Q2 2024 Waste Connections Inc Earnings Call

Ronald Mittelstaedt: Thank you, operator, and good morning. I would like to welcome everyone to this conference call to discuss our second quarter results and an updated outlook for 2024 and to provide a detailed outlook for the third quarter. I'm joined this morning by Mary Ann Whitney, our CFO, and several other members of our senior management team. As noted in our earnings release, solid operational execution supplemented by incremental acquisitions and increased commodity values drove an across-the-board beat in the second quarter, positioning us for an increase to our full-year outlook.

Operator: Thank you, operator, and good morning.

Ronald Mittelstaedt: I would like to welcome everyone to this conference call to discuss our second quarter results and an updated outlook for 2024 and to provide a detailed outlook for the third quarter.

Morning.

Speaker Change: I would like to welcome everyone to this conference call to discuss our second quarter results and an updated outlook for 2024 and to provide a detailed outlook for the third quarter. I am joined this morning by Mary Anne Whitney Our CFO and several other members of our senior management.

Ronald Mittelstaedt: I'm joined this morning by Mary Ann Whitney, our CSO, and several other members of our senior management. As noted in our earnings release, solid operational execution supplemented by incremental acquisitions and increased commodity values drove an across the board beat in the second quarter. Positioning us for an increase to our full-year outlook. Revenue and adjusted EVA dye increased in the quarter by 11.2% and 16.4% respectively, as price-led organic solid waste growth and 100 basis points sequential improvement in volume was augmented by a creative acquisitions. We are extremely pleased by the continued strength of our operational execution during the quarter, including sequential improvement in employee retention.

Speaker Change: As noted in our earnings release, solid operational execution supplemented by incremental acquisitions and increased commodity values drove an across-the-board beat in the second quarter, positioning us for an increase to our full-year outlook.

Ronald Mittelstaedt: Revenue and adjusted EBITDA increased in the quarter by 11.2% and 16.4%, respectively, as price-led organic solid waste growth and a 100 basis point sequential improvement in volume were augmented by accretive acquisition. We are extremely pleased by the continued strength of our operational execution during the quarter, including sequential improvement in employee retention, as we maintain the strategy that is designed to differentiate our results and which positions us for continued outsized growth. Given the strength of our performance in the first half of 2024, the momentum from continuing trends, and contributions from recent acquisitions, we are raising our full-year 2024 outlook to approximately $8.85 billion in revenue and approximately $2.9 billion in adjusted EBITDA, or a 32.8% adjusted EBITDA margin, exceeding our initial outlook and up 130 basis points as compared to the prior year. Before we get into much more detail, let me turn the call over to Thank you, Ron, and good morning.

Speaker Change: Revenue and adjusted EBITDA increased in the quarter by 11.2 percent and 16.4 percent respectively as price-led organic solid waste growth and 100 basis points sequential improvement in volume was augmented by accretive acquisitions.

Speaker Change: We are extremely pleased by the continued strength of our operational execution during the quarter, including sequential improvement in employee retention, as we maintain the strategy that has served to differentiate our results and which positions us for continued outsized growth.

Ronald Mittelstaedt: As we maintain the strategy that has served to differ and shade our results and which positions us for continued outsized growth.

Ronald Mittelstaedt: Given the strength of our performance in the first half of 2024, the momentum from continuing trends and contributions from recent acquisitions, we are raising our full year 2024 outlook to approximately 8.85 billion in revenue and approximately 2.9 billion in adjusted EVA dye, or 32.8% adjusted EVA dye margin, exceeding our initial outlook and up 130 basis points as compared to the prior year.

Speaker Change: Given the strength of our performance in the first half of 2024,

Speaker Change: The momentum from continuing trends and contributions from recent acquisitions, we are raising our full year 2024 outlook to approximately $8.85 billion in revenue and approximately $2.9 billion in adjusted EBITDA, or 32.8% adjusted EBITDA margin.

Speaker Change: exceeding our initial outlook and up 130 basis points as compared to the prior year. Before we get into much more detail, let me turn the call over to Mary Ann for our forward-looking disclaimer and other housekeeping items.

Mary Whitney: Before we get into much more detail, let me turn the call over to Marianne for a forward-looking disclaimer and other housekeeping items. Thank you, Ron, and good morning. The discussion during today's call includes forward-looking statements made pursuant to the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995, including forward-looking information within the meaning of applicable Canadian securities laws. Actual results could differ materially from those made in such forward-looking statements due to various risks and uncertainties. Factors that could pass actual results to differ discuss both in the cautionary statement included in our July 24th earnings release and in greater detail and Waste Connections filings with the U.S.

Mary Whitney: The discussion during today's call includes forward-looking statements made pursuant to the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995, including forward-looking information within the meaning of applicable Canadian securities laws. Actual results could differ materially from those made in such forward-looking statements due to various risks and uncertainties. Factors that could cause actual results to differ are discussed both in the cautionary statement included in our July 24th earnings release and in greater detail in Waste Connections filings with the U.S. Securities and Exchange Commission and the Securities Commission or similar regulatory authorities in Canada.

Mary Whitney: Thank you, Ron, and good morning.

Mary Whitney: The discussion during today's call includes forward-looking statements made pursuant to the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995, including forward-looking information within the meaning of applicable Canadian securities laws.

Mary Whitney: Actual results could differ materially from those made in such forward-looking statements due to various risks and uncertainties.

Mary Whitney: Factors that could cause actual results to differ discussed both in the cautionary statement included in our July 24th earnings release and in greater detail in Waste Connections filings for the U.S. Securities and Exchange Commission and the Securities Commission or similar regulatory authorities in Canada. You should not place undue reliance on forward-looking statements.

Mary Whitney: Securities and Exchange Commission and the Securities Commission's or similar regulatory authorities in Canada. You should not place undue reliance on forward-looking statements, as there may be additional risks of which we are not presently aware or that we currently believe are immaterial, which could have an adverse impact on our business.

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

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

Mary Whitney: We make no commitments to revise or update any forward-looking statements in order to reflect events or circumstances that may change after today's date.

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

Mary Whitney: On the call, we will discuss non-GAAP measures such as adjusted EBITDA, adjusted net income attributable to waste connections on both a dollar basis and per diluted share, and adjusted pre-cash. Please refer to our earnings releases for a reconciliation of such non-GAAP measures to the most comparable GAAP. Management uses certain non-GAAP measures to evaluate and monitor the ongoing financial performance of our operations. Other companies may calculate these non-GAAP measures differently. I will now turn the call back over to Ron. Okay, thank you, Marianne.

Mary Whitney: On the call, we will discuss non-GAAP measures such as adjusted EBITDA, adjusted net income attributable to waste connections on both a dollar basis and per diluted share, and adjusted pre-cash flow.

Ron: Please refer to our earnings releases for a reconciliation of such non-GAAP measures to the most comparable GAAP measures. Management uses certain non-GAAP measures to evaluate and monitor the ongoing financial performance of our operations. Other companies may calculate these non-GAAP measures differently. I will now turn the call back over to Ron.

Ronald Mittelstaedt: I will now turn the call back over to Ron. Okay, thank you, Marianne. Revenue growth of over 11% in the second quarter was driven primarily by core solid waste pricing of 7%, which range from over 5% in our mostly exclusive market Western region to over 8% in our competitive market reads. Pricing is largely in place for the full year and continues to reflect the resilience of our market model, with retention in line with historical levels. Reported solid waste volumes of negative 2.8% in the quarter were up 100 basis points from Q1 and continue to reflect the ongoing purposeful shedding and price volume trade-offs that we have discussed in previous quarters. That sequential improvement was in line with our expectations, despite a limited seasonal ramp impacting most notably special waste tons, which reflect the more cyclical and event-driven aspects of the business. Special waste tons were down 13% year over year in Q2 on reduced or delayed project activity across most regions and are now down 20% from '22 levels, a reminder of the cyclical sensitivity of these speculative and event-driven waste streams. In spite of these clients and underlying activity levels, we are encouraged by the pace of sequential improvement to reported volumes as we anniversary the purposeful shedding and non-renewal of certain contracts during previous quarters. Any pickup in the macro environment to drive incremental activity levels would be added to that improvement. Beyond solid waste revenues, also played out slightly better than expected in Q2, with recycled commodities, landfill gas, and renewable energy credits or RENTS collectively up about 40% year over year. Recycled commodity values were up around 20% from earlier this year, on prices for OCC or old corrugated containers averaging about $140 per ton in Q2. RENTS average slightly above $3, with higher values mitigating impacts from additional costs and delays in the commissioning and startup of the three renewable natural gas plants previously expected to commence operations in Q2. These benefits are now expected to begin during Q3, along with better than expected financial results. We sought continued improvement and transfer employee retention in Q2. Voluntary turnover once again stepped down sequentially, now marking our seventh consecutive quarter of improvement at the low 15%. Voluntary turnover levels are now 35% below the peaks we saw during 2022, with open positions down 45% from related highs from two years ago. The wide-ranging benefits of reducing open positions include not only better safety incident rates but also improved levels of service and customer satisfaction, along with employee engagement. To that end, as noted earlier this year, we've also expanded training, including through our two in-house driver academies, where we will be actively engaging both new hires and existing employees, along with our diesel technician school partnership offering and emphasizing opportunities for family members of existing employees. We are already realizing the impact of these internal efforts on retention and continue to expect them to augment the improving dynamics we've seen in employee recruiting resulting from additional resources and targeted efforts. The changes put in place today are investments to drive continued outside margin expansion from future savings in productivity and risk management, along with continued and expected growing savings across several areas, including labor, maintenance, and third-party services. We're also taking steps to address the evolving opportunities around PFAS capture and removal through lead shape treatment, with the introduction of technology through partnerships at several of our landfills. Consistent with our sustainability-related priorities, we're positioning ourselves for decreased reliance on treatment by third parties as we develop and expand our internal capability. Moreover, we're actively pursuing other investments in technology focused on both customer experience and our operations, including the use of robotics in our recycling facilities and through machine learning applications using cameras and our trucks for safety, service, and sales opportunities.

Ronald Mittelstaedt: Revenue growth of over 11% in the second quarter was driven primarily by core solid waste pricing of 7%, which ranged from over 5% in our mostly exclusive market western region to over 8% in our competitive market region. Pricing is largely in place for the full year and continues to reflect the resilience of our market model with retention in line with historical levels. Reporting solid waste volumes of negative 2.8% in the quarter was up 100 basis points from Q1 and continue to reflect the ongoing purposeful shedding and price volume trade-offs that we have discussed in previous quarters.

Ron: Okay, thank you, Marianne.

Ron: Revenue growth of over 11% in the second quarter was driven primarily by core solid waste pricing of 7%, which ranged from over 5% in our mostly exclusive market western region to over 8% in our competitive market regions.

Ron: Pricing is largely in place for the full year and continues to reflect the resilience of our market model with retention in line with historical levels.

Ron: Reported solid waste volumes of negative 2.8 percent in the quarter were up 100 basis points from Q1 and continue to reflect the ongoing purposeful shedding and price volume trade-offs that we have discussed in previous quarters.

Ronald Mittelstaedt: That sequential improvement was in line with our expectations despite a limited seasonal ramp impacting, most notably, special waste tons, which reflect the more cyclical and event-driven aspects of the business. Special waste tons were down 13% year-over-year in Q2 on reduced or delayed project activity across most regions and are now down 20% from their levels a reminder of the cyclical sensitivity of these speculative and event-driven wastes. In spite of these declines in underlying activity levels, we are encouraged by the pace of sequential improvement to reported volumes as we anniversary the purposeful shedding and non-renewal of certain contracts during previous quarters

Ron: That sequential improvement was in line with our expectations, despite a limited seasonal ramp impacting, most notably, special waste tons, which reflect the more cyclical and event-driven aspects of the business.

Ron: Special waste tons were down 13% year-over-year in Q2 on reduced or delayed project activity across most regions and are now down 20% from 22 levels, a reminder of the cyclical sensitivity of these speculative and event-driven waste streams.

Ron: In spite of these declines in underlying activity levels, we are encouraged by the pace of sequential improvement to reported volumes as we anniversary the purposeful shedding and non-renewal of certain contracts during previous quarters. Any pickup in the macro environment to drive incremental activity levels would be additive to that improvement.

Ronald Mittelstaedt: Any pickup in the macro environment to drive incremental activity levels would be additive to that improvement. Beyond solid waste, revenues also played out slightly better than expected in Q2, with recycled commodities, landfill gas, and renewable energy credits, or RINs, collectively up about 40% year over year. Recycled commodity values were up around 20% from earlier this year on prices for OCC, or old corrugated containers, averaging about $148 per ton in Q2.

Ron: Beyond solid waste, revenues also played out slightly better than expected in Q2, with recycled commodities, landfill gas, and renewable energy credits, or RINs, collectively up about 40% year-over-year.

Ron: Recycled commodity values were up around 20% from earlier this year on prices for OCC or old corrugated containers, averaging about $148 per ton in Q2.

Ronald Mittelstaedt: RENs average slightly above $3, with higher values mitigating impacts from additional costs and delays in the commissioning and startup of the three renewable natural gas plants previously expected to commence operations in Q2. These benefits are now expected to begin during Q3. Along with better than expected financial results, we saw continued improvement in trends for employee retention. In Q2, voluntary turnover once again stepped down sequentially, now marking our seventh consecutive quarter of improvement.

Ron: RINs averaged slightly above $3, with higher values mitigating impacts from additional costs and delays in the commissioning and startup of the three renewable natural gas plants previously expected to commence operations in Q2. These benefits are now expected to begin during Q3.

Ron: Along with better-than-expected financial results, we saw continued improvement in trends for employee retention.

Ron: In Q2, voluntary turnover once again stepped down sequentially, now marking our seventh consecutive quarter of improvement.

Ronald Mittelstaedt: At below 15%, voluntary turnover levels are now 35% below the peaks we saw during 2022, with open positions down 45% from related highs from two years ago. The wide-ranging benefits of reducing open positions include not only better safety incident, To that end, as noted earlier this year, we've also expanded training, including through our two in-house driver academies, where we will be actively engaging both new hires and existing employees, along with our diesel technician school partnership, offering and emphasizing opportunities for family members of existing employees.

Ron: At the low 15%, voluntary turnover levels are now 35% below the peaks we saw during

Ron: 2022, with open positions down 45% from related highs from two years ago. The wide-ranging benefits of reducing open positions include not only better safety incident rates, but also improved levels of service and customer satisfaction, along with employee engagement.

Ron: To that end, as noted earlier this year, we've also expanded training, including through our two in-house driver academies.

Ron: where we will be actively engaging both new hires and existing employees along with our Diesel Technician School partnership offering and emphasizing opportunities for family members of existing employees.

Ronald Mittelstaedt: We are already realizing the impact of these internal efforts on retention and continue to expect them to augment the improving dynamics we've seen in employee recruiting, resulting from additional resources and targeted efforts. The changes put in place today are investments to drive continued outside margin expansion from future savings in productivity and risk management, along with continued and expected growing savings across several areas, including labor, maintenance, and third-party services. We're also taking steps to address the evolving opportunities around PFAS, capture, and removal through leachate treatment through partnerships at several of our landfills.

Ron: We are already realizing the impact of these internal efforts on retention and continue to expect them to augment the improving dynamics we've seen in employee recruiting, resulting from additional resources and targeted efforts.

Ron: The changes put in place today are investments to drive continued outside margin expansion from future savings in productivity and risk management, along with continued and expected growing savings across several areas including labor, maintenance, and third-party services.

Ron: We're also taking steps to address the evolving opportunities around PFAS capture and removal through leachate treatment, with the introduction of technology through partnerships at several of our landfills.

Ronald Mittelstaedt: Consistent with our sustainability-related priorities, we're positioning ourselves for decreased reliance on treatment by third parties as we develop and expand our internal capabilities. Moreover, we're actively pursuing other investments in technology focused on both the customer experience and our operations, including the use of robotics in our recycling facilities and through machine learning applications using cameras and our trucks for safety, service, and sales opportunities. We see the benefits of these and other AI-driven applications as opportunities to drive both growth and value creation.

Ron: Consistent with our sustainability related priorities, we're positioning ourselves for decreased reliance on treatment by third parties as we develop and expand our internal capabilities.

Ron: Moreover, we're actively pursuing other investments in technology focused on both customer experience and our operations.

Ron: including the use of robotics in our recycling facilities and through machine learning applications using cameras in our trucks for safety, service, and sales opportunities. We see the benefits from these and other AI driven applications as opportunities to drive both growth and value creation.

Ronald Mittelstaedt: We see the benefits from these and other AI-driven applications as opportunities to drive both growth and value creation.

Ronald Mittelstaedt: On the subject of value creation, moving next to acquisition, another key driver of our growth. We are positioned for a record year of private company acquisition activity in 2024, having already completed 18 acquisitions with over 500 million and annualized revenue. Acquisitions during the second quarter included multiple tuck-ins to existing markets as well as the strategic acquisition of state-of-the-art recycling facilities in the Pacific Northwest, furthering our sustainability-related efforts and internalizing our recyclables in that market. In addition to the deals already closed this year, we have over 150 million in annualized revenue from solid waste acquisitions in franchise markets spread across multiple geographies that are under definitive agreement and expected to close later this year.

Ronald Mittelstaedt: On the subject of value creation, moving next to acquisitions, another key driver of our growth. We are positioned for a record year of private company acquisition activity in 2024, having already completed 18 acquisitions with over $500 million in annualized revenue. Acquisitions during the second quarter included multiple tuck-ins to existing markets as well as the strategic acquisition of state-of-the-art recycling facilities in the Pacific Northwest, furthering our sustainability-related efforts and internalizing our recyclables in that market.

Ron: On the subject of value creation, moving next to acquisitions, another key driver of our growth, we are positioned for a record year of private company acquisition activity in 2024, having already completed 18 acquisitions with over $500 million in annualized revenue.

Ron: Acquisitions during the second quarter included multiple tuck-ins to existing markets, as well as the strategic acquisition of state-of-the-art recycling facilities in the Pacific Northwest, furthering our sustainability-related efforts and internalizing our recyclables in that market.

Ronald Mittelstaedt: In addition to the deals already closed this year, we have over $150 million in annualized revenue from solid waste acquisitions in franchise markets spread across multiple geographies that are under definitive agreement and expected to close later this year. To be clear, these have not been included in our updated full year 2024 outlook. Continued balance strength provides the flexibility to fund outsize acquisition activity, along with an increasing return of capital to shareholders.

Ron: In addition to the deals already closed this year, we have over $150 million in annualized revenue from solid waste acquisitions in franchise markets spread across multiple geographies that are under definitive agreement and expected to close later this year.

Ronald Mittelstaedt: To be clear, these have not been included and are updated full year 2024 outlook. Continued balance strength provides a flexibility to fund outside acquisition activity, along with an increasing return of capital to shareholders. We continue to see high levels of seller interest and have a robust pipeline of solid waste opportunities across our footprint, positioning us for over 700 million in acquired revenue by the end of 2024, which would set an all-time annual record for us in private company acquired revenue. And to be clear, this is 700 million of acquired revenue in acquisition, not 700 million in acquisition spend, as has recently been communicated by others.

Ron: To be clear, these have not been included in our updated full year 2024 outlook.

Ron: Continued balance strength provides the flexibility to fund outsize acquisition activity, along with an increasing return of capital to shareholders.

Mary Whitney: We continue to see high levels of seller interest and have a robust pipeline of solid waste opportunities across our footprint, positioning us for over $700 million in acquired revenue by the end of 2024, which would set an all-time annual record for us in private company acquired revenue. And to be clear, this is $700 million of revenue in acquisition, not $700 million in acquisition spend, as has recently been communicated by others.

Ron: We continue to see high levels of seller interest and have a robust pipeline of solid waste opportunities across our footprint.

Ron: positioning us for over $700 million in acquired revenue by the end of 2024, which would set an all-time annual record for us in private company acquired revenue.

Speaker Change: And to be clear, this is $700 million of acquired revenue in acquisition, not $700 million in acquisition spend, as has recently been communicated by others.

Ronald Mittelstaedt: With over 1% roll over contribution in 2025 already in hand from acquisitions closed, we are well positioned for up to 3% or more roll over, including incremental contribution from other deals as well as those noted under definitive agreement. And based on our ongoing elevated activity levels, clearly a great way to already be positioning for continued outside growth as we look ahead to 2025.

Mary Whitney: With over 1% of the rollover contribution in 2025 already in hand from acquisitions closed, we are well positioned for up to 3% or more of the rollover, including incremental contribution from other deals, as well as those noted under the definitive agreement and based on our ongoing elevated activity level. Clearly, a great way to already be positioning for continued outside growth as we look ahead to 2025. And now I'd like to pass the call to Mary Ann to review the financial highlights of the second quarter and review our increased full year 2024 outlook and provide a detailed outlook for Q3. I will then wrap up before we head into Q&A. Thank you, Ron.

Ron: With over 1% rollover contribution in 2025 already in hand from acquisitions closed, we are well positioned for up to 3% or more rollover, including incremental contribution from other deals, as well as those noted under definitive agreement, and based on our ongoing elevated activity levels.

Ron: Clearly, a great way to already be positioning for continued outside growth as we look ahead to 2025.

Mary Whitney: And now I'd like to pass the call to Marianne to review more in depth the financial highlights of the second quarter, to review our increased full year 2024 outlook and provide a detailed outlook for Q3.

Ron: And now I'd like to pass the call to Mary Ann to review more in depth the financial highlights of the second quarter to review our increased full year 2024 outlook and provide a detailed outlook for Q3. I will then wrap up before we head into Q&A.

Mary Whitney: I will then wrap up before we head into Q&A.

Mary Whitney: Thank you, Ron. In the second quarter, revenue of 2.248 billion was 23 million dollars above the high end of our outlook, due primarily to incremental acquisition contributions and higher recovered commodity values. Revenue on a reported basis was up 227 million, or 11.2% year over year. Acquisitions completed since the year-ago period contributed about 123 million of revenue in the quarter or about 121 million net of debauchers. As Ron noted, core pricing was 7% in Q2, with price stepping down sequentially as a result of the typical cadence of seasonality unreported price. Fuel and material surcharges of negative 20 basis points in the quarter primarily reflect the benefit of improving diesel cost.

Mary Whitney: In the second quarter, revenue of $2.248 billion was $23 million above the high end of our outlook, due primarily to incremental acquisition contributions and higher recovered commodity value. Revenue on a reported basis was up $227 million, or 11.2% year-over-year. Acquisitions completed since the year-ago period contributed about $123 million of revenue in the quarter, or about $121 million net of development. As Ron noted, core pricing was 7% in Q2, with prices stepping down sequentially as a result of the typical cadence of seasonality on recorded prices. Fuel and material surcharges of negative 20 basis points in the quarter primarily reflect the benefit of improving diesel costs.

Mary Whitney: Thank you, Ron.

Mary Whitney: In the second quarter, revenue of $2.248 billion was $23 million above the high end of our outlook, due primarily to incremental acquisition contributions and higher recovered commodity values.

Mary Whitney: Revenue on a reported basis was up $227 million, or 11.2% year-over-year. Acquisitions completed since the year-ago period contributed about $123 million of revenue in the quarter, or about $121 million net of divestitures.

Mary Whitney: As Ron also noted, volumes were down 2.8% as expected, up 100 basis points sequentially, in spite of underlying volume declines.

Mary Whitney: As Ron also noted, volumes were down 2.8% as expected, up 100 basis points sequentially, in spite of the underlying volume decline. Here are the stats looking at year-over-year results in Q2 on a same-store basis. Daily roll-off polls were down 3%, driven by declines in all regions except the Western U.S., where polls were up about 2%, and Daly Landfill Tums were down 2% on special waste activity, down 13% year over year and down over 20% from 2022. Similarly, C&D tons were down 4% year over year, while MSW tons were up 3% in Q2. The declines in both special waste and C&D were most notable in our central and mid-south.

Mary Whitney: Here are the stats looking at year-over-year results in Q2 on a sane store basis. Daily roll-off pulls were down 3%, driven by declines in all regions except the Western U.S. where pulls were up about 2%, and daily landfill tons were down 2%, on special waste activity down 3%, 13% year-over-year and down over 20% from 2022. Similarly, C&D tons were down 4% year-over-year, while MSW tons were up 3% in Q2. The declines in both special waste and C&D were most notable in our Central and Mid-South regions.

Mary Whitney: Adjusted EBITDA for Q2, as reconciles an hour earnings released, was 731.8 million, up 16.4% year-over-year and about 10 million dollars above the high end of our outlook. At 32.6% of revenue, our adjusted EBITDA margin was 10 basis points above our outlook and up 150 basis points year-over-year, including about 20 basis points drag from the decline in special waste tons referenced earlier. Adjusting for that impact, underlying solid waste margins were up 80 to 90 basis points, reflecting benefits from reductions in certain third-party costs, as retention improves, and some cost pressures abate. Other key margin contributors include combined commodity-related impacts of 50 to 60 basis points, and about 30 basis points benefit from acquisition.

Mary Whitney: Adjusted EBITDA for Q2, as reconciled in our earnings release, was $731.8 million, up 16.4% year-over-year, and about $10 million above the high end of our outlook. At 32.6% of revenue, our adjusted EBITDA margin was 10 basis points above our outlook and up 150 basis points year over year, including about 20 basis points drag from the decline in special waste tons referenced earlier. Adjusting for that impact, underlying solid waste margins were up 80 to 90 days, reflecting benefits from reductions in certain third-party costs as retention improves and as some cost pressures abate.

Mary Whitney: Dead interest expense in the quarter of 78.4 million reflects the benefits of both our Q1 public offering and 750 million of senior notes in the U.S., and our 500 million Canadian dollar inaugural senior notes offering in Canada, completed in June. Our current weighted average cost of debt is approximately 4% with an average of 10 or about 10 years. We ended the quarter with debt outstanding of about 7.71 billion, about 13% of which was floating rate, and liquidity of approximately 1.26 billion. In spite of acquisition outlays of 1.5 billion through Q2, our leverage ratio as defined in our credit facility declined in the quarter to 2.67 times debt to adjusted EBITDA.

Mary Whitney: Other key margin contributors include combined commodity-related impacts of 50 to 60 basis points and about 30 basis points benefit from active, Net interest expense in the quarter of $78.4 million reflects the benefits of both our Q1 public offering of $750 million of senior notes in the U.S. and our $500 million Canadian dollar inaugural senior notes offering in Canada, completed in June. Our current weighted average cost of debt is approximately 4%, with an average tenor of about 10 years.

Mary Whitney: Net interest expense in the quarter of $78 4 million reflects the benefit of both our Q1 public offering of $750 million of senior notes in the U S and our $500 million Canadian dollars inaugural senior notes offering in Canada completed in June.

Mary Whitney: Our current weighted average cost of debt is approximately 4% with an average tenure of about 10 years. We ended the quarter with debt outstanding of about $7 $71 billion about 13% of which was floating rate and liquidity of approximately $1 two 6 billion in.

Mary Whitney: We ended the quarter with debt outstanding of about $7.71 billion, about 13% of which was floating rate, and liquidity of approximately $1.26 billion. In spite of acquisition outlays of $1.5 billion through Q2, our leverage ratio, as defined in our credit facility, declined in the quarter to 2.67 times debt to adjusted EBITDA. Our effective tax rate for the second quarter was 22.6%, slightly below our outlook on lower foreign exchange rates.

Mary Whitney: In spite of acquisition outlays of $1 5 billion through Q2, our leverage ratio as defined in our credit facility declined in the quarter to 267 times debt to adjusted EBITDA.

Mary Whitney: Our effective tax rate for the second quarter was 22.6%, slightly below our outlook on lower foreign exchange rates, and finally year to date we have delivered adjusted free cash flow of 727.4 million, or 16.8% of revenue, up 15% year over year.

Mary Whitney: Our effective tax rate for the second quarter was 22, 6% slightly below our outlook on lower foreign exchange rates and finally year to date, we have delivered adjusted free cash flow of $727 4 million or 16, 8% of revenue up 15% year over year.

Mary Whitney: And finally, year-to-date, we have delivered adjusted free cash flow of $727.4 million, or 16.8% of revenue, up 15% year-over-year. I will now review our updated outlook for the full year and provide our outlook for the third quarter of 2020. Before I do, we'd like to remind everyone once again that actual results may vary significantly based on risks and uncertainties outlined in our Safe Harbor Statement and filings we've made with the SEC and the Securities Commissions or similar regulatory authorities. We encourage investors to review these factors carefully. Our outlook assumes no change in the current economic environment or underlying economic trends.

Mary Whitney: I will now review our updated outlook for the full year, and provide our outlook for the third quarter of 2024. Before I do, we would like to remind everyone, once again, that actual results may vary significantly based on risks and uncertainties outlined in our State Harper Statement, and filings we have made with the SEC, and the Securities Commission and similar regulatory authorities in Canada. We encourage investors to review these factors carefully. Our outlook assumes no change in the current economic environment or underlying economic trends. It also excludes any impact from additional acquisitions that may close during the remainder of the year, and dispensing the transaction-related items during the - Gary.

Mary Whitney: I will now review our updated outlook for the full year and provide our outlook for the third quarter of 2024.

Speaker Change: Before I do we'd like to remind everyone. Once again that actual results may vary significantly based on risks and uncertainties outlined in our safe Harbor statement and filings we've made with the SEC and the securities commissions or similar regulatory authorities in Canada, we encourage investors to review these factors carefully.

Mary Whitney: Our outlook assumes no change in the current economic environment, our underlying economic trends. It also excludes any impact from additional acquisitions that may close during the remainder of the year and expensing of transaction related items during the period.

Mary Whitney: It also excludes any impact from additional acquisitions that may close during the remainder of the year and expensing of transaction-related items during the period. Let's look first at our updated outlook for the full year as provided for and reconciled in our earnings. Revenue is now estimated at approximately $8.85 billion, up $100 million from our initial outlook, primarily as a result of contributions from acquisitions completed since that time, plus updated values for recycled commodities, with volumes reflecting recent trends.

Mary Whitney: Looking first at our updated outlook for the full year as provided for and reconciled in our earnings release. Revenue is now estimated at approximately $8.85 billion, up $100 million from our initial outlook, primarily as a result of contributions from acquisitions completed since that time, plus updated values for recycle commodities, with volumes reflecting recent trends. Adjusted EBITDA for the full year is now estimated at approximately $2.9 million or 32.8% of revenue, up $40 million and 10 basis points above our initial outlook for a 130 basis point year-over-year increase in adjusted EBITDA margin for 2024. Our adjusted free cash flow outlook for 2024 remains unchanged at approximately $1.2 billion on catbacks of approximately $1.15 billion.

Mary Whitney: Looking first at our updated outlook for the full year as provided for and reconciled in our earnings release.

Mary Whitney: Revenue is now estimated at approximately $8 85 billion up $100 million from our initial outlook, primarily as a result of contributions from acquisitions completed since that time, plus updated values for recycled commodities with volumes, reflecting recent trends adjusted.

Mary Whitney: Adjusted EBITDA for the full year is now estimated at approximately $2.9 billion, or 32.8% of revenue, up $40 million and 10 basis points above our initial outlook for a 130 basis point year-over-year increase in Adjusted EBITDA margin for 2024. Our adjusted free cash flow outlook for 2024 remains unchanged at approximately $1.2 billion on cap backs of approximately $1.15 billion.

Mary Whitney: Adjusted EBITDA for the full year is now estimated at approximately $2 9 billion or 32, 8% of revenue up $40 million and 10 basis points above our initial outlook for 130 basis point year over year increase in adjusted EBITDA margin for 2024.

Mary Whitney: Our adjusted free cash outlook free cash flow outlook for 2024 remains unchanged at approximately $1 2 billion on Capex of approximately 115 billion.

Mary Whitney: Turning next to our outlook for Q3. Revenue in Q3 is estimated to be in the range of $2.275 billion to $2.3 billion, and adjusted EBITDA margin in Q3 is estimated at approximately 33.7%, up 120 basis points year-over-year. Depreciation and amortization expense for the third quarter is estimated at approximately 12.7% of revenue, including amortization of intangibles of about $44 million, or 13 cents for diluted share net of taxes. Interest expense net of interest income is estimated at approximately $82 million for the third quarter, and finally, our effective tax rating Q3 is estimated at about 23.5%, subject to some variability.

Mary Whitney: Turning next to our Outlook for Q3. Revenue in Q3 is estimated to be in the range of $2.275 billion to $2.3 billion, and adjusted EBITDA margin in Q3 is estimated at approximately 33.7%, up 120 basis points year over year. Depreciation and amortization expense for the third quarter is estimated at approximately 12.7% of revenue, including amortization of intangibles of about $44 million, or $0.13 per diluted share net of tax. Interest expense, net of interest income, is estimated at approximately $82 million for the third quarter.

Mary Whitney: Turning next to our outlook for Q3.

Mary Whitney: Revenue in Q3 is estimated to be in the range of $2 $2 75 billion to $2 3 billion and adjusted EBITDA margin. In Q3 is estimated at approximately 33, 7% up 120 basis points year over year.

Mary Whitney: Depreciation and amortization expense for the third quarter is estimated at approximately 12, 7% of revenue, including amortization of intangibles of about $44 million or <unk> 13 per diluted share net of taxes.

Mary Whitney: Interest expense net of interest income is estimated at approximately $82 million for the third quarter and finally, our effective tax rate in Q3 is estimated at about 23, 5% subject to some variability.

Ronald Mittelstaedt: And finally, our effective tax rate in Q3 is estimated at about 23.5%, subject to some variables. Now, let me turn the call back over to Ron for some final remarks before Q&A. Okay, thank you, Marianne. We're extremely grateful to our teams for once again driving better than expected results while prioritizing our most important assets, our people, and positioning ourselves for continued growth. On the back of double-digit top-line growth, we further expanded our already industry-leading margins during the quarter while implementing and integrating record amounts of acquisition activity.

Ronald Mittelstaedt: And now let me turn the call back over to Ron for some final remarks before Q&A. Okay, thank you, Marianne. We're extremely grateful to our teams for once again driving better-than-expected results while prioritizing our most important assets, our people, and positioning ourselves for continued growth. On double digit top-line growth, we further expanded our already industry-leading margins during the quarter, while implementing and integrating repetitive amounts of acquisition activity. And as indicated by our increased outlook for revenue, adjusted EBITDA, and EBITDA margin for the full year, we remain well positioned for continued outside margin expansion throughout 2024.

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

Ron: Okay. Thank you Marianne.

Ron: We're extremely grateful to our teams for once again driving better than expected results, while prioritizing our most important assets our people and positioning ourselves for continued growth on double digit topline growth. We further expanded our already industry, leading margins during the quarter, while implementing and integrating record amounts of acquisition.

Mary Whitney: Activity.

Ronald Mittelstaedt: And as indicated by our increased outlook for revenue, adjusted EBITDA, and EBITDA margin for the full year, we remain well positioned for continued outside margin expansion throughout 2024. In fact, as provided in our updated Outlook for 2024, our Q3 Outlook reflects margins approaching the 34% threshold we've referenced in recent quarters. And that's in spite of a slower seasonal ramp thus far and ongoing cost pressures in many areas. Our results reflect our consistent focus on revenue quality as we shed less profitable activities and maintain a disciplined approach to acquisitions, a strategy that has served us well.

Mary Whitney: And as indicated by our increased outlook for revenue adjusted EBITDA and EBITDA margin for the full year, we remain well positioned for continued outsized margin expansion throughout 2024.

Ronald Mittelstaedt: In fact, as provided in our updated outlook for 2024, our Q3 outlook reflects margins approaching the 34% threshold we've referenced in recent quarters. And that's in spite of a slower seasonal ramp thus far and ongoing cost pressures in many areas. Our results reflect our consistent focus on revenue quality as we shed less profitable activities and maintain a disciplined approach to acquisitions; a strategy that has served us well. Moreover, our results in 2024 should set up another year of outsized growth in 2025, expected to be driven once again by price-led organic growth, along with role over contribution from acquisitions already completed and under agreement.

Ronald Mittelstaedt: Moreover, our results in 2024 should set up another year of outsized growth in 2025, expected to be driven once again by price-led organic growth, along with rollover contribution from acquisitions already completed and under agreement. Looking ahead, we would expect our financial results to reflect more of the benefits of improving operating results and retention and safety, along with the potential for underlying volume improvement and an easing of cost pressures not fully captured by headline CPI in the current environment.

Ronald Mittelstaedt: Looking ahead, we would expect our financial results to reflect more of the benefits from improving operating results in retention and safety, along with the potential for underlying volume improvement and easing of cost pressures not fully captured by having aligned CPI in the current environment.

Ronald Mittelstaedt: As we reflect on the success today and our positioning for 2025, I want to conclude by thanking our nearly 24,000 employees whose dedication is truly our greatest asset. Our differentiated results are driven by their commitment to our operating values: safety, integrity, and customer service. As we strive every day to be the premier service provider in North America and a great place to work. With solid waste pricing largely in place, higher commodity values and record M&A activity driving better-than-expected results, we were off to a great start for 2024 and well-positioned for continued success. And for those of you in New York City, you've probably seen our EV trucks in action picking up recyclables.

Ronald Mittelstaedt: As we reflect on the success to date and our positioning for 2025, I want to conclude by thanking our nearly 24,000 employees, whose dedication is truly our greatest asset. Our differentiated results are driven by their commitment to our operating values, safety, integrity, and customer service, as we strive every day to be the premier service provider in North America and a great place to work. With solid waste pricing largely in place, higher commodity values, and record M&A activity driving better than expected results, we're off to a great start for 2024 and well-positioned for continued success. And for those of you in New York City, you've probably seen our EV trucks in action picking up recyclables.

Mary Whitney: Starting values safety integrity and customer service as we strive everyday to be the Premier service provider in North America, and a great place to work with solid waste pricing largely in place higher commodity values and record M&A activity driving better than expected results were off to a great start for 2024 and well positioned.

Mary Whitney: <unk> for continued success.

Speaker Change: And for those of you in New York City, you've probably seen our EV trucks in action picking up recyclables were excited to expand our presence across the city beginning with the first commercial pilot zone. This fall as well as additional expansion. We expect we will keep you posted on this and other developments. We appreciate your time today and I will now turn.

Ronald Mittelstaedt: We're excited to expand our presence across the city, beginning with the first commercial pilot zone this fall, as well as additional expansion we expect. We'll keep you posted on this and other developments.

Operator: We're excited to expand our presence across the city, beginning with the first commercial pilot zone this fall, as well as additional expansion we expect. We'll keep you posted on this and other developments. We appreciate your time today, and I will now turn this call over to the operator to open up the lines for your questions.

Ronald Mittelstaedt: We appreciate your time today.

Operator: Now we'll now turn this call over to the operator, so open up the lines for your questions. Operator? Thank you. If you'd like to ask a question, please press star and one on your telephone keypad. If your question has already been addressed and you'd like to remove yourself from Q, please press star, then two. We do ask you to pick up your handset before pressing the keys. Once again, ladies and gentlemen, that star than one. If you have a question.

Speaker Change: This call over to the operator to open up the lines for your questions operator.

Operator: Thank you. If you'd like to ask a question, please press star 1 on your telephone keypad. If your question has already been answered and you'd like to remove yourself from the queue, please press star then 2. We do ask that you pick up your handset before pressing the keys.

Speaker Change: Thank you.

Speaker Change: I'll ask a question. Please press star one on your telephone keypad.

Speaker Change: If your question has already been addressed I would like to remove yourself from the queue. Please press Star then two we do not see a pick up your handset before pressing the keys once again, ladies and gentlemen that Star then one if you have questions.

Tyler Brown: Once again, ladies and gentlemen, that's star then 1 if you have a question. And today's first question comes from Tyler Brown at Raymond James. Please go ahead. Hey, good morning. Hey, I just want to make sure I have it.

Ronald Mittelstaedt: So what are the expectations around volume in the second half? Is maybe Q3 still under pretty good pressure, and it eases in Q4 as you anniversary that purposeful shedding, or would Q4 also remain under pretty good pressure? Well, Tyler, if you think about the way we came into the year, our expectation was that volumes would be most negative early in the year and sequentially improve as we anniversary the shedding and the purposeful non-renewal of contracts.

Tyler Brown: And today's first question comes from Tyler Brown at Raymond James. Please go ahead. Hey, good morning. Come on, Tyler. Hey, I just want to make sure I have it. So what are kind of the expectations around volume in the second half? Is maybe Q3 still under pretty good pressure. And it eases in Q4 as you anniversary that purposeful shedding, or would Q4 also remain under pretty good pressure. Well, Tyler, if you think about the way we came into the year, our expectation was that volumes would be most negative early in the year and sequentially improve as we anniversary the shedding and the purposeful non-renewal of contracts.

Speaker Change: And today's first question comes from Tyler Brown at Raymond James. Please go ahead.

Tyler Brown: Hey, good morning.

Tyler Brown: Good morning.

Mary Whitney: Hey.

Tyler Brown: Wanted to make sure I have it so what are kind of the expectations around volume in the second half is maybe Q3 still under pretty good pressure eases in Q4 as you anniversary that purposeful shedding or would Q4 also remain under pretty good pressure.

Ronald Mittelstaedt: We also expected that there would be some contribution from underlying volume generation, which we haven't seen yet, which is why in the updated guidance you can see the impacts of volumes that's implied by that. And so I would say the trajectory that the pace is a little different, but we would still see sequential improvement Q3 versus Q2. And then about the same or a little better in Q4 again as we anniversary known losses, very purposeful losses. The upside, of course, would come from any pickup in that activity. As at this point, as we've mentioned on the call Q2, we didn't see the seasonal ramp and special ways.

Ronald Mittelstaedt: We also expected that there would be some contribution from underlying volume generation, which we haven't seen yet, which is why, in the updated guidance, you can see the impact on volumes that's implied by that. And so I would say the trajectory, the pace is a little different, but we would still see sequential improvement in Q3 versus Q2 and then about the same or a little better in Q4 again, as we anniversary known losses, very purposeful losses.

Ronald Mittelstaedt: The upside, of course, would come from any pickup in that activity as, at this point, as we've mentioned on the call about Q2, we didn't see the seasonal ramp and special waste. And, as you know, Q3 is the strongest seasonal quarter. And so we'd be looking for that to come back, and we haven't seen it yet. Right, and that kind of plays into my second question, and I don't want to necessarily get out of my skis here, but it seems that you have a pretty easy special waste, maybe even C&D comp, next year. It feels like housing is maybe a coiled spring if mortgage rates could move lower.

Tyler Brown: And as you know, Q3 is the strongest seasonal quarter. And so we'd be looking for that to come back and haven't seen it yet. Right.

Ronald Mittelstaedt: And that kind of plays into my second question. I don't want to necessarily get out of my skis here, but it seems that you have a pretty easy special ways, maybe even C&D comp in the next year. It feels like housing is maybe a coil spring. If mortgage rates could move lower, infrastructure spending should be pretty good next year. I guess you think roll off and maybe just volumes more broadly could stabilize into 25, maybe 26 after three years of negative volumes, or will that calling still pressure? Yeah, I mean, obviously, Tyler, we can't predict a total macro economy, but I would agree with you.

Ronald Mittelstaedt: Infrastructure spending should be pretty good next year. I guess, do you think roll-offs and maybe just volumes more broadly could stabilize into 25, maybe 26? https://www.youtube.com Yeah, I mean, obviously, Tyler, we can't predict the total macroeconomy, but I would agree with you. Look, as you know, special waste, in particular, 90-plus percent of special waste that this industry speaks about is the cleanup of generally contaminated soils for speculative real estate. What we are seeing is that many municipalities across the U.S. are, you know, saying they are sort of cash-strapped in their current budget and are delaying the completion or the starting of their larger projects within their communities.

Ronald Mittelstaedt: Look, as you know, special waste in particular, 90% of special waste that this industry speaks about is the cleanup of generally contaminated soils for speculative real estate development, residential, commercially or industrially. What we are seeing is that many municipalities across the US are, you know, saying they are sort of cash-strapped in their current budgets and are delaying the completion or the starting of their larger projects within their communities. At some point, that just ends, okay? And so there's a natural bounce back of that. And, you know, so we've seen these cycles before. They're generally, you know, a year up to maybe a year and a half long.

Speaker Change: Look as you know special waste in particular.

Speaker Change: 90, plus percent of special waste that this industry speaks about is the cleanup.

Speaker Change: Generally contaminated soils for speculative real estate development.

Speaker Change: Residential <unk>.

Speaker Change: Commercially or industrial what we are seeing is that many municipalities across the U S.

Speaker Change: Are saying they are sort of cash strapped in their current budget and are delaying the completion or the starting of their larger projects.

Speaker Change: Within their communities at some point that just in okay, and so there is a natural bounce back of that.

Ronald Mittelstaedt: At some point, that just ends, okay? And so there's a natural bounce back of that, and, you know, so we've seen these cycles before. They're generally, you know, a year up to maybe a year and a half long.

Speaker Change: And so we've seen these cycles before they're generally a year up to maybe year and a half long we feel like we've been in this sort of for the last 18 months.

Ronald Mittelstaedt: We feel like we've been in this sort of for the last, you know, 18 months. So I would concur with you that at some point in, you know, 25, and certainly as we go into 26, that should improve. I would also note, Tyler, that we have historically seen, in national election years, presidential election years, we've seen sort of just a stall of activity as things become unknown leading up to an election and then sort of a releasing of it at once the results are known. So, you know, for all those reasons that would concur with that, you know, your statement.

Ronald Mittelstaedt: We feel like we've been in this sort of situation for the last, you know, 18 months. So I would concur with you that at some point in, you know, 25, and certainly as we go into 26, that should improve. I would also note, Tyler, that in national election years, presidential election years, we've seen sort of just a stall of activity as things become unknown leading up to an election and then sort of a release of it once the results are known. So, you know, for all those reasons, I would concur with that, you know, your statement. Interesting. Okay.

Speaker Change: So I would I would concur with you that at some point in 'twenty five and certainly as we go into 2006 that should improve I would also note Tyler that we have historically seen in national election years presidential election years, we've seen sort of just a stall of activity as things Bill.

Tyler Brown: Come on known leading up to an election, and then sort of a releasing of it at once the results are known so for all those reasons I would concur with that your statement.

Tyler Brown: Yeah, interesting. Okay.

Ronald Mittelstaedt: And then, Ron, on the labor front, it sounds like turnover continues to trend lower. I know that there are lag benefits. So as we look at the margin performance this year, how much is attributable – and maybe this is difficult – but how much is attributable to idiosyncratic labor benefits, and how much of it is just solid execution, and a positive price-to-cost spread? And I guess what I'm getting at is, won't some of that labor benefit really trickle more into 25?

Ronald Mittelstaedt: And then, run on the labor fund. It sounds like turnover continues to trend lower. I know that there are lagged benefits there. So, as we look at the margin performance this year, how much is the tribunal? Maybe this is difficult, but how much is the tribunal to idiosyncratic labor benefits? And how much of it is your solid execution, positive price to cost spread? And I guess what I'm getting at is, won't some of that labor benefit really trickle more into 25? Yeah. So, first off, Tyler, as you know, and others, we have said that as we get turnover to our targeted levels, we're not there, but we're getting closer.

Ronald Mittelstaedt: That as we come through 25, we should see approximately a hundred basis points of margin expansion due to these efforts. Today, we've captured about 25 to 30 basis points to that. So it implies there's another 70 to 75 to go. And, you know, we would, we, we still are fully confident in capturing that. As we've all said all along, excuse me, you know, it doesn't just come in the labor line. It comes in, you know, six or seven areas, you know, 15 to 20 basis points in an area: labor, labor overtime, variable, third party, you know, repairs, outside repairs.

Ronald Mittelstaedt: All of these things are affected by what your downtime is on your routes and what your route times are due to your head count. So, yes, it's a long-winded answer to say we do, you know, we think we're a little more than a quarter of the way there. And that's why we've made comment of outside margin expansion continuing in 25. The other element associated with that, Tyler, is really what hasn't abated to be where we still see the runway for opportunity. You know, we made reference to the fact that we had outside underlying margin expansion and solid weighting Q2.

Ronald Mittelstaedt: Right. And the other element associated with that, Tyler, is really what hasn't abated to date, where we still see the runway for opportunity. You know, we made reference to the fact that we had outsized underlying margin expansion and solid waste in Q2, and I would note that that's in the face of still seeing same-employee wage increases above 5.5%. And as you may recall, coming into the year, we thought the 6% we were seeing would abate to sub-5 as we moved through the year, so we're still looking forward to that. And that's the point about, you know, headline CPI not necessarily capturing the reality of all the cost pressures that still continue.

Tyler Brown: And I would note that that's in the face of still seeing same employee wage increases above five and a half percent. And as you may recall coming into the year, you know, we thought the sixth percent we were seeing would abate to sub five as we moved through the year. So we're still looking forward to that. And that's the point about, you know, headline CPI, not necessarily capturing the reality of all the cost pressures that still continue. Okay, perfect.

Speaker Change: Boy wage increases above five 5% and as you may recall coming into the year. We thought the 6% we were seeing would abate to sub 5% as we move through the year. So we're still looking forward to that and Thats the point about.

Speaker Change: Headline CPI not necessarily capturing the reality of all the cost pressures that still continue.

Tyler Brown: Thank you guys so much. Thanks, Tyler.

Speaker Change: Okay perfect. Thank you guys so much.

Tom: Thanks, Tom.

Kevin Chiang: Thank you. And our next question today comes from Kevin Chiang with CIBC. Please go ahead.

Kevin Chiang: Thank you. And our next question today comes from Kevin Chiang with CIBC. Please go ahead.

Speaker Change: Thank you very much.

Cowen churn: Question today come from Cowen churn with CIBC. Please go ahead.

Kevin Chiang: Good morning. Thanks for taking my question. You noted in the prepared remarks just, you know, you still see strong seller interests. But I guess if I look at maybe what's happening both in Canada and the US, you know, we did have a changing capital gains legislation up here. We also could have an election next year. And obviously, you guys are going through an election with the potential change in administration later this year. Just wondering if you're seeing any changes in that seller expectation or maybe how sellers might be trying to time, you know, deals, you know, just based on, you know, what's happening both in Canada and the US.

Cowen churn: Hi, good morning, Thanks for taking my question.

Speaker Change: You noted in the prepared remarks just.

Speaker Change: You still see a strong seller interest, but I guess, if I look at maybe what's happening both in Canada and the U S.

Speaker Change: We did have a change in capital gains legislation up here. We also cut him an election next year. Obviously, you guys are going through an election with.

Speaker Change: With a potential change in administration later this year, just wondering if youre seeing any changes in that seller expectations, and maybe how <unk> might be trying to time.

Speaker Change: Deals.

Speaker Change: Just based on what's happening both in Canada, and the U S.

Ronald Mittelstaedt: Yeah, well, I mean, very intuitive question, Kevin. And so look, we would tell you that historically, and we do not believe this is any different, that as a potential increases in capital gains tax have a very material impact on seller psychology and timing. And as we, as we currently know, the former Trump tax cuts that were put in place are currently set to expire at the end of 25 if they're not acted on prior in either direction. So, you know, if there is depending on who wins in the US and the presidential election and, of course, the House and Senate, if there was a belief that sometime in 25 or beginning in 26 capital gains rates would be going up, I think you would see quite a bit of accelerated seller activity throughout the back half of 24 and throughout 25.

Speaker Change: Yes, well I mean, very intuitive question Kevin.

Speaker Change: So.

Speaker Change: Look we would tell you that historically and we do not believe this is any different.

Speaker Change: That as.

Speaker Change: <unk>.

Speaker Change: Potential increases in capital gains tax have a very material impact on seller psychology and timing.

Speaker Change: As we as we currently know the former.

Speaker Change: Trump tax cuts that were put in place are currently set to expire at the end of 'twenty five if theyre not acted on prior in either direction.

Speaker Change: So if there is.

Ronald Mittelstaedt: Conversely, if, again, depending on that, if there was a belief that it was going to be a word is today or lower, I think that just sort of perpetuates where things are. So obviously, if it got much higher here, at least in the US, that would be a negative after 25 on seller psychology. Now, the contrary to that is that when that occurs, you know, multiples generally come down if there was a negative on that.

Kevin Chiang: So, you know, we've succeeded in M&A in both environments and both administrative, both administrative political administration, but certainly lower capital gains rate or is an incentive to sellers looking to do something. Thank you, sir.

Speaker Change: Citi. Please go ahead.

Speaker Change: Good morning, Thank you for taking the question.

Speaker Change: If I heard correctly in the prepared remarks, you guided to <unk> EBIT margins like 33, 7%.

Speaker Change: Just how should we think about the drivers of that is it accurate to say that underlying net price trends are the same or maybe a touch better and then I guess you have less help from commodities, maybe a little bit of dilution from M&A as that.

Speaker Change: Directionally accurate.

Ronald Mittelstaedt: Yeah, that's the right way to think about it. You know, when I think about what's different in the back half of the year than in the first half of the year, a couple of things. You know, the incremental deal contribution changes the mix a little bit. I'd say that the lack of special waste becomes more of a headwind. So that implies that underlying solid waste continues to expand, you know, becoming a little granular. There is an extra day of expenses in the quarter.

Speaker Change: Yes.

Speaker Change: Way to think about it.

Speaker Change: When I think about what's different in the back half of the year than the first half of the year a.

Speaker Change: A couple of things the incremental deal contribution changes the mix a little bit I would say that that lack of special waste becomes more of a headwind so that implies that underlying solid waste continues to expand.

Speaker Change: Getting a little granular there is an extra day of expenses in the quarter and so that impacts the year over year and takes it down 30% to 40 basis points and then as you said the commodity tailwind or smaller in the back half of the year than they were of course in the first half of the year.

Ronald Mittelstaedt: And so that impacts the year over year and takes it down 30 to 40 basis points. And then, as you said, the commodity tailwinds are smaller in the back half of the year than they were, of course, in the first half of the year. Yeah, thanks, Brian. You know, in the quarter, we had a variety of acquisitions close. Probably, you know, the largest was the recycling facilities we acquired in the Pacific Northwest. One was a company that had recycling facilities just outside of Tacoma and one just outside of Portland.

Speaker Change: Got it got it thanks for that detail and then.

Speaker Change: I was just wondering if maybe you can touch on just some of the acquisitions you made in the quarter.

Speaker Change: Or anything just kind of particularly noteworthy or these kind of focusing on the rural exclusive market that waste connections is in these all collection businesses.

Speaker Change: Thank you I'll turn it over.

Bob: Yes, Thanks, Bob.

Speaker Change: In the quarter, we had a variety of.

Speaker Change: Acquisitions close.

Ronald Mittelstaedt: We were one of the larger customers of both of those facilities, so it became an internalized recycling operation. Very important in these two states, which have recently adopted recycling legislation, and very critical for us there with our very large footprint. So, that was a very strategic transaction. We did a number of tuck-ins throughout our footprint on the solid waste side. We also did a smaller E&P deal in Canada in our R360 Canada footprint to bolt on to the secure transaction that we had done in Q1 to continue to expand the presence there. So, it was really, you know; we did deals throughout the U.S. and in Canada.

Speaker Change: Probably the largest was the.

Speaker Change: Cling facilities, we acquired in the Pacific Northwest.

Speaker Change: One was a company which had.

Speaker Change: Our recycling facility just outside of Tacoma, and once I've just outside of Portland.

Speaker Change: We were one of the larger customers of both of those facilities. So it became an internalized recycling operation.

Speaker Change: Very important in these two states who have recently adopted ERP legislation.

Speaker Change: And.

Speaker Change: Very critical for us there with our very large footprint. So that was a very strategic transaction did a number of tuck ins throughout our footprint on the solid waste side. We also did a smaller.

Speaker Change: E&P deal in.

Speaker Change: In Canada in our our 360, Canada footprint to bolt onto the secure transaction that we had done in Q1 to continue to expand our presence. There. So it was really we did deals throughout the U S and in Canada. So it was a very solid quarter.

Ronald Mittelstaedt: So, it was a very solid quarter, and we signed some much larger deals yet to be closed that you'll be hearing on next quarter's call in both the West and the East Coast that are franchised in nature. So, that was part of the 150 we said was signed but not yet closed. Very helpful, Ron.

Speaker Change: And we signed some much larger deals yet to be closed that youll be hearing on next quarter's call.

Speaker Change: In both the west and the East Coast.

Speaker Change: Our franchise in nature so.

Speaker Change: That was part of the 150, we said was signed but not yet closed.

Speaker Change: Alright, Thank you and our next question today comes from Noah Kaye with Oppenheimer. Please go ahead.

Noah Kaye: Yeah. Thanks, I'll just pick up right there Ron.

Noah Kaye: And that is to think about the actual return profile for all these deals in aggregate I think your point well taken about looking at the revenue profile and then Marianne you mentioned some of the.

Marianne: The margin implications from what's already been been close but.

Speaker Change: How do we think about the kind of returns that youre seeing now on these acquisitions, you've always had a pretty disciplined underwriting process.

Marianne: We are standardized.

Noah Kaye: <unk>.

Speaker Change: Where are where are your returns penciling out these days on the acquisitions.

Speaker Change: And can you comment at all Directionally on multiples.

Noah Kaye: Sure.

Speaker Change: Well first off let's start with the latter part of your question I would tell you that I think overall multiples have drifted down about one five to two turns over the last two plus quarters.

Speaker Change: So that's number one and of course that reflects.

Noah Kaye: A rising cost of debt capital in large part.

Noah Kaye: For most private companies and public companies.

Speaker Change: Our returns no really have not changed I mean, and what I mean by that is look we don't look at an EBITDA multiple on EBITDA multiple is sort of an outcome of our return on invested capital model.

Noah Kaye: We are looking for generally depending on the the risk the <unk>.

Noah Kaye: <unk> and the risk of the of the investment on an acquisition, we're looking for an IRR between sort of 11% and 15% and we're looking for an NPV on on invested capital throughout the life of that transaction.

Noah Kaye: Of net present value being not only positive but positive in relationship to the size and scope and the risk of the investment. So that's how we look at and then in EBITDA multiple which is an easy way to talk about it so obviously asset quality margin necessary capex replacement.

Noah Kaye: Capex investment risk permitting risk all of those are looked at in this in the scope of the transaction to determine what we think we can pay.

Noah Kaye: And get the acceptable returns so I would say if anything that over time that will continue to improve and why do I say that because look we have 115 to 120 landfills.

Noah Kaye: The ability to continue to acquire and develop landfills is is very difficult today relative to 10, and 15 and 20 years ago. So you will see more collection and transfer as we develop the network of those landfills both in the U S and Canada going forward and that will be.

Speaker Change: Bring the aggregate returns continue to give upward bias to the aggregate returns.

Noah Kaye: Okay.

Ronald Mittelstaedt: I want to touch briefly on the RNG sustainability investments because while you mentioned the higher commodities as a tailwind, it sounds like you, along with the industries, are seeing some startup delays. So can you just refresh us on the expected contribution from those incremental investments to EBITDA this year and then possibly how you see it for next year? Because obviously, these should be a lever to support margin expansion as they layer in.

Ron: Very helpful. Ron.

Noah Kaye: I wanted to touch briefly on the <unk>.

Speaker Change: <unk> sustainability investments because while you mentioned the higher commodities is a tailwind it sounds like.

Speaker Change: View, along with the industries are seeing some timing startup delays. So can you just refresh us on the expected contribution from those incremental.

Noah Kaye: Investments to EBITDA this year, and then possibly how you see it for next year, because obviously this should be a lever to support <unk>.

Speaker Change: Margin expansion as they layer in over time.

Speaker Change: Sure. So no we had talked about an expectation of 15% to $20 million in contribution and in our revised guidance that was taken down by about $10 million with very high flow through and we mentioned that in Q2 in essence, we just had cost not the benefit and so that mitigated some of the benefit from higher rent.

Speaker Change: And when we think more broadly about what's driving the delays in this case, it's really the last mile. If you will.

Speaker Change: It's the interconnect with electric utilities, and just getting the projects up and going so it's tough to generalize on project development and all the other projects, we have but what we do know is that across the industry. The projects are taking longer and the costs are running higher and so we remain committed to the the plans that we.

Speaker Change: We have and we would say during 2026, we still expect those projects to come online that we've described the about $200 million in EBITDA contribution. So that's how we're thinking about it.

Ronald Mittelstaedt: So that's how we're thinking about it. Yeah. And the other thing I would note, Noah, is that while projects are running a little more expensive, that does not include in our analysis the offset of ITC tax credits because we've never included that.

Speaker Change: And the other thing I would note, though is that while projects are running a little more expensive.

Speaker Change: That does not include in our analysis, the offset of ITC tax credits because we've never included that and that while it can create a timing mismatch between the project and that when you net that against the increase in Capex you should still be net about what we thought.

Ronald Mittelstaedt: And that while it can create a timing mismatch between the project and that, when you net that against the increased cap backs, you should still be net about what we thought. Okay, so all very helpful caller, and just to reflect back and make sure I understand, still committed to the $200 million EBITDA, at least as a run rate by 2026, you know, maybe just more of a ramp to get there as we move through the next year and change benefit characterization. Thanks so much.

Speaker Change: Okay.

Speaker Change: All very helpful color and just to reflect back make sure I get it we're still committed to the $200 million EBITDA.

Speaker Change: At least as a run rate by 2006.

Speaker Change: Maybe just more of a ramp to get there as we move through the next year you are unchanged that a fair characterization.

Speaker Change: Yes, that's how we're thinking about it and to that point, we're still committed to spending the capital.

Speaker Change: Primarily this year, but maybe some will flow into next year.

Speaker Change: Okay.

Speaker Change: Very helpful. Thank you.

Speaker Change: Yes.

Speaker Change: And our next question today comes from Toni Kaplan with Morgan Stanley. Please go ahead.

Ronald Mittelstaedt: Strong free cash flow quarter, but looks like you kept the guidance unchanged for now despite raising the EBITDA guide. Anything that might warrant higher than normal spending or more than you thought before, or is this just conservatism, and how should we think about potential sources of free cash flow upside for the year? Yep. Okay, great.

Toni Kaplan: Thanks, so much.

Toni Kaplan: Strong free cash flow quarter, but it looks like you've kept the guidance unchanged for now despite raising the EBITDA guide just anything that might warrant higher than normal spending or more than you thought before or.

Speaker Change: Or is this just conservatism and how should we think about potential sources of free cash flow upside for the year.

Speaker Change: Sure So Tony the reason for keeping free cash flow. The same in spite of the increased EBITDA would be that <unk> would be largely unchanged given the incremental interest expense associated with the $1 5 billion in acquisition outlays, we have.

Speaker Change: <unk> already made so that's how we think about it the other observation would be we didn't.

Toni Kaplan: Just capex in spite of the fact that we did all of that M&A and very often or in some cases M&A can come along with capex needs right upfront and so I actually think of it that there's underlying upside outperformance and we're absorbing those incremental that incremental capex and not changing.

Toni Kaplan: Our free cash flow guidance at $1 2 billion.

Speaker Change: Yes, okay great.

Speaker Change: I was hoping you could provide an update on any technology opportunities or productivity initiatives. I think you mentioned that cameras in the prepared remarks, but maybe expand on that opportunity or any other opportunities you think could move the needle for you.

Ronald Mittelstaedt: And I was hoping you could provide an update on any technology opportunities or productivity initiatives. I think you mentioned the cameras in your prepared remarks, but maybe expand on that opportunity or any other opportunities you think could move the needle for you, you know, in the next year or so. Ron, Mary, hi.

Speaker Change: And the next year or so.

Toni Kaplan: Sure.

Tony: There's a number of them were working on Tony.

Speaker Change: Effect that affect revenue that affect productivity that affects safety that effect.

Murph: Murph productivity and quality, but just to touch on a few that we are definitely seeing in real time.

Murph: We have I think we are the largest user right now on a percentage basis certainly of robotics.

Murph: And AI in our mergers we have just opened another mirth this quarter, meaning Q2 in Illinois that we completely rebuilt and with the use of both robotics and AI.

Murph: Optical sorting and that is taking down.

Murph: Our head count significantly in these mergers drastically increasing productivity on a per hour basis tons per hour basis, and most importantly, improving.

Murph: Quality material quality that we're producing and shipping the market quite dramatically.

Murph: And so that as that is happening in real time, there are <unk>, where we have rebuilt and we went from 80 to 100 employees down into the high <unk> on the same or more volume with the use of robotics, and and air classifiers and optical sorting.

Murph: We're looking at bringing another one online in.

Murph: Early 'twenty five that is under development right now. So so that's an example camera technology new camera technology, we've had camera technology on our trucks for risk forever, but now using.

Murph: Generative tech.

Murph: <unk> technology to measure commercial over loads in bends and create automatic billing for commercial customers that have overloads, rather than relying solely on driver interpretation.

Murph: We believe that this is.

Murph: Very good opportunity for improvement of commercial revenue, which will be reflective in both volumes and price going forward as we come out of 'twenty four and go into 25 very large push for us going forward. So those are just two examples where using new routing technology that allows us.

Speaker Change: Laos little literally routing on the fly as weaker.

Speaker Change: Our operating people come into a district in the morning, and recognize that they may have either vehicles or drivers down for some reason and they can reroute dynamically where before that was much more of a manual process. So those are three examples for you.

Speaker Change: Perfect. Thank you.

Speaker Change: Thank you and our next question today comes from Jami Rubin with Goldman Sachs. Please go ahead.

Jami Rubin: Yes, hi, good morning, everyone.

Ronald Mittelstaedt: I'm wondering if we could trouble you for an update on the Northeast rail development, how the ramp is going, and can you give us an update on when you expect to be fully operational at full volume? And, Ron, can I ask just one last question? You spoke about the automated truck cameras. I think they're coming from a supplier that just changed ownership. Please correct me if I'm wrong. I'm wondering if you could just talk about your views on that potential change in ownership, and can you just talk about where you stand in receiving truck deliveries today versus replacement levels, if you don't mind? Hey, good morning, everyone. This is Jasper Verman with Tobey.

Jami Rubin: Hi, good morning, guys.

Jami Rubin: I'm wondering if you had trouble you for an update on the northeast real development.

Speaker Change: Is the ramp going and can you give us an update on.

Speaker Change: When do you expect to be fully operational at full volume levels.

Jerry: Well sure Jerry so.

Speaker Change: Give you a couple of updates so number one.

Speaker Change: So we are not quite at the first year anniversary of acquiring Arrowhead were which is what you're referring to or what we refer to it as arrowhead that is the name of the landfill not the rail infrastructure, but.

Speaker Change: We're coming up or a little more than a month away from when we acquired that and when we did it was just a little less than 3000 tonnes. A day. It was about 2700 tons a day.

Speaker Change: We are now and we said that we would double it by the end of 'twenty four okay. Well here. We are at the July the midpoint in 'twenty four and we were at 6000 tonnes a day, so we've more than doubled it there.

Speaker Change: There are days, where pushing 7000, plus right now, but we have more than doubled it in.

Speaker Change: Less than the time, we committed.

Speaker Change: Now the ultimately we have said that we believe we will get that site to 10000 tonnes a day plus and we have said that that will take into 2026.

Speaker Change: Sites permitted tonnage is 15000 tons a day.

Speaker Change: We're not saying that can never happen, but that is obviously somewhere down the horizon.

Jerry: So those have all been very positive most all of that incremental improvement from 2700 tons. A day to 6000 has been internal tons. So that's one reason you don't see revenue growth from it as great because it is not third party tons its internal.

Jerry: Tons from our northeastern operations and so it gets eliminated in the accounting.

Jerry: So that and in the volume reports so that is that is one other thing to keep in mind.

Jerry: Those are all the positives on the negatives.

Jerry: And they were more short term.

Speaker Change: Norfolk Southern had been going through some I would just say some operating difficulties when they were going through some potential leadership upheaval during Q2 with an activist challenge.

Jerry: And that certainly affected their ability to deliver the all of our volumes on a regular basis that has improved and has as has gotten back to normal over the course of the last 30 to 40 days and we're more encouraged now than we've been about the ability to push through more volume we are putting down more track.

Jerry: At our Arrowhead facility.

Jerry: Being able to keep more take more volume in a day and store more cars. We are doing the same at our rail sites in the northeast.

Jerry: At our transfer facilities, so a lot going on with that right now.

Speaker Change: Super. Thank you in terms of free cash flow conversion. Obviously these investments you mentioned that recycling upgrades with the landfill gas investments as well.

Speaker Change: Can you just talk about the puts and takes around free cash flow conversion.

Jerry: And three years out once the landfill gas facilities are online.

Jerry: How much.

Speaker Change: Higher could your already strong free cash conversion.

Speaker Change: As you look at the puts and takes including bonus depreciation et cetera.

Jerry: Sure.

Speaker Change: As we said when we gave our guidance at the beginning of this year. If you if you normalize the free cash flow. This year. It was closer to historical levels of that 48% to 50%. So we'd say that's the right way to think about.

Speaker Change: The underlying conversion and Thats in spite of the fact that we do have bonus depreciation sunsetting, a lesser until some other changes put in place.

Speaker Change: And so we still think thats the right way to think about recall that our highest our peak years, it was 53% to 54%.

Speaker Change: Absent the benefits from bonus depreciation and outsized M&A in the you know the expensing of qualifying equipment right.

Speaker Change: Or writing off so that was.

Speaker Change: Benefit during that period.

Speaker Change: We don't see getting back to those levels in the current environment with the sunsetting of bonus depreciation, but certainly in the 40% to 50 is the way we think about it on a more normalized basis and jewelry averages and as we continue to there is no theoretical ceiling on conversion.

Speaker Change: Just like there is no theoretical.

Speaker Change: The ceiling on margins as we move margins up over time.

Speaker Change: And and all things staying even you will continue to see that conversion move up naturally over time.

Jerry: Super.

Jerry: Just one last one.

Jerry: Looking ahead to the automated.

Jerry: Our cameras.

Jerry: They are coming from.

Speaker Change: Supplier that just changed ownership. Please correct me if I'm wrong I'm wondering if you could just talk about your views on that potential change in ownership.

Speaker Change: Can you just talk about where you stand in receiving.

Speaker Change: Truck deliveries today versus replacement levels, if you don't mind.

Speaker Change: Sure well I think the transaction youre referencing unless im wrong. Gerry is terex is acquisition of environmental solutions group from Dover.

Speaker Change: And if I, if I'm right in that assumption, yes, we are acquiring cameras and have for many years. Although this is a different technology on the AI.

Speaker Change: For commercial Overages, but yes that is through one of the ESG subsidiaries third eye.

Speaker Change: <unk> had a very long standing relationship with ESG on a number of their products as you know they've got seven or eight different product lines for solid waste from containers to two truck bodies too.

Speaker Change: Two.

Speaker Change #100: Safety technology onboard safety technology to compaction equipment. So we are a user of all of that as I said have had a very good relationship think very highly of the folks at ESG I think they've done a very nice job on their products and services.

Speaker Change #101: <unk> is the transaction itself, we don't know much about it never had much interaction with Dover as apparent just.

Speaker Change: With ESG corporate and as I understand they're going to continue to be sort of a stand alone entity within terex.

Speaker Change: And I think they feel good about that from everything we've heard.

Speaker Change: And as long as we continue to deal with the folks we have dealt with.

Speaker Change: We think.

Speaker Change: It's excellent for both companies.

Speaker Change: Really excellent for ESG and for tariffs or getting a quality company.

Speaker Change: And we have some relationship with tariffs on some of our heavy equipment stuff in our field and so we know them not as well as we do ESG, but think highly of both of them.

Speaker Change: Super I appreciate it thank you.

Speaker Change: Thank you and our next question today comes from Tobey Sommer with true Securities. Please go ahead.

Ronald Mittelstaedt: I think you mentioned earlier the price cost spread still being elevated in 2025. Based on your pricing visibility and what you're seeing on the inflation side, is there any way to frame where that spread is now and where you think it might be in 2025? I'm hoping to get an update on the secure energy assets, how the integration progressed there, and any expectations for the E&P waste business over the balance of the year.

Jasper Bibb: Hey, good morning, everyone. This is Jasper bibb on for Tobey I think you mentioned earlier price cost spread still being elevated in 2025.

Jasper Bibb: Based on your pricing visibility and what Youre seeing on the inflation side is there any way to frame where that.

Speaker Change: That spread is now and where do you think that might be in 2025.

Speaker Change: Sure.

Speaker Change: I had made is that the wage pressures.

Speaker Change: The beta to the extent that might have otherwise been suggested by the lower CPI and that we were delivering the underlying margin expansion approaching a 100 basis points in spite of that fact, and so in our view that creates opportunity ahead to the extent that those wage pressures, we expect would or should.

Speaker Change: <unk> continued to abate, we also acknowledge that yes.

Speaker Change: That price cost spread is something we'll be very mindful of as we think about what pricing as necessary. As we go into 2025, we certainly know that CPI linked markets would be expected to step down meaning the price increase and 25 would be lower than it is in 'twenty four and in those markets, we're getting a little.

Speaker Change #103: Over 5%. So those are the pieces that start informing us and of course, we'll have better visibility on that by October when we typically start talking about the pieces of our guidance, yes, Josh what I would say is look.

Speaker Change #108: For 20 plus years now.

Speaker Change #107: Our approach hasn't changed we target getting a 150 to 200 basis points spread minimally from relative to sort of the <unk>.

Speaker Change #107: Ongoing not only CPI, but what we believe our cost structure is doing which often reflects CPI, sometimes there's some minor dislocations.

Josh: So you tell us what you think the CPI is and layer on 200 basis points.

Josh: And that's what we'll be likely targeting and achieving in in our reported net pricing next year.

Josh: And that is at 200 basis points, that's just below to answer what we're getting right now and of course, we target, beating what we've what we out there. We guide. So we would tell you we would expect it to be relatively the same.

Josh: Dollar amount maybe of a little different because CPI comes down, but the spread of price to cost should be about the same as current.

Speaker Change #106: Okay, all that makes sense and then.

Speaker Change #102: Hoping to get an update on the secure energy assets.

Speaker Change #105: How's the integration progress there or any expectations for the E&P waste business over the balance of the year.

Ronald Mittelstaedt: Well, you know, first off, I appreciate the question because that gives me an opportunity to thank our R360 Canada group. You know, their first real full quarter was Q2, which we just came out of. They had an exceptional quarter delivering, you know, in both revenue and in EBITDA at or above our expectations. An outstanding group of assets there, and outstanding group of employees that we were fortunate to hire up there and that we have added to since then. Exceptional leadership team that we've developed up there, and they're performing very, very well.

Speaker Change #105: Sure well.

Speaker Change #102: First off.

Speaker Change #110: I appreciate the question because that gives me the opportunity to thank our our 360, Canada group.

Speaker Change #110: Their first real full quarter was Q2.

Speaker Change #102: Which we just came out of they had an exceptional quarter.

Speaker Change #102: Delivering.

Speaker Change #102: Both revenue and in EBITDA at or above our expectations outstanding group of assets there.

Speaker Change #102: Standing group of employees that we were fortunate to hire up there and that we have added two since then.

Speaker Change #102: Exceptional leadership team that we've developed up there.

Speaker Change #102: And they're performing very very well.

Ronald Mittelstaedt: You know, we have not yet reopened any of the seven incremental E&P assets that came along with that transaction that were shuttered at the time. We're getting closer to reopening one of our first of those. And over time, we'll evaluate. We think, over time, probably four or five of those make sense to reopen.

Speaker Change #102: We have not yet.

Speaker Change #102: Reopened any of the seven incremental E&P assets that came along with that transaction that were there.

Speaker Change #102: That were shuttered at the time were getting closer to reopening in one of our first of those and over time, we will evaluate we think over time, probably four or five of those makes sense to reopen so that's some incremental opportunity there as I mentioned, we did a tuck in transaction in our.

Ronald Mittelstaedt: So that's some incremental opportunity there. As I mentioned, we did a tuck-in transaction outside of the Alberta market in the E&P space in Canada in Q2. Excellent company, excellent leadership team that has joined our R360 Canada team. So, you know, long way around the boat to tell you I think we're performing well. We're very pleased with the assets and asset quality and have an exceptional team in place to drive things up there.

Speaker Change #102: Side of the Alberta market.

Speaker Change #102: The E&P space in Canada in Q2.

Speaker Change #102: Excellent company excellent leadership team that has joined our 360, Canada team. So long way around the boat to tell you I think we're performing well, we're very pleased with the assets and asset quality.

Speaker Change #102: And and have an exceptional team in place to drive things up there.

Speaker Change #114: Only thing I would add to that with respect to the E&P waste trends that we're seeing we also saw sequential improvement in the U S in that business and I would say that in spite of rig count continuing to decline. So I would point out that there is remediation activity that contributed to the Q2 beat of our expectation and we never have.

Speaker Change #115: Soon that that continues because those are one off job.

Ronald Mittelstaedt: I appreciate the detail there. Thanks for taking the questions. And this is what I would guess, is in the winter, the incinerators on the eastern seaboard dropped their price from, you know, the $100 a ton rate down as low as the teens to keep volume and attract volume. And many landfills along the eastern seaboard chased prices down to keep volumes when that happened. And that would be what I would guess it was. We did not play that game, and that did have a volume effect, but others did, and I'm imagining that's what it is.

Speaker Change #116: I appreciate the detail there thanks for taking the question.

Speaker Change #114: Yes.

Speaker Change #102: Thank you and our next question today comes from James Schumm with Cowen. Please go ahead.

James Schumm: Hey, good morning, everyone.

Speaker Change #111: There's a.

James Schumm: There is a third party survey, noting landfill pricing declined year over year with the exception of maybe the northeast I was just curious what do you think drove that and what's your expectation going forward.

Speaker Change #113: Number one im looking <unk>.

Speaker Change #117: James I'm not aware of that survey. So I apologize I can tell you that is not the case for us.

James Schumm: All.

Speaker Change #120: Three lines of disposal business price per unit increased.

Speaker Change #112: In 2004.

Speaker Change #112: It was up almost 6% just under 6% between all three of our lines on price per ton basis year over year, So I am not.

Speaker Change #112: <unk>.

Speaker Change #122: I'm not certain what that is.

James Schumm: One thing that does affect that and it did hurt our volume somewhat in Q1 more than in Q2.

James Schumm: And.

Speaker Change #119: This would be what I would guess is in the winter the incinerators on the eastern seaboard drop their price from the $100 a ton rate down as low as the teams to keep volume and attract volume and many landfills along.

Speaker Change #119: The eastern Seaboard chased price down to keep volumes when that happen and that would be what I would guess it was we did not play that game.

James Schumm: And that did have a volume effect, but but others did and I'm imagining that's what it is.

James Schumm: Okay interesting. Thank you and Ron you mentioned cost pressures in many areas.

James Schumm: Maryann.

Maryann: <unk> labor maybe.

Ron: Labor expenses not.

Ron: Declining are decelerating as fast as maybe you thought is there anything incremental.

Speaker Change #124: Are you seeing anything on the repair and maintenance side are you seeing any.

Speaker Change #134: Reacceleration of inflation elsewhere, just just any color you could give there.

James Schumm: No.

Speaker Change #125: Yes. The point, we were trying to make was that cost pressures haven't necessarily abated to the extent that headline numbers might suggest.

Speaker Change #123: So we are still seeing for instance, improving trends in things like third party maintenance costs in parts and materials those are getting better but there is still about.

James Schumm: 3% for instance, headline numbers. So if that's your proxy for cost escalation, we're still north of that which is why our overall cost inflation is more like four 5% because it's driven by those higher numbers. We are seeing them improve they are just not improving as quickly as we had expected and so when you think about our 80 to 90 basis.

James Schumm: Points of underlying margin expansion. It tells you those retention related efforts withdrawn center 25 to 30 basis points are helping to decrease our reliance on third parties, whose costs are escalating quite as quickly as they were before but are still escalating.

Speaker Change #131: Okay, great. Thank you very much.

Speaker Change #121: Thank you and our next question today comes from Southern <unk>.

Speaker Change #130: <unk> capital markets. Please go ahead.

Ronald Mittelstaedt: Great, thanks, and good morning. There was some discussion earlier around just the outlook for maybe some of the more cyclical volumes in the system and some of the shedding. But I guess maybe if you sit back and look at a high level, if we think about the moderation in volumes over the last little while, has more of that been macro versus shedding? And as you look forward, would a macro recovery mean volumes in your direction will be positive even with some shedding? Just trying to think about it, and as we look at those two buckets, is one more dominant in the volume story than the other?

Speaker Change #126: Okay, great. Thanks, and good morning, there was some discussion earlier around just the outlook for maybe some of the more cyclical volumes into the system and some of the shedding, but I guess, maybe if you sit back and look at a high level. If we think about the kind of the moderation in volumes over the last one in a while.

Speaker Change #128: More of that been macro versus shedding and as you look forward, what a macro recovery mean bondage address will be positive even with some chatting just trying to think about and as we look at those two buckets is one more dominant in the volume story than the other in terms of the Shannon. Thank you.

Speaker Change #121: Yes.

Speaker Change #127: Very insightful question look.

Speaker Change #129: When we talk about special waste volumes as an example, being down in Q2, 20% relative to 'twenty two that's macro.

Speaker Change #145: That is not any shedding whatsoever and that was.

Speaker Change #129: Yeah.

Speaker Change #129: That certainly macro helps drive that roll off volume being down 3% in the quarter.

Speaker Change #129: That's construction and event oriented that's macro so to your question.

Speaker Change #127: As.

Speaker Change #127: Macro improvement would drive both of those positive very quickly and historically always has.

Speaker Change #132: Where do you see the share the shedding the intentional shedding is generally in the commercial and residential lines of our business because when we're acquiring companies who have underperforming contracts as a part of what they do that's what we are shedding that and broker work that comes along with commercial.

Speaker Change #132: Business that we acquire we often end up shutting the all or a piece of that broker work. So.

Speaker Change #132: The greater macro economy, because again shedding is not anything new for west connections. We've done this forever. What you had in the past as you had a macro environment that gave enough underlying volume that you didn't see it in negative volume with.

Speaker Change #132: Real volume being closer to zero any sharing you do that's why it goes to a negative so that would be the answer.

Speaker Change #140: Okay, that's great color and then one other.

Speaker Change #133: The topics, obviously out there that you'll probably hear a lot is.

Speaker Change #137: How do you control pricing as inflation has lower but I guess, if we think more specifically about the price cost spread.

Speaker Change #138: One line of thinking is as inflation had lower the absolute level of pricing kind of moves lower maybe there is a better one.

Speaker Change #133: Bill or stronger ability to maybe capture a bigger price cost spread because the absolute numbers are lower.

Speaker Change #136: From your seat how would you comment on that line of thinking that's out there.

Bill: Not too.

Speaker Change #139: Disagree I would actually say, it's inverse of that and what I mean by that is it's easier and see this is why it's so critical to understand strategic differences and mix differences of business model because it is far easier to cast capture a greater.

Speaker Change #133: Price cost spread and a rising inflationary and a higher inflationary environment.

Speaker Change #133: It is harder and a lower inflationary environment.

Speaker Change #133: I know that may seem a little counterintuitive, but look if youre if people are seeing 7%, 8% I'm using that inflation.

Speaker Change #133: They expect 10 or 11% price they expect a two or 300 basis point differential if theyre seeing 3% getting that differential of 2% to 3% and go into six is much harder.

Speaker Change #133: It's much more of a perception issue with customers. So.

Speaker Change #133: And so as a percentage differential right once 20% differential or 30% and the other 50% differential and so that's why it's harder.

Speaker Change #141: That's why we like our business mix with low, 40% and franchise, where we get a guaranteed CPI or return, which allows us to focus our energy on that 60% that is competitive.

Speaker Change #133: Which tends to be more rural.

Speaker Change #133: It allows us to drive higher competitive market pricing there so.

Speaker Change #133: We're very comfortable the bottom line is there I think it is misplaced very misplaced for people to be saying pricing is decelerating no absolute dollar percentages decelerating the spread is all that really matters.

Speaker Change #133: Okay, and so that's what the focus should be not the not the.

Speaker Change #133: The total dollar the total percentage number.

Ronald Mittelstaedt: Thank you. If I could just squeeze in one little one, I just want to make sure I heard correctly earlier in the call when you talked about some of the M&A you undertook. Was it noted that some of the acquisitions were in new franchise markets?

Speaker Change #142: Great and if I could just squeeze in one little one I wanted to make sure I heard correctly earlier in the call. When you talked about some of the M&A. You undertook did you was it noted that some of the acquisitions were in new franchise markets.

Speaker Change: What we said is the $150 million in deals that have been signed but not yet closed those included franchise markets. So we're looking forward to closing them in the <unk>.

Speaker Change #142: Half of the year.

Ronald Mittelstaedt: Great, thanks very much. Thank you. And our next question today comes from Bryan Butler on Stiefel. Please go ahead. Well...

Speaker Change: Great. Thanks very much.

Thank you and our next question today comes from Brian Butler with Stifel. Please go ahead.

Hey, good morning, most of my questions have been answered, but just two quick ones hopefully.

Speaker Change: On the R&D, just wanted to clarify that $200 million of EBITDA.

Speaker Change #144: Out there and maybe 2026.

Speaker Change #143: And that assumption was kind of made with RIN prices closer to $2 is that correct and there is potentially some upside if rain.

Speaker Change: <unk> for the next 24 months at a higher level I just want to make sure we get that that assumption correct.

Speaker Change: Yes, we are.

Bryan: Actually that 200 million was made with Ren pricing of $2 50 to $2 60, Bryan So no not $2. So there certainly is some upside at $3, but it's not 50% because it wasn't made at the assumption wasn't made at $2. What we have said is that the inverse.

Speaker Change: <unk> thesis worked down to $2 without an ITC tax credit it worked below $2 with an ITC tax credit.

Speaker Change: So that may be a little bit of the confusion, but the $200 million was based on 250 to 260 rents to answer the question.

Speaker Change: Perfect. Thank you for that clarification, and then you talked about a partnership on P. Fast and obviously this is kind of an.

Ronald Mittelstaedt: Issue that's out there.

Speaker Change: How should we think about that that partnership and maybe from a management of reshape what that cost might look like out into the future I mean, obviously, it's early days, but we're.

Bryan Butler: There is a good starting point.

Ronald Mittelstaedt: Well.

Ronald Mittelstaedt: It is early days, Brian I mean, I would say a couple of things number one this type of federal regulation.

Speaker Change: That is uniform for at least all of the competitors we compete with.

Speaker Change: <unk> has historically been a very positive development for our industry.

Speaker Change: The public companies have the capital depth to comply with the legislation and it is a pricing opportunity to recover not only the investment, but some incremental margin on top of that and so we don't view this opportunity any differently.

Ronald Mittelstaedt: As.

Speaker Change: It is a different cost impact by market depending on.

Bryan Butler: How much <unk>, you may have to treat and what levels. What's your outlet levels that options are.

Speaker Change: And so it's a bit of a logistics issue.

Speaker Change: But look somewhere between two and $10 million of capital at a landfill.

Speaker Change: We'll generally.

Ronald Mittelstaedt: Handle.

Speaker Change: Purchasing treatment units from a capital standpoint.

Ronald Mittelstaedt: And.

Speaker Change: It's probably more in the $2 million to $4 million to be honest.

Speaker Change: And that will allow you to use the technology to in effect solidify.

Speaker Change: P pause that is within your leachate, allowing.

Speaker Change: Solidified to go back into the landfill permanently encapsulated and the liquid to be treated at tw or an industrial wastewater treatment plant at no greater real cost than it was before.

Speaker Change: And that's going to probably be a two to four a gallon type impact.

Ronald Mittelstaedt: <unk>.

Speaker Change: We will be pricing through this both the capital and the incremental operating cost.

Speaker Change: But it is early days as you've said.

Bryan Butler: Okay, great. Thanks for taking the questions.

Operator: Thank you. And our next question today comes from Tim DeTanners with Wolf Research. Please go ahead. Yeah, hey, good morning. I just have a few quick ones that I think will be pretty high level.

Speaker Change: Thank you and our next question today comes from Timna Tanners with Wolfe Research. Please go ahead.

Ronald Mittelstaedt: But I wanted to just ask for any updated thoughts on Desire, if any, to stray away from your, you know, solid waste focus given a competitor doing so. Any, any updated thoughts there? Well, you know, look, I don't know who. None of us know who will win the election and what they will ultimately do, whether, depending on what they say, it could always be different anyway.

Speaker Change: Yeah, Hey, good morning connect <unk> quick ones that I think can be.

Speaker Change: Pretty high level.

Ronald Mittelstaedt: I wanted to just.

Ronald Mittelstaedt: Any updated thoughts on desire if any to stray away from here.

Ronald Mittelstaedt: <unk> given a competitor doing Sally any updated thoughts there.

Ronald Mittelstaedt: Yeah.

Speaker Change: No I mean, well, yes updated thoughts no intention to do so look we have.

Ronald Mittelstaedt: We have for 27 years been what I call sort of our peer set.

Speaker Change: <unk> play.

Speaker Change: 12 years ago, we entered the E&P disposal business.

Ronald Mittelstaedt: And.

Speaker Change: And with continued at one point that was 15% of our business. It's now five five to six with what we did earlier this year. So it's well less than it was back in 2012, but we see ample opportunity in the solid waste.

Speaker Change: Core solid waste and recycling side and in our E&P disposal and treatment side and and we really see no reason I'll use your words stray from that at this point in time.

Ronald Mittelstaedt: We've got ample opportunity in front of us.

Speaker Change: And while we look at other things, we just have not found them to be attractive and and and.

Speaker Change: Relative to all our alternative excuse me uses of capital so.

Speaker Change: I can't speak to what others are doing.

Speaker Change: I'm, assuming it makes great sense for them, but it's just not strategically something we're looking to do.

Speaker Change: Okay. That's helpful and then similarly in the past you've said the elections in politics aren't necessary that important for you all but seems to me like pregnant.

Ronald Mittelstaedt: And.

Speaker Change: Try to deemphasize if you will in that even if nothing else and I'm. Just wondering does that change your strategy at all or is it too late to put that genie back in the lab.

Ronald Mittelstaedt: Well.

Ronald Mittelstaedt: Look I I don't know, who none of us know who will win the election and what they will ultimately do whether depending on what they say it could always be different anyway, but we have not by any means gone quote all in on EV.

Ronald Mittelstaedt: But, you know, we have not, by any means, gone, quote, all in on EV. We are doing it in markets that are asking us to or demanding us to ask in the bidding process, such as New York City has done in parts of the franchising, such as parts of California have done. And we are complying with or planning on complying with these requirements. But no, I don't think that there's anything out there investment wise that would be suitable, so I'd remind you that since the initiation of the dividend in 2010, we've raised it double digits every year on a per share basis, and we continue to think about looking at it every year in Q3, and we have no differing expectations at this point. Our open positions, that was your question, peaked at about 7.2% back in 22, actually, sort of the mid to the end of 22. That was the peak.

Ronald Mittelstaedt: Doing it in markets that are asking us to or demanding us to.

Ronald Mittelstaedt: Asking in the bidding process to such as New York City is done.

Ronald Mittelstaedt: In parts of the franchising.

Ronald Mittelstaedt: As parts of California have done and we are complying or planning on complying.

Ronald Mittelstaedt: But.

Ronald Mittelstaedt: No I don't think that there's anything out there investment wise that.

Ronald Mittelstaedt: Irrespective.

Speaker Change: Specter of who wins the election and has control of Congress I don't think we've made any decisions solely based on one regulatory policy or another these investment decisions are made based on strategic decision. They are made based on what's best environmentally and sustainability while.

Ronald Mittelstaedt: And they are made with an economic focus on each return if something changes in any of those equations.

Ronald Mittelstaedt: We always reserve the right to back up some but we're not seeing that from anything that were hearing on either side right now.

Speaker Change: Okay got it and then final one for me.

Speaker Change: Just remind us what it would take to revisit the dividend at this point isn't just a question of alternative.

Speaker Change: Acquisition opportunities or just if you could remind us your thinking there.

Ronald Mittelstaedt: So I would remind you that since the initiation of the dividend in 2010, we've raised at double digits every year.

Ronald Mittelstaedt: On a per share basis and.

Ronald Mittelstaedt: We continue to think about.

Ronald Mittelstaedt: Looking at it every every year in Q3, and we have no different expectations at this point in time.

Ronald Mittelstaedt: I'm, sorry, I misspoke I meant the buybacks I'm sorry about that.

Ronald Mittelstaedt: Oh, the buyback, yes, we'd say the same philosophy that we've always had which we view M&A as our highest and best use to drive incremental growth of course, it would be depending on valuation and strategic fit but that always comes first I've already mentioned our philosophy on the dividend. So what that implies is that in years, when we're not seeing an hour.

Speaker Change: <unk> the amount of M&A like we are this year, whereas we've said we've already had out laser over one 5 billion on deals and continue to do between now and year end.

Ronald Mittelstaedt: So when it is not like that there is certain it certainly could be ample free cash flow available and we would absolutely consider stepping up on the buyback opportunity Opportunistically. That's how we continue to think about it.

Speaker Change: Thank you.

Speaker Change: Thank you and our final question today comes from Scott Moore with Jefferies. Please go ahead.

Speaker Change: Hi, Good morning, Thank you I will.

Ronald Mittelstaedt: I'll keep it to one quick one here Martha just a clarification question you talked about labor open positions being down I think you said about 40%.

Speaker Change: How much more is there to go on that Labor front and then as you think about maybe the reduction in the open position is it.

Speaker Change: He can talk a little bit about it this is a function of better retention and lower turnover versus maybe.

Speaker Change: This need for incremental labor, either data productivity or maybe you're seeing.

Speaker Change: Other talent kind of come in any color there. Thanks.

Ronald Mittelstaedt: Sure.

Speaker Change: Well, so first off when we really.

Ronald Mittelstaedt: Our open positions that was your question that peaked at about seven 2% back in in 'twenty to actually sort of the mid to the end of 'twenty two.

Ronald Mittelstaedt: That was the peak.

Speaker Change: We had traditionally.

Ronald Mittelstaedt: We had traditionally, pre-pandemic, let's just use that, traditionally always tried to run the company about three to maybe up to 4% open headcount, okay? And that's sort of a sweet spot for us, naturally. That brought us about 18 to 21% total turnover, with about half of it being voluntary and half of it being involuntary, where we're being very proactive on potential, usually, unsafe driver activity. So, you know, we are now sitting right at about 4%. Four of our six regions are under 4%.

Speaker Change: Pandemic, let's just use that we have traditionally always tried to run the company about three to maybe up to 4% open head count Okay.

Ronald Mittelstaedt: And that's sort of a sweet spot for us naturally that that brought us about eight.

Ronald Mittelstaedt: 18% to 21% total turnover with about half of it being voluntary and half of it being in voluntary.

Ronald Mittelstaedt: We're being very proactive on potential usually.

Ronald Mittelstaedt: Unsafe driver activity.

Ronald Mittelstaedt: So.

Ronald Mittelstaedt: We are now sitting right at about dead on 4%.

Ronald Mittelstaedt: Four of our six regions are under 4%.

Ronald Mittelstaedt: So we're getting closer to our target.

Ronald Mittelstaedt: So we're getting closer to our target. In this environment, we want to run this at about three and a half to 3.8% open headcount would be sort of optimal. We've reduced voluntary turnover from the mid 20% level, like 25%, down to 14.6%, and our involuntary turnover is running around 11.5 to 12. So we've probably got about another four points, optimally, to go on the voluntary scale. I'd like to get that down to that 10% to 11% level. We're comfortable with our involuntary behavior where it is.

Ronald Mittelstaedt: In this environment, we want to run this about three and a half to three 8% open head count would be sort of optimal.

Ronald Mittelstaedt: We've reduced voluntary turnover from the mid 20% level like 25% down to 14, 6%.

Ronald Mittelstaedt: At our involuntary turnover is running around 11 five to 12.

Ronald Mittelstaedt: So we've probably got about another four points.

Ronald Mittelstaedt: Optimally to go on the voluntary wed like to get that down in that 10% to 11% level.

Ronald Mittelstaedt: We're comfortable with our involuntary where it is it will also naturally drop as everything stabilizes. So.

Ronald Mittelstaedt: It will also naturally drop as everything stabilizes. So, you know, we're getting closer is the answer to your question. It is almost, other than the MRF side that I commented on, which is a small piece, when I talked about robotics, it is all due to our conscious improvement in turnover versus, quote, quote, productivity, was your question. You know, that is, as you get fully staffed everywhere, then you are able to focus on incremental productivity improvements. And you do that both through incremental growth per route, which actually drives productivity the best without adding headcount. But it has all been from turnover improvement at this point to answer the question.

Ronald Mittelstaedt: We're getting closer is the answer to your question. It is almost other than the mirth side that I commented on which is a small piece when I talked about robotics. It is all due to our conscious improvement in turnover.

Speaker Change: And versus productivity.

Speaker Change: <unk> was your question.

Ronald Mittelstaedt: That is as you get fully staffed.

Ronald Mittelstaedt: Everywhere, then you are able to focus on incremental productivity improvements.

Ronald Mittelstaedt: And you do that both through incremental growth per route, which actually drives productivity the best without adding head count.

Ronald Mittelstaedt: But it has all been from the turnover improvement at this point to answer the question.

Speaker Change: Great. Thank you.

Speaker Change: Thank you.

Ronald Mittelstaedt: A question and answer session I would like to turn the conference back over to Mr. Scott for closing remarks.

Ronald Mittelstaedt: Great, thank you. Okay, well, if there are no further questions, on behalf of our entire management team, we appreciate your listening to and interest in the call today. Mary Anne and Joe Box are available today to answer any direct questions that we did not cover that we are allowed to answer under Regulation FD, Reg G, and applicable securities laws in Canada. Thank you again.

Speaker Change: Okay, well if there are no further questions on behalf of our entire management team. We appreciate your listening to and interest in the call today, Maryanne and Joe boxer available today to answer any direct questions that we did not cover that we're allowed to answer under regulation FD Reg G and applicable securities laws in Canada.

Operator: We look forward to connecting with you at upcoming investor conferences or on our next earnings call. Thank you, sir. This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.

Operator: ...

Operator: Thank you again, we look forward to connecting with you at upcoming Investor conferences or on our next earnings call.

Operator: Thank you Sir This concludes today's conference call.

Operator: This includes today's conference call. We thank you all for attending today's presentation.

Operator: Thank you all for attending today's presentation.

Operator: You may now have a wonderful day.

Operator: May now disconnect your lines have a wonderful day.

Operator: Yes.

Operator: [music].