Waste Management (WM) 27 Jul 222022 Q2 Earnings call transcript

Company Profile

Participants

Edward Egl	Director, IR
James Fish	President, CEO & Director
John Morris	EVP & COO
Devina Rankin	EVP & CFO
Patrick Brown	Raymond James & Associates
Jerry Revich	Goldman Sachs Group
Michael Feniger	Bank of America Merrill Lynch
Hamzah Mazari	Jefferies
Michael Hoffman	Stifel, Nicolaus & Company
Toni Kaplan	Morgan Stanley
Noah Kaye	Oppenheimer
Kevin Chiang	CIBC
Sean Eastman	KeyBanc Capital Markets
Walter Spracklin	RBC Capital Markets

Call transcript

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Operator

Thank you for standing by, and welcome to the WM Second Quarter 2022 Earnings Conference Call. [Operator Instructions]. At this time, I'd like to turn the call over to your host, Ed Egl, Senior Director of Investor Relations. Please go ahead.

Edward Egl

Thank you, Valerie. thank Earnings joining Conference and Second for everyone, XXXX Quarter Call. morning, you us for our Good With me and this and Chief and Executive morning Rankin, Chief are Jim John Devina Executive Fish, Financial Morris, Officer. Vice Vice President Executive Chief Officer; Officer; Operating President President and

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

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

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

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

on Jim, provided recorded is results addition free EPS, Net release income the and company's July measures WM GAAP refer have operating may stated, or business website call, at will measures. today. hours our XXXX. non-GAAP adjusted not WM certain call, cash day with is a and the reflect website found enhance the measures These flow, without and at replay of available hear from the the for the be during access the expense and can this amortization. believes of projections. any longer John of operating most comparisons, EBITDA occurring to of to fundamental non-GAAP to is management are in non-GAAP www.wm.com today's or discuss and will Time comparable operations. and income, beginning of excluding Any otherwise do unless be p.m. been which During consent form press use comparability by measures, written second being on margin information results tables, be earnings performance about the XX, items that no operations redistribution, which rebroadcast XX Please Devina additional to Time-sensitive www.investors.wm.com. time our call, Eastern XXXX, To a in SG&A and EBITDA, which will reconciliations and Any before is depreciation operating the be adjusted replay. call information at and expressed X:XX call approximately of retransmission accurate a This prohibited. of quarter

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

James Fish

Thanks, for and deliver quarter Ed, clearly business quarter our and resiliency expectations. as second built first joining us. The strength results on momentum display thank exceeded you the all our our that to we in on was of

pressures cost price strongest-ever with recovering our yield remain teams Our inflationary results. focused on core

Our contributions, growth above pricing for combined drove first time. billion volume sustainability revenue with $X and results, the quarterly

upper of bring positioning to billion. X%. to more our Cash quarter, us operating cash return translated $X.X the growth shareholders to shareholder remained of operations X% to strong in our billion adjusted which revenue than to total operating returns of of -- end profile EBITDA above year-to-date more is than into growth growth into X.X%, robust long-term the from Our $X the of second

our Currently, us for economic sign we adjusted confidence we environment. positioned economic serve. strong second XXXX point In to and economic continued You'll activity. any encouraging the continued That the outlook hear strong to see quarter, more to details revenue, our for flow. free from volumes, well Devina, start WM our EBITDA gives operating indicators to but cash in said, across increase areas is key an business activity positive the year

our the and customer the and underpinned revenue. essential diverse essential base our Our of of nature service -- of resilient business nature annuity-like XX% is about model by our characteristics

X our market. sustainability great renewable RNG add workplace of We advance In us owned position facilities energy reduces achieved serve RNG in to our and and labor to that of WM new XX career that fifth providing XX tight this We the dependency announced, build to XXXX. our while in growth. platform the strategic priorities and also the continue place long-term our plant first Investing cost in opened for we automation together portfolio differentiates sustainability we our Oklahoma, of a WM WM are to our technology automation employees, investing making leveraging milestones best in MMBtu permanently our journey, growth and for RNG and through exciting navigate reducing the to labor a expected quarter. second to our million by operated attrition

year. of complete We construction the facility next RNG expect to on the by the end

online the utilizing reduce improve product and to sixth Houston we labor quality. brought the technology recycling our MRF, advanced On front, facility redesigned recycling

market, advanced the X Our compared a open tangible second expect rest the the advanced year, us allocation moment a In the benefits, of single-stream we technology capital new additional related half to a in to discuss track take investment to want are XX% keeping ton and cost I our resulting facilities to recycling to priorities, particularly labor recycling savings enter our to network. yielding recycling MRFs about technology M&A. of goals. per on meet

and the us allowed $XXX and and pre-ADS leverage has return typical strongest expect of to of of $XXX had million Disposal sheet growth balance $X.X acquisitions. a levels. This billion year, We between time M&A $XXX year consider EBITDA to operating million million in the close to have and be we've we our a $XXX between million to long acquisitions. pipeline quickly acquisition Advanced absorb strong Our

tuck-in generate industry-leading to and position strong remain in maintain our returns. will and waste our disciplined acquisitions We financial traditional to solid approach recycling

dividends, for sustainability generation and team cash as the our predictably initiatives, John entire balance thank us turn priorities, remainder capital work of returning to the strong the about growth and deliver repurchases. now excited cash operational I'm WM discuss to continue in their for quarter. team our ability the sheet growing our allocate want affords communities to share customers, XXXX dedication. over In through our accretive members, to plus acquisitions completing we shareholders. to and hard I to I'll organic conclusion, to on the results our call commitments our investing Our and

John Morris

in exceptional collection and by and yield quarter, growth organic morning, Thanks, led Once of the everyone. good second we Jim, again, disposal X.X%. achieved revenue

Our inflationary continue throughout the cost sequentially business. to we pricing accelerated as address persistent pressures

intentional to contract, an a that X%. rising receptivity quarter pricing appropriately on national industrial first across Second quarter commercial business increased lifetime customer XX our core was Customer strong was X.X% strong to We value. points of as record responsive we account business. from for XX.X% price Core line and prioritizing X.X%. remain are in remains loss performance pricing basis costs adjusted confident price of standout of business, in every second churn, our unprofitable while the the quarter to had and our our strategies

X% of signal year, the disciplined Key second approaching economic Our and to we quarter. core and indicators in continue teams the half in activity now continue X%. and yield be to pricing collection the focused more business in our XXXX price expect on disposal healthy than of

Second and quarter up X.X% growing volume grew with volumes X.X% collection special volumes more disposal XX%. waste commercial and than

by service business business as decreases a outpace wide increases Additionally, to service exceeded continue new margin. lost

collection and Second half volumes about for expected are year, X.X%. volume we disposal growth of remain strong and to the expect full

renewed fuel Our our the controls. a basis points alternative year-over-year business. second controlling operating cost in quarter increase XX are teams basis increase points recycling remain not from second operating commodity yet that and of XX this impacts, our again costs, the XXXX we costs, the and with in in was brokerage inflation impact higher driven the price as both Adjusted managing largely and percentage on XXXX through XX.X% operating higher revenue commodity of In expenses and high of have XXXX. to focused related credits XX of tax second the single-digit in point for expenses cost. on revenue fuel from prices saw quarter, a pricing fuel been basis received from XXX points quarter, were The basis by we

technology This to routes our Our and core the each the where improve price significantly investing railroad loaders inflation ways in are conversion we of of dependency impacts efficiency. are business, on is to recovering most one our is reduce certain labor automated reduce our X,XXX positions. both where will of in high-turnover costs except business, that cost side approximately of of line line residential, labor pronounced. In higher of

results in to our high showing routes gains range the early increases. roll-off optimize are percentage pilot our Additionally, to programs single from of efficiency low double-digit fully

into the half move wages to second of the we raise of pressures the proactive expect inflationary took frontline ease second a XXXX. in steps the basis year-over-year As we given on cost year, half to we

operating our on and XXXX. contributed than record results. million renewable mentioned, on par Jim renewable in we the quarter. modestly growth energy strong results recycling in opportunities to and to achieved businesses business energy recycling and The of both or recycling EBITDA is about As Together, we're $XX excited in businesses, second deliver the track growth continue deliver higher earnings

on safe Overall, we ability call our in reliable ton a I'll to the second our customers. Our business, ton. outlook costs. $XX commodity Devina and the discuss stream natural higher expect the programs team WM I'm for the energy to to demonstrated proud now turn renewable to guidance year we our million. in of was results having and our service is pricing credits exceeded pricing further million environmental full our per to work In quarter, our of together electricity for as $XXX renewable by full over to detail. gas, second year this blended extremely our average disciplined results than to business and original average our quarter provide driving entire manage expectations continue $XXX per recycling price financial and better execute $XX

Devina Rankin

to a give I The Thanks, our financial a quarter first. and saw and around outlook. of strong positioning I'll year in a number year-to-date operating full we cover us to results second and color of more in want good quarter our increase our financials guidance second important emerge confirmed but financial moment, little John, updated morning. QX, the indicators

well discretionary X.X% have SG&A by disciplined controlling XX growth, spite second organic incentive leveraging efforts. been adjusted As quarter, this on accomplished as increase compensation an back robust a We element to those our point sales management. pricing SG&A in focus our has important XXXX. led the Proactive to technology and in of office John the discussed, by customer results revenue, period the In was spending our in result reduce same investments SG&A an driven basis our as of of and diligent cost been due improvement cost over management management of focus functions.

in We are in million year. basis the deliver quarter, first point improvement our as on of to percentage disposal more operating the and margin increased EBITDA collection about track XX.X%, revenue of X.X% $XXX XXXX. of increase an in EBITDA from Operating million. for business by EBITDA the the of than the full XX quarter of second driven was quarter $XXX a Operating SG&A a

over be points our is rising cash strong $XXX from could the outlook, to margin which from by of or growth prior fuel relative given flow was ability the full year, to Cash muted X%. taxes, operations over X.X% driven has achieve EBITDA costs, which growth million We in from now due year. EBITDA continue up basis are and capital year. operating result from remainder year about Year-to-date which throughout our to pressure we about growth the moderate expect operations to flow year, which the the impacts been working cash particularly estimate higher was that for operating we dilutive slightly XX of a will confident the

support year, businesses. capital the additional strategic energy the of to our and we've growth million an half of million we $XXX and renewable in invested to recycling support $XXX the business, During the invested first

to flow, billion $X.XX free of upper impact pace cash guidance initial on includes which the of year-to-date $X.XX our our exceed putting sustainability growth XXXX Our $X.XX investments, of capital billion. outlays to the to end is support billion, us

projects schedules business half encouraged chain in spending pace and currently first are to the improvement, anticipation the the capital While deliveries, categories the to see capital last we've the in has year. promising over asset slower delivery supply second show been begin expect longer of constraints landfill we experienced signs certain though managing to We're in year. in the proactively truck we expected half the of than construction of of XXXX, sustainability ramp of

in next free quarter. flow capital revisit more guidance and will cash We detail

all Jim priorities. As are discussed, allocate our cash to capital allocation positioned free among well flow we

In year, addition full share to to we increased repurchases. acquisition $X.X expectations billion our allocate authorization expect for now to the

now to updated Turning our XXXX guidance.

our equating We June higher outlook offset to fuel Those $X.X compensation. billion operating that the by Note inflation in I you of a open first for expect adjusted performance XXXX. XX% the drag to With business. benefit operating in still, costs, and year success. our increase for partially million by million increased of for of deliver We optimistic energy at which to and our The a in were by from margin things performance EBITDA incentive guidance. their in In would combination excellent margin. be half financial the better $XXX levels in approved $XXX than $X.X the to receive continue line driven we is range questions. credits remain year, approximately Valerie, to to all XX.X% Even point from price EBITDA year million another $XXX basis enough half are billion. our $XX expect operating renewable of that remain fuel that, driven midpoint this growth second thank up pressure approximately and approximately XX team million million XXXX prices to tax the will growth expect WM us the and sets assumes of include $XX closing, revenue outlook. the performance of at to guidance contributions we the can't deliver let's and full EBITDA of in volume of strong the more alternative

Operator

[Operator Instructions].

comes Brown Our Raymond question of Tyler James. first from

Patrick Brown

prepared want it. bit remarks, threw have the make I sure just to You out guys in quite a I but

credit the the commodities. XX from right? from fuel, points down Is that basis the it and XX was XXX So on walk, CNG on from points margin basis XX

Devina Rankin

for And important right. -- pieces. operating line, That's thinking and also that's the about so at in margin looking EBITDA EBITDA expense X it's think margin, the in we would I

we by at And solid pleased. we that relative by the can So year. out expectations to renewable waste X of is one in basis outperformed did is how we're we the And extremely laid beginning say that what our that perform there the and that that's to expectations points relative XX business XX outperformance places, our is expectations the traditional energy basis expectations business about points. and outperformed really,

that expectations, had and we've initial of to those had couple mentioned, as fuel of the performance we 'XX, for terms fuel which a at that's perspective, XX.X% QX, the remind walk performance, there is in margin the that between But we've put a fuel As headwinds compensation. all relative as we incentive alternative we when are really QX our credits well the in say delivered base headwinds original that strong and walk of in for XX achieved performance of in can everyone, and we that I'll really, outlook XX.X% on about relative our full and When we specifically, guidance, the our expectations look think forward the half, first at together history and outlook. from we've today our best forward. to our to year tax ahead of a points the that particularly is quarterly what story basis QX we're

XX saw it's points And from effectively XX basis basis the that XX was expectations. revenue. So about, Recycling points basis pass-through points fuel XX the line points is led XX basis in we that was that business from what higher talk credits. brokerage you that costs, from points negative, tax points XX fuel. where in that XXX is points alternative is basis basis by fuel basis of with

So a higher And piece higher increase XX just points. was commodity cost. incentive dollar-for-dollar that other much prices cost compensation the in translates pretty at of into then basis

highlight think the when So and quarter. performance business that's really the I at margins of the in for strong happy with the business, solid waste the you look the

James Fish

CFO, why the That's she's Tyler.

Patrick Brown

going say Yes, that very extremely helpful, to I was was detailed.

it like focus call not conceptually. But about looking XX somewhere margin just the feel So uplift on points. think, think back quickly, for half, it but circa, you're real I the much in margins, to kind it want I does too to of a basis

Is contribution in kind half unit 'XX. the it frontline of that Because your but talked is place, hang same I that So about pulled cost the kind the kind how will of you pricing it, forward will that of eases? think believe, John of wages, around some back work? inflation I

James Fish

QX from mean, QX, that's out Yes, got year. I we issue I think Tyler. of last labor right, the kind listen,

like it's I to the while same feel think inflation, inflationary other labor going pressures, still at obviously we right. rate. we're So you it got be And seeing there's not but

Patrick Brown

you temporary getting Okay. exposure is, Great. us John, your landfill my of revenue And what of about roll-off just your kind questions been one, volumes? percent C&D some quick. Can there. last just real just it, I've housing, Just remind call in

John Morris

there, not Tyler. low business The Yes, too single we're exposed digits. much temp C&D really is

Operator

question next Jerry Our comes Goldman Sachs. Revich of from

Jerry Revich

Nice developing? an in? how Jim, underwrote the coming are the pricing that trouble tracking are you relative could update facilities your the you on that just mid-XXs you quarter. landfill And how the feeling investments we to if is point for about I'm pricing online. gas wondering now market offtake is

James Fish

-- I of for were look, path. comfortable. pricing the RNG, We the we pretty here go in that's Jerry, thought built the So expectation on you our think that to half back down But going I $X.XX, waste think to year. solid is

at even at those $X natural based you business RIN lower those discussions, forma-ed But expectation this our in know, $X.XX pro the 'XX, RIN gas, was that we $X.XX the that And business for the back is numbers. pricing, in see we're half much terms returns. in and is with comfortable on you an number. for lower even and As at our outstanding numbers, of that feel of and with we'll numbers, specifically lower

Jerry Revich

market, lock inbounds Jim, And And looking to those the folks that agreements? terms going? are can of is level developing? are offtake you on for of that What's long-term in in how conversations your comment

James Fish

to would it direct But offtakes started -- is gas. part the think our we're obviously quarter have of is, Yes, -- good that's and do natural Jerry. you what seeing in some and I And the contracted I portfolio. to those last quarter before, become of market momentum started we some a we're rates. RIN tell renewable for or that

Jerry Revich

Okay. solid to the positive about Super. And that? the CPI we Jim, since course want talk about it, big you into revision over to talk pricing. waste next year, So year. Can of this pricing tailwind obviously

look you rolling could best business core probably As price the 'XX. just might today, feels book C&I sense X comment But pricing at entering and in back that. pocket how of CPI your the with on if 'XX? your of like in already for I'm pricing increases, timing wondering It what's you of points have look you

James Fish

about you're about lot an of that tailwind index-type in we've that businesses driven XX-month on starts a The are increase. lag really talked next absolutely most quarter the significantly right, Jerry, first those the Well, help year. by us to

gotten at to we back down. see So discussion pretty believe just we to X.X%, taper that the would assume the -- sake of for that top CPI pricing if let's then inflation starts here has close

that businesses exactly. pricing see not down you'd market think those open follow I in but

a now, where percentage spreads kind Right at trying that that margin CPI. then rates. what get that to better their at go about the to just a second every your kind that with of would first the pricing back place those in And to really we've inflation initial the price think fight recovery. in increases first bigger half to X.X% not if for of year. of said see that we're our -- banks, are that's takes to about place about down, street recall our is of it think in improvement, starts see you'd lower I half takes of taper cover cost yes. price I we the example, you And talked index-driven with half respect year XXXX, XX% is to and question, and costs we of what really When of XX% compared

business to some in when XXXX to an the first the getting XX% see but second When it. in most So not real residential that from index. -- the because just of tied we of of pronounced is it's the get half will XXXX only is that's the we as half tailwind it's tailwind is we of because primarily revenue CPI, get line

Operator

Our next Michael of Stifel. from Hoffman question comes

Michael Hoffman

of on industry price because one think most is Jim, issues going critical I the I'd the conversation has the to for like it. follow-up this

open 'XX you're X%, is have to So the your But the it, to points in what right? summarizing it I factor market in you're your about said tackling there the That's second 'XX still index, in call to basis and goes open good I in XX-XX index versus then get just get XXX, first market. closer to and algebra it, to half. am going you're you formula, half, a And math, spread churn. maybe X-something, I XXX In if just a weighting CPI X%. greater at an before than going price

James Fish

Michael. doing inflation think X reasonable everything we our it I we X.X% it, as a have price call goes X% greater is where that X improvement percentage comes cost not quarters, we think market more said, price kind then focused and kind about pricing. doing recovery, on to margin of just we're let's over our number, of to to which are back the actually a with next of not with open and today mean, to If the we're spot but I I a inflation. can you're down look, cost. job with And on, I crazy cover good

Michael Hoffman

Right.

ahead, And thinking was -- I go so John, sorry.

John Morris

to progress think Michael, can is on in the one you price we're volume that caveat we're what side going the residential. to keep. and we're Jim to and would what core specifically we're going And about say, commented just what and was I to what not to being volume one that continue make I the to see pretty doing deliberate on. we be still the caveat That keep going yield side,

Michael Hoffman

and Yes. the of I trying volume, day, better end have the quality not get the attention to pay you're And that, supposed convince market a because you'll keep at to I to business. price,

of keeps question price and we try that to are. So coming unit the the how understand up part help the other sticky market is prices

the very So per might market a unit significance a of we in but core the sticky, change well? very, X that Can per yard, prices of rate go price the are open X from underlying to core, price appreciate price everybody pull. per help as ton,

John Morris

to estimated X.X% reason when sticky us. but pretty consider a versus overall customer's to you overall price-inelastic. a add customer And it's little the darn I a We a a our probably be differs X pricing it's of differentiate cause residential cost business And business' what we're be we've very things then that for bit those structure. business you're of percentage the whether is small doing it mean, to small customer, that truly spend. to ourselves, such

It you're maybe -- to So might. is tend businesses hold to of more we than other it on right.

James Fish

this being And you an is unit from don't standpoint point walk Right. back or prices. all recession, there's inflationary my if a of unwinds

'XX. hold got that of plus is internal favorable compelling. You underlying to unit power the higher in inflation the trend price on of cost price, versus I've pretty The of

John Morris

price. figures. as a of are bit. that it's then that's think growth kind does which about percentage, No, or comes is. just down, I the taper said, right. I've And we core yield percentage percentage it is price as the mean, inflation stays the growth Yes. Those unit figure, And but down improves the spread where

do at little CPI. margin that have towards we a at goes So improvement CPI X.X% than X% we more bit

Michael Hoffman

$XX upside of in coming the weighted million, RIN million to $XX assuming half down, recycling's all because down mostly come sequentially. the that's The recycling I'm RIN's first

already benefit captured. of And that the so has been

Devina Rankin

take Michael. that I'll pieces, in So X

we the the were better in On million. $XX recycling the first side of about half business,

that year. expect second to actually the give We half in some up of the of

of pressure the to of be to the to just of million second where second $XX we half were half expect earnings in what about expect we of second relative in $XX in them half commodity million the because prices 'XX. So 'XX

the of $XX have in captured half. back to the half million side, earnings energy million million incremental we $XX On expect 'XX, another we 'XX -- of renewable and $XX in or the first

$XX when down we net be call in range. to $XX the, those million you So X, million it, to expect

Michael Hoffman

guide That's helpful. it you on then beginning the Okay. the the as And framed XXX of headwind. points at Devina, very negative basis year, of

First second XXX sort XX half, X plus to half, of XXX; to up.

You positive XXX, the XXX, to us that's of revising if were the telling part actually it? you're than XXX half. less pretty the negative other But a little the actually. messaging, second now it's in less That's close we're part of

Devina Rankin

of when plus the to business right. energy would the of now you XXX to renewable relative impact underlying waste speak initial benefit does our say strength That's plus And XXX. really is of like, looks plus fuel But that I the fundamentals what the the XXX more points, call it, expectations. XX solid the incremental and consider basis XX of plus at to to

Michael Hoffman

not Fair you be XX the just It's increase -- a clear, It's offset with and that impact. the is pass-through enough. a real math. points math. basis cost just surcharge, And cost pass-through it's the to just

Devina Rankin

we Yes, you'll that's see was right. in side What had From the really zero-sum what sorry, on I'm million. fuel or us. surcharge -- growth, revenue we QX perspective, an should QX, of earnings $XXX game -- a for be

costs is dollar-for-dollar from a elements offset We as both on subcontractor But and transfer decrease quarter-by-quarter of year maybe effectively fuel for expect higher other a moderate the the that direct the basis. indirect of in half similar costs, a second costs business. operating levels, and our

Operator

Hamzah comes of Jefferies. Mazari Our from next question

Hamzah Mazari

front guess, could this in shock of But recover. just -- a perform seeing in lot a know is clearly was the volumes internal pretty sector took the revenue you it maybe but are different. more know a We're ask just system. that 'XX, I them, business frame investors year recession. pretty how growth, kind reason is is the to fell the of question That either companies downturn first seeing us most most yet, COVID XX% the for different business of I And X%. from negative and pricing, My for to question then business will is you when more how have a disciplined. not is think your I was new frame resilient. longer where your the is I just us sector how

Just frame downturn. downturn I going it this of lags a us just playbook for resiliency also and know your into business.

James Fish

Hamzah. Thanks,

primarily question volume, kind really of right? there's of going forward-looking to optimism us that statements. to what different about call We gives on this you here. components your focus talked it, I'll tell cause about So is of knew be XX% But for you the here. couple a

a So couple things. of

of they like their look volume, terms areas. we at cost when in I a for the If optimistic really in about big numbers our basically of we We price and about First a of about the think price, June. July maybe That's person, of XX bit the And one look to mean, that is big the pretty little bit, think a just side, I of mentioned good I on Michael's in we so and positive If saw and feel just question, exactly all, we feeling control, price, own we little customer X individual presidents a our price-inelastic -- they inside area real base. volume reviews, quarterly a here. stickiness volume X. we almost good. their being really look to price. had of vice very baseball terms price and they're have on of

this last day. was of we You work July year consider that have had was X on Fourth Monday, Sunday. to kind on less year of

have like of bit a shed to still good. for really look And XX% volume in the pipeline our But looks -- waste. out, still almost was X looks account the us we onetime component year, consider we are, for the it And things forward-looking also big up It us point. by things is considering commercial -- we special of volume factor QX. side, little we is telling on towards out most affected those pretty a good. of remainder the there's the we as intentionally what that that. So if national -- percentage but And

that of weeks Our volume X stream. special first in good July waste looks the in

our question But there. know that that's companies. X would starting we're of Hamzah, I a do different other share. your really big also John the tell take why company, a that believe we're you, market operating we're different industries. tough So some X of to It's necessarily. from I to lot industries about for a don't And other we operating market, tough from why we've about this a about kind that's of third don't talked a big some taking trend. which and not -- them short-term is X, and is a the have advantage trend. bit categories the our have of control shortage, the we're for talked That's I backfilling think of the That that of looking at, long-term turnover. cost attrition in business, cost labor XX%

other most our through the have And some So hamster don't space single day? let have jobs in use -- the or to our attrit to and benefit? not the every why go technology out that those of that technology wherewithal. wheel companies actually away Why just there use

in recessionary that tough look So some a in feel we even is that of better good about environment share makes a climate. ultimately this taking operating us

Hamzah Mazari

Very million you year. $XXX an know long But for helpful. How us, change that? think an do you seeing it. last? had any figure. just above-normal what's I $XXX maybe in it's M&A private flagged sort And could valuations environment you're the market? M&A driving million, Got in And still of frame above-normal just

James Fish

Yes.

of a it fact is of operating So that for environment I tough just lot a talked there about a companies. out the bit

more we a ridiculous $XXX purchase traditional a to several calls, of are attractive we're million our a problem. of enough it we still to asking we I of of going do what comes and $XXX see really don't million to to that to there's out our out us. in for to we not appropriate. prices, valuations. bail on want we've $XXX are more good solid feel And previous is want the when be those we year that versus companies there like conservative to in this space million said those mean, to and and recycling prices, And the so But say space, million $XXX somebody think waste don't some

Hamzah Mazari

Got it.

I'll over, for question just clarification a it and Just Devina. turn

the million I think out surcharge million had you in $XXX that's of sort of recovery flagged $XXX fuel QX.

sort fuel $XXX $XXX increased for did for What than there. when Just comparing sense Just much that we're number, at Was your the $XXX million? did you, any fuel mention just that of over looking million or how comparing increase it you number? cost $XXX less million? million

Devina Rankin

It was effectively equal.

fuel indirect. direct So a of it was and combination

subcontractor category. indirect lines show like in the up will the So

So of dollar-for-dollar like you think effectively it a offset. can

Operator

of Markets. Our Eastman Capital question from comes KeyBanc next Sean

Sean Eastman

trends Last just back Any I comping half. Wondering just I X%. cooling that element wage happening in around what of of And about was outside quarter, of in in interesting would color the under how of else inflation what's inflation. second mean, I guys the heavy still the things we be hood wanted the are the be think, dynamic ramping, algorithm of terms increases. come was should inflation? But wages, Last into aware quarter. think to that year, that part it second how off? we quoted, terms what helpful. you to this around on

John Morris

going Sean, third on seeing labor, intentional see, we're on year not to but way commentary got the pressure touched we down, year. inflationary Yes, it the it's of steps party of the the maintenance I because And and going on last took pressure the back clearly, third-party of all well. I Devina we're of last moderate it's think out And as still we we seeing. repair. whether in And repairs, about half think it, the the while there's big front truck, on seeing think that indirect rail through you sticks commodity a to the one that by Subcontractors fuel that. When we're by commodity there chunk well. a a it's element piece impact bit little That's maintenance is out. and year. as runs or

think which labor, tell feel a expense of is big like our generally So did the with And that terms speaking. operating we'll peaked, in we you I it's what benefit I see is line. I would our chunk of

James Fish

there, her supply to I But itself, true. as you didn't think, mean, little that of on particularly and important that she we that touched get we ordered. in about trucks the do seeing that it easing is the year, us, we're remarks. delivery I think pretty that's last us. of I chain Sean, the mean, mentioned bit trucks a Devina to But

John inflation pretty trucks And picture that We're that so maintenance in a far a that this as year, And we in we've pretty we as have the not back is we to you're not keep significant the fleet. impacted That's of of hopeful part half vehicles there gotten the cost that insignificant year, the mentioned, is important having in the to because, a the cost ordered. see ramp-up line item. as obviously older start expected. to number

Sean Eastman

Okay. That's question. next a of interesting kind into my segue and

that risk sustainability expecting of first whether any here? to into if roll in talking remarks, also these that investments the think EBITDA running out I next spending are prepared the that a is around there's capital program. to of I guys delays the spending And is capital some we're seen quarter. investment in you had see incremental those year. it I little below wondered next mentioned being just you'd Maybe trucks mean, guidance half. revisit expectations really about we're

Devina Rankin

Sean. Yes, great question,

important energy hear the both and relative It the of and be with confident facility talked for investments expectations on are continue remainder rollout First our and year renewable to online the the to the there. to message it's expectations. sustainability the recycling initial are and say I those very strong initiatives, coming We of about foremost, facility would our that we track.

more when space traditional being and solid specifically below trucks. So for capital the levels, guided we at waste our it is really in look

And relative still deliveries we slow As that to those has Jim unfold, time. even expectations, just mentioned, at had after saw revised they're in really we our we below been truck what XXXX and QX expected expectations. in our point initial

opportunities slowdown as of proactively business capital, we truck at across that for we're how to whether And spend rest look So forward front. our the adapting places capital, in we we're be looking the it on our line seen have at pull continued at investment because we returns landfill special the business volumes, we've parts other business of as strong look and where are been particularly have or waste, the that those strong. well in performing of

you tell the unfold still $XXX completely to point, traditional sustainability would I capital you, the at would detail QX tell what is the for can on we part. we overall, expect capital at to additional I we on year. this give So firm million you need the about before stand

Operator

Noah of from Oppenheimer. comes question Kaye next Our

Noah Kaye

ASL's should for us. can behind XX-month to? type to to XX- investments John, XX is But a expectation some question talk which to the that, planning chain I talked ask of to couple and into for of think kind us? where about, percentage to longer-term these about sorry, for last about maybe that that want fleet, feeds put Actually, investments can just just generally, the -- really kind to you next you XX supply be of the years. Jim constraints what up reduce ramping How the about outline you some get years? you've are wanted can months of of medium of terms You these of course, But talked in we think in where you labor Hopefully, you about you helping the X your automation. intensity, within recycling maybe

James Fish

about, is what you're it of talking that about think your we to is will where we're standpoint with roles? from Just to -- it really So backfilling be impact by an what is capital? respect I think around we not expect the these question so be clear. operating some Or

Noah Kaye

both, right, It's one understand follow we because that other. the will

So...

James Fish

Okay.

you're some John that big shifting about you piece $XXX,XXX think -- talked from The maybe to lot pickup is in more, of is a ASL XX%. laborers. then about we pays those where off wouldn't ASL. of let's We've think productivity ASL done the and there. helper about time So the in truck. a refill. truck itself about ASL, there But $XXX,XXX because if And I've that -- you of additional the to maybe a the really, I around in just There's off up efficiency you X,XXX rear-load taking the all-in of first. think and about going -- temp X,XXX helper to a kind bucket's, you're off big $XXX,XXX, from buckets truck mentioned, picking as capital is pretty talk X moving about capital chunk an significant year's positions a about cost back, And back, rear-load take an if that, a the so actually times, are many almost and being to a if this rear-load

in paying that temp the trucks. on a for back firm, person we're So be the $XX,XXX to all $XXX,XXX might of

year's time. bucket it itself in almost That's one. So back a pays

-- we've goes lot there the So bucket, is for the about it's think we If And we neighborhood fast. recycling. pretty some kind of and I truck, cost think that away mentioned as OpEx we've we've those And anywhere remarks X in said XX% X,XXX in a another additional we've somewhere of prepared to the talked at there positions CapEx reduction. first the XX% and about XX% X,XXX seen in but done. that we labor my between reduction

actually closer Salt Lake the reduction one of labor. one plants was rebuilt to in So XX% That that we was City. in

million-ish already in a sell much accounted We've So paper. in Previously, capital at -- it's rebuilt of the about a already the we in for. range shows an then X of line plant, were that's of paper to years, before low-grade material Lake the that that number. labor over doesn't recycling, comes And gets as we they period up top improved how a the an the Use also, plant, revenue. having mixed example show all out $XXX quality in talked is and the Salt back that end up and there. their of as

they a to higher And the pretty of Now paper obviously price. they're big component able that at separate a comes high-grade have it.

John Morris

are I is the other this capital that's we would are actually in is of inflationary when we're examples. doing we a those better I said cost thing ago, thing this good investments view good those you, then, has of -- is view. And we between environment, would of recycling Residential getting started are and as residential go labor calculus Jim down along. add total to what few happening past the a operation only that taking tell already and were The years OpEx. X of kind Kind

labor think soon. any shortage labor think us going or As is of Jim to the wage anytime abate mentioned, pressure don't I this

So to formas actually better look goes on. as invest, pro continue these as we time

James Fish

Yes.

you. -- whatever this complete those on refilled. kind color, and is to there -- get to that is on do put number of Thank positions put look, -- to answer be? The your good expect number want this mean, traditional, impact I okay, good you what don't John. news strategic It very we our by the we're So of a advantage numbers X,XXX is at workforce. X,XXX is That's not to these some in is. these all a what this the dependency approach very This jobs. that taking reducing going high-turnover labor of XX% not rip of to

whether jobs, cost end job of number -- on impact and better. it's that to a the becomes per, material $XXX,XXX even OpEx it improvements, SG&A. operating accounted capital a the to is If to it's low. for. -- then if of it's let's put $XX,XXX higher X,XXX so cost it's big range, or The a is the of operating SG&A And exit And largely cost just cost, it's very the X,XXX, at that

Noah Kaye

Yes. great color. That's

recycling? waste? the a where seeing to you're in is Is the primarily good wanted of greater this M&A solid terms get of Can of Just color little sense mix give you the in you But on and opportunities? a coming force pipeline, bit to back to as see us well traditional the market. it

James Fish

announced as ago low-value that are getting those recycling It's to a that solid making plastics taking bit both. combining and a traditional a but and a that some last continuous is of value of and be I kind bit for consider couple papers we we well, we of paid mentioned weren't them quarter lot or consider quarters roofing both. it's waste, mixed material. which low of little a and -- investments We of the mean I

really of maybe thinking plastics we material light, of bit example, is, but How light? also recyclable. there's that are coming today landfill plastics are so add take about doesn't I'm into this. that very value, do I in that plastics, a for is little if mean the And both a lot very

already in and HDPE, so come through environmentally you're at with makes into piece everything waste where plastics out may have landfill, be economically things acquisitions, can feels doing that there got of reasonable it's model. PET that or sense XXX we would doesn't going our like existing of the -- we just that's Taking like And and lot a very it we're solid do and we favorable it right, something And something -- things where can then network to single doing kind for it's tuck-ins, is the a the years other landfill? traditional something, the or stream. that them hole for we've Are -- valuation. us additive both a of other with a traditional decompose and

Operator

Our next question from RBC. comes Walter Spracklin of

Walter Spracklin

keep like on So the to front. I'd M&A

to you the coming by you Xx year, doing held consider over being X, the would at majors, you and Xx would that do Or market the normal sights? market You're When a your look and look not XX as attention your at do focus coming I'm this acquisitions for year you entire addressable what not over as years in you in the see would what's year. this portion where in -- of that some saying scope? being lower

James Fish

company. talking we're if American guess North a I we're geography,

definition -- looked doesn't operations type waste haven't for outside of don't really have a North of Obviously, So tuck-in meet overseas. any anyway we of big we that a for America the solid because acquisition.

that us it do competition when use ability a that the enables acquire It the then able thing, the dependency, if can't always part of table within the bring -- strategically we're about where reduction believe sense when their these it to -- this the we at to Walter, it labor not excited yes, for more -- and gives dependency. us our technology synergies looking can what way, acquisitions, it's look reduce most bring the to same why labor we in we're they're North So at we we America, of to us makes company. where -- by

everything But we're of be think -- table filing then if it have a then, America. within requires of on maybe and look course, would strategic we'll goals? we And Justice be it. properly? the on North piece it I some is And the at we to So is type, valued conservative our always single meet feel it valuations, want that's most important like does

Walter Spracklin

only that not Jim, perhaps in guess, I does you, to makes those it mom-and-pops synergies, investment. with your can't it compete you for given they harder match more and also say? that to more it fair drive technological bring to Is

James Fish

say Yes. that trying to to think somebody problem, cost very their robust it why Look, do mean structure us. something important And It's not rules a -- pretty I our I opportunity. else I -- we're it's is does pipeline extent the an can't mean, to present don't that's that's but to that, reduce the that against it's ours. seeing here.

a And HR an and to so there XX/X. okay. of make companies to WM think be around doing, at I'm reasonable investments that them the there's not that's want coordinator don't I want and going look, I a sell turn lot that -- in say, to And same out technology I do try valuation. is the to thing don't I'll to

Walter Spracklin

makes That sense.

a your And for market about as And about our beyond possibly I and a Jim, -- yourselves you've little talked -- kind that a little I larger hazardous. worry bit As always going you that an getting competency. little gets of we go further afield mean, by is bit would we option acquired still further? and potential majors, the know, the it for even into core you? and

of curious, solid market Waste waste. is view on of an outside just even addressable what your So outside or for Management hazardous

James Fish

earlier, of business. point, there just of yes, bit robust waste And strictly some should we away But focus and time. be add ancillary then kind this I pipeline are at interesting of might of to up talked that a solid can about, as that we're No, just the I that of think businesses our that nice a little there's that us. take a feel there's mentioned -- such we from services-type kind recycling-type businesses there. staying all like we've traditional to And

Operator

of from comes David question Manthey Baird. next Our

James Fish

off He Dave. lost We fell screen. the

Operator

Looks next from like Feniger. question is Michael to our going come

James Fish

He he We've disappeared queue. done job Did the in good the miss questions. a the from answering call? just

Operator

So from our question Kevin comes next Chiang.

Kevin Chiang

hear you Can me?

Operator

Yes.

Kevin Chiang

down there price capture through been come of push you starts that a you're good a using couple get guess here, guess. program? core obviously, dollars. more Congrats capture wrong, over if It peak long a Third will me of and feeling time's starts via it price, for and I'm correct been to inflation sounds Maybe to can you've take of pricing inflation on inflation just past presume, to of you're as I but knows inflation. roll just quick it ends has to that the -- And I back kind to I me. being charm how surcharge here, of But wondering, inflation normal kind to a ones kind versus core like quarter. inflation more CPI up here. if offset that the who of stickier moving I'm

James Fish

I our it's core our designed price surcharges combination think been in don't And We the and take right. captured question, that I've holding little fee, that, always It bit does long been those which we've yield increases. to with and think. of fuel give as pricing. -- figures. long a then you -- fee your our increases, is numbers. in there's I I We don't as price model and been a we existence, why a there's combination But price some core little have a the to second there. that's it's that's a of really a an environmental component of pass-through price there's was it's I as if company, think for as in heard or is environmental on And that be bit of to just the mean, I also, X. do capture us. truly in get But

holding percentage increases those price of So on component. a an is important higher to

Kevin Chiang

what exactly last for. looking No, I helpful. me. that's for was No, one just that's And then

contracts. some the talking You're -- of about of index these repricing

talked about XX-month You this lag.

end compensated Has in to industries? some push getting start that been cover, industries other lag? there we've like seeing been for that when there's any I shrink seen for repricing customers' your there shrink acute pressure they line on how Some between start or shrink, been, that guess, to that it. perspective other lag Has from I has maybe start push given any maybe acute of time been just can inflation desire to your a when they to it the

John Morris

Yes.

is residential probably example that. think great of I a

you it If in our look the what you, we're what what the the tracked not maybe CPI last side going yield couple of been. the X, doing on has the to pricing at we're at up shows last what quarters, which strike That's price even seeing to handful in have certainly our results quarters, quarters Kevin, balance X, and last core outpaced XX case of what the of kind we're contracted right rate accept between escalators, willing forward.

this to don't did of we at of index, the been. best the we you in but we've the most at when quarter said, CPI the as business, necessarily well. last quarters. you're -- probably we've volume couple of look volume, that want that -- be look what's that on the thing you again seeing is and I strategy that's is in when terms want also play exception side, And shed out what And we think has of encouraging price And trade-offs to I line profitable. residential So the example happening outpaced as the

James Fish

XX-month municipalities. you lag point. with really contractual big And that is That just one talked these last about

their change an to specs. that, to they us really not there's So for choose bid option change unless

Operator

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

Michael Feniger

this Apologies is at XX.X%. on your is I about finish hour, years was margin that. we're My main at the going question, ago, Jim, to it X up year XX.X%. know

it's been kind a Yet So renewables. basically with of profitable you business have range-bound. sustainability now, very

is on strong very ago? was where even or breaks Just QX. in years like when this is higher? XX basis is really XXXX pricing points feel compared today Your X where business to Does margin it based this range it out

James Fish

think of an fact does when the be kind but that EBITDA it's things great that a of look, not acquisition it's were it's happened as for margin of to of hurt about more mean, really on we It's a us. an the of kind couple number an been we've Obviously, nice earnings-destructive. I fuel. digesting it's had That kind this impact a line. that have had whatever shot designed us is. big job headwind margin-destructive, there's standpoint, And XX% get I then like Yes. neutral it XX% a but -- margin then for of all a on And But of aspirational or on it a we margin. sudden, from was business been did impact ADS, business Devina finished from XX% so digesting we margin. and has this talking ADS

So kind level business will us. to things of to the one help That raise a see margin. on, the going up extent that of see of is to ADS couple you you our us continuing

covering component on fuel about there talked other is accretion. see As does goes have bigger talked us. pricing nothing of the down, to we're now as -- coming to about a doing is and price down, starting a really we've that positive margin, you things. inflation right X then it a margin to And other but impact basically cost we come One thing affect lot back that see you

whole one. X this cost is number And then that's So number piece.

take of cost the dependent, -- out As definitely labor impact we organization permanently become an on margins. and less that take has

me think really improvement I gives that of about in will all think we beyond, overall for we reason that margin business. So and 'XX the as optimism see

Devina Rankin

to the over period, have terms fantastic. have that what SG&A specifically it be think The X-year company I decided would the I you dollars when thing the different in of commodity-based for and one emphasize, think about up looking in addition we the effectively a had showing in to ADS outlined Jim to color Michael, making run technology, Jim, in our would that total model. SG&A at that is than margin impacts investment acquisition, we're in it's way was business

than that making otherwise would significant level you of what so provide a strategic have investments over term. weren't have that these long the we from different see if we will is SG&A we us And returns

over that you I adapted how aspect last so to in And we in of think period. the how margins do terms have our about strategically that consider X years really thinking changed of have have that

Michael Feniger

spot? context over you X-year operations. That the industry like for place think And feel helpful us that X% great obviously, the like What level lastly, sweet give a was of do CPI right your just for for doesn't the the think to mean, for decade that's is Jim, clearly of about to what it that and stretch. how business? I Because is CPI of

Is handle that's at for inflation another CPI sweet spot year? can also right would sweet you savings you number CPI contracts, where there is Now a productivity good the like X%, the it feel every think? guys getting you in that get business, spot cost story. terms the yet on the on business you resets helps pricing those What of be also that

James Fish

not I question. know I'm right is it's number wrong sure good the what the I you tell I mean, a can X.X%. number is.

it's inflation the kind know as been try reason you I answer drop on talked don't fact know of to I that done and we reason have about to the to of had now sub-X% do it. is until career. the there question, X.X sure -- no try my ago of most was there been for But work it's years of haven't and kind same But a for as to banks, But banks So I a a do we'll and compare pick because do we where math number. and mean, bit math. it the see really well. off X% know, where the -- probably that me I spot we be don't don't of is for And spot I might sweet rates? the math sweet terms CPI. that X%, It if is as I Where the in know on or and

Operator

question Toni from Stanley. next of comes Our Kaplan Morgan

Toni Kaplan

A macro question.

environment any little So little being the just for bit? are conversations in the on not there -- within that within slowdown But have cautious? That this particular some more changed a you're maybe general. point a seeing industries despite the increased commercial, a are bit macro example, caution at

James Fish

mentioned a -- talked are part -- leading more lagging is of we said, there's well John indicators. mean, about jobs, quarters. this waste recession, is have one is that discussion it? of Well, good And it's some our business that I is waste recession lot we kind the our business. demolition, ton leading of indicator. us long have as downturn, revenue off. of not resilient when and hit, the a those about a those a the a spend them news industrial as what seeing turn largely But we're industrial-type you're they dollars. any right, special pretty speculation be mean, it's environment. Special And We've for lot that's the One waste we're And most is there of leading small to of indicator. couple is I XX% how because companies and the a in might perform of couple is -- special we Toni. construction our when last but maybe out pretty I of a -- to of so does how deep our

look strong in and for at July, special special numbers was to So seeing special when are positive waste. QX. we be comparisons for continue waste in very about was month the It very of QX, our strong Even we waste. still we optimistic our very

is to think But recession I there's a one I the of coming. coming. think So do to kind macro there just there trend the going about economy saying because overall, I of not our as is I'm feel buck everybody anybody a the like ultimately, technology storm out with this and, better else. dependency, and come labor doing in we're things great than the reducing thing we're weather some with of industry

Toni Kaplan

Sounds outlook, good. pricing, as obviously the And raised follow-up, then just results, a strong there. and

and could if Just commercial industrial maybe pricing one sounded wondering quarter on just this you talk great.

the goes commercial, Just industrial landfill on how thinking -- are as you about pricing, year on?

James Fish

years a It QX. Well, focused landfill landfill for was good pricing area probably X for to pricing. very and or I in mean, QX us. has been X specific

excellent has more So put to through. you I would well. you're around we're pleased with pricing. pricing and tell able commercial landfill industrial specifically And on pricing been of through. as asking commercial, can't that the kind Commercial that fact performing industrial a we're the price landfill, I to the everybody industrial we're terms put pricing, of able front. really residential in seems board, price weak Whether across find or it's spot how be and to

that willing of shows they're is these business think that increase. take is they because overall know there. well, spend, business to part inflation price the our I customer -- small of on a small a TV as the it's their percentage because is is They they're And real. watching watching and it's know -- out

Operator

time. this I'm further Fish, showing to and call turn I'd over closing you. the no like to for remarks. at Jim Thank President CEO, questions back

James Fish

Great.

So joining thanks for us today.

'XX, stability At I WM, We conclude. strength short-term really about we our a XXXX 'XX for today importantly, and outlook that looks symbol of outlook so out The to to excited in about outlook. we good Investor quickly stressed have only the of through, out as confident long-term not Just play the that the beyond. the in end we're at questions back just there's a a but be way And and long-term as is we maybe somewhat of more -- communicated we're and expect just our Day. to playing 'XX, are very many to time when think proud investors. expected, strategy macro we from but standpoint,

for everyone morning, to next quarter. and again to you this thanks us talk So joining we will

Operator

Thank you. and this gentlemen, conclude conference. today's does Ladies

day. a all You disconnect. may Have great

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