Waste Connections (WCN) 3 Aug 232023 Q2 Earnings call transcript

Good morning and welcome to the Waste Connections, Inc.

Second Quarter 2023 Earnings Conference Call. [Operator Instructions]. Please note, this event is being recorded.

I would now like to turn the conference over to Ron Mittelstaedt, President and CEO. ahead. go Please

third outlook well also operator, this welcome you, our I'm morning. morning would XXXX I'm I quarter Okay. detailed to and of Joe. Joe by Box, this Anne to a as for outlook everyone promoted quarter. and our Investor Vice Congratulations, Mary President Whitney, joined discuss to conference the for like CFO. joined provide results Thank updated by good as our call recently second Relations. to

As our the basis solid XX EBITDA in quarter execution earnings noted adjusted extremely release, margins a pleased strength during points we above by beat for operational and deliver are on our revenue of outlook. our to the

underlying XXX transfer disposal values pressures ongoing recovered Solid period. waste core and points pricing basis headwinds growth in inflationary of largely waste expand from margins and solid overcoming by X.X% commodity continued the to in period, positioned declines the the year-over-year collection, during us

the approximately $X.XXX Our our XX.X% full along and XX EBITDA positions increase the to first headwinds with us other outlook outlook commodity-related performance for fuel to reduced points EBITDA and billion, half adjusted up compared to year initial adjusted from basis year and prior expanding from our XX points year. margin basis up full in as acquisitions impacts for recent the XXXX, of our to

operational structure. into driving of forward we a retention sixth our the XXXX region operating and structure Most refinements trends down are model, employee outsized second of with the our safety in to and as human doubled through organizational of look the realignment corporate we capital importantly, encouraged improving half to We XXXX. our including margin by on and in expansion decentralized in addition

the Before housekeeping into let disclaimer our for more forward-looking we turn items. over and me other much Mary call to Anne detail, get

the of made harbor to you, morning. call the includes Laws. Ron, statements today's provisions Securities The XXXX, the Canadian Securities including Act of Litigation good during Reform U.S. information forward-looking applicable pursuant of Thank meaning within and Private safe discussion forward-looking

our those in statements risks Actual from both results could are materially differ cautionary discussed detail statement Waste that regulatory and results to cause could similar in to in U.S. Connections August earnings differ the in of the release and commissions in due Canada. actual X Securities with such in uncertainties. various the Commission Exchange greater made Factors filings and securities and forward-looking authorities

that there forward-looking to not reliance that commitment be You are should as an additional believe We or business. are adverse order statements immaterial, could which reflect place to presently today's after change may aware in not date. we undue or may update any no we forward-looking events on statements on make currently of circumstances which risks or our impact revise have

measures measures to operations. releases of to non-GAAP the may and uses GAAP performance non-GAAP discuss cash On earnings both the on calculate measures evaluate non-GAAP and adjusted as comparable Management Connections free measures a such most Please Waste our for our measures. such income adjusted certain EBITDA, monitor companies per call, of will a basis share these we and adjusted to financial diluted to ongoing differently. the net non-GAAP refer reconciliation flow. attributable dollar Other

back will I to the now call turn Ron. over

Mary Thank you, Anne. Okay.

core between from competitive our to region with exclusive market, X% from began regions. results our mostly QX, price-led and solid XX% over price ranging of at in X.X%, organic in Looking waste growth X% our Western

degree growth shedding purposeful accounts and point a quality quarter includes X.X% of decline of and reflects of X.X% projected. of in surcharges, intentional lower fuel Total XX and reflecting a price material as the diesel volume nonrenewals prices basis of in Reported negative improving recently consider for margin revenue acquired including integral opportunities and contracts, some this the to municipal to of in our improvement opportunities pruning at see growth approach for cases, quality. typical disciplined where We to identified we certain in acquisitions. operations, be we've lesser

Given this anticipated. fully over the past number was the few of years, acquisitions

reflect volumes, on Our activity cyclical levels impacting tons, regions. collection, volumes in of had a the good across special delayed seasonal were we muted notably transfer or project and down business most as of most aspects anticipated, barometer a X% ramp also event-driven and activity waste more disposal year-over-year the reduced

these lumpy be generalize about special why can business. July, it's event in and tough in X% volume reminder year-over-year. special of volumes waste broader trends waste were A However, project other on or up improvements how to volumes based

price in achieve a making to our of Lastly, constructive very reflect We're between trade-off consistent with with objectives. we've described benefit. we're up choice and point improving of to reduction price volume conscious comfortable and volume trade-off our the margins the EBITDA a prior periods, X

recycled next is that or revenues renewable Looking at credits, QX landfill recovered commodities, RINs. commodities, from gas energy and

year-over-year commodities old in values to in ruling recycled comparisons in quarter establishing response per obligations. due both late Excluding $XX favorable for RINs RINs. $X.XX and containers, down about about acquisitions, and XX% starting averaged the jumping volume lower OCC, and $X and were tough over of averaged they ton to collectively, renewable QX, or a EPA corrugated about to

million with XXXX under renewable track year to when of we facilities later EBITDA ruling in facilities by of to $XXX the encouraged annual our capital be a this should ownership Those projecting in XXXX, when are ramp begin are the to RNG structures. deliver We EPA from benefits expected X range and majority operational expenditures. projects the natural projected which a given development, by incremental on gas are over remains portfolio dozen

these we acquisitions. opportunities, we complete as evaluate Beyond including projects, additional continuously

X,XXX-acre recently a Arrowhead, MSW on leveraging in New to subject Connecticut, access include Alabama. integrated in rail revenue to $XXX feed and all We network on disposal across locations has expect transload Arrowhead of the provides one locations and serviced landfill strategic company. opportunities the strategic our Coast afforded the our This potential directly assets by strategic operations with reshape Arrowhead disposal to Jersey of million be closed Northeast most expand transportation asset. and of facilities which acquisition this both landfill to Operating multiple on in Massachusetts, the East Environmental, from internalization transfer important markets acquisitions. Moving Florida, time, and a this the into In we by addition rail. to will existing the given benefits enhanced opportunities, internalization

above closed This revenue. in to on we already million once consider with track we as $XXX be year is again annualized what of have in over activity terms acquisitions average

addition, very In acquisitions many into pipeline, year. with all robust setting for XXXX rollover later this solid additional for ways, a contribution remains in potential up the active dialogue completed

the is years through always, as over value and selection XX change capital our strategy. consistency culture. allocation an and market replicating success Our with achieved In creation on to there no along remains, short, intentional disciplined focus in

operating oriented been our has culture. with decentralized along servant to Our continues be and a philosophy Connections leadership Waste of point for differentiation

number things, of end, and across field. that segment a approach, organization approach serving decentralized completed we realignment in made we and to this to changes both and field-focused to corporate Among field the To footprint implementation. maintain our decision-making the accommodate reinforce growth our our other our within operational continued

This the several over U.S. Eastern acquisition regional portion just serves our enjoyed past our U.S. we're the fifth growth the have to including announced the the years, region, concentrated structure expanded which a of of a We Mid-South. addition of calling Arrowhead. in we was through accommodate heavily

sets regional operations look North ahead bandwidth in in is office Moreover, our positioned additional we the of local model. this drive and relationships for growth $XX addition our infrastructure the With Charlotte, as revenue more. results region a we believe Carolina, to continued well our us billion across ultimately team footprint of maintain leadership to with which the up

implemented developing position next some roles In of ourselves changes the an we leaders conjunction for the as a evaluation to serve we of experiences corporate with long-tenured leaders To on resources perspectives. that end, coaching of we their certain changes field, senior broaden the to also and and made our with purposeful generation regional leadership to of our emphasis future.

be of significant drive the financial leaders expected of internally an point and as to not changes they operating view, outsider's from are these influence While generation next necessarily will to results. impactful

First, and prioritize matters changes on the towards are decision-making to the also two objectives. the to to corporate of autonomy designed resource further utilization directed from appropriate; local operational achievement field ways: to in local support These as second, streamline support enhance

we We labor size, we and to we have set up of see way of always that focused as that capital environment. maintained is also the are challenges are still we that regardless what are this retention end, is our a committed local we human business our on is a it success. To manage and that employee critical to tight addressing believe ensuring to

down requisitions we with year-to-date the and down further As head noted levels of to 'XX look progress count variety earlier, open driving approaches. seen seen early from are we and we during XX% by forward encouraged a turnover the peak and voluntary have XX% improvements through 'XX,

resources, expanding use through ownership interests adding we're of improving other alternative exploring driver technology, technician approaches We're our the we training and have and including in candidates, flow or qualified to which facilities involvement. of

safety, correlation the along of and accelerate mindful Given with the high and between we're improvements to safety retention rates potential retention. incident

to in drive greatest. made acquisitions and and where our technology the the in at customer investments telematics service, the including also recent We're continuous camera opportunities updated improvement are leveraging we newest safety

outlook of before review more quarter and XXXX for up the Q&A. call Anne to I financial a And outlook pass increased to I'd to into the like detailed the now for heading to wrap our then Mary highlights will depth QX. second provide and in

outlook divestitures. completed the ago in since Thank billion quarter, about $XXX of million $X.XXX our contributed year-over-year. about $XXX above or the up you, quarter XX.X% net Ron. revenue In of or million was million revenue year million Acquisitions $XXX the of second period $XX and

X.X% vast done the in core with Ron year. of the As pricing for was noted, pricing QX majority

pricing and the surcharges result year, diesel described price the of over impact in key the As of drivers. typical reported the on costs, stepped as combined a price. With the of already of we've total a from the Ron and anniversarying dynamics negative volumes, outsized fuel to on reported increases seasonality cadence XXXX prior described the quarters, course down respect in basis improving of

nominally, nominally special MSW the results landfill up about was X%. year-over-year XX%. tons as about on are were X%, pull down waste XX%, up looking per about and up with on at Here X%, same-store down roll-off tons basis. C&D rates on noted, about were and pricing Daily up flattish revenue on tons a tons steps pulls Commercial up

points revenue, reconciled a earnings drag. point million by increased basis headwinds XXX from margins Adjusted of expanded release, Underlying offsetting above or point basis XX.X% tough $XXX.X waste basis commodities XX% by comparisons basis our a year-over-year EBITDA for to as year-over-year, QX, largely solid our in XX guidance. basis XX XX points in for RINs drag XXX points recycled combined and margin

combined points waste impact movements activity ago to during the basis from period XX Other period. the market point year year-over-year related basis stock a to included margin offsets benefits completed higher deferred since drivers with compensation and from acquisitions E&P XX

stepped QX of up the higher second, Our which factors: to Canadian XX.X% severance foreign were rate nonrecurring rate adjusted most for rates the result as impact and tax of payments, executive dollar, severance exchange an the for XX.X%. normalizing of a nondeductible; of first, yields two

XX.X% Year-to-date, or revenue, our year million in we've adjusted for $X.XXX adjusted delivered to full meet positioned us flow. free cash outlook cash free leaving well of billion $XXX flow of

cost about we about average down leverage resulting mix XX% X.XXx During a of in debt about million of $XXX taking variable to down paid debt, rate and the a X.X%. quarter, debt-to-EBITDA, opportunistically weighted and in

percentage and again sheet annual balance last the our returning will increases our flexibility in flow and reinvest also affords we've dividend, to cash execute demonstrated this of on capital which over strategy strength business cash per shareholders, years as while including, dozen growth the free year. our generation double-digit share revisit The our to through later to we

outlook outlook quarter review and the third of XXXX. our I will year now for full our the provide updated for

We SEC filings Before uncertainties we'd again made everyone harbor or based remind the on review Securities investors results significantly to encourage statement vary risks like actual similar the with regulatory and carefully. factors Canada. outlined we've do, in these to in and I that authorities Commissions once safe and may our

and significant trends. economic transaction-related excludes year underlying period. during acquisitions assumes in of from impact the the expensing close change also no the during any remainder additional that items outlook may Our It of

of for reconciled basis for Looking the XX or margin earnings in year full the at $XX full updated as million points XX.X% a our approximately year revenue, for our estimated provided EBITDA at $X.XXX EBITDA point now XXXX. from Adjusted is and basis our first in year-over-year for up billion about for increase outlook initial release. adjusted XX outlook and

a our reflects million to outlook revenue declining in $X.XXX approximately providing material surcharges reduction $XX updated initial outlook in of billion Our February. costs and related fuel fuel since

updated $XX volumes contributions from adjustment, this that solid recycled since time QX February outlook values trends. of reflecting our acquisitions Net with is plus on for million completed commodities revenue from RINs, and up waste

$X.XXX cash by EBITDA for capital Our adjusted outlook adjusted way, $XX capital another flow to with adjusted our Said -- net increased billion flow free well. reflects increase up million, million. we of expenditures our as operations cash $XX expenditures raise free an line from for outlook and took in of cash

next to approximately QX. our outlook Revenue $X.XX Turning estimated is be billion. QX for in to

range on of of in and X%. of $X. line for recent with volume plus values X% Recycled RINs from approximately to down approximately price We amortization of are expect at lower projected per X.X% total with XX.X% Adjusted third core values at $X.XX to is about taxes. plastics of amortization sequentially levels, the the net QX including diluted price revenue, in $XXX or for share $XX.X quarter $X.XX is million about or EBITDA Depreciation estimated in expense revenue. million of intangibles of XX.X% and about of estimated QX commodity

and estimated at at expense, QX variability. approximately effective $XX million XX.X%, subject in Interest is is interest of tax finally, about income rate to net QX our in estimated some

the turn me let before Q&A. now Ron And some for remarks to back call over final

by impacts. you, our given ongoing and Mary increased encouraged to full particularly again, extremely factors reality Once the year, outlook date for are by the our we Thank margin pleased inflationary Anne. of the driving results

the of not and of margin XXXX. year, as in year-over-year year, of a As margin And recycled this for margin puts provided off EBITDA XX.X% power set waste demonstrating margin are the the and of from half just the outlook core EBITDA updated well point the for company disciplined EBITDA points away it exit for to expansion approach this close strategy. XXXX to along solid with we half to in and of is back at XXXX of price-led avoidance the north adjusted XXX translates our total jumping basis XX%. our margin, over our growth the yes, commodities, acquisitions, adjusted to activities back dilutive organic that Normalized

local hard by want and performance to thanking our and metrics work results, driving safety second year and which driven new of for price-led year underlying efforts Their from produce our in in for shedding. expansion purposeful conclude half anticipate we whose our improvements expansion market ahead, in growth, improvement benefits up organic retention, first of pressures set our Looking waste margin margin another inflationary XXXX, solid these us the has role once outside from employees, with continued us continuous and along in potentially ongoing commodity-driven provide and out positioning validated outlook acquisition 'XX again Moreover, we when facilities could lay industry-leading will including improvements half. the the in contributions for formal and we to the XX,XXX activity, selection RNG revenue dedication further strategy growth, in decision-making of February. I our in results. abating

is today. served well, strategy our We playbook on a on has us maintaining on appreciate commitments. focus your our that delivering executing and time Our

I this And will over the the your Operator? call with open turn to for operator that, up to questions. lines now

Instructions] question Stanley. [Operator from The Kaplan first of Toni is Morgan

verticals? or any know start with were the finished the them, -- Or think cumulative wanted is over were Just with they you about incremental? to in sort more of common go? Was or particular shedded. we mentioned this I And negative contracts I first, are guess, themes shedding? volume trying there geographies that -- between I to to that X%. the is

I M&A some there over eastern that did continued reviewing the Progressive the would that our last the that actually of in of a also X from a greater growth had say a off, in lot Toni, we've throughout where our were contracts still South, first years X-plus years. There the ago. part amount But the Well, were were transaction was Sure. footprint. we shed of through seaboard are contracts

these capital with in happy come and on -- return low that it's mind, our was acceptable contracts landfill, else either municipal will so our The we're an we and or win-win. that often make that common a let are volumes somebody the price to are margin take margin still theme to or to

specific So no geography.

shedding, your have time M&A doing we the as which M&A. question period, billion are far you been, in regarding As you any years, high know, for look, X-plus a as $X over last in

XX% XX%. You're to going private to from anywhere M&A have transactions in

you of revenue So that let's XX% take that is X of probably the an to average margin. negative acquire

to come or You as know you And them. you them identify and reprice up, that that. contracts exit going to work those in

always XX effectively of so shedding. last you're been standpoint, seeing has M&A a for from the because -- always intentional over also a large you've economy. our -- of little economy there in years. softer it flat in the So done a flat X over a It's more And model, now years, got amount year GDP

So larger bit a volume numbers. in more of you the with little M&A, amount it a of see

in that GDP a still in normalized acquisition it. a doing so economy, X%, we're whatever Again, X% is, pace, slower

see in, don't quarter on a just basis. quarter out it You

I to is is M&A. So part expect we would with way we business of -- the do down haven't year billion that in $X a this number this on this the But a running normal focus done a come because returns.

the at same as look several I last Again, they reported the exact they you had thing. companies, peers -- acquire same some pretty the in over M&A think saw also the quarter, that situation. the you if They years, have heavy who've basically inherit

the contracts. municipal around So story that's really

one Ron a would the a of couple touched on to that, thing just add And regions. I

saw the is is stands contracts. years X back that both which point, acquisition follow residential mentioned point about reporting to refining the after of portfolio purposeful out you would look shedding frankly, as in that because if on. shedding Eastern I our impact as I'd And that municipal The off you of Progressive from and tells contracts other improvement make the then Q, I going mentioned Because the still we ago, of years in margin. add still Ron's dates really it where acquisitions, multiple you, see you're margin course, And opportunistically the you'll of at Canada, region our Canada, to other would be certain having completed. the regional our roll

obviously, a may say, or ultimately you as it. Because Toni, have you're XX% level that all we're Yes. of contracts not of well. as I and reprice Why? revenue And would I between that seeing acquired you mentioned, XX% municipal winning lastly, shed, there's number also that along

So a net the said, Anne again, making Mary on as of right And that follow this is or because you of the not. margin decision tells number we're sort that. whether repricing

my Perfect. go margin. I And to wanted for follow-up, to the

maybe mentioned would of you XXX-plus even staying and of to that then So some be guess, inflation your top Even this leverage basis at half even factors of XXX quarter why year? moderating next What year-over-year expectation? offset have 'XX shouldn't that seems like year, on modeling higher that? basis be level third expansion some we second than I that? would you be is Or over then to And expected little be a normal and typical. in just the Like, for operating points XX.X%. of points expansion bit

Toni. as Anne to off, take Well, well this Mary parts I'm of going remember, and let first

the half First of just period. margin remember, second off, higher year is the seasonally

being year, of of XX.X%. guidance the QX half So the second

If the around in blend. I XX.X% XX.X%, math, do QX think so you comes

quite year to XX.X% going margin at at QX guided so and have we down this QX have seasonally, your as total XX.X%. a yet isn't is You're in naturally step

that somewhat as So you below enter. you're

to what moving of north number And margin with year's be. as But make around points too things. We expansion. projections basis say, be of I think to to I will a growth, next there's not Yes, any of that the generally it's XX year, think next margin. to know, price-led certainly XX number for get you yet we will commit look, ready early that

But this half to can commodities depends also assume as you is so a in level of you margin cautionary on normalized for want is what over in we that dilutive the come to. at That we're because, the what be balance XX% know, M&A on guiding second what the number. are on that year and to of want we saying of year basis depending this

XXX I'm there things So our but influence be that. control, saying can't outside happen, basis not points. I would you cautious telling are which that

now. I half easier just which haven't the back what in things of abate year, to of would not and the pressures We of the little reiterate right the first in cost on is, course, dynamics half reality that up to resulting again last the the year, the we're And sets cetera, back of increases, -- we'll then, from stronger. that instructive really course, improvement see it's to we're year. year. seen wage sequential talk as a expecting what's about the Ron of half next it said, comps providing of think see in up we is count that's guidance et the be like this part setting the year get And

influence margin next there. will year, about jumping would off other that and your expansion cautious of be be reason point from So going to up which cadence the the

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

the the margins, wanted just to back to comment. XX% come I

run longer-term commodity of the second level? input half there that we're on Just Just a rating be where is basis for helpful. clarity, at an would some in clarity annualized average sort

just point, on, since So points, to XX long there's right? basis to at last So commodities basis as XX.X%, XX which more points. was way year last XX% say up where layer you July's the July, go probably year, it's XX% to was, back about than exit from from think the I that get was we point the a really we're only exited and trying are communicate last to levels, so it's highest down look, they Ron's

exiting And of if we're at so north he's XX% saying around XX.X%. well

around off margin programs that Okay. retention enhancement or Understood. kicking that Ron? And or the quantify you're here, then cultural KPIs could are of targets share employee sort there big you any

mentioned a some missing previous I things as Waste is we basis with as XXX we a look it number has always our there been, out in that are very question we there cost-focused at analyst and basis take points of conferences. cost and there's structure I've Sean, But not that meetings lever Well, here Connections. at. company Look, investor The been -- Sure. point improves. next of in where no XXX can retention X But over turnover had XX XX X well-run as there up that months company. line or is is the to items to

As mid-XX% we level. what in call drive I'm the so points, going the turnover from into was XX the that to level down, I'm mid-XX%

You're or going XX line each. XX points X X see improve to items to basis

it's both And to in time, to labor labor, it's it's risk, it's in account, come it's and that's to equipment going going your come outside come running going workloads because our people people's in volume balanced you're your to in in it in everything our repair, not going at to over variable in SG&A, you're and come going come come to going comes when max staffed gets and are better level. fully

and so of items things the as improve. line at demonstrate revenue that comes I we're there's focus And turnover these demonstrate on the we throughout balance is, #X as categories that But year. in as we'll said, throughout those turnover. see And next a continue think of this year, percentage you'll we'll to And that of monitor. each looking down, I just thing

exiting -- a months. as I'm half approaching of points, XX.X% EBITDA to you I getting XX%, out and back basis at to XX% in or triangulate to Sean, year if the XX us for you XX are we XXX look accept the if type correct in normalizing that's margin -- things that how what above the north those So commodities and said, that

The next is James. of Raymond from question Tyler Brown

even get asset if if I'm an stations could the then basically, is move the Northeastern in to that curious how alternative, that just Hey other along or this the more basically, acquiring you Seneca, can very does transfer talk East down? curious to interesting Ron, me. you in about were deal. details to seems collection And fits that if strategy? market do we in on Coast. rail-serve with have shut site This give And it some confidence it disposal more does Arrowhead anything

Sure.

Let's question attack part first that Seneca. of regarding last the

do our first nothing to with Seneca of confident in very expansion So has well, to change real and we're there, that. doing it and our Seneca. is very position no

seaboard have now quite a just the integrate bit know, eastern We of there you need a been really have those and markets disposal connectivity many as along until grown options up nonintegrated. to incremental had was to that to

been looking were that had and the last for eastern X, years X.X the or at to have committed We this we internally able going seaboard. be to integrate

quite additional additional release, that time we're and today asset excited mentioned MSW that's It's is we permitted So about. in period X,XXX-acre landfill, time. are large some handle we of of for asset first part M&A. very a this tons for capacity of very integrate X,XXX to strategic, question, up is or more a your in -- a have to we We're and an can absolutely, your to as up do this opportunities opens yes, day opens This opportunities market And in that so around markets have and site. that currently taking the multiple nonintegrated.

So I development that quarters about see think over and you'll continue talk year, to us next have planned. into we ensuing the

about to an these are up rail looking It from options think in is does As other at multi-years we you standpoint. out. open how transfer things acquisition try we that know, this asset. And

in is it our So mind. strategic very yes,

Yes.

implied And from the kind interesting. from based of M&A in full perspective, then Mary just the just Very year is on Anne, a acquisitions much contribution Okay. modeling guide? to how date,

Yes.

like million, $XXX then the was about guide million next rollover $XXX $XXX now million. around For And the original full year, is and we're million. $XX year at for the to

question. my picture then Ron, last And here, bigger is Okay. a one this

think I it's you investors. what already there been market the seat. actively. in been the And been your have really about left, you I back impressions with you pretty know but just that the if you story, never or all What So miss curious think days seems anything? to the new I'm XXX do still have interfacing investors

well today top is a but and It's I that there's think days in well that very the informed. the the is, And We've investment known volumes. industry I answer But Tyler. I had and to our us space, of opportunity thanks, a now, have think issue your getting who look, community touch and back I tremendous to is think and who the Well, right question. I mind newer regarding many in investors with appreciated and a XXX very all a I community thing story have haven't transparency. think think to meet. Look, an analyst of investors I from misplaced are that got topical misunderstood helps it's followed amount

this the volume the public market I good nature lot There's all that companies is think in the volume conception or XX% is to completely just inaccurate. positioning margin volume can operate that and contract structurally public the that's structurally at of a have. company the market. that of volume, because with or there's of the XX% EBITDA shouldn't The intrinsically low

are other and be should So accreting, if think should into concerning they're volumes tells if whatsoever. read concerning that direction, doing margins something going It I as negative flow people it. are why people in cash you the think I that be but should

that be reiterate I now would more than would just So topical right just anything. it's because the -- that

of from is Burgmeier Citi. The next Bryan question

you and you point you leverage this perspective, allocation just can quite optimal a me is? what the guide remind your Maybe for big can picture you Connections balanced increased year comments think And Waste from a Connections' expand see CapEx fairly guidance right bit where little Your quarter. capital returns the best Waste on you for now? and

with start To leverage Sure. first.

So provides a above about what the for a Xx to you it like which -- a environment feel there's we of outlay, sitting in comfortable I there if to current to that Xx. range. X.X we mathematically, very take take drive the leverage takes is lot And mean, it an lot in higher. leverage optionality large isn't opportunity our

we want investment-grade to by our And to big the optionality. to. have but have low-cost which it's meantime, it'd retaining to we deal, So a adhere maintain to really nice in capital access be rating,

most one of right tremendous with after the capital you the sit about So X.XX respect to dozen point billion range years, and cash double that that's right regarding returns, have think just in reinvest middle best now. With deployment free and data for the a is course, at where building about to leverage, also the flow we has $X dividend, a given landfill. of we which just like only amount over business, last paying in out not industry, flexibility digits those in and the if projects grown great in our this which an capital in opportunistically can CapEx we'd of returns, think best certainly, we're are you're of we tax we when say running in your in returns environment And RNG, we're XX% be credits. opportunistic is. what XX%, replacement then, which investing Across

to RNG. make we And ahead, for And we'll remarks, look But the we're not $XXX so when in continue outlays We million CapEx limited. prepared we'd be next a that about year what really those for will big is expect in opportunistically. year mentioned CapEx.

And feel with we and have the optionality. why is sit of leverage we where in I we continue how reinvesting really our of so that's business, a sit to much CapEx lot good about started and where on

years. financial forward. I continue to how that criteria. to that, capital just our have operating market, Look, an our and best we'll we is mean would how without our Mary that And it return valuation Bryan, priced That's M&A going build of add the strategic have over stating said built we Anne XX it directly. meets it our is and discretionary I appropriately

you've And us. and from so that's what continue us to see from you'll seen I think

up more second you as your niche stands Would it's it X full full, follow And little you pipeline deals. it. right maybe or full, that able now? on Can been maybe you're targeting of say bit on Got where know outlook. detail a M&A less than of just ago? the always was provide X kind to find but maybe I you've markets, fairly just years

it outlook. the I'll bit detail pipeline turn little a over. Just the and of on

Yes. comfortable over any our offer that very to There's be. Look, a will may feel ago, stage. M&A detail proprietary a we about you Bryan, very several you out quarters, period. we M&A -- or pipeline have we're very than a stage you real and the to unique a full. using I'm year-and-a-quarter Actually, will as cadence is in Sure. lower provide a relative negotiating look but that final and what LOIs not we of don't the a just for But next lot number year was ago, in pipeline, obviously reasons, understand on LOIs pipeline. obviously what the may is tell an There's sensitivity of in great know, I

number from -- of coming a X there were of their years had you coming they catalysts pandemic, of on of off because sellers pandemic at the demand number low with than rates, very hyperinflation, a normal been sort was had You the that look doing had more of a business you who -- out sidelines. interest had a of private pent-up made something

look little think an bit I 'XX you sort at a of So of have anomaly. to as

it equitable So those in above tell to both in disposal, solid norms, was to it misleading and our is and sort continues footprint it'd our of relative a the be and it's mix Canada. waste and to collection is you where across But so broad-based pipeline U.S. opportunities to historical of all be 'XX.

Hoffman is Stifel. Michael next The of question from

X% on about the that so X.X%? was correctly? don't inflation a number maintaining we that need I price follow about giving in to And Am and trend? open XXXX's given up, X% half aren't you're reach inferred So X.X%. the And sets big is resetting Can XQ, the I in second in a XQ at year if on the thinking you're trend we market that full the guidance you outlook. on restricted hit restricted the higher talk in

numbers. middle Yes, some and Michael, about is year, that are and basically we're increases what contracts our to, been of into those of the The those increases there way of on that in it, reset I'd of price be the price more year XX% influences in there's that price year, the you referring early happen our broadly that's coming factored the for the encourage what And will we that into increases. think communicating majority most you're reset know full year. to our those numbers. business the But where

movement reported in the And on course off why of the driving getting And inflationary And really which mentioned fuel basis so prepared of a a that basis, was, price pressures the reported news number. in got just in outside down. also as the earlier math of come denominator did happening. over the we noise factor core down. things then There's of year you've is the got cadence the bigger, few of having remarks, kind fuel, a face year. The our on overall last that course, the the a price we little the the bigger on determines rolling increases is then, in year. good accelerating surcharges steps of One you've

encourage CPI back it's I'd you dramatically the how to move the about It in the denominator contracts, it, that's think year. those around half X% bigger. So gets linked of market. again, in doesn't And

And number a down little comes so bit. the

retained open market? But Okay. trended ahead Fair you've You've better. your on budget enough. of

any... there is So

of pricing we about as as above the had we out had about expected, quarter, see that up pricing locked or really visibility about We done now. last into the feel even on already known we're coming We we year. said XX% it playing good We Michael.

So we'd full year. encourage a people number good the for pretty that X.X%

$XX $XX. Okay. is in What's OCC -- the model above RISI, your at which at is

the importantly, to here. equals normal what normal OCC are made comment RISI. and a do underlying we you And What so questions think than you when about normal price able X margins? that recycling But there's more recycling, differently

Well, things. couple so a of

I is our geography think we other dynamics. in about of and see which what we by business, influenced all talk book

pricing we RISI that And lows so lift talk of have XXs. in when about $XX been maybe might the high

we're compare, always to tough above. running it's but So

seeing think, we're have value of I benefit out using the improved marketing and sure Now facilities. and make the maximizing commodities. to consolidating. where our of our agreement doing benefit things a the facilities, robotics contamination addition, of taking some decreasing of volumes And way, we're of out quality national recycling the the end advantage also, from therefore we're we By in back we do we're coming coming

say would influence I as we numbers those are. communicate So what what the

in about the last relative expectations all have we early XX% year. it's what's year. so year, into above we're guided when and And full to we for for, think what exited factored the we where I were that's

in what normalized we're we're what I Obviously, you, a $XXX that everything would Yes. is spot what $XXX get no. we OCC and to No, down mean well how tell to $XXX sort -- Anne somewhere the on. Mary pricing, think? above it numbers is year-over-year. range. saying do $XXX I that those of peaked to asked call that's a normalized, you in think is said you I We

have off much we also, calling So you've we're I But X the Midwest that's of do. lot markets sort in most in transportation advantages don't your got But know volume normalized. And people got that X what you are of of our of you not our saying commodities a South. Michael, and have model -- coast, that. to the there, we're more the when recognize, comes you've so to

royalty spread as you well. to that some gives ] And [ the so pricing

possible labor that turnover Ron is year big now, labor of then periods the end best-in-class world, can sub-XX%. your Okay. current In improvement again? from in And -- were to challenges the

Yes.

a goal, Obviously, ourselves that is, hold high we're that's but going I think high high it to bar, Michael. a to bar.

then think level our getting the or I down down to below certainly mid-XXs working way the goal. that into from the and mid-XXs is first XX%

mid-XXs XX%, to it to from Our sourcing goal a the next that to focus to turnover what get range, involuntary to or Michael, of bring next that safety going the on is, components of then along about onboarding are today on go year reported it we is There's As work lot year supervision, turnover from part mid part into to of involuntary. make early most decisions down means bigger the on hung it likely to that we're of that you're off and the we to not is by making voluntary? that. I number there. But if and achievable, issue. We that it number XX% really There's who just because that point versus up as hold we're at are is a what cause so time if to at you ourselves that you employees going in a number. is equipment, so. much things say, to down a look, that just backed long fine-tune have proactive once yes, to somewhere as is get involuntary down many not could or everything. we're get XX% pick XX%, those How would down, numbers to XX% also to and going to a

we're of long is XX% as when that, to really, to So to to proactive to voluntary XX%. dropping understand where that got XX% we're decisions to get you making number as half going standard you've that almost hold our

like shared with volume basis opportunity? is it. repair points, then price us another equals and that XX-XX. we What talked over This self-help what's what things of and you've about just And couple fleet age spread XX a about maintenance and Got getting XX, X years. labor fleet it's replacement,

of in that's issue mean, function when a of I clearly to down use opportunity, XX%. the the also Look, technicians. is part percentage, an just and Yes. And several Michael, XX% that same turnover technicians, things. is you're

the of turning to something inside have instead to into $XX,XXX internal it you're $XX,XXX lot that repair. do a being of you repairs a cost, $XX,XXX external manpower sending outside to $XX,XXX a You're don't

particularly going outside you're when So see properly repairs. repairs maintenance, and to staffed, in you're improvements

maintenance also maintenance to PM breakdown proactive because more expensive going maintenance. less and is than You're see Xx breakdown preventative always on your more you're to X maintenance

hearing which point. throughout we're Michael, a to there's in schedule the variable late So probably think a XX schedule, and a probably to will this repairs CapEx to at And delayed internal mid- manufacturers look, replacement I of to between also improve, repair repairs. pick 'XX but equation from XX number, that's whole your from be what function, a basis maintenance units happening and point continuing some continue is on outside

CIBC. Chiang Kevin of The is next question from

some there. your you that -- this ask help Mid-South between could Arrowhead this started how I you I in those of Eastern results, if the the Maybe Do Congratulations, margin look of X the those time? title new look at and X terms segments to in at of disclose. Arrowhead Mid-South markets? over segments dramatically Joe, see result what question lower way. convergence segments Does asset segment profitability If segmented the on your versus changed other some you in

market, margin to I can that up Yes. pick mean, was external. a you're going internalized on if obviously, that Kevin, integrate you disposal going

and obviously margins improve the is time. your question. of competitive a help positioning It of a it market going So also in improves sustainability margin to period without importantly, over more longer area

so it is why important. that's So

to look a You this, at when lower-margin a always, of that got pricing to you also Northeast, particular, whole, disposal. of part, as be taken remember, the profile most going Kevin, because for the in is the business

You're about a to ton, as a that be market $XXX talking $XX South $XX a might midpoint that pick that a to $XX $XXX a or a ton. is $XXX, comparing to Midwest

same in system, the therefore, EBITDA is obtaining inflated an and difficult. your that revenue disposal in margin much of got you've collection revenue because more number So your

in as you've historically the area that's if Casella, lower than company not So a a someone anything reflection company Northeast, like based margin, market in at and much seen based Northeast public of else. the look as you

West will margins? likely Arrowhead most possible, the it's structurally that. because we or raise to Northeast And from absolutely margins help where but Well, to is. is Coast raise not the the are it not Canadian So going to it structurally it possible

in the new individual constituents those just South That's look of cost great this color. But in noted with of response, the your impacts terms mix regions. if And that segment. simplistically in structure of the again, I revenue revenue you segmented at the it, what's kind previous of

if most second recent look million at quarter, the below excluding Canada. revenue you're U.S., least in $XXX in or smallest maybe the the quarterly running at I say roughly Let's region

the million can or Mid-South is call so other it your size Here here Is let's revenue. the that perception annualized $XXX to of the of some the segment. U.S. argument grow of

perspective an front in of growth here see. and gap line we M&A or it's outside you Mid-South, through a that's whether So opportunity from organic that top kind close the can should the overall of

Yes.

Kevin. So yes, question, good

that geography, that. cover road the travel And in either we and size, within our staff of over geography. think it terms think think regional it it a ability mechanisms not explain opportunity in geography, it about of and we of waste it think in growth. has to M&A our to of So revenue within regional terms get of our forward-looking in then first of think of how of of think and terms we other about size, terms let off, me how we employee or flows via We flows, just alignment, because it terms okay? in So we

annualizing one look $X one a can must at because billion." can't way a of only is the may to billion that region number the $X $X.X of employees at a region $X the that $X are say, in at the factor. So to to is that and way in So and misleading think because it they "Well, That $X would go characterize other about be We of think a close to is this same billion are region billion region things. billion billion. to have you that from $X because another of price region disposal

Mid-South, a geography the you So people. so you're Kentucky, in rural covering and look Tennessee, states, lot if more we -- of at have Alabama, more you

business. of You residential a have lot more also

more employed people that. got you've So through

it region. So Absolutely, Does within believe tell goes complex opportunities? way we Mid-South how tremendous have it's think a growth a to the you about what we does.

of a about think or as getting should little Southern the time? you those region it That look Eastern might size states, Just be in misleading. but at the to the

is question next Jerry from of Goldman The Sachs. Revich

Ron, pipeline scaled? expands M&A if potential asset can the mold acquisition the you your talk with fit Alabama how Connections Waste much of be companies about given how could wondering that I'm that much

Yes.

would don't of I the for now think as through Rhode you as our well, and example, that Island integrated, that our of announcement, look, if I are to take hate our to. network look exactly. know don't us. those were don't I yesterday's anyone They today. can our our -- be an do prior okay? Jerry, market, and Island to I and Rhode nonintegrated to landfill because market We markets guess, Arrowhead most We Mass But or that exactly. know Massachusetts at for want a again, just you it'd

few in, ago. What gives there's we that there's states are an some M&A those we within in know opportunities So today Jerry. I don't number you idea is? a yet, states than and was opportunity more exact that that days surrounding that not where there are

forward But model which a that some greater you is give can going couple a to it similar if asset I a And that positioning exclusive think suffice of we to go we we're become we understanding, as either opportunity asset because more we market de or create within disadvantage, to de try a have going asset agreement long-term franchise. competitive or market. through facto a a create franchise are to an in franchise where to going market, not be us facto and you disposal have you're a in our quarters say sure something gives on, whole clarified. passed we integrated. Remember, we if could it of had weren't we're okay, that

we that of of self markets sort were shedding there that So we now were out can consciously revisit.

So that's say why we how it is strategic. --

totally local can there, just all integrated in point flowing you're mean the And those rail. disposal markets. existing some of you Super. on than areas, I in Alabama options becoming by that through currently there's more vertically way expand shipping just of the the to efficient

So terms point just expand the in can that you plan. on of

of on really on view disposal want for that? you out in railcars running Because those capacity sure practice, know you're years this folks good you markets? really to you returns aren't Can a So X taking getting just make is expand I those investments.

point, not are take within going them means. niche Therefore, always going by of return we our basis of them to We're have it our municipal to conversation. going pick local to a look, comment, anything. as an is there. this $XX is are disposal. markets some Arrowhead some to And in local market, look or Northeast midpoint of to market to parts all our sense There understand of disposal, going can't that have disposal, Jerry. a go we're absolutely, some more and go any there, to $XXX your area just flowed at many to we $XXX for of the that That's your of market Northeast that. But makes them Yes, -- said do each economically are municipal -- to

on ton. a You a waste ways can move long rail $XXX at

happened, contraction the basis. a there's project. a us. along Northeast, which By collection if hurt helps we So on Okay? the it disposal doesn't That way, unless pricing in don't us

see You're continue where makes move the going basis. us to return economical most to to waste it

a very taken look hard this. so And we've at

You've got along Northeast. diminishing capacity disposal the

disposal to have upward continue throughout an to bias as lives on going You're Northeast contract. price the

So to to waste if anything, Northeast see of going and think, move continue I you're the longer outside distances.

industry, the on utilization? are from capacity project up Super. update just the cadence, are I that margins. the getting certified moving And obviously can us flowing how other timing, in to gas essentially moving through pieces the given you timing landfill they start appreciate on only delaying Any think Ron, the ramping tracking? and as developments but and we about the totally And detail. update in EPA contributing some and pieces players not when

a talked that the be by line say the by over next our in the And change year, we is couple million they of that we've projects and there's no to Jerry, on about in of annual would EBITDA $XXX Yes, We update outlook. this should that 'XX, with that then online years. layer are They're end in expectations. there said couple our were track.

question Kaye next from Noah of The Oppenheimer. is

just little I of appreciate the wanted to do to clean today. housekeeping a up. these bit thoughtful I And responses

turnover just into voluntary First, if you versus can we on today sit involuntary. where and disaggregate set to level on

do so. can I Sure.

We about the XX% peaked end QX 'XX have of about XX% at at we in of the that by to So the at just further decreased middle of QX under we of down XX%. QX. to turnover brought that end and

at tracking head X by lower of that X,XXX or and end We than 'XX QX. We of end the would we QX the end project about X% of QX I below to ended of point are where X at QX, head that or at QX of the we be positions into about as of peaked 'XX, open count.

we or is a into X% ended X.X% of X.X%, you're would into always the X.X% to positions the position are to QX, we X,XXX June of count a by my in count to X range. optimal have X get number, -- some, course we'd over can is head open going X%. about open that project getting X,XXX if on A below at I X.X% very to the you're but versus making We comfortable get just There's and to maybe would that months, your head some, going of mind, range, that be currently you're decisions running open material very want that difference that's next X.X% the we X%, involuntary X% happy. about

at Very all guide? helpful. on recycling RNG remind And year And facilities? did then much in this in and spending the $XX CapEx number new how us just million you're higher that change CapEx

No change the in higher guide.

it another in the up $XX total spending million. million about steps facilities expectation as million, So the mentioned total expectation and this $XX thereabout. the for probably I somewhere million of stepped a our year, for for earlier, 'XX, RNG is R&D recycling $XXX And around $XX up 'XX, for of

Okay.

kind So off? rolling investments there's recycling, and an year? are that next is step-up on flattish for $XX of Or RNG million those

those I year next rolling are from think nominal in off a maybe amount 'XX.

Okay.

So beyond million, you and net-net, increase what that's a million $XX normally $XX above like total in CapEx spend?

Yes.

And be operations, would are this this your of And East a for Mississippi. is use helpful. transformative valuable and I right word, network is know the significant with That's Coast of lot peers extremely then look, I but don't on Arrowhead, if operations too. Northeast imagine there

these talk So little you? about Connections? can bit came Waste Why assets just you a how maybe to

answer from that in Well, sure, understand. Obviously, you somewhat certainly we can what we the of try. can sellers. rests the tell we But

after into to intimate year, came throughout this assets transaction, marketed a course not we was this almost the or ago, year we these QX. a or these This assets. of pursuing off, and over began ownership went discussions those was accelerated transaction heading us the not First years shopped with because a auction brokered we X.X

that say, off taken us in would it market and by rifle was that by targeted, was proactively a the sort So this I was us something shot, of manner.

they was how of of fit execute a but to can that's had staying develop into the confidence think become felt felt as fair why a to think that's was So economic sellers it as us? would I they cultural felt is entire obviously, on they they leadership high a degree what our tell well I that turn ability with their in our they ability that. And they tell what happens. Why their chose was and believe who I would transaction, it us employees us. dream you, for you there and the network -- their really

the I So be those major would think reasons.

The next Sommer Truist. of question from is Tobey

labor of the own turnover as open in wondering RECs external market-related or actions. internal I'm just market, to voluntary you your and attributable sort the changes see changes decline if in

So I'm already not or results internal yielded sure your more have sort actions if of come? on the

I Tobey. Yes. come. you actions internal on our tell are mean, I fair question, more think that's I that the a would

had impact, internally, or that misleading would take credit XX% would be inaccurate. I we've of the but some to that be more think

labor a we somewhat, impactful we've in remain out now, function from as internally. this of that. to seen as be we've of think QX year continues although, And it's market X last the year, easing definitely, more definitely said, or months it where But that it think tight. do of that was I is QX I much get will not

put I'd -- But a than That say external well, it's number, to just right that. now. internal it's the more rapidly at market, will pretty us, So XX% had I if XX% I mean, I'm estimating clearly flip.

that I color. Great. appreciate

competitive in spread Just an question difference think expect have sort markets Do relative relatively pricing, Coast be you increase then in contracting expectation for versus Do I'll you stable? the to you be price that difference? one of that a and markets? Or other your or on done. West do in widening

and the CPI year, dictates look increases influences will function price markets, CPI-linked in real-time out, which And for we'll what that. a dictate of even the year be course, happen will next spread. to coming certainly the where in of into benefit CPI-linked those that dynamics those that Well, forward-looking or markets. competitive ahead in this a of markets the So get settles right? ultimately it's We pricing we back, inflation know higher in prints look as that continue

Yee question next The is Stephanie of JPMorgan. from

the your on you been the employee given that what from color color you're if price forth customers the provide from seeing some retention put customer can a standpoint? all just for Thanks have I increases wondering side, yes, was and retention. the on

what our is Sure. retention I good. Well, that would to you tell continues be

time increases of We get into if markets where small are our are you inflation experiencing, hold in and overall in have it Customers, part And household's that we year. we business. that's sort monthly where will. can it our very range their a and exceeded tells continue of is. tend us haven't expenses. a we be experienced not businesses but in that to that the course, price that we market, Any is to early retention There did they the plus significant good of of true, XX% a

to when XX% on comparison get is $XX big month smaller XX%, on a about on or that a about bill, $XX, talking are pales commercial going XX%, a you're So on large $X at up their bill a residential the $XX same XX%. numbers, increases $XXX in although it number, a that a or numbers talking you're $X, that expenses they bill, that residential commercial

have customers input very all So are I that sectors you, been would tell from seeing costs high.

And they're so you if providers. line we are, what from in their will, service with seeing

providing obviously, So acceptance get quality, understandable, their push rates customer on want rate then tension easier, always has back never beyond makes customers have quality the where you it. immediacy increase service lot a then And a And of increase. can your reason if you the rate very until increase. again, drives is issues, legitimate service that relationship if that see, that a to to you're of which that in some

the never-ending retain a battle. it service focus turnover reason improve to quality, So turnover, a and drive heavy service easier that's on drive a price. have is our retention -- again, to quality, we down down and But retention better the

The of question Harold Jefferies. is Antor from next

This for Moore. is on Harold Antor Stephanie

back or company investments the or attention about the for ask tech to automation rest year? the making areas into that you look of think could wanted Just talk software you need as if the half any you

little an recruiting we in But are made half we we back a was apologize. company was until to then, making in in And of -- been is probably the significant I software July, which It we year. platform enhancement the is Sure. what question and investment up entire brought online hard that have Harold, in our a to doing had is most hear. about the software I that think your investments significant.

have the productivity safety, also our are into telematics real-time that both in for investments of coming customer made out truck significant We satisfaction. and

these the think improvement normal we're that a make our or all these -- way it's out -- expense all about normal out sort are because is these, So course just about year all but this in in nothing in continuous year significant There calling investments CapEx that are process. and course. we we that our is of

our This concludes for session. back to question-and-answer turn would the closing remarks. over conference Ron like I to Mittelstaedt

Okay. Regulation in team, our forward hearing under and we call. earnings are direct upcoming to interest and allowed in the G call and again. that Joe we not Canada. to our conferences any answer look Regulation Mary there are FD, laws Thank today are at you If you today. you investor to we our management cover questions, seeing from your to next on questions applicable did appreciate We securities of no entire or behalf Anne listening available answer on further

for conference The has you presentation. Thank attending now concluded. today's

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