Waste Connections (WCN) 4 May 222022 Q1 Earnings call transcript

Company Profile

Participants

Worthing Jackman	President, CEO & Director
Mary Whitney	EVP & CFO
Toni Kaplan	Morgan Stanley
Walter Spracklin	RBC Capital Markets
Stephanie Yee	JPMorgan Chase & Co.
Noah Kaye	Oppenheimer
Michael Hoffman	Stifel, Nicolaus & Company
Kyle White	Deutsche Bank
Mario Cortellacci	Jefferies
Jerry Revich	Goldman Sachs Group
Sean Eastman	KeyBanc Capital Markets
Kevin Chiang	CIBC Capital Markets
Christopher Murray	ATB Capital Markets

Call transcript

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Operator

Greetings, and welcome to the Waste Connections First Quarter 2022 Earnings Conference Call. [Operator Instructions].

As a reminder, this conference is being recorded today on Wednesday, May 4, 2022.

Now I would like to turn the conference over to Worthing Jackman, President and CEO. Please go ahead.

Worthing Jackman

good and operator, you, morning. Thank welcome I'd to outlook this quarter. call to first like for quarter second detailed to discuss a results conference provide everyone and the to

Mary our is morning this me CFO. Joining Whitney,

strong driving our earnings inflationary record are by year As noted expansion start pricing in release, the growth, in to waste pressures. margin extremely we pleased our underlying solid of with spite

expected, year-over-year the combined since points basis and decline $XX as quarter margin XX XX EBITDA January in in COVID-related Our margin the of points included basis impact, in period. frontline from million adjusted prior support year completed acquisitions

sequential further execution ahead, E&P continue waste waste and improvement Looking pricing should growth, performance. increasing in solid our to operational strong differentiate activity

year and flow of revenue expectations has in activity. We outsized are on year-to-date, elevated track the continued million year our of to waste full free $X.XX with outlook adjusted meet acquisition billion annualized of confirming our or solid cadence $XXX activity another approximately cash for such exceed

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

Mary Whitney

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

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

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

Worthing Jackman

highest growth XXX price reported price volume Thank material totaling competitive mostly sequentially Anne. about exclusive basis Western X% our our to points from in marks region, X.X% solid markets, quarter, in from The first X.X%, In between market price and X.X% points you, Mary about waste up and including we QX. plus range of our delivered fuel XX surcharges, and basis X.X%. all-in the in

points headwinds inflationary above the address during ramp the pricing continue we was our basis as Our to and QX quarter the accelerating XX period. during outlook

increase ahead X%. in with price exceeding to we another expect QX, sequential all-in surcharges growth Looking price both and core

basis growth to exceeded is positive pricing. and Reported of execution leadership accountability in our XX to points and structure operating addressing of a and both the of Moreover, the our continues headwinds testament cost, our of which of the informs price differentiated local strength model, decentralized which of our the our our on resilience market volume inflation purposeful to also strategy. are the level of hallmarks visibility pricing Our reflect outlook. to approach approach

XX about a points up reflect X in As basis basis, all up normalized noted X.X%. was quality volumes in from volumes contracts, reported the region, and Western which in impact period. about X.X% underlying the poor up regions On applying of expiration to strongest quarter, be our were municipal volumes last continue

commercial first X%, Looking Roll-off the were at waste XX% quarter day year-over-year on up on in in a landfill a results was same-store by XX% and tons revenue collection up special pull per X% were revenue basis, per pulls increase up year-over-year. up X% in broad-based in Illinois and up U.S. and jobs of tons otherwise markets, timing for MSW several including weather up including waste X%. may activity and have Minnesota, some QX. X% C&D Special with both the where accelerated tons some planned favorable was Colorado, Canada markets led

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

up quarter they seeing in the slightly million a up QX as higher stayed Prices below we in on as RINs remediation resulting in were for year-over-year up $X XX% and QX and XX% of first increased waste OCC, values $XX.X sequentially the well collectively, the or we expected, in the recycled per quarter, RINs, commodities for $X.XX, margin to as levels activity, pickup points. tailwind the waste E&P due from mostly about both Basin. were in acquisitions, in corrugated jobs of E&P to Excluding primarily XX% about finally, $XXX And during the year. from a in on reported activity year-over-year XX Permian range earlier revenue period drilling about the in ton containers, of averaged and basis old

run bringing we higher and trends Given about counts the to which rig are and saw the we by backdrop levels, elevated incurred quarterly million. into during QX improving the pricing rate crude of $XX continued April,

million the for completed remains U.S. annualized we've solid and in $XXX encouraged activity. Year-to-date, and waste approximately of acquisition We above and both consider are the revenues, by an in average robust. X closed Through would the in what year months, all us, we've we pipeline cadence Canada. similarly already

take our to share focus as on the in shares an maintain outstanding we to As long-term remain repurchased we multiples always, end, that we approach We markets To selective the million we value of opportunistic and creation. QX. repurchases. about we continue $XXX early enter pay

attractive in long-term capacity debt this more at accessed bank capital free facility. to our also year We an rate on the markets and lock up early

of strength of net X.Xx acquisition capitalize shareholders. to sheet, basis, remain with period our debt-to-EBITDA positioned the on on we this of our leverage with to optionality a capital Given activity well outsized return balance about continued around

in In dividend our per addition typical to maintain would undertake our increasing October. our share when expect to practice annual repurchases, we established review share of we

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

Mary Whitney

the the billion, $X.XXX up million growth $XX our and In completed Worthing. since first quarter, XX.X% XX% you, in $XXX above or was revenue Organic acquisitions was quarter, Thank million year-over-year. about and outlook release, ago reconciled about for contributed earnings in EBITDA year our and Adjusted revenue. QX, of $XXX.X the XX.X% million revenue $XXX or period divestitures. of as of million $XXX about net was million

up of XX% points would about margin higher March, margin Reported and in hedges sequentially support in from about QX. year-over-year. this of from quick up $XX points we from Margin year the and basis We run-up the about year-over-year, adjusted half As gallon X.X% acquisitions, drove impact in the also into be this which benefit incremental the costs revenue, XX that averaged points diesel the quarter, the about QX expectations about expense our reflect margins impacts about January, EBITDA XX prices Fuel from the XX and for plus in $X XX supplemental fuel of acquisitions. Normalizing including of impact drag fuel impact was quarter. approximately up million COVID-related from the XX% diesel basis impact in costs per of during basis reflects period a XX.X%, February. ago for provided reminder, our February expense in basis higher beyond mitigating the dilutive about basis of on reflect a unique late purchases, million $X.XX XX points prices. points for during of up drag

XX at about more by XX for than expansion. fuel basis drag drivers. reported Higher higher noted, earlier, XX a XX year-over-year accounted E&P offset points commodity-driven on described the was waste basis headwinds points. basis Looking point net margin a in benefit QX margin of from revenues basis revenues resulting This also basis point about

in power proactive quarter, To the face importance of approach. only inflation, underlying levels of January the expanded accounted from noted, and in basis XX reiterate, of drag. solid during resulted basis waste and the for waste million persisted but support hauling, by record expected which As demonstrating drag points and margins in And margin expansion transfer a accelerated we about a point basis solid and acquisitions points, not of COVID of achieved price disposal. XX the the in a $XX underlying XX

in we cash year-over-year of or of Finally, XX.X% QX, delivered XX.X% up free $XXX expenditures in of adjusted capital spite approximately up over flow million XX%. revenue

positioned meet I XXXX. now are to or in we year quarter $X.XX of our review As for second February. such, exceed outlook adjusted flow provided our free cash will outlook billion the of well full

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

of year also includes estimated excludes may additional in the close trends. is QX from volume no billion. Our of to X.X%. $X.XXX It the approximately transaction-related in plus change during that price the during growth and be solid expensing waste items of period. assumes outlook remainder significant underlying to economic any acquisitions impact Revenue X.X% This

quarter about net diluted is expense, or acquisitions income, XX.X% amortization finally, excluding approximately some year margins remarks to Worthing since of the estimated expense to revenue, EBITDA of XX.X%, year-over-year, basis about values for sequentially tax revenue QX Similar back before implying our of trends. X% share rate $XX such current the at at from now about And X.X% some Interest including subject in to point with turn in volume second per And variability. positive amortization and pricing we taxes. volumes XX increase growth point. remain is to are and reflects reported QX, our to dilutive E&P basis expected line XX As reflect reported down revenue million estimated impact to recovered at contracts, levels. or will of This expected approximately drag Worthing margin of be of thus of implying at the $X.XX XX.X% an from over final underlying effective $XX Adjusted estimated about to intangibles estimated is commodity waste me expect volumes estimated is noted, a million. flat is Q&A. in and interest let million. at completed call QX million for to largely $XXX continued $XX.X net of expired approximately Depreciation flat prior impact. range to points period, X.X

Worthing Jackman

Thank cost year, It Anne. throughout you, pleased our variant geopolitical by end, welfare labor magnified record shared we as continued employees waste extremely XXXX levels has the their pricing, chain and families. Mary We solid be growth in-person support the of health a for constraints record from pandemic, with for have regular impacts. positioned and overhang easing are focus and for supply particularly provide of to celebrations, the volume outsized and E&P We're given remainder inflation events, well to that getting challenges together disruptions underlying ongoing our growth, in we we're also levels to back start been training believe the of and further as with COVID-related our of of the waste to cadence other and well opportunities to comparisons. recognition And collaboration. to

outlook full track back our coupled pipeline our to a approach completed In lines years. our QX to appreciate robust outlook. your Operator? release a ourselves solidly operator year. is our the I'll typical until the QX year-to-date, our XXXX which wait meet we'll earnings the exceed That We call update full now anniversary with to our intentional intentional driven success in the to our on we said, suggests today. or to value for start intentional remind addition, acquisitions have and open fitting up year XXth are time stick turn your a to culture, and over we year year the through creation that strategy for questions.

Operator

from Stanley. we'll with our the Kaplan [Operator line Instructions]. on first And get Morgan to question Toni

Toni Kaplan

history. I strategy versus about could in exclusive about attrition. if markets you're Obviously, wanted and really ask secondary trends to you attractive attrition talk for

understand really to if any impact wanted because not had on you have? So basically just pricing or of strategy the has that it

Mary Whitney

incremental way this asked, some several to I observed the We've Toni, at the difference the environment the quarters we year, increases. see as the geographies excess We guide of no. deliver the price fact price that highly if throughout past and in receptivity very really way, with we as said been price increases and historic is well that respect or think fact for last to year increases. keep a -- we pricing continuing of highs. And attrition in into retention, did as short have retention price another reflects we've the really for we a that across broad-based, seen terms have receptive people to answer rates

Toni Kaplan

That's I super. see What to And recycling objective main want growing separately, of would you as what be just you percent the have? a long on of there recycling, hear to sort do term, revenue? that

Worthing Jackman

before should the revenue. to but online commodity -- of in the a activity, values as more facilities will to year. construction of acquisition may too check a total much next a continue now what again, as that know, X the Obviously, we'll of have are end move we percentage But you portion see revenue to add total. percent that That It of drive the that of nominally you keep as won't under come pace recycling currently. that

Toni Kaplan

X That's me. great. for last One

volume is the markets about selectivity volume Just a of market? think the by we the a in your year. something level market? had your question than broad just should line know contracts about volume. impacted more lead expiring But sort growth to around with should this volumes price-focused know I I strategy. the of Or term, lower you've long that of being there a

Worthing Jackman

and cover think Well, years, that X% we periods to it might the where system. model, the be industry X% business said some pay a Obviously, through our X% industry. growth this thing given do always to of our But is so fixed there geographies below periods you we as the of much especially remember got we've it being volume is, in a X%. where exceeds here

contracts, volume of on likely calculation to revenue. closer new of actual the might X XX% being be it XX% our so And by impacted growth for is to episodically. But

And between that's on and really you're XX% so activity that's of be meaning third-party reported and XX% tons across a roll-off X% reporting reporting XX% to our And that volume and to XX% between X% revenue really growth growth, scales. impacting volumes.

Operator

Capital is Markets. from go Walter the with We on to our Spracklin next question line RBC

Walter Spracklin

before, kind I I adjacent here case. here are to check acquisitions touched your wanted but to wanted purview returns less into of but the just getting a are availability. or to the opens up I capital and competitors that a double attractive turn starting widens for perhaps we deals of when know look lower on this to compelling markets, of acquisitions in highlighting either terms and intensity, terms strong potential it's of valuation time in It the little in

with merits high still what now? the the consistent in somewhat -- on So is markets just and there the on propensity markets that with into you're Worthing, curious, still right your basis it that adjacent view return go of to consistent

Worthing Jackman

long negotiated as have -- in creates a on our are we've third within for right can't And be pick row, model, pick when relationship done, the sell, a with call will will done for of again, sellers And timing. row the the to the space. you be so that the see that million we solid in actionable decades. be get that's multiple a We were we're $XXX a It's the question, most call a again, of Many it's it's the seller to waste couple year-to-date. deals of so deals the are that the getting the is And closed right? a transactions that this pipeline timing, we the in of execute you ready third transaction. sold consistent is, we know, and that. Again, being is that we're And been the determining in that runway the chasing getting Sure. look, to answer. need

for you transactions see these many the anything And And so size. new us. of of is our market obviously, long that runway entries, here,

DOJ with that to issue there's maybe nationals have. of concerns some the less regards larger so of might And an

is margin, As got a industry you return adjacencies we're cash flow. lower the barrier-to-entry businesses. lot resilient and seen I returns, flow analysis profile it cycles. here, mean of economic with are businesses lower this cash-on-cash of and through And to attractive. we you've the of those ups volatility downs great buying to very do still cash relates the and remember, Again, businesses to

And to march so reason billion. and we on are our to no who stripes see $XX we our

Walter Spracklin

repeated I nothing's great question, great that That's to changed, the to it's hear. sure guess, and make always wanting to And hear.

on gone, of gone environment gone, there unless there an look or more out one look this And up. a when acquisition obviously, it's as in you come bit I and on transact you go acquisitions tempted willing terms a to peers those then here, where they're of that there aggressive. -- ever opportunity little at line deals to -- staying In done. being therefore, it bit to are comes it. consider little you once is does that more are know ever about, red that's you theme And there and perhaps get deals they're it's would in

opportunities to kind you've take advantage through perhaps, come resiliency, you've you pandemic, little for pretty M&A the your to recessions, able be through proven Xx through consider grow front? a order away quickly leverage would of that in temporary opportunities gone short-term example, unique and go going You've on of faster above a these to or

Worthing Jackman

that's delevering on Well, of first flow $XXX the dividend, equation. free the Because $XXX million million with EBITDA to after you first off, have, cash spend over adding again, right? we the

higher, so acquisition lot still when of transactions, $XX model. a lot right? or a And is of we acquisition And considered so in remember we're needle to to of the activity a to $XX million doing move Xx million revenue it takes our big

are than within got cross that, $XXX million model. that it's revenue for in we've handful larger a but our transaction Now a that you rare

that is to spend a see seen, even we've now cost the and buying, executed we're logistics we I'd plan say make to is labor or very it's are But sure to is, the when inflation we about as Xx. the to anyone when else's -- current standpoint it transaction near what's last is I approach, fuel X already spike, you be XX% spike look, to and And sure overcome of term We've need to implemented see move that of cost valuing well. or speak third-party thing everyone from needle realities years, move close to we the a need $X actionable so they last try we I'm underlying the got approach but that the XXXX want important that lot someone to to The leverage the in we're on in very can't pressure. on takes to In be needle. -- appreciably billion mindful. it. do the doing results plan face spiking in X% an as to

multiples transacting because your And sure so can we folks on want we're -- move see to that don't to point, we it's box the we need the make up. to on, check

Walter Spracklin

the to final in we or bit least get to may employee know acquisitions XX. comp would basis that me through in the at than passing that aspect seen of here would XX, margins Great. flagged back that it, pressure normally had get points normal carry than pretty on on the much you XX you report XX put And otherwise what the to employee little points just little we call you for could we that a on that you're past. more the muted comp what year Anne. a see would I would see -- Is for XX and now Mary Margin of more some basis expansion, you the period? -- X it a more a improvement

Mary Whitney

fact Think XX.X%, I those you costs -- make but to we'll points, basis reported course, the we fuel margin certainly as headwind decisions those point tried out appreciate Certainly, to deals. other the that Well, and the the is discretionary, add margins to in fact acknowledging that like and stands drove of the of would underlying for about point. waste thing spite and expansion a been be the we've headwind the of then our would those that impact XX we that. have in had basis which then, do still Sure. solid the XX opportunity

these on in that much have That there to price. if as have observation sure, And would we based the wouldn't underlying Absolutely. said, in ahead as expansion we're QX weren't should of needed I you seeing could expansion being think margin been pressures, margin than So greater? kind be be was look now, QX. it greater QX, what

Worthing Jackman

that back, you got impact looking flat inflationary point X% to fact down a so The activity To you pressures year-over-year. that, of up do basis points reported XX the will is that periods. that's of say XXX to right the to expansion dollar much ease, in net all QX, And future just the acquisition were recover that remember, dilutive as now the But And also, get to year-over-year. environment, about in expansion does inflationary the XXX on this be company seeing to running margins. of as and XXX we're -- me, margin if that margin environment flat start guiding narrows XX than in point basis I'd is starting about in better fact that's right?

Operator

question We'll Jerry Goldman on get next line the Revich from to Sachs. from our

Jerry Revich

since to going I'm coming back year. last talk inflation talk about to half started indicators half inflation Can a just accelerating about slowing edge where wondering, the you among we the in you you high pretty on folks the inflation seeing first back I'm your be inflation see we business? point wondering in might at to see for you're upside? the those comps percent of to that comps see they in just trending? the the you look leading how where were what if in And And are of potentially up could are year? We're business the

Worthing Jackman

look, just the last inflation. a That's use like is transitory good question year, that wasn't our the of Sure. word view because,

for business, if inflation assuming and sticking the at now these You wrong started got the does for be and a levels to bit. more to prior we're that couple around prepared ease quarters little -- it because the be anniversarying run higher in year, levels a we

we've said, for us. always As that's upside

do to still that at that wages longer, catch-up what transitory, they and up of are wasn't of at that realities year, Our to seeing price more could year last increases, certain even expectation that to year through be waking this not. they're just year. teens. meaning ranging it of especially And right? are trying elevated paying didn't I levels higher the play or today realizing running or for even the at is inflationary low upwards this we're people look believe last most so year They're labor mean relate or some that this vendors it vendors pressures

it's because QX up we our in And year. of With to pushing QX. to business X% toughest until really going so run in wages not. comp environment assuming regards our our is started the QX that was wages, that, year-over-year about wages we're last were

macro. with Look, fuel regards pressures and right And vendors still will -- inflationary so be wage start on our third-party -- unknown in seeing should wage from easing of the stuff, now. that pressures to kind we're

then should labor and again known start to it's known, is ease, going it when to you but it our and mostly fuel run is does. So business assuming until we're not say

Jerry Revich

comment then plastics. interest wondering recycled premium you is if companies virgin talk chemicals procuring can what strong we what's in that plastic And see seeing And recycled a pricing the point development versus we meaningful Super. from might for that in for potential just time? your I'm market about business, can on over you the recycling we're plastic? on

Mary Whitney

Sure.

say, I primarily where would sort fiber. in been of start is, really the let's of value and So recycled commodities it's framing the with

that the it's XXX, about been the It's the of that value reality basket, but this which really basket for our back. So of of value XX% is when the a type sits has end talk higher piece XX% level point they're I toward of range OCC to it there's though commodities in yes, we extent at plastics changes OCC. the greater moving you're come a there's the the price because, And as in of of are expect And equation, to up fiber. better. a that as mentioned small that interest equation. piece is will and it's part of not this at do XXX

there different Now demand seen some of among is differentiation grades have some we greater plastic? Yes, for others. than

recycling whether so timing capacity. since and It standpoint And of basket. from recycling, doing frankly, And increases all in the it's manufacturing good that's increases a interest we're adding just a additive good more the thing. it value if a the consumer that's or standpoint,

Worthing Jackman

you the the plastic one, we them. mean, look applaud at business, refiners, also, I know, And as again,

clear, not get be to business. to going we're Just refinery the in

Jerry Revich

used like? at the just obviously, virgin that versus are be that... Has Because an a that plastic happen wondering the what all? you what you're seeing improvement narrow to to it I'm discount selling discount. yet? past, plastic at look if starting And Is you're in in that that would something started see

Mary Whitney

Certainly. Yes, general certainly narrowing. in And as lift . there's a certain said, overall. grades plastic values outperformed and I have

Operator

Michael We'll with question the get on Hoffman from Stifel. line our next

Michael Hoffman

that those telling of like but that container X, growth to be one at business back data so X to peaked. data interval a it factors the market that things perspective contribute thesis different about ask the that What's new formation, trends higher. of your to from small have to you're looking support Neither to to activity? business are That's what underlying service a come I'd that you alluded positive, that the because being the can you volume

Worthing Jackman

for doubled our through force, sales business QX competitive And in obviously which see. year-over-year. us happening sits what's measuring net Let's new that's markets.

Michael Hoffman

Okay.

So positive is we tight. good know allocation. that's equipment we a hear is All statement. labor And on right, then

business sitting new equipment? puts get for potentially seeing do do service you because are I competitors needs labor? growth, a the somebody competition get where of in and that going, are So Where piece I a the there less a garbage store the

Worthing Jackman

much I as think that don't business. it's type on of

people I X-month trying times may enough their days, municipalities seen if right? -- maybe get to contracts end it's up RFP it's seeing the extend on large some just hard it's compete it's municipalities time months, of have show a rebid you're existing to X-month process. oftentimes the trying go in some lead the And bid. to on to for -- or trucks year that more And tough lead think X it's the they're term. come old finding contract the because had so cases, in And put and you've bid, those they're because times XX to they in

Michael Hoffman

if have little are business, a that's for rates you good and up bit, the you. So renewal

Worthing Jackman

up pricing as Renewal is dramatically well.

Michael Hoffman

asked going underlying know I components I an was and they perspective, you Cool. have I And the were where off, would to slightly answer anniversarying one settled inflation we to inflation this think you sort continuing into cycle. rise? it peaked not get But they're differently. question Do from leveled of have are.

Worthing Jackman

Yes.

double-digit fewer say they're -- peaking. and increases from feels We're they've I that. getting it like fewer vendors, I'd think

they obviously, seems But peaking. don't. we're be it So they to to end, for until that persist prepared them like to going are

Michael Hoffman

it's Okay. Mexico? Or starting And see basins narrow, to is of is other last Are reactivate? for we me X that improvement $XXX? E&P Gulf the and Texas

Worthing Jackman

seeing pick things Haynesville of I up up. The where a the mean, Permian bit. is little it's we're most

Mary Whitney

Ford... Eagle

Worthing Jackman

last Gulf news some probably return we finally abate. impacts the those I we're seeing Gulf. has year. of impacted from are hurricane seeing negative the rigs been to is good was the heavily impacted or mean, some the And season And

Operator

the line is next question with from to Hamza Jefferies. We'll our on Mazari get

Mario Cortellacci

Cortellacci your U.S. you comment of how on you're This long-term for in your exposure, remind just about in the is Massachusetts, on Hamza. just us light thinking deals Mario Could what strategy you larger Northeast done can there? is particularly you've just there

Worthing Jackman

us is in just such the which it and always what it's seen when Northeast. going Well, again, into markets -- we've in markets, done replicating do other you've

our nice to the have $XXX whether and in go million, geographies seen as on you've some try I and the Pennsylvania. $XXX had seen us England. internalization Northeast, York New mean, business some build benefits million us in we and Midwest in that a be in with and the do obviously, You've And integration in other work New to well. also we they'd sites of strategy

just it's had last Massachusetts handful beachhead playbook. last of the -- executing fact entered We given just we've late we year, Harvey. us year that so the and And our done of another acquisitions

of New And same no that it's the no for New fit we other us again, our just just model. playbook sense make not and are -- look, seen, certain England that do so Well, England in different. there know you've areas markets it's is

So it's where -- we're not going to doesn't go everywhere. we there discuss mean

Mario Cortellacci

energy you to just is And And to happen? what the get I back just its to exposure looks guess, are kind also, counts you for of the need various your could finally you that business? revenue what base coming see a my of energy it business Understood. more rig what for the like us remind for is within follow-up, just up. margins and sense us to can could And business then that and a little back basins prior whether peak would for give the

Mary Whitney

So piece. starting the with second

terms is say each about Permian the exposure of that comes XX% of in If when that to these -- XX% revenue think revenue. basins, the percentage of our you you the from of largest call

X% get of in between which and Louisiana jumps After XX% of Ford, of onshore/offshore, down to revenue, the is for instance. XX% pretty including quickly onshore/offshore. much revenue basins, XX% it other split Eagle Next a -- of to that, you smattering evenly is then kind

In back peaks, rate that quarter more the prior would not the million because be peaks about of $XX of I'd a run of a the beyond which peak included prior right kind getting is comparison Bakken, to per terms say recent of factor. really the

Permian, So there's here, competition get the more as can more you million, well. would I'd prior there's math take at the the since see it although $XX up activity what there. say we is, change to in biggest stood to do peaks

about So grow what quickly factor I'd we into level. that and expectations any how to

Worthing Jackman

environment standpoint ago. versus don't years is have about from macro standpoint rigs from you know, what different X, a right? the XX rig as got the peak half count of And now, -- the drilling the so You you

of a There's changed, activity amount lot drillers. prior trunk of drilling right? dramatically. the like for I changed And propensity spend so years, in different drillers the pressures, pressures that's the sailors mean, has on to external and the

us never to never it's it's see but right so say And amount peak, hard prior twice the on doing we're the to almost getting back revenue of that now.

Mario Cortellacci

And margins? on the then it. just Got

Worthing Jackman

XX% a range. it's that XX% landfill-type again, which landfill-based in this margins, a Overall, to is is Again, business.

Mary Whitney

With than the higher that. incremental

Operator

on line line connection. question White have our Bank. may The We on next with Kyle get with Capital Eastman to We'll question next Sean the Markets. the from lost Deutsche KeyBanc from

Sean Eastman

wondering -- topic you just just I'm versus Could walk you where CapEx, maybe budget potentially how a would on capital characterize that? address running delayed by inflation et the through deliveries, could cetera. from us Could offset with spending we perspective? we're inflation you

Worthing Jackman

what standpoint year think got you've in original you as units it a you've out. back in mean, later are points your also, some locked happen. units or certain likely this mean, from But got pricing pricing that up in already point, I likely delays will that you some this Sure. above to cases, I look year of to I for number -- some on expectations. weren't spelled be construction

an in pocket cases, the inflation. So that you've some delays basically to create got backfill air

also wheel as environment come contracts get we're as Now and again, as in I that they this we have possible fleet surplus it's on think can more fleet putting to for around in capital hands our try because, important much up. to certain to

year. I fleet And so of has point, But earlier inflation mean, trying your look, the in the with we're to CapEx too. backfilling to delays access some

the You inflation just recover don't within P&L.

meeting focus on on got us capital sure we've for well. that to always to as margins to you're end you going to still indicating side make And covenant we're our will that. accomplish flow and come the cash It more for to year. and exceeding means revenue more July guidance as EBITDA around our guidance, there plan be we update As the said to or that be in on

Sean Eastman

And trying was fuel basis maybe fuel it of that XX first point the catch-up over just Okay. I'm higher I guidance margins versus the like balance Very the impact sort of about a part fuel shortfall mean, to the quarter revenue is of the dynamic, whole a think sounds the of of that pass-through part year? -- was dynamics. helpful. and on

stayed the on just be here there fuel much if year dilution expectations? balance over margin would full the So of the year, how

Mary Whitney

your So a points. that to the QX of be, indicator basis incremental pretty is would full what year XX point, good

of right a appears I high basis the a see QX, be. we're going at assume XX what we stay what we're headwind similar, a to think in said, point ahead of indication the fair little as again, And Comps level, Worthing worse things at drag same. it's terms to it otherwise, that little Looking until get easier. is now. But a looking to

Worthing Jackman

in spike and timing Yes. And and street. the was February was about late throughout March, the the QX more already that given the the drag happened pricing so the fact in on

that. quarter adjusting some that's a full So QX for as step in that why of you recapturing of as impact up see is well as the

Sean Eastman

And then one. X Helpful. Okay. last quick

guidance? waste margin margins XQ. is were that So essentially basis XQ the in underlying solid points up number XX in What the core

Mary Whitney

is or it's but about directionally number way that, the higher. XX north XX points, that think of it, maybe we basis is like something That

Operator

go is White Bank. from from question line We'll the Kyle to Deutsche our next on

Kyle White

happened there actually little a question. wanted still confused. before. I'm up to fuel Appreciate I follow nothing on the

your is was surcharge? maybe And acceleration be the headwind and relative can are of recovering you basis strategy then given quarter? of of kind XX the in to how going So for point How those year? the on to guess relative basis is XX late much my prices costs it Or year? others to confusion balance full into this the this expectation, basis this you a saw quarter? hedged using headwind remind diesel the XX we headwind your I the is, year in fuel for just a us remainder it going

Mary Whitney

Sure.

what guess to gave One I X So things. talking guidance of expectations, because, we different relative is we're about right, in original February. course, are

and headwind so see a in referring assuming QX we've process we're I thus our with far way And to associated have of was that about the hedged. to incremental respect fuel fuel probably the costs to to what XX% what strategy, terms seeing. fair in think of is With what levels and of we that our expecting about we're seen

And we're rates. impact mitigating the reflect hedging impact, numbers the giving so the of you below market

in QX, you're instance, about that XXX $X saying for have the higher. would So been

in place. had instance, For these hedges we not put

saw in our including as markets, respect all steps to some of not And it. goes got get we to used fixed since our adjustments. fuel it In step-up in QX, we've additional fuel then, strategy, which able basis other core we ahead model. with part in we which we in that from to number up in is fuel you points going to do where CPI-linked surcharges. recover look the the And markets addition the we're have higher pressures, purchase we higher higher, the how make why XX of surcharges, markets. contracts course, different is cost varies core some So these recover It QX,

in recovery increases. And some form next price see the so CPI-linked to we of year would higher look

Kyle White

you're inflation. guys what and you but helpful. wanted very in side, in to decentralized I the this how the more That's capital, the your it. seeing maintain curious increase your are on of OpEx And returns invested it's to Got to kind inflation then model? Clearly, or side, go CapEx back in order on context managing especially of on

Worthing Jackman

higher having right? impact Sure. down a from I on mean year-over-year -- a margins keeping the on of up of CapEx returns. year-over-year the that's margins the mean I margins, basis, you when are some folks it starts ROI. same-store that's see with where you It's are diluting start the that

And here. that so we're seeing not

Operator

question Kaye from line Oppenheimer. next on the Noah Our from

Noah Kaye

you XXXX. fully So during say year? stripped last Are any medical adding this in that discretionary incremental costs year Are were out XQ, you would they discretionary started back? and back headwind costs, those

Mary Whitney

costs. certainly up. prepared QX, stepped QX. to his we costs, And step has different things we've say were meetings, the we're both in back, like I'd normalized of money together speaking, there be like part remarks, which that happy travel, in them are things guiding and didn't discretionary we those medical you Worthing report they're way a will a generally to but what and spending said, run as are taking of buckets And as we're said things. rate, we're said, at more as already with there what respect We call back we're we on Well, reported out

Worthing Jackman

a Yes. on in we're where all This is year discretionary costs.

we're XXth. there our So back. celebrations lot Obviously, our to of for happy are throughout going a company be on

Anne there's week. the of handful throughout Mary As said, company every a sessions training

together be to a again. of who great And next this -- year be And year, for may so it's no, tailwind knows. it is a

Noah Kaye

of would situation, hear. your on at the the us that's is see. if still, where Are it can, of labor retention Give We'll to an currently? turnover short you rates. describe kind good And regions any you you just staff update, retention then key or routes? on But on

Worthing Jackman

X% in XX, But newer we to for right been And not employees this but kind great points that to think the basis company how any that. of environment impactful, X could X% leaning you X, it from more had I obviously, right? it pleased full of look, so can of pre-pandemic we And you're distribute there these that, or standpoint, be only getting across, have it Look, those past newest to are labor, we probably we so XXX extra we're an in turnover I an -- typically retention, our to every would hump, on so I'm X% environment, that many XX, we're and onboard say higher common. doing so on X%. seeing that state X% focus that That's employment. is how mean, employees because get that interviews, this so than -- turnover inroads how run of again, employees huge I on improving. X% right? over days had very overall concentrated you hire locations. call how we're back to industry X% it's society in, by X I fairly location, you about In Sure. environment, down to just be been was in we're what we're I If or into what slightly what that we've was the above in throughout now, think probably you I kind resignation on years. And I running living imagine a And it's XXX think we've attributed wish levels. in XX,

Operator

We'll get on from Markets. our question Capital ATB line the Chris Murray next from

Christopher Murray

going quarter maybe flow Just pretty your the to strong. back cash looked free and conversion in

QX? parts moving And a think a of at to looks of few about was then hitting equipment. we trying to can about you're free maybe in an think if it trouble like we're us working Should just kind cash the the running all piece fact we that other Just into now, guess of moving as your alluded would kind CapEx to that up? the at parts the terms I great. thoughts think guidance. through of bit give flow of I talking than year you're when be have you what lower capital? of that this, you the right some idea go I expecting about you'll little But getting least pieces anything some is probably be having mean, some catch

Worthing Jackman

start off, XX% up year-over-year. over CapEx, Well, if first obviously, me, Yes. I'll we're

But capital. the on biggest you at acquisition-related and that to knows I'd fleet -- We right? rate problem QX CapEx. front-loaded deliveries, expectation both so had obviously, purposely component Lord item QX for we we're had side, shifts, capital chassis spend within that spending got And we So the the of on of on an year-over-year having to deliveries. to money. you in stay working a our settle. lot bear the working Look, increase chassis is timing say And ahead on the

that the there. So right acquisition you a gives it's capital, an use related but to just of of optics working

quarter-to-quarter payment a the from influence QX and And timing so tax know, have flow as that's in can just so in and the that you we again, well. the that is out typically standpoint. year. quarter as lowest And

Mary Whitney

a and always typical. echo just referred QX. That's rate you to that it's would that in the And pretty the other QX, And Yes. I conversion I'd observation add that in little outsized to respect reminder year in outside we'd with We capital, a prior that did with we a the had come working the make like in cushion. cushion. to this year, as just it's

the year the we So intend well. gives end us, to as certainly some like but cushion optionality we with that

comments EBITDA that. revenue made then update in So about drive consider address I'd say we'll having when we the drive updating more to dollars to July, flow, certainly, cash more Worthing free the or

Christopher Murray

Yes.

the flatlining just my we But XX% rest question. across of Okay. the for shouldn't the quarters? guess, board I be

Mary Whitney

revenue. to percentage respect of No. a With -- as

Christopher Murray

revenue? Of Yes.

Mary Whitney

of for that and outlets. changes it interest those Worthing describe taxes Now the other timing and reasons

Worthing Jackman

summer than in projects in the you be seasons, heavier season. have construction And right, and the could spring winter

ins and So there are all sorts outs. of

Christopher Murray

of Okay. for just QX, the give cadence your just of what be remaining you And great. divestitures you guidance from think over and No, about us thinking idea then the year? the acquisitions an contribution that's part of can might the

Mary Whitney

million it QX. stepping QX. in then down from was -- about did $XXX step QX, We back in $XXX or million I'd and Sure. million in there XX% down probably around to in to expect to that maybe to up QX $XXX XX%

Worthing Jackman

to any with we that. And be between additive and deals now year-end to close

Mary Whitney

done today. That's what we

Operator

our [Operator CIBC. line on Chiang to We'll Instructions]. the question from next get Kevin with

Kevin Chiang

do. just you got are on looking Maybe and question to some earlier your on an following M&A maybe strategy up of what peers

challenging And valuation there? also are Is the well of wondering some on as maybe that waste? seeing multiples you facing deflation seeing valuation a concerns your to smaller out of if Just players any and operating solid mentioned you're competitors impact multiples you're larger environment. outside if going looking in any DOJ more are

Worthing Jackman

in real cases, the in that's you they're the -- in from of to that's handful be some the not geography value, consideration. of may the can XXXX estate transactions hold of West Coast Canada. say on In in want both And say the what real the right? many influence because this last north call well sellers and down a value, underlying is some underlying of East estate XX% the estate unusual, right? cases, larger got right? of is these acquisitions and Coast, key What's market into been payment, estate And in view real owning unique component these of our we've so The is, doing and real the that in -- geographies, year I'd from an Yes. rent also can underlying and I'd in standpoint, as a our XX% would presence. some obviously, deal I a you've year.

underlying that And estate those look so may the little much in in haven't the have a really cases, at bit, those back, the geographies, changed down multiples again, step much. too real so the because, while is multiples come worth

Kevin Chiang

No, continue to X first you're here. just that's me. grind in interesting color. higher going to And maybe quarter, good last for Obviously, sequentially, the that pricing

stay this seen these corporate that model. loop inflation. I I'm regions inflation just wondering, suspect they in for between a feedback of sure levels lot make has the have haven't changed You the ahead a guess, us of decade. at decentralized to I

terms you in is were bit how with So sure this of all different because top staying decentralized the ago they're I make to little Or a inflationary you're pretty the does where Has that were at of tracking years X here. the suspect the picture? things changed they figure full out interact good costs model, region going, probably on today. to seeing

Worthing Jackman

we feedback been moving the model this. hallmark of with year. We're early in our we've decentralized were communicating loop a think always strategy Look, I the I wages last early has had. mean, in up last year

to continuing beyond week, X price X lot magnitude the or inflationary months at beyond month decentralized at proactively we're sure ahead rolling looking of where X X, currently nature. and the it is throughout pressures And at day, look because the period. moving X make full understood of year and You've constant X the been is And basis a this months, look constant of just seen now, updates this X, right. on us again, weight a

this cetera, -- do. the it's recovering held the Pricing of et that a how time. one you the our a pressures, so willing cost for run over we measure be how that what wage who creation. pressures, and are business, a do P&L realities in ever local changed value terrific run is And how business. -- hasn't folks cost, recovering and accountable job said the we financials again, folks easy right, I to, are is they commitment mean we how both price they capital -- what are we've and and how recover our in business No to what

to Great hallmark in so through again, we strategy a inflationary that's in proven environments we a -- Recession, mentioned times good again, our effective day -- bad. And and in said it's of the and since we that high because, been be pandemic X, really

a company quarterly more. million It's done are So that know -- to it changed surprises in our our to nothing's horizon through so -- hallmark a we And a what's pricing never been Remember, the of we or now here comes public visibility price. still guidance. since and what's We've run gives when $XX it's $X it's that And again, really the on our again, billion business. ability happening years. on in at we're went revenue. rate us.

Operator

with the JPMorgan. Yee line Stephanie We'll proceed with from the on question next

Stephanie Yee

you've you that just issue, to also there comp been forward to a year going year. to would stay as as we're that ease some we're the this the as we pressures a inflation pushing let's I ease of kind I of customers to customers, the elevated. the of, assume but roll the is, of Should across some prices to Who about little. just ask either board? wanted some see this we give bring, of guess, beyond pricing is year, back from what the but kind break seeing knows just some back year-over-year these kind probably of of I the is next well comp pricing know roll expecting pressures

Mary Whitney

Sure.

think X So the Stephanie. certainly, different of we types about market,

CPI-linked expect you should typically steps X% mentioned midpoint prior back I the markets the next since look this of we're as that to earlier, in first, we're so year. year, it's a the And exclusive year the where up getting

boost we do point, there's make we'll we our consider our increases as consider a mind year. price as year need provides the then X% other remains to on push this we certainly of the great balance -- exit north to for that but number that impact it's rollover we'll that will make 'XX. extent in as And the is next that the the a environment plans. whether of year, right, seen, because overall we depends And the and thing plans be higher year to us directionally So where pricing impact, or to to the the next reported it keep hard, your we'd not

Operator

Mr. the questions And further Jackman, no to you. we I'll turn have line. on call the back

Worthing Jackman

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

Operator

for disconnect conclude everyone. you. the And participation. for much, day a very great thank conference you today. lines. your Thank call thank that you Thank does you, and one. Please your Have We

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