Waste Management (WM) 26 Oct 212021 Q3 Earnings call transcript

Company Profile

Participants

Ed Egl	Finance and Investor Relations
Jim Fish	President and Chief Executive Officer
John Morris	Executive Vice President and Chief Operating Officer
Devina Rankin	Executive Vice President and Chief Financial Officer
Tyler Brown	Raymond James
Hamzah Mazari	Jefferies
Walter Spracklin	RBC Capital Markets
Michael Hoffman	Stifle
Kevin Chiang	CIBC
Sean Eastman	KeyBanc Capital Markets
Noah Kaye	Oppenheimer
David Manthey	Baird
Jeff Silver	BMO Capital Market
Jerry Revich	Goldman Sachs
Michael Feniger	Bank of America

Call transcript

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Operator

Thank you for standing by. Welcome to the Waste Management, Third Quarter 2021 earnings release conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation there will be a question-and-answer session. [Operator instructions] Please be advised that today's conference is being recorded. now hand would to conference I Egl. Ed instructions] like the to over [Operator you. Thank ahead. go Please

Ed Egl

Thank morning, XXXX Rankin, And Erika. Fish, Executive for Chief With you, Vice Good and this Executive President our joining you me Officer. Chief Officer. Financial Third Vice us and for President Chief President Quarter John are and Devina of morning earnings Executive call. everyone. conference Jim And Morris, thank Officer. Operating

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

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

and X-K, expectations, materially. are schedules you call, that actual based periods. uncertainties Forward-looking opinions differ hear press results Form press could information. cause All important release during on of release or are the and which the to the risks include future to current Forward-looking statements will about projections, subject the statements

growth Some our are by SEC, XX-Q of are areas of John today's which stated IRG discussed specifically our volume, of as yield unless or including revenue filings XX-K recent from will otherwise, most more Form the our or our release, and volume. to subsequent risks results in these updated and press uncertainties Form discuss in filings. in internal yield and references

found the enhance addition refer business non-GAAP stated, been EBITDA or item operating Devina and available on results Eastern hours These today, operations. over expense adjusted with third access cash excluding fundamental do being call earnings the to in the additional believes until of is will flow press to www. Any comparability SG&A a day on Net at website a X:XX is measures. the and from depreciation Internet and income John certain and most Time be release call adjusted performance website beginning amortization. of Please wm.com. of not for reflect non-GAAP operating and free information PM Xth. to During our which measures of are Waste approximately Eastern of Company's expenses, wm.com, the EPS, This have by projection. results XX GAAP recorded non-GAAP To and the comparable which XXXX. the otherwise management measures, www. we at be operations Time that Management PM unless call, will X:XX tables to our margin, November replay discuss quarter the and use EBITDA, operating Income, Jim, comparisons measures before will hear and reconciliations

during occurring of at Time-sensitive the time a provided If rebroadcast code or you're is XXX-XXX-XXXX, the today's call, redistribution, enter reservation on any retransmission, call a express XXXXXXX. Waste no dial the of may be replay. form of call, longer information which XX/XX/XXXX, is Management this replay telephonic written without prohibited. consent accurate at Any

managers, Waste over Fish. and turn President I will Jim to Now the call CEO,

Jim Fish

Thanks, Ed. joining all us. Thank for you

the operations. from exceptional our we quarter billion cash-generation third highlighted of generated of nearly Our model performance $X.X cash business as capability

of outlook in of Virtually, other quarter underlying Overall, about and for challenges. we inflationary supply inflation accrued constraints. accelerated the highest inflation we results our $XXX categories. years, at of labor that roughly full-year solid on operating and sector, the quarter meet chain put third supply in historically some no chain even face these seen Disbursement economy, of government segment by and third labor higher million the to inflation as the saw through quarter, the and million labor has during unaffected us along been Our the the was last $XX with track cost X.X%. inflation financial we private provided inflation including quarter, we've

that to news adjusted tough finish our are So we lever doing good to medium-term. business inflationary the above combat prior adjusted the the operating be EBITDA what our And that free continues we The and flow short-term expect previously cost perform operating volumes. year well to and by in price inflation. labor due news. discuss price will revenue within EBITDA, execution and still raise, that's Not strengthening our will range cash disciplined and pressures the strong these guidance to Devina, is and primary the as the I fact programs ranges. we're John, surprisingly, about demonstrated

improved about based on a often yield of keep to escalations in of delivered MSW line collection to residential tied of X.X% programs over mind the price quarter. business X.X%. while to third the prior pricing X%, the Our XX% price X.X% and Standout But of of yield be with the yield core year. in are revenue continues our an index, and disposal on performance back look

this the favorable timing a they there's rising it's XX% a cost than businesses, step-up recovery get May. until the our our in price we to increased increases price more quickly cost who full we discuss did. as quarterly lag automation pricing recycling that Strategically, finished portion we So, won't plants. The of That We're a focused interest automating, working fully And XX% won't the to to both costs, said upgraded that X% high recent customer a positions most this A advantage challenge of our setup in across business need immediately. in the index XX-plus impact said, the as John on of seen, looking jobs. at in and cycle. previously has Let's certain a single-stream understand believe a acute and evidenced expedite in remaining addressing of market we've automation level we labor we're address competitive that of don't they their turnover the challenges. as percent We've an the how role decade. derisking seeing and opportunity next today's directly attract increase labor to mechanism the the our adjusting X% very where we've we're rollbacks certain as cover price are price of have. open-market environment certain to simply and next important when view jobs full we're increase get labor where by examples previously reduction just until which May, rebuild the customer low will

We results the their higher long-standing unrivaled solutions address the the our in by needs. and impacts expertise, in success by strong new inflation performance state-of-the-art pleased of demand the rents those have in energy rebuilds uniquely plans Earnings the at for we singles-stream positive of the driven to With challenges recycling highest XXXX-XXXX by for customers [Indiscernible]. asset our support contribution, and sustainability and business. the great of were at network, recycle single-stream continued continued, our retooling we remaining margins equally quarter Given and these with accelerated our from new volume expect In performance late, business growth of XX% timeframe. and growth more single-stream current plans, of were outstanding level quarter, sales of recycling operating driven sustainability the some ever, prospective renewable prices. in their is our situated evolving the saw WM in material and and where robust labor to

our well still sustainability particular, circular chain, shortage in labor and progress quarter, causing to doing acute achieve ranges. us year, nearly opportunity fast-moving the areas, the inflation, seeking take way demand higher-than-expected faced and and operational unexpectedly focus unlocking people made year's and The the X to supply outlines the which increasingly for the those generated we call increase highlighted and for growth parts continue growth communities At within focuses stream, our energy neighbors, this through ourselves an are in expect customers the this we same positions the made goals, sustainability discuss past their our Of In on note, in behind And results and move And In details renewable revenue recycled America. environment driving planning WM of our the deliver our headwinds. time, for in drove from flow. thank of XXXX further guidance advance well are WM strategic conclusion, growing third to journey. to double-digit more volume us investments from like it we I'll in challenge our to across and this, annual progress this XXXX. for presents since managed content. earlier how has on [Indiscernible]. our made solutions of their against areas the an for to separate the which challenge turn North XX,XXX report to published workforce and is we've are line a revenue, has in people report free results EBITDA, cash XX% XXXX. materials, customers, another more plastic sustainability, our waste now John our and recycled operating key the I'd of quarter. in for quarter automation, over month. industry. and They the plastics we decisively this to growth the quarter bottom to is Recycling they sustainability report and care The Our

John Morris

Thanks, And good morning. Jim.

disposal percent operating a more challenging the in drove business than continues X% third integration growth This combined team producing higher. and well Our more very organic growth despite to with EBITDA execute Disposal collection Advanced revenue of operating continued XX% in environment quarter. than

pressure quarter, to impacted as programs improvements, costs-related to constraints, supply In and third operating planning. costs other the revenue experienced XX.X% Jim a our employees growth. a we to new seeing As training to quarter. addressing and from in basis of costs, Adjusted are to stronger-than-expected are categories, expenses XXX management, cost the on impacts controllable these chain percentage increased of volume the and inflationary hiring pricing and third mentioned, and workforce cost labor particular, as we pressure in points labor we efficiency

employees. last automated, fully we our while including of we retain route, are and see attract team not willing evidenced market business proactive as automate business, shortages to same quarter those adjustments the and are a continuing yield this the we last in by in be on, years. we the end selective of the hours good up longer-term collection on to volume to continue saw to in We anticipated In showing adjusted the volumes. increase labor wage that front working of pressure a the earlier cost, the number of also growing overtime roles labor get We are meet higher-than-expected as third to made take line that from very to time, few we in our through the where to meet ADS residential work results of as challenges At demand. portion our year the are XX% and of

While only now we cost seeing the the we're are of in incurring the stages with investments, these associated benefits. early

the some back of with our costs supply volume to they hire incur we hours the overtime have and we Similarly, some address pressure demands. chain are of in additional Our also robust lines accelerated in constraints to to labor market QX, collection business. address higher-cost as Third strong in that see growth trucks continue service volume Quarter, place we've technicians [Indiscernible] the repair operations, coupled added in increasing had in the growth, volume maintenance to and temporarily

business adjusting third-party our business collection quarter, increased in costs us. Overall, the quarter similar pressures are stations, In transfer passing off those in hours. and the again, for and we addition, our the collection in third our training and third adjusting in are strong efficiency are taking the the improved onto recovering facing road remain sub-contractors, the business reducing and day. pricing truck most The the to of most increases expensive cost of hour increased expensive fundamentals through committed our

quarter. to Now of the I positives on focus want in the several

and Turning outpaced collection disposal grew which X.X%, expectations. to our strong by revenue volume results, our third-quarter

outpaced, is Year-to-date X.X%. new was twofold to runway performance decreases continue second see and medium and by increase customers by strong by quarter. churn the for solid more metrics more special fourth reopening up in than see for in XX.X%. consecutive business We were is quarter volume we X.X% service economic also for small commercial strong waste Service volume the XX%. quarter. the with driven continued than up and business net And up Customer volume

to advanced disposal go to operations of and smoothly. and all billing combined the systems XX% the remain of migrate the acquired by customers our integration we our of end operational track into on virtually around We've the year. Finally, continues ADS

of $XX XX million We run realized annual $XXX have the rate $XX to run captured during year. XXXX in third in capital achieved of total another costs nearly by the Fourth combined to of we XXXX, the a end million quarter, in rate year-to-date the million of million savings. from with we're bringing to the synergies the million annual and Quarter $XX reach forecast and continue And on combination to track XXXX synergies be

service turn Our further to teams with want Devina our financial them I the safe call and are their to communities, efforts. provide working our all results and customers reliable that, I'll tirelessly to discuss for And in to and to over detail. thank

Devina Rankin

Thanks, John, and good everyone. morning,

we As year, collection Third expectations growth growth, to volume all deliver continued Quarter. have in strong and price top-line prices, increased ahead commodity disposal robust seen core in recycling of an the

and recycled EBITDA $X at with XXXX and X% XX.X% outlook Company is collection year. continued increase and billion. strength again values. growth guidance than We're also for midpoint, confirming updating result, between business is -- $X.X are we and recent of the seven from about revenue includes in Its adjusted revenue As once an between higher year. most in volume a an almost expected the year Which initial to disposal our be guidance, RIN X.X%. our and the for and our our commodity about Total prices XX% of now XX% yield almost for expectation the billion prior outlook operating

XX-basis X.X% investments, that engagement was million results revenue, of technology our to we controllable our point sure a enhance making initiatives remain benefit in as advanced of increased over on business. XXXX. SG&A serve we will and Included is Third-quarter $XX about each that will customer improvement allocate spending We our dollar lower focused to the cost managing term. long our digital that over

contributions increase billion, Cash growth Third from Quarter XX%. costs. net interest the in to be and increase driven $X.XX an was including acquisition ADS our operations cash provided the by EBITDA, operating robust operating activities by of from lower continues

tools from comparison demonstrate a our the timing payroll and to taxes working was deferral Overall, of of unfavorable of in billion third capital months of place the we're the and P&G X due capital benefit processes. quarter, capital modest our there million, improvements third in the While the $XXX expenditures the cash quarter, X.XX capital year part large In spending working in systems putting first in in was dollars. to enhance XXXX. in bringing credit to

than due chain longer we spending to construction continued capital to project Our and XXXX planned. pace be has of taking slower than supply planned constraints or

Investments proactively we our $XXX forward at for pulling year. investment, where equipment last recycling capital discussed the in technology returns As expected we recycling, are the [Indiscernible] know particularly quarter, about to we in will be are be and strong. million

of While coming into our guidance of $X.X-X.X flow Quarter. capital full-year in on we We've $XXX our to way first flow billion, chain million billion the our $XXX targeted targeted pushed full-year one billion. low to million target our through end spending some in with free constraints. dollars supply of dividends of generated below shareholders of spending free our due and XXXX $X.X repurchasing our to to more billion range, at cash $X.XX continue we business cash levels putting Third XXXX And billion than the to months, generated cash our $X.XX free nine flow paying primarily through $X.XX in We could well of stock. returned see September, the us

repurchase $X.XX authorization to up to of expect to continue in XXXX. billion We our full

achievement of plan. the drove X.XX targeted leverage times, of performance the our ratio business, of the integration at ahead Our acquired was of leverage ADS successful end in the our ratio of the business strength as quarter the

that XXXX, costs, set WM are positioning capturing be employer and up focused teams’ an programs, pricing choice, As a final managing to our of we'd strategies We of the controllable finish our accelerating teams on address questions. With the to growing solid happy as our know disciplined we our volumes. enter stretch for this Erica, XXXX.

Operator

As Instructions]. question a you a reminder, to will [Operator need to ask

Tyler from Brown comes question Raymond line of James. the first Your with

Tyler Brown

guys. Good morning,

Jim Fish

morning, Tyler. Good

Tyler Brown

the Hey these pricing it looks for you clearly favorable all got setup ton but sounds give I inflationary year. I looking color know this environment. QX on inflation. next Jim. guys mean, you've a don't on Thanks calls, just like very for ahead the

an let's resets that You CPI have market very to just and open rational. say strong you feels alluded

wouldn't price pretty 'XX you in next So Why can picture. And that in have excess just accelerate big unit do pricing you cost inflation meaningfully? confidence of year?

Jim Fish

Yes, that, I Tyler. think right about you're

about some acute a thought. I day, my it, any bit think biggest that, than TV as was we And we we is talks yes, which It perfectly biggest about not single talked saw that's I that more the has quicker this, offset add cost is lever, show our been of remarks. than probably the little and watch you the in message that. was -- it of timed business which at inflation, a said is thought. with price To on

talked in So, We've there fact lot our of a rep, there our on of tied that many mentioned And cases, is comes business there. a XX% in is XX%, about I an a title January. that lag the back look index. XX% a, in to about About is business XX% that of that. that

it those the on remainder July, And that go about here X% piece, then and to back another We adjustment the increases the a market you then the so and smart index and the price hit going spattering comes don't we that half comes I cycle, need the open here. us comes We're want And thought, year. And until increase October. business job of and buy of than XX% about we get gave first going and, there's to we'll year, on to then them January, the still to the X to XX% May. customer remaining that increase by we we their So, ahead have increase a of example back of come price of mind in the to to improved the inflation price XXXX. and hard comes we're in margins. the May annual be customer in the -- next in in that amount XX% in some hey, in so wait costs October in in customers keep go it then of cover

Tyler Brown

Yes.

Real is That extremely helpful. Okay. Devina. quickly,

if just year-to-year. quarter in some margins that So, buckets it in sounds down, on margin, points out but bridge us key help the there's you it a XXX know basis going and there? can like lot can this don't I distill EBITDA specifically, EBITDA you of down the

Devina Rankin

The two discussed at primary and the then to that look buckets are recycling inflation really brokerage. impacts we've

about a that of say impacts of XX So, color that a Jim quarter, little mentioned impacts was the put inflation total recycling million we impact the around XX% that from our about during earlier, that brokerage. normal been that. was we the estimate inflationary To about XX% would and from $XXX would have more was inflationary

in And that over million was have you we half projected year. that of about we then, inflationary excess above So recall a consider to normal the we of going and might XX impact. $XXX back million in what rate run were that had the normal our

you a would business. So, meaningful and about costs the in that have pretty to $XX-$XX million is of we QX our that above margin what were think we overall impact can the see projected,

which our XX% cost cost indirect I of see operating look of labor, another seen we've important subcontractor consider that labor-driven. big is our that driver. XX% when is are it's structure a then structure our and at to effectively that's labor-driven costs, you XX%. think as And costs and

John Morris

expectations, those a long of are I have our take to overtime advantage as my we short on able volumes. I costs I additional my part strong we're certainly, term sight with what spoke only little of to. and Devina bit the mentioned volume more we've what prepared line comments of to of the a which Tyler, view a And out the is we done in in be as that thing outpaced clear over good term. go the would service add to remarks, And spending that, commented in

Tyler Brown

back Great. queue. the I'll hop Thanks. in

Devina Rankin

Thanks, Tyler.

Operator

Hamzah question comes Mazari Jefferies. next with Your of the from line

Hamzah Mazari

Good morning. you. Thank

availability cost operating fair pricing I is leverage? greater that of restarting reset, much existing because just Just issues second your guess that, just a wage leverage. op Just follow-up much that to comments, the timing you that is I subcontractor given to is your base I labor of into when is how cost on increase resets you'll existing incremental these how listening to versus up see hiring op labor impacting also would and cost labor say year half adjustments? guess. related your leverage, it referenced of with next put

John Morris

labor Yes, training and a related the Hamzah, I and hours is pressures when seeing, aggregate. About this you I to doing, hold about and think turnover of some has at just some good a morning. it that of seeing. in increase with do we're would industry that tell that to transportation I is additional hiring look quarter in is we're everybody

good terms over quarter, last make having I talked as on I resets think in impact labor think we an showing the whatnot. started this the in news is, we've up quarter to actually progress And retention rates well, clearly are last four five our which the good or there. of are to months,

to we're over mentioned, of we're long incurring. volume are will, Part don't is is quarters of three seeing it, OT bad were view some related expectations. you up numbers that thing the as outpacing as our we other as because term of we I the The a if that, increase

to overcome be through Jim line clearly year we automation expectations to the Jim keep with of change mentioned, increases previously focused as cost we able is more something efficiency pricing think question, we're mentioned the on, to a is business of outlined. pace need clear have and to to as will change, broadly the strategy do that. to etc., do in on have gains, we've pricing resetting our our sight going and I that half that think Tyler's index, I XX% what of to and first not

Hamzah Mazari

up over mentioned investment follow-up question Murphs it I some I as being mentioned you just technology, you And functions. and just you -- there Thank automation as accelerated also then what, of is just peace behind automation, you is around and know My to level, you automation, yet you? and it at will well helpful. part a come? in Very what the as a are in on turn that, start from could technology left perspective, And customers Jim, referenced you. of is, terms automation again, to high Maybe inning it. of Got do? recycling? what's the What's

Jim Fish

I think comps we that the under the we're it's in -- the that today, not lot probably X probably kind think, in automated we've the optical And second since have single-stream think our device. inning is is plants. to -- inning, There's about I I technology refer think it. just digitalization, of like fully But of of customer in falls we're it's that lot we're automation is It's point. And second using which plants. about XX, I technology, plants really a here. automation talked at I the baseball this not that. not Houston analogy those umbrella. as a that digital service It's we sorters your side while we've It's mobile but at

still - dollars taking about you, plants of to have those of think And put savings. those month fact the and that XX that about it's we plant in ish left. plants XX dollars million ish a - into labor of per for think XX percent labor about the -- you if we're out, So, fact per that

piece feel get obviously just smallest have we're recycled the you the big automating we automation not plants, positions But those mean, positions they the from high lot first, those to that a we'll very of themselves million to lend some going dollars question, a at very of turnover and be that your that's of I Now, plant, a looking those but won't ones have it's so like forward. automation.

week think the be pay make third about, And effect, think we But certainly total the and peak OpEx, want your one what's almost also, would which last impacted at we the to haven't we those was John talked automated of on made setup, you customer And I And to them. COVID then recycling. I it's to which if conscious number out decision but September. So, employees that more the question just XXX than had fully point [Indiscernible]? the employees, a think, we to peak. about we pay I by

XXX, of cost about by way, the over somewhere picking X we of million period. them so, at think their you lot probably X were that between those, half a are bucks routes time, with If those up of a the and The we that hours. was drivers. impact of paying are and overtime two-week same over

more back XXX essay I So, it's that the COVID in not down come and range the number now And employees. way a at from That manageable employees the as down both, insignificant. -- have number virus. it's quarantined of by the we've has looked much seen is number that the in it's the who XXX Employees the it across U.S. P. to

be was causes off unless and So won't position. in a coming we back the was we we were short-term that certainly bearing. back to kicks same us variant have cost another repeat that that and That that see

Hamzah Mazari

want per savings dollars plant thing, clarify is quarter, just I for the both? the from Still, to a one recycling million not plant for

John Morris

Sorry.

Sorry. it. I knew

Hamzah Mazari

Got it. Thank you so much.

Operator

Your Spracklin next comes question Walter the from Markets. Capital with RBC of line

Walter Spracklin

everyone. Thanks question. my morning, taking Good for

dilutive you've is through So, of costs, dollars, track and you as re-priced nature. re-pricing margin pass given pass-through looking to merging achieving lot a a historic great press but be the are had somewhat you assistance in year-to-year, to years at now, enhancement and margin but your protect improvement EBITDA of able in Devina, margin, can for record it

us mind to historic though. of cautionary pass-through when expansion revenue is that cautioning any is lot expansion, So, margin to a revenue look next you're when year we margin that at versus cost we your next there year, given look in keep

Devina Rankin

outlook is Yes. half that I go of first what's price is we of experienced cost the that of fact of that any are other the increases, the order we that those during are would comments And should margin automation when had that more pricing to lot this the mismatch to nature and of impact of experienced in index really pushed of kind through. in the and work, remains say we've increase significantly to third one a our is back in ability acute fact terms the cost revenue Jim's say, anything business. And the both of important I efficiencies increases year, time the a earlier lag than strong a discussed when Degradation, to long-term in of indicating quarter. operating improve the way the one acute that, businesses the about in through or towards terms short our indicates not that more as the term, terms that, we we margin. weighted

that structure. expansion think XXXX. year-on-year of of the it regard some one impact being as with solid of the noise our higher with in long these even continuing, have over respect term to timing the But a some margin volume differences can XXXX in expansion particularly we've remains expectations to that you about seen I cost think with outlook

Walter Spracklin

not you wage you of that pretty part that, built that repricing wage it framework? is of your or meaningful to is That's you want And and numbers, into type on likely will overall just a regard up from coming color. percentage that workforce or wages then see are been workforce perhaps call larger an with outsized that. the a done renewal much has your been has part that it that Appreciate your re-priced there or great if Okay. my price follow-up yet are increase discussions of to

John Morris

been spoke most technicians, really of adjustments Walter, QX etc. we in recycling So, carried drivers, through have employees, in in our front-line the have folks, and to QX wage

that we that do in that So, have close everybody's folks what's the on X/X on But our listen, to in say push. competitive it's folks a here, rates now. probably compensating regular to XX% to that addressed are think Greg, keeping I'm eye were to adequately but on that some of go that's through XX% something of taking employee population least to shape, raised balance swag and market basis the employees, way, annually on relative -- the group. labor make then -- in we've we part market. a of that We're form. sure the those but XX% we're mention we've all's I that's at initial one every in or And other not right And going

Walter Spracklin

Okay, a appreciate that lot always. I of as sense. makes the time

Devina Rankin

Walter. you, Thank

Operator

Your next question comes with Hoffman from of the line Stifle. Michael

Michael Hoffman

lot solved And versus would with you're let's pace the garbage morning. you time, How Good the all that first inflation. right of what everybody, inflation now? that the of market's compare deal pace then the pricing, seeing for a experiencing you inflation remind first-time with of then XXXX covered too. of the eventually

Jim Fish

don't I think that they're close.

a was increase seen. not example think acute this we've people in Maybe of there's seen sure is of Company anybody got May type their gave more price 'XXs this of in the couple At a than today. that the what X% this example. the is I'm at I I customer real rapid far working our inflation. that have

in May, really this end So, we this as has July the seeing quickly almost -- as came and weren't of on accelerated. but even

it. you're make are because tell don't growth. lifetime. improvement, these think we've significant Michael, to I on inflationary between look in there's efficiency going maximum for a lot and But we truck certainly career, jobs serious There I that think than job the the to cover being and we we're we Chair with that not we primary would it's and the is s period. extract I there automating, all organization. the is talked in XX% even John really why this this more really we maybe do this about talked our a driver to the really to at I my seen you're out side efficiency need so acute time price the turnover sure thing job, high automate But it people to have turnover mean, at of using it, doing do it's the we some talked high have wanted some efficiency a customer House, service my we driver fully talking digitalization with routes, and cover and it. that to about automate weren't stressed when opportunity price about other think and same somewhere labor good got White there XX% and with are did being jobs right way Fed -- you up we've by that before, about You hearing but at

Michael Hoffman

Okay. Fair enough.

is, message clear So and expected want inflation. you've to you've in said to this all I pieces, out but this say it cover loud,

months. You need and years, time just it's isn't time

Jim Fish

January focus happened a XX% of of half talked the of think XX-month will in I is contracts, I won't how get then and we of in big The or We so on the the There we look-back it of We on full take is capture this XX%. wouldn't impact. those that adjustments January effect that's think some those of indexed adjustments. in I the months some the last should the until comes about, those adjustment mean, of full year. right. that much that full that adjustment first of a July in have the the effect inflationary which pretty inflation. wouldn't three for of XX% That half inflationary reflect effects I of driven get -- look-back, -- acute XXXX. all this take inflation the the we of

Michael Hoffman

your Devina, to enough. fair of guidance free to flow, capital X.X flow on cash on Okay, what maintain spending? are cash the and ops the X.X from assumptions

Devina Rankin

and year for $X.X a capital $X.X investments now, recycling renewable as some pull love That full-year some the steps But we that said, taken think have love would've than to to we've things liked, billion. to more spending order the bit higher made to I of seen to the of $X.XX From $X.XX finish forward. little particularly all year perspective, billion. energy forth be in specifically. we it and the every slowly guidance we a as right in we capital somewhere spend proactive put would than being just could that, range move We'd we in we've a we mentioned, number

based of that puts taxes takes, the cash seen months, but expected of increase terms and recall on In have we basis. you'll in other I X a through impacts an impact at proceeds We've in that capital total the of timing basis on of tremendous first really performance year. ahead All the think the seen of of We X aspect of months And contributions just growth. we've in for back the working year-over-year cash meaningfully the we'll give significant think every payments that that from in leg QX. when the some then another divestitures some we we is that ADS year-over-year our exceeded important to the would in of some transactions. say normalized, in XXX in from about that certainly all-in-all have. I contribution. midpoint is year, But XXXX cash has you of a is flow the single good the it for free On and the of at all, XXXX expectation the one that flow QX, the look

and that So a growth level shows on of the free year-over-year basis cash flow.

Michael Hoffman

the the an sum to range bias to you upward up the your on But end flow. Okay. of lower spending there's midpoint cash on end free if Capex, of comments,

Devina Rankin

working cash I thing and that would the there, capital yes. I I ops impacts have but flow only that one the caveat That's is do we The have there the taxes would mentioned. from caution on

Michael Hoffman

least they John, then positions from that suggested accurate started And recently, peak in peak other longer Hawkins peak I all to and open Tim Jason -- they a a an peaked against NWEA pressure and little couple statement bit? positions were open others saw were has companies add So, Okay. past and open. Kraft all had and meeting a Is struggling and you still? at this no you that

John Morris

truck to month-out the you coupled hearing transportation, will, you at Michael, show without TV good adjustments those X or can't a around I months, form net make in some and we've ranks. progress positions, WM, mentioned, and terms or yielding I transportation. if here efforts as probably in the pressure whether it's rail and of of the to within some mentioned But add, being news I positive Jim or those key results still marine, think turn of some to would my we wage it's whether of X out competition lot able as X a comments, tell I our is the for it's are efforts the specifically, still with about months. hiring there's whether of made retention lot of on mentioned, some prepared last really X last certainly there, driver you as month-in There's pressure, started

Michael Hoffman

message? peak you're the clear So, off the is open positions

John Morris

Correct.

Jim Fish

figure year. above, higher XX% that. know about our than - have is a the I it, significantly don't over Michael, of we but XX,XXX drivers are think making that XXX,XXX ish what for And it's

paying and COVID, same teammates back. good benefits, the So, time, education at here pay of quarantine. months benefits we've on them when our we've care We announced out chosen to chose them on have number that seeing really -- dividends think taking I And the across then we focused the to have several really are think the volume they're still of pay we're point, 's reducing them during U.S. pays John course the in I thousand time open XX To terms was, us increase. positions churn. this trucking for amount we of read there of last the same week We

thing, compensate have, we good for like to we're a that we problem roles well-positioned. trying we're we're point, to but It's John's well. really hope make so, as We but past why of our to good yes, these [Indiscernible] getting that a as have benefits And part ourselves we it's there. -- pay that differentiate good we think sure to and peak we're

Michael Hoffman

you and leverage. And new remarks, momentum think should picked your then up seeing John, business Its in net that just net are continue. new business [Indiscernible] I there's where growth momentum, I last one opened for for not growth me,

new So impact able be guess inflation spending there's capital I growth. that's net meet thoughts business the How good about that but two pieces news, to that that. does to

John Morris

off accounts. large filling spends momentum capital, And was of We're I QX. mentioned business some containers say really to then seeing and collection the would when small the I XX% is is mean, incremental from ordinary but medium function spend. I decreases guys good between tell a that that raft number, some familiar of pretty which there business, and you there. things service as don't -- I which I would and temporal also we've Michael, increases you and big traditional that in capital prepared don't see first capital raft, would capital, the strong a That before next remarks, are I the you, Well, out versus up the is terms be our and to which extent, the net talked step but X QX to we mentioned about on see

Michael Hoffman

Thank you Terrific. very much.

Operator

CIBC. Next line question is from of with Chiang the Kevin

Kevin Chiang

Good just your for next as inflation thanks I If mentioned, on strategy how acute Jim. taking ask everybody, here. given you've us year, my repricing question for morning, can

go you are that could continues maybe, what of you for think what might seen inflation to pricing that got elevated pricing you But wondering allow you maybe more contract to between maybe the to this. when reprice a Just few in looking than event months how you all be limit persistent lag in do half the Or versus costs or ago. at we level? you've look persist increase inflation you year like, had versus might at terms this inflation back see maybe are that hoped you've

in being limit that seeing strategy that kind as of into repricing you look think lag, interested XXXX. out to about you Just how

Jim Fish

of cost from we that anybody the that, not cover sure we here, up we catch Yeah, plus Kevin, catch XX% a with good index-based the just I'm the three-month runs the then, on these that, add that's increases inflation really in we're to and position then we're kind like this which lag don't pricing once anticipates first these anticipate, margin. I've once with up up feel with hits us we really adjustments where unless seen period, part in

which price if that That's we price Core of numbers look expects was retract anybody for goes the landfill X.X% were that X.X% but of very core you pretty price probably increases, will price the then well, core that, statement, happy Now I yield. good number at business inflation metric showing. is X with in for questions example, of think core the in Yield of price. increases. best quarter a core best right lot look of don't couple approximator was to but And over the at price commercial. XX% price as if landfill the line for consecutive price, so you X% I that's now, price is core years. price last has gotten a really core if versus Core we're big over the was as the at probably quarters looking

keep in I with place as margins and the really pricing mechanisms feel comfortable have So, that the the CPI that existing provide will improve opportunity in system that inflation us to we core and cover some that also XXXX. won't a go the look in that's adjustment the we into year in going XX-month of that's coming back, capture take January mind to a all inflation big include piece of to that.

Kevin Chiang

question. as we're roadmap, go can put That's to I look looks P-fast XX% guess I Maybe next inflation out and the what guess over they the non-inflation there. evaluate ask things heading for Yes, this strategic let's I not few it hope years. studies great a all color. to Recently

do? you comment think look that the what - you anything EPA the would they as that roadmap do it Does would you Or align is evaluate should wondering, you EPA Just thought that put at with there, the out strategy? on? as there P fast

Jim Fish

have want to but cost last with was to over think that long published could press that term, some from they two going Kevin some same the answer us, the I our on assets still to certainly short-term a Yeah. long the we believe bit something dates impact to just week the benefit is milestone It here are or covered, little we off in term. the that the EPA but that. things of that over get post-collection still present the

Kevin Chiang

leave questions. you All right. for thank I'll taking it there, my

Jim Fish

you. Thank

Operator

next line Sean Capital KeyBanc with question the from of Your Eastman is Markets.

Sean Eastman

is my track down just impacts ultimately we've WM's causing taking seen been service quality. I where for there? curious great trend Hi, you this to this concerning Jim. that any questions. take Thanks continue shortage in guys wonder Have you've anything pricing if if I'm a ability just that instances labor seeing?

John Morris

every and of eye a that. day. keep we And mean, track we first everywhere it us it, on close So, get to I Sean, there's pockets track of it. all foremost,

making the where for you We there. is have we And look as feel To mentioned to the have sure think second if to Michael's if had and think strategy has question, for pricing you of our turnover front? acute -- our where we're really with at peak seen No, at we probably we're of look response residential, is headway us pressure most was, we look it for not has been so. to yield there profound we've and us what the But at issues. some were impacted results the of line I on pricing enough quarter -- business. pricing and you your corporates some labor our acute any the a number what issue in lot pockets around other -- past anything us the last or the our like concede and of don't question, for Michael to frankly, in and quarters, it over

Jim Fish

when the but uptake And XXX drivers the the to or seeing it's of churn pockets, you probably gauge X.X% we've prior think right have for XXX to was some churn, you churn helps We out be year That in But when there that see got pressure I we're COVID COVID have an a pressures, for not direction peak it mentioned. up that going at best I been was doing to hard quarter level, ish hiring can all at We're missed moving some way in pick from churns. lot certainly we today, that XXX. the hey, - to that look and to make right pressures, these quarter. out I make John out saying, recycling And same sure everything to as the employees them. The is I operation, down sure the we when due level. notes person we think of metric that. on get can was at we the operating there's during pressure that for. the think there's we're you all to expect doing on we're compensate a us was my to my of X.X%. came the the everything pour number Well, that in come for so customers and to

Sean Eastman

kind need do and safety? of issues dynamic. about the with labor incrementally mean, this What's there, safety That's associated thought I Jim? what And to Okay. helpful. we concerned safety the costs be about around

Jim Fish

probably is let that would the the on very John Safety be compromise never safety. but Well, at I answer top should answer list. our we of

And organization. so, a we anything are extremely focused on being add safe there? John, to

John Morris

and through distance, artificial scan phone been of entire to XX% we've issues, kind is what's that help They got so about with some has with behavioral fleet. going will you on some to intelligence helping. the to on-board for of with I vehicles, equipment We're able regard that's our updating collection the spot one are vehicles, where our all supervisory Well, in where like being extent would technology process automations -- usage, our tell cell collection thing. things --that's following

doubling we're if think I well, of there as to safety of folks, getting integrated make no, core continues well. little that sure perform business why absolutely results, fully our at but totally the our trained. way So a have more we get bit tucked-in of because our ADS. we've on well look WM ADS, you we're saw pressure to training ADS seen a and as The they we It's business, we as part hours hiring

comes And number as we're fewer saw fewer Xx that we and that down we think hiring so, and drivers our training hours, in technicians.

Sean Eastman

Thanks Okay. for guys. help Very the stuff. interesting

Operator

question with Your Oppenheimer. Kaye from is next the line Noah of

Noah Kaye

not operations question, my guys. is the potential that I I frankly, vehicle to can and constraints, when Obviously, taking delivery. the linkage so that's a I'd learn the know in appreciate something road, the be as use shortfall a for customer Capex interested to reminder Thanks experiencing I and commercial between about. I'm off guess impacting cellphone industry's do bit production

be Just talk vehicles, wondering elevated maybe this translate older the having that through think little into year. can structure? impacting utilized is a how this but mentioned cost [Indiscernible] might bit some how you you I

Devina Rankin

now. Sure,

we pull into having vehicles to flex the think roll-off, were think the significantly most so mentioned, line John those about we because take the service. speak, some XXXX. sidelines, that that, older of most able We and I to business that that's industrial the way and to off of in significantly saw in where of

so on optimizing ownership it While be cost focus side, long-term focus on of fleet we reducing continues the total vehicle. we our of strategies operating that each on our see expense do to the

We of fleet have seen on the some unit pressure terms per in cost overall.

particularly driving inflationary cost earlier business. general that but pressures, automation of of towards Some to in residential that we're they've line of that the some the points is made

So, definitely we more have efficiency. on we that the a from expense expensive operating of lower street, terms while of labor in unit the benefits see and both

nine in point to saw. date. that's expected wage we'd So the abate XXXX that certainly experienced we we to that we expect in overall of current an the only trucks and a deliveries. It's that that through say of get truck as to the pressure gotten we component overall was pressures the would But I quarter, get that months, interesting XX% secondary that to we that cost

impacts see those you'll So, trucks well. we start reduced to think get that delivered, of as when some we those

Noah Kaye

work presume on going a at landfill. source be flip upward and that, what guess, the do Presumably are construction for the I to is of others shortages to there pressure labor at side I landfills of helpful. that's That's pricing expansion. industry-wide

you pricing a but robust may this assume quarter, the a I at X.X% factor. had pretty be And contributing yield outlook You landfill. got this

John Morris

good Jim of of some think that did categorizing too. I a Yes, job

the keeping close [Indiscernible] make is. fixed think to number team things that are on. and that's I XXX% steels decision a liner, of chain respective those our But not And whatever are the eye it. costs, places, a a we the buy-one versus costs, container or supply while bulk steel teams landfill all few there's a or up may can operating

there is I majority to strong against a of really think some fleet coupled volume. the spend of the spoke Devina delays which

side, recover the why this we're it's side being including not on of you to collection be whether to that. that's that post-collection So somewhat cost transfer the acute confidence going some pressure about or having subcontractor a talked of able

Jim Fish

-- increase I is matching third-party got the the way think caution would increase price might One cost just thing our landfill really I quick, got because volume what by at on we that was we X.X% That yield, doesn't against be against the the that there. number. Noah,

our in at priced what the not a landfill the lot a of that MSW, is on yield volume X.X% increase comes that gets that imply at volume does curve, So, that's in which was own our street. the cost which Keep the gets landfills. mind at priced

we increases going So, the just up our increase. a because wouldn't are we've that's our necessarily landfills I cost that means overall, talked that cost got X.X%. only landfill on by at includes that lot are prices X.X% about we're that seeing costs That overall assume MSW, and

Noah Kaye

digitalization you pull-forward investment you anything out been Thanks, that. of and just John. customer of programs I focused, that margin Devina, maybe that one could into a quick call controllable? year, sort spending next that year Appreciate know you're that's as tailwind service Jim Any currently but or turn doing lap, that one. next would one-time has this margin year tailwind a

Devina Rankin

lag it other that year than anything The everyone in think course in inflationary over therefore discussed. the some we've it's is That this next our giveback at compression already There's but call a being to compensation. such that's only of WM that I year one incentive XXXX, out the knock see would XXXX, park I would and out. said, one margin creating that not else the that's love not mentioned higher we've us that

Noah Kaye

so thanks Perfect much.

Jim Fish

driving Quit Noah. texting and

Noah Kaye

got it. You

Operator

the David line is of Baird. from Your next Manthey question with

David Manthey

idea an that relative elevated hopefully normalize get how the benefits noted it of elevated us year it to you I should give cost run Good about labor Can is front some long that out XX% COVID quarter. to as in issues. said was you've you of was And settles this that labor in your then, believe we next time. morning. the onto you question, of past into over component these of Tagging And average. last stack expect you. of unrelated and Thank

John Morris

see, challenges, long-term of up business of do think get some right No that as that premium of that you're was problem in folks good but expensive now, as we efforts, really quarter. as I of got outpaced lines some a have the expectations. we're short-term, some board, because to in dollars and because also and start X% We obviously volume prepared our industrial little staffing off mentioned David, we've street the collected. I get the collection outlaw volume about and about to going that most that to view from the bit yes, to and the the particularly we've a for spending commercial I it think overtime these on take staffing talked remarks, our

Devina Rankin

in look sequential current one it increase is So, when in this year. increase clarification costs that on year-over-year about year-over-year is meaningfully is David, great Their at on X% XX% a basis, the in point, actually a saw you you basis and our that more a it's pronounced. because quick hours overtime

David Manthey

last Right. so it up guess I would've significantly anyway, right? down It been was year,

Devina Rankin

right. That's

David Manthey

[inaudible year. XX:XX:XX] year over up

Devina Rankin

of up we is that quarter -- already ba is meaningfully some so seeing cost year second in the It sequential and the year lower. impact were over

David Manthey

understand here. question And dumb prices higher? Can operating help recycled higher your Okay. Thank mechanism by expenses commodity just drive you you. which me the mechanical a

Devina Rankin

for sold customers that our where expense higher call and operating goods a our commodity of table sold cost cost show will as of to you line. our And the prices. see In up Sure. rebates we line what goods is

provide press also a and that table of XXX the impact We margin the points. was that release in quarter shows basis on that the current

significant So, year-over-year the a comparison impact very to

David Manthey

Thanks Makes sense. that. very much for

Jim Fish

you. Thank Okay.

Operator

of Market. next comes from line Your question Jeff with Silver Capital BMO the

Jeff Silver

much. one. it's just ask so I know late, will I Thanks

Thanks. are adjustments M&A perspective, it, increases. conversation sellers’ expectations it'll because either your talking from wondering Just increasing continuing the expecting to also are they they're are about cost? higher be just an inflationary higher I'm Or EBITDA multiple? about adjusted

Jim Fish

expectations, and going the I so them we've and are that [Indiscernible] this what the sell. heard guess pay in going times. grow work I great can saying, be about ahead resignation of than or say would I I I'm rather of disciplined control I've We're much are of sellers what of expectations, had I multiple their enough anecdotally, XX I the But to what you and to we called have lot terms which I placing same continue and is facing in -- is it to a pay. that. control a kind their would tell will is organically XX can't And

Jeff Silver

Thanks great so Okay. That's hear. much. to

Operator

of Goldman Your with the Revich Sachs. next Jerry question is from line

Jeff Silver

Are prepared Yes, ten price open about hi. of are needed in talk cover to you the some you that Good points market costs, percentage your at increase based that in you can the folks open remarks, on for year-end? Jim, into higher the are increases morning. of business up price mentioned October and improvement putting on you through price increases what's through market yield you're seeing putting line XX% your now

Jerry Revich

renewal? for

John Morris

Now price number. of core that a that's increase taking. X% I more XX% is to the price that we're mean,

there's down component then in you and calculation. the to yield So, mix get yield, order rollbacks in a to have

-- inflation XX% So, you're for labor see the not I mentioned quarter. to with we've X% yield. But going to that like seen feel X.X% we do

got in to seeing. about to order the John do XX% We take price increase. we've So, like we're a and and inflation cover feel non-labor X.X% to Devina inflation that X% labor talked lot

what number that's So is. that

Devina Rankin

ago, and believe period so that industry recovery, acute And that satisfied has way in seeing mentioned this you're continued, now priced that this it the quarters you Okay. inflation? two I far was we're the rationally has with maybe of

Jim Fish

we think am Did the it kind And the X% the usually how wasn't on I it we own that with yield our is But in industry. anticipated. I what job at not the lines residential in story only of I and control you we margins? terms of we I this speak about when say than pricing. worked, at real yield our with our improve of good that? do metric, what really then I WM feel is is that being satisfied accelerated of looking nice because only we -- don't the of more residential. long out place -- comment industry But -- been look and and has can't business doing. of as a I do how talking that's how we much do range, a were about And we've also, inflation X%, held is, residential that any that one about we've success ago own just

Jerry Revich

terms Okay. -- going availability the this is be to And in economic labor obviously the of costs on low cycle. for duration of topic, labor then

gives if you an etc., of peak standpoint, escalating be from year point if we're cost issue from inflation this comfort what availability reached could So, that training that labor conversation a having we've now. actually a

John Morris

a what Well, of quarters think the pressure benefits folks obviously I what good We the headway to and I that months, I helped does other certainly really helped. have volume the the started on certainly need place we've the X we put we But front couple news tracking even think need, adjustments. some is is volume. of And to And think in terms that ago, or we for in Jerry, recruit. in last have we wage mentioned, we're versus obviously making strong. relative I still X versus That that as the QX, volume. job have we're the of in got that's openings

Jim Fish

using it don't I can but lever. importance of of And a been automation has business. some of labor very talked this today lot of conversation the pricing don't overstate It's it, can think I've about the of I times, labor-intensive intensity But we out a take primary a we number overstate to business. of the think

positions some attrition have have of not automate does and the out imply with We to to saying we're use that a turnover I'm these we going can very that big what not that's high roles I'm benefit. our come then that reduction, saying.

Jerry Revich

the discussions. appreciate Thanks. I

Jim Fish

care. Take

Operator

is question Michael line next of of Bank Your Feniger with from America. the

Michael Feniger

thanks I'll it Hey guys, keep me short. in. squeezing for

Devina, for obvious highlight, cash when we about working could Just XXXX. be year through, can obviously, some CapEx capital thinking sales might walk catch-up higher-than-normal. year, But this flow year XXXX takes, for through next a puts think about about you free so maybe is reasons. of we're conversion, as There think you next the year maybe just low-end coming taxes, anything the and like next you'd CapEx to walk we

Devina Rankin

That's The to where We've declare for we've based We're a think could as at too systems conversion that the one tell for in check on cash question on certainly that looking new early progress us interest currently. are that really or the that XX% that's reducing say tax targeting you it, are dollar it's made ahead. EBITDA representative XX%, has some way we're free do the But conversion are and victory. of of that's XXXX, certainly Too a above value. step back management at us target. that we I strong. we're early our strong how if working Yeah. processes been use capital Michael, and That's flow already trend to to optimistic to long-term showing outlook. our although and then other great we happening XXXX mark be and question, would a those some year from a we difficult for conversations tax cost, you mentioned, success implementing outcome at it's one of that business. the had The say in least every for

from can be capital return for M&A on going a business we if dollar. always differently on. going Capex, really we're to at growth-oriented of we in Because long-term maintenance allocation we capital, than that or that is the prudent do accelerate us, way a the or do look focused we're our better so one managing consider opportunities get of we're we're dollar terms accelerating will capital an invested capital energy investment-oriented look in capital what that, same looked and no capital versus In for renewable that a perspective. really facilities, recycling do should from decision. to capital a so more to at And to while And going

provide color specific can next So there we at we'll our but could XXXX, that's that evolution this no an discussion you point, that outlook place the in more be one give in quarter.

Michael Feniger

a midpoint XX.X%, XXXX, implies That of your around of makes year look the in That's you fourth when being straight there. since range. margin that sense. of XXXX guide, at kind the of mentioned I margin And

one years of those pandemic, impressive a granted Now, contending that's with inflation. so was in now and we're

more business, different pressures? So, with XXXX the of ways, a in I couple see some has think the deal out Is kind expansion of that been margin, story, that in do COVID this we of but typical as of of or a period asked these know odd we like margin so. inflationary XX bps coming this and of we're the

Devina Rankin

And cost period that way interesting recycling impact impact margin. we've What's our of in COVID consider a really and that stripped if really inflationary that you discussed. you mentioned on the the I same think three-year is and impacts the already out

You at collection that the really wanted delivering margin are seeing all in execution strong can why line it price really hopefully points think the do that in we front-line been team margin table. covered of the we've front take efficiency execution look the up. the training is you with we satisfied impacts, so add I on the continued a on color these press when at expansion to of delivering though at that, impact But of expansion. of XX That's basis release, look commodity

is continued of be business. for this to the XXXX point expectations though part positive noise going from have recycling we some So, at there the

Michael Feniger

you. Thank Great.

Jim Fish

Thanks Michael.

Devina Rankin

you. Thank

Operator

and call And there will Jim I at the Fish, over turn time. President this Mr. CEO. are no further to questions

Jim Fish

for challenging frontline to you thank particularly but folks year been big the on has quarter. of out for for again, who everyone, service our conclude, essential all to them years great the since -- two a This challenging a-half to shout one. been and XX,XXX just day have Well, providing

So, to you them. us to you for next forward year. We morning. you joining talking in to quarter all thank early through Thank to look Thank and the you. you this

Operator

today's concludes conference participating. This Thank you call. for

now may You disconnect.

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