GFL - Earnings call transcript Q3 2021

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Operator

Hello, everyone, and a warm welcome to the GFL Environmental Third Quarter Earnings Call. My name is Myrna, and I’ll be coordinating the call today. [Operator Instructions] With that, I have the pleasure of handing over to your host, Founder and CEO of GFL Environmental, Patrick Dovigi. Please go ahead, Patrick.

Patrick Dovigi

Thank you, and good morning. welcome us. today’s to you and like joining for would everyone call, to thank I we be the morning, and year. This will updating third for our quarter the outlook for remainder the reviewing of our results joined take through into will details. I’m CFO, we disclaimer us morning Pelosi, our by our this who before forward-looking get Luke

Luke Pelosi

Thank Good and everyone, morning, you, thank Patrick. you for joining.

is filed includes important press release which earnings information. website. release, available press our our We have on The

that is presentation a have call our accompany We available to website. also this prepared on

these I on call, we’ll events those forward-looking whether of found a This is certain of Page statements. meaning speak the events in regulators. non-IFRS turn in filings now or the our in presentation. or only update this not including U.S. we do be a will results a be During guarantee the call non-IFRS start as believe and risks as statements with in Patrick, making and reconciliation and back can X may statements occur to who from uncertainties, out call regarding and differ off Canadian future within discussion the of not A performance, securities developments future. assume expressed include some securities These These will measures. measures over the Canadian or of our new U.S. the obligation will these a statement to today’s or information, securities of statements implied to and date, result with we any of and regulators. forward-looking may and forward-looking statements, otherwise. forward-looking materially developments of the forward-looking actual U.S. including that set of future Any applicable statements Canadian filings anticipate subject number laws, those are

Patrick Dovigi

capital capabilities strength performance the free of that and and excess generation of of Luke. our The strategy The drove the exceptional the expectations. with you, adjusted solid drive are XXX driving was adjusted asset to high-quality assembled, our continue base equity in up will our EBITDA lead EBITDA we’ve of value more headline flow tremendous discipline XX%, growth to up basis XX%, numbers Once coupled revenue growth own were business deployment, the margins impressive underlying around believe again, leading Thank effectiveness waste we on industry-leading numbers creation. Even quarter points. their the than up factors. the for headline cash rigorous

was basis and for plan. points Solid XX of waste accelerate continued the quarter, pricing ahead X.X% to

our to which today’s like markets climate have one -- those been and That for in our has market, they A real that’s we do broad-based earlier stay company of job. allowed the to we’re labor a that. in through of there’s said of pressures proactive GFL. a And is part one happening, job to areas think the in manage The and things clearly has in markets. few our have underestimate contemplation the our that in cannot As except QX, not those in talk of Canada. urban the a be especially just in brand. couple was in the market, inflation secondary are pockets want while lower. large business. labor in We acute ahead helped that that experience as our of operations I pricing is markets, pressures know really been majority secondary in approach us lot Also, our we the employees is of seeing us about to year have as wage

more operating to as in expensive, we of and resets pricing to the it cover market is the talent pool we’re to on our reopen pricing pricing incremental used in. same strong volume to current our encouraged So And to exceptional, cost Canadian see brand. date are At on relates CPI-linked pressures. where able the We while opportunities particularly our of we that’s a has time, come find have and even slower labor results that proactively been attractive return attract many to markets. more by revenue horizon, pricing commercial in the of the we the

Midwest volumes up growth volume a tailwind increase volumes saw X.X%. of a dynamics We Canadian high U.S. think restrictions strength also these in of waste through Solid with many in were at ongoing XXXX. X% set should with ahead QX. despite delayed our plan particular markets. Xs markets most was Canadian in

line remaining U.S. support throughout restrictions changing of we overall of the tailwind. we again once realizing recoveries in recycling volume And the are like XXXX. business, to our anticipate the saw strength lifted, within with a Canada continues set this regulatory As values the our business. outlook provided opportunity coupled on landscape, Commodity in favorable

basis stated to margin our focus is margins cost remain XXX optimistic speed targets. leverage drive increase period the inflation, substantially which in all Solid be Luke despite margin. pricing a able organic. recent but drag the through the internal operating on Realizing walk, of will from margin our point prior of our EBITDA M&A adjusted components the cost the realize XX.X%, the and tuck-in waste excess walk margin program on And to a were productivity controls, real M&A. from we over continues will expansion we

revenue margin slower-than-anticipated the significant show we in during leverage infrastructure EBITDA expansion as closing expansion liquid significantly segments realized saw business. in the quarter. was tariff substantial the and is to during of the quarter where activity expected, with as adjusted organic reopening base recovery the of it operating Canada, years Finally, the earlier-than-anticipated despite the bulk But second had increased The margin the revenue quarter over Both a recovery. this continued offsetting sequential liquid derived. at dilutive volume associated waste margin,

acquisitions other pursue approximately continue the to revenues, more strategies approximately to annualized the we saw year. Year-to-date, X.Xx than acquire at suggested for in The $XXX million XX us value billion third we the beginning amount deployed into creation. quarter also of $X.X

prior transactions on our approach incremental in move likely coupled value creation and future. to continues robust, be establish And think completed be to returns lead to us with certain will choice rigorous our of on invested We continues we focus markets. pipeline outsized acquirer to to M&A this when year-end. into the an as Our as opportunities capital, will

realizing disposal We’ve of high-return opportunities whole beginning assets incremental $XXX anticipate and of this Midwest, our host year our year. also for noncore to bringing proceeds realized identified a the of million capital twice deploy of to from being nearly total more able waste We million, approximately proceeds stated strategy, before in continued the reinvest an -- contribution at of low solid proceeds process target redeployment $XX half the these year-end. than the capital to the

advanced are our Our that strategy, that strategy MRFs rates. for like at includes sorting deploying recovery technology efficiencies we support sustainability that material investments our drive operating installing this capital and improve

our investments finally, continuing to longer onboard automated retain our support sheet. early technologies attract loaders expect targeted side driving these And we off and to many and them and our and safe achieving we expansion. on drivers. Our balance investments, of see strategies in paying to are days work term continue for margin These

whose notes built demonstrates institutional have the debt many point we’ve group from execution. successful our continued XX successful quarter years and highly our offering the basis on support a investors, trust credit of rate during we improvement over Our facility

closing us it We adjusted to together, When our will support raising for through free free EBITDA combined And the we’re the second before in value. until raised. our cost XXXX providing and cash Luke, our over our ever-improving operator of walk quality equity financial questions. and incremental quarter, being pass who better turn you this the Luke, it the XX% credit call flow with XXXX some revenue the effectively up all February well it year. pass but continue for create growth revenue, guidance capital, guidance, adjusted point reduce put through the And free you for back also before of wrap sets now time will results. growth cash to up flow will than leverage excess share launch-off are for walk perspectives and going I over of and XX%. of drive and will although the to outlook, guidance wait favorable results quality the for I’ll for our adjusted then of to who I’ll all flow cash to the details us details, increases we to

Luke Pelosi

X up earlier XXX pick outperformance for was adjusted prior than driven Page of the quarter growth points and Page organic to July increase Revenue on over in of basis restrictions the XX% the compared the prices effectively benefited across the I’ll on presentation. Terrapure of Thanks, period. This from for the prior increased by guidance and second and waste XXXX. since contribution year Infrastructure pricing, first volume, months our And of to X commodity acquisition closing waste turned ahead strength our continue basis waste solid from margin Patrick. On recovery at QX. EBITDA QX ease. time improving volumes positive liquid over recovery the XX Canada, of expect anticipated. up X, sequentially of segments see in we million as a the of period you’ll an solid $XXX.X of points over Similar Canada in of these both comments to M&A. XX%,

of backdrop as labor incentive with such this input travel rising fees well as entertainment, reintroduction and cost pleased and to headwind considering a as and certain the were certain professional the that when particularly all inflation margin. of discretionary costs We’re result compensation

structure of and flow cash adjusted On from segment. volume basis were by points and programs cost drag basis waste XXX we period-over-period revenue as expansion to period period of and XX% of margin, over of came the and inclusive million pricing excess up points but XX point including liquid free basis in million, end organic Terrapure our just thereof to the sequentially from these contribution QX XX continue in margins segment and Solid before rec of be improved dollars considering XXX above as QX year. below and path segments point waste quarter. from Liquid and in portion of fuel revised the of proceeds basis from we’re XX from to we and Terrapure’s volumes the growth to basis activities leverage recovery. sequentially operating was can bring a again, allocations waste we’re substantially Terrapure the a this the be reported margin with or a and in deploy before organically impact sale. and over these year Page the a from our operating proceeds prior waste the used was And turn prices Infrastructure the therefore, able revenue pricing basis our ahead relatively increased to sequentially the was proceeds currently points $XXX prior these XXX but tailwind, basis see you Once redeploy basis to liquid offset $XX by is between points XX the over that QX. year-end. flow XX.X% XXXX. Commodity the our of intend XXX margin of of Over over basis average. in adjusted asset M&A. the cash points XX margins leverage a margins point segment basis most nearly positive, to to headwind see points mid-XXs XX driven fixed up before points X, comparable we expect dilutive soil offset of capital will

While for lumpiness expenditures capital cash free annual some the a business. will flow there the level normalized will quarter-to-quarter, include from of be reconciliation

of price. as capital working During by the compared approximately Canada on quarter, normalized M&A, better $XX as the which is Note characterized XX million that inaugural recent million of holiday impacted we prior to September $XX purchase working to the an related believe we’ve for year. in capital part

Turning to Page X.

points, accessing to, amended all we to announced, consistent facility our among the leveraging the quality previously successful credit were with things, lower capital XX at by our of our and again once borrowing debt. ever-improving strategy other coupons rate debt capital raise in the As basis cost tighten of drive credit attractive markets to

business rolling of generate million and year. We approximately end, there’s expect of we we from $XXX over acquisitions. before to M&A this quarter, further of these the would quarter we this incremental contribution of post an divestiture, one deployed a $X.X any the $XXX sold part annualized During billion another approximately as extent incremental $XXX million increase revenues the of XX anticipate XXXX, the of for approximately into acquisitions. to deployed into Net X end acquisitions. And million completed the amount

at end As The with fund quarter on support to acquisition liquidity our cash to hand have anticipated, Terrapure. to we M&A and the largely net continue of October, at used end leverage goals. in was stepped ample up quarter modestly the growth

Additionally, million of a gives which year. the during end the we XXX issue of entered before the agreement, up us USD the definitive aggregate of an to right preferred quarter, to amount shares

We draw previously executing commitment equity growth leverage this we’re us drivers stated X, our to our targets. will on to maintaining needed while continue as guidance. On of our updated allow strategy showing the Page

our For now the from expectations. a The July billion, comes on contribution, communicated guidance out in the $X.X components when but provided million are growth price, expecting midpoint laid the over measuring and volume all year, to exceeding the we’re revenue of M&A previously we increase $XXX midpoint. page,

at both in X.XX $X,XXX for XX launch-off basis volume a million revenue, expecting higher $X,XXX again, than measured million an increase For this and midpoint. to about guidance of encouraging pricing the adjusted XXXX. to and point points midpoint over guidance, we we’re expect million, our mid-Xs, July’s year, the EBITDA From now July $XX.X

at CapEx the $XXX a guide beginning the was of base In CapEx, of the terms of million. recall year

of growth growth opportunity million, on and to of business, $XXX this number, with business. half increased this first now to guided from disposals the attractive July the $XXX increasing asset growth into we of line proceeds in redeploy outsized the the we the With top to On opportunities. in million are

was of spend. opportunity $XXX million million incremental this to for guidance original Our $XX

we’ll think end terrific range, will high investment drive we as a high-quality more the XXXX. As in incremental or at this of growth this be of today, outcome

Now from all by of this the asset covered incremental spend was being proceeds disposals.

$XXX number So of CapEx at $XXX although million, there million $XXX would $XXX net the remain million, be gross million. the CapEx plus a would

$XXX free to year-end of flow is asset We CapEx in adjusted rationalization net proceeds the these realizing and from program, our extremely yield million asset number our flow to year the effectively reconciliation before divestitures for our date cash in XXX% have and with realize Including a of more successful possibility done. free of year. proceeds portfolio $XXX would been overstate disposals million the cash

approximately as compared excess $XX net million M&A-related in guide. to adjustment original the million of working working in us exclude cash million This over is proceeds to million. So the a a include use to at million investment $XXX will this capital. million July’s we And increase around disposal over an to number above working adjusted year-end, new capital, $XXX capital On investment. the to going from CapEx CapEx and the yields somewhere all $XX the July and $XX has normalize nil free of $XX guide guide $XX million incremental an $XXX flow to and of million, to despite

XX margin, midpoint Xs X.X point volume and basis to adjusted seasonality to going many you a point I From is the above the implied guidance. year. but specifically based the do of see dollars QX recalibration the low through approximately not there’s a the business. a expensive think both our perspective, prior XX.X% X is billion therefore, We’re This EBITDA of at a and revenue, point, And in July results of over of modeling to walk QX, continue math QX. pricing and between can $X.XXX on underestimate the increase

from simple excess cash of cash just math. dynamic million year number the flow, of complicates free disposal. adjusted year-to-date proceeds I implied QX For spoke full $XXX is QX normalized to year-to-date flow the CapEx inclusive The less free

give we for we And XXXX bridge line X.X% from better our volume meet while macro where provide proceeds lastly, nearly anticipate February, already guidance again until price number $XX a to full then from while the not -- will QX going $XXX and support the into to growth backdrop X. in we’re organic picture not we’re basis. of constructive top on million better with a and Excluding than sitting stand-alone of going year these the of million and rollover,

clear the line over turn have will growth incremental Patrick With we plus mentioned, XX% back today. a I call to considering there’s what Patrick. as path to anything top that, So before to

Patrick Dovigi

Thanks, Luke.

is out advancing next also we As focused our seventh Board that our female part commitment Jessica to of made our that deliver announced in year. the participation the IPO, to be our Board map, Director, McDonald, laid second with the road business organization the our Waste the to women on we’ve in for are February appointment of joining on improve of will sustainability promote through program. our QX in initiatives. diversity Director we the greater since broader of across Independent our last commitment continue to Women Consistent we our we Board, year as today Jessica’s

told gas the services Summit GFL renewable us to call, carbon landfill projects to had on have through unlock achieve Renewables future, our to COPXX goal, in energy our to value you help the that the focusing our of move of and never that significant been up to that we fleet to vehicle need initiatives at our week better the projects landfill. we conversion world’s our On lower gas With this to we and positioned natural set CNG. development last recycling accelerate as a attention the including the will provide

announce our We GFL projects leader a recognition will on world. year-end. continue make a at in XX with XXXX this Demonstrating share from future to of our week, vision other and prior participating Vision progress significant be the in the leaders around as sustainability, expect growth to a initiative quarter, in to our greener business to for landfills next number

over reflection and continue is operator our the of us our build a and are value our the talked I of to our I be line long-term dedication of up achievements work open that to All achieve the of to stakeholders. employees’ turn all all vision allows of will today hard for for to It deliver GFL green quarter-over-quarter passion dedication to call commitment life that and Luke employees. now have about our on the to questions. for to incredible

Operator

comes [Operator Brown of first Instructions] Tyler from question Our Raymond James.

Patrick Brown

you guys down us Canada? revenue new just Can breaks that reset to any your Sorry. $X.X And tied color CPI? billion on me? quick, hear how is guys you of and real U.S. can how much the Hey, base on between just just

Luke Pelosi

Yes.

there’s base, about you -- linked. sort all rest rolling So roughly your XX% today, CPI on post M&A what a that’s round line, is numbers, into And that now that’s the Tyler, if $X and billion the of is in think is XX%, recent XX collection. residential

So roughly pretty is $X then another will reset. which billion And QX XX%. about that low, in QX reset sort of then is QX of XX% big

that’s of a when So in how U.S. you XX-XX. that you the through the about about and of And look, hits. Canada, timing that’s which I’d from cadence balance say, then roughly, maybe year, XX% think the

Patrick Brown

Okay.

helpful. been Okay. Yes, know And very has early. then little it’s Pricing strong. a I

accelerated think do bigger volume Is price, X% a revenue of think it be I it it that volume? organic composed? price that mix? you X% ’XX how of the sequentially. expectation, you just feel that plus could [ph] being that envision about But kind when X% price Or does part

Luke Pelosi

X% the know, were price, pre-COVID, sort as to mean, top X.X% migrate saying range. I to we’re you the the and going we of where end to of

that with X, that and the from support I X, sort can X%, think look to up moving CPI, somewhere points incremental commercial bit you’re with add lines, the to today easy. you $X the I backdrop little that pricing pretty you’re when higher and on a post-collection if basis XXX of I typical think mean, billion at moving you number of

range So of X.X X now maybe that in into year. going you’re sort next to

us and just I acceleration you. plays and before as much months it’s think And year better, a and I in continued of something resets those think X. to the out But we we pricing, So a better of couple the see back come have have you’ll better view we’ll overall to quarter February. give than how

Patrick Brown

And that. do here. can then one my I right. just All last Okay.

year story, the to divestitures. should time your has to a But we’re big Obviously, I churning kind do a that’s something it bit big part one-off? going it kind obviously, picture time out year Or kind curious all a where of of the just more mean, of Patrick, is So Is the happens have for to of and in but you we there. process how acquiring interesting see and about revenues assets? been think see this this just I’m divestiture everybody. program?

Patrick Dovigi

sort acquired No. of I we’ve there’s some think where players urban use assets strategic dollars I into higher and these mean, businesses our not for better of -- effectively build of strategic a market and to more better makes don’t could. the into markets, with we’re of perspective, the add big of these it’s right? needs I and mean, some just been And that? in where mean, certain redeploy exit focused could to I market. X got market of that the asset we divested something were of specific what’s plus it to I think for the we think largely going going do focus it. doesn’t work needs market, those to them if fifth these us on we’re strategically, look identified you -- And from regional around think at I to market a than overly it another we’ve a that I you I these If if think not GFL And player, sense us. local when go player, competition. I’m sort assets, some lot So a to large

where point feel large, I we of base the think by that next with course should we have think the have. months, the rationalized XX to over entire I we the book comfortable and a

Operator

question Markets. of Our comes Walter RBC from Capital Spracklin next

Walter Spracklin

Perhaps we could start.

give it Terrapure you what the up maybe was I certainly average. done that lower Can to us margins think the XX%, than before. But mentioned of Patrick on some Luke, to that hope get you you’ve you indicated the it are will up of duration? to longer to it how Do would that you initiatives that think type and or get little quickly what be going loaded average it’s to occur? whether front-end to as a indication do you

Luke Pelosi

Yes.

comment I was waste So it’s specifically made liquid Luke speaking. walk. about talking Walter, the The

So is high margin. extremely solid. The solid liquid waste, part components recall, Terrapure part are

underwritten liquid large about you had a that out, the a sort so a the you high then forma for sort business, XXs, pro lower XX% liquid pushing And And landfill of margin. that was was component Terrapure, When of waste was XXs. break XX.

in which waste, the remarks revenue that in came actually comment the prepared accretive So in high at solid is revenues the solid liquid at which waste solid in mid-XXs, another of that sort to was And is that came right margins. the of with low -- expectation. was sort below just in Canadian XX% line our the And segment, XXs. waste of in

where line anticipated right is Terrapure in we with being. So

liquid waste is to I existing to we become harvest Terrapure as accretive we the neutral the And component the think those see expected, of component facilities business our rationalize synergies waste solid already liquid the and segment. component liquid opportunities accretive. you’ll the and

Walter Spracklin

That’s And getting obviously, acquisitions consider kind better in Can plan, of and it year’s bit the of to you’ve peek great. of see growth a assets some in cadence consistent so a in in program? give a with your of lot review you’re And of next capital business into the you would on based now the a you a sense the you’re Okay. had chance buying. far. us you’ve that acquisitions that of Is you’ve done the in condition capital change terms any XXXX? reason would major your that any for Or seen historically? we growth there CapEx of

Patrick Dovigi

front-load throughout or mean, question markets redeploying of we take some year. to new the them contracts we into dollars will this Walter, what see there’s to seen commercial post-collection Tyler’s, landfills. CNG proceeds, I with opportunities operations consistent think we into or the -- Midwest can about business continue as and look in be we sort we’ll rationalization, opportunistically of you’ve I acquired conversion only capitals to talked it some redeploy units of those in some develop municipal these businesses where where those

the of very saw So ordinary, nothing out think year. with you this consistent what I and

Walter Spracklin

that and that that we’re here. change that Perfect. next last ballpark the considering year. look that cadence closer ballpark just we high should flow of year? little there, now looked that a of would at question before, And XXXX? cash kind into free the Okay. kind When for we XXXs Anything at kind that is the next to indicated is be Or you’d of we

Patrick Dovigi

Yes.

I think right zip from of be from to the But better. on our be. mean, expectations zip think working that’s likely, making I we’ll think I that’s I right sit I perspective, where code most number that code. think our from today, we today, the

Walter Spracklin

That’s awesome.

a on Congrats great Okay. quarter, guys.

Patrick Dovigi

Thanks, Walter.

Operator

comes Our of Jefferies. from next question today Mazari Hamzah

Hamzah Mazari

renewables and My question just the strategy. on first gas the landfill, is

you’re a all Is going going take? just maybe detail. too little talk exposure Are these How Just talk do stakes around about thing? that ramp? projects offtake? or the Maybe big about, it’s but early some there to I remind RIN us it but to previously, strategy. you just price the detail fixed Are how more -- that could again? be to whole equity think you own it quantified more

Patrick Dovigi

Yes.

think of we part this Hamzah, mentioned that I program. that about have So we’ve previously, will XX perform landfills

initial focus to Our on X X. is the first

Our expectation the of sixth then definitive is on early that them we QX. year-end in sometime and will sign one agreements to prior X on

get look initially XX will from you free it, we in sort cash the when million generated flow projects. was of think that the number the I at to $XX of million $XXX put out

seeing by is what think I I think it We’ll we’re from that. conservative stick number But that today. from is. our perspective,

right just that make It’s And right. taking are XX-year I taken these a sign little this we’re we to around agreements we’ll time. the I expect time we sure bit effectively committing I get them mean, think probably to. longer. we’re think

stuck everyone market, the where is evolving wants mean, market played fuel, I the and fuel in everybody XX-plus I and them for of focus right are medium historically, part we are the supply factories, another industrial, on given I is RINs making ESG-type of the as and right? there’s part a looking moment. that’s This et think on them big sort And manufacturing the upside the think cetera, the you years. initiatives at we’ve and us transportation their for a think all have market price I think But I in lot big in agreements. growing, is own the large number Operators the of an lock looking as there’s what the happy at sure agreements with just knows, of in that to for long-term your that facilities, happens finding gas think which this delay supply goal is that because to past. And with question a I the permanent of But commercial, it. to of these is sell them which a into, the going be also a landfill lock to supplying we’re us

simply. I think them very we structured

get [indiscernible] -- joint going We’re we to XX-XX going top venture these royalty And like also we’re doing provider, projects. but a are entities. normal share to sharing the other in off any we’re gas

below. in making then but the the the we’re So top royalty sharing profitability entities off the of

Hamzah Mazari

my And leverage. question around follow-up operating is Great. really

You about inflation. talked labor

service leverage. an price with could demand well pretty businesses that talk been capture it’s labor of There’s been a through if you maybe or labor adjustments. availability hurt about managed You lot availability. to where has issue operating But

some labor pricing issues talk then But your is of just of forward, can look manage you markets concern. as a in to availability the less of as through markets? are going to inflation And adjust you you continue Maybe secondary So how that. ramps? some through

Patrick Dovigi

in questions of there. lot a There’s Yes.

I I think yes, real. labor think are where challenges today, and issues definitely sit we

labor, it’s all of business our conversation simple. the of pricing same the you the is I because think at and end think part talk of day, when I very about sort

you We’re up, So If business, a increases, put of of pick sort think whatever paid don’t want. we’re it can right? price you up you But tied to we pick I that charge lot in waste. waste, together. generally all churn of the up they’re we if can’t pick bringing book the and in

to pick you month a they afford for. end engaged and and the when So to that day, want the is people care retain we’re at you paid charge right? our generally say this leave time. they labor of residential the $XX you work have who accountable If I all it’s tight, up that today. and At then $XX what about what our paying Yes, just They the want. it it companies is to they’re to ability actually customer you tell day, us the the our don’t and the the whether going and I do. work leave And will a a that And they or regional paying say on for up management they’re you’re pick really think retained guys but month. to commercial, you of guys end working subscription $XX boss we the or for, be or doesn’t keep guys

grab selective different in you where new got it’s to because So business you can are not be market robust pools. you right. And a labor today about

contracts, We municipal to practice. getting new at winning it. you’re right you’re don’t and business the that into be wage price make new replacement going winning sure need you’re there’s you better when some to goes because so And

-- this sort now. of we’re what is on that’s So for-profit and a organization, we’re focused

Hamzah Mazari

question, here. update you where a the don’t just much over. see the those I’ll business do numbers given But know longer you turn of M&A. business where cash do see Patrick, you’ve Last free There’s out ton flow there. longer you expect term? I term? been it I to

the You’re digits plus growing sheet. organically mid-single balance delevering

How same at the assets. answer You’re think grow about longer you integrating we want. those however, term? Just to business Are going should that; this you pace?

Patrick Dovigi

I was you’re did $X of look is of mean, we going to much when I X-year a believe in billion change. think March is take I very think anything our I IPO going future. same XXXX, simple, plan the going to don’t we in and Yes. mean, I we EBITDA billion to the the think that see period. roughly $X from we could what over

$XXX we sort $XXX to from million period were XXX to XXXX. that basis think I million over of cash thought to sort drive free tune the of from in flow could to expansion in of XXX $XXX where margin and points continue we take we million

can think I will flow our from those I you new think at And think we we’ve flow. recent fairly in of months, and year. XXXX, organic get all do volume opportunities, that And X you And be you perspective. is used And and to made of never a our free the has in free conservatively. moves plus when I you from exciting. $X when been over that get this last Canada, to of the to And the -- billion getting And new we’ve our perspective, opportunities bogies the over I next to targets. billion. -- price to we years our think that all when XX, of opportunity goal XX U.S. in, think continue footprint sort we sort M&A, the closer XX think the a I to is starts cash healthier exceed very do look rolling of internally. reset $X I in at think X.X the a industry I layer M&A cash now deals we’ve bogey to RNG that look

We’re year. pace year. a This probably XX deals we’re doing XX-plus deals on do year, a XX, to

refinancing think all I and out free together of of can flow of sort you of layer on cash incremental drives all then business. the that -- just sheet couple that the the balance that So

well I think we’re very positioned.

doing So I think what we’re we’ve to just of a going lot done. keep

Operator

Neville Mark from comes Scotiabank. question of next Our

Mark Neville

wrap cash to of math printing fully XX. conversation for my Is XXX. something the to XX, to up if closer guiding here. we free just correct? the Maybe quarter divestitures, going to sort But were flow, Great you’re probably X you’re on account the

Luke Pelosi

Mark. exactly that’s right, Yes,

excess I there’s in proceeds. been program the rationalization successful, As remarks, said and prepared has extremely look,

with you end as if XXX take as net year, number be the we all could XXX or So CapEx the low where the proceeds.

I’m normalizing of So those to excluding portion by of XXX. a sort

were number the your you’d all to to point, proceeds, be XXX at sort to include you XXX. a of If

Mark Neville

when capital there big Is for projects? GFL a CapEx just next year. the X on X, these curious thinking first I’m about I’m And Renewable Okay. opportunity, requirement next for year

Patrick Dovigi

No.

structure think large it of spend. I a be mean, that shouldn’t look I it into sort way -- it. we’re back finding, That’s CapEx the the

do of fund the to agreements little very offtake some of thinking, that these that build-out require if equity I we’re the we will think project.

Mark Neville

Okay.

starting then for maybe opportunity in to the versus they price happen some year. Canada price resets through just go some finally accelerate where you’re to reopen, commercial. on entering after year? And year, Okay. good presumably, And should idea next of the when sort -- there’s next pricing With year the the just given

Luke Pelosi

Yes.

XXXX, throughout is industry would peak down. think steps be I The that’s I think the that’s atypical. what seen think Mark, I right. we’ve which normal then and being QX But

I attractive recovery With coupled the commercial dynamic upends price-centric of the volumes, the think typical cadence. of CPI that resets with

sort support then so as XX% first our couple in pricing certainly, the I to of again the with resetting book think of QX, will well. And and roughly QX quarters of that provide

I So has do of to opportunity you the that XXXX see. for pricing similar to continued as opposed think XXXX, normally the peak QX acceleration might

Mark Neville

Right.

And acceleration just of QX that commercial Canada and sorry, Canada, in just kind like? assume does better and of talking in about guide, volume in terms stadiums given reopening the of sort of certain we’re while the sort

Luke Pelosi

really the It on exiting based of was QX.

I I resembling but like mean, as further, are we it’s mean offices, again. to back. hockey Things I normality mean, there, still So I you in go but we’re we’re the Toronto. coming game. a went know, mean if I not

would of me. pretty back the offices went happening upside. chances tomorrow, seem to that So remote before be XXXX the to everyone of I it’s sudden, a today. reflective mean, I of that -- if all

Mark Neville

Good quarter.

Luke Pelosi

Mark. Thanks,

Operator

We question of Hoffman from have Stifel. a Michael

Michael Hoffman

X% is us until modeling, wait kind EBITDA, organic at you year-end February. can’t we better be that any run which we’re what shared billion that on flat in given M&A or be to XXX, in in you’re $X.X year-over-year. without business would margins If the the rate settles you based XX have of hand, going and of That

that’s are So million expansion do? -- you and that not see to what $XXX and in margin about start, free places flow. then any rates Is can cash assuming those we’ll

Luke Pelosi

Yes, you Michael, say X.X. have I’d

that X% the put So X.X of the on plus or rollover. that X

math that And sort mean directionally, math -- is everything So of is that’s that number. look, else, I then you X.X gets accurate. said, the

where So free XXs. think year, hear expansion real. yes, margin we keep push cash us XXs. was hope beyond look, I don’t flow guiding This I it’s The we reality, you know flow low free last cash year, we’re as are. conversion we high in mean if story conversion we I EBITDA saying, that to

of other I described, you self-help north just you’re Patrick continued later you of math on, that. was that the think And year, the and sort XX. Next then M&A go saying,

is the out. shake So that’s math going where to

your of I But February. your you in temporary for I’ll do sort think zip top sort you and directionally, the line again, right now, can in code. it model of refine

Michael Hoffman

way should given think then mix, the in all us And our down to through be step models? think can XQ? about you a doing in seasonality what then XQ Great. What’s into walk the and now changes how in about the and to we seasonality

Luke Pelosi

and recalibrating revenues the all And just Terrapure the budgets our it certainly previously is recent that the a for curve. next the the all as of -- existing M&A all curve of tempers seasonality in good we’re finalizing of inclusive add because a continue sort again, that of because question, it’s of to as that Michael. business But has Midwest nature year, our to adding doing we significant the of regions, Yes, seasonality more And southern such. in growth is well. obviously,

historically, the is in at say, is of sort And So curve. then QX QX, XX, top this look you the up down the then you line, at to peak sort had in XXs. historical roughly path. XX sort you at that of jump by if QX let’s far That’s XX% to low year’s of XX, QX. mid-XXs even

code. is the probably you the in that again, And modeling then think February. give I I can right zip in refinement

Michael Hoffman

of going the used oil organic? That’s fair the then were of in performance enough. some that of the on what’s beneficiary Okay. And in a net helped liquids, you X% market

Patrick Dovigi

No. I pick wrong the mean, I to think index. seem we always

stuff Motiva. ago. X.X probably there tied or the index were we not years -- a historically, switched there and Street IMO all Motiva, volatility WTI to We think was I when then and in was it then to the X Motiva, XXXX was The all really always understanding

mean, really got -- over a haven’t been it’s basis. any haven’t we spread, any couple material our at the look of we on years. expansion got the year-over-year spread you last of flat when relatively course I So

Michael Hoffman

Okay.

way, So increased -- of is this a of did the that seeing little lots of old-fashioned it customers bit the that importance is you little business?

Patrick Dovigi

from I Yes. lows. $X $X $X.XX. mean Motiva to in Motiva the Today’s went to [indiscernible]. mean, $X Look, Motiva, is I the

never rest capturing has Street The much. So But environmental service been in that great for our which -- all of that the offering we’ve been to that services. the are And I haven’t the all a really augments refiners of Street We’ve that been changed margin, this the them. think rebates is -- game.

So we’re that existing previously. we had just that maintaining spread I happy think

Michael Hoffman

on of my And non-oil incremental improvement. X% back. was right. didn’t customers positive point the reflects small that get the some carried lots the Right, showed message That’s that

Patrick Dovigi

That’s right.

Operator

Our next Jerry from question Goldman comes Sachs. of Revich

Jerry Revich

your pipeline just wondering looks you standpoint? recycling, talking you mind see you Can either about from the that like wouldn’t M&A I’m in folks or about opportunity a what if talk greenfield there?

Patrick Dovigi

Yes.

our listen, and about into in you Southeast new the to real think then greenfield looking operations -- around Midwest, sites. volume, up build we’re is So where from think to significant I -- perspective, right? a bunch a they’re our opportunity the for us Michigan, facilities look we’re we of to not we’re amount we have some markets of

out outside capital over in that need trickling to I think, XX Canada, terms new we facilities in investments months to obviously, XX already we’ll specific in with in to months make going recycling ones is the into own markets of Ontario. extended play producer next responsibility of the

the think probably and opportunities, to I agreements But a build with the facilities months. of attractive, X to of continue look at focus greenfield we opportunities. into we dollars XX producers want those model continued the be to when ours municipalities X I that type revenue-sharing So There’ll continues and and to work next customers. to over have be deploy

Luke Pelosi

area, The or today’s the add, from with very of does efficiencies, facilities, particularly levels, technology, latest the to adding it’s at coupled retrofitting, whether just those investments. another retrofitting that more there’s type eyes. rates, attractive what existing returns And then, recovery Jerry, optical I’d and to ability more and labor robots improve

also that that’s so to facility addition that in greenfield existing the area we’re another And actively Patrick referenced. base, across our pursuing opportunities

Jerry Revich

your do? wondering, assets I’m just in out detail? the M&A separately, look What’s that pipeline within that then you about for can and optimism to a of the the enough that to And of mix pipeline your at getting looking the issue activity like today? flesh in level little quarter us preferred bit shares more you essentially What’s pipeline the option fourth Terrific. you’re yourself gave

Patrick Dovigi

Yes.

I be you on annual $XXX million So of of I an roll another would upwards think sort case, base up Canada of next sort probably $XX-ish to and million our sort robust mean, between -- of of rolling acquired the to revenue, continues year pipeline U.S. perspective, the revenue. from we basis. It in over that could be of this see into

back around still lot through continued half M&A the a the year. conviction of So of

Jerry Revich

landfill in gas. out areas, Patrick, monetize I’m the are the that you returns lastly, flesh you to what gas. wondering I on the could And But to like would for infrastructure attractive laid you the mechanisms that other monetization that to maybe options those and out the And guess, economics most not pipeline pipeline looks various look option limited suggest at you the least It Okay. just if guess. comment mentioned could that pipeline, to I connected us. folks for optically

Patrick Dovigi

Yes.

buy or in of that’s that pipes sort put looking looking when the put a gas. mean, other pipeline, of to the ways, into industrial it we to we So pipeline manufacturing in or the different whether green this facilities portion in I gas obviously, transportation the that are put are market

there’ll agreements. a those think of hybrid what see is different all I you’ll of be

I XX-year in simply, today’s pricing, attractive on you capital extremely them returns paybacks today X.X-year when to I invested mean, a at probably profile. think you obviously, on at those look very at look agreements. on think it when X- I you’re facilities

be will have we overall the of structure that accretive sort they very currently to today. So

Operator

from Our next question of Chiang CIBC. comes Kevin

Kevin Chiang

you number XXXX, the on ask just organic can I the X-plus provided. percent Maybe

that were if XXXX? of normal are the a have that’s that assume And that, assuming recovery. volume of if recovered convergence, there’s see could organic one closed? we’re some volume if do lagged into assume your Or markets You in a of your year? to guess have to that kind sitting of number what fully, to in the highlight markets upside I any lag -- that we you go is that spread markets be them. that and we more of kind between is there all to if still Does next assumption, sense were back

Luke Pelosi

Yes.

guidance not So reiterate the that of Kevin, giving saying we’re we’re X. want something better think sort supports What it’s to today. Luke. is than backdrop I the I

that very to know going what to what perspective. So I’m as it’s ‘XX be better -- yet. optimistic don’t so say like. is Every well, a that are about passes going to trying month we the look sort of We of

So February, than give when be X. we’ll to It’s you in we better a come number. going

how Just better remains much sort of be to seen.

to positive, say, was intent hey, the looking and So it’s we’re very optimistic.

use think if what a with already year. was done, next I it even number more X at XX% we’re -- only we’ve you for

going more intent as to better X. to opposed So than us number to trying the It’s that X. was anchor of be sort a to

Patrick Dovigi

on leave to little bone. It’s meat [indiscernible] a the good

Luke Pelosi

of to that all X exactly together, to back, comes can think, us, then have X.X for with shaking put or number going the out you And going that of or couple we But go simple a time. pricing, you at you to you think pricing points get X I if volume that’s to to cannot of look, volume almost math top. could is back with and to we’re way be is backlog better. the on X.X X Kevin, get the to Yes, that a if the X

Kevin Chiang

question, That’s enough. then ask can I helpful on solid And second U.S. fair That’s waste margin. the my color. actually very

-- I level come sequentially. you’ve an and think And you of sequentially a at up and year-over-year saw elevated up margin. in So M&A, lower

They a And of your just I if acquisition if think margins solid legacy quarter, wondering, to your maybe you U.S. thought in mix? about third extend base lot how change than margin off year pulled have I kind seem rate would ago. that the be to expectations in, Does were multiyear we what you the further. take like of consolidated -- when all even sense your waste run what’s account maybe So give that it would be. U.S. higher your a a for

Luke Pelosi

Yes.

Kevin. about -- was the think in M&A Look, our our business to lot a you So the that, business, U.S. if drag U.S. margin base. a

pretty the If -- mean, they’re about base you close. think all I

If low thing. the about in you the base sort think of XX% XXs

north is So to remember, right? it’s organically, leverage have be you go peak, asset to the and leverage we not XX% rerated, there. just whole. going think base the But that QX year of got business in You that think have a the as reflective forward at of margin. we I real I we And there’s and as have operating

that. to high underutilized as got collection have post-collection you and the sort out flow-through very So remember, go we There’s build assets. of we and networks densify

idea and out basis we business an together, mentioned business it a So came XX, Patrick XX.X. margin say you bringing in we that gave a put XX% out prior it and came to of we his that all add of sort XXX points, blended response XXX, up to and margin

And operating to we I higher, think going I can a point of sort be take think has XXs. is bogey waste and high the this it. now of gotten that to leverage, business solid leverage

And that to bring infra to get are targets as that liquid and then solid blended You’re XXs. going those to stated into waste low going segment well.

waste So think, U.S. it’s just, not I solid

as to business. level, all up as U.S. margin to to the XXs, contribute also solid new I that high is high the we a started we’re going liquid getting is relative waste think well It’s segment as going bringing Canadian which and this. take where think to infra

Kevin Chiang

good color. on That’s very quarter helpful there. a Congrats

Luke Pelosi

Kevin. Thanks,

Patrick Dovigi

Thanks, Kevin.

Operator

James Securities. of TD Our question comes next from Tim

Tim James

could in on was that you know the update bit of an I exciting to facility opportunity hands and us comment the if Stoney wondering kind Just on get a or that. plans little around opportunity your Creek Terrapure, the landfill particular.

where Just today? as is and opportunity stands the what of that there you look talk sort it at about

Patrick Dovigi

Yes.

than us have be to using there’s waste perspective, historically with internalization slow our from this going a and I the mention a of been But certain we’ve the back being industrial of to manufacturers sort large other to to bunch come online, I for opportunities recovery, generated to other that. opportunity able third pretty not real landfills soil internalize think waste parties. that as GTA think been

we So as but coming material that XXXX, process there’s think has us. we side for roll think upside that I started, into from

Tim James

That’s Okay. just it’s seems mean, My second overall. I here helpful. going well so like it question, execution, your

opportunities. M&A securing You’re

forced this mean, to got challenges R&D as would now in identified. if I very initiative obviously, could You’ve where were are to? things you’ve promising, the business you what you greatest the underway. point look I today, mean, or say you

Patrick Dovigi

DNA. been now around company, we’ve and a integration, perspective. perspective It as lot always the I think right, regional on of is, a function from doing the sort is like this XX may and right? for a eyes on that of people but where mean, in the is I this I a the sitting this just pacing it for years, sort bottleneck outside is of out -- mean, seem public is company both always

have we we we And building front. ramp of years provinces The all than cetera, of M&A where teams on where always regional sort what XX Canada, we in So the GFL XX of those terms are et of systems, ago were today. is beauty in as states in is far different which continuing U.S. had bottleneck we management know is that’s there your out. the that to have X

M&A So the is existing own program markets already because tucking we now are businesses businesses. built, that into we’re where seamless those really pretty these

were businesses, risks to us. the I’m chain concerned, equipment of get labor our to people our around get about we basis Obviously, supply think good eye continue of that of those ensuring feel where and daily cyberattacked need the We the a the are. we tell us. continuing inflation But stuff, the I XXXX, all So need in front, cyberattacked keeping on run will just prevalent as to business that we we far the cybersecurity. an that I on the top be very threat parts biggest I on for and part business. as stay our run of to all in on just business the And

a I spot. job So on and would a industry is we’ve good ensuring But very in need and get we a we good far, that that whole the ourselves we have and procurement done I the our large, and and the parts has department very to our think maintain what of as trucks. today. position been top an of company in excellent staying say by ensuring

Operator

next question America. comes of of Our from Michael Feniger Bank

Michael Feniger

just you about is Just QX, I’m it on as curious, on easing? curious getting worse have at Patrick, it those of and least side the supply you labor seen guys Clearly, not Or some any comment, just well. just incrementally of and constraints? that think signs labor I’m last into you’ve supply that you constraints. managed moved when

Patrick Dovigi

into just Labor spring. less the people natural need businesses, the the think and people Yes. is I the cadence eased. winter definitely just Like of right? say would coming summer. peak was the over spring, I And

eased. that’s to think we lot definitely So the government program I starting a ease. seen definitely But of it off, as come just

our brake pads, times, and we appropriate to us it’s and are the OEMs letting suppliers, whether need were Our we of again, we They things what on we’re right times, size XXXX that lead these a lot the come and back constraints, need lot focus have do with customer listen, our and it’s I lot with experiencing of done day-to-day sort it, the they of right now our some said, you to Like this talked a appropriately, given than pockets. basis. a relationships think, spring it’s very of run bodies of to the right? et forthcoming guys delays the that the right in stuff. just you them. a them cetera. a hoses, smarter XX-week business They staffed me Supply I can lead in and think And all hey, And of on and have X- are of is because we’re ensuring on whether people seats. on the know to kudos lot

XX historically, stuff in get where could you hours. that So

I far. what our been proactive, to through one the purchased for it bulk existing so we So think and manage guys were to out, need able purchase business

in gotten I how has have find idea. gone -- where world a of XX mean, going, things months. crystal get of program we’re right next that’s you. I a terms In the on start, here it, the X of sort end know I listen, starts, back hopefully, tell over ball, I But I other mess and shifting don’t coming the out no we other can months. such last the the

Michael Feniger

I’m in for the XXXX just front. curious Makes you out we on then as sense, price the you pricing, And CPI picture laid on enter terms of the reset. Patrick. big just guys

curious are March, CPI to happen, implement price go as a those strategy business XXXX put you to say, you I’m your let May, think another resets price yes. you April, managing you’re is and -- in commercial one let’s normal willing how back for that wait price to with the go annual your about increase? just you’ll of If to increase? customers, you Or increase

Patrick Dovigi

Yes.

big the contractual and adjustments So you’d between see open on CPI municipal difference that contracts. market annual

to have wait Fortunately -- year anyway. that municipal the ones, on unfortunately, you

choice. no are and things service, -- more. think great and open day, maybe understand if the providing change, with the as at like think I we the -- are I business, know materially But real So will on that much you’re book these pay customers of end listen, to customers work pressures we’re Obviously, But cost have we can. as all our of to experiencing. there’s

first predicted to put So out when extraordinary of we the and to if earlier hadn’t order inflation be we we we need PI I that put the wouldn’t in go through sort increase some maintain back real think in price the shy saw measures to through a year.

Michael Feniger

peers believe U.S. different than the your would bit to a say Canada and you lastly, recycling are just a just That’s sensitivity when you you or remind out? prices? contracts great. just in can And great. I different be That from us maybe flesh it’s your commodity those that earnings bit Can

Luke Pelosi

Luke. is Michael, Yes, this

end. XXX,XXX some the terms in roughly of have tons we We on have back volatility that

Now in more about customer. those are is rebating are if getting Of I the is blended migrate. think more that. we talk give as we continues to dollar I’m to although dollars math it we’re February, today, sort tons, But at, $X.XX the say at the where it time. latest a And would that up we we’re going the $X, the if XXX,XXX in on you the change good we’ll the math, when view rough of back That’s getting, you keeping. for basket and $X.XX to

Operator

Merer final today comes Bank Financial. National question of from Our Rupert

Rupert Merer

share? frame how quickly in X assets XXXX, about million Can Or the And that this? quick the staggered confirm these later talk RNG or of come follow-ups RNG X when you year? Patrick, that’s a start. $XXX cash. to of to through for you or million you we to XX% $XX your you’re the on time looking of should we Is in... mentioned free online couple sort expect earlier Just first at

Patrick Dovigi

is you think -- will to So yes, million number. I the right $XXX the million $XX

think I will through and parts year the come of in run the various a rate. you’ll have of share lion’s that full in XXXX,

on number those spoke to get by we beyond out be course incremental about. X of XXXX I bring landfills XXXX the because the think the But a probably to in $XX X projects. that over the just then higher we’ll time I for of XXXX, -- to good million chunk XXXX $X a probably have and coming rate you’ll will lion’s in share full real of little XXXX million numbers run the the

Rupert Merer

the are first X X or X the What as... look X imagine have. I like projects you best that or the after as next And are Great. Okay. far opportunities

Patrick Dovigi

simplest the to they -- sure not execute. are I’m

day. to electrical For if able think the about, pipelines roughly, XX,XXX of, to gas you these SCFM of infrastructure, we’re require some a incremental to talking out call come some it, be contracts X X, first there are about site. have or have to expanded the some of require that get But

sum would ones other to same. the the conservatively, think, I

the execute we on were able So the to opportunity size double them could be all. if

Rupert Merer

And them Can follow-on quickly? XXXX you are then on opportunities, story? that the those bring

Patrick Dovigi

the sometime over XXXX. the they I XXXX, right? rate for XXXX think also we will with full sign up come sure of run some in So the course online of others would in

Rupert Merer

have good. now can quickly, how Very forward? the modeling And right. talk prices right to going that we be you All sensitivity fuel you Luke, should and then about

Luke Pelosi

Yes. going I fuel of as nearly not million mean, And look, fuel we as we our cost recovery, of are our right XX sort on now. could roughly of we recovery are liters advanced that a quarter we’re be.

more exposure. we and high that progress the strategy, But today, a on degree offsetting. to we as we’re continue covering on of So have more

sort is probably We’re the the rest falling of XX% of price mitigating of volatility, and sort through.

to drive of Now is also but where incremental sort continue do improvement, conversion today. we as that’s sit CNG that going to we

Operator

Q&A call. have today’s great your of you day. all a also for rest concludes concludes today’s Thank We This you session and hope joining.

You may now lines. disconnect your

GFL Environmental (GFL) 6 Nov 212021 Q3 Earnings call transcript