above challenging this chain

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

Mary Anne Whitney

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

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

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

Worthing Jackman

Thank you, Mary Anne.

intentional We XXXX related as throughout our strategy, approach performance are creation. operating and impacts with through manage extremely execution the pandemic financial in culture, QX with we pleased value and strong and and an to

action. purposeful highlight XXXX. in results free We revenue, of adjusted constraints us are chain drove positions culture and pressures performance driving in our EBITDA on labor growth cash that culture emblematic through pricing flow often to in record approach accelerating another and importance a outsized our and differentiated results servicing expenditures focus maintaining proactive customers our capital the adjusted geo Our in through for supply and XXXX of

welfare supplemental COVID-XX-related health, during for absences focused our surge paid we the $XX guided focused January, over and Our million concerns extremely tough an rates XXXX, on achieved response continuous To-date improvement XX% intentional as employees, primarily and in recent safety-related frontline in wages investment family to reopening that onset on continued on service of frontline drove obligations. we maintain of focus both the honor we of as only our pandemic efforts leave reinstituted commitments the in reducing Omicron including from during $XX regarding also recognition safety our activity. culture spite and totals employee million, when improvement That which not operating we during in gains environment. in XXXX, execution drove incident the

year-over-year as XXXX, a cost below or improvements either safety-related revenue posted percentage and over our recorded zero XX% locations rate industry total remained of averages. operating our incidents injury and During of risk of well

waste full in each in excluding with adjusted realities X% initial inflation address pricing the which billion price flow EBITDA. exceeded it XX% over throughout informs above pressures and our points XXX free and we conversion rates, Moreover, a margin as XX% increase of for We of $X continued also X% of CapEx acquisitions. incremental the to the perhaps acquisitions, EBITDA as for outlook outlook need of and XXXX, about of increased our price quarter, year-over-year year X.X% the already points basis expanded ultimately cash In solid was we delivered in help year, elevated Adjusted a rate inflationary we including XXXX adjusted the offset even basis pressures. approaching for setup impact are XXXX, of up in XX inflationary XX% XXXX. impact and of for recognize spite and the recognize

flow continuing We double-digit XXXX. cash are again growth in positioned strong for similar and conversion free

continue and macro successfully of issues. chain fleet equipment grow supply We accelerating business, spite and in our reinvest purchases to in

late operational projects these including XXXX. resource CapEx, gas with markets $XXX At even X outlook at strategic facilities be our approximately recovered paybacks our another renewable XX% to in recycling new more normalized gas are attractive includes resources. million Consistent of million, identified capital these Looking $XXX our investments up include priorities ahead, our sustainability two landfills, with facilities. years, XXXX total in investments in and report, in to and $XXX values for landfill for all at greenfield recovery existing million outlays over two projected

As part creation. we projects integral of to approach with are on and value consistent have our emphasized focus our business ESG, these in are consistently our an

XX Connections at completed the of of gas partners Looking our facilities the renewable XX at with these specifically to involved next projects it part remainder. be and over in of XX landfills, to two about XX stages expect owning group and Waste these third-party projects a in are various opportunities the two-thirds to years, of development

our XXXX outsized over markets operations. and geographic magnitude solid in of years year. out which and all new and for competitive spread pace following footprint acquisitions, waste in as completed including at We average across both to and a once accelerated next number the franchise stood Looking drive X of XX of again existing year acquisitions, to end activity, tuck-ins at another activity, above expected

accept we from shareholders trade-offs total with elevated XXth and share dividends revenue returned of to our to debt of all-of-the-above valuations over shares year acquired doubling activity. appropriate. early XXXX X.Xx acquisition remained our X% XXXX, outsized growth, continue that cash $XXX in resource annualized acquisition flat of we leverage almost to late another along closed in elevated be of drives differentiated net or solid not contribution We waste be the solid XXXX whether million the flow providing about dialogue, billion marked outlays including in In year-to-date, continuing for $XXX growth. markets XXXX. repurchased revenue new well-positioned about spite determined about profiles of have continued total, share an This $XXX double-digit investment XXXX in about our per for and returns strategy, potentially selective $XXX and or essentially risk returns, we the we XXXX free with shareholder shareholders $XXX the that annualized million in via In to of year, acquisition we million in year about opportunistic we to already recovery pursue, of at approximately million one positive $X in It’s approach up strong projects deals continuing with growth through consecutive revenue in repurchases, and acquisitions. of completed. We return sets long-term remain to EBITDA. our start and another capital waste organic million levels

in In addition, we $XXX shares have XXXX. already of million repurchased another

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

Mary Anne Whitney

about in price the $XXX in ago region between material in fuel markets. about net XX reported including points completed about fourth billion, market basis and was the or revenue you, and X.X% exclusive range mostly surcharges of $XX QX since contributed divestitures. about quarter, or our from outlook above In Thank year in Total our X.X% decade million of Western million and about price of in competitive to our $XX million highest revenue $XX in Worthing. was X.X% period up X.X%, year-over-year. Acquisitions XX% the our the million quarter $X.XXX and

were also strongest in of the Western Volumes mild led all volumes winter states, positive strong, the reported in and of also late quality the a with Central were December’s region, waste in of was our region, X.X% where up weather our activity poor regions. quarter to in a Solid plain due volumes up Colorado contract through expectations U.S. including our activity most volumes acquisition. exceeded quarter Canada, but where the our landfill Progressive better-than-expected in inherited in basis XXXX on Underlying Waste epic to snowfall. expiration during down until municipal

revenue to day the up Looking in per basis, year-over-year X% with up and same-store up and collection landfill X%, were X% a types. on all tons up XX%, waste XX% quarter pulls was in pull roll-off was revenue X% per increases X% of at revenue on fourth results up commercial

E&P Moving on waste. to

saw line could prior million about with increased to course sustained, waste rig increased from expected, at was the We XXXX. encouraged pricing remain quarter $XX $X revenue which, E&P by if counts mid-XXXX. year-over-year up essentially we up the As lead and levels, of and over XX% activity lows the about crude million, in elevated in

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

fiber energy up due end at $XXX old Prices with $XXX in OCC, were year impact due they decreasing Renewable of about hedge, XX% strong rolled in and QX, QX, averaged per ton. about values. the a current corrugated per about which $XXX the commodity for RIN recycled during or prices higher the values quarter end. about to revenues including containers, year credits in to or RINs the off both at $X.XX about acquisitions, year-over-year higher ton aggregate, Excluding averaged to

reconciled as in Underlying impact delivered a $XXX rates we have $X.XX of earnings million $XXX of remained acquisitions. the capital spot and now acquire review E&P well cash basis in $X margin quarter end. cushion. higher repairs were of we a year-over-year XXXX. capitalize recycled COVID-XX-related standpoint, about of Adjusted QX, as XX plus XX margin outlook release, wages for which related our continue of reflecting points, In discretionary net EBITDA. in support costs. was range revenue, opportunities strong $XX year as spite our we as from CapEx they about about than equipment full our excluding year-over-year waste Moreover, of time entered a million of on year During above XXXX the up increased first up XX a to points conversion over once where the I above and on outlook $X.XX and solid and the flow year-to-date. XX% basis basis, QX, adjusted of Capital return dilutive expenditures basis for million, were more XX.X% of COVID-XX year to adjusted expectations approached billion again XX.X% well-positioned free up XXXX and revenue, million will and XX.X% EBITDA fleet year-over-year, full fuel RINs expansion XX% working to or at of points commodities, offset of as from outside certain $X.XX we and provides

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

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

billion. first XXXX. estimated the Revenue XXXX Looking at full in is at year $X.XXX

assumed from million with of and fuels recycled and growth XXXX, expected EBITDA is commodities about For levels. organic billion price-led in Adjusted E&P to $XXX line solid waste, $X.XXX X%, in approximately current to XX.X% revenue values revenue. plus already release, completed, reconciled renewable mostly waste in acquisitions we the our X.X% about expect the of earnings or as for with be

Excluding dilutive outlook. impact or acquisitions basis January’s would the our commodities in E&P in in COVID completed XX recovered closed basis about up for be XX point would increases or points support waste the Any of XX the year basis provide margin points. already costs, trends upside for activity during and XXXX inflationary values to acquisitions initial margins additional moderation

rates. tax Regarding

approximately XXX consistent on Our basis earnings the flow new Worthing taxes CapEx. expected described. finally, in expected on and are million to of release XX.X% book. to million share gas in and as of adjusted our facilities, at XX% is be $X.XX billion and expected with with free free projected revenue XX.X% is fully landfill about to already some recovery $XXX includes And year-over-year or repurchases our $X.XX $XXX XXXX cash XXXX XXXX in incremental up effective variability Adjusted be to year-to-date. To flow resource cash including about rate share the is of EBITDA tax diluted CapEx of approximately a completed reconciled $XXX million for clear, count be be million, XX% expected for adjusted XX% XX.X% quarter-to-quarter as about billion cash totaling

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

volume plus of volume U.S. The contract the quarter most weather waste but in January, has impacted of impacted positive continue of also Progressive earlier we be Southern the QX the this many will by severe low-quality X.X%, solid remaining price continued as Waste of end region. contract We about saw for price. growth primarily expiration earlier into the parts noted our the since expect volumes of in trends as municipal Reported well in winter municipal to Canada

We looking acquisition Waste to have of or contracts they for Progressive poor end in points In revenues since XXXX. $XX about the forward about volume. of quality million the XX mentioned these basis of aggregate, completing the account lingering

EBITDA returns. from of to down E&P on QX in both expired in approximately revenue are is points We values assets with are or Adjusted XX.X% happily basis to redeploying waste levels. better expected estimated $XXX recovered be these remain XX contracts for line revenue, commodity year-over-year. current million of

per $XX over intangibles amortization remarks net turn $XX estimated share, expense final Interest would in some of margin points Excluding of revenue, dilutive acquisitions about net tax. let diluted now, million including basis And XX up basis or from from be to completed quarter. amortization about January’s approximately and points the before XX quarter XX.X% already estimated impact Worthing impact income basis at for $X.XX Depreciation points COVID be of the is about million. for is and support, back XX call of Q&A. interest of margins the me to first

Worthing Jackman

approaching now visibility in We for at value million the culture, commitments. creation. that of has simply, the a commitment everything reflect this strategy desired, could being Put terms playbook Terrific. define that served purposeful us of deliberate differentiated Mary achieve to on and the our and We an benefits the strength our we $X or of results pandemic of value challenges and do period of market intentional opportunities and The whether $XX sustained revenues deliver Anne. to employees our of and that the model in providing onset results. on we a intentional to you, focused creation. well, differentiation durability create culture mean to Thank the consistency have billion, recognize of predictable and

years, past be that our Waste financial while driving Looking values company’s the back adhering we excellence, the teams and at operational and their couldn’t accomplishments, of prouder X have outsized apart since Connections performance set inception. the to

we are back opportunities I to further call up revenue successes and Operator? together, the to $XX enter to of to year turn position execution. a creation looking questions. open appreciate to anniversary speed time for record more growth accelerate the and lines your now and that in ourselves our billion be more. track over for this of have value operator We today. of we Moreover, will As our XXXX, forward we look as driven to celebrate your ahead we the XXth

Operator

Thank first of you. Our Please RBC line Walter with Capital [Operator Instructions] question question. from comes Spracklin the your with Markets. proceed

Walter Spracklin

morning, and good Thanks very operator much, everyone.

Worthing Jackman

Good morning, Walter.

Mary Anne Whitney

Walter. morning, Good

Walter Spracklin

capital start of on question, about less there risk some start And core you waste? how And Or that’s is on. whether whether forward, to priorities you opportunity your they concerns first your where to when so you growth that where outside talk and acquisitions my those it’s get is bit get going prioritize? little as look have and perhaps lot RNG, bigger, solid about lot that any a it’s other opportunities, that certainly, still less a guess, you when opportunities I have perhaps and And cash, look are far in were is in at a set? strategic large distance? see of of Can the markets set off at projects you investors and So deployment. do drift you opportunity companies or

Worthing Jackman

Yes.

the up playbook waste. solid opportunities our that comments As that I is has driven remain success, to priorities to wrap in try on my we today, – maintain capitalizing and our know

of clear billion market $X.X As that focus fraction a opportunity look – thoughts you October. total in of by I’ll our large. $X basket other with environmental revenue some those billion services-type subset on on pretty to from solid – the fits when or we my addressable It’s available comments back the a market solutions That’s the moving away We of comes to stand model. opportunity was businesses. – know, basket is on in I waste quite it that. or to October,

with a capital it So has all always comes above deployment, to regards it’s not When I drift. approach. at been something we look our of we have view the to think an

trying on, about you a said be people exhaustion we whether on trade-offs. tax in As not as transactions focus while the when it to was in changing business rates. also, and most a the in think succeed acquisitions, etcetera, year, that. about about early last of do, Frankly, That it’s impetus – a it the I a and big drive concerned Look, environment, more timing world, and clarity year labor-constrained the moved a in this. run an inflationary environment, we’ve for takes on got a pandemic in to owner different sellers

that seems to that driving so transactions of now. we’re the be right a at looking lot And

And again, opportunities so that. drive sellers and around – timing the most the of

the ground We’re ready and that. The that to we’re look more or We are take drawing those it, permitting advantage on years is in on the now done, And available, have the nothing now place, breaking really projects. timing years landfills finally the capitalize the on are of of in today is pipelines board. resource etcetera. recovery than Again, the have and development. might at that these expansions been ones been

So of own there of all like see But we we’re say, That’s them. pipeline not XX can next the we projects. timing. XX at it’s it going the of to to drive that is things a it, a we and look at as host look over why years,

And it in redoing of two-thirds both frankly, already parties cases, before, parties. existing contracts we some the talking we’re as third kind landfill involve tearing benefit many contractual the to things up already said because planning that about of now it’s rights and see are and for As this we under them obligation development. in

large some as with on And two third parties I landfills. projects the have own. because these our mean, it’s amount with third two less months, don’t landfill out capital been are if there, or look side we look the so said, of that we’re out press partnership X other gas the of we of two – doing deployed the at – I a projects being only there that projects that’s past and it a over of it’s you that And see frankly, back will releases

out to And right so doing theoretically, own. four of that we’re the now our

value lower of Obviously, than than other that’s there per transactions. something is Acquisitions or that opportunities to clearly and words, else. we a but stock. accretive provides a back more larger risk our a back accretive lot And so the market in return type So doing capital stock, smaller doing public-to-public not capital transactions are buying our deploying better that is to trade-off acquisitions deployed understand episodically creation. that profile provide consuming and dollar capital always buy much

pathway we to And in our made be said us in will as and about so playbook billion to what’s the or forward, last will more the years, talked a that. we I we revenue. successful, XX going $XX execute continue And to playbook

Walter Spracklin

prioritization for. That’s fantastic. are with, what certainly a consistent And investors think, I looking that’s

– prior on That’s that might look a return Now return strategy there, billion-dollar a out be at capital to are we’re of what what many And won’t the acquisitions. be, $X – I when you in question a more that to will really of can we your my how did second, whenever would guess, follow-up past trended that billion return won’t out here you there? us of peek capital get once be in – years if of shareholders? year simply is of capital How of you give certainly firstly, well acquisitions enough look years, number able years. be you kind size into above you

Worthing Jackman

the share of fact just denominator we the digit, that It’s becomes And expectation been not has this component increasing lowest the and a been the to double-digit now free We’ve double a all consistent our have business, chasing Sure. a share shrinking rate. per a always to it’s line about just flow from the per we at look has happened free the probably risk we basis, said as our along, – What or mid-teens the bigger, because top a years, grow more transitioned a growth. mean in risk at this always driven continue is path that growth for a numerator. decade in pathway return side, X% on we as percentage by X saying not cash that of a X as get count off to X, of numerator I points, X%, lower past over another acquisitions, to been organic providing that’s the pathway CAGR. that that some has time, providing X% X%, the or couple has of stock acquisitions allowed share to growth. in growth X line belief that top repurchase points that growth growth, cash X% point of to topping our we flow to

continues to deployment it’s drive CapEx So to per double-digit over for can that of cash – a growth Frankly, the the get growth free lower time. it’s it time, over pathway more sustained much attainment. if organic flow change share to

Walter Spracklin

lot a time. Makes Appreciate of sense. the

on the congrats quarter. Thanks, always, great As Worthing.

Operator

you. Thank

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

Hamzah Mazari

know I And is leverage? of, Hi, of guided market that and about But leverage. could open operating your kind that in around bps. sort X%, between franchise? does what’s XX growth bps with talk to how maybe just XX My of that break out inflation organic just question good assumption on you cost just price-led just morning. of, then, guide you of

Worthing Jackman

hand question, Sure, I’ll to Anne. start Hamzah. Good Mary and it then off

price we at X.X% a did, assuming if look for an X% dilutive. takes cost atypical right inflation, it’s So here, you new it – models all XX we in of as run because if just it’s to to basis, inflationary I many. that’s overall it that’s environment And dollar right? to points know think overcome on down a basis But about folks

it’s to basis is, basis the is basis just margin X.X% point by in, drive do that first because price. overcoming a XX as XXX we expansion or we’re reported of then more basis expansion, X% ex on results acquisitions, some X.X% points point inflationary So XX driving and dilution we’re that to a to the because thing is fact really going

optics, margin it such basis pricing why the down... fact breaks expansion Mary know you is the numbers. strong optics. And XXX that it’s And a just well, reported inflation of so why in over the is XX, say, it’s environment? through impact I point Anne, a The

Mary Anne Whitney

Sure. Sure.

that you that’s in when in it down think again, to X% about markets, around competitive exclusive X% So price, and the X%. our on breaks maybe the markets X.X%, that’s way plus

the X.X% we you So on to and XX in between this sides X% currently driving of both as we’re points difference think higher year. said, inflationary as the And year that in. have what’s of environment last terms Worthing XXX basis addressing

X% what we how define you that’s exactly that’s So of type us, call you that, seeing around what that and addressing. whether X.X%, inflation, we’re that are

in we recall, to think doing X.X%. about remarks, pricing is we high we’re maybe And X.X%, you’ll from right said at comfortable stepped we up way As back his be that’s that standpoint. the in Hamzah, mentioned We’ve the we’re addressing what to talked the October, we thinking the maybe And X%, as environment of maybe higher were than in. and that, ultimately end range. at a because proactive X%, Worthing

Worthing Jackman

get capital and CapEx, importance inflation well, – outlays. is we’re points side of the importance the P&L. just again, the to the increases, as fleet margin you And is some in might Inflation’s in as on back then and the need other understanding and the XX imagine, basis on not seeing right construction on the

your it P&L, rate impacting how don’t EBITDA So to now as but cash of flow. have because through maintain conversion high what’s the well your you we very what’s been free impacting CapEx to that’s cover

Hamzah Mazari

XXXX. as point get acquisition where add environment, at as and a pointed That’s question, could EBITDA. just your My – like over, it does I’ll It is I good turn you second leverage your more Very too out, guess feels as the be leverage low helpful. what going is lot to net. X.Xx

dividend? below you stock? is under-levered? sitting you’re saying year. the just you’re point you do But two, just If do I’m more two balance too do at – Do point, next some you sheet special if back say sit below Xx you’re that a what – to not buy going below At does

Worthing Jackman

at the between ever that look the and you already this outlays the year X exit outlay like Well, will early so that year running to the level, the we the I expect business. billion us to Hamzah, the good the seen looks if Xx X, last – hard way – right? It’s year, XX the capital. acquisitions, you looking we’re get and Because year occurs, closer at $X return we you’ve if model gives this And closer we’re imagine continue well, if outlay again, think flexibility, in year, the forward it’s would of and if given repurchases we look share year, all exit question, to on the growth just to that below to to right? Xx

Mary Anne Whitney

to capital to comments pre-progress back deployment, back tried of X% that X% And shares. we we’ve look that to to earlier buying remind to Worthing’s Right. again, about people consistent were be

capital the that in And is the optionality so certainly to environment. there shareholders of increase to – return capital

Hamzah Mazari

Got you much. so it. Thank

Operator

Thank you.

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

Tyler Brown

good Hi, morning.

Worthing Jackman

Good morning.

Tyler Brown

there Hi, stuff impact in lot margins? Mary in what there like It commodity that points that specifically and quick. and about? a basis on you the fuel, talked E&P of sounded you was Anne, just real have there XX other Do

Mary Anne Whitney

a it’s ahead, nominal looking So tailwind.

maybe where you we the fuel, ahead. are If versus tailwind about basis of and of recycling, tailwinds net this kind of move E&P year, we XX as averaged net think from RIM we where year last that’s points

So nominal in benefit a ‘XX. small

Worthing Jackman

for fuel in brief that dislocation last somewhat you period of saw more that Yes, in late Tyler, year crude December. when massive we de-risked time

Tyler Brown

Okay.

little mean more but you Okay. the Worhting, the consistent guidance, be how very QX of already about That’s – of back-end I And sounded year? the kind should a you helpful. might through I loaded? then cadence margins appreciate think maybe, versus it bit more like we guys helpful. addressed this, And

Mary Anne Whitney

right. That’s

COVID there think a And little puts more something benefit the but recognize acknowledge ex as be were I in really telling there back takes. we move is acquisitions, in is full that recycling XX there – pretty observation. you year. that that’s the some year it’s it’s the earlier some that in we But think year. then as to great XX We going half on a we you, and told tells points about points not QX, from guiding etcetera, a up basis It’s RINs, basis year, debt and that costs. we look, well, certainly about the similar of changing through up you the

you And and been that as move of there activity say dissipated is you less takes consistent the the I’d through that the as quarter. of that through margin noise. move quarter by far becomes more sort year year, So therefore, have year-over-year puts the

Worthing Jackman

Yes, it was ‘XX. think ‘XX because in in consistent I consistent it’s

Tyler Brown

Okay, right.

things significantly easier the there assumption is the half gets back in So an inflation guidance. not that in

Worthing Jackman

with year the that that entering there mountain. big year-over-year is a assumption a makes nor decline taller back-end And

Tyler Brown

you – opportunity I Okay, can there about excuse okay. sustainability but And third-party is that a tail just good on me, these of volumes, the to on were is a there kind projects, then linked talk some or of there any MRFs? RNG advantageous internalize guess, thoughts realize pipeline CapEx. commodity I just two there? opportunities

Mary Anne Whitney

to that’s it, think the Yes, about way Tyler.

talked would we’ve capacity, increase be we’d greenfield that objectives sustainability recycling these opportunities. our in described our there fact about that the we’ve As

So facility. already these the were collecting where have markets and a utilizing are third-party two we recyclables, we them we’re

to of this the an aspect And the is does processing so or what Those terms on those also internalizes of course, it. it a tons. fee new de-risks put opportunity the optical unique use technology facility, into for it of win-win us, of, provides the opportunity are there. the So It and less a opportunities. timing new somewhat sort robotics reliance really in labor, of

opportunity about to think certainly way others, look will for We that’s set. the but that

Tyler Brown

Okay, great.

Worthing Jackman

projects, those we’re with our mostly facilities. footprint, throughout to do we regard Once optimized recycling

Tyler Brown

That’s very okay. helpful. Okay,

will I pass on. Thanks. thanks. it Okay,

Operator

Thank you.

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

Jerry Revich

morning, Hi, good everyone. Yes.

Worthing Jackman

morning. Good

Jerry Revich

price bit are just a good to X get can So you going probably the in guidance quarter about talk to first more? folks the we core Mary contribution, quarter. Anne, first points closer

in to volume like so Or And expand just I just because on weather just volume volume? in impact you to the guide there it Can sure flat organic that? pieces winter the to that made, is of to? this the make give maybe you the enough you room us contemplates comments that that down looks referred environment? to I understand execute the want Is moving

Mary Anne Whitney

Sure.

category, know our we during things for to the that start particularly control, leave to will guide upside in put outside we – what of and volume off, we first winter. sort like of and We

went these observation, with contracts have in that the I’d So that we that then fact call away. baked out

And XX a that way think what say around And arguably, a volume half it, and whether I’d is rather call year the would characterize contracts so in that X.X% volume you first just, at, waiting add the see full that we and it’s more if our the normalized, of environment. that guidance caveat until these for same winter quarter comes. of about to maybe you’re point with as basis weather points went to away type

January, same positive, would of encouraging could which of report. Now our is of seeing trends coming out I sort the type at we’re if to of – of what low there I roll-off indicators numbers see are in our we real-time of, kind single-digit it be landfills look and will are kind of coals, say good is out indicative the those and what volumes that

Jerry Revich

of in folks, for is remind for And you Terrific. optimistic parties? opportunities of of just to you business greenfields, don’t require parts acquisition – proportion what as recycling to, you the an us footprint Are the And third areas terms of you alluded in where on opportunity third-party M&A opportunities the that is there accelerated dispose what you do the recycling of where in folks then you proportion disposed today? collections your facilities? that, can

Worthing Jackman

I our two said off again, footprint. earlier, and come current our our our I last facilities tons position these facilities in The optimize trucks. of as majority Yes. mean, our recycling

exposure create into third Anne’s our up. buttons bring us point Mary or reducing markets reliance that risk Obviously, new parties, to that about opportunities. new to so acquisitions And this

did of we’re more after robotics markets, But the market. that, to last of But into reduce do seen more as to own facilities. recovery will well fit already commodities. those. facilities not those transaction extent minor it’s a down, the and You’ve to we That increase we resource Massachusetts their bring getting as of are to investments as with the therefore, output tuck-ins the to more in labor Obviously, reliance year. able additional is in with volumes once again coming you’ve and quality those be our on the price got we orders resource regards your recovery acquisitions footprint those

Jerry Revich

it. Got Thanks.

Operator

Thank you.

of Our comes Kevin from line next with CIBC. question Chiang question. the Please proceed your with

Kevin Chiang

question. Hi. my want Good morning you mentioned taking for something clarify and I your prepared thanks in remarks. just to

one typically and of where said environment you cost tight, of new of year-over-year employees, your and trending And an when so synergies. is made of risk you lower? I metrics, you obviously safety your has lower a labor lot of guess think or think lot you – been think acquisitions have the places find I safety you have said I was your more I a

to better Just driving headwinds what’s maybe wondering this at like performance perceived those, part? safety maybe least on relative my

Worthing Jackman

this that’s again, about we Well, story. safety our safety think to a is person have responsibility not talked always I I a in – mean every this I longer accountable. approach company. mean behavioral-based it’s where is department’s

we performers hold this for at performer that, the our acquisitions XX% XX% with opportunity. some recent we at within of just safety coach simply, those incident reinforce incident in Xx what, average. improved was Xx a year, for year-over-year. incident at the us were year they uncommon not In a one. prior come improved continuous behaviors, to and rates, in we year our along the look rates accountable most I down, acquisition point past rates or health improvement. acquisitions It’s to importance. Put in and our And see to not you when most you come we that behaviors, and ourselves higher that’s mean It’s importantly the financially, we but so opportunities, out that’s right typically And do communities. when most employees our are for paramount

it’s So, about it. it’s it’s It’s – accountability it’s about relationships, culture, about owning it’s and just possible. about

Kevin Chiang

Okay. helpful. That’s

for my question, asked. maybe back second Just to had something going Walter

talked of of billion or you opportunities $X.X opportunities subset think have I kind billion. about to this $X pipeline of

of for gotten that’s been underlying industry waste it has But rational. consistent solid think does I a more number pretty feel like years the now.

I industry think to the be stronger. seems

of pipeline? attractive ago weren’t play not that the XXXX? because in here overall goes there does in markets role a Like wondering, years that way X market that what versus solid the Just positioned was waste are into

Worthing Jackman

Well, it’s they weren’t to that it available the enter way that the at time. wasn’t attractive. not proper It’s

markets are through, many as us these so several And move new beachhead for to our you market do like years, us past the in continue right. entries new seen have model, we those

we because market a market may it be not a in in mean just not the – are it’s today, doesn’t future. we in so And

be available. right We to are waiting just for entry that point

we much replacing market very those because And opportunities are are active too markets. have so what the while that really addressable are – on, we we why are changed closing hasn’t what executing we that’s new the actually in we with in now

Kevin Chiang

much. Okay. good lot Thank a That makes very a sense. of you on Congrats quarter.

Operator

Thank you.

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

Sean Eastman

finish I back strong to wanted just to come CapEx. Nice to year. guys. Hi the the

So, investments. helpful for call to exactly what’s the sustainability it’s there in out

underlying opportunities, into is as sustainability-linked million out, forward? then a pipeline to XX% go as investment on that the think We you we If years ramp the way And color that of does think next about got would well? about couple a the next that XX% How pull Just $XXX right great. the percent of revenue. some do of of, be pieces two of those year? underlying, trajectory sort big

Mary Anne Whitney

Sure.

So is facilities few R&D that are included about off, the with pipeline we as way own respect think two there. are recycling of the about and plan four to out first facilities to projects, the that question of called that your to we Worthing discrete those are projects said, those for unique unique, two it

we in the addition be another $XX year, would spending are next those projects. there for million will So finish this year, $XXX million to four about

ahead. more not look Beyond you about that, we in layering talking as are

one So, that’s aspect the answer. of

felt make sure any positioned And year, we about we concerns and same to were into get about year. and last all has outsized to some respect thought sure make deliveries ‘XX what prudent were CapEx, supply chain The this positioning we second be talked to to in constraints that we arguably way. been would was we the given ourselves, that with it, coming that

we the have we those positioned and ourselves so again And communicated. have are numbers

as further in. percentage have type at look more a that the we about down of normalized we revenue seen you would say, back XX.X% range more that us As a historically CapEx of road, think

Sean Eastman

course then that E&P looking to XXXX? But encouraging, And upside meaningful leading of are reason have won’t I some indicators, about just upside. very other uplifts other than probably to as ask is the to helpful. which prudent to hard the E&P over think leave wanted It’s ignore Very that the conservatism any prudent there Okay. optionality. potentially

Mary Anne Whitney

And us. we we Sure. let’s have opportunity get is that’s to when typically there better say we don’t better when suggest because there that would there. disagree, that is, would the have spring look, into that’s because is and And Sean, an visibility that what fundamentals the certainly are communicating drillers visibility the

I So, are the element realities say well. that constraints impacting labor additional is of drillers one would the as

be might otherwise And though be is quickly. moving see you movement, generated mean quickly it so being rig because – may the even as it not is as doesn’t that waste as people

typically limiting guide in through we as characterization recall, you to And be move see. would factor that as ‘XX. of we agree so near-term. what the And a we your with opportunity the But we

why that’s so is. of we should an course, is move as year. the guidance what we acknowledge But through opportunity be there the it And

Sean Eastman

Understood. very Thanks much.

Operator

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

Noah Kaye

and pike year. it’s toll infrastructure. to wastewater happens, treatment a about Thanks it for leachate like in if take It and questions. seems investments circling that we at seems are management. public taking like maybe the regulations mid-next infrastructure, My private going potentially morning. treatment around the first water and is And specifically down a on when landfill one date the huge Good PFAS come for just

the with think extent for some be landfill your the pricing? might proactively addressing industry of the So, that what disposal? implications And you ready incremental Do are expenses you handle leachate is investments? to of to what

Worthing Jackman

just our what I making focusing on now, investments emissions address into many HXS can to plus landfills. say or providers we because how to Well, on at de-risking we PFAS are R&D Yes. treatment have for years exposure been – doing, third-party

progress right leachate it’s so treatment to we percent third-parties. be we would efforts thermal that Clearly, remember handling are PFAS. to on-site landfills our are contain versus treatment are We – now. got on-site are regulated be capsule in those you And wastewater would in continue. the in Look, it whether in and position we the or monitor it we whether what like investing

it is a opportunity much are where And how us But out a of issue that treat and the bigger an you treatment so is and risk. this for is for to that’s bigger, we right point this there less wastewater focus, more plants, utilities. a complicated

Noah Kaye

a of invest And just Clearly, been second labor perspective business, your Thanks. labor to frame drive it? and as And you even Where continue the would subjects Waste automation line extent talking in your optimize operations is force. Connections one really the do around from you a natural on how is people-first attrition to see are some and potentially automation tool the you Okay. have this industry to And for players the automation. employees. front labor you it way what Obviously, is a costs? love lever optimizing approaching that, investing? further about just your as in

Worthing Jackman

the reduce recycling our Look, on labor or upon. be been those We don’t as business. to have good expectations proactive at a talk kind have running you what for about may view something is, the future may delivered happen investments and not already you to called know, just have we continue. it’s facilities, might Look, therefore, and Sure. look will robotics that of headcounts

You every and happen market-by-market. remember good there in takes, as P&L right, puts got and is to things always

I employees a and operation. you is out, so you thousands and taking reality whole layer takeable, in ourselves run a of The view. different a as this view representing better don’t chip away And

difficult that to You hope reliance out hang try not deliver may may on but labor But to be tough wouldn’t environment. more upon. – I it’s reduce something in your good, a may – for sound

Noah Kaye

very much. Thanks

Operator

you. Thank

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

Michael Hoffman

cool up I XX a in model, of any the in on a down. questions Congratulations about of and not the garbage rising a run. the not that been got or model, about up? pretty It’s expense it’s is bunch going again. are operating some think rates but as the and Hi business you your years. rates do rising going consequences company rates particular order, of about issues, interest What

Mary Anne Whitney

or what the needle. a our even think Well, think is the I And weighted our extent would majority is interest the and on consider it debt is from take look to but the spite to perspective, people up. this that for more have average respect relied made. we of opportunities to other our for our fact I more modest – moves the rates X%, acquisitions I we still since fix should to expect debt, environment be decisions Perhaps increase, are because cost don’t of who you expense with average debt say on of fixed, we around with other attractive low aggressive more have they an in can

I it think impact. bigger a have would But that’s not again, us.

Worthing Jackman

way you mean recession. of kind I this is Yes. I say, if horizon and know, from Michael, all potentially But industry. have well the a to dislocate as this it’s we in as the economy a interest interest a to view on increase very expense, very recession a resilient does industry mean rates

that easier XXXXs, you Again, the model differentiation. business over XXXXs, us It’s it continued if dislocates for in of well. etcetera. look fact – well and labor a quite allows pool recession, back that that puts an makes does we the early available And the late an us, performed to in industry well increases In it’s force, recessions, market time, our labor for operate.

Michael Hoffman

writing I down Mary was And Anne, Perfect. so numbers then fast.

it you gave give for first ‘XX? full – quarter. missed did You the and the for I the it. for But expense an give Did may you You year? for first have said interest interest expense it

Mary Anne Whitney

about million. $XXX It’s

Michael Hoffman

million. $XXX

half you And are clear, been business zero. to cadence I then and am happening you go-forward that, volumes second in on the the from going half basis. feels and if when positive of appreciate probably very like market and a seeing freak Can negative I second reflects actually in am bad think the in out away give negative Okay, have I and what’s us the don’t you a therefore, are first I that. because – half missed walk it the I or

Mary Anne Whitney

You went away. are two in that in QX. respect the contracts talking QX about went to One and one with

in four, XX three, in four one So, lower it’s basis quarters. pretty steady, the and little points, two and bit across a higher

Michael Hoffman

Okay.

and way to slightly is positive more flat think being negative to one to positive So, of in about and then negative two it. sort the in

Worthing Jackman

positive X%-plus losses. be now been could it more one look, No, Or and kind think have the of environment. positive would environment without in as an of we this right underlying

basis and we you what top points, reported. of do it Obviously, that of you on And out so that. XX if than better be X%, factor then might layers a sense that gives

Michael Hoffman

are Got in shared being predominantly on is have Where internal a wage positions? fill a in it. the then issue. to sort And to cost of capital positions your you issue of able inflation, addition and which actually you open trend

Worthing Jackman

it’s a just say issue. wouldn’t and CapEx I wage

all proactive year, back the going very last were the the those the remainder picking up wages first come just started notably, First year going last of anticipation was in year. to the of way off, I when say would of in what half we to

are first those same that the have stations pressures do move we labor work whether me, start the to to has all through same wage maintenance, it would out anniversary of we all there, half as landfills, we from Yet right. this excuse some they waste the wage because to And But the the so still and around availability, of trucking – third-party sorts availability the of pressures year. there be repair around issues and do. pressures

pressure said, X%. the line And belief as Mary at there year, pop. maybe higher of because for items X% a as is year right be approaches underlying to, that, And least is if the up, that are as so think that. we now going the full we than to move see will is I through many step that you our alluded And Anne pricing

Michael Hoffman

little that still – now that same being early was the the of had it positions? sort XQ, then Have finding bit at is are little of positions? open or a open high And bit in better, it’s worst a are you able and gotten to you you of level you easier people it find Okay.

Worthing Jackman

did is are at obviously, would open not mean X% I at positions. of And say so across with running extra some which X% some you I Omicron able is, when many locations ways. is to that month point affected locations, by spread were up, we in show still to we was the we the of to in – there impacted time, stressed, unexpected. Yes. that that or or were so those why pressure over X,XXX work in employees we January. were operating done, the X% running to many get do that in And

think is going telling the through start is I to the spring, because where you get is pressures. the do how sign really obviously, the spring be you getting

the would it’s where love seats But that so – in And in put and we like now, make some some stand. we inroads to right more trucks. we obviously,

Michael Hoffman

that your a on to Seneca trying the Do party then of in this fee, and what in now is where your And are But in you November? change bit. community is area change landfill is weeds get Okay. agreement. there political you given a host host happened handicapping a down the a in

Worthing Jackman

Look, it’s – we don’t control the outcome.

play heads. will And we that time where let out just determine and so

Michael Hoffman

And $XXX did buyback I in share correctly, Okay. a spent you January. then hear so million on last, you

And so shares? X.XX that’s million like

Worthing Jackman

of you count And a the gave right. for full million, X.XX share that’s That’s what, why year. we

Mary Anne Whitney

That’s right, yes.

over back about X.XX, a So point.

Michael Hoffman

very Alright. That’s Okay. much. hear. terrific you Thank to

Operator

you. Thank

line Our Markets. the proceed from your Capital question. Murray last ATB Chris with question of comes Please with

Chris Murray

Yes. folks. Thanks

to Just inflation the question. quick questions going back

some fair that’s the moderation going is is will all it the the we into your have all a and as annualized were the the got the to putting increases have inflation, think Those you understanding go in back just year. an of stuff to that of half chance some second there sticky. on in see fact to on if Can that about we you that markets, pressures be to you captive mechanics the inflation we of be think like maybe that the been get basis. So, could pricing

half that your margin really if leads inflation back improvement So, moderates? some to on about, perhaps, comment the

Worthing Jackman

what it wish moderation second mean are to half I the produce is saying not upside, for Right. what takes recovery. we

Mary Anne Whitney

of there your CPI year, lag. our That’s the in early the And that’s extent just, is price point, Chris, majority the right. to increases where the to put in length, we their

known gets in we have pressures of could because those those where because it only extent for numbers sit the ‘XX. the ‘XX are better So, in To happen, were ‘XX that we seen now, to terms on impact of for inflationary it pricing.

Chris Murray

Hamzah I term? longer about of now a dividend. where – outstripping dividend of just above the the terms I base grow also that’s we asked we was I it’s of flow some question last you. Alright. the pace to in that generation. on growth? reverses to like see pretty at sure question cash think think in in out back the the that seen have and that fair. flow how last flow do But do the are years your want base is make as be the outgrow were couple guide. start future? Worthing, And cash a share your dividend you probably cash and that base Certainly, it with you that as times special. But buybacks. we But the base growing then wasn’t dividend about now, that a dividend. would No, look are ‘XX of the looks this at to supplementing year, going the to you And few very to you you that kind idea made my going trying strong back that just just there well appreciate quickly something growth in comment around you

Mary Anne Whitney

Chris. observations, of couple a So,

since ago. it XX dividend all, of initiated years First about been XX% has a the we CAGR

that And So, anticipate like a cash of that we double-digits. of from our we slows XX% have free flow. when the XX% XX% down is that free raised it that as to see it now, more flow, to acquisition could do will grow outsized we consistently where percentage cash growing total

in for ‘XX, continued be in share repurchases year repurchases shareholders to well capital the something coming growth return having year the And The in year, a the already comparable. expect into continued actually positioned our prior the and other from we growth between like of the share and being observation this, should would doubled this dividend. done dividend, you

Chris Murray

you. Thanks Thank time. great. That’s for your

Operator

Jackman, I call at back there closing questions now Mr. are remarks. no this Please continue you. time. further Thank turn or will you. the to presentation with your

Worthing Jackman

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

Operator

Thank you. That for the your you conclude today. please We call lines. conference does thank that and you for disconnect ask participation your

Waste Connections (WCN) 17 Feb 222021 Q4 Earnings call transcript