GFL - Earnings call transcript Q1 2022

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Operator

Welcome to the GFL Environmental Q1 Earnings Call. My name is Ruby and I will be moderator for today's call. [Operator Instructions] I will now turn over to your host, Patrick Dovigi, Founder and CEO, to begin.

Patrick Dovigi

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

Luke Pelosi

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

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

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

Patrick Dovigi

with Organic our impacts continue that set exceptional Environmental for growth and year segments. rationalization acquisitions impressive again, this quarter positioning and Services with double-digit was revenue year. XX% of in expectations results over Luke. growth and objectives. volume, our to to our another Once both Waste for the quarter Solid all growth portfolio surpassing exceed you, Thank up us industry-leading price, are an we The positive started us first

mid-Xs, the and highest own the of our accelerated pricing Waste expectations. ahead history in to Solid our

operational capabilities landscape to quality of ability pricing Our the adjust time testament our of to real the model in reflect the our and business our team. is changing a strategies to both

see to optimize opportunity for and the and focused year. business, book be we'll the we surcharges our that of as on rest continue We price our of for

With business business onetime our MrF impressive of trends the volumes the acute and the ability Canadian impacts first year, and strength from in quarter because were guidance Northern lines expectations is high severe first in in conditions the year year our This our the that that across experienced excluding the in from the of provided. increase the the previously many markets. end of exceed confident not we the to recur. we feel and U.S. start Volume all our quarter, it for even were with achieved also volume geographies weather that and at of base in winter prior to for we balance we of the Omicron we the knew going our up

over ahead pandemic customers during saw result deferred of reduced read-through reengage were of positive we this that with have in trend or anticipating of recovery saw services year. been Environmental we segment own Given XX%. the this our our revenues We've our a that We that full sector the that think quarter. of been backdrop, Services the for is there that by this rest the the expectations

inflationary of segment the Adjusted margin think at be result, previously really a considering factors was faster we're in A result play. for prove EBITDA expected. to than to this we XX.X% thesis able As the we're proud going the out quarter.

very cover takes. But the Luke foundation margin year-over-year implementation restrictions Canada With base business our the previous from balance by uniqueness acquired period. Complementing by of have COVID-related the of will finalized the year. quarter this puts will we vertically of provider GFL we're services. peel then Infrastructure that continued GIP relevant business of you the the and while but exceptional lost all COCO a of a more end because Partners. spin-off impact for its will margin us of our QX, fuel to restrictions leverage comparison spike that positive the portfolio when that the of cost the we in moving Canadian price cost most utilization. and this should recall rationalization. inflation our to The business able it the also significant business performance sudden to less on for of the quarter, optimistic driving the finally about Green of lifting prior our headwind allowed our Canadian end in Infrastructure think leading of was You'll strong comments of create results the Paving the year. operating that infrastructure integrated was be a to model unpack back, than be the In April, our into we demonstrate the improved leverage asset recover through

brand supportive demonstrates organic near, growth infrastructure highly -- As our will from and to balance recognition value rationalizing transaction the quarter, to of sheet a terms last the GFL's of mid with base. a think projects macro GIP we of We our backdrop a commitment longer that asset opportunity. create maximize together said this over the compelling

will believe fragmented our infrastructure value meaningful market, We that our and in the shareholders. for Canadian also creation consolidation in services see GIP investment opportunities result in we

incremental $XXX acquisitions year-to-date, also on approximately completing million to execute We continue strategy, our M&A of annualized revenue. XX representing

of week, we Sprint a Sprint, combined existing Waste family, Services. in as based XX integrated vertically GFL of business completed earlier a our footprint their consultants As excited Texas the business. margins we regional for that ownership investment shareholder for years Waste opportunity and the acquisitions complements continuing strongly industry-leading and GFL showing with Joseph his Swinbank and Sprint their Solid has sons GFL's Joseph one was and the Will over achieved we're to through announced their under that support this footprint, of and as a are Reagan his

closed addition XX further Sprint, were acquisitions, XX and quarter. X contribute acquisitions subsequent footprint. our than enterprise those to quarter and to in all In the $X the value we tuck-in less million XX to of densifying smaller in

The Our around by highlighted development. the M&A the of the into to $XX we of pipeline to are capital that remains on of mid online we see to to robust, and continue earlier outside year projects strength is On with the you we our another continued and pace next encouraged R&D, opportunities in the progress year, development year. QX, we to deployed start million start project of to year expected in come late these opportunities.

these flow cash of We continue that our to the range of sites per incremental in be million to share expect to $XXX $XXX free from year. million

of on Earth at-risk continue at employee with focus awareness centered pollinator of around one across Canada. On the On we new ESG a landfills Day, species. our local increased biodiversity front, project our in to engagement activities GFL

time some details the then up. call share back quarterly will before walk to -- some perspectives share Luke, the the XXXX appointed to and and have Jessica the to our in us over Board the our I pass governance representation front, results by XX% financial I of increased we On will McDonald will committed who female now Board we our and to of on AGM. the quarter wrap

Luke Pelosi

Thanks, Patrick.

Before have Infrastructure basis. the analysis divested discussion like-for-like results. now of on I I division a frame comparisons that All the discussion, excluded of we from the contribution start and the to our are period-over-period GFL reference

surcharges, strong with year The exceptionally As and from we and volume, driven expectations volumes Patrick both from when with Volumes in X.X% XX.X%, X.X% of growth Solid volume. the anticipated we of geographies. price the and in broad-based started came X.X% X.X% outperformance from said, were organic organic excluding prices growth price revenue nonrecurring that commodity both Waste by our original our Merck guidance. exceeding

of was incremental quarter. within price in see mitigating of certain in see closer have meaningful rising in geographies. price done opportunity volumes, outperformance this we balance, we better upside that at surcharges great our area industry we and approximately our pull forward see will but recovered fuel our fuel said, guidance, we increase and I of increases, growth pleased cost as area Part Our our costs, retention this to a on a where both On job increases Many fuel industry on norm. were book. is in saw of a customer peers lag higher we the the of during Compared practices to to existing function this an recovered, the price XX% significant be migrate timing is markets. a as

markets significantly to by of the that headwinds and across wave conditions collection Solid waste lines the of most of all being of severe our contending certain at the year positive northern pulls beginning Post-collection service geographies, areas. the strong with are commercial prior year. more market with across volumes our winter roll-off the some in Omicron weather on particularly first impacted in newer of acute were the we're strength of quarter compared volumes

slower But have momentum particularly just quarter, COVID exited as the mentioned, emerged Canadian volumes as the true recently may we've While little Patrick started in we accelerating March. markets. a restrictions. was started in This from

But was impact level began apparent more performances read-through Contribution increase segment, for of And these businesses plan all half XX% of of Environmental of the seasonality some Canadian pull we and strength to growth the result XXXX. quarter. in for as second government-mandated ongoing forms we normal balance the cadence we nearly M&A openings ahead XX.X%, business. was our from of we think in favorable phenomenal this the organic definitely revenue had highly acquired the the work Again, was year. these intervals. that, been nonetheless, or than of closings the the base the Nowhere rewrite customer largely the to in and where service to realized first with results Services into market our the think our has results forward of attributable outlook a restart

XX.X% a EBITDA the Environmental adjusted and XX.X% for Services profitability, whole. as for XX% were of terms In Waste, for Solid margins company

communicated Waste a prior U.S. saw for as quarter of somewhat margins the year, in attributable and recall, the is less XXXX, Solid going be the and quarter our based over QX Although this to both strength factors. of and the to margin of provided quarter-over-quarter the year margins To Solid relevant atypical of organic decrease were anomalous guidance our we first was outcomes XXXX XXXX. when in sequentially on of various comparison from business, highest XXXX inorganic which the increase Canada QX impacts Waste this

guidance a to of combined increase, diesel the end to and basis quarter versus we of of alone view expect to the XX decrease, the impact and at segment beginning the the XX's. our margins margins the our Service the change in we QX items. a the performance these in guide, at Environmental the point Considering whole Waste as impact costs Solid Looking of of to year, company ahead excluding headwind mix our X high expectations,

of was we the and the balance an $XX was million a for Although Note that segments that both that comparable and continue with completed payments company proceeds in period than disposals in period. year cash tied to million in go in drive of interest during whole we million individual $XXX responded adjusted across a $XXX incremental to our during cost reconciliation expected cash of comparisons XXXX. of confident additional remain activities the interest, ability by as free quarter-over-quarter through the only inflation the year. quarters approximately quarter. the Included was as anticipated, year, we for end is to compared Adjusted the cash the of path to the margin cash to asset received are the flow price refinancing to by and around skewed from the margin flow $XX expansion time prior The moderate so cadence free see do burdened outcome million higher year.

in by outflows with may differences the XXXX, don't strategy of effectively we a CapEx investment within the timing We number started able the RNG by our contributions the the manning development and our free be same CapEx-like in these to ventures, But program. confident our projects year that point, CapEx given end balance last the in markets, also projects opportunities pull of in be disposals investments anticipated. disposal outcome net net our is of attractive as into quarter. forward capital have with, or number investment our elevated we'll may at happen to reconciliation. XXXX. we're any this such, recall, first towards the we year of of cover these and capital therefore, We've into of And inflows effectively in It you'll to we'll represent may these included a thrilled faster or and we -- period, core an joint this able XXXX the on process early proceeds cash as item lower the or be appears proceeds number. this net organic our which, received be the As and expect this remain incremental to be originally complete deploy partners is and than But a flow during any end and end period. to redeploy with

demonstrate equity Services. into our the After was XX in-year of in portion during anticipated contribution in These including the approximately are on leverage we be is the to revenue the tuck-in additional served said, X continuing of $XX Patrick total $XXX the before The dual acquisition any levels. Sprint of commitment divestitures Sprint's for of incremental shareholder the expected Waste base As annualized of amounts dollars end, the $XXX quarter. acquisitions that consideration basis. including to million purpose impact deployed deployed XXXX our acquired million an acquisitions, Swinbanks the into to contribution while A quarter year. we of million

GIP. was As interest the and as at comprised XX% for quarter received million in was GFL April. end divested Infrastructure and at classified cash as we Consideration $XXX of end guided, approximately sale was of in equity held

spinoff. acquisitions the GFL a the proceeds constitute Infrastructure, historical As reduce GFL's in the from taken net a the the GFL's financing of transaction structure to to amount charge carrying was assets that result sheet to divested approach of the balance received equal from

be interest the Going will for equity in accounted of under forward, GFL's accounting. method GIP

Regarding we flow quarter therefore, been year, the for over leverage spin-off, received account the the cash and M&A. from reconciliation expect slightly XXXX. within the $XXX forward. We by reinvested into as our business forma at tempered have free end slightly these a M&A albeit not the Pro improved proceeds the of Net be on included QX still end million cash adjusted post-quarter-end to pace go delever increases. of M&A at will leverage proceeds

turning we respect with remarks, base want any which for before back in our to Finally, closing the not the raising XXXX. we increase at by point, base provided contribution. year in providing because the that than one, an guidance businesses solidifies the press I call -- the to see for seeing guidance clarify be will for guidance this another you'll we're that should fiscal on Patrick our but business The that are the expect release the of we warranted beginning our our strength business update updates the the want there. better the of we before there On views incremental the we of of M&A quarter do We're to at we not least M&A and that benefit beginning year.

revenue, flow of M&A I is contribution only $XX or call cash impact. new loss Patrick. updated that amount adjusted that, the assets. the to the net back we've So divested With of impact over the now for will contribution EBITDA The updated less million free turn from and

Patrick Dovigi

a to capabilities big this quarter, The for our and catalyst me showcase start XX,XXX Day than more you year. that to dedication GFL. strong couldn't prouder upcoming the deserve the Again, exceptional exceptionally team our make Investor this and employees credit of all our drives talent for is this to

our most We're here of team hope now Team all this Green you say management GFL I of you industry-leading to You've York that New later deliver and of excited a to Luke fronting continue you, see for to heard results. the and Q&A. see face be the all will before, line call to may the but I over me the for for turn open in firsthand the month. to quality best-in-class operator

Operator

[Operator from Instructions] Michael is Our first Hoffman of Stifel. question

Michael Hoffman

pieces I just of like kind are, through into understand walk feel cadence. where I and growth could the we dig to

What's the did good what with? really average, entering you it, place, momentum? I do in you I'm think X.X exit a an about you XQ comment If a I did So the your what made How get quarter? exit script.

Patrick Dovigi

Yes, Michael.

pricing looked year X, of starting big math. Jan then anticipating, lot the number just virtue base ratably of our guide on have on And January really and right? a if happens at have So normal were of cadence So down the a that's QX the that. we through you by surcharges you you would stepping the what been

we and do, out need as and surcharges commented intend Now after. we and incremental we go there's get to think to that pricing

after the have of XX a but surcharge previously QX the if to points, net incremental going absent from down material to a the XX level cadence would going is step to going basis Still now we're cadence at that stepping been so have down. I than price And expectation lower anticipated. think today, to new the of pricing that QX be is sort and would normal we temper down, step a

Michael Hoffman

it's [Indiscernible] X, low very So X. on handle got it high or

Patrick Dovigi

I think way we Michael. sit today, in that's Mike. exactly right the

Michael Hoffman

get ex So X.X the volume, that. I MrF,

that alluded is a be pace bit summer. fall hey, dismissive, summer come office of to front lag in still to almost folks Solid is instead of Is back not the a Canada that a the in bit the, leverage so some of I'll us. harsh And at is up there. to it's at little -- look winter, You there the short given therefore, but regional. to of recovering, which Waste little

the X.X powerful. So is even more

Patrick Dovigi

those markets say would Canada, primary I certainly of is Ottawa, large secondary you Halifax, are the bifurcate markets, say, way you're back exactly offices think getting and levels. markets levels Winnipeg, sort thinking what still, schedule. people getting big fairly pre-pandemic the normal would by Montreal, when Edmonton, sort to and for and said, most you a markets, the X look getting are Vancouver, urban mean, part, that in I markets still lot secondary that when back Calgary, about to a I markets work think I between urban driven off the across of Yes, to I normalized [Indiscernible] back Toronto, of the

mean, right, come here that start been the in February we end to of results are think from off online, I the again, full shutdown came most that time January there's Canada And at in listen, March. some a presented of -- So with took back Omicron. I phase to these restrictions

for going February just a sure. came are we're in you here volume off But the no fairly in I we're you're for the living into other the in going lot part they've knew question a the to be shutdown sticks restaurants, think all the X going as come. was back normal most January. to a have And the when, done, strategy, -- government assuming sort with upside assuming of side Environmental and waves on of get happening. fall, vengeance and of et to events, moves to XXX% Omicron and Services think side, fully obviously. Now late COVID actually right seeing was the their some the -- on We which Canada, it we summer back It over cetera, that sporting on it you're March post Canadian I

think to now So other that they we're like. or But Obviously, finally and on we we've because this I the well X X about moved times of like never we've We're I expectation were on. know. been what looks pretty think -- temper we'd side said think bullish really it, that we're positioned I now. here. -- We've

Luke Pelosi

over volume. other highlight was QX 'XX that Michael, point that, negative if on I'd X.X% about think QX, is QX the you

X.X% so we MrF. are ex positive And printing the here,

about was and think X% If XXXX, or I of QX think plus X% change. plus it you

arguably much comp a So tougher there.

tougher contemplated that original flat being guide close by Our comp. to virtue of

think that going I the QX. the all because less number. in reasons something it's print of to the said, than be think just Patrick see to math for comp, was we what the upside on I But

Michael Hoffman

of if So to XX. XX, deals, thought Sprint's M&A, big. could the touch XX I you I'm XX on assuming do the you'd

of the of even $XXX $XXX little. other with and of million So XX, them of million is it sort Sprint, $XXX of million revenues XX are the claimed you really

imagining sizes integration? but portfolio are talk then of talk So little takes bit that And XX all about are sort ones maybe you that -- already? can Sprint you you the you've where I'm we? about days, inside acquired? the the fully can And a little integrated

Patrick Dovigi

Yes.

smaller of then only, XX $XX right? hauling generally, that's very I you So tuck-ins, think And that base certainly you million. the were facilities, XX facilities, small, to $XX unpack transportation, that the the mean Sprint, enterprise look integrated then like now, by but fixed important value, if that over good and be a you acquisitions large, I X-ish. existing sort between that's we XX it the But sort cost moving have XX HR, have recycling at M&A. you said; certain That's of X will now fully would between XX million little timeline it to million integrated mean, be deals, days. laid X. group our next deals obviously, quicker, question just integrated our And integrated of of and landfills. than over August parts fully So have of regional leverage fully between will of tuck $XX out. into accounting, August I

will in will ordinary, in the and states be in U.S. of fully normal Canada, the X nothing just spread it the on simple it provinces very So run course. But XX out platform, our through

So for not on. take to team a lot the

Michael Hoffman

Canada? And what of it million, is -- of versus how the much $XXX U.S.

Patrick Dovigi

So mean total $XXX million? the yes, of I

Michael Hoffman

Yes.

Patrick Dovigi

of in the About U.S. $XXX million it is

Michael Hoffman

kind mix shifting it's of the mix not well? keeps the all at -- that as So

Patrick Dovigi

No.

Michael Hoffman

this game. equal negotiate partnering? where in are economics? less think, better chances are chances lastly, get you've, put but on now many RNG, are you up What And can wisely What are there since so developers the then capital I the or the playing you

Patrick Dovigi

we sitting on themselves ways one to available And is sheet, at that's something capital. certainly by a differentiate to Obviously, us. the on differentiate they're their is gas. finding themselves. balance developers putting lot way asset, capital that I up is So looking to the which have mean, the are of as

on, find other develop some than $XXX to the So move that more the probably fairly to million. of know is they couple a come that communicating that's go the numbers is using site grow that." with sort be think to a reaffirming of "Hey, the we between $XXX million to on we're to we we $XXX going million have We sites incremental Obviously, share there know up. which think as million to today hand. number of I somewhere way quarters, that how internally, opportunity is of that we base $XXX forward we to $XXX next of to see just over $XXX million in able you'll But details gas case. have gas. to saying, conservative actual and And So million, the sale what the in feel

communicated. been in And all XXXX. coming it's online comfortable online changes. XXXX we is coming There's very feel of in on well and that We no previously and It's track. so what

So all that the will to months. of progress XX nicely over course XX sort of next the

Michael Hoffman

me. And one for last

making there's script, the year, Will shared million Given cover at up work $X this on then the real the $X the -- fuel your the million. of surcharge cost everything rest point fuel. the feels impact of you'll forward and you data it from like from about

Luke Pelosi

Yes.

at viewing look you in when back, So March which majority it GFL. that's and can pace I sort the And right at mean, fuel then was think you you QX. the a diesel, as do peel when spike is of I meaningful we're of you all it Mike, for a opportunity timing the But recover. for have lag

for itself the and you mechanisms think within fuel managing number. in probably at they base. if addition, our to industry, to much opportunity at you like, we mid-X% fuel of amongst in the total in you if of increased in a have tested best-in-class than incremental place then actual what the tried, P&L it's of that. I And quantum customer consumption. exist. was look and I are XX% true implement fuel that think, cost, recovering I the cost a XX%. Today, X% that higher look we're number to And a sort our sort looks our And just look when cost, the recovering book mean,

have industry some of the that, number sub think in peers that I X%. we our is

again, function that's and a of opportunities of other to But CNG available are sort Now measures. us.

sort in is fuel quarter-to-quarter foresee be from there tailwind to the this So look noise can for year some totality, a while what GFL of profitability this we become. may be of we ultimately the great towards as business

pricing there's they were to year, after. today, that market through get probably chasing this incremental you prices that stay if of would a that bit to go yes, there. So And we're $XX hole a are where to a you million incremental open million have or have surcharges get $XX aren't

perspective. our any give you're quite I Now much the And margin be. in QX, feeling guide we're And we're like. side, confident think of we overcome? what in on bullish hole that can looks impact question then per we'll you that opportunities think But covered. our we our how incremental the what dollars When is have about ability On to go that. out and updated execute would

Operator

from of question next Capital. Walter Our is RBC Spracklin

Walter Spracklin

come And to out. noted volume, wanted the just in back past I little bit on So further a the U.S., but reopening we're part.

So go-forward as larger for is that Can behind there one your ascribe in on service -- volume to by and out volume accelerated, the in to the well? industry way the point, and something peers, that we I despite peers? through an smaller virtue investment that basis, to have and opportunity to asked you a see technology there size the it's that they the players gain Patrick, it's just service. view has Is flat, share sustainably longer Canada, compared term higher simply us of better in volume offer but your still that said of was and U.S., mentioned you behind to

Patrick Dovigi

think possible. on think mean, I seeing the it's we're some I side. I uptake, particularly municipal

that As that and and challenges. equipment that and players haven't the some have come smaller out interesting have experience had is tenders have labor probably some new performed municipalities of challenges

C&I the Canada So on side. we're I both to U.S. come we're there's still don't Obviously, the seeing some that in recoveries on I fully recovered. certainly mean and opportunities side, think

think XXX some I that opportunity think whether is. points, yes, so needle some what to that's I volume term the in basis the yes, points, there's on So XX I material the that basis mover. short elevated I level a it models, opportunity -- there's for don't moves don't certainly numbers here think going some But certainly much it's that's side. see we're think really

Walter Spracklin

gate envision cadence this to the end something And is interest roll-up on going you. that strategy? Is have the strategy? on? that's Or will us you you toward of more the the started do What nice will the strategy? that And updating venture. toward the progress that out that follow be a -- be you'll of how in Green of a great for progress Infrastructure of that something updating will the would Partners, roll-up year? ramp of you your obviously, they -- now? that There's -- how opportunity shareholders be the How of on that's success Have we

Patrick Dovigi

a we're opportunities when capital space the semiannual available dialogue on we active. the for think, dollars there's a again, into different with away. just Yes, not and shareholders. very deploy company, often through space give chose Waste opportunities active brief now leverage we'll cognizant set is we the those we'll pipe most to LOB. of opportunity be of to of other team it. business. favorable what's Solid the of basis, all us on had opportunities go vehicle, obviously, we're within And update likely that but the things will to right what the owned to we other basis, that you obviously, just had. annual on think But those an I dollars every of private We're structures There we Listen, I full there's and outcome quarter, those starting the to things, business. our that not in in on in annual the being we'll give mean because it of And have opted X capital lot lot it's Services to as amount we was a happening were that. allocate going in I updates all update. of And a sort private seeing the you're But our deploying. that be Environmental deployed. And will financing I Obviously, a opportunity dollars. allocate in we

eventually, we we create So that out But business our said, it. take to of business plan company will is that equity take and another within business. like -- minimize that need public the we

start and other driving the So we motion in on it wheels normal And we will will -- course. the things. in perspective to go already put

Luke Pelosi

clarify to equity the a just that we'll is point Walter, reporting be accounting. method Patrick's on the while company made private,

will quarterly a basis, GFL probably it's as a folks there to that based color certain whole, but the be disclosure, not to looking for. going of on the So that on materiality might give be

our of of come we update in what alluded -- a one is more decks. So to, a Patrick basis, robust provide what to type investor on sort semiannual

the above are looking color for. provide itself information So get financial disclosure while, probably disclosure, won't all that that and the the folks because statement unto private what can beyond individuals

Walter Spracklin

And change the just in the does next formal other net with net on? it activity you your -- the you does of updated words, the Or date, to that me. the In -- update also mark-to-market the now hold when to M&A didn't guide that the quarter the updated in year-end, consider more one later done? and -- kind debt fact do contemplate a didn't guidance -- reflect M&A is or but the be pace final next is M&A you've you you here guidance? debt of that Luke, for updated for even to

Luke Pelosi

the capable delevering free no the M&A of leverage And that the Recall net the pace with incremental would still debt power although of there updated get cash to number, the of X.XX extent guide, incremental to will was delevering, to need think, X.XX flow. because M&A. said M&A. the of to reflect the from XX Walter, basis points Yes. I deleveraging temper is the

achieve in think will year, in another M&A, light looks it the we've year been of the able of to I like. M&A so quantum So of that this outsized early be

delevering that sort although we've we ending no communicated. from than of the than guide contemplated be that, direction the still different with leverage will overall M&A, to so that And are committed level

better how considerations. So end. again, could speak, leverage as business have visibility of to at by views year time when whole those the that where we with some the -- And on the think our when QX, a we base plays we'll we get out refresh we'll year-end time, as to

Operator

CIBC. Our is next Chiang question of Kevin from

Kevin Chiang

you just in are And maybe these they're return market on delta [Indiscernible] when question Like specifically, want what's you a And quickly be when what the so finding that Is you acceptable? is you to where getting made to pricing you acquisitions the what capital book it there you negative between have margins just is date. the acquire acquire, businesses, that on similar on to find there? a versus that XX pricing if here doing? how the replace delta the can latter, it be I we're you But most or you pricing. an invested would

Patrick Dovigi

environmental aren't we escalators share $XX lion's typically which put proper what of I the I typically got structure by is they ones, fuel But and bifurcated the ones, smaller surcharges. between these, tells $X Yes. acquisitions that that we larger have and think mean, are what Sure. us particularly we have. properly, work it, obviously million most, they enterprise that that the of it's got call small, have million XX doing contract contracts base out value, customer did typically the don't history of the

them these model, So there's the and pricing platform, within that take putting with definitely books And business. the will obviously, good place to XX days opportunity within our close acquisition. those first effectively of days of on integrating a pricing XX of within our

to what they within So we're I bringing pricing just be. that's on that very books contract, a should the it's levels opportunity those obviously, generally, to surcharge but based mean, subject where seeing there is today large

Kevin Chiang

question. is just -- see some you made? that that of up surcharges, kind opportunity hole lease given And you the your there about to of talked is environment? book players really deals parts the to that your opportunity? that you've actually, the recent see Where from primarily it kind extent you And that my of you've Luke, was follow-on of these programs. surcharge weren't legacy also the these where extent small proactively the can implementing is you to think clean here Or up inflationary those

Luke Pelosi

some I of while recent were priced it's the then program. surcharge was of pricing levels tied more the as well, opportunity be books book, is of have component M&A, about the both Patrick in just to, a the we which alluded sort the and may And across Kevin, buckets. talking industry. big surcharges at mean, don't to many in the latent that the pre-COVID to legacy those customary

at in So timing the even cover art lag. the the -- there's peers here, I degree a this at on the we're $X.XX covering I mean of with maybe look certain dollar today some is think dollar where in that well you dollar when what And or that more probably $X.XX, for possible respects. are we're established position and

peers move you the are. where we as but think a there's simply for a And forward reinvent this to to profitability important of think those place already to get the an that perhaps when is regard. have that's about our lot versus their wheel I the where forward think we as real path So us, in opportunity go not just already I optimized consideration

Kevin Chiang

know more out I of again you you underlying remind you'll that's us challenging would outlook one more be, not question us it maybe You're pricing. had you the last on this recovery tracking for on And would like and base I But what of, Canadian times what have of XXXX? you assumed guess, guess, the give potential for you sense remind back of what a a I of the then terms February. where you guess I assumed assumption what to is in through business? be can that we there But us we basic base to what -- just recovery terms can today? when have would expect your way update sit look obviously guess, when quarter. you're your and second -- me, But level I set, as giving in here offsets been January really just update are of post-Omicron to is that could a in base calling And you're level

Luke Pelosi

Yes.

starting the certainly a in prevalent think Environmental in than Services QX Canada. segment, and delighted see I volume Kevin, perspective played we're And materialize. anticipated from to to recovery better that out So that most was

the drag September. it's often now because should unknown it that one our therefore it that's Canada is until the continue sort and we was earlier sort I think making May, well, of feet Michael have going of draw entering momentum to and And comment, we enjoying are as at night this clearly be people much into had to just a as the the continue to summer. we is freedom game, hockey finally out delayed once and because last we're again, there summer,

do specifically, thus update was may guide now, to right, and think So seen XXX, to flattish. be when what I in next look on what will upside QX, volume. months far XXXX, tell. our originally this to July. speak think of remains timing based it for we be is of path QX of we comment the to I The couple what QX of points, my because this better on earlier, basis and like. say late about to Where months a back to think I'd We of QX plus couple we've that the seen. desire reserve thought of sort I strength of much What is than XXX next going there's alluded be for our sort something the How

the a the as near-term plays whole. for that's year look, So how it but out

back to in asking at that we're think we'll and better come visibility until July, have I wait we time.

Patrick Dovigi

pretty about what rest of perspectives. like the bullish feeling looks We're all from XXXX

the be a trends given I today. we're it favorable outcome think will So seeing

Kevin Chiang

note a a on good on Obviously, strong you [Indiscernible] are Congrats QX. there. you off very

Operator

Our next Raymond James. question of is from Brown Tyler

Tyler Brown

I've to it. that want just sure make I got

A it it clear, right? So customer today. fixed have a no to amount, a only what XX% crystal has it number surcharge low amount starts all, a and you to but mechanism. happens at when surcharge your mechanism doesn't fixed a alluded of have that's book coming has new surcharge, recover properly the we'll on flex be at in driver introduce the that sort sometimes of one, Patrick on

moves. as So much was number we and that surcharge PI. to reporting base proper are a the credit earlier give were and XXXX, just multiple is of base that this, because the out we What level and a together Yorston, initial days doing as surcharges those you flex actively need and recover the like effectively to incremental saw I team price we are do, pivoting and all now through you now that that price going getting to Greg

there. in you move So getting something then and there from the point starting is

to So the look our of natural today, sort in take the we're on But sort recovering of $X.XX bit hedge. and pricing. a of alone, Solid at set lies. a dollar we're by a of -- market all virtue those, Services business probably when it you Environmental Waste that has surcharges that's response we bunch proper opportunity where now ones exist pivot those to in It's of to get the them the that

Tyler Brown

of practice. And quickly. I'm common in a wildly mean pretty pretty you to I is just very easy isn't coated going But oversimplify quick fix. kind [Indiscernible] this this this. a

Patrick Dovigi

Yes.

oversimplified yes, it's not when we I'm it, about need the and but wildly you've opportunity think here, talking out to that's go do like something. I why

all that As get to you It just said, in this coordination sort place. is a common practice. of takes some

at news is that couple can And of recover to But which folks. in of some we'll so see couple we the impressive be what I how will and the that's incremental then next hopefully pace come good be and let's dollars months. the think execute pivot we with able speak to the back over effort. next when months And why

Tyler Brown

GIP, I sure that all it then just on here. want make And have to I

That fully that number X, closed. transaction in happened So has April.

in and your you that contribution got XXX entity, XX% for all the million about new a stake retained You CAD correct? is

Patrick Dovigi

Correct.

Tyler Brown

the so appropriate, is deal And EBITDA? we GIP on what et of that closed, cetera. now ascribe whatever fully et based that is pro forma is COCO multiple is pro we importantly, cetera, back the So think what leverage and that more kind forma value is can funded

Patrick Dovigi

Yes.

Pro would number on [Indiscernible] million basis of -- forma I EBITDA is yes. leverage $XXX XXXX. forma for roughly say mid-Xs. a of on So pro the business

Tyler Brown

still EBITDA. It of is --

Patrick Dovigi

The average.

Tyler Brown

Yes.

Patrick Dovigi

on -- it's million, million it roughly just about $XXX of We're way $XXX debt today. --

Tyler Brown

Luke, then just the -- you kind high And of can level give

Patrick Dovigi

the between And industry, and look business mean XX be I and it Tyler, sort a gold business of trade the margin. is when on in XXx, margin those mid- I industry-leading This things forma is. a what to anywhere that of profile flow standard margin terms -- is is at really XX% cash to basis those industry will industry-leading This you high-teens business. mean depending profile where the pro if on for is -- free XX% asset a the like

come So more of M&A significant and going period behind -- opportunity there's a amount that. to that's

Tyler Brown

So walk the last you cetera? fuel, XX.X, et through things about to m commodities, thinking one to here, margin XX M&A, like Waste just can Solid of just pieces high-level due kind give the

Luke Pelosi

Yes.

of quarter margin this the the right? period, the is a I'd for I profile little the XX prepared prior anomalous And what walk articulated based notes, in the reasons the you that So be ought XXXX. of call the unique Tyler, higher And just profile seasonality the was confluence arguably it on XXX, XXX of about factors basis cadence. that points whole to a was margin QX normal than the benefited when think

and through points. to point So the from of were sort basis component, I anomaly sort drag have you saying commodities about acquisitions. that if from you offsetting there's of, drag basis fuel to roughly roughly in this this that XXX you of basis XX XX tune basis sort think And think, by XXX of walk pricing, point context you the it points XXX of then have we

the And pieces, business. look pricing strategies X with the normal delta what leverage so I'd the just margin expansion at from you of operating underlying those are call you and if overall course then the left of

Tyler Brown

Yes. That's kind of my line.

So at slightly were core up? level, a margins

Luke Pelosi

margin. to there, a runs back, margin up high it when quarter and operating balance, fuel difference I able is of But and all the timing that's cover last to overall, and than leverage quality to the There XX operating And it underlying might the slight be industry there like sky the when know be think the expansion by pricing of pressure. drive inflation Yes. in think to I think peel everyone's testament in can this testament the the industry and actually, is of may be of model reporting, available a testament, real temporary a that's I do to you days again, pricing driving the sort cost inflationary from a some it's I in more environment levels strength it's a available.

Operator

from is Joe next of Revich Sachs. Goldman question Our

Joe Revich

on nice hear. I'm on gas investments the wondering of your plan. you Luke, if expand That's ahead just being landfill to could comments,

we of one quarter. the the think run commence? And the you one another earnings What's do second about the spoke once do 'XX, quarter to in starting operations full I get line? how time plant in those in quickly rate up first updated they

Luke Pelosi

Yes.

I capital pace So think to you the which the original Jerry, And deployment earlier be like in there'll completed more said guide, at mostly that are capital moving, these guys opportunity that that deploy looks would we in be the XXXX. XXXX. it

this that million So number if within $XX there million, to could $XXX million $XX was original million, be upwards year. going of to $XX

CapEx with for $XX number this a Now still CapEx net that from disposal, million proceeds covered year. the we're incremental of incremental

So just there, but of sort no accelerating change would be that path.

half coming online we accurate remains the about that XXXX, today. the sit comment of your projects first in So first where

for we we as is that a online path late think as XXXX sit, in free within number. just But flow about being Now XXXX of we'll, a the that coming I everyone bit think just so year, I a that cash where of it earlier buffer. it enjoy to just benefit suggested build opposed in that therefore, and XXXX, the be to little

Patrick Dovigi

first saying biggest mean, first. were the we come to commission we CFM -- the today Yes, I online site obviously targeted few

So commissioning gets by like mid time of June. sort have late up and those that sort perspective, from their of there's X-month optimized online a April. those their them of frame is models in sort -- to plan the then And to by fully

Joe Revich

the investment the made [Opel] nice with And nice developing markets to wondering hear. agreements and European having the in offtake some spot about I'm how then view, rates? in move mid-XXs, both offtake was Henry on prices and a it's Hub market your spoke for can originally you thoughts been you in which spot RINs decisions. versus what your the market update gas us that's contract

you to So intend hedge any thoughts to out. versus what term

Patrick Dovigi

mean, Yes. energy we're again, not I an company.

still significantly little offtake I agreements. reduce market. the that initiatives their enter corporations into looking moment, being of mean by in what the bit mindset footprints. We're voluntary the we're ESG is the carbon of really So And moves voluntary that patient long-term market, material are just going sort that given the some focused to at are are large a we type on to just

So talks market. of with lot we're voluntary and negotiations in a the in

will We amount. certain a float

revenue is we'll But coming XX% our the rigs. some XX% still those So of have model fix internally volatility of facilities. with the to to stream out

I all the number the where to said why wins $XXX of the grow of money. our million mean, material get stability a et $XXX $XXX this flow. The we are. not to sites industry at there's So it's flow perspective, Like quarter-to-quarter trader. based reality sort $XXX to investors cetera, and the initial amount don't estimates, that's a of cash money. free have with changed of volatility easily sort the about I is amount the and we cash to million And look ones, from be can buy to our for on you million you said, of energy explain combined, to material when million, of that incremental

of a on plan we contracts. significant locking long-term cash in in terms So amount of that

Joe Revich

you that developing? deals. it's least on And take developing? market stages in early ramping Patrick, is the of I long-term is to how that Can market think people's willingness at comment

Patrick Dovigi

months doesn't in the the perspective, X it, which just, RINs even for change are sharing as come I really much. so much upside. forecast market It's moved in they're I -- about and the downside mean, changed think you the year, mean, rates we Yes, our yourself that moved on So up, should they RINs to protecting next When X last I again, some have have look a the right? but since to it's started the forecasted obviously, talking from down up. of bit, what at

longer-term negotiated then So price, the these and the we but new today. beyond will a share a we'll being that's agreements certain floor price, are, upside have way in what's

Joe Revich

real-time was visibility Luke, gears, accounting with what you your moderation differences signs based inflation any you potential Canada? basis. systems, shift a to really cadence And just course. then year-to-date? wondering good on And inflation I'm you're purchases I any And comment outside from on the in in the hearing if know diesel, have and between on of your of U.S. what of can

Luke Pelosi

seen Yes. primary really our throughout versus less impacts have take than secondary you the Jerry mix, market have Canada we've I And true as And mean, mean, Right. really in versus everyone versus year what has inflation been. much seen it at end of markets. I of out if think we've it sort remains our that it secondary U.S. greater market. of areas, sort as we've obviously, last the the urban as today, we the sort QX. that's otherwise diesel in business the the day, component, dense what's may is skewed tempered on of But the labor In in driving. of I said and the wage

a as expected, QX number. So was high

was terms on QX comp XXXX. of of Xs in based in, I think the but the inflation, all it that wage is low

rate of XXXX our I the So feeling And of increases think through lap pinch. to all you point the we're XXX quarter, the we sub-XX that. points, quarter-over-quarter, from look were as basis if sequentially was now you XXX is basis to prior acceleration more telling right? had starting which

to I therefore, a still was higher sort get see original and elevated you could be low probably and current path be if -- the So end where reduce sequential I into peak but year QX little those the we you're for at guide where year QX of beyond, X, significantly bit decreases think the the in will Xs. QX was going a pace, think the as

that, than respond to going little bit but a cover. again, probably you're You're to, pricing higher than see more the

Operator

Jefferies. Our is of next Mazari question from Hamzah

Unidentified Analyst

Could much CPI This is open specifically of and Hamzah. book filling your sort indexed how how running book CPI market. you comment what of then versus structured? those [Tom is is on Hoffen] are for contracts of just And business in

Luke Pelosi

Yes.

$X.X billion, book CPI to $X.X of tied revenue That's collection. residential spread about across which contracts, business linked. of billion So terms are in most in the XXX, of is just XXX of

business resets balance before been of roughly based reset to is QX, reset. then in have post-collection that. XX%, and based the QX, mechanisms also them We sort of book XX% that in other XX%, of The reading at XX% be ones of in The on are spread contract can have time. linked and between QX. Many the point sometime QX

up levels at So the the June XX year, example, that like for of prior often in on January be based and way. were actually X pricing may set what that's

So municipalities what sort have upcoming like. into visibility look budgets their of

number. If you X% at book think running that about normally blended a sort of of sort

to higher still diesel rates it now number. book are inflationary lot that more a Certain X% X% are seeing today on environment. tied meaningful contracts current resetting much But that. the to components at sort a of lagging of is You're that than at

in of So XXXX. benefit on will only the I real business reality, in realized earnest be that book by think

happy going. it's with we're that as here. lag, just still upside where a we opportunity and from we There's So but view go as forward

Unidentified Analyst

then sort for on assumption a the labor there? I just what of the comment inflation you labor could on seeing guess, And you're bit year? turnover like

Luke Pelosi

Yes.

last sure. a for in the to remember of comps seeing. meaningful So what versus there's component we're QX, you meaningful labor of seasonality been got turnover year, improvements And there's

QX the will I and story told. is So really be where think QX

far into a the subsided. of for drivers us was second sort much of that will in that sort last May rate said, last better has through what peak really But the going tell tale. friction the than we positions success think sort experienced material experienced we being July season the and of better in of half we've of it's really year as We're complement year. think the turnover that I with definitely a busiest of

Because the better of how it's at we'll on QX, exactly speak have playing end we So sort and perspective come when we're you feeling of good. to back out.

labor the just question. I On provided inflation I think the previous color rate, that in

Operator

We have no further questions.

So for our to back remarks. closing I'll hosts their hand

Patrick Dovigi

seeing for call, not to look at forward the very everybody looking forward second and for for York. you, our after to Thank joining you And everyone, New we speaking Thanks joining. to Investor quarter. Day those in attending, much

Operator

That concludes today's call. Thank you for joining.

You may now disconnect.

GFL Environmental (GFL) 7 May 222022 Q1 Earnings call transcript