Q3 2023 Republic Services Inc Earnings Call
Good afternoon, and welcome to the Republic services third quarter 2023, Investor Conference call.
Republic services is traded on the New York stock exchange under the symbol R. S. G.
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I'd now like to turn the conference over to Aaron Evans, Vice President of Investor Relations.
Thank you.
I would like to welcome everyone to Republic Services' third quarter 2023 conference call.
Jon Vander Ark, our CEO and Brian Delguercio, our CFO are joining me as we discuss our performance.
I would like to take a moment to remind everyone that some of the information we discuss on today's call contains forward looking statements, which involve risks and uncertainties.
To be materially different from actual results, our SEC filings discuss factors that could cause actual results to differ materially from expectations.
The material that we discuss today is time sensitive if in the future you listen to a rebroadcast or recording this conference call you should be sensitive to the date of the original call, which is October 26 2023.
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I want to point out that our SEC filings our earnings press release, which includes GAAP reconciliation tables, and a discussion of business activities along.
Along with the reporting of this call are available on Republic's website at Republic services Dot com.
I want to remind you that republic's management team routinely participates in investor conferences.
When events are scheduled the dates times and presentations are posted on our website with that I'd like to turn the call over to John.
Aaron Good afternoon, everyone and thank you for joining us.
Our strong third quarter results reflect our focus on profitably growing the business.
We produced revenue growth, both organically and through acquisitions, while generating healthy margin expansion across our business.
During the quarter, we delivered revenue growth of 6%, including 2% from acquisitions.
Generate adjusted EBITDA growth of 9%.
Expanded EBIT margin by 70 basis points.
Reported adjusted or adjusted earnings per share of $1 54.
And produced $1 $8 billion of adjusted free cash flow on a year to date basis.
We continue to effectively allocate capital by investing in acquisitions to create long term value.
Year to date, we have invested $947 million in acquisitions.
All transactions were in the recycling and waste space.
The M&A environment remains active with opportunities in both the recycling and waste and environmental solutions businesses.
We remain confident that we will exceed $1 billion of investment for the year.
Year to date, we returned $671 million I'm sure shareholders through dividends and share repurchases.
This includes $201 million of share repurchases completed during the third quarter as our leverage ratio returned to target levels.
We continue to make progress demonstrating the value of our complete set of products and offerings to customers, while increasing the profitability of our environmental solutions business.
Pricing realization in the environmental solutions business remains strong and we continue to drive organic growth through cross selling.
EBIT margin in the environmental solutions business improved sequentially to 22, 7% in the third quarter.
An expanded 390 basis points over the prior year.
The results, we're delivering are made possible by executing our strategy supported by our differentiated capabilities.
Regarding customer zeal R.
Our efforts to deliver industry, leading service continues to drive sustained customer loyalty inorganic growth in the business.
Our customer retention rate remained over 94% and.
And we continue to see favorable trends in our net promoter score supported by our valuable service offerings and quality service delivery.
Organic revenue growth remained strong during the quarter with simultaneous increases in both pricing and volume.
Core price and related revenue was eight 6% and average yield on related revenue was seven 2%.
And organic volume growth and related revenue was 10 basis points.
Turning to our digital capabilities.
<unk> continues to advance the implementation of digital tools that improve the experience for both customers and employees.
The next phase of our digital operations is expected to drive additional productivity savings through our route optimization further improve safety performance and provide more predictable service delivery to our customers.
For example, we now have the ability to provide real time customer notifications regarding expected service time on a given day.
We're in the early stages of deploying advanced technology on select recycling collection routes.
Platform utilizes cameras to identify contamination and recycling containers.
We expect this technology will reduce contamination overtime and drive incremental revenue.
Moving on to sustainability.
We believe that our sustainability innovation investments in areas, such as plastics, circularity, and renewable natural gas or a platform for profitable growth.
Development of our polymer centers remains on track.
Construction of our Las Vegas polymer center is substantially complete and.
And we expect full scale operations to begin in November.
Our Midwest polymer center will be located in Indianapolis. This center will be co located with a blue polymer production facility with operations expected to begin in late 2024.
The renewable natural gas projects being co developed with our partners are continuing to advance.
I projects were online by the end of the third quarter.
And we expect eight additional projects to be completed in 2024.
We are making progress in our efforts to reduce greenhouse gas emissions, including in our industry, leading commitment to fleet electrification.
We expect to have 12 electric vehicles in operation by year end.
And more than 60, he used to be added to our recycling and waste collection fleet in 'twenty 'twenty four.
We now have six facilities with commercial EV charging infrastructure with more than 40 additional sites in various stages of development.
We continue to be recognized as an employer of choice and are proud to be certified as a great place to work for the seventh consecutive year.
Our team members remain highly engaged to ensure that we are delivering high quality essential service.
That are valued by our customers.
I now turn the call over to Brian will provide more details for the quarter.
Thanks, John core price on total revenue was 7%.
Core price on related revenue was eight 6%, which included open market pricing of 10, 4% and restricted pricing of five 7%.
The components of core price unrelated revenue included.
All container off 12% large container of eight 6% and residential of 8%.
Average yield on total revenue was five 8% in average yield on related revenue was seven 2%.
We continue to price new and existing business ahead of cost inflation to drive margin expansion in the underlying business.
Volume on total revenue and related revenue increased 10 basis points.
Components of volume unrelated revenue included an increase in small container of 50 basis points.
And an increase in landfill of 3.5%.
Landfill was primarily driven by an eight 2% increase in special waste revenue.
Volume growth was partially offset by a decrease in large container of one 7% and a decrease in landfill C&D volumes of six 2%, primarily due to a slowdown in construction related activity.
Moving on to recycling.
Commodity prices were $112 per ton during the quarter.
This compares to $162 per ton in the prior year.
Recycling processing and commodity sales decreased revenue by 20 basis points during the quarter.
We continue to see a steady recovery and fiber markets in plastics pricing has improved from recent lows. Our current average commodity price is approximately $120 per ton.
Next turning to our environmental solutions business.
Third quarter environmental solutions revenue increased $8 million over the prior year.
On a same store basis, environmental solutions contributed 40 basis points to internal growth during the quarter.
Adjusted EBITDA margin for the environmental solutions business was 22, 7% an increase of 390 basis points compared to the prior year.
Total company adjusted EBITDA margin expanded 70 basis points to 29, 9%.
Margin performance during the quarter included margin expansion in the underlying business of 100 basis points and a 30 basis point increase from one less workday.
This was partially offset by a 20 basis point decrease from acquisitions, a 20 basis point decrease from recycled commodity prices and a 20 basis point decrease from net fuel.
Year to date adjusted free cash flow was $1 $8 billion.
Similar to prior years, we expect to spend a disproportionate amount of our full year capital expenditures and cash taxes during the fourth quarter.
Year to date net capital expenditures of $935 million represents 56% of our projected full year spend and year to date adjusted cash taxes of $152 million represents approximately 60% of our projected full year spend.
Total debt was $12 billion in total liquidity was $2 3 billion our leverage ratio at the end of the quarter was two nine times.
With respect to taxes, our combined tax rate and effects from solar investments resulted in an equivalent tax impact of 21, 4% during the third quarter. The relatively lower tax rate included a $20 million favorable tax settlement from previous tax years, which added six tenths of EPS during the quarter we.
Now expect an equivalent tax impact of approximately 24, 5% for the full year.
As noted in our earnings press release, we upwardly revised our full year adjusted earnings per share to be in the range of $5.46 to $5 49.
Primarily as a result of the law or tax rate.
We remain comfortable achieving the other components of full year financial guidance that we provided in July.
I will now turn the call back.
Actually we're going to open it up for Q&A.
Okay.
We are proud of our results.
Healthy contribution from our pricing strategy more than offset recycled commodity headwinds and cost inflation.
Which continues to moderate moderate looking forward to 'twenty 'twenty four we expect continued outsized growth in the recycling and waste and environmental solutions businesses supported by pricing ahead of underlying costs cross selling our complete set of products and services and capitalizing on value, creating acquisition opportunities we have.
Also expect financial contribution from the investments made in sustainability innovation, including plastics circularity and renewable natural gas projects. The fundamentals of our business remains strong and supportive of continued growth in revenue EBITDA and free cash flow along with margin expansion.
We plan to provide detailed guidance on our earnings call in February now with that operator, I would like to turn it off or request.
Okay.
We will now begin the question and answer session.
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The first question today comes from Toni Kaplan with Morgan Stanley. Please go ahead.
Thanks very much.
Not looking for guidance in 'twenty, four but just maybe.
If you could just provide some initial thoughts on pricing maybe on a.
Separated into open market and restricted.
Hold that thank you.
Yeah, we're not providing guidance.
'twenty 'twenty four but we expect that.
Outlook is positive so I think about high to mid to high single digit revenue growth and we will grow free cash flow in.
EBIT margin faster than that and that gets to your pricing question, which is pricing will come down nominally as inflation comes down, but we'll still be pricing ahead of our cost inflation, which should lead to that formula or grow.
Bottom line, a little faster than the top line.
Great and then just thinking about some of the.
Sort of the expense drivers.
<unk> heard from Paris, and for me as well in prior quarters that the equipment availability has been a little bit better that retention has been improving is there any way to size. Some of those benefits I'm just trying to think about those on a go forward basis. Thanks.
Yeah, we're certainly we talked about cost inflation modulating in the second half and we're certainly seeing that so you can see that some of the cost categories.
Labor maintenance are certainly a bright spot the supply chain there may.
Maybe getting incrementally better.
Still we're not going to get all the trucks, who want this year.
But I think if you see the improvement in the maintenance that really speaks to the underlying cost of parts inflation has certainly improved versus the first half and we expect those costs.
Modulate into next year as well.
Thanks very much.
Good afternoon, thanks for taking the question.
John Brian apologies, if I missed this but when I look at the <unk>.
EBITDA and free cash flow, which is provided in the press release, it seems like that didn't come.
Some kind of steps up consistent with the tax rate changes, we've talked about but it maybe doesn't flow through to cash.
Wondering what I might be missing.
Maybe a change to an adjusted number and higher cash taxes. If there are changes in working capital.
Yes.
Great.
Yes look the as.
You mentioned that we raised the full year EPS guidance predominantly due to the relatively lower tax rate. There is a cash component to that as well that is somewhat offset by relatively higher interest rates than we normally thought which is flowing through to cash interest and that's why your adjusted free cash flow remains relatively consistent with what we previously provided.
Got it thanks for that detail and now last question for me I'm. Just wondering if you could maybe try to characterize the M&A market within environmental solutions, you've obviously been very busy with acquisitions, but we haven't seen any deals.
Yeah, I'm just wondering if M&A is a little bit slower than you developed or everything is moving along and maybe it just comes down to.
Sure.
Yeah.
Yeah. It really comes down to timing of the pipeline is strong lots of opportunities lots of conversations.
We remain incredibly disciplined in terms of our financial strategic lens and a financial lens on that but we feel certainly optimistic for the remainder of the year and into the first half of next year that there's a number of attractive opportunities in that space.
The next question comes from Tyler Brown with Raymond James. Please go ahead.
Hey, good afternoon guys.
It's al.
Hey, so Brian I think restricted pricing actually accelerated again to $5 seven here.
Here in Q3 do you think that this is going to prove the high watermark or do you think we get maybe one more quarter of acceleration and then we kind of hit that second derivative.
I think we're near it you know quite honestly tire Tyler here, you know again, we talked about the relationship between CPI based pricing starting to step down, but water sewer trash and garbage trash stepping up and right now I think theres somewhat offsetting each other we think that you know.
The question earlier about as you look forward, we do think that the restricted based pricing does step down sequentially 24 up from 23, but again still stays above that longer term average.
Yeah, Okay. That's helpful and then.
So John I think last quarter. There was some talk about kind of hitting a quote unquote ceiling in certain places and yes with some of the pricing actions. It said that you were you kind of said that you were moving forward on that front, but just curious if you can give us an update there was pricing good in E S. You're starting to see some churn and just sorry.
Have you seen any impacts from the economy and that business specifically.
Yeah, No price do you remain strong and we certainly remain committed on that so that's a customer churn on that portfolio. So much permanent work. Some of that is all that work and we're trading off some low margin.
Arjun work and we're adding to that very attractive cross sell work and so.
Lots of really attractive growth opportunities in that space, but we're never going to do work for free and we're always going to start out with a price on that so I'd.
I'd say the macro environment of manufacturing and yes broadly is a bit mixed so yeah.
You know the upstream oil and gas has been slower hopefully a couple of big deals announced here that that will ignite some increased activity there in Q4 and into next year. Our automotive obviously, it's been a little bit challenged share where the labor activity, but then other parts of the petrochemical complex have been very very strong and we're gonna overall, we're happy with it.
Results and still feel very positive going into 'twenty four in terms of the demand environment.
Okay and then my last one here a couple of housekeeping items, but based on what we know today what is the expected M&A a rollover benefit next year and then.
Based on what we know today with the Orange in the polymers what is the incremental benefit to 2004 EBITDA from from those.
Yeah. So first on the rollover based on transactions that have closed to date that'd be about 50 basis points of rollover into 'twenty four.
And then just on polymer centers and the renewable natural gas you can think of polymer centers kind of that 12 million or so incremental contribution next year from an EBITDA perspective, and being circa $15 million to $20 million on the R&D portfolio.
Okay.
EBITDA Yep Yep got it thank you.
The next question comes from Noah Kaye with Oppenheimer. Please go ahead.
Hey, Thanks for taking the question.
So if the printer right then the economy grew four 9% real GDP annualized for the third quarter and it's really the consumer leaving that can you talk about your.
Your view of the broader macro right now and specifically I know you're not guiding for 'twenty for what what kind of a volume environment. We are in an underlying basis or are we still in a positive volume growth environment from your view.
Yeah, let's see there's tons of uncertainty in the economy. If you look back 18 months and then even if you look forward do you think about to the war going on in.
Lots of different dynamics election, coming up next year.
The underlying but I think we're closer to a soft landing than we certainly were a quarter ago. If you look at the outlook and you know we're planning another positive year next year and you heard that in our numbers and forecast with a lot of humility baked into that in terms of things could change there's uncertainty and we'll adjust accordingly according to that.
The recycling and solid waste business, the underlying volume growth in that business is kind of.
50 to 100 Bips were on the lower end of that with where construction that that's certainly been a soft spot and you know we saw that with residential commercial starts.
Even last year, and then earlier into this you're slowing down.
When that starts to anniversary and rebound.
Yeah. So I'd say you know positive environment, we're not firing on every cylinder.
We're cautiously optimistic that we're going to grow out of this thing coming into next year.
Very helpful.
Given the progress that you and the industry have made and in reducing some of the volatility around recycling commodities are in and the impact of the business.
Just.
Curious to know how to think about.
As it relates to the polymer center or any of the vertical integration efforts you have.
You know what the level of exposure is to commodities in that business. In other words is this largely a processing and fee based model for you and you know is there any increased sensitivity to be expected from that.
No. The models constructed right were really mixed body on the spread and so that's one thing that we when we did this investment we're very sensitive to that we're not adding to the volatility of the overall profile. So could there be spots on the margin of course, but in general this isn't something where we're increasing our exposure.
Yes, because you have that underlying commodity risk as you get the value of upsides cycling and capture that spread you have the same amount of volatility in dollars with incremental revenue so as a percentage of volatility actually goes down.
The next question comes from Michael Hoffman with Stifel. Please go ahead. Thank you very much on the EPS side U S ecology used to have a decent exposure to you all.
Auto industry, given its Michigan density.
That business.
But reasonably well there's been some slowdown in activity in certain spots, but as you can.
Kind of read from the headlines right. It's been you know walk out on certain facilities to the point, where if it was a mass shutdown right we'd have a much deeper impact because it would be all of the automotive plants that we serve directly but then it goes straight into the tier one tier two and even tier three supply base.
It's been such a case again, we're a very very small portion of the overall cost structure. So youre not seeing people kind of get down to cancelling service or even reducing service intervals outside of a few facilities that have been directly impacted.
And then Don on the RMG accounting since you're doing mostly partnerships.
Is this going to be an add back into the EBITDA or how are you going to account for this as we see printed financial statements.
Yes, we do the reconciliation you know Michael moving from net income to the definition of EBITDA. We will include our pick up in those in those joint ventures I remember that this first round of of of facilities that are coming online most of those are going to be predominantly.
L T. So you're not going to see a lot of that in 'twenty four that'll start being 25 and beyond that you'll really start to see the accounting that includes the pick up in those jv's. Okay.
Right, that's what I needed.
One last you had great margin expansion.
And yet you're reaffirming the guidance it seems like you're.
Then expecting a lot more seasonality in poor Q, given the strength of the margins or you're at least at the very top end of the range, but that's sort of where I am.
And the 45 to say it was a real.
Positive outlook, Yeah, we're already in Q4, obviously, we've got a positive outlook.
Given that.
There is some seasonality of the business, where you do get some weather impact the business. This time of year given there are some moving pieces in the broader economy, we thought it would.
Be prudent to reaffirm and I'll give you the results here in February always finish but to that point, Michael If you remember even when we began the year. We said the cadence of margin expansion was going to actually start negative, which we saw in the first quarter and sequentially year over year margin expansion was going to improve every quarter throughout the year and we still expect that.
So we still expect to see the most amount of margin expansion in the fourth quarter ultimately driving margin expansion for the full year.
What margins might be down sequentially, just because of the seasonality.
That is correct. Okay, that's what I wanted to clarify alright. Thanks.
Okay.
The next question comes from David Manthey with Baird. Please go ahead.
Hi, good afternoon. Thank you.
So acquisitions were one 7% in the third quarter, you said 50 basis points for 2024, it looks like maybe a couple of hundred million rolled off third quarter to fourth quarter last year. So we're looking at what maybe 150 basis points in the fourth quarter of this year.
Yeah remember when we talked about most of the rollover that we had for full year 'twenty. Three was the portion of U S. Oncology that we can play it may of 'twenty, two right coming in which was a majority of the rollover for for the full year as.
We think about the actual impact within the fourth quarter were looking about 180 basis points.
Okay, Alright, thank you for that.
Second.
On the RMG development I see around now is when these facilities were scheduled to come online and maybe you could.
Just remind me the financial targets and how those 39 RMG facilities with the BP joint venture are expected to ramp from here.
Yes, So let me just talk about the entire portfolio rather than just the subset right. So again five have already come online here that are going to start contributing here dominantly in the fourth quarter, but really start to contribute in 'twenty. Four you can kind of think about the cadence in the $20 million to $25 million per year of incremental EBITDA.
Beginning in 'twenty, four and ultimately hitting run rate 28 at which point, we expect $100 million cumulative of additional EBITDA in the portfolio compared to baseline.
Got it okay. Thank you.
Yeah.
The next question comes from Jerry Revich with Goldman Sachs. Please go ahead.
Yes, hi, good afternoon.
I'm wondering if we could just talk about the.
Margin opportunity over the course of 'twenty 'twenty four O'brien as you pointed out.
Margin momentum on a seasonally adjusted basis and accelerating this year, so you're already on track to expand margins by <unk>.
Call. It a full 30 40 basis points, just on a run rate <unk> versus the full year average and so as we think about the moving pieces in 'twenty four.
I guess, it's not hard to get to double your normal margin expansion targets, especially given the moves in.
Potential moves in OCC and I'm wondering anything that we need to keep in mind as we look at those moving pieces in the cadence of margins that you pointed out.
And in answer to an earlier question.
Yeah. So so Gerry the one thing I would point out is just remember from the from the point in time in which we acquired U S ecology, and we took several pricing actions and as we sit there and move forward, we're going to get more on the cadence of more of an annual price increase on that portion of the business. So while we still expect margin expansion in environmental solutions.
Business and at a rate.
Nor are higher than what we expect in recycling and waste, we would expect that margin expansion to decelerate from what you saw in 'twenty three.
So you can look in just in the quarter alone margin was up almost 400 basis points year over year, we would not expect that level of contribution going forward.
Got it.
<unk> business the momentum it sounds like it is accelerating excluding yes.
Yes, correct I mean, if you take a look just right now we're kind of in the 30 basis points. We've talked long term in that 30 to 50 and you start to get some of the contribution from some of the other sustainability investments that we're making so a little bit of push and pull on that.
Now we would expect margin expansion in 'twenty for over 23.
Okay Super.
Can we talk about capital deployment.
With the buyback announcement can you just update us on how much more runway do you think you have to deploy more capital towards polymers opportunities to redevelop.
Gas electric.
I answered two gas plants and.
Stock buyback from there can you just calibrate us on how to think about the opportunities in each of those areas.
Sure. Yeah, you know just to give you an idea of what we've talked about several investments you've got the R&D portfolio, you've got polymer centering our blue partners some of which is going to come through capital some of which is going to be the investment in the JV is just to kind of think it from a cumulative perspective here, maybe I'll walk through each from polymer centers, we see.
Total investment of around $300 million okay.
Okay for the four centers.
Right and that's going to happen right. It's happened and we think that's over a four year timeframe of about $70 million year Blue polymers, you can think of that being about $160 million investment and again those are going to be J P. So that will come through as an investment in those joint ventures, and then the investment in the R&D.
Leo it's call it around $375 million.
Okay. So those are the cumulative investments we've been making those investments. So those are somewhat in our run rate now.
Now and we talked about that after the U S ecology acquisition, where leverage elevates to three four times, we were going to focus on deleveraging and getting back to that three times before we resume the share repurchase got back to two nine times, we have since resumed right that share repurchase program and as you just.
The announcement the board just authorized another $3 billion program that extends over the next three years beginning in 'twenty four through the end of 'twenty six.
Super Thanks.
You bet.
The next question comes from Stephanie more with Jefferies. Please go ahead.
Hi, good afternoon. Thank you.
That's right.
Hey, guys. Appreciate the color so far in 2024 outlook and and just now and Ken margin operation be too, but maybe could you talk a little bit about your views on inflation in 2024.
Really hard numbers, but kind of bucket out there, it's where you think you know some inflationary pressures maybe could linger from 'twenty to 'twenty three or on the other side of that you know should abate versus 2020 three just trying to think of those puts and takes would be helpful. Thank you.
For most categories kind of thinking about a macro metric like CPI kind of puts you in the right zone.
And it'll be elevated off of that just historically, it's inflated a little faster than that and we don't expect the supply chain to be fully.
Caught up are reconciled in 'twenty, 'twenty, four which means we're going to be driving some older equipment and that's going to be at the end of the curve where maintenance cost is higher than it normally would be so that would be the one I think is going to be elevated everything else kind of think about that where you see inflation going and if that's you know four four and a half wherever that lands.
That's kind of where we will build a buffer against that.
Okay. That's helpful. I appreciate it and then just and just wanted to follow up a little bit on the commodity basket exposure can you talk a little bit about how that basket. It's trending today, maybe how that compares to a four kids last year.
Some puts and takes at the various components so that'd be helpful. Thanks.
Yeah sure. So as we said our average commodity price for the third quarter was $112 per ton right now, we're expecting 120 in the fourth quarter that compared.
In the prior year for the fourth quarter, we were at $88 per ton.
So were expecting a year over year increase of about 30 Bucks a ton in the fourth quarter.
Got it I'll leave it at that thank you.
Okay.
The next question comes from Tobey Sommer with Truest. Please go ahead.
Thanks.
I'm trying to follow up on a recent question, but ask it from a different angle if you think.
Think about some of the pressures on margins.
Smaller players that might be potential acquisition targets, how do you anticipate trends in a few buckets impacting their financial performance and maybe.
Our desire to sell and I kind of I'm thinking of inflation on the in terms of their costs.
The ongoing requirements and necessity to invest in technology and then as you just mentioned I think the fleet and supply chain won't fully be normalized but if you apply those things to sort of the other side of equation at your own business, but with those that you may look to incorporate into your business what do you see.
Yeah. The pipeline for acquisitions is strong both through recycling waste and environmental solutions.
Cost pressure, which has started to pay for the smaller players on the labor side.
We're starting to get.
Less pressure there as we've seen turnover come down the labor availability go off it's still elevated versus historical norm, but it's gotten easier relative to a year ago or the supply chain has it and that's certainly becoming constrained and anybody who was a spot buyer of vehicles is it.
Really in a challenged spot certainly through the end of next year and probably into 'twenty five 'twenty six depending on how they.
How fast the supply chain can recover because they're prioritizing all of their base customers, who by the large number and a similar number of trucks every year. So we certainly see that as an advantage and then digital I'd say, it's just been a building trend over the last five plus years that I think he is going to be with us for at least the next five and probably.
<unk> a much longer period than that which is we're making a series of years between capital and Opex hundreds of billions of dollars of investment our digital footprint.
The experience better for our customers and employees and that certainly has a scale advantage for us.
And also a skill advantage of investing in the resources, who know how to take those technologies and apply them in a way that make our customers' lives and employees' lives better.
And then just as my follow up I know, it's been in the news.
It may be even too much ad nauseum, but.
G L P ones in the market looking for second third and fourth all the way to and derivative impacts have.
Have you looked at that in half.
Any sort of preliminary view on what that could mean for volumes over what would probably be a very long term. Thanks.
No that's not done a lot of work done that yet plenty in front of US right now is that.
Did you just to be a major trend, we'll think about that but I'd say, we are in the tertiary or beyond in terms of the impact of those.
I appreciate the response thank you.
The next question comes from Kevin Chiang with CIBC. Please go ahead.
Hi, Thanks for taking my question.
In regards to the M&A pipeline within environmental services, I think up here in Canada.
There's been the.
The competition Bureau, as trying to prevent the merger of two.
To I guess I'll call them energy waste service companies here. So it looks like there'll be some as I was just wondering how the pipeline looks up here in Canada and.
And as energy waste services, and an area of growth for you or or accelerated growth for you and when you look at your opportunities in Canada.
Yeah, we're sort of looking at opportunities in both U S and Canada that probably isn't the top of the list we'd be more opportunistic in that side of environmental services.
Okay.
Just I get the I get the pricing I guess, it sounds like the pricing opportunities or you are going to move from something that youre doing it.
Three or four times, a year within environmental services to once a year, which is maybe more regular as inflation starts to.
Ore continues to subside here, but just given the pricing opportunities that you've talked about and the ability to get pricing more in line with how you think about pricing within solid waste.
Why not push that lever more if you. If you if you can or or or did you feel the customers, where we're starting to push back on maybe the the frequency in which you are coming to them with price increases within E. S.
Yeah, No I mean, yes, it's a big diverse space, So theres been places, where we've kind of pushed past.
The Priceline, where we would want it to what we've lost some volume, which I congratulate the team. Obviously you don't understand the scaling on price until you take it there and it's supposed to hit certain parts of the business. This will get into more of an annual increase you know for our bigger customers. That's contracted for example, and other parts of the business, particularly the moorefield.
Facing field services those are things, where it's really dynamic price because every opportunity event job you've got a lot more flexibility there and we'll certainly test the market and see what the market bears in terms of opportunity I'd say underneath that to theirs.
Big mix opportunity, which is just looking at the types of jobs to do looking at the customer mix and making sure. We're prioritizing our sales team around the most attractive customers and then Conversely, deep prioritizing your own customers, who arent willing to pay what we think is a very fair value for what we deliver.
That makes a ton of sense. Thanks for taking my question and best of luck as you get through this year.
Thank you.
At this time there appear to be no further questions. Mr. Vander Ark I'll turn the call back over to you for closing remark.
Thank you Betsy I would like to thank our more than 40000 employees for their continued commitment to providing our customers with first class service to create a more sustainable world.
Good evening and be safe.
Ladies and gentlemen, this concludes the conference call. Thank you for attending you may now disconnect.
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