GFL - Earnings call transcript Q2 2022

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Operator

Good morning. My name is Victoria and I will be your conference operator this morning.

As a reminder, this conference call is being recorded. I would like to welcome everyone to GFL Environmental, Inc.’s Results Call for the Second Quarter of 2022. I will now turn the call over to Patrick Dovigi, the CEO of GFL. Mr. ahead, go Please Dovigi.

Patrick Dovigi

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

Luke Pelosi

everyone. morning, Good Patrick. you, Thank

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

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

Patrick Dovigi

you, Thank Luke.

of was the double-digit headwinds. many the to start growth our this in industry-leading Solid accelerated all demonstrated accelerated model, selection growth quality and our both our cost solid the as record-breaking The environment. again quarter, to face driving in of flex the the Services first the into quarter, over row Environmental segments. quarter market response our unprecedented Waste XX%. in inflation results. of the again in price Organic strong of a waste our team year capability were second revenue we once the strength X.X% even second business Our to the continue The the quarter quarter That’s with in pricing second in X.X% and strategies quarter to for

outperformance business that X.X%, quarter onetime the when quarter’s in MRF lever. X.X% and revenue Volume to to of and surcharges, the book contracts beyond. business. was our QX, waste our from area expect most of of optimize comparison. remember of guidance. lot efforts book contribution. have considering impressive to to in in revised performance see delayed as the prior a XXXX price growth and important we part year, substantial With our in of this dollars to will opportunity that CPI-linked making high in was Volume the the is being realized using ability impact inflation believe achieved a The cost before be confident our the the compelling highly for XXXX. will our We’ve we’re excluding from XXXX volumes, recover those only to exceed significantly the this first excluding growth year the the financial from that solid year’s continue nonrecurring. volume second X.X% It’s our from we growth in recognized performance our knew half we tough surcharges of MRF of this also price creates the current guidance even this a in We in begun We meaningful for to we with drive price revenue and of speak our increase Luke this were end backdrop year, XXXX, more increases recovery meaningful the said for

business, As we expected the from saw reopening volumes activities. benefit continued in our Canadian the

Adjusted acquisition. overall strategic acts to collective prices for motor fantastic Environmental energy our reflecting service we expectations We the over a outcome growth that knew hedge our XX% and capabilities to revenue segment for team natural and was of considering XX.X% organic in would our driven in was dedicated the QX. cost the was at rise Our the EBITDA also in the The customer Terrapure there integration be of back and year ahead pressure started the from play. the used half first Services margin expanded headwinds cost XXXX. continued think growth oil realized resulting of half the increases of increase the reengagement that’s other quarter. saw network, QX, we in contributed margin from Higher the that by and base the price well during against the quarter, labor of

and disruptions We how would extent and pressure pandemic the cost fuel anticipated that margins, supply put labor costs ramping also rising chain the would on knew but the of we continue. not and the up other of travel had plus shortages

and our responded rental blaze spare comp repairs the with high flow-through unprecedented but parts and highest and trucks. also all-time increased overtime and for and higher higher surcharges, rates delivery We on maintenance, pressures of nearly unit costs XX% pricing new costs and and from transportation to those quarter in truck history. hours the and third-party more cost This labor, reliance saw effect fuel third-party

over period. comparable We grew the prior XX% by EBITDA adjusted also

are temporary recovery margin our shortages once and the all the disruptions that labor the our subside. by we quarter drove supply compression eventually suggests will in model. higher unit quarter, again demonstrates costs inflation in business rate will see resilience While this chain essentially eventually magnitude of driven fuel the History performance the and which impacts and from that prices, believe of cost strongly the as moderate cost

ability through asset expansion our pricing for we to significant improve. recover improved costs energy see happens, will Additionally, accelerated When and our margin to continue opportunities that utilization.

continue also that first continued On year X and negotiation M&A of in annualized acquisitions million continue approximately deployed The expect of than we our under have in an see all our The sites. footprint. and year-to-date, have projects development, densify capital projects tuck-ins to to half XX were completed RFP ramp XXXX to approximately the is representing active We attractive M&A an remain incremental these QX we acquisitions Sprint $XXX in remains through we to same these pipeline second Waste continues revenue. on $XX other We begin projects cash opportunities. in that environment five the small We to confident additional now strategy, and invest deep half. beyond. million in and execute of highly the XXXX through our the accretive for and and we grow flow completing X projects issued up into to will generate RNG,

the we values. when at of XXXX, told to about the opportunity investments RIN first return As discounts significant our we you we expected RNG said, these modeled prevailing on in December

British delivery in is in As recent service and fully a the use to took electric of opportunity the loader conservative ESG, our result, the Columbia. we month our still quantification residential RIN Squamish, first that side softening contract this our pricing. On of we’ll despite

percent or highlighted deploy CNG service fleet to by Gainesville city conversion. annual vehicle XXXX electric increase our the the electric Day our with XX-plus overall of part of awarded deployments May, As short-term XX contract. with we’ll replacements recently in an XX of at These vehicles Investor to are to plan vehicles goal

walk are fleet also over recovery to will and our I’ll who services include perspectives from resource financial to details We wrap us to before the our the our some Luke, the then increase issue back of call track we this results goals full greenhouse customers. goals through we and gas reduce of This pass the offer share landfills will and our closing up. in set to of now on sustainability-related will I QX emissions year. to our

Luke Pelosi

Patrick. Thanks,

that contribution that reference unless say the want a excluded the now we’ve results, I division GFL of otherwise. comparisons remind I like-for-like from basis, divested Before once period-over-period I start, I Infrastructure our and all again everyone on to

XXX accelerated QX by Solid or commodity QX, from X.X% when volume surcharges, points the basis X.X% X.X% volumes waste the from revenue from driven price, from to organic excluding XX.X% MRF in X.X% nearly nonrecurring prices volume, growth and period. prior X.X%

line strategies in inflation volume with our revisit in in original to While significantly broadly prices of was unprecedented recover base cost the pricing fuel surcharges our and business. levels as the price guide exceeded and order our we guide,

relatively material and substantial were time You Previously, that that of surcharges this recovery costs now volume. fuel happening we the month. in the our reporting, out price we for being quarter will first each presented a broke amount of note have recovered amount in

surcharges forward, XX% Going the fuel this as amount separately direct be recovered Variable saw disclosing we’ll just increases quarter. quarter. done we price under of fuel we’ve the this

were the segment saw in where first XX.X% practices that solid a and follow. As also momentum QX our M&A and over other path and motor term quarter, effective margins market the positive a volume that organically can ahead over than segment, on the but the post-collection strong XXXX we strong the XX particularly basis an largely Environmental in Canada, geographies. continuation result Terrapure quarter, harmonize only years plan. X.X% for and this volumes basis near demonstrated looks and mentioned, recovery our most our clear norms. the services point as a cost what and QX, we pricing points was grew XXX the in environmental selling reinforcing a we original saw the of of industry positive incremental expected, of into approximately XX% carried the pursue for for fuel The we was mitigate XX.X% also second used the better Adjusted gap, in Volume EBITDA oil prices. recovery in as not a and cost XX%, has was were over strongest growth outlook plan the price open from To as this start for with on see industry program increase sequential waste, X.X% segment revenue and the to across our volume current like, for whole. quarter Services realize our higher in outperformance growth XX.X% business. Contribution fuel of company we

nearly fuel by book a cost Impacts combined and from rising prices, XX than million of coupled impact energy As was additional XXX than associated $XX impacted $XX resulting oil direct duration the unexpected Patrick million the a and costs margins of original strategies also – mentioned, margin shortages impact impact third-party fuel our fuel just further direct yielded low gross prices or XX XXX lower XXX CPI-linked points in selling costs the this alone. from biggest with we the basis indirect has our to largely severity pricing financial open impact, fuel margins. transportation basis quarter. and over margin points a and our in on pricing of labor higher $XX more increasing of to plan see for our in of offsetting lower single and hedges, noted, had basis. million XXs supply disruptions Partially costs chain benefits surcharges and with higher and expect offset fuel approximately which net points mind, just our significant from used of XXX than as realized business, Fuel by Patrick the of through Keep reducing the over costs to decrease basis the achieved basis price prior in the of points not over market date in year. XXXX. Labor-related been on was benefit motor

costs. in approximately Supply labor resulted expectations, costs prior also and higher in period increase deliveries rental markets third-party costs impacted overtime spare the truck operating for broadly part over truck with and tightness drove rate line labor higher unit new reliance chain R&M While delays, than and on higher third-party the was X% in persisting anticipated. technicians which

facing. We by incremental responded from fuel impact our surcharges. headwinds an through suppliers, essentially increases to the rates charged indirect which is in third-party also saw labor Until prices. this transportation and of and price of storm fill perfect higher fuel We cost fuel increases pricing we to pricing available a core shortfall, ramp up currently other the recovery portion we multitude of use atypical the need our cover surcharge to programs, limiting the cost we’re to our

the quarter, recover While year expect strategy as the pass-through and this as to dollars, us margin pressure now for of we has the saw there this majority our of allowed we from is a cost EBITDA recovery nature the whole.

dynamic However, the current temporary. view as cost we inflation

Adjusted supply to and sets and anticipated together expansion move may lows, we will continued strategies, moderate the them pricing asset on margin with While from current CapEx annual levels, likely discipline unit rate costs previous our labor million CapEx, continue flow was to period which compared million cost relief, million comparable organic and in XXXX. to in subside. The market the included goals the included expect current into a This for back increases us period, go investment with up inflation not our we chain-related $XXX $XXX of our as period. focus free proceeds $XX $XXX to net joint benefit compared ventures year of prior cash a in million $XX million the included nearly RNG $XX to of sales. CapEx million

million a flow in offset our as the our compared so results flow, projects our an proceeds can like-for-like received therefore the spin-off CapEx. basis. While included not a we’re been reinvested on and to broken infrastructure RNG have have call, said are as free we on we last to them separately item of CapEx-like $XXX were out cash cash be cash in into Also, M&A as capital treating free adjusted within business contributions that from

million prior included In timing year-end. we year in net capital. whole. working why in period growth all and that period focus million The current net quarterly the basis, in addition working from in movements an a $X adjusted CapEx investment the a comparable included a cash current are flow a on but as revenue tied free guide CapEx a by flow substantially number of can free to the $XX normalize target variability and rather incremental the adjusted was not capital, result the to capital within which investment working the period should The quarter, year do for on to realized cash

deployed seeing. the approximately at $XXX in in last revenue million about year-to-date, by account with expect the M&A tempered terms in-year we’ve leverage approximately of $XXX The acquire had to annualized and cost In million estimated Xs, We delever on is to quarter was XXXX which line end we still basis be although headwinds call. more of M&A, of revenue. $XXX net at million contribution the of what communicated the a on of high Net divestitures. end year, we’re to inflation

billion direct for billion, our the revenue terms fiscal end are $X.XX we be is second expected time outlook, EBITDA year. be In our for XXXX guidance of this increasing the expected $X.XXX is million revenue million $XX and includes $XXX expected high At adjusted to Services increase ranges, the the million. X,XXX from million price surcharges. roughly and basis summary. and million majority XX% segment increasing see incremental increases rollover nearly $XXX so, point fuel or guidance. the Fuel pricing, Offsetting the in million of but these other M&A, cost temporary dollars, pressure. are is recover in costs, $XXX a $XXX represents are of our million. over approximately we margin increases doing $XXX really This XXXX increased of guidance flow the net million for and to outperformance is to adjusted of from $XXX incremental in Environmental FX At $XXX that’s free the and revenue M&A, increases will new We’ll from be our rates, which cash line, original

strategies, period position which accelerated us We’re we pricing subsides. expansion strongly once the accelerate using inflation this cost margin and for will to our broad-based surcharge believe

CapEx, inclusive interest on the from able XXXX. for guidance $XXX pace joint is carried in interest, fact million The leverage timing attributable In increases $XX $XX the original flow guidance over of free rates rate adjusted as is interest of rate to on as business. floating in which ventures forward higher in our million in flow million approximately guidance, opportunity of is well investments free the which difference a raise cash our and anticipated of testament proceeds of debt. net our which increase that included to adjusted of is R&D Included operating is unprecedented $XXX cash million dispositions we’re cash our adjustment now to cash reconciliation of terms despite free our flow, a normalizing the

As incremental transactions year the any from guidance in to M&A will will the call further laid current to the turn and what always, currently. current be out that Patrick. completed no contribution assumes are over we’ve I that, With back

Patrick Dovigi

and have. business confidence will the quarter’s even I impacts results the that our were global of pandemic. noise knew of and represented us historical the at Consistent we for start great face that Thanks, on no represents and emerge come those exit we public from is demonstrates Luke. these to even challenges make this current the as profile. We point XXXX, disruptions our ways final continues of respond have the we that March To to by always an went us the to of amazing with that period to the temporary that business fade. growth we from of environment to and to the data and we first current disruption In and in flex demonstrate our When will our margin our resilience challenging capabilities hope business respond every resilience and work the commitment to demonstrate unprecedented trends, times of economic this of employees hindsight, the find the better. personal pandemic, the business brought and me, everyday quality our none stronger around different. further

never we that the continue the we to now pull our of line about I will operator drive our the open have to have levers that for this we more optimistic disposal built Q&A. growth As turn together, at over to business all been call future. to I great the

Operator

Thank question Walter our you. go from Please [Operator Spracklin And Capital at Instructions] comes RBC first ahead. Markets.

open. is line Your

Patrick Dovigi

Hello, Walter. you are Maybe muted.

Operator

Hello, Walter.

Unidentified Analyst

Walter. is Can you Hi, for this on hear me? Louis

Patrick Dovigi

Yes. you. hear We can

Unidentified Analyst

question our is… so Okay,

Patrick Dovigi

Louis. Hi,

Unidentified Analyst

A question on your Patrick. Hi, pace acquisitions. for

the down And So by at would come you sure point X.X% your it XXXX. Day, starting of for indicated then X.Xx. that XXXX around Investor to leverage

Your up leverage quarter. X ticked to at of under turns this just end the

were point pace the to Investor Xx you acquisitions end your ending this expect year, year above the do given you your contemplating for the in see leverage to starting year or the X.Xx as do of pipeline you be at So of the Day? closer at

Luke Pelosi

Hey, Thanks question. the Louis, this for Luke is responding. Pelosi

out it could Day, scenarios depending like M&A. So we levels look laid of at what the varying multiple of Investor on

cadence If leverage you is roll how just because the of QX off. rate run think our natural about goes the through adjustments year, the peak way

and when Xs so did we more And will the half done. that expected as year, M&A be right? the high where considering the presentation, FX, contemplate how back we original the guide. in that end end happens Ultimately, number was performance of So the had in of it peak business QX given we there even the time investor was at the the would the that – bridge we it’s to much on

guide see we’re you about with. $XXX million, million costs contending this $XXX incremental now, that talking in As we’re fuel of

So I to de-levering. heard commitment our think you’ve

the capabilities demonstrating de-lever. math seen to You’ve the business’

little of be the in I continued the pace think the current a with environment, pace M&A bit slower. might

you’re forward beyond. see through accelerating moves is think business I as power what the to XXXX deleveraging trajectory and that continued and then going the the directionally,

Patrick Dovigi

that answer path short no in the there But is the levered to going Xs. we’re is be

mean here. was from I think down that steps I your it the think question. – I So

M&A point step on move much but So of M&A little is, side this the here. the doesn’t move will it contribution the leverage we’re it contribution relative is given from the M&A contemplating. and will Obviously, a what bit this at depending that peak down

Unidentified Analyst

guys. Thanks, sense. Makes

Operator

Louis. your for question, you Thank

Our Please at next from question Hoffman Michael go Stifel. comes ahead.

Michael Hoffman

got Luke, a Patrick, I Hey, couple.

I price, on in forward draw be second you’re the to year. think guidance. the X% to power and the look X% going really price half at of I one for somewhere could out important presume running like, you’re not First this the through asking it’s between X.X%, what of quarter, I’m But

for it. again, in they in cost to next be power it’s this So Can where that’s of leverage. is ‘XX, you’re it’s frame is operating clearly inflation an even just think And and for right now? the going so down only so not And starting marginally, you’re if way mean, – about that an price is you down. the appreciate, internal X% going? still to models it’s year, X.X%, of everybody, guiding down is but it’s factored not creating nobody I

Luke Pelosi

Michael, Yes, it’s Luke speaking.

right. I think that’s exactly

level are that recovering is inflation X% And things going the think today. half be seeing to correct above really I the are the to you up. going at And numbers directionally end of strong. cited that where cost back You’re The what you’re is year to expansion there. today, that right, into price XXXX, side, level we’ve peaks comps you of does of you as is moderate But these had. the because opportunity a And on retain of alone more cost meaningful moderate. there if sort move compared

Additionally, really is XXXX. what receives today CPI-related of to increase, XXXX going happen which into before in and price full book its business is you’re doing really the

there So price with sort where low digits, if in better, achieving than or tailwind still is be, think of ramping what but happen starts to not needs X%, could up number better about of your the meaningful as a historical, you’re X% X% still CPI-linked as it single that to you today sort well.

about current forecast So contemplate price. don’t that think the right that thinking are exactly it I accurate of the and forward power you’re

Michael Hoffman

because $XX then of In fuel. to the Okay. your through. just follow inflation there of costs And guidance, million real is on revised

the You’ve run for into you offset so by be up close that ‘XX the that million going flat, that a the through $XX price. costs fuel covering the the if all stayed surcharge? you’ll at year make of other of Will rate

Luke Pelosi

Yes.

that, two things So Michael. to

all, $XX highlight alone. articulate of direct million and fuel I want our is just hole, the to costs First

third-party bunch are a indirect cost seeing aware, increases fuel. you’re our that actually As we’re of

our if as contemplate well, XX%. fuel-related to So you that gap is were greater than

quarter work Mark are program where actively rate said that ramping take of are supposed are right? in fuel at the think that surcharge months to clarify I change to they to and the phenomenal, going they If getting sort you point, look, to the look at that. just in fully get be, So Greg was to to and XX and I of quickly, it results But the originally the up. wanted team baked. your We

path the that, I aware doing guys of that and to than are faster the think a is urgency. there

Now, in is cover what pricing we also had addition market to sort that fuel helping that’s excess of gap. open

before So point to second what we’re articulate while some, exactly, have going cost. we’re therefore can of play out expansion to the path the when we XXXX, need year the that think of to that and I there actually real opportunity and half XXXX from about for path all that by will look price our covered talking like in a margin excess then we have returning is

Michael Hoffman

sure not to to this. I here just clearly. I’m else trying I and is And make Okay. belabor everyone want

of You other there surcharge, shared of the fuel, offset break Then with else, XX us XXX, XXX XX. XX third-party offset the of is there headwinds, with so the XXX it’s XX. everything by and which XXX is If is direct includes is and I price.

to It’s the So direct I’ve indirect making up got you’re up on. the already. catch

Luke Pelosi

Correct.

Michael Hoffman

I covered else everything fuel that’s through make to Alright. open this to direct want I you’ve okay? understands inflation Okay. everybody market cost else pricing, sure point, related except at mean just

Luke Pelosi

covered. all top shortage It’s are this labor important costs it’s but creating the inflation incremental well actual disruptions, on supply these the we what’s subside. it’s rate ancillary that’s the strongly because those And inflation, of of peak right, chain you’re more important Yes, those unit than not together inflation piece believe think headwind. an cost like rate unit unit and the contextualize, I from Michael, feeling that today is just to think as being I rate

Patrick Dovigi

don’t Michael, lot again, on said, early the as share the Luke in non-recovery a XXXX. we And pain and forget, also, XXXX the of into come stuff big residential book those the So is increases business, on the get of right? coming wearing of lion’s we’re Yes. from fuel

as come are of expansion there sort to get when and those going And those up, be margin to So meaningful costs contracts. of on CPI it’s significant going instead you more. be all resi horizontal inflationary some is adjustments those recovered that picking going

So XXXX that like XXXX. in and we’re what looks confident very in

Michael Hoffman

it. all already. peaking I settle Got seeing you And made things and trend these starting to was to of you ask, are or slightly the going comment lower

So a exceed to it. to and be to position in you’re as able catch it opposed chase now

Patrick Dovigi

forget that and this and supply certainly a was call QX whole testament is and remarkable the think war came peaked. of the bunch is, to to industry and how XXXX for enough etcetera., no smart meaningful or forecasted industry the where business it the a industry our a disruptions done from the what we discipline I what QX peak increases, we Russia has the of I – I GFL with we today. It’s the different think reacted the I and not what fuel. and think to then that through that what has to industry I’m obviously chain did thought just of parts of wage second. But fast the it’s mean put one the industry Ukraine did

sort XX everyone’s of sub-X% we’re of this not customer, we’re years of the And again, just sort think different their is the was represents And it industry costs, in this sort well. P&L reacting a ago, ticket I for and rich way an covering So were. our than getting given than as it’s from size business our it, they right? of

X.X%. it’s generally, So,

And is is So picked I up. happen. we they waste want to to their understand in being that it this environment, And is. what need ensure think they this what

have I etcetera, volatile, prices, right are driver, in you So the steel – now, in the wage that look if themselves. supply just we chain pretty putting our first from the trucking think warned inflation finding bumps right again at this out major to side, half continue our the to seat. on that’s transfers, issues, long-haul Any chin etcetera, whether slowly year. third-party yes, we it’s that’s subsided going the providers, of were get resolve Obviously, of equipment,

to sideways, of to So starting all are upwards. those not go continuing escalate again,

what for and all those XXXX So of very signs like. good look point to XXXX

Michael Hoffman

Last on XXXX the will just was, me, end December leverage, of on be be than XXXX your number for what it XX, Okay. one leverage less – XX, December leverage less on is, it’s regardless based year what the the ‘XX?

Luke Pelosi

Yes.

Michael Hoffman

That’s what I needed. Thanks.

Patrick Dovigi

Michael. Thanks,

Luke Pelosi

Michael. Thanks,

Operator

Thank you for your question, Michael.

comes next Kevin question of CIBC. go Chiang ahead. Our from Please

Kevin Chiang

I where peaked down maybe we a about with of is made. everybody. guiding about of in economy math. Michael of morning, before of of year when from you we let’s here, you’re think next a surcharge lot bit you program? think is uncertainty still up the a going I ask now catch-up see X XX% was price inflation months, broadly kind I margin inflation that Do of pricing, divestitures kind hopefully, clear the way some margin Is on to the margin bit kind And of there say core being you think we perspective? kind just If year obviously you if a I off on the some as things in stuff closer good a the then back or which good roll the But If get of this should that know business fits deflation, little accretive. XXXX of thought question is. possible that on the hope. Hi, through XXXX? what peaking little Maybe R&D in be CPI maybe

Luke Pelosi

important short contextualize the I guide. I Luke. done. But to want has business don’t get back it’s Yes, I to into think yes. the step is, what the I Kevin, answer it’s mean mean, XXXX and

a XXXX mid-XXs public. margin was business. We’re

inflation being increase about of of talking year despite over this this mid-XXs, sort still sort basis this its XXX We’re very point uncertain unprecedented time.

that sort of program. of mix of is rationalization a portion portfolio the and the result Now our

but then if in margin that take was I at we a this mid-XXs business. you going It’s just solid go individually, if sure, out, mean, XXXX look solid year. So now to

I think the increase here we’re of XXs, that’s basis that. XXX guide mid-XXs, point in saying another that sort low is

I think are So I that strategies because highlight working. our

opportunity improved our is fuel-related of have is clearly plus a year pricing this margin working, asset we utilization solely expansion is outsized is our there. a impact. temporary Our price sort What of just for combination and and self-help

derails it plans. So our longer-term I don’t think

to reasons to you are to catching the improving we impact have saying temporary track. get a up, the CPI it’s about back recovery think path a all for surcharge I that in that on addition

So think from that fact, period, XXXX because I’m has this changed looks than And annual opportunity was has think long-term this planning like. in what programs exactly expansion going we and undertaking. greater sit I of on some I were will don’t outlook. today previously But for margin before it the to emerging anything even not be in say our that how of our accelerated

Kevin Chiang

just how pricing, at costs they buying, second current in little cover Maybe whether challenged you have been you’re go given me, and been businesses the of got on the just way their it. ability to environment, maybe the at from wondering change just it’s inflation more you get to a all that’s impact one look terms M&A of out a bit and the

be So may shortages. not labor something want into you get to

ago, just you or has ago the you today sit wondering, XX some companies? evaluate materially versus that of months looked months how Just maybe pipeline you X these here as changed how at

Patrick Dovigi

from etcetera., a perspective, sort we’re of depending availability, in driver actually it’s question think been driver of businesses, etcetera., labor on things. I markets, our looking right, where where has at been a pool acquire big we

our again, from have an better. I perspective think changed. perspective, not mean, from has economic businesses some performed much I

getting a but to the think have front inflationary bunch Some – some in much. pressures, these of reacted of I really changed quicker of PI it’s don’t and getting

the just cost we’ve how base been see lion’s again, fixed share through. where the of a footprint acquired of of company’s densified leverage can as we mean, of will we facilities. But Sprint our have year through P&L tuck-ins that existing We what go largely our that outside has bunch flows this I

front well. number changed frustrated pressures are that look much than that some of sort lower a we’re base units would So has you I maybe buying or businesses they you’re that business because exit potentially, and as off about the have experiencing, these these that’s Because going of are of perform inflationary you some to provide offering year ago. continue of And opportunity. a to to two at a from pretty they good not be think to want going

data but experience different to use the So of business our large, things today more just we’re regions, looking to the still given evaluate businesses at we the have think points obviously today. and significantly I in the by have different same, existing

Kevin Chiang

strong the there. sense pricing in it on leave the Congrats quarter. I’ll note. Excellent

Patrick Dovigi

Kevin. Thanks,

Operator

much Thank you Kevin. so for question,

ahead. from James go Please comes question next TD Our Securities. Tim at

Tim James

about Okay, thanks very guidance. parts about moving in Could oversimplify the a and inflation much. here detail how pricing Good morning. entirely minute for EBITDA yet. talked We’ve in things your though and cost is recovering, think not I

for of being to factors impact that the sophistically or the drag time sort relative are raise than dollars terms coming there And price factors of guidance beyond drag of better than sort higher dollars What amount. guidance suggests are versus Could of costs EBITDA price are other inflation EBITDA actually the of help second year and your understand that that dollar you you driving that? recovery. this incremental the EBITDA me from of recovered therefore despite increasing expected that to guidance through despite this original in and of other expected inflation? all allowing You’re your are the negative these of are pricing better

Luke Pelosi

it’s Tim, Hey, Luke. Yes.

of story few I think the working sort existing we exceedingly utilization the there now is in optimizing center, recovery that’s overshadowing that out, rate there. great An drive together the part it’s that network anticipated because as on the and in thesis is much U.S. the if leveraging in on is our at improving direct The and look the of the for a are through bringing you business that’s ahead assembled example of strategy year exactly I our mean alone numbers. our the like sort and come margin services escalating helping that’s exactly cost, drag. of with by that of brought sort cost you as of our of that overshadowing. proving right. does, and is seeing solid it of waste fuel front of are guidance lot the And business, Terrapure we over margin end waste the the quantum But asset the it at improved happening. improved of suggesting new utilization, obviously solid fuel Unfortunately, like and expanded that our out and together same the business goes to asset is exactly book day, but a There gone rerouting instances impact just years. the we point a of The core together putting the market and businesses past focus whole, environmental are and of costs through the mean I drive expectations, of bringing XXX the pieces that. the with efficiency, is existing well. basis infrastructure opportunities, have

my the points. etcetera, in you to probably factor comes basis that If closer XXX to that’s indirect, transport, third-party

So, speaking the you And underlying XX to basis asset core year-over-year point points solvent. one, in I improved lot am by waste, inflation. XXX That’s price the margin cost that by from, XXX a being coming two, That’s solid a actually basis are to. speaking, actually utilization the driven contemplating speaking being point a decrease that’s of XX basis expansion otherwise covering point, basis driven fuel.

Tim James

we shift potential pricing differently by segments long-term where reflect My them a And just just at the at us and offset higher quarter margin think about from be obviously not misleading I costs structure, that shows the second to percentages basis? the each kind we dollars update the of long-term don’t be to about time-to-time, Like keep to your because wondering, bit. margin part am with potential, they all of hurts of percentage that about you ability is percentage helpful. But that for should being if really the on today? a second talk theme think That’s dollars if more cost to expect same up enough little on I way be or question, significant Luke, which margin segment. long-term EBITDA you could am kind initiatives, we wondering you actually important that here. any percentages. potential can opportunity in change of it really a because change these looking going Should the the Okay.

Luke Pelosi

think responding was I of as step our this think to temporary horizontal margins. Kevin, we trajectory upward I a in I No, as view otherwise sort of

on dollars and mean of comment that drive ensuring secondary. I is the top think So, while that. the that of I about is mean first margin is sort then right sort foremost margin the retaining want we sort dollars we you when absolutely about your can of and of the

has the we where taken changed. where though, we have I about, don’t are anything think going, think business you If and

of be the our sort changes. nothing surcharge of of achieving think we We have solid in of remember, that and this recovery, our perfect the CNG a is all about a high-margin when self-help have groups a you while excluding accretive a have of slower the of lot direction, that that’s where best-in-class, to fuel that business waste think that of to you And are think may to our drive aspects still a we already we the the that best-in-class. businesses step and – today. margin we think RNG, we we it about lot solid And that add to peer a conversion When you is year and footprint sort going all have. previously you waste results are sort we think suggested. And if of margin realizing sort that’s intend to, to and spoken bringing profile on margins about accretive

got that cost achieve. million million, you little corporate revenue $XXX of not And we when because everyone. we $XXX remember, left came infrastructure, continues XXs mean we Our upside of taking and our sort out exceeding that to and Environmental confident in from you highly are already ability to support industry mid-XXs articulated, you plan to divested that to as think when there a I are to mean segment, Services the the of small is more margin that were a significantly it’s and have I profile, from the terms see those we to there together, put we what I group in be high- lot a corporate those costs of bucket. But bucket of cost lot two

incremental help going further So, will margin. add leverage growth we cost well, forward which with pushing now are of sort that’s line to as to that

agree our And in I anything our trajectory we meet that that. priority. have the would we is to upward that optimistic articulated, But ability to we I caveat want on So, that dollars changes. the exceed focusing highly and don’t remain think do previously

Patrick Dovigi

quickly, responded very, But lifetime. appropriately. sort and look mean it I see very didn’t at you – And Yes, happened came in what of yes, you of been of along might right, dollars. I our I of and of have based the I of own and at high I we that and contraction as to with look when certainly sort you sort on the I the it’s can long resiliency if mean think industry And think margin GFL inflation, XXX%-plus we XXX the for period it But alive. as we the a have and XX-year of there day, business its durability feat a the sort industry. testament of of at the recovered basis points short the be business, look end a time. at And think that and

back lived point to think three it’s to that states. issue From through months have I think just data think perspective, the great a the we my move months, XXXX of normalized four outcome we real. do get a particularly last as provide XXXX I going that’s all great And we I and So, is here. more into driver sort as

the original we that we keeping and we unemployment going challenge about back ways with to for retention to outside pool in driving a continue and spike. to I are business And inflationary of and rates but them But talked think we we historical have are lower opportunity technology sort of quickly the normalize large of that the this going get and margin think pretty continue expand that, the to at averages, than that etcetera, industry pool prior to I to we ensure expansion driver forward. the to on significantly is different yes, going automation, to that look can be driver industry. entire and drivers

Tim James

Great.

Okay. you much. Thank great interest. very That’s really

Operator

question, Thank Tim. you your for

ahead. Please Sachs. Our Jerry at Revich next question Goldman comes go from

Your line is open.

Unidentified Analyst

for right But Hi. you you are the How initial This the in many of is beyond gas producing on landfill Adam focused the potential? on gas for the Jerry initial pipeline your us sites? now. set could today have opportunity development know I today. frame landfills projects

Patrick Dovigi

Yes.

we we opportunity done – sort the RNG updated in of prepared have our remarks. So,

which of So, of online, going of fuel. sit where – if and are represents, you MMBtus to come QX have on sort all and then construction, look at XXXX, sort X XXXX of track, approximately we five under between today, you that sites of basically sites really million today QX represent

which sites that. the have price X.X then probably apply you are you the And other plus final So, per we the eight, pricing about MMBtus. in sites MMBtu, literally that Today’s another talked throes which is sort of we negotiation. million that, just are on $XX are which in about those we want market half of whatever probably represent the over of And that royalty. $XX, represent

the we out, we stage And we have And that we large same are whole which we – gives site approximately enough, site, million So, gone MMBtus. – math out And subset outcome. approximately have done have which a million of those, the now which which another we is another have accessible. we gone projects that nine then the have are and further X.X out RFP it work, are have to we a that again, have sites. have of then is in for other apply X.X – Canada, finalizing, gone of we you pipelines in MMBtus are a sort

of to X.X IRR cost bit perspective, say, X will from hurdle. million million within would bit, a So, sort MMBtus an They a less so but be I sites acceptable sort little represent would another MMBtus. of little those an profitable, well still operating nine

and of moved plus sites that guide XX% we that’s couple sort the to opportunity that XX So, of the those of the has sort given I plus sort definitive original think were another when around eight nine, now from subset in to around the five documentation XX had you up the altogether, XX%.

Unidentified Analyst

on acquired helpful. year? where think could M&A us revenue end dialogue last is $XXX question, Based year-to-date. the you around that about of towards Got just help my the it. That’s super million can And today, track annualized

Luke Pelosi

what we Yes. at $XXX as the year for to acquired. whole is don’t give quarter Adam, Luke. could think year said of revenue and of this was we per mean I $XXX like the target to se I beginning the to speak million by be a M&A million

more on that to to be any we will QX. I So, think year, Sprint $XXX of or today, to up don’t sets balance sized think at that if amount. for the exceed you acquisitions are I see similar track the million you

the I we well goal our focusing with will be had the targeted have reach the think obviously on year stated first half. densifying But achieving first success for We in tuck-ins. within the quarter – is in

Unidentified Analyst

Thanks Great. lot. a

Operator

Thank for And go Chris your from Murray Jerry. Please comes final question Markets. ahead. Capital at question, you ATB our

Chris Murray

the as What move used price you forward? the from in should terms to going to thinking to of that forward? a that little any the And should well, key wanting margins solid bit about services I is XX%. Yes. about of about margin you growth half And acquisition the was because significant, Thanks the of how guess folks. bit lot Can growth just just and masked talk of be thinking levers motor profile organic bit We going tied really organic little margin just about about much spent impacts growth. little a a talked waste. for time low-XXs oil of profile in talk talking are high-XXs. a a the sec. and Organic XX% growth over be the Can we we environmental we maybe about that’s

Luke Pelosi

Yes. it’s Hey Luke. Chris,

the a picking incremental up because we in million year. on $X hedge sort about quantum in fuel $X factored to we cost to this that’s rising line are of of as So, here of services, into you outperformance think the have our environmental oil motor top But first fuel question, pricing, which the used natural of sort the the broader that impact million prices.

than quarter given of If basis lower about the is in a this remember right. got – point you came you think drag, that business on margin to are second of inclusive seeing margin that segment by business, our Terrapure XX mix point sort profile The of at as to M&A. about drag being basis the a for and XX impact the part you question, from a

getting that you peel our are that you in organic have solid business and from margin and strategies So, in waste talking been same about the actually back that levers expansion business. we

plan. we tuck-ins what a network infrastructure well scaling margin. as think densifying that now are fixed with And end the best-in-class cost assembled as that’s have is organic drive We and or leverage to we relatively operating back growth that

greater. are we had Terrapure as the it of network earlier opportunity forward has play seeing and leverage been set anticipated we this never capabilities much think in expanded integration. we our And than go the out with to on think spades new I sort we

for run the next of to do incremental So, mid-XXs that drive couple it’s and tuck-ins down the to continued price relatively cost are going fixed that take path small is the years as volume to that well just as densify and into to high-XXs. we the from

Patrick Dovigi

our people would just Canada restrictions because playing was mean a starting, that when East always Yes. West we as said part would opportunity knew that this timing, of there there a from of in from business, of didn’t I come out. bought so we COVID but was the that And anticipated. we opportunity. that anticipated were called using work Coast. all the the had I lot to how last Luke business, the know exactly numbers back. to was business And We we part think We bought is lot levered exact attractive come stopping this of and we we because a and year. and the impacted When is clearly out, and of again of business COVID massive the synergy sidelined this Coast the

we COVID that half our timing removal all prove synergy little I expectation the out bit year. but certainly we the with perspective the months thesis be restrictions, that’s the year, first up. into prove out synergy this all exceeded as going think happen back as the off, the anticipated, the of recovery all in move additive even to into albeit going played of it’s to so obviously, And we a six it a of original to had continuing was continues to from and

So, all on plan.

Chris Murray

at items, the it a you like next talked My you Okay. things self-help great. just, little bit type motors. question your Investor like side call That’s CNG, about, Day automated

we how equipment give supply equipment or the and of starting Is free go up you guys delivery are second to equipment opportunities kind curious, add Just accelerate you seeing additional to to as half? days? these into going of anything some

Luke Pelosi

is Chris, Yes. this Luke.

things think tied I are there. out

You heard the remarks it of is delivery in truck R&M sort our of incremental that driving etcetera. truck prepared impacts delayed rentals,

for there is things we next to that quarters be sort think deployment. as up of I don’t anticipating a go should sort is loosen think couple anyone of of the opportunity forward. But I accelerated perspective

be I from go and to we get what originally forward happy we think hoped there. receive to will

than sort we into and get as opportunities the the opportunity ‘XX excess thinking you profile flow. really cash of the latter and think really M&A of about ‘XX, at start self-help cover accelerated those provides ramps sort looking of you sort of half set deployment free can those flow I to things cash out any opportunity strategies to as start for capital more free into plays

So, little programs. bit still a those have think of we of before sort we contemplated runway accelerating I

course course normal advance to beyond of are above to the normal said, have in replacement CapEx and initiatives a using couple we CapEx capital years still the dollars out. opportunity probably As deploy areas, is we the those replacement but

Chris Murray

Alright. Okay. folks. That’s Thanks correct.

Patrick Dovigi

everyone so – for much. you, questions, thank you any Well, other Thank operator?

Operator

to back I you, will pass No, over there questions. Patrick. further no are

Patrick Dovigi

Thank this for the to us look to time taking morning. our speaking Thank QX to much. after you everyone so We forward results. you you join

Operator

call. conference today’s joining for everyone you Thank

now may disconnect. You

GFL Environmental (GFL) 30 Jul 222022 Q2 Earnings call transcript