Q4 2021 GFL Environmental Inc Earnings Call
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We're going to the DFL environmental fourth quarter earnings call. My name is one and I will be coordinating your call. Today. If you would like to ask a question. During the presentation you may do so by pricing.
Speaker 2: Welcome to the GFL Environmental Fourth Quarter earnings call. My name is Juan and I will be coordinating your call today. If you would like to ask a question during the presentation, you may do so by pressing star 1 on your telephone keypad or the flag icon if you have joined us online. I will now hand over to your host, Patrick Dobichy, founder and CEO of GFL Environmental. Please Patrick, go ahead.
One on your telephone keypad lock icon, if you have joined us online.
I'll now hand over to your host I think there'll be <unk> founder and CEO of DFL It might a mental please Patrick go ahead.
Speaker 3: Thank you and good morning. I would like to welcome everyone to today's call and thank you for joining us.
Thank you and good morning, I would like to welcome everyone to today's call and thank you for joining us.
Speaker 3: This morning, we will be reviewing our results for the fourth quarter and providing our guidance for 2022. I'm joined this morning by Ruth Pelosi, our CFO , who will take us through our forward-looking disclaimer before we get into the details.
This morning, we will be reviewing our results for the fourth quarter and providing our guidance for 2022.
Joined this morning by Luc <unk>, our CFO , who will take us through our forward looking disclaimer before we get into the details.
Speaker 4: Thank you Patrick. Good morning everyone and thank you for joining. We have filed our earnings press release which includes important information. The press release is available on our website. We've prepared a presentation to accompany this call but is also available on our website.
Thank you Patrick good morning, everyone and thank you for joining we have filed our earnings press release, which includes important information. The press release is available on our website. We've prepared a presentation to accompany this call but it is also available on our website.
Speaker 4: During this call, we will be making some forward-looking statements within the meaning of applicable Canadian and U.S. securities laws, including statements regarding events or developments that we believe or anticipate may occur in the future. These forward-looking statements are subject to a number of risks and uncertainties, including those set out in our filings with the Canadian and U.S. securities regulators.
During this call we will be making some forward looking statements within the meaning of applicable Canadian and U S securities laws, including statements regarding events or developments that we believe or anticipate may occur in the future. These forward looking statements are subject to a number of risks and uncertainties, including those set out in our filings with the Canadian and U S Securities regulators.
Any forward looking statement is not a guarantee of future performance and actual results may differ materially from those expressed or implied in the forward looking statements. These forward looking statements speak only as of today's date and we do not assume any obligation to update these statements whether as a result of new information future events or developments or otherwise. This call will include a discussion of.
Speaker 4: Any forward-looking statement is not a guarantee of future performance, and actual results may differ materially from those expressed or implied in the forward-looking statements. These forward-looking statements speak only as of today's date, and we do not assume any obligation to update these statements, whether as a result of new information, future events and developments, or otherwise.
Speaker 4: This call will include a discussion of certain non-IFRS measures. A reconciliation of these non-IFRS measures can be found in our filings with the Canadian and US Securities Regulators.
Certain non <unk> measures a reconciliation of these non <unk> measures can be found in our filings with the Canadian and U S Securities regulators I will.
Speaker 4: I will now send the call back over to Patrick. We'll start off on page three of the presentation.
I'll now turn the call back over to Patrick who will start off on page three of the presentation.
Speaker 3: As we look back and reflect on what we accomplished in 2021, I have to say I've never been prouder of the entire GFL family. While we had all hoped that COVID would be behind us with the vaccine rollout in Canada and the U.S., I think we can all agree it hasn't been as smooth as we would have liked, particularly here in Canada.
As we look back and reflect on what we accomplished in 2021 I have to say I've never been prouder of the entire GFS family.
While we had all hoped October will be behind us with the vaccine rollout in Canada and the U S. I think we can all agree it hasnt been as smooth as we would have liked particularly here in Canada.
Add to that the labor shortages in some markets building inflationary pressures and overall supply chain disruptions, there's been a lot of challenges to deal with and as a result.
Speaker 3: Add to that the labour shortages in some markets, building inflationary pressures and overall supply chain disruptions, there's been a lot of challenges to deal with. And as a result, we have overcome...
That we cannot overcome all of these challenges.
The quality of our asset base and market selection continues to be the foundation of our growth.
Speaker 3: The quality of our asset base and market selection continues to be the foundation of our growth. The strength of our brand supported our talent retention and the dedication of our team allowed us to excel. GFL now stands with more than 18,000 employees, 9 provinces and 26 states in the U.S.
The strength of our brand supported our talent retention and the dedication of our team allowed us to excel.
GFS now stands at more than 18000 employees nine provinces in 2006 to eight in the U S.
Speaker 3: Every day we go out and we drive to win. I think it's safe to say that no one will outwork us, and I believe that's what distinguishes us from others.
Every day, we go out and we drive to win I think it's safe to say that no one will outwork us and I believe that's what distinguishes us from others.
Speaker 3: Count them up not to take the easiest path, but to take the most accretive path.
<unk> been asked not to take the easier path, while the take the most accretive path.
The proof is in the headline results revenue for the year grew by over 40%.
Speaker 3: The proof is in the headline results. Revenue for the year grew by over 30%.
Speaker 3: Our adjusted EBITDA grew closer to 40%. Adjusted free cash flow grew over 50%. And we have exceeded expectations for eight consecutive quarters of the public company.
Our adjusted EBITDA grew closer to 40% adjusted free cash flow grew over 50%.
And we have exceeded expectations for eight consecutive quarters as a public company.
Speaker 3: How are we able to consistently achieve these results? I believe that GFL is different. The collective equity ownership of our management team far exceeds that of any others in our industry, and I believe that alignment drives a relentless focus on long-term value creation.
How are we able to consistently achieve these results I believe that <unk> is different.
Collective equity ownership of our management team far exceeds that of any others in our industry and I believe that alignment drives a relentless focus on long term value creation.
We are laser focused on the levers of our growth strategy that has guided us since our IPO drive organic growth and margin expansion rationalize our balance sheet to optimize our asset base and reduce that cost and execute on strategic accretive acquisitions.
Speaker 3: We are laser focused on the levers of our growth strategy that have guided us since our IPO. Drive organic growth and margin expansion, rationalize our balance sheet to optimize our asset base, and reduce debt costs and execute our strategic accretive acquisition.
Speaker 3: ESG continues to be a focus. It is core to our organic growth strategy. We released our updated sustainability report for 2020 and Q4 and we will be releasing our sustainability action plan with our ESG targets, goals and objectives in our 2022 sustainability report later this year.
ESG continues to be a focus it is core to our organic growth strategy. We released our updated sustainability report for 2020 in Q4, and we will be releasing our sustainability action plan with our ESG targets goals and objectives in our 2022 sustainability report later this year.
Speaker 3: As we'll discuss later in more detail later in the call, traffic in 2022 includes investments in our recycling business, in fleet conversion to CMG and in RNG projects at our landfills to support our sustainability action plan commitment.
I will discuss later in more detail later on the call Capex in 'twenty <unk> includes investments in our recycling business and fleet conversion with EOG and an LNG projects at our landfills to support our sustainability action plan commitments.
Speaker 3: In the face of the pandemic, we deployed $2.3 billion on 46 acquisitions.
In the face of the pandemic, we deployed $2 3 billion on 46 acquisitions with our focus on rationalizing our balance sheet. We were also a seller of assets when it makes sense to ensure we are achieving the highest and best return from our asset base.
Speaker 3: With our focus on rationalizing our balance sheet, we were also a seller of assets when it makes sense to ensure we are achieving the highest invest return from our asset base.
Speaker 3: In 2021, we sold non-core assets in three separate divestitures, from which we realized approximately $260 million in proceeds.
In 2021, we sold noncore assets in three separate divestitures from which we realized approximately $260 million in proceeds, giving us additional capital to deploy into higher organic growth opportunities in our base business.
Speaker 3: giving us additional capital to deploy into higher organic growth opportunities in our base business.
Later in this call we will discuss our plans for our infrastructure services business, which is more involved in the divestitures, we've done to date, but the underlying strategy is consistent.
Speaker 3: Later in this call, we will discuss our plan for our infrastructure services business, which is more involved than the divestitures we have done to date, but the underlying strategy is consistent, taking the path that we believe will drive the greatest value for our shareholders from our assets.
Taking the path that we believe will drive the greatest value for our shareholders from our assets.
Speaker 3: As I mentioned, rationalizing our balance sheet also means focusing on our capital structure. So I'll touch briefly on our view of the impact of higher interest rates.
As I mentioned rationalizing our balance sheet also means focusing on our capital structure. So I'll touch briefly on our view of the impact of higher interest rates.
Speaker 3: I think you need to look at GFL differently than other industry players who are already investment grade. As our credit quality continues to improve with our increasing pre-cash flow, we still have lots of room to decrease our cost of capital. We believe that the spread compression on rates, we can realize as a result of that improvement in our credit quality, will mitigate the risk of higher interest rates.
I think if you just look at GSL differently than other industry players who are already investment grade.
As our credit quality continues to improve with our increasing free cash flow, we still have lots of room to decrease our cost of capital.
We believe that the spread compression on our rates, we can realize as a result of that improvement in our credit quality will mitigate the risk of higher interest rates.
Speaker 3: In pulling this all together, I believe that 2021 is another example of GFL executing on what we said we were going to do when we went public.
Pulling this altogether I believe that 2021 is another example of GFS executing on what we said we were going to do when we went public.
We buy when we see accretive opportunities, we prune when we see opportunities to deploy our capital and we invest when we see opportunities to add complimentary line for a business like R&D and doing all of that we create value for our shareholders.
Speaker 3: We buy when we see creative opportunities. We prune when we see opportunities to deploy our capital. And we invest when we see opportunities to add complimentary lines to our business, like RNG and doing all of that. We create value for our shareholders.
Speaker 3: I'll now pass the call over to Luke who will take us through the financial results and guidance.
I'll now pass the call over to Luke who will take us through the financial results and guidance.
Speaker 4: Thanks Patrick. I'll pick up on page five of the presentation. Revenue for the quarter increased over 25% compared to the prior year period, which was 125 million greater than the guidance we provided in November . While the outperformance was primarily driven by contributions from M&A, we also exceeded our targets for solid waste pricing and volume, which came in at 5.1% and 3.4% respectively.
Patrick I'll pick up on page five of the presentation revenue for the quarter increased over 25% compared to the prior year period, which was $125 million greater than the guidance. We provided in November while the outperformance was primarily driven by contributions from M&A. We also exceeded our targets for solid waste pricing and volume which came in at five one.
And three 4% respectively.
Speaker 4: The price growth was 80 basis points better than Q3 and was supported by a pull forward of price increase plans in certain US markets to respond to cost inflation.
The price growth was 80 basis points better than Q3 and was supported by a pull forward of price increase plans in certain U S markets to respond to cost inflation.
Speaker 4: Included in the volume growth is the impact of some opportunities to get ancillary revenues we picked up in our Western Canadian operations. Commodity prices softened versus the peak we saw in Q3, so that was a modest drag on the quarter as compared to guidance.
Included in the volume brokers being back to some opportunistic ancillary revenues, we picked up in our western Canadian operations.
<unk> prices softened versus the peak we saw in Q3, so that was a modest drag on the quarter as compared to guidance specifically on M&A, we saw meaningful volume in the tariff your liquid business continue straight through to December a deviation from the typical seasonality profile. We also saw growth exceeded expectations in certain of the new U S markets that came through the queue.
Speaker 4: Specifically on M&A, we saw meaningful volume in the Terrapur liquid business continue straight through to December , a deviation from the typical seasonality profile. We also saw growth exceed expectations in certain of the new U.S. markets that came to the Q4 2020 acquisition.
For 2020 acquisitions.
Speaker 4: It's not uncommon to have imperfect information on the contribution cadence of recent M&A, and as of late, COVID-related disruptions and then subsequent catch-ups have compounded some of this forecast uncertainty. Infrastructure and solar remediation continue to see delays in the start-up of new projects, but our pipeline of new opportunities remains robust and our outlook for this segment, as we finally get the other side of COVID restrictions, is exceptionally positive.
Not uncommon have been perfect information on the contribution cadence of recent M&A and as of late Covid related disruptions and then subsequent catch ups are compounded some of this forecast uncertainty.
Infrastructure and soil remediation continued to see delays in the startup of new projects, but our pipeline of new opportunities remains robust and our outlook for this segment as we finally got the other side of Covid restrictions is exceptionally positive.
Speaker 4: On page 6, you'll see adjusted EBITDA for Q4 of $388.3 million at a margin of 25.2%. The decline in commodity prices, outperformance of the relatively lower margin M&A contributors, and the ancillary Western Canadian revenues all combined to partially offset the base number for margin that was largely in line with guidance.
On page six you'll see adjusted EBITDA for Q4 of $388 3 million and a margin of 25, 2%.
The decline in commodity prices outperformance of the relatively lower margin M&A contributors and the ancillary western Canadian revenues, all combined to partially offset the base number for margin that was largely in line with guidance.
Speaker 4: While internal cost inflation continues to rise and now sits around 4, we view this quarter as a continued demonstration of the capacity of our platform to respond with price levels that not only cover the cost escalation but drive organic margin expansion as well.
While internal cost inflation continuing to rise announcements around four we view. This quarter is the continued demonstration of the capacity of our platform to respond with price levels that not only cover the cost escalation, but drive organic margin expansion as well.
Speaker 4: Looking at each of the segments, solid waste margins were 30% or better every quarter this year, a first for the company and a result that is all the more impressive when considering the inflationary backdrop under which it was achieved.
Looking at each of the segments solid waste margins were 30% or better every quarter. This year, a first for the company and our resolve that is all the more impressive when considering the inflationary backdrop under which it was achieved.
Speaker 4: Excluding the impact of M&A, macro headwinds and certain one-time both collection volumes, margins expanded organically 20 basis points quarter over quarter, driven by pricing and overall operating leverage. The margin drive from rising fuel prices was partially offset by benefits from commodity pricing. For the year as a whole, solid waste margins expanded 90 basis points with organic margin expansion in both of our geographies.
<unk> the impact of M&A macro headwinds and certain onetime both collection volumes margins expanded organically 20 basis points quarter over quarter, driven by pricing and overall operating leverage the margin drag from rising fuel prices was partially offset by benefits from commodity pricing.
For the year as a whole solid waste margins expanded 90 basis points with organic margin expansion in both of our geographies.
Speaker 4: Liquid waste margins were 21.7% for the quarter and were impacted by the outsize and diluted revenue contribution from Terapur.
Liquid waste margins were 21, 7% for the quarter and were impacted by the outsized and diluted revenue contribution from tariff your.
<unk> margins are right in line with exceptions, and we can do with expectations and we continue to see a path to bring the therapy liquid revenues up too and then above the average margin for liquid segment for the year as a whole liquids margins increased 80 basis points, overcoming 100 basis point headwind from M&A and demonstrating the operating leverage.
Speaker 4: Tera-Pyr margins are right in line with exceptions, and we continue to see a path to bring the Tera-Pyr liquid revenues up to and then above the average margin into the liquid segment.
Speaker 4: For the year as a whole, liquid margins increase 80 basis points, overcoming 100 basis point headwind from M&A and demonstrating the operating leverage associated with post-COVID volume recoveries that we have forecasted.
Stated with post Covid volume recovery that we had forecasted.
Speaker 4: Infrastructure and soil margins improved over 400 basis points period over period as the soil volumes recovery continued and we were able to leverage the relatively fixed cost structure of the segment.
Infrastructure and soil margins improved over 400 basis points period over period as the soil volumes recovery continued and we were able to leverage the relatively fixed cost structure of this segment.
Speaker 4: While the first part of 2022 will be challenging on margins from a quarter over quarter comparison perspective, we are confident in our ability to continue to use our pricing levers as well as cost and asset-based optimization to drive sustained and ongoing margin expansion over the near and longer term.
While the first part of 2022 will be challenging on margins from a quarter over quarter comparison perspective, we are confident in our ability to continue to use our pricing levers as well as cost and asset base optimization to drive sustained and ongoing margin expansion over the near and longer term.
On page seven you can see adjusted cash flow from operating activities of $321 million or 33% increase over the prior period, we completed another asset divestitures during the quarter, bringing total proceeds from asset disposals for the year to approximately $260 million.
Speaker 4: On page 7, you can see adjusted cash flow from operating activities of $321 million, a 33% increase over the prior period. We completed another asset divestiture during the quarter, bringing total proceeds from asset disposals for the year to approximately $260 million. As previously discussed, we are redeploying these dollars into attractive, high-return growth initiatives within the base business.
As previously discussed we are redeploying these dollars into attractive high return growth initiatives within the base business.
Because of the success of our portfolio rationalization efforts outpaced our ability to redeploy the proceeds into the business. We have a timing difference between dollars received a $1 deployed.
Speaker 4: Because the success of our portfolio rationalization efforts outpaced our ability to redeploy the proceeds into the business, we have a timing difference between dollars received and dollars deployed. As such, for the annual adjusted pre-cash flow reconciliation, we've included an adjustment to exclude the excess proceeds realized from asset disposal with the intent of burdening the adjusted pre-cash flow number with a normalized level of capex.
As such for the annual adjusted free cash flow reconciliation. We've included an adjustment to exclude the excess proceeds realized from asset disposals with the intent to burdening. The adjusted free cash flow number with a normalized level of Capex. When we discuss our guidance for 2022 will provide additional color as to how we're thinking about the treatment of these excess proceeds.
Speaker 4: When we discuss our guidance for 2022, we'll provide additional colors to how we're thinking about the treatment of these excess proteins.
Speaker 4: During the quarter, we normalized for an incremental $5.6 million of working capital related to recent M&A that we believe is better characterized as part of purchase price. We believe our cash collection toward the end of December were modestly impacted by disruptions from the rapid spread of Omnicron over the holiday period. And also, our working capital was negatively impacted by just under $10 million as a result of the required repayment of 2020 payroll taxes previously deferred under the CARES Act.
During the quarter, we normalized for an incremental $5 6 million of working capital related to recent M&A that we believe is better characterized as part of the purchase price. We believe our cash collection towards the end of December were modestly impacted by disruptions from the rapid spread of omnicom over the holiday period and also our working capital was negatively impacted by just under 10 million.
As a result of the required repayment of 2020 payroll taxes previously deferred under the cares Act.
Despite this $10 million to $20 million working capital headwind, we realized over $540 million of adjusted free cash flow for the year. Our results ahead of our guidance and representing over 50% growth as compared to the prior year an outcome that we believe continues to demonstrate the attractiveness of our ongoing free cash flow growth opportunities.
Speaker 4: Despite the $10 to $20 million working capital headwind, we realized over $540 million of adjusted free cash flow for the year, a result ahead of our guidance and representing over 50% growth as compared to the prior year, an outcome that we believe continues to demonstrate the attractiveness of our ongoing free cash flow growth opportunities.
Speaker 4: Turning to page 8, in terms of net leverage, we ended the year as anticipated at 4.75 times, in part due to the previously announced issuance of US$300 million per bird equity.
Turning to page eight in terms of net leverage we ended the year as anticipated a 475 times in part due to the previously announced issuance of $300 million preferred equity.
Speaker 4: We deployed approximately $1 billion into 17 acquisitions during the quarter. Now over 900 million of this was completed when we last spoke in November , so it was about $90 million deployed into nine tuck-ins as the net new number since we last spoke.
We deployed approximately $1 billion into 17 acquisitions during the quarter.
Now over $900 million of this was completed when we last spoke in November . So it is about $90 million deployed into the nine tuck ins has been net new numbers. Since we last spoke for all of the acquisitions completed during the year, we expect to generate annualized revenues of approximately $785 million.
Speaker 4: For all the acquisitions completed during the year, we expect to generate annualized revenues of approximately $785 million.
We previously guided towards a rollover of approximately $450 million related to M&A, we still believe that to be inaccurate net number is the new $50 million of revenue acquired since our last guidance is largely offset by the timing differences related <unk> and the incremental negative rollover from incremental divestitures.
Speaker 4: We previously guided towards a rollover of approximately $450 million related to M&A. We still believe that to be an accurate net number as the new $50 million of revenue acquired since our last guidance is largely offset by the timing differences related to Terapur and the incremental negative rollover from incremental divestitures.
Speaker 4: From a liquidity perspective, we start the year with nearly $200 million of cash on hand and an undrawn revolver, which we think is an ideal setup, providing maximum optionality as we evaluate growth opportunities for 2022.
From a liquidity perspective, we started the year with nearly $200 million of cash on hand, and an undrawn revolver, which we think is in the ideal setup, providing maximum optionality as we evaluate growth opportunities for 2022.
Picking up on page 10, we wanted to highlight what we believe to be the final significant step in our near term portfolio rationalization initiatives.
Speaker 3: Picking up on page 10, we wanted to highlight what we believe to be the final significant step in our near-term portfolio rationalization initiative.
Speaker 3: Our infrastructure and soil remediation segment is comprised of two divisions with two different margin profiles. A mid-team service component and a high 20 soil division. The soil division is a service line that the entire industry participates in, but the services division has a different investment profile relative to our core solid and liquid weight business.
Our infrastructure and storm Aviation segment is comprised of two divisions with two different margin profiles are mid teen service component and a high 20 <unk> Division.
So our vision is a service line that the entire industry participate Tim but the services division has a different investment profile relative to our core solid and liquid waste businesses.
We believe that our services Division leadership team is best in class and will thrive because given the opportunity to invest incremental growth capital into its business.
Speaker 3: We believe that our Services Division leadership team is best in class and with Thrive has given the opportunity to invest incremental growth capital into its business.
Speaker 3: That investment has been tempered under the GFL as we have been focused on deploying capital into our solid and liquid waste business.
That investment has been tempered under the GSL as we've been focused on deploying capital into our solid and liquid waste businesses.
On page 11, we outline our plan.
Speaker 3: On page 11, we outline our plan. We will bring together our services business with Cocoa Paving to create a leading infrastructure services growth vehicle called Green Infrastructure Partners.
We will bring together our services business with Coco paving to create a leading infrastructure services growth vehicle called Green infrastructure partners.
Speaker 3: Coco is a leading vertically integrated civil infrastructure company with highly complementary assets and service offerings to our existing infrastructure business.
<unk> is a leading vertically integrated civil infrastructure company with highly complementary assets and service offerings to our existing infrastructure business I will be the chairman of the new entity and oversee the new management team, which will be a mix of existing GSL and cocoa leaders.
Speaker 3: I will be the chairman of the new entity and oversee the new management team which will be a mix of existing GFL and CoCo leaders. With $180 million of pro forma EBITDA and meaningful M&A pipeline, we see a highly attractive value creation opportunity by spinning off the infrastructure services business and allowing it to capitalize on the value creation that we believe will far exceed its value within GFL.
With $180 million of pro forma EBITDA and meaningful M&A pipeline, we see a highly attractive value creation opportunity by spinning off the infrastructure services business and allowing it to capitalize on the value creation that we believe will far exceed its value within <unk>.
The form of the transaction, we will see us sell the infrastructure business, the green infrastructure partners for cash and equity interest in the new entity.
Speaker 3: The form of the transaction will see us sell the infrastructure business to green infrastructure partners for cash and equity interest in the new entity. When complete, we will no longer recognize the results of infrastructure services within GFL's financial statement. Instead, we will carry our investment in green infrastructure partners that we can monetize over time as value is created.
When complete we will no longer recognize the results of infrastructure services within GFS financial statements. Instead, we will carry our investment in green infrastructure partners that we can monetize overtime as value is created.
While the timing of infrastructure services divestitures still a moving target we intend to execute the plan in the near term.
Speaker 3: While the timing of the infrastructure services the venture is still a moving target, we intend to execute the plan in near term.
Page 12 illustrates the impact of the Divesture to GFS post transaction in summary weighted of solid waste in the portfolio increases.
Speaker 3: Page 12 illustrates the impact of divestiture to GFL post-transaction. In summary, the weight of solid waste in the portfolio increases, even a margins increase, and the Retained Soar and Mediation Division will be combined with our liquid waste segment and renamed Environmental Survey Case, simplifying our overall segment reporting.
Our margins increase and the retained so our mediation division will be combined with our liquid leaf segment and renamed Environmental services simplifying our overall segment reporting.
Speaker 3: And finally, while not listed on the page, we think there's an opportunity to take the cash component of the consideration we got for the infrastructure business and redeploy into near-term M&A opportunities to backfill the divestment infrastructure services EBITDA.
And finally, while not listed on the page, we think Theres an opportunity to take the cash component of the consideration we talked to the infrastructure business and redeploy into near term M&A opportunities to backfill the divested infrastructure services EBITDA.
With the increase in our leading a solid waste and the opportunity for near term M&A. This reaffirms our conviction that there is still a lot of opportunity for growth within our solid waste business, both organically and through accretive acquisitions I'll now pass it back to Luke talk about further while reviewing our guidance.
Speaker 3: With the increase in the leading of solid waste and the opportunity for near-term M&A, this reaffirms our conviction that there is still a lot of opportunity for growth within our solid waste business both organically and through reprieve of acquisition.
Speaker 3: I'll now pass it back to Lou to talk about further while reviewing our guidance.
Speaker 4: So starting on page 15, we've laid out the details for the guide. We followed the same format as last year, so hopefully that makes it easy to follow. Page 15 reiterates the levers Patrick mentioned earlier that we intend to continue to pull and create equity value. We believe we have demonstrated capabilities in each of these areas since we went public. We think the opportunities set looking forward is even greater than what we've accomplished to date.
So starting on page 15, we've laid out the details for the guide we follow the same format as last year. So hopefully that makes it easy to follow page 15 reiterate the lever as Patrick mentioned earlier that we intend to continue to pull and create equity value. We believe we have demonstrated capabilities in each of these areas. Since we went public we think the opportunity set looking forward is even greater than what we've accomplished to date.
Looking at page 16, we've laid out I would see it all coming together on the top line solid waste pricing at high fours or 400 basis points better than the prior year in response to inflationary cost pressures.
Speaker 4: Looking at page 16, we've laid out how we see it all coming together on the top line. Solid waste pricing at high scores, a full 100 basis points better than the prior year in response to inflationary cost pressures. There could be upside to the pricing number depending on retention rates and actual CPI levels of the time that each of our various resets get calculated.
There could be upside to the pricing member number depending on retention rates and actual CPI levels at the time that each of our various resets get calculated.
Speaker 4: Follow-ways volume at a point to a point and a half. We expect to anchor at the high end of this range with the opportunity to beat if Canada can once and for all move beyond the lingering lockdown disruption.
Volume at a point to a point and a half we expect the anchor at the high end of this range with the opportunity to be a candidate for once and for all move beyond the lingering lockdown disruptions.
Speaker 4: Commodity prices are plus 0.25%, whereas non-recurring commodity volumes that we benefited from in 2021 are just over a half a point headwind. So the net commodity impact we expect to be about 40 basis points dragged. The commodity forecast assumes January's net basket price of approximately $170 Canadian per metric ton, which was about $25 less than where the basket was when we provided our outlook in November , which decreased as an impact of about $20 million to revenue EBITDA and pre-cash flow.
Commodity prices are plus two 5%, whereas nonrecurring commodity volumes that we benefited from in 2021 or just over half a point headwind. So a net commodity impact we expect to be about 40 basis point drag the commodity forecast assumes january's net basket price of approximately $170 Canadian per metric ton, which was about $25 less than where the bask.
It was when we provided our outlook in November a decrease as an impact of about $20 million the revenue EBITDA and free cash flow.
Speaker 4: Liquid and infrastructure expected generate 5 to 6% top line growth, largely unexpected volume recovery associated with the reopening. The net M&A rollover, including the approximate $40 million negative rollover from Dev Estuators, is expected to be around $450 million. The guidance assumes an FX rate of 1.26 versus the 1.25 average in 2021.
Liquid and infrastructure expected to generate 5% to 6% top line growth largely unexpected volume recovery of social.
With the reopening the net M&A rollover, including approximately $40 million negative rollover from divestitures is expected to be around $450 million. The guidance assumes an FX rate of $1 two six versus the 125 average in 2021.
Speaker 4: That brings you just over $6.3 billion of revenue at the midpoint, or just over 15% growth, excluding the negative drag from divestitures.
That brings me just over $6 3 billion of revenue at the midpoint or just over 15% growth excluding the negative drag from divestitures in the last half of the bridge you can see that we've backed out the standalone guidance for the infrastructure services business that we plan to spin out as Patrick said the timing of the spin out is still a moving target, but we intend to execute the plan in the near term and we will.
Speaker 4: In the last step of the bridge, you can see that we have backed out the standalone guidance for the infrastructure services business that we plan to spin out. As Patrick said, the timing of the spin out is still a moving target, but we intend to execute the plan in the near term and we'll segregate the results from this division until the transaction is consummated. The last bar on the page, which excludes contribution from infrastructure services, shows 5.875 as a midpoint, and this is the number we would highlight as 2022's base revenue guide.
Segregate the results from this division until the transaction is consummated.
Last bar on the page, which excludes contribution from infrastructure services shows 575 at the midpoint and this is the number we would highlight the 'twenty twos 2020 twos based revenue guide.
Turning to page 17, you'll see that revenue range is listed on page 16 convert to <unk> 10 of adjusted EBITDA and $6 80 of adjusted free cash flow, including infrastructure as I mentioned previously the contribution of adjusted EBIT and free cash from commodity prices, but $20 million less than we provided our preliminary outlook in November .
Speaker 4: Turning to page 17, you'll see that revenue range is listed on page 16, convert to 1710 of adjusted EBITDA and 680 of adjusted pre-cash flow, including infrastructure.
Speaker 4: As I mentioned previously, the contribution adjusted EBITDA and free cash from commodity prices by 20 million less than we provided our preliminary outlook in November .
Speaker 4: Those are the numbers for the business as a whole. We've also presented in the blue highlighted column the guidance excluding our infrastructure services. 1645 of adjusted EBIT and 640 of adjusted free cash at the midpoint. Again, these are the base numbers that we think you should be expecting for 2022 before considering the impact of any net new M&A, which we'll touch on in a moment.
Those are the numbers for the business as a whole. We've also presented in the Blue highlighted column the guidance, excluding our infrastructure services $16 45 of adjusted EBIT at $6 40 of adjusted free cash at the midpoint.
These are the base numbers that we think you should be expecting for 2022 before considering the impact of any net new M&A, which we'll touch on in a moment.
Speaker 4: In terms of the walk from adjusted EBITDA to adjusted pre-cash against the 1645 of EBITDA, we're expecting net cap-backs of around $615 million, cash interest expense of approximately $340 million, neutral working capital, and other net drags of approximately $50 million.
In terms of the walk from adjusted EBITDA and adjusted free cash against the <unk> 45 of EBITDA.
<unk> net capex of around $615 million cash interest expense of approximately $340 million neutral working capital and other net drags of approximately 50 million.
Speaker 4: No incremental M&A and all three cash flows used for de-levering, the results of which you can see at the bottom of the page with leverage ending and low force.
No incremental M&A and all free cash flow is used for Delevering. The result of which you can see at the bottom of the page with leverage ending in low fours.
Speaker 4: On page 18, we unpack our capex for both 2021 and 2022. In 2021, we had normal course capex of $540 million. Offsetting this amount was $260 million of proceeds we received from the divestitures. And as anticipated, we were able to redeploy just over $110 million of these proceeds into growth initiatives within our business. The remaining 150 million proceeds that we did not deploy during 2021 are normalizing as excess proceeds and expect to invest these dollars in 2022.
On page 18, we unpack our Capex for both 2021 and 2022 and 21, we had normal course capex about $540 million offsetting this amount was 260 million of proceeds we received from the divestitures and as anticipated we were able to redeploy just over $110 million of these proceeds into growth initiatives within our business.
The remaining 150 million proceeds that we did not replace during 2021 are normalizing as excess proceeds unexpected investing dollars in 2022.
Speaker 4: Looking at the 2022 bridge at the bottom of page 18, we've identified approximately 150 million of incremental growth opportunities, substantially all of which will be funded with excess proceeds from 2021.
Looking at the 22 bridge at the bottom Vijay team, we've identified approximately $150 million of incremental growth opportunities substantially all of which will be funded with excess proceeds from 2021.
Speaker 4: These investments are centered around new and material upgrades to existing recycling facilities, continued investment in the infrastructure and asset bases of certain new markets, and RNG development. Again, all this investment is being funded by the proceeds from our rationalization program. So another way of thinking about these dollars is simply a timing difference between when the cash was received and when it will be spent. This bridge does not reflect any cash proceeds for the sale of infrastructure division, as we intend to reinvest those dollars into M&A.
These investments are centered around new and material upgrades to existing recycling facilities continued investment in the infrastructure and asset basis of certain new markets and RMG development again all of this investment is being funded by the proceeds from our rationalization program. So another way of thinking about these dollars is simply a timing difference between when the cash was received and when it will be spent.
The bridge does not reflect any cash proceeds received from the sale of infrastructure division as we intend to reinvest those dollars into M&A.
Speaker 4: Consistent with past practice, our guidance does not include any impact from future M&A. As Patrick mentioned, our M&A pipeline is robust, and page 19 has summarized how we were thinking about the landscape. It is an option toESE
Consistent with past practice, our guidance does not include any impact from future M&A as Patrick mentioned, our M&A pipeline is robust and page 19, and summarize how we are thinking about the landscape. There is one larger transaction within our footprint that could largely backfill the infrastructure services EBIT, we have carved out in our guidance this opportunity will be immediately accretive and.
Speaker 4: There's one larger transaction within our footprint that could largely backfill the infrastructure services we have carved out in our guidance.
Speaker 4: This opportunity will be immediately accretive and actionable in the first half of 2022.
Actionable in the first half of 'twenty. Two then on top of this larger opportunity. We anticipate continued execution of our regular tuck in M&A program. We highlight this opportunity the $250 million to $300 million of incremental revenue across 25% to 30 transactions, but history has shown that there is upside to this number if you think about those as potential upside opportunities.
Speaker 4: Then on top of this larger opportunity, we anticipate continued execution of our regular tucking M&A program. We highlight this opportunity as $250 to $300 million of incremental revenue across 25 to 30 transactions. A history has shown that there's upside to this number. If you think about those as potential upside opportunities, page 20 shows that if executed, we could exit 22 with adjusted EBIT at $1.8 billion and adjusted pre-cash flow of $730 million on a run rate basis.
Page 20 shows that if executed we could exit 'twenty two with adjusted EBITDA of $1 8 billion and adjusted free cash flow of $730 million on a run rate basis.
Speaker 3: Page 21 has an overview of our RNG opportunities and while not highly relevant for 2022 guidance, we wanted to frame how this ties into how we're thinking about 2023.
Page 21 is an overview of our R&D opportunities and while not highly relevant for our 2022 guidance. We wanted to frame how this ties into how we're thinking about 2023.
Speaker 3: We are contemplating using the 50-50 joint venture structure arrangement with third parties from the development of the landfill sites where we think there are viable RNG projects. Using conservative assumptions, we think our portion of the aggregate incremental free cash flow from these sites could be $150-200 million per annum.
We are contemplating using the 50 50 joint venture structure arrangements with third parties from development of the landfill sites, where we think they are a valuable R&D projects using conservative assumptions, we think our portion of the AGR mint aggregate incremental free cash flow from these sites could be $150 million to $200 million per annum.
Speaker 3: We have finalized arrangements for the first four sites during the process of finalizing the next five sites and the expectation that our portion of adjusted cash flow from these nine sites will be $105 to $125 million per year.
We have finalized the arrangements for the first four site during the process of filing the <unk> site and the expectation that our portion of adjusted free cash flow from these non site will be $105 million to $125 million per year.
Our portion of the expected capital outlay for these non project is $150 million to $180 million. The majority of which will be spent in 2023.
Speaker 3: Our portion of the expected capital outlay for these nine projects is 150 to 180 million, the majority of which will be spent in 2023.
Speaker 3: We see RNG as a great add-on to our core business, but it will not distract us from our focus on continuing to invest in the fundamental organic and M&A levers to drive our continued growth that we highlighted earlier.
We see R&D as a great add on to our core business, but it will not distract us from our focus on continuing to invest in the fundamental organic and M&A levers to drive our continued growth that we highlighted earlier.
Speaker 3: On page 23, you will see we start with our potential 2022 run rate.
On page 23, you will see we start with our potential 2022 run rate.
Speaker 3: as this conservative estimate of the RNG opportunity to normal course and to normal course organic and M&A assumptions in 2023 and we end with an adjusted pre-cash flow run rate in the big 900 setting a clear path to exceed 1 billion in 2024.
As this conservative estimate of the RMG opportunity to normal course, and the normal course organic and M&A assumptions for 2023, and we end with an adjusted free cash flow run rate in the mid nine hundreds setting a clear path to exceed 1.1.
$1 billion in 2024.
Speaker 3: As many of you have followed GFL through our history, we think you'll see that there is a consistent theme when we have these calls with you every quarter. As owners, our senior management team is fully aligned with our shareholders. Our 2021 results again reaffirm how that alignment drives this management team to achieve industry-leading results even in the face of the most challenging times.
As many of you have followed GFS of our history. We think you will see that there is a consistent theme. When we have these calls with you every quarter as owners our senior management team is fully aligned with our shareholders. Our 2021 results again reaffirm how that alignment drives this management team to achieve industry, leading results even in the face of the most challenging times.
I am very proud of what we've achieved so far and I've never been more optimistic about what GFS future holds I will now turn the call over to the operator to open the line for questions.
Speaker 3: I'm very proud of what we've achieved so far and I've never been more optimistic about what GFL's future holds. I'll now turn the call over to the operator to open the line for questions.
Speaker 2: Thank you. As a reminder, if you would like to ask any questions, please press star followed by one on your telephone keypad now or the track icon if you have joined us online.
Thank you as a reminder, if you would like to ask any question. Please <unk>.
Followed by one on your telephone keypad now what the <expletive> icon, if youll have joining us online.
Speaker 2: When asking a question, make sure your phone is unmuted locally. The first question comes from Hansa Maciri from Jefferies. Please, Hansa, your line is now open.
When asking a question make sure youre falling suddenly it locally.
Next question comes from Hamzah <unk> from Jefferies. Please handset your line is now open.
Speaker 5: Good morning. Thank you. You know my first question Maybe for Luke is just on free cash flow. You know it looks like the sector You know organically grows free cash flow in general high single digits Maybe if you add M&A maybe it's 10% or slightly higher You know your your free cash flow profile and growth Appears much higher than peers, and and you know we it looks like it's approaching a billion in the out here Maybe walk us through you know what you're doing differently. How sustainable is this? You know do you just feel like your markets have less competition? I know there's some mixed differences in Canada versus us But just walk us through you know confidence level in that free cash flow profile And and and why your numbers are a lot higher than peers?
Good morning, Thank you.
My first question.
Maybe for Luke is just strong free cash flow.
It looks like the sector.
Organically gross free cash flow in general high single digits, maybe if you are the M&A, maybe it's 10% or so.
Likely higher.
Your free cash flow profile and growth.
Appears much higher than peers.
It looks like it's approaching a 1 billion in the out year maybe.
Maybe walk us through.
What youre doing differently, how sustainable is this.
Or do you just feel like Joe markets have less competition I know there is some mix differences in Canada versus U S.
But just walk us through confidence level in that free cash flow profile.
And why your numbers are a lot higher than peers.
Speaker 4: Yeah, thanks, Hansa. Good morning. I mean, I think it's a great question. It's one that we sort of sit around and think about a lot when we look at where the sort of stock price is and try and correlate the sort of two of them. I mean, I think you're right. The normal model in this industry is you have mid-single-digit top line with a little bit of margin expansion, and at the bottom line, it equates to sort of, you know, high single-digit pre-cash flow. I think when you look at our business, there has been a sort of market selection, quality of the asset base, and all the opportunity we have in the middle.
Yes, Thanks, Hans and good morning.
I think it's a great question is one that we sort of sit around and think about a lot. When we look at where the stock prices and try and correlate the sort of two of them. I mean, I think you are right. The normal model and this industry is you have mid single digit top line with a little bit of margin expansion and at the bottom line at a quake.
High single digit free cash flow I think when you look at our business.
Market selection and quality of the asset base and all the opportunity we have in the middle we see an opportunity before considering the capital structure to beat that through the margin expansion. So even at sort of 5% top line growth I think we can eke out a little bit of incremental margin year over year, which is going to help drive a bigger number at the free cash flow line and when you couple that with.
Speaker 4: we see an opportunity before considering, you know, the capital structure to beat that through the margin expansion. So even at a sort of 5% top-line growth, I think, we can eke out a little bit of incremental margin year over year, which is going to help drive a bigger number at the free cash flow line. And when you couple that with what I think is a unique opportunity solely for GFL, which is the delevering profile, and if you think today about that interest cost, as we're able to leverage that interest cost line going forward as we've reached the inflection point of self-funding, you know, our growth, there's a meaningful accretion at the free cash flow line that comes from that. And I think you put those factors together, you can take what a normal core grower is at sort of eight or nine, and organically, you can see that at low to mid sort of teens as a result of what I think is that unique advantage for GFL, you know, tied to the market and the cap structure. Then on top of that, when you look at, you know, what we've been able to achieve and look to continue to achieve in these sort of organic redeployments, I think you have another sort of five to seven basis points easily as sustainable for the next few years on that piece, right? And that's how all of a sudden Brokery Cash will grow up to a sort of, you know, high teens, low 20% number. Then you layer on M&A on top of that, and you look at the numbers we're suggesting, let's say it was 50%, next year it's 30% that this conservative guide would give me, the year above is another 30%. Like, I think there's a real unique opportunity that's compounded by not just the outside M&A and other, but just an organic opportunity that's unique to the industry. And, you know, I think in time, as, you know, I've heard people say the results are noisy, but as that noise subsides, I think you'll clearly be able to see this organic growth rate at the free cash flow far in excess of years, and then complemented, if you will, by all this other value-added items.
What I think is a unique opportunity solely for GSL, which is the delevering profile, you think today, but that interest costs as we are able to leverage that interest cost line going forward as we've reached the inflection point of self funding.
Our growth there is a meaningful accretion at the free cash flow that comes from that and I think you put those factors together you can take what are normal course grower or is it sort of eight or nine and organically you can see that at low to mid teens. As a result of what I think is a unique advantage for GSL tied to the markets and the cap structure that on top of that when you look at.
What we've been able to achieve and look to continue to achieve in.
These sort of organic redeployment. So I think you had another sort of five to seven basis points easily are sustainable for the next few years on that piece right and Thats about where all of a sudden of our free cash flow growth up to a sort of high teens low 20% number and then you layer on M&A on top of that I mean, you look at the numbers. It was 50% extra 30% that is conservative guidance.
The year above is another 30% I think there is a real unique opportunity that's compounded by not just the outsized M&A and other but just on an organic opportunity that's unique to the industry.
I think in time.
I've heard people say the results are noisy, but as that noise. Aside I think you'll clearly be able to see this organic growth rate at the free cash flow far in excess of peers and then complemented if you will by all this other value added items, we've been looking at.
Speaker 5: Got it. You know, the other question would just be on the infrastructure announcement. You know, it's pretty clear, but could you just talk about
Got it.
The other question would just be on the infrastructure.
<unk> smart.
It's pretty clear, but could you just talk about.
Speaker 5: What kind of proceeds do you expect? Is it too early? What does your equity pickup look like in terms of percentage ownership you want to keep? I know Patrick, you're going to be chairman of that business.
Yes.
What kind of proceeds do you expect is it too early.
Is what does your equity pick up look like in terms of percentage ownership you wanted to keep.
Patrick you are going to be chairman of that business.
Speaker 5: you know, is that distracting? You know, is that business going to grow to be much larger? Is BC partners going to be involved in that? Just, you know, any more detail around the execution of that.
Is that distracting.
That business is going to grow to be much larger.
As BC partners is going to be involved in that just any more detail around.
Joe.
The execution of that.
Speaker 3: Sure. So, I mean, for some people that don't know the story, I mean, we organically built that business starting really in late 2009, early 2010.
Sure.
I mean, some people I don't know the story I mean, we organically built that business starting really in late 2009 early 2010.
Speaker 3: and have grown that business really over an eight-year period between 2010 and 2018, free us thinking about starting to go public and what that would look like in the public realm. And grew that from zero to revenue today in excess of $500 million on the combined infrastructure.
And have grown that business really over an eight year period between 2010 and call. It 2018 free thinking about starting to go public and what that would look like.
In the public realm and.
Move up from zero.
Revenue today in excess of $500 million and the combined sort of infrastructure business.
Speaker 3: It's always been my view that there's a significant opportunity to create a GFL 2.0 in the infrastructure services business. When we were a private company, we were doing that ourselves.
It's always been my view that there is a significant opportunity to create <unk>.
<unk> two point also in the infrastructure services business.
When we were a private company, we were doing that ourselves.
And it was less relevant to how we sort of looked and felt compared with the industry peers.
Speaker 3: And it was less relevant to how we sort of looked and felt compared to the, you know, the industry peers.
Speaker 3: I think we have a best-in-class management team in that business line. And, you know, young, hungry, very successful guys, industry leaders in Canada, and we just saw this opportunity. I mean, the easiest path would be just, you know, we could just sell it. But I think from my perspective, why would we sell something when we know there's a significant amount of value to be created for us as shareholders? That team reports to me today already, so it's not as if I'm getting more reports.
I think we have a best in class management team and that in that business line.
Beyond Hungary, very successful Guy's industry leaders in Canada.
And we just saw this opportunity I think the easiest path would be just we can just sell off but I think from my perspective, while we sell something where we know there is a significant amount of value to be created.
For us as shareholders that team reports to me today already so it's not as if it was getting more reports.
Speaker 3: You know, they have lots of great ideas and you know, Coco being, you know, one of the great ideas we've had over the last couple years being, you know, an industry leader in Canada, one of the most successful best family-run businesses in Canada.
They have lots of great ideas.
<unk> being one of the great ideas, we've had over the last couple of years being.
And industry leader in Canada, one of the most successful best family run businesses in Canada.
Speaker 3: right down the middle of the fairway of what GFL likes to do and you know it worked and you know that got the brain sort of thinking on my side about what we do and this created the opportunity to sort of spin that out. I think when you look at what makes sense for us.
Right down the middle of the fairway of what GFS likes to do.
And work that got the blame sort of thinking on my side of it what we do and this created the opportunity to sort of spin that out I think when you look at what makes sense for us.
Speaker 3: you know the thought process is as we said spin it out.
The thought process same thing as we said spin it out keep it leverage neutral so I will get back.
Speaker 3: Keep it leverage neutral so get back, whatever, coach, the round numbers a quarter of a billion dollars of proceeds.
Coach for round numbers, a quarter over $1 billion of proceeds and then get left with just under 50% equity stake in the new entity and we're going to go and build it and I think overtime as we build it.
Speaker 3: and then get left with just under a 50% equity stake in the new entity, and we're gonna go and build it. And I think over time as we build it, we're gonna create significant value for our shareholders. And starting with a pro forma, just call it roughly 180 million, I don't see any reason why we can't take 180.
We're going to create significant value for our shareholders and starting with our pro forma EBITDA just call. It roughly $180 million I don't see any reason why we can take 182 1 billion over sort of five six years, there's a significant amount of opportunity significantly under service.
Speaker 3: to a billion over sort of five, six years. There's a significant amount of opportunity, significantly underserviced.
Speaker 3: and highly fragmented. And when you start with a business, the quality of ours, you know, if you look at industry comps, this combined entity will have, you know, margins that are four to six hundred basis points higher than the industry norm because of the quality of the two businesses.
We remain highly fragmented and when you start with the business the quality of ours.
You look at industry comps this combined entity will have.
Margins that are four to 600 basis points higher than the industry norm because of the quality of the two businesses.
Speaker 3: So it's a very unique opportunity. It'll be a great opportunity for our investors to participate in that have followed the GFL story. And for GFL shareholders that have been a part of it that are gonna contribute over the gate, it's a great opportunity as well. So I think it's a win-win for everybody and I think we'll just create a lot more value than we probably could have if we just would have sold it off.
It's very unique opportunity it will be a great opportunity for our investors to participate in that followed the GSL story.
And for <unk> shareholders that have been a part of it that are going to contribute out of the gate, it's a great opportunity as well. So I think it's a win win for everybody and I think we will just create a lot more volume.
If we just sold it off.
Yeah.
Speaker 5: And then just last question, I'll turn it over. You have a lot going on. You have these free cash flow numbers in a lot of detail after 2023, and people can probably project beyond that. You've been public for two years, Patrick. Stock's been volatile. It's been a good stock last year. Obviously, the market does what it does. But maybe talk about your role at GFL. Do you plan to see this whole thing through? Do you plan on being here over a decade? How are you thinking about your role given, obviously, you have a lot of network tied into this, but also you've created a ton of value in the private market for yourself and others and how do you imagine that going forward?
And then just last question I'll turn it over.
You have a lot going on you have these free cash flow numbers and a lot of detail on 2023.
People can probably project beyond that.
You've been public for two years.
Craig stock spend.
Volatile.
It's been a good stock last year.
Obviously the market does what it does.
Maybe talk about.
Your role our GFS.
Do you plan to see this.
See this whole thing through do you plan on being here over a decade, how are you thinking about.
Overall.
Given obviously you have a lot of network tied into this but also you've created a ton of value in the private market for yourself and others over.
Speaker 5: the last decade plus.
The last decade plus.
Yeah.
Speaker 3: Yeah, I mean, we're locked and sort of unpacked there, but I think from what we've seen today...
Lots of sort of unpack, there, but I think.
So where we sit today.
I think.
Speaker 3: You know, we get a lot of, I can't control the stock price, right? Like there's certainly like control. All I can control is allocating capital, making the right decisions for the business that I think are going to create value over the long term.
We get along.
Can't control the stock price certainly led control all I can control is allocated capital, making the right decisions for the business, but I think youre going to create value over the long term, that's what I've done here for sort of 15 years and I don't think thats going to change anytime soon.
Speaker 3: That's what I've done here for sort of 16 years. And I don't think that's going to change anytime soon. You know I think as we continue getting respect from the industry as this thing continues to season I'm not going to be happy until I see this change starts go from you know wherever it's 32 33 US to 100 US. And I think.
I think as we continue getting respect from the industry. As this thing continues to season I'm not going to be happy until I see the stock go from wherever it's 32% 33 U S 100 U S and I think that's at the tip of our fingers.
Speaker 3: That's at the tip of our fingers. I think, you know, I think.
I think I think.
Speaker 3: you know, there's always been sort of the under-promise and over-deliver approach, I think you see that. I think we've, you know, investors have asked us what the pieces of the puzzle look like, and I think that's why we came out and gave you the pieces of puzzle. I don't think there's a more attractive story in the industry today. We're in an amazing industry with amazing peers that have been successful over a long period of time.
<unk> always been under promise and over deliver approach I think you see that I think we.
Investors have asked us what the pieces of the puzzle look like and I think Thats why we came out and gave you the pieces of puzzle I don't think there is a more attractive story in the industry. Today, we are in an amazing industry with amazing peers that have been successful over a long period of time and there's no better industry that I'd want to be in today than this one and I think there is a significant amount of value.
Speaker 3: There's no better industry that I want to be in today than this one. And I think there's a significant amount of value that can be created here over the next little while. And I dare say I'm here because I want to win. I don't need to be here for a paycheck.
That can be created here over the next little while and again.
Again, I think I'm here, because I want to win I don't need to be here for a paycheck.
Speaker 3: I have enough money, but like anything, I'm here to make money and make more money, and I'm going to make more money for everybody that's on this call. So we're going to take the 33 and we're going to get to 100, and we're not going to stop until we get there. And when we get to 100, then we'll realign our goals, but that's where I sort of feel the opportunities here and where we're going to go.
I have enough money, but like anything you have to make money and make more money and I'm going to make more money for everybody Thats on this call. So we're going to take the 33 and we're going to get to 100, and we're not going to stop until we get there when we get to 100, then when we align our goals, but that's where I sort of feel the opportunities here and where we're going to go.
Okay got it and you are still a young guy. So you have a lot of time. Thank you.
Speaker 5: got it and you're still a young guy so you have a lot of time thank you
Yes.
Yeah.
And one of them all hold hands with my wife.
We're going to keep working until we get there.
Thanks.
Thank you.
Speaker 2: Thank you. Our next question comes from Michael Hoffman from Stitel. Please, Michael, your line is now open.
Thank you. Our next question comes from Michael Hoffman from Stifel. Please Mike Your line is now open.
Speaker 4: Hi, thank you very much. I'm going to tackle green infrastructure for a second. Just so you're putting in your fifty five million you're getting half of the value you put it in for cash and then the equity interest. That's how we got these numbers right. You then got one hundred eighty million starting number. Throw it call it four or five percent organically at 20 million a day that from M&A.
Hi, Thank you very much.
I'm going to tackle drain infrastructure for a second just so.
If you are putting in your $55 million or getting the value as you put it in for cash and then the equity interest.
If I got these numbers right. You then got a 180 million starting number EBITDA.
Call it 45% organically at $20 million of EBITDA from M&A.
Speaker 4: That's a 210 number. Take it public. It appears at 10 to 12. That's a $2.1 billion enterprise value. I don't know. You can leverage it 4 and 1 half times, take out $900 million. That's sort of 1.16.
That's a $2 10 number taken public appears a 10 to 12.
$2 $1 billion enterprise I don't know you can lever at four five times take out $900 million sort of 1.16.
Speaker 4: forty five percent of that five hundred twenty nine dollars that's your value plus the equity cash that right way for everybody should think about that
45% of that is $520 million, that's your value plus the.
The cash is that.
The right way everybody should think about that.
Speaker 4: Yeah, my bad, I think that math is very good. I mean, I think there's probably more of an opportunity. It all depends on when you would actually want to take the thing public. But yeah, and if you do that, you're getting close to sort of 2x on your equity. And so while it may look on the basis of it today that maybe, you know, the 55 isn't getting maximum value, following that logic you just described, we think you're going to end up monetizing that significant premium to what you would otherwise get for today. And that's the exact rationale. And if things go well, it could be a multiple higher than what you just said.
Yes, yes.
That math is very good I mean, I think there's probably more of an opportunity. It all depends on when you would actually want to take the big public and if you do that youre getting close to sort of <unk> on your equity and so while it may look on the face of it today that may be.
The 55 isn't getting maximum value following that logic. You. Just described we think you're going to end up monetizing that at sub.
Significant premium to what you would otherwise get for today and that's the exact rationale and if things go well the multiples are higher than what you just said.
Right.
Speaker 4: Right. And I'm using all the low end of things. I'm not trying to overstate the state and take a conservative view. That's how you create the incremental value for the shareholders. It's not sure you could sell 55 at 12 times or something. This is creating in a relatively short window of time. Your Montgomery Countyangan trap has been frequently researching how to calculate what's needed for someone to essentially Wan Miamistores is vineyard is now in365History.com
Using all the low end of things I'm not trying to overstate stay to take a conservative view, that's how you create incremental value for the shareholders. It's not sure you could sell 55 at 12 times or something this is creating in a relatively short windows of time.
Calculate what the path to the upside there.
Correct.
Okay.
Speaker 6: Okay, good. All right, 2022.
Alright.
2022.
Speaker 6: Part of being a young company and in the development mode and all the growth, I get the adjustments.
Part of being a young company and in a development mode in all of the growth.
I get the adjustments.
Absent noise people talk about.
Speaker 6: It's 30% of your adjusted free cash flow at the midpoint, our adjustment. I didn't get that number.
It's 30% of your adjusted free cash flow at the midpoint our adjustment.
I didn't get that number of sub 10.
When.
Speaker 4: Yeah, I mean, maybe I hear people talk about adjustments. I mean, it's a level set.
Yeah.
Maybe I'll give me pause either adjustments I mean to level set I mean really what we're adding back never mind blowing up the cap structure in past years with the IPO really where we're adding back is sort of $25 million a year at this pace of rebranding where we're painting everything bright green and you can see that as you travel all over the country.
Speaker 4: I mean really what we're adding back, never mind blowing up the cap structure in past years with the IPO, really what we're adding back is sort of $25 million a year at this pace of rebranding, where we're painting everything bright green and you can see that as you travel all over the country. And you know, that's a strategic decision that we do with this M&A and you know, you can debate that. But we say look, that is unique as we're in growth mode and there's that $20 million. Then you have $16 million a year roughly of transaction costs. I mean you look at the last four years.
The strategic decision that we deal with is M&A and you can debate that but we'd say about that is unique as we are in growth mode in that $20 million spend you had $60 million a year roughly a transaction cost I mean, you look at the last four years.
Speaker 4: We've done over 125 deals and deployed over $11 billion.
We've done over 125 deals and deployed over $11 billion and across all of that but 60 million Bucks a year and transaction costs of $240 million in aggregate over 40 years and transaction cost to deploy 11, $11 $2 billion, let's say, 2% so.
Speaker 4: And across all of that, about 60 million bucks a year in transaction costs. So $240 million in aggregate over four years in transaction costs to deploy $11.2 billion. I mean, that's, I think, 2%.
Speaker 4: So, you know, what I've said to both is if we're deploying capital at these levels, there's going to be transaction costs associated with that. I mean, we don't pay bankers, we, you know, put these lawyer fees and etc. sort of add up and that's what it is. I'd say if you look at the last three years, I think those, that number has been like $60 million every year. And the pre-cash flow has went from a negative to $300 to $500 on its way to $9.
As I said to folks is if we are deploying capital at these levels. There is going to be transaction costs associated with that I mean, we don't pay bankers we know.
The lawyer fees and et cetera sort of add up.
What it is I would say if you look at the last three years I think.
That number has been like $60 million every year and the free cash flow was went from a negative to 300 to $500 weighted nine so.
Speaker 4: You know, I think the relative quantum of that number is naturally going to decrease through the growth of the free cash. And obviously if we're not growing...
I think the relative quantum of that number is naturally going to decrease through the growth of the free cash and obviously, if we're not growing free cash at 50% a year.
Speaker 4: free cash at 50% a year, you know, augmented with the M&A, that number's gonna come down. But if we're deploying this year $2.3 billion across 46 transactions, I think $60 to $60 million is a fair number of where that's gonna shake out. So I mean, that's the way I think about that. I do think though, your comment about the percentage, that's naturally just coming down in meaningful steps as the base number is growing.
Is that the M&A that number is going to come down, but if we are deploying this.
This year $2 3 billion across 46 transactions, I think $50 million to $60 million.
A fair number of where that's going to shake out. So I mean, that's the way I think.
Think about that I do think though your comment about the percentage that's naturally coming down in meaningful steps as the base number is growing.
Great I think that helps clarify.
Speaker 6: Great. I think that helps clarify how to think about how dissonant that noise really is. You introduced the idea that we ought to think about margins, first half, second half. You want to walk us through the cadence so everybody gets that right.
Think about how distant at that noise really as you introduce the idea that we ought to think about margins first half second half do you want to walk us through the cadence so everybody can get that right.
The street numbers don't end up with them.
Speaker 6: street numbers don't end up with a, you can drive a truck for it. Yeah, so.
Right right.
Yeah. So.
Speaker 4: So starting form, we've included in the deck like a full form for next, for recapping 2021 if you backed out infrastructure. So just so we can have a sort of right level set comparison. If you think, we're not going to give the quarterly guidance. I mean, Q1.
So the starting point we've included in the deck like a pro forma for next for of Recasting 2021, if you back that infrastructure. So just so we can have a sort of right level set comparison. If you think we are.
Not going to give the quarterly guidance that in Q1.
Speaker 4: historically it's sort of 22 to 23 percent of annual revenue in a normal seasonality case. Now as I said, seasonality is sort of getting a little bit wonky. You know in Canada, with
Historically, it's about a 22% to 23% of annual revenue and the normal seasonality cadence now as I said seasonality is sort of getting a little bit wonky in Canada.
Speaker 4: with the COVID starts and stops, but do you take 22 and a half?
But with the Colgate is borrowings and stops, but if you take 22 five.
Speaker 4: 22.5% times the midpoint of the revenue range, that's $5.9 billion. I think that's a good sort of revenue number for Q1.
29% at the midpoint of the revenue range.
$5 9 billion.
Sort of a revenue number for Q1, I think typically Q1 is the lowest margin quarter.
Speaker 4: I think typically Q1 is the lowest margin quarter, the tune of 150, 200 basis points.
Tune of 150 to 200 basis points, David thinking about high 20 Sevens as the blended number for next year.
Speaker 4: So if you're thinking about high 27s as the blended number for next year, you know, you see Q1 is sort of, call it high 25s. I really think if you unpack that, you have, you know, solid will be a tough comp last year. If you look at last year, Q1, solid US was its highest margin of the year, which is very atypical for Q1. So normalizing for that, you know, solid's going to have a tough comp. Liquid, you know, the new liquid will have some expansion. And you know, you can bank on the corporate cost bucket being about sort of 3%. So that's how I see Q1 shaking out. Then Q2, Q3, and Q4, I think will follow that sort of typical seasonality, catered peak margins in Q3, you know, and rounding out the year, you know, ending at that sort of high 27, low 28s as per the guide.
Youll see Q1 and sort of.
Call. It a high 20 fives I really think if you unpack that you have.
Solid will be a tough comp last year. If you look at last year Q1.
Solid U S with its highest margin of the year, which is very atypical for Q1. So normalizing for that salt is going to have a tough comp liquid and illiquid will have some expansion.
You can bank on the corporate cost bucket being about sort of 3%. So that's how I would see Q.
Q1 shaking out in Q2, Q3, and Q4 I think we'll follow that sort of typical seasonality cadence you'll peak margins in Q3.
And rounding out the year.
Ending at that sort of high 27 28 for the guide.
Speaker 6: Okay. And then Patrick, I don't think you're going anywhere. You have, I think you have four kids under the age of 10. So, you know, you're going to go to work every day. Talk about your bench strength.
Okay.
And then Patrick.
I don't think Youre going anywhere you have.
If you have four kids under the age of 10, so youre going to go to work every day right.
Talk about your bench strength.
Speaker 3: um obviously being public you know
Alright.
Hi.
Yes.
We're going to do an investor day.
Yes, it's obviously been public.
A week before Covid hit in March of 2020, we haven't really had the opportunity to sort of showcase.
Speaker 3: a week before COVID hit in March of 2020, we haven't really had the opportunity to sort of showcase.
Speaker 3: Showcase the team And you know where I sit today, yeah from my perspective I don't know the other yeah, I don't know the other teams, but what this team's been able to accomplish at the end of the day I'm here. I'm a cheerleader right on I'm cheering on
The team.
And you know where I sit today.
From my perspective, I don't know the other haynesville.
Haynesville what this team has been able to accomplish at the end of the day I'm here I'm, a cheerleader right I'm cheering on.
Speaker 3: you know, starting with sort of Greg Yoorston through the sort of, you know, Luke and his team, through the HR team, through the integration team, the BD team, you know, general counsel. As we go through the whole list, from my perspective, Rice is the hand-picked team, best in class management team that have delivered exceptional results quarter after quarter for a long period of time.
Starting with sort of Greg Yours, then through to sort of look and his team through the HR teams and the integration team the BD team.
General Counsel as we go through the whole list from my perspective, <unk> Best in class management team that has delivered exceptional results quarter after quarter for a long period of time.
Speaker 3: When we look at that, I think that is a big thing. When you look at the solid waste, which is a lion's share of our business, when you look at the results...
And when we look at that I think that is a big thing when you look at the solid waste, which is the lion's share of our business. If you look at the results that <unk> been able to pump and execute on and the amount of M&A in the face of all these inflationary pressures and all the other things I think it's exceptional.
Speaker 3: that this team has been able to put and execute on and the amount of M&A in the face of all these inflationary pressures and all the other things, I think it's exceptional. And you know I look forward to showcasing that team when we do our investor day in May, you know we haven't picked a date exactly yet because we're just waiting to see what happens with COVID but I think
And I look forward to showcasing that team when we do our Investor day in May we haven't picked the date exactly yet because we're just waiting to see what happened with Colgate, but I think.
Speaker 3: When that onion gets peeled back and people get to look under the hood, you know, if Patrick gets hit by a bus tomorrow, I think it's going to be pretty clear that GFL is going to be just fine. So, you know, I think we have all of the relevant pieces of that management team in place.
When that gets pulled back and people get to look under the Hood.
And Patrick get hit by a bus tomorrow, I think it's going to be pretty clear that <unk> was going to be just fine. So I think we have all of the relevant pieces of that management team in place.
Speaker 3: And you're just doing and executing and continue to do great things. And it's really amazing to watch because, you know, from, you know, starting on a scale, being on a scale to sort of sitting where I am today and then being able to watch, you know, these guys execute the playbook, it's pretty amazing. And, you know, I take my hat off to them because you know what?
And Youre, just doing executing and continue to do great things and it's really amazing to watch because you know from from starting on a scale of being on a scale of a sort of sitting where I am today, and then being able to watch these guys execute the playbook, it's pretty amazing.
I take my hat off to them because you know what.
Speaker 3: There's guys that are doing better job than I did when I was in the seat and you know.
So you guys are doing better job than I did when I was in the seat.
If it wasn't for them in these sort of hanging over the range, we wouldn't sort of be where we are.
Speaker 3: If it wasn't for them and me sort of handing over the reins, we wouldn't sort of be where we are. So, you know, I'm thankful to all of them for actually making that.
I am thankful to all of them financially, making that happen, but I look forward to showcasing an entire team in may when we do that investor day.
Speaker 3: But I look forward to showcasing that entire team in May when we do that investor day.
Okay. Thank you.
Thanks, Brian .
Thank you. Our next question comes from Tyler Brown from Raymond James Please Tyler Your line is now open.
Speaker 2: Thank you. Our next question comes from Tyler Brown from Raymond James. Please, Tyler, your line is now open.
Hey, good morning, guys.
Hey, Paul.
Speaker 4: Hey Paul. Can you guys hear me? Oh hey, sorry. Hey, obviously pricing was really solid. You know, it sounds like you pulled forward some PIs into Q4, but given the pull forward and the fact that CPI will layer in over the course of the year, just how does pricing look as the year plays out? Does it start high and fade or should it be pretty consistent as the year plays out?
Can you guys hear me, okay sorry.
Good morning, obviously pricing was really really solid it sounds like you pulled forward some pis in.
Into Q4, but given the pull forward in the fact that CPI will layer in over the course of the year just how does pricing look as the year plays out does it start high and stayed or should it be pretty consistent as the year plays out.
Yes.
Speaker 4: Yes, I still think we're anticipating to start high and then walk down, but with less fade than a sort of normal year. I mean Q1 and January particularly, we have about...
I think we're anticipating to start high and then walk down, but with less space than it sort of a normal year I mean Q1 in January , particularly we have about 40% approximately of our CPI resets are hitting then.
Speaker 4: 40% approximately of our CPI resets are hitting then. And then just a bunch of open market stuff is focused at that time as well. So Q1 will definitely be the biggest number.
And then just a bunch of all open market stuff is focused at that time as well. So Q1 will definitely be the biggest number.
Speaker 4: You know, we've guided sort of the high fours. I think there's maybe opportunity to beat, and I think Q1 will tell that tale.
We've guided to sort of the high fours I think there's maybe opportunity to beat and I think Q1 will tell that tail. So if you can see Q1 and it will be dependent on how the CPI resets actually hit and what the Retentions are like but if you see Q1 at a high fives I think thats going to set the stage for our beat for the year.
Speaker 4: So if you can see Q1 and it'll be dependent on how the CPI reset actually hit and what the retention are like, but if you see Q1 at a high five, I think that's going to set the stage for a beat for the year.
Speaker 4: But, you know, we'll see how that actually shakes out. But I think, you know, Q1 is the majority step down in Q2, and then consistently Q3 and Q4, albeit perhaps not as...
But we'll see how that actually shakes out, but I think of.
Q1 is the majority of step down in Q2.
And then consistently in Q3 and Q4, albeit perhaps not as big of a step downs as you would've seen in the sort of pre COVID-19 environment. Because we will have good support from large CPI is that hit in Q3, primarily in our U S book of business.
Speaker 4: big of a step down as you would have seen in the sort of pre-COVID environment because we will have good support from large CPIs that hit in Q3 primarily in our US public business.
Speaker 4: Right, okay, that's helpful. And then just real quick on RNG. So to be clear, you know, despite the JB structure that RNG CapEx will flow through the actual CapEx line. Is that right?
Right. Okay. That's helpful. And then just real quick on R&D, so to be clear. Despite the JV structure that RMG capex will flow through the actual capex lines that is that right.
Speaker 4: So as the structures aren't all finalized, that's still sort of in flux, but you know, either way we'll parse it out so you actually see the sort of apples to apples. If to the extent it manifests itself on certain transactions as investment in JV, we'll be sure to sort of reinvent and isolate so people can actually see the real underlying economic.
So.
The structures arent all finalized all of that still in flux, but either way, we will parse it out so you actually see the sort of apples to apples if to the extent, it's manifest itself on certain transactions as investment in JV, we'll be sure to sort of ring fence and isolate so people can actually see the real underlying economics.
Speaker 4: Okay, and then kind of in the same, along the same thinking here, but how in 23 will you account for the unconsolidated share?
Okay, and then kind of in the same along the same.
Thinking here.
In 'twenty three will you account for the unconsolidated share.
The EBITDA from those plants, well theyre, just simply be an add back to EBITDA, how will you show that.
Speaker 4: the Ipada from those plants. Will there just simply be an add back to Ipada? How will you show that financially? I know it's probably still in flux but just any thoughts there?
Financially I know, it's probably still in flux, but just any thoughts there.
Speaker 4: Yeah, I mean, again, in flux, just because all the agreements aren't sort of done, but I mean, if you look at practice, I mean, you know, you end up picking up your proportionate share of the sort of results of the JV. And, you know, if you look at those guys who in practice are already doing this, they exclude that and they add back their share of the EBITDA.
Yes, I mean again inflection because all those agreements on sort of done but I mean, if you look in practice you end up picking up your proportionate share of those sort of results of the JV and if you look at those guys who in fact is already doing this they exclude bat and AIG.
Back their share of the EBITDA right. So there is.
Speaker 4: Right, so there's, you know, other, if you look at other RNG players, I mean, Darling, just as an example, is one I was looking at that has a bunch of these, you know, as what the precedent might look like. But yeah, I think there's something about backing out the normal course accounting and then just layering in your share of the EBITDA is probably how that ends up shaking out.
If you look at other R&D players I mean Darling just as an example is when I was looking at that has a bunch of these.
As what the precedent might look like but yes, I think there is something about backing out the normal course accounting and then just layering in your share of the EBITDA is probably how that ends up shaking out.
Speaker 4: Okay, okay, that's my last one. And I appreciate the pro formas in the appendix. But when you layer in terra pure just for modeling purposes, will that new environmental services line be about a billion dollars in revenue? Is that kind of a good placeholder?
Okay. Okay. That's helpful. Just my last one and I appreciate the pro forma is in the appendix, but when you layer in Terra pure just for modeling purposes will that new environmental services line.
$1 billion in revenue is that kind of a good placeholder.
Speaker 4: No, that's a perfect place. I think about 2022 is a billion dollars of environmental services and 4.9 of solid, you know, on the base, the base guide. Okay. Okay. Perfect. All right.
Yes.
That's a perfect place I think about 2022 was $1 billion of environmental services and $4 nine a solid on the base the base guidance okay.
Okay perfect Alright, I appreciate the time thanks, guys.
Thanks.
Thank you. Our next question comes from more of a test Brooklyn from RBC capital markets. Please.
Speaker 2: Thank you. Our next question comes from Walter Sparkling from RBC Capital Markets. Please, Walter, your line is now open.
Your line is now open.
Speaker 6: Thanks very much. Good morning everyone. So I want to come back on the renewable energy approach and Patrick your strategy on how to tap that resource that you have. And we've seen your competitors take or discuss and reveal some some other ways to do it more of a go it alone invest at all you know invest in only the entire thing. But then subject.
Thanks, very much good morning, everyone. So I wanted to come back on the renewable energy approach and Patrick your strategy on how to tap that resource that you have and we've seen your competitors take or discuss.
Reveal some some other ways to do it more of a go it alone invest at all.
Invest.
And on the entire thing, but then subject.
Speaker 6: a little bit to some of the volatility that would come with that higher level of investment. We're going to partner.
Little bit to some of the volatility that would come with that higher level of investment you're going to partner.
Speaker 6: approach. I'm hearing positive feedback on that relative to the other approach. Perhaps talk a little bit more about what led to your decision and how would you characterize
Approach.
I'm hearing positive feedback on that relative to the other approach, perhaps talk a little bit more about what led to your decision and how would you how would you characterize.
Speaker 6: the goat alone which being much more upside but perhaps with some more volatility.
The go it alone, which being much more upside, but perhaps with some more volatility.
Yeah I mean.
The way I mean, initially when we started talking about yes I think.
Speaker 3: The way I mean initially when we started talking about this, I think
If you went back if you sort of rolled back to Claude.
Speaker 3: If you went back, if you rolled back the clock eight months ago, I would say...
Eight months eight months ago, I would say.
Speaker 3: We knew very little about how to actually...
Very little about patent actually.
Speaker 3: harvest dollars from this RNG. I think some of those other companies that have been going at it alone have significantly more internal resource.
Harvest dollars from this R&D I think some of those other companies that have been going at it alone.
Are you, having any more internal resources.
Speaker 3: that have been looking at this for a while. So I think that was one thing. Yes, we could go and figure it out. I'm not looking at this as a core pillar of, you know, what I think they were.
That have been looking at this for a while so I think that was one thing yes, we could go and figure it out and not looking at this as a core pillar of.
At the end of the day, we're one environmental services company R&D is something we sort of found that was not going to be sort of a new.
Speaker 3: We're an environmental services company. RNG is something we sort of found that was not gonna be sort of a new business line where we were gonna stop doing exactly what we've been doing for the last 15 years. It was just like, how do we realize dollars as quickly as we can with experts that know how to do this, that can get a shovel in the ground as quickly as possible, that it's inventory to build out, the parts that they need to build out one of these facilities as quickly as possible, have the engineers on site and get us permitted, and most importantly, find the best back end to be able to maximize profitability on the scale of the actual RNG.
A new business line, where we were going to stop doing exactly what we've been doing for the last 15 years.
How do we realized dollars as quickly as we can with experts that know how to do this that can get a shovel in the ground as quickly as possible.
Inventoried.
Inventory to build out the <unk>.
So they need to build out one of these facilities as quickly as possible have the engineers on site and get it permitted and most importantly find.
Back end to be able to maximize profitability on the sale of the actual LNG overall things, we didn't know anything about six to eight months ago.
Speaker 3: Those were all things we didn't know anything about six, eight months ago.
Coupled together with.
Speaker 3: A lot of our sites had, you know, they already had gas rights that were given away, we had royalty agreements.
A lot of our sites pad.
I already had gas rates that were given away we had royalty agreements.
Speaker 3: which required our consent to switch those from the typical...
Which require our consent switch those from good.
Typical.
Speaker 3: you know, electric or flaring model to, you know, RNG. So that opened the door to have a discussion about, hey.
Electric or flaring model to RMG. So that opened the doors that have a discussion about hey, R&D certainly makes more sense and these all sort of electrical subsidized agreements, let's go R&D, but let's split 50 50, and it makes sense I think it's fair.
I think it will get it for the market as quickly as possible with experts that do this every day, we're somewhat we didn't have any.
Speaker 3: it'll get us to the market as quickly as possible with experts that do this every day, or some that we didn't have any in a division that we don't have expertise in. And you know it's hugely profitable. So I think you sort of couple that together. I think we learned a lot. I think if we have to go at it on our own today we probably could on some of these sites, but at the end of the day it's just something we're not sort of set up to do. And let's just let the let the expert do it because they're going to do it better than we're going to do it. It was just my perspective. Thank you.
The vision that we have expertise in and it's usually profitable. So I think there's been a couple that together I think we learned a lot I think if we have to go out on our own today, we probably cut on some of these sites, but at the end of the day. It's just something we're not sort of set up to do and let's just let's let the expert to it because theyre going to do it.
Speaker 3: But at the end of the day, it's just something we're not sort of set out to do. And let's just let the expert do it because they're going to do it.
Speaker 3: better than we're going to do it. It was just my perspective.
Better than we're going to do it.
My perspective.
Yes that makes a ton of sense.
Speaker 6: Yeah, that makes a ton of sense. Okay, switching gears here to pricing, service and churn.
Okay switching gears here to pricing service and churn.
Speaker 6: You know clearly you're driving price as is your as are your competitors. When a customer gets a big price increase they may have to take it but I think their lens gets a little more focused on.
Clearly youre driving price as is.
Are your competitors.
When a customer gets a big price increase they may have to take it but I think theyre lens gets a little more focused on.
Speaker 6: on getting the right service with the higher price, all things considered. Are you seeing either any...
Getting getting the right service with the higher price all things considered are you seeing either any any.
Any.
Speaker 6: Are you getting worried at all about any trends in TURN within your own organization? And or are you looking at any opportunities for TURN in other of your competitors that could see you grow market share as a result of this kind of very extreme pricing dynamic we're seeing emerge continuing into this year?
Yes.
Are you getting worried at all about any trends in churn within your own organization or <unk> or are you looking at any opportunities for churn in other of your competitors that could see you grow market share as a result of this kind of.
Very extreme pricing dynamic, we're seeing emerge continuing into this year.
Speaker 3: Yeah, for me it's an interesting time in the market, right, because even for us as, you know, companies, we're all having to be very selective about new business and ensuring that we're getting paid the appropriate...
Yeah.
For me, it's an interesting time in the market right because even for us.
Companies.
Having to be very selective about new business and ensuring that we're getting paid the appropriate.
Speaker 3: price to collect new business just for the simple fact that
Price to collect new business just for the simple fact that.
Speaker 3: You know, it's a challenging labor market. It's challenging to get new equipment. Everything has been slower. I think we've all navigated the situation as an industry very well. And I think the market is, we've all as competitors have been very disciplined to ensure that we continue getting price.
It's a challenging labor market, it's challenging to get new equipment everything has been slower I think we are all navigating this situation as an industry very well and I think the market is we've all as competitors and very disciplined to ensure that we continue getting.
Price to at least cover our internal cost inflation, Motherwell I don't think anyone.
Speaker 3: to at least cover our, you know, these internal costs and inflation measures. I don't think anyone's seen, you know, myself today in inflation, you know, high since it's been since 82.
That's all today depletion.
Since has been sent to ADT.
Speaker 3: I think there's very few industries like ours that have been able to sort of pass that on like we have.
I think there's very few industries like ours that have been able to surpass that all make behalf.
Speaker 3: So I don't think the focus, the focus of ours is not you know trying to go out and grab as much market share as we can based on some of the PIs that are going through the market. I think our customer base knows that you know the price is needed for us to be able to you know remain competitive and provide that service.
So I don't like to focus the focus of ours is not trying to go out and grab as much market share as we can based on some of the pis that are going through in the market I think our customer base knows that.
Price is needed for us to be able to remain.
We remain competitive and provide that service.
And they want to make sure that it's picked up on time and I think at the end of the luxury of our businesses, but the lion's share of our account for between two and $500 a month right. So even if they are getting a high single digit price increase I mean, it's not a material amount to them I think they have other bigger fish to fry than the normal.
Speaker 3: on time and you know I think if you have a day the luxury of our business is you know with the lion's share of our accounts are between two and five hundred dollars a month right so you know even if they're getting a you know high single digits price increase I mean it's not a material amount for them I think they have other bigger fish to fry.
Speaker 3: than they normally would. So I'm not seeing any, I think the market is understanding of it. Clearly the headlines every day in the papers around inflation and driver shortages and fuel and insurance.
So I'm not seeing any I think the market is understanding of it.
I mean, the headlines every day in the papers around inflation and driver shortages and fuel and insurance and.
Speaker 3: and R&M and supply chain shortage, you know, backlogs, all of those sort of coupled together have remained intact. I think all of us in the industry is...
R&M and supply chain shortage backlogs all of those sort of coupled together.
It remained kept all I think all of us in the industry as well.
Speaker 3: you know, a pretty loyal sort of customer base today. And it's not, people aren't driving to go out and win new market share just at any cost because it just doesn't make sense today, just given what's sort of happening in the industry. But I think that's where it sort of sits today, but nothing that worries me in any really rich way today. Okay. Perfect. Okay.
Pretty loyal customer base today, and it's not people aren't rising to go out and win new market share at any cost because it just doesn't make sense today, just given whats sort of happening in the industry, but I think that's where it sits today, but nothing that worries me in any which way today.
Perfect Okay.
I appreciate the time Patrick.
Thanks Walter.
Thank you. Our next question comes from Kevin Chiang from CIBC. Please Kevin Your line is now open.
Speaker 2: Thank you. Our next question comes from Kevin Chang from CIBC. Please, Kevin, your line is now open.
Speaker 4: Thanks for taking my question. If I could just clarify, I think Luke in your prepared remarks, you talked about when you get the bridge for 2022 and you highlighted the...
Thanks for taking my question, if I could just clarify I think Luke in your prepared remarks, you talked about when you get the bridge for 2022 and you highlighted.
Speaker 4: the upside to fall as we follow you. But you made a comment on basically Canada and maybe there's upside if we see more of a reopen. Just wondering what are you building in for recovery within
The upside to solid waste volume.
Made a comment on basically Canada and.
And maybe there is upside to us if we see more of a reopening just I'm just wondering what are you building in.
Coverage within.
Speaker 4: within your solid voice. Is it what we're seeing today in Canada, which is obviously pretty challenged, or do you see we kind of get back to some level of normalcy through the year?
Within your solid waste.
We're seeing today in Canada, which is which is obviously a pretty pretty challenge or do you assume we kind of get back to some level of normalcy through the year.
Yes, Kevin it's a good question to be honest, we're sort of getting tired of trying to pay your pin the tail on the donkey in Canada. So it's really.
Speaker 4: Yeah, Kevin, it's a good question. To be honest, we're sort of getting tired of trying to pettipin in the tail of a donkey in Canada. So it's really, you know, I think, you know, you're sitting here in Toronto with me today. We seem to be in the right direction. It's assuming we continue this.
I think you are sitting here in Toronto with me today, we seem to be in the right direction. It's assuming we continue this we get back another two weeks led to have full restaurants et cetera, and we continue on this progress if we all.
Speaker 4: We get back, you know, another two weeks, he lets us have full restaurants, et cetera, and we continue on this progress. If we all, you know, sort of get completely locked down again, obviously that would be a headwind. And if we, by this summer, we can actually be fully enjoying life again, that could be a tailwind.
Sort of get completely locked down again, obviously that would be a headwind and if we buy this summer we can actually be fully enjoying life again that could be a tailwind.
Speaker 4: So, you know, I think it's sort of middle of a fairway right now. I do think there's upside to the number because I'm very hopeful we don't go backwards from here. But, you know, we've tried to guess for the last two years and been wrong. So, sort of just taking a conservative approach this time.
So I think it's sort of middle of the fairway right now I do think there's upside to the number because I'm very hopeful we don't go backwards from here, but.
We've tried to guests for the last two years <unk> been wrong, so sort of just taking the conservative approach. This time.
Yes, I hear you.
Speaker 4: Yes, I hear you. I've stopped wearing suits and I'm only wearing track pants as I've been stuck at home as well. When I look at your 2023 run rate, you're implying about a 49%.
Our software and seats in the motorway trackpad, so they've been stuck at home as well.
Sure.
Just on your fleet and when you're looking at 2023 run rate.
Youre, implying about a 49%.
Speaker 4: pretty cashflow conversion. If I go back to the presentation you had this time last year, and you talked about what 2020 could look like, I think it was about mid-40s. I'm just wondering as we kind of look up maybe past 2023.
Free cash flow conversion, if I, if I go back to the presentation you had.
Time lost Jamie talked about what 2020 could look like.
I think it was about mid forties.
Just wondering as we kind of look out maybe 2023.
Speaker 4: Do you see yourself being a north of 50% free cash flow converting company? And I guess I ask that because it does seem like you have, you know, incremental free cash flow opportunities from RNG, which I suspect convert at a higher rate here. Any color that would be helpful.
Do you see yourself being a north of 50% free cash flow converting company and I guess I ask that because it does seem like you have.
<unk> free cash flow opportunities from R&D, which I suspect convert at a higher higher rates there.
That would be helpful.
Speaker 4: Yeah, so Kev, I think it's a little of that page you're looking at, there's some footnotes that I think are relevant, because really the RNG for simplicity on that page has just been layered into the pre-cash number. You can see the table on the page before that tees that up and the footnotes, but you're dividing the pre-cash into EBITDA, but it's not Apple's Apple. So when you do that, it would be more along that line in mid-40s. But to your point, we don't think that's the ceiling. As you go forward from here, you've heard Patrick say it, and we think this can go above mid-40s, and yet we're going to break through the 50% level and keep going from there. I think when you look fundamentally at the opportunity set that lies in front of us, and where the industry as a whole is going to echo Patrick's comment.
Yes, so Kevin I think that's a little of that page you are looking at there is some footnotes that I think are relevant because really the RMG for simplicity on that page is just been layered into the free cash number you can see the table on the page before that tee that up in the footnotes that youre dividing the free cash in the EBIT, but it is not apples to apples. So when you do that it would be more along that.
<unk> mid Forty's, but to your point, we don't think that's the ceiling.
Go forward from here you've heard Patrick said, we think this can go above mid forty's and yet we're going to break through the 50% level and keep going from there.
When you look fundamentally at the opportunity set that lies in front of us and where the industry as a whole is going to echo Patrick's comment.
Speaker 4: I don't think there's a ceiling there, and the asset base we have and the opportunity, we see a path to continuing that march to a point where we think we can be industry leading....
I don't think there is there is a ceiling there and the asset base, we have and the opportunity we see a path to continuing that March to a point, where we think we can be industry leading.
Excellent I'll leave it there thank you.
You very much for the clarification.
Thanks.
Speaker 2: Thank you. Our next question comes from Mark Neville from Scotia Bank. Please mark your line is now open.
Thank you. Our next question comes from Monica <unk> from Scotia Bank. Please Mark your line is now open.
Hey, good morning, guys.
Speaker 6: I appreciate all the closing remarks. Maybe just on the remaining environmental service business, is that something that you would consider sort of core long term? Is it saleable or would you sort of participate in that consulting remark as well?
I appreciate all of that squared watermark.
Maybe just on the.
The remaining environmental service business.
I mean is that something that you would consider sort of a core long term.
Salable or would you sort of anticipate participating consolidator.
Consolidating that market as well.
Speaker 3: I think as long as we can keep creating value, I mean obviously...
Hi.
Long as we keep creating value I mean, obviously, we will.
Speaker 3: we'll have this equity interest and you know I think the plan is to take that into the public and let people participate it in from the beginning and we'll keep it and you know again we have there's a very good plan behind that to significantly grow the equity value of that business sort of post IPO but you know I think we have the ability to monetize that over time and we'll do that once you know we create significant value.
This equity interest I think.
The plan is to take that Anthony public and let people participated in from the beginning and we will keep at it again.
There is a very good plan behind that to significantly grow the equity value of that business sort of post IPO.
I think we have the ability to monetize that over time.
And we will do that once we create significant value.
Speaker 3: Are you, sorry, you're talking about, are you talking about, this is actually talking about listening.
Sorry, you were talking about sort of how youre thinking like infrastructure you're talking about.
Speaker 3: The liquid, there will be the stub that will be left, the liquid and the soil. Oh, sorry, my fault, I misunderstood that. Oh, the liquid business is...
The liquid stuff that'll be less liquid in the soil.
Great.
Michael I misunderstood that.
The liquid businesses.
Speaker 3: It's great. I mean, like I said, I'm a shareholder first. Someone could pay a big number for it. I think, you know, looking at what we're public paid on the face of it for U.S. ecology, I think, you know, U.S. ecology was a, you know, high-teens business. You have our business that sits at high, you know, mid-20s margins, going to go to high-20s margins. You know, great.
It is great I mean, like I said I am a shareholder first somewhat to pay a big number four and I think looking at where Republic pay at all in the face of it for U S. Oncology I think you want to call you with a high teens business our business. That's at high mid Twenty's margins is going to go to high Twenty's margins.
Great similar comparable sort of asset base.
Speaker 3: similar, comparable sort of asset base. You know, they say sort of over 14 times for that. So I think from our perspective, you know, we think we have a similar business. Could be better in some ways, maybe not in other ways, but at least it sort of sets the benchmark of what sort of, you know, what value.
Over 14 times for that so I think from our perspective, we think we have.
Similar business could be better in some ways, maybe not novel ways, but at least it certainly sets the benchmark of what sort of value.
Speaker 3: and that's where we're sort of in the base case. But I think we're going to keep it. I think it's a great business.
That's where we're sort of in the base case, but I think we're going to keep it I think it's a great business.
Speaker 3: very comparable free cash flow margins to our existing business.
Very comparable free cash flow margins to our existing business.
Speaker 3: There's no reason not to keep it. You know, largely sort of focusing on the Canadian market today. So I think we're of the opinion we're going to keep it. It's a great business, why not? And we'll keep growing it with an exceptional management team with industry leading margins as well in that business. No, no, no thought to get out of that any time soon.
There is no reason not to keep it.
It's largely sort of focusing in the Canadian market today, So I think we're.
We are of the opinion, we're going to keep it it's a great business why not and we will keep growing it with an exceptional management team.
With industry, leading margins as well in that business. So no no more thoughts to get out of that anytime soon.
Speaker 4: Just on renewables, you gave some numbers for your capital investment. To get to the $1,500, roughly what's your investment required? To just look at it linearly.
Okay.
I just wonder renewables just.
You gave some numbers I think for the.
Your capital but.
Capital investment to get to the $1 5200.
Roughly what's sort of your investment required from just kind of looking at linear leaks.
Yes.
Speaker 3: It's a little bit of a moving target because we're negotiating. You know, I think some of the benefits of what we're working on today is the future capital commitments will be significantly less than the original deals and that's how some of the developers are differentiating themselves. So I think, you know, I think
We are a moving target because we're negotiating.
I think some of the benefits of what we're working on today with future capital commitments will be significantly less than the original deals.
And Thats all some of the developers are differentiating themselves.
So I think I think.
Speaker 3: There'll be minimal capital required from us for the future project that you see. So I don't think there'll be much more required given what we're negotiating with today.
Minimal capital required from our from us for the future projects that you see so I don't think there'll be much more required.
Given what we're negotiating with today.
Speaker 4: And maybe just one final point of clarification. When you report key one, even if the infrastructure hasn't closed yet, if the plan would be to report with that excluded, is that correct?
Okay.
And maybe just one final point of clarification.
A clarification when you report Q1.
The infrastructure hasn't closed yet, but the plan would be to report with that excluded is that correct.
Yes, Mark that's correct, whether it's officially done in the financial statements proper or I need to sort of pro forma do it in the report is still sort of TBD.
Speaker 4: Yeah Mark, that's correct. Whether it's officially done in the financial statements proper or I need to sort of perform I do it in the report, it's still sort of TBD. But either way, we will get you a clean sort of segment presentation, X infrastructure.
Either way, we will get you a clean sort of segment presentation ex infrastructure.
Sure.
Alright, alright, thanks Nice machine.
Thanks, Brian .
Thank you. Our next question comes from Jeremy Rebates from Goldman Sachs. Thanks, Jerry Your line is now open.
Speaker 2: Thank you. Our next question comes from Jerry Ruppet from Goldman Sachs. Jerry, your line is now open.
Yeah. Thanks, good morning.
Speaker 3: Yeah, thanks. Good morning. Patrick Luke on the some they have a million mmbtu of landfill gas projects. I'm wondering if you could talk about what proportion of that you expect to use as you build out your CG vehicle fleet versus other win three eligible applications and, you know, and what proportion you expect to go to industrial non win three applications based on the offtake plan.
Patrick Luke.
Suddenly.
Million Btu of landfill gas projects I'm wondering if you could talk about what proportion of that.
Do you expect to use as you build out your CG vehicle fleet versus other Realogy will applications.
And what proportion do you expect to go to industrial non win three applications based on.
The offtake plans.
Yeah. So we need we need about 10% of that volume and that will slightly grow that we're going to be putting that.
Speaker 3: Yeah, so we need about 10% of that volume, and that'll slightly grow, but we're going to have to put into our own vehicles and the transportation market. And then if you're left with 90,
Onto our own vehicles and that sort of transportation merger and then lots of 90.
<unk>.
Speaker 3: So we're in process, you know, and have negotiated some long-term arrangements, but I think what you'll see is most likely, you know, 50% of that, the remaining balance going into the sort of industrial commercial long-term agreement, and then the other 40% will continue into the transportation sort of live market today.
So we're in process.
We have negotiated some long term arrangements, but I think I think what youll see is most likely.
50% of that remaining balance going into the sort of industrial commercial long term agreement.
Path and then the other 40 will continue into the transportation market.
Got it.
Speaker 3: Patrick, when we last spoke about the topic, you had mentioned that industrial market price is in the 20s. Is that where it's shaking out? Any update as you spent more time with the business?
When we last spoke with topic, you had mentioned that industrial market prices in the <unk>.
<unk>.
Is that where it's shaking out.
As you've spent more time with it.
Sure.
It's still there obviously is the RIN pricing has moved up the pricing has moved up a bit.
Speaker 3: It's still there, obviously, as the RIN pricing's moved up. The pricing's moved up a bit.
Speaker 3: But what we're seeing now is the ability to
But what we're seeing now is the ability to actually share in the upside for example of RIN pricing went from.
Speaker 3: actually share in the upside if you know for example if written pricing went from you know it's called three dollars and twenty cents to three thousand forty times in rain to four or five whatever that wherever may go
It's called $3 in 2010 to 2040 <unk> in a range of four five whatever that wherever it may go.
Speaker 3: These new agreements are now, you have a sharing agreement that's sort of correlated to Linn pricing. So if they go up higher, then the long-term supply agreement has to pay more and they have to pay a portion back. So, it's even getting a little bit more lucrative than we originally anticipated back, you know, three, four months ago.
These new agreements are now you have a.
Sharon agreement that sort of correlated to when prices go up higher than the long term supply agreement has to pay more and they have to pay a portion back.
<unk> been getting a little bit more lucrative.
We originally anticipated back.
Three four months ago.
Okay terrific and then in terms of the plan to rollout.
Speaker 3: terrific. In terms of the plan to roll up the infrastructure and asphalt industry, not a lot of assets out there that can post.
Restructure in ASP.
Asphalt industry not a lot of it.
Assets out there that can.
Speaker 3: mid-teens, EBITDA margins. Can you just expand on what the M&A pipeline looks like for that part of the portfolio? How much heavy lifting will you folks need to do to get acquired businesses to the margin profile that your business and certainly CoCo is running at?
Post mid.
Mid teens EBITDA margins.
Can you just expand on what the M&A pipeline looks like for that part of the portfolio.
Okay.
Much heavy lifting will you folks need to do to get.
Acquired businesses the margin profile of that business.
Cocoa is running at.
Yes.
Speaker 3: Yeah, so I think it comes down to exactly what we did on the solid waste and liquid waste business, right? It's, you know, how are our assets performing, sort of where they are? And I think at the end of the day, you know, it comes down to market selection and finding the right market and the right places to go. The beauty of us operating in nine provinces in Canada and 26 states in the U.S.
It comes down to exactly what we did on the solid waste and liquidities business related.
How are how our assets performing sort of where they are and I think at the end of the day.
It comes out to market selection, finding great marketing Great places to go and I think the beauty of US operating nine provinces of Canada in 2016, and U S. We generally know what markets to be in and I think Youll think youll see us focused on markets that have better margin profile than others right so with that backdrop.
Speaker 3: we generally know what markets to be in and I think you'll see us focus on markets that have better margin profiles than others, right?
Speaker 3: With that backdrop, I think it'll be the exact same playbook that you've seen in the sort of GFL, the margin profile of GFL, and it's liquid-waste business and solid-waste business. So I think you'll continue to see that, and I think you'll continue to see us be very selectable about the markets we go into with that business and the quality of businesses that we acquire under that profile. So we'll continue to be our perspective on the industry leading business, and it should go pretty well.
It will be the exact same playbook that we that you've seen with sort of the GFS margin profile Tfl and politically things installing these businesses I think deal.
Im continuing to see that and I think youll continue the CSB very selective about the markets. We go into that business and the quality of businesses that we acquire under that profile. So we will continue to be our perspective.
Leading business.
And it should go pretty well.
Speaker 3: And lastly, you know, nice to see the pricing pull forward on the solid wayside. You know, I'm wondering as you look at the absences from Omen Krahman in the first quarter, you know, any new actions that you folks have implemented given, you know, higher overtime and other costs, you alluded to it in potential for pricing to be higher than what you're guided to. So I'm wondering how did that look through Jen and Fab as you folks have dealt with those constraints.
Okay, Great and lastly, nice to see the pricing pull forward on the solid waste side I'm wondering as you look at the absence of spring.
<unk>.
In the first quarter or any new actions that you folks have implemented given higher overtime and other other causes.
You alluded to it and the potential for pricing to be higher than what your guidance. So I'm wondering how does that look through Janet.
You folks have dealt with.
Those constraints.
Speaker 4: Yeah, look, obviously at the beginning of Jan, the sort of labor constraints, I think Omicron fortunately had a very sort of short fuse, and a lot of that sort of got behind us quite quickly. You know, I think...
Yeah look obviously, the beginning of Jan or labor constraints I think on the call. Unfortunately had a very sort of short fuse in a lot of that sort of got behind us quite quickly.
Thank.
Speaker 4: The pricing in Q1 is coming in sort of strong, as I said, at some of our strongest levels. And this is sort of keeps up throughout the quarter. I think there's opportunity to beat the high end of that guide that we had provided. Look, I think it's important to understand, the low end of the guide at four and a half, that's enough to cover the cost of inflation.
The pricing in Q1 is coming in sort of a strong as I said, our some of our strongest order levels and this is where it keeps up throughout the quarter. I think there is opportunity to beat the high end of that guide that we've provided I think it's important to understand the low end of the guide at four five that's the number that's enough to cover the cost of inflation so isn't it.
Speaker 4: So even at the low end of the guide, we're good.
The low end of the guide we're sort of we're good.
Speaker 4: I think the opportunity is to beat, you know, if ever achieved the high end, we'll beat the guide. And as I said, you know, in one of the earlier comments, I think Q1 will sort of tell the tale. First, you know, January , February is looking promising in terms of sort of retention, but we'll see by the time we get to the end of the quarter. Again, if that's sort of a high five number, you know, January is six.
I think the opportunity is to be achieved the high end or beat the guide and as I said one of the earlier comments I think Q1 will sort of tell the tale.
January and February is looking promising in terms of sort of retention, but we will see by the time, we get to the end of the quarter again, if thats sort of a high five number six I think thats. So it sets us up for the opportunity to sort of beat the guidance for the year, but I would just I think people shouldn't should rest assure that even the low end of the guide more than covers the.
Speaker 4: I think that sort of sets us up for the opportunity to sort of beat the guys of the year, but I just think people should rest assured that even the low end of the guide more than covers the current cost of inflation we're seeing.
The current cost inflation, we're seeing.
Terrific I appreciate the discussion thanks.
Thanks.
Speaker 2: Thank you. Our next question comes from Rupa Amre from National Bank. Please, Rupa, your line is now open.
Thank you. Our next question comes from Rupert <unk> from National Bank. Please <unk>. Your line is now open.
Speaker 7: Thank you, good morning guys. Patrick, on GIP, you mentioned 250 million cash GFL should receive from divestment of the infrastructure aspects and you gave us a rough estimate for the ownership space in GIP. Can you tell us what's left to do to finalize the economics on the deal when you might have that final plan?
Thank you and good morning, guys, Patrick J P. You mentioned $250 million cash Tfl should receive from divestment.
The infrastructure assets and you gave us some rough estimate from your ownership stake in VIP can you tell us what's left to do to finalize the.
<unk> on the deal when you might have that final plan.
Speaker 3: Yeah, I mean it's gonna come together sort of over the next, you know, five to six weeks You know, we're just looking at a bunch of sort of a structure of etc on a you know leading up to sort of, you know, getting that entity public in September and so that's all pretty fluid now, but That's generally the parameters of what you'll see
Yeah.
Come together sort of over the next.
Five to six weeks.
We're just looking at a bunch of sort of structure of et cetera.
Leading up to sort of getting that entity public in September so thats, all pretty fluid now.
That's generally the parameters of what Youll see.
Speaker 7: Okay, we do expect to be minority interest and have a joint venture accounting kind of along the lines of what you explained on RNG.
Okay.
To be minority interest in <unk>.
Joint venture accounting kind of along the lines of what you explained on R&D is that fair.
Speaker 4: I remember the equity accounting won't be a joint control as an unlikely outcome as Patrick said, it's still fluid, but probably non-controlling interest just to have a regular way equity accounting as opposed to actually joint venture accounting.
And it would be equity accounting it won't be.
<unk> control is an unlikely outcome as Patrick said, it's still fluid, but probably noncontrolling interests, just regular way equity accounting as opposed to actually joint venture accounting.
Speaker 7: Okay, great. And then you mentioned your asset rationalization is largely done. Are there any assets out there, any regions you might consider non-core? Do you anticipate seeing any other asset sales in 2022?
Okay, Great and then.
You mentioned your asset rationalizations, largely done or are there any assets out there any REIT changes you might consider non core.
Anticipate seeing any other asset sales in 2022.
Speaker 3: Yeah, there's a few things left to do, which we'll expect to get done Q1 and early Q2, sort of well underway, you know, anticipate proceeds probably in the sort of $50 to $60 million range.
Yes.
A few things left to do.
Which we will expect to get done.
Q1, and early Q2.
Sort of well underway.
Anticipate proceeds probably in.
Sort of $50 million to $60 million range.
Speaker 7: Great. Given those were quick, if I could lob one more quick one at you, the RNG projects first for what's the timing on those? I know we're looking at them in 2023. Are you thinking early 2023, mid, late? How should we think about the cadence? I think for simplicity modeling purposes, if you basically get 50% of those revenues in 2023, the reality is we probably...
Great given those real quick if I could love one more quick one at you the R&D projects first before.
What's the timing on those I know, we're looking at them in 2020 threes, you're thinking early 2023 mid late how should we be thinking about the cadence and then for simplicity modeling purposes would you basically get 50% of those revenues in 2023 and the reality is we probably.
We're going to we're going to shovel ready and starting construction on some of them in in March. So typical construction final knows what 12 to 12 and a half months.
Speaker 3: We're going to shovel ready and starting construction on some of them in March. So, you know, typical construction time on those is like 12 to 12 and a half months. So, I think, you know, late Q1 or early Q2 we should be online, particularly with the largest one, which is a landfill in Michigan that's like a 10,000 SDFM site. So, we hope to have that up and running, you know, sort of Aprilish next year.
One.
And so I think late Q1 early Q2, we should be online.
Particularly with the largest one which is a landfill in Michigan, that's like a 10000 that CFM site.
So we hope to have that up and running.
Sort of April ish next year.
Okay excellent thanks very much.
Yeah.
Thanks.
Speaker 2: Thank you. We currently have no further questions. I will hand over Patrick to BG for any final remarks.
We currently have no further questions I will hand it back.
Eric <unk> for any final remarks.
Speaker 3: Thank you so much everyone for joining the call and again appreciate your continued support and as always available today to jump on the phone if there's any further questions there. Thanks so much.
Thank you so much everyone for joining the call and again appreciate your continued support.
As always available today to jump on the phone if there is any further questions. Thanks, so much.
This concludes today's call. Thank you so much for joining you may now disconnect your lines.
Speaker 2: This concludes today's call. Thank you so much for joining. You may now disconnect your lines.
Yes.
Speaker 1: I that.