WM - Earnings call transcript Q4 2018 | Waste Management, Inc.

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Operator

Good morning. My name is Sia and I will be the conference operator today. At this time, I would like to welcome everyone to the Waste Management Fourth Quarter and Full-Year 2018 Earnings Release Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer period. you. Thank Instructions] [Operator I Egl, to Director time, over the to Ed of would this turn like call At Investor Relations. sir. ahead, go Please

Ed Egl

Thank Chief Officer; quarter Officer; Senior everyone, us morning, are Chief Jim With you, Operating you and morning Financial Executive Sia. joining Chief Vice Vice President for and Executive me and this Rankin, for Morris; earnings President and XXXX thank fourth Officer. Devina Fish, and conference John call. our Good President

today. them will of will each overview. from for comments prepared a of John hear financials XXXX. high-level update. And details provide guidance cover Jim and financials cover You'll cover operating including the Devina strategic will an

earnings website we filed note Before we X-K please at get is the have started, available on release www.wm.com. press and includes our this that the Form morning that

release include release Form the X-K, important the information. press the schedule to press and

statements projections risks actual current differ During about future the based are results call, on Such subject you which will or could cause opinions statements, materially. uncertainties that forward-looking are to expectations, to hear periods. and the

are results volume volume, quarter of results growth references these our to discussed or stated, in on areas internal and which XX-K. and and Form fourth most are uncertainties discuss SEC, in are yield discussed with of Some workday-adjusted and revenue recent today's press including will volume. or IRG otherwise Devina unless Jim more basis. All in specifically our filings from the risks our a release the yield

or otherwise to will is X the approximately our the and internet, website, beginning call GAAP day be most p.m. and about Management of until website, hear telephonic of be information information at at during a Eastern the dial on replay the additional call, call, which XX longer and today's a code is no Waste the on or hear X February replay enter provided being of occurring in Waste p.m. redistribution, XXXX, XX. To To Time will XXX-XXX-XXXX access Management use EPS, been and fundamental recorded performance without be share, reservation is have Any the hours XX, and available operating reconciliations comparisons prohibited. the as EPS share, from flow the discuss and earnings Please results and before stated rate, operations, comparability the excluding Net per tax diluted to to full-year quarter they income, release amortization, measures margin. and adjusted believes fourth can our These on which found fourth may will Devina During certain by income EBITDA addition earnings in measures. address press the income XXXX refer EBITDA, and then non-GAAP of operating depreciation also Jim, notes management our operating XXXX. of will free the items call, and which operations XXXX or effective with earnings per from cash of today the consent XXXXXXX. call This operations. business www.wm.com. be measures. accurate written and call both quarter refer at the reflect Company's adjusted that to expressed schedules, of rebroadcast EBITDA Time-sensitive to which www.wm.com, for for Time enhance a Eastern measures not do are comparable unless non-GAAP February over is form any retransmission of replay. time the Any of this

and to the President turn I'll call Fish. Management's CEO, Waste Now, over Jim

Jim Fish

year. few, focus Through experience, telling last were arguably our to even best all name thank on this XXXX discipline, and Thanks, that for year I our we've this we At customer the was results a to management was price that Ed. continued our you had report seen. I'm year, a great And morning. joining better. us you pleased cost time XXXX

X%, the charging a year, the we double-digit our XXXX produced be and EBITDA about $X.XX guidance in the To our year of seen in business. in X%. to improvement. is to tailwind, costs another our contamination. year extent clearly turn Management will of high more EBITDA the business We year demonstrates own grew overall headwinds best guidance for into another Waste reducing produced plants cover the economy last Overall, strong rate detail, are recycling health in a from over year that growth forecast our our operating our than our record headwinds of in will strongest we've operating the of the operating operating as spite EPS, record thanks of of Devina business by XXXX decade. our of in focused we which Included our economy, the but EBITDA, XXXX, and reflection with in EBITDA year this a in U.S. forecasting XXXX fees a expectation record is more expected in of is a strength the whole. on operating For the the recycling good for efforts proxy another

is As business of growth the year strongest into strong the we've best energy XXth share flow we the repurchases. on spending ever waste translated with cash dividend seen our free EBITDA of consecutive of allocated XXXX our cash We operating shareholder the when and we close growing reflection and billion free $X mentioned, our to exception XX% sold flow that our our returns, health the for business. of to

to XXXX, technology acquisitions, M&A $XXX million ability our customer our we delivering about profitable on growth, active and of and in on indicator We our to also all spent continue disposal returns. exceptional at the we’re complete optimization, transactions focus environment an service. people, targeted In

that continuous in and execution results cost our differentiation XXXX. improvement growth drive progress on in validate and Our strategies strong strong we our focused XXXX further business, expect our

operating, in Tamla of in Our of formerly place, an strategic much move cultural valuable the hiring leadership Similarly, team the was focus Chief as terms Resources this upgrading going our class Waste after to cloud-based Nikolaj customer December, Waste XXXX, shift and HR and importance. investment announced Officer, GE. migrate under at new cultural in who in and putting executive quickly we is moving only forward serve helping at very the In with technologies, Human how agile look beginning growth. the Management. Sjoqvist, Tamla's to profitable show a at and digital back to places office Oates-Forney processes can of world-class our in direction transformation systems, of XX our XXXX, employees direct we Management propel forward like will months talents more that facing Management as differentiate head we Waste towards forward,

our sustainability on of cleaner in CNG the XXXX for held to two in attendance the an sustainability geographic environment, front, trucks. renewable weeks complement the fleet avenue Phoenix shift shift lower investing returns message strategic quieter, assets, energy forum the To which our all Management Company. and return our built Management, plants XXXX provides towards aid and for higher and between with in close broke investment This loop for was in ago, cost, and favorable the records sustainability, emission higher by to is our the our forum on breadth at landfill and Open, previous creating Waste good CNG beyond. higher collectively the fleet, that energy conjunction Lastly, customers, cost for good trucks good demonstrated best our much burning, from of our diesel landfills That's is investors. Waste plants benefit and from our

no waste Our strategic by the from business as acknowledged our better to to a is leader Fortune moving a was leader Fortune recognition a Management companies. and the in focus world's Waste admired people, the in on one technology growth of experience with superior most recent That than customer XXX. being

to in criteria strategic acquisitions and our that Finally, will we value shareholders. continue as part create surpass return invest plan, of for our growth our

a looks Our pipeline there achieved invest rate XXXX. and to in opportunities plenty similar what in of are we at to robust acquisitions

XXXX, of we proceed in that expect antitrust to year recently activity. received To of West So, acquisition point, Hart-Scott-Rodino have that the clearance above with Texas. average may in M&A assets we landfill seen you another

In hope an at multiple below be Waste EBITDA operating excited offering. core our We well difficulty] close March these trading will [technical Management to provide service we and again multiple We XXXX, in buying expect a the we’re XXXX. and assets successful closed. growth strong additional hardworking in see we year, our to employees details very once made and deal is will summary,

investments our and business, improve make in in this technology year generate employees to continue equipment grow will further and strong and returns. capital customer We our to service

into Devina more to are well XXXX detail. the discuss future. John guidance to will position We our XXXX for call and our turn that, and over results, And with the and I'll in these that confident investments us

John Morris

strategies. growth as Jim, price well with Thanks, our pleased on our we fourth good results, and extremely core disciplined We're morning. quarter executed very

continued and in organic half Throughout EBITDA been both to on year, X% cost industry-leading our fourth of the income very second operating we've Our growth, the from strong revenue drive programs grow and inflationary pressures and focused XXXX, growth operations the quarter. margins. ground overcome pricing particularly in to

labor, grow continue into by that that and increases best and is landfill operating pressures particularly in so expect in our As XXXX. will strong can generated generate trend to to continue demonstrated cost we transportation our along these XXXX, passed we and we being ensure experience cost, to are to customers This line business. strategy continue growth We margins. that returns collection appropriate XXXX of

see our in the of business, from about our people, think and investments expect the we collection fleet benefit As technology. we to ahead in line year

and XXXX facility, XXXX training to fleet this our in our only upgrading of a tax will recognized through of the retention. our offering. to of In with First, wage almost those XXXX, year, which expect and automated also employee employees, model investments immediate the were purchases our our critical in automating service is we as additional driver sizeable to able employees proactive fleet on most regard improvements convert in our the Last paramount, we contracts maintenance meaningful that performance, the and running we to and addition meaningful invest from training a truck on costs. efficiency half natural safety this open is an our a steps elements year facility compared important of beginning year. validated in solid planned XXXX for savings be to end We an our are with we the with to Jim move routed work investments, XX% to increases, at our gas, fleet maintenance natural the vehicles portion we’re another over know technician priority fleet, respect will to in savings modernizing gas, year improvement we trucks mentioned, people XXXX. By our in towards as and continue there drive in and of focusing have is automated invested around proved the which employees. first taking efforts diesel continue and to all but performance. We to believe they of in and environment This again improvement recent will was drive not improvement as significant traditional to continuous age. rear-load to several our further

truck safety technology We same are partnerships through to we also cars of have advancing fleet the our with manufacturers today. our strategy many implement the in

looking detection to lane that with are and added time brake for are worthwhile incidents. making departure they of collision like features associated and lost implement operations costs We as we benefit alone, assist more warnings, efficient avoid have safety our the and enhanced

and to our of shareholders. technology the respond customers above it's customer is been vehicles our collecting and technology economic our This volume using growth and customers’ U.S. on creating of collection continued for growth use into from anticipate to We've to and value levels, churn, data growth our the is translating and lower the Finally, needs. business. important

the our our stations higher America in North best as disposal landfill pressures costs. seeing at we our are transfer positioned network, cost and but have haulers have at from we Looking discussed, operating third-party we assets

to focused a environment. disposal pricing continue create opportunities in margin rising We’re cost will on that healthy

these In continue that look assets. investments, the operated like our to remote returns make Caterpillar to addition, will we valuable pilot equipments in for continue with technology increase to

and by restructuring we to to costs, the in investing XXXX, a about by of plans as continue Turning requirements. our in improve direct municipal recycling, thoughtful well look operating customers' the contracts being battling fourth and future to will further our focus result contamination. in In the MRF recycling successfully meeting continued on improving improve we of our our performed costs operating optimizing to quarter

the to managing average strong operating on of making above and cost, excited to fees closed many In addition, cost for cost amount acquisitions service deliver optimizing about teams Waste contamination, value customers. as the and disposal and continue a of cover Jim of of progress will business mentioned, believe technology XXXX, we ensure to our and week, come. these pipeline growing opportunity I'm for outlook. XXXX our assessing focusing turn superior we service we our Management, strong Last reducing in acquisitions will Integrating reduce further provide to materials. using results as key the priority our for manage looks we on extract years is people, XXXX. that future call and network, our now our better over discuss our transactions the returns to I'll these Devina for financial on

Devina Rankin

Thanks, John, and morning, good everyone.

for results fourth XXXX. year, our strong and exceeded either XXXX detail quarter to those allowing going we in turn results as then all were on strongest expectations. in Our note I'm ways all to the a us start close many met to outlook reviewing we saw by our or

cash that growth convert In we those XXXX, priorities. more by X%. free the financial delivered on leveraging year-over-year on fourth basis two to growing more Operating in to Our grew than are quarter top earnings each operating EBITDA of EBITDA a flow. and priorities

non-strategic a operating predicted. We headwind million, XXXX, full-year, in greater the and we X% our spite guidance, line $XXX in the than every almost solid supplemented the increase was of expected is $XXX assets in dollar with year traditional of have of growth businesses over growing $X,XXX the that million EBITDA in business recycling original million performance the the over higher free cash incremental $X,XXX of strong For flow far converted course prior million, into or waste an of was from that's XX%. as of free by flow cash EBITDA was sale could and the than operating year. over increase a to over This

always While these measure, expected. we more amount part of $XXX flow million our was a the free in are over proceeds cash than XXXX,

impressive when we about million, normalize In targeted this is X.X%. and business quarter. year-over-year of was growth at collection third quarter highlight consider we in result balanced we result volume XXXX in facing were the $X,XXX of difference, the hurricanes the right particularly results in on These our free organic of given the middle as disciplined guidance pricing that growth. our comparisons Achieving and cash the fourth front, revenue gave so, is of of the the end And you disposal fourth XXXX quarter, volumes. volume the this the for flow range of value the execution

notable has and driven prior Our the churn our from our been XXX business, by focus a basis-point volume commercial over has customer collection progress year. to on performance our reduced X.X%, which improvement is

momentum both strong increases We have achieve been also for by that special year in digits In to to us outpace to we see landfill result. this are seen service double the And by build. has volume which decreases, making grew quarter. business, the waste driven consecutive service that on growth C&D front happy and volume, sixth fourth continue the of

to the like like wildfire prior we continue to we see contributed ourselves never this into volume we result, expect as have XXXX. positioned those strong increase have partner to C&D community California volumes, which calls, significant in volumes events expect see continue We to on the discussed XXXX. particularly occur, we As fires, devastated for will by a as but and a that the fire a into our well

in volumes we considered uncertainty and magnitude the given in effort, these our not specifically have outlook. inherent this However, XXXX

special expenses the are change, operating Turning with of were as for employees and of pleased create SG&A to and transportation fourth and that percentage XX%. about full-year that the and a us XXXX, ways, that quarter There impact spite a the our labor the percentage fourth as time increases programs quarter now variables growing is year benefits cost full-year. in margin been higher for costs revenue margins. X.X% expense more were a the the cost to results in comparability incremental third-party first our the These in both the our we XX% revenue percentage our paid to of XXXX In and impacted as operating were XXXX, of improved for we when the of but X.X% XXXX, recycling, margins a operating and the This right frontline we we accounting isolate revenue SG&A cover has revenue of for margin, tell the below operate efficiently. of since our executing In costs. and full-year. to pricing continuing number are

on testament EBITDA down; In fourth XX the our growth the come done fact, points basis to when that's XXXX margin manage SG&A a compare to drove our had environment. XX full-year. you operating that dollars expansion work you'll margin spent XXXX, points strong a even basis spending, these the and of team our see Together, operating cost to expansion hard actually SG&A XXXX, than results of more in of quarter in for has

guidance about performance foundation $X.X at for and fueled by a again we this and to strong with flow focus in $X.XX on XXXX, increase EBITDA delivering outlook to growing that think for as we project billion continued will our As cash X%, see the operating billion our growth. growth We growth. industry-leading earnings from revenue about organic XXXX, XXXX

and in X%, greater greater We and price Company around total of disposal, core of growth expect volume than than X% of X%. yields collection

support tax in and in won't to increase billion average ahead. asset XXXX of capital growth planning strong of X% benefit billion our drive business flow to adjusting repeat. $X.XX expect cash and We between X,XXX approximately million to free our the project operating and for sales between that for We normalizing million, after EBITDA $X,XXX $X.XX required an above be expenditures year the

and to growth, flow and continue Adjusted our year pay excess between that expected of to will be to shares. our prioritize long-standing $X.XX cash the for repurchase dividends, commitment and is shareholders bolster $X.XX. organic acquisitions EPS well-priced will We using investments free long-term our

guidance higher EPS effective Our our as setting as on XXXX credit guidance, growth XXXX XX%, of tax well XXXX X% represents points is based that not XXXX. in for Normalizing counting X than percentage in fuel of what which is this on that rate an for tax from saw we we almost are benefit about XXXX.

We pleased the make years Jim, enough questions. are and best the fantastic in With accomplished delivered. industry. open continue Waste Management financial the they with the the for are the and let's in team thank we particularly commitments we of the in line and very will ahead to strong can't in for proud year building made XXXX performance I the John, that, Sia, team all

Operator

come [Operator And will of Feniger Bank the first Instructions] from America. Michael with

Michael Feniger

Hey, morning. the year taking XXXX. in guys. questions. SG&A, obviously Good talk my for we about great it's Thanks Can a just on

So, going about percentage ‘XX? and how was we're I as thinking a into wondering SG&A sales of

Devina Rankin

Sure.

ensuring SG&A performance and and costs of definitely that see XXXX’s you'll very-focused it, we’re baseline right. we attention think dedicated what controllable we invest can When manage the is you're So, we the result that was a baseline, in of cost our about to fantastic future.

XXXX about for think that right continued strategic that about technology investment percentage dedicated thinking see revenue increased to discussed, the a is And level we an as us that Jim so, XX% priorities you'll to two towards be long-term. that's and of the increase SG&A people. And is in and in that level going SG&A

Jim Fish

in what since run something about when Devina XXXX would and XXXX. I continuing trend is thing I way taken is and in the I adding said only not that a The really And one-year it's has to trend, with been was back Devina a this CFO it. talked has continued ball this say that to

started something ongoing, something it's -- this ‘XX. happen that just it’s is not to So, that in but

Michael Feniger

how and just there, I'm X%. playing X.X%; X%; X% to year? least should the about year, seeing out, pricing how the at go over we half second to quarter, was to it mean, And close pricing, I think up you're think I for even be as that strong of guys, we was up core ‘XX full pricing XXXX curious, up fourth the the you're was the guiding the momentum that on in

Jim Fish

mix the to we’re are customers you complicated, best more talk because core the price right it's actually our bit Look, passing about Michael, includes -- what to core I price representation component, some in probably a of but of is yield terms price, increase. think,

X.X% indications excellent of when You mentioned in a fourth terms in which terms the January month, core quarter, was early the look And terms at honestly and in January price ‘XX of couple and is of price, I numbers yield X.X%, for there core I in was in volumes. outstanding. in mean

sweet both So, spot we’re encouraged to the no driving is We terms see two. continuing. reason accretive a really right volumes between trade-off think it we’re to in now price that a see and strong really of and in

Michael Feniger

was have Understood. remained Could prices to recycling? flat. uplift might a was XX were And just $XX million just $XX XX about into kind you months guys EBITDA what’s Obviously prices -- I ‘XX mentioned this, we few to lastly, million ago. mean, I take but think if down. bps actually with clarify talking we that this saw you the it -- baked guide of

Jim Fish

a mean, components with predict a is I what the we're operating mentioned to look, prices. John cost and commodity then that doing there there little course -- we couple of is we're a bit on There's what number and which doing is number, it. contamination Yes. because it's to fees, of hard

efforts tailwind didn't reason a that second because the to this the our tailwind for is quantify softening extent really, quarter the fees The of going by of were year, commodity to we’re ‘XX. and about with comments now And fees. really so, our start the prior in tailwind with sticking solely they the be right to throughout our we’re year. continued because contamination prior that is of the for continued is driven ramp prices. But, The difficult recycling comments confirmation sticking honestly until

tailwind And be reduced should operating get as and those this then, certainly cost. we lessens that quarter, XXXX. first from So, a through

Devina Rankin

job The profile fee add on going is longer the key Michael, done to be happen there, think getting Waste deploy variability there there ensuring of no of can good and think volatility priorities. about the how a our going that we time. that reduce color using that of earnings a of driver to that -- service commodity to business. a technology model price assets so to little is cost If prioritizes Those be much is then to point moving bit for really Management’s because that you the the business, of line in just that and we a over are return recycling

I average. We range predicted that that we we would be full-year if on at data would I one that. the we you think the for at about look estimate $XX our I as average XXXX XXXX, $XX prices, that point the that $XX well softer for in are commodity seeing to XXXX. And ended additional, do levels you guys are know as in early than in that

number why we're a hesitant had told the you that what So, you end specifically of to we confirms at that's QX. give

John Morris

OpEx. is it’s would was last recycling in look reflected our And at through quarters our in the of QX to showed what in improvement. the think, but we certainly QX, QX despite beginning I I of prices in results if the volatile of you commodity Devina, our seen kind and OpEx couple QX steady year add for we've improvement flattish

validates talking and Jim were think Michael. Devina I So, it what about,

Operator

is The Maguire Sachs. from with next question Brian Goldman

Brian Maguire

of there initiatives Jim. how see your in up didn’t picking -- I Phoenix. though, seeing but of get topical a vehicles. that's seems obviously future lot was real very good Obviously, [indiscernible] guys a making some golf CNG the of lot industry. was you lot waste are about both on and lot been you've the -- a MRF in got and like talking Hi, those to the and there you a on and of steam game recycling It’s consumers the momentum, side, the investments with

them -- Are you waste you do guys of sort road protect defensive lead these general. industry or of current have the the that can view of business almost new sustain offensive investments in of today? that and of lines how really view investments wondering, in down Just don’t exist to be sort to the that these they sort turf profitability some as

Jim Fish

better last a game year. golf this was than little year my Actually

of sustainability But, are forum happy. offensive our your this we said really I’m as regarding work. along spoke at my all at it I I and So, being to has environmentally and both question, Kevin it, is Starbucks Johnson this about it point with as move. for looking about I said economically When sustainability an week and and year, to really this sustainable be

in. and out venture there so, group backend. of going Boettcher our of that's about Chuck's And the recycle of themselves, kind of what backend these a we by is something we looking is improves Chuck invest go that at For can think When our we lot the plastics upfront waste that example, have run -- goal investments the in plants?

of able that both we’re frontend said plastics something a charging is And really ideal. so, invest returns fees and the the produces sustainability to handle can in the standpoint, there contamination. From but on But, we environmentally, some also economically backend of is plant. be as would we've earlier good for that these waste out of

his for think, and it. world. looking we’ll Chuck find what the really that's are I around So, team And

still but recycle think is going fees of model, we’re reducing plant to I us still to our we’re work going doesn't sustainability model, still improve contaminate new trash the going to our helps to find them we’ll something that and our of charge and concede, recycling the their future, somebody operating on costs.

Brian Maguire

sort you little little in little of methane you fleet landfills bit can said little from from a that? of give doesn’t already continued things? that bit some the and you're levels, is CapEx. the is that on just were general, recovery spending your maybe maybe CapEx of at think, higher elevated it I sustainability XXXX just step-up initiatives with color a seem And I amount, in can't the on about you remarks, or I more And new -- bit, these more in prepared some XXXX, wondering tying bit just like it was talking And that think comments a environmental a but huge modernization a

Jim Fish

Right.

‘XX of But, year, through of there a is for are a CNG; good bunch standpoint; gas because the big are close really be building such months credits cheaper in maintenance natural what difference. or XX are So, or and But of a maybe mean, look have available in us it's -- us. takes by trucks. we is will do on the The over close mind CapEx either are guidance these which middle is fleet how not I way energy renewable is percent include XX% you’re this the our year. for doesn't XX at our the in of actually to guidance to plants. modernization all because this reasons to that the gas plants. It last us right. timing year, that range say of The of capital It’ll it’s include they not these fleet these allows a us natural the the is guidance XX.X investment there's why percentage, a renewal loop percent we from does gas reason of EBITDA made revenue, at kind energy trucks of EBITDA -- the keep be now on a big to XX.X% XX revenue, well of a build natural end We've that I plants. CapEx plants for loop. these to

excellent that So, process, go are the energy when through to years. a paybacks we decide plant, to out build if capital three those renewable committee we on we're our going in four

attempt that of we calendar XX-month timing And a to kind also match simply have construction returns, a a we -- recognize to they’re plants. you're to at But because year the So, no-brainers investors is of don’t the with to them period for looking have investments. there on difference. XX terms in

the CapEx takes so, obviously upfront. place And

Devina Rankin

XX%, in of the point from and of to solid We've the historical normal digits. growth both fleet really it special in And with those the has seeing in mentioned to we're CNG elevated we’re capital volumes, double business. norms I do your the airspace landfills. invested waste that would at that being the the up also investing on waste I additional add kind being number and

growth to. keep And that is so, to something committed with constructing airspace up we’re that

main as are business a that And investment. economy worthwhile environment and so, in certainly seeing our that growth those spend the elevated of a growth the we’re a for drivers

Brian Maguire

to I in regulatory that you portfolio closing in wondering those Permian in do kind decline think you the just is right recognize landfill But, feel West Texas. get a appropriate was the where out there? I'm mentioned time of you now? Jim, for oil are be in me. in in Okay. guys. And the the Last like for the prices, clearance you now March; one prices you're hole I assets multiple you some got given some on oil with investing why businesses,

Jim Fish

really good. feel We Yes.

didn't have to presence my That's at. the in As that's void. the have basin, big be feel script, are the multiple be you we in I that this one good in. energy we’re in the in mentioned if a really States, we really going services the which Permian United to buying And about that space you

been this at something for was looking and so, us. really while, we've is we for And a this like felt the fit one, right

and strategic multiple more we’re on of at. give it financial we it, about the will getting that excited certainly we’re value this we this, the side of but So, the we're details excited about once close

Operator

The will Macquarie come Mazari Hamzah next with Capital. from question

Hamzah Mazari

realize any as as just $X.X buybacks have is large any either billion But, as outside how a authorization. ‘XX kind of about allocation. thoughts of solid in thinking My the around think to question in waste? capital you waste and well updated solid as you're to or about I how M&A, pace

Devina Rankin

Sure.

stock. But, same and good spent look at prepared his to to it start, a million turn that M&A to So, then, I'll during that solid of the back accustomed waste to spend about if XXXX, you that are tuck-in morning, to we million $XXX acquisitions, for Jim on he be billion over on time Hamzah, more $XXX million the $XXX more over seeing as us. bit the at bought could the being M&A XXXX, where $XXX little in In mentioned million range talk remarks, and landscape. you in expect core spending we $X our million $XXX more

And XXXX. to we M&A when planning repurchases balance strong million sheet. different share a of maintain So, we level, outcome side, about as that should flex see think about will appropriate a we're we for the that on $XXX

Jim Fish

-- the is Yes. really because in -- Texas this for handfuls energy acquisitions weren't the West looking core to the of M&A said, case middle an space. assets, to type are Petro exciting the right normally at if these going to are doing also looking we benefits And but not something of with where out us we it’s Waste, energy And a landfill -- I be at purposes. of smaller as mean, be really Hamzah probably We're we wouldn’t then, we with do middle the is that's handful out on the we’re it tuck-in And this place of that front, synergies. wanted in Devina as otherwise, if those several tend fairway.

at buy the that with multiples, the the our why X, synergies wheel about that through X, we of then doesn’t think those latter, multiple the a that X turns come comes well really always and below with had trading multiple. I it tune we synergy But, down tuck-in And to good with feel So, feel respect then those about tuck-ins, we with. fact that respect to to that's at good monetization. buy because we them even to

Hamzah Mazari

And are do That nobody of -- to volumes slow of then, you down? slow? were business down think in obviously terms recession. I that. about defensive do cyclicality cyclicality things expected were if of XXXX if things how your But, a XX%, you thinking business about this qualities, and great was differently, know just

Jim Fish

that's and different recession do driven the lot we been many that it. just bit think if I here than lot look, so has when. a And about tapered by turns there's bit what chatter I about a said that was know We some earlier. down, It mean, coming happens We’ve it housing. think say. bit. is a off feels at a is normal XXXX don’t like XXXX would a this all because point, a we times I know economy that there recession -- Yes. the I talked what We’ve of about mean, was

that right volume tend the industrial has business, lead business business, and a is our landfill. indicator our indicators waste might at really, those those when our tend recession strong volumes be of look side economy We believe and that the now so, now. And volume that leading. we than indicator where returned to to are of is on indicator. collection a C&D somewhat best over for us the And which housing in not were good on of the leading really very all look at at when numbers to And to it But, of lagging our be the all more January looked our our us commercial into January was strong three a special numbers and strong they those horizon, in a indicators look well. XXXX. right we in on as carries those measures But, our

the we few do in sure we right want and been downturn the now news guard focus softening to control. that off attention last over pay and on months. talked by So, a efficiencies we to not make good that's that seeing it not real the economy. the cost about we're we're caught But is Hence,

Devina Rankin

think our the it's I always a today. mean, nature, industry But, it's in And around, from time we point about Hamzah, a maybe discipline there's made good at. and industry weren't good business, deal our great of I last defensive anytime very a

capital certainly flex down our can we So, expenditures.

volume You've forward. to we that well-positioned would saw And seen our costs. those be softness going us things flex from we do environment SG&A in the

Hamzah Mazari

customer us is is it I'll turn further? there a dollar you're And could something then, Thanks. churn? room calculating improve to it On follow-up a any and just churn, how more it Great, different? basis, question Is you remind on over. that

Jim Fish

is there think go I ahead. -- John

John Morris

to much on at is a that year-over-year, structural, going we seeing as And but ways a improved the ways quarter-over-quarter. we’ve Yes. I -- and that environment, yes, service, and how we're count. even customer growth of that of and doing was customer churn you're growth you're both has seeing look say, one is [indiscernible] rate, the talked about growth year-over-year that our getting down which in we're we've and in come

Jim Fish

there, your we point And still last some I'd Hamzah, have say, opportunity. think I

down still we more aspirational. But, look, at finished below You rightly have we think I get then And certainly few over asked But, question we below were and think X%. X.X%. so, where really think, the we I I opportunity. And can with business a some last quarters. can from the there and happy X%. structural, improvement be We is think the I go

Operator

James. next question Raymond is The from Tyler with Brown

Tyler Brown

had basically, growth benefit from the the net what modeling like of year what what a the in action for questions. bit Hey, total Devina, I'm of at quite at But, some divestitures. your driving of maybe are assumption for couple It expectations is revenue ‘XX. ‘XX? is, So, in you end M&A looks including your

Devina Rankin

Right.

if add incremental X% to X% about about activity impact a I little acquisition So, and in both revenue net XXXX. $XX rollover, about the elevated to for then same, million increase guide to about revenue year be a around And were yield acquisitions and with we plus would that in us revenue. divestiture in it's activity it'd The to mark. X% the the and that expect the be you volume, say X% was

Tyler Brown

Petro Waste guidance? be in Okay. that is to clear, And

Devina Rankin

specifically No. It's included not guide. in the

Tyler Brown

helpful. That's Okay.

Devina Rankin

$XXX to in the was included million range guide. $XXX growth million the Acquisition in

potentially. the after million. to to piece we're until $XXX think Petro revisit to you the quarter beyond guide total year, So, the for puzzle But, that million being about can M&A the wait of a the going first $XXX

Tyler Brown

to and CNG And will then, of or want I in in we sure just terms have all big But, specifically a of headwind recycling credit make be how QX it. EBITDA tax the EPS?

Devina Rankin

from be. recycling expect prices the cash until the CNG actually expense that business operating So, in perspective, of didn’t we hard credit year; $XX million last was in From up will predict it softness the flow we've in how tax discussed, show with some much second recycling, quarter. though upside to QX in commodity a benefit it's

Tyler Brown

the seems like a just market X% growth. Jim, is solid then, question, it picture waste organic to And X% but really a bigger maybe affording

‘XX, turn at X X very and function of pricing strategy, in capital, conceptually, is function it dial environment? healthy. not call an or is a why dial, X turn plus the down X looking a You're plus inflationary of up airspace mean, Maybe particularly what the obviously which the require your market But, go-to-market it to I volume et obviously, is volumes cetera. in affording? the is

Jim Fish

X% and X% it And of Tyler, very about look, tell ‘XX, think X higher X not and here that X would it's I we core on you X was of fact, year; what in although -- it's gave it's and is a on here we in on similar what price. from volume. kind I what that for is the X last So, gave total the to also different

we in volume. kind think of gave ‘XX X% I yield price X% X% core and

there but consistent that, There be I we bit with that at we when a on our we performance to much. But, skis some last out Again, we been XXXX mentioned the what there wouldn’t say of to guidance -- Obviously, giving purposes, upside, get with want look on earlier, might of But, our pretty we've a don't you recognize it's metrics, respect you well of that on some over those wanted could as and disagree might years. is the to softer. conversation climate you has guidance over -- been, been too So, of couple with be top has that. do be line. our we're in kind gave that things bit not the macroeconomic seeing upside. when cautious for we

John Morris

collection and and about talk we're talked we've focus both transfer and is that to station. area pricing, one to the about think, post continue going I landfill

third-party the all network us heard on our to volumes. we’re pressure seeing the be and of about talk from to pressures some transporters You able all move the

side you the the see these But, as one particularly cost improved. results to landfill we’re trying that price there, transfer as we see volumes has some going think, facing. piece of if think, focus that and on the I the and I mitigate the to core and mentioned, that's Jim look we’re opportunity you're pressures improvement, at our

Devina Rankin

this all existing our don’t really We through for see the business, incremental we important. trade price providing better view that's environment we’re volume I and Tyler, flow in that off. achieving and think marketplace the than that us add And in would I as a volumes at

bring our capital that we’re reasonable as to at see as addition so we incremental long capital existing market. same a to to control at see margins, see going as exceed on a volume the good price the discipline to volume grow to return the continue level and we EBITDA invested continue and growth time, on And margin we the can

Tyler Brown

bit Devina, lastly, I cash the cash maybe of you start post the flow out taxes, get if flow interest, to maybe down waterfall, I And the closure, I a EBITDA guidance. EBITDA cash like feels add Am need little still in cash with a closure, walk so comp, free take working free to to it stock CapEx, capital all right benefit there?

Devina Rankin

had I benefit ahead. We're we But have a mentioned say a expecting that thing I a exactly that that, my capital that working XXXX repeat. the that XXXX planning remarks prepared of in in tax it have other is I of think, bit about The repeat one the a I you -- million the saw and won't year we $XX we little benefit would in right. think, in than yes,

guidance. bit interest So, does tax is the little our the a in that that a piece and look But headwind, in you equation of provide if included XXXX. at of

capital. your point on emphasizes So that working

to value some We there. expect see

Operator

The Kaye next Noah with Oppenheimer. question is from

Noah Kaye

talked that contracts drivers know for contemplate out year-over-year that some the guidance said items you're including that new that about. of So, you large you or you the obviously as would comp growth Any the that contracts volume call fires, coming doesn't volume off and or X%, this include year? new as large a tough you

John Morris

about I us one obviously a a would Los not of of that I we lot volume our drove about city last we that for just implementation call year. takes Angeles, of in was is the and anniversaried the But that there's which big one the that, think, puts outside and spoke out.

Jim Fish

Angeles a respect see little ‘XX cost side. the Los bit may in John, we with positively city up to the impact start of was of

that start should show really some So, did and last a costs may that much while to part anniversering, see persisted through the of we year, not top big up the start line due to mitigate.

John Morris

lap to start should that. We

Jim Fish

Yes.

Noah Kaye

that you're on I EBITDA additional revenue the if seeing exceeding at guess, look EBITDA assumes volumes year-over-year. we’re new kind follow then, comment I it margins EBITDA right, margin guess, volume. doing of I if guide flattish on previous math wanted And and to Devina’s up guide, thanks. Understood, the we our

should question a seeing headwind, healthy you very this I there is, operating So, anything Is environment don't expansion we in higher margin and for have leverage do it point? the the can that at growth? ‘XX be we recycling guess, is considering get to

Devina Rankin

Yes.

of at out And about what think for solid just XXXX, think, impact it’s hourly we results; margins waste when XX as that by point a basis expect a improve up is of the in you And to line muddied were XXXX, that saw Noah. we mentioned. I points. I business well great the do important as guidance is we same little recycling look the point, by to they the bonus

And so, XX when of strip solid that, we generated basis we away all in of points expansion waste margin XXXX.

the Where dollars SG&A to the do you're an to to going invest expect in technology EBITDA that XXXX. we offset expect We same is incremental on people. line in and have the

is incremental business so, with And getting leverage well that we're performing also volume. waste right solid the and the exceptionally

John Morris

and sure that is that a would that on recognizing to mentioned making sure or lot do pressures overcoming transfer collection landfill make all those on through Noah, we're landfill cost we're I we're the has networks and pressures earlier it's and cost that the focused one add seeing to I post pressures the clearly we're transportation pricing to with pressures. probably area and revisit that, John. that

Devina Rankin

that’s And recycling business. well recycling we our point in of are volumes is perhaps lot increases those increased seeing brokerage finer volumes. are a worth actually mentioning as A our in

mute so well. as the the does that overall little And of a business expansion margin

Noah Kaye

Right.

to EBITDA So, very is business, color. right. have about said brokerage X% Thank in that it's margin as that shift you. so All well. as an will impact you This the is past, helpful

Operator

KeyBanc The Markets. from Eastman next Sean Capital question is with

Sean Eastman

or coming for for from relative on get you contamination benefit the to the how stable those is context on through basis, maybe how the know, portfolio trying tailwind provide year to on commodity costs tough over on last I so? portion much percentage the anticipated contamination have the ‘XX. guys what environment, fees if fees, recycling you operating a operating to far perhaps costs. some of through the it's the down assuming give just But a have worked can and price come number a I'm a And on the sense perhaps underlying

John Morris

of is start this tell kind of in mentioned. the contracts, we’ve me obviously, One innings kind fees out would mid -- Let buckets. with different of municipal which couple of -- on contamination kind there. you, broken I a I And we’re

longer As there. contract you the is imagine, might cycle

our working through way we’re So, that.

So, the to and we beyond. that's into upside ‘XX where going see expect

that And when lastly, we we are hits it sure the expect. contamination otherwise are giving process. levels the what material material above not floor making us phases little then, if on, our although easier, The customers commercial big, is a to as were -- internal bit weren’t the that two you making customers buckets will, own which that quite execute first sure is the that can

stabilized to revenues, of at buckets we're as that big around what which that MRF X% down at But, come mentioned from of earlier, volatility suggests contamination three I improvements is ton So, is our that if improvement. continued performance lot and probably a is driving make off we've cycling doing in MRF there we've since the standpoint you my there kind -- the to market and surprise X% around and cost kind per because in the in shouldn’t top to then. at QX, And probably QX, that that. QX we of a those OpEx a obviously point. look plants of come a head, operating overall our about anyone it piece of peaked is

Jim Fish

that. prices tailwind commodity And think millionish, we was number assumes it to Sean, were. They come original million that have by $XX in gave from terms that the qualified they down we $XX always something like I a where flat bit. And of -- saying was

it's we’re a a softened be -- to they’ve where of it why it's that's number. bit think, going tailwind, it know between going going I it's would If suffice say, stay to bit to don’t So, be. we here, a we're But, to somewhere give I exactly hesitant to what we just are more, say, be going flattens a and from now. to

don’t flattens range up it's we a but $XX not again, return ago. the my to guess. We think here. haven't number, million was probably where know -- I But, in know that months I'm be would It it to sure I may XX the it then, back couple

you will operating that that back was why we’re at with And things it. commodity assuming also I uncertain it But, the that X that end see to in added little the on the kind XX kind focus flat us mentioned, quarter gave work number of that's if $XX about costs. and an the does continuing with that, return phase think pricing of of well, John we the So, million. originally, to as municipalities third fees to contamination range on of a then

John Morris

volatile the Sean, generally this going market is toughest on from is commodity with what’s because to overseas. standpoint a quarter generally this probably a just call

Sean Eastman

talking impact are line year. question are a you -- second a lot this investments technology, I And it's the having guys on visible SG&A the is, have those about

terms investments, dynamics? you guys want I few to flowing some core of through investments targeting KPIs a understand Whether the I just want period initiatives. are year understand sort or in of for sort to But, goals are mention SG&A. big technology those make those payback just some what of those to sure implementation did guys relative You there's on this exactly

Jim Fish

get do it and and those. Nikolaj they are for analytics, customer-facing whether see to whether we of you is in if data looking his once certainly, investment we they're a a and So, scoreboard, very -- a looking -- returns of really technology, prescriptive at what will, came a it's team have an kind use

we’ve So, it's tool results. promising residential rolled showing a out really, open recently customers, our really market for and

-- wanted we a open technology not market out business, payback for one the before we And when residential is bigger was think our We a to will on is lines happens But what The ran. question for short. like it business roll customer-facing big us. be very of we so, huge walk it’s of commercial.

or as in the for them. that as kind process business mean we of such of also why analytics, think about, I like and he's that It of terms use think building doing right largely go to the And right lines data we chose very But, to predictive results short commercial do that's in promising with to those we we things have with of some pilots on John's to Once our it's of bear paybacks gauge and now. [ph] expect generating. we And on about OMR we're of roll-off, so first. then, bigger is that move those using will And we data maintenance, will that. use some some us now, we're help and fruit the cost we're purposes you have metric how those that. talked definitely and a really maintenance out analytics

Operator

Hoffman Stifel. Michael The with next from is question

Michael Hoffman

million for SG&A investing I you. $XXX Devina, we're -- Nikolaj’s you cold have talking sound a the correct is too. is Thank what Hey. swing you projects? am about Jim, like in

Devina Rankin

Yes. right. about That's

Michael Hoffman

the to just last And follow on one. up

paybacks, So, about that think that's way way sort that? and of think on typical mid-teens leverage about the and three-year to the unlevered to IRR,

Devina Rankin

think That's to Yes. it. about a way great

Michael Hoffman

numbers flow about current the growth to talk but climate? smooth Xs. rate mid two ‘XX those under on free to look If ‘XX we I flow, last growth sustainable a to three cash and XX%, then, X% for out up And sustainable of say me it get you're free up X% Okay. them, of appropriate things Is that the I That's you like over between cash the in sell ‘XX ‘XX at the you periodically. and can numbers. strip swing the years, that to business sort are I sort

Devina Rankin

‘XX if growth in normalize Yes. are. from we're the for we that about divestitures annual happy and where do to ‘XX interests to We ‘XX, ‘XX are environment. and same That's taxes for X% definitely you proceeds the and a

Jim Fish

the EBITDA, to cash, I that ‘XX, at it which that to all long mean, think, how how this flow? is Michael, how is us And of in cash one free -- is if tent, converting look you're is I the pole is converting the of you’ve really questions had we right? XX.X; I we're have ‘XX, divestiture, there. ‘XX, mean and pleased that. I at tax those of pleased, ‘XX ‘XX, normalize guide, mean that to going was course some in if one-time ‘XX the so of very if our with is we we're planning out look always divestitures you strip some

not it this saying million we completely more big than $XXX that the in but year. a had divestitures take I'm year out So, of

XX.X for ‘XX, you you look ’XX, If guidance normalize when at and our XX.X. then

long annual points So, mid-Xs. remember, somewhere started And ago way, XX basis XXX -- the that the between that too number in it really ratio. basis X a points was it the to that of was and by we’re conversion growth with

that really to X% on cash. now is we’re we’re starts with last year, pleased year with something X; from which a to to that So, EBITDA X%ish the conversion this path

Michael Hoffman

And there, waterfall factor the do in this $XXX your of that's a But, bridge then, on SG&A. XXX. midpoint there got to differently is X,XXX, to million I EBITDA million, $X,XXX

solid really about something is to recycling way XXX So, and think waste that up is that? the the

Devina Rankin

right. exactly That's

Jim Fish

on the X% the which grew could number -- it year what focused why year and pretty benefit. it's add itself, lot last actually why, on of to to and And -- why your this X was EBITDA puts about this of takes much that year, times. and as we add we is we’re the the morning, That's X.X and last big there has as say, recycling another not number. there's know, is say, times economy as -- it's your what grow or hey, X% not but year a easy will Michael GDP nobody kind bonus, easy -- really all times -- X And that last be

health with pleased EBITDA best in we're the of so So, which the indicator our is growth, very of mind is that the the business.

Michael Hoffman

you the revenue solid that Devina, about when last the when make And XXXX for is what business? that that So, statement, to that the number you bit, what's waste waste business, talk solid number?

Devina Rankin

revenue but The And thinking to to have the that. number? back good tables, how We’ll about clarify we've information we’ll you, got in Michael. we’re get

XXXX, the because XXXX business, stellar the headwind when relative $XXX business. was in we million million the waste we saw in It from growth that over solid a look that talked $XX we growth recycling that sense EBITDA line of EBITDA of which had really business at to about $XXX makes million of of performance. So, the

Michael Hoffman

trying but was that in that part that what to hard I I the on maybe also -- of way business, to for at, see provided would people it's margin get clarity the given That's that expansion but a little help. is Okay.

Devina Rankin

that take consideration. We’ll Okay. into

Michael Hoffman

good they so counting thing RINs renewable experience they last these are there you, projects, for one you and the credits, in Jim. I'm on not as come energy on forever? CNG then, return assuming And go, capital, are

Jim Fish

also Yes. the RINs them. look, But, That's really we to of we’re some feel gas landfill volatility those And us over the years. and for are not right. in a investments making interest to so only of our like -- CNG available is good -- but because And conversion RINs. they're this they us our there made that period

Operator

BMO. from is Silber Jeff question final The with

Henry Chien

Hey C&D. comments, and and I thinking ask of there's like different a I of wanted the of economy. guys. the for am about to more to how volume Jeff. the little volume Good sensitivity Chien bit morning. calling in sounds of just to that just the parts It’s commercial that sort you're skew to for about some curious Henry XXXX growth relation guidance number

weaker stronger year? changes thinking economy continue any and the the So, as in there -- look that to this to or volume, get sensitivity of just if or other forth. starts forward housing any or so you Is of kind industrial

John Morris

Henry, mentioned think I Devina it earlier. Yes.

C&D our I still had look in pipelines our we health when and a special pipelines. waste you XXXX We strong and those obviously see think, pipelines. at

to commercial make the is decreases we're outlook both is increases short-term on sales out while we're something, -- at we of And the other sure a commented and Jim Devina I activity. business. horizon with our looking versus along missing the barometer kind think, line certainly of good not strong. still And service

fact, and as decrease service mentioned, actually year Devina increase In the improve the as goes on. ratios

buckets those of not softening yet. as have we So, in seen

Devina Rankin

is new starts certainly lot we formation. consideration of business housing take a our and into attention in business to And paid

with We're that have growth the data are And the important in tied year. valuable about in so, the less we X% to in housing achieving points us than for last that's those directly a lot to two downturn. margin us. And were thinking confidence we

John Morris

also that I X.X% volume we look line, Henry, things, X.X% increase if on when it some being in at a kind the some for the tables as at you one-time when to the would really about one-time back add, you in normalize out MSW look net issues. you of of

sit all pretty here. consistent strong our as we volume and fronts So, look

Operator

questions. for At conference management turn closing back time, to would this further comments. I any like to no are There the over

Jim Fish

Great. Thank you.

So, Mittelstaedt to is to mine. not was conclude, his And Ron I thinking friend about this due Ron call of we're a this prayers morning in to family first, to morning. thoughts on him. I understand do And want a and He's say our that emergency. Ron definitely just

the and very our And we Thank be talked for this few it but our solid quarter. last and be for this proud last I morning, to years you the few that. to doing shareholders, business. metrics our excellent business, could joining the and consider demonstrate this not and growth we about our all in talk Regarding morning. really this financial what of year team we're in And producing expectations us for we've operational next to all managing years you returns of more and consistency will

Operator

conference thank today's call. participating Ladies in for you and gentlemen,

You disconnect. may now

Waste Management (WM) 14 Feb 192018 Q4 Earnings call transcript