Q4 2024 Waste Connections Inc Earnings Call
Thank you for watching!
Thank you operator and good morning.
Speaker Change: I would like to welcome everyone to this conference call to discuss fourth quarter results and our outlook for both the first quarter and full year 2025, I'm joined this morning by Mary Anne Whitney Our CFO and several other members of our senior management.
Speaker Change: As noted in our earnings release Q4 provided a solid finish to a year of extraordinary accomplishments for waste connections both financially with double digit growth in both revenue and adjusted EBITDA and operational with accelerating improvements in employee engagement and retention along with the integration of record levels of private company acquisitions.
Speaker Change: Which totaled approximately $750 million in annualized revenue in 2024.
Speaker Change: Most importantly, our continued focus on human capital resulted in multi year lows for employee turnover now down over 1000 basis points from 2022.
Speaker Change: What's the associated improvements in operational execution, providing momentum for another year of outsized margin expansion in 2025.
Speaker Change: Price led organic solid waste growth, along with improving commodities and ongoing acquisition activity should position us at or above the high end of our range of potential outcomes with normalized adjusted free cash flow in excess of 1.55 billion.
Speaker Change: Before we get into much more detail, let me turn the call over to Maryann for a forward looking disclaimer and other housekeeping items.
Maryann: Thank you Ron and good morning.
Maryann: 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.
Maryann: That could cause actual results to differ are discussed both in the cautionary statement included in our February 12 earnings release and in greater detail in waste connections filings with the U S Securities and Exchange Commission and the securities commissions or similar regulatory authorities in Canada, you should not place undue reliance on forward looking statements that there may be additional rest of which we are not presently aware.
Maryann: 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.
Maryann: On the call, we'll 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 free cash flow. Please refer to our earnings releases for a reconciliation of such non-GAAP measures to the most comparable GAAP measure management uses certain non-GAAP measures.
Maryann: To evaluate and monitor the ongoing financial performance of our operations. Other companies may calculate these non-GAAP measures differently.
Rod: I will now turn the call back over to Rod.
Rod: Thank you Marianne.
Rod: As noted 2024 was an extraordinary year at waste connections by any number of measures, including safety performance employee engagement and retention acquisition activity financial results and ultimately value creation.
Rod: Solid waste core pricing of seven 1% was supported by strong operational execution and record levels of acquisition integration to drive industry, leading margins for the whole company that is not just solid waste of 32, 5% up 100 basis points year over year, despite significant commodity.
Rod: Rens and FX declines in Q4.
Rod: As we have indicated we maintained that the best leading indicator performance is voluntary turnover.
Rod: It does decline by 50% in less than two years to below 13% now.
Rod: Over the same period, we have also seen a reduction of over 60% and open employee positions with every region at or below targeted levels of 3% to 4% down from 7.5%.
Rod: Additionally, our 2020 for employee engagement scores showed continuous improvement from an already high base on record levels of employee participation.
Rod: We are seeing traction from higher staffing levels and expanded frontline training, we're sending more new and existing employees through our in house commercial driver academies and realizing the benefits from that engagement in both improved retention and safety statistics.
Rod: We're also reducing overtime as well as reliance on third party services, improving service levels customer satisfaction and employee morale, while also maximizing the integration benefits from new acquisitions, and providing more avenues for growth in.
Rod: In short we've achieved the balance in service quality pricing retention and acquisition integration that we've been working towards over the past 18 months.
Rod: The benefits of these improving trends were evident in Q4, when we delivered a six 7% core price and overcame the effects of an additional half point of negative volume as a result of our decision to ramp down activity at Chiquita Canyon landfill.
Rod: This reduction along with the combined headwinds from the sequential decline in commodities rents in FX rates during the second quarter during the quarter.
Rod: Counted for more than 60 basis points margin impact relative to our Q4 guidance. The good news is that rents have already bounce back to about $2 50, and commodities have firmed up from recent lows.
Rod: For the full year 2024, we delivered better than expected adjusted free cash flow of one point to one 8 billion.
Rod: Converting over 50% of adjusted EBITDA to adjusted free cash flow.
Rod: Normalized for RMG project, Capex and over 200 million in outlays associated with the site specific impacts at our Chiquita Canyon landfill in southern California, reflecting.
Rod: Adjusted free cash flow of over $1 4 billion in the base business excluding Takeda.
Rod: On the subject of Chiquita Canyon, we made the decision to close active waste disposal operations at the site as of year end 2024.
Rod: While we do have remaining aerospace available at the site, which we determined was no longer feasible to continue operations due to the imposition of tonnage limits taking effect on January 1st 2025.
Rod: And the final permit approval needed for chiquita to access otherwise permitted and constructed airspace along with incremental capital requirements.
Rod: Although not our preferred choice long term closing chiquita was within the range of potential outcomes contemplated when we provided a preliminary framework for 2025 back in October.
Rod: And we have successfully redirected a significant portion of the waste.
Rod: Throughput to another of our landfills in Central California.
Rod: It's simply the economics of operating no longer made financial sense.
Rod: We will of course continue to manage the site, including addressing the elevated temperature landfill or E. T. L love event as well as honoring our commitments with respect to closure and post closure as and when appropriate.
Rod: Maryann will cover the impacts to our 2024 financial results and closure and post closure liabilities in Q4.
Rod: To address and mitigate the tail off event impacts, which as we've noted before our site specific and nonrecurring in nature.
Rod: Looking next at acquisitions in 2024, we closed approximately $750 million in annualized revenue from 24 acquisitions with deals in E&P waste and across our footprint of solid waste franchises and competitive markets, including acquisitions that can be internalized into our disposal network.
Plus new market entries and a number of tuck ins to existing operations.
Rod: We continue to have a robust pipeline in fact, we have all we already have over 75 million in annualized revenue either closed or signed and expected to close during Q2.
Rod: Bringing the 2025 expected revenue contribution from acquisitions to over $300 million as we sit here in early February.
Rod: Our disciplined approach to acquisitions remains unchanged and relationship driven.
Rod: With our focus as always on market selection the risk profiles, we accept and the valuations we determined to be appropriate as.
Rod: As we say what matters isn't closing deals, but integrating and delivering results to provide value creation and to maintain low leverage for continued growth.
Rod: To that end in spite of outlays of $2 2 billion, our leverage was virtually unaffected during 2024, ending the year at 2.67 times debt to EBITDA.
Rod: A reflection of the quality of the revenue acquired and our ability to Delever dynamically.
Rod: That low leverage plus liquidity approaching $1 billion provides tremendous optionality for more of the same.
Rod: That is continued funding of outsized acquisition activity and investment in sustainability related projects.
Rod: Along with an increasing return of capital to shareholders.
Speaker Change: And now I'd like to pass the call to Mary Anne to review more in depth the financial highlights of the fourth quarter and provide a detailed outlook for Q1 and so your 2025 I will then wrap up before we head into Q&A.
Mary Anne: Thank you Ron.
Mary Anne: In the fourth quarter revenue of 2.26 billion was up 225 million or 11% year over year, bringing full year 2020 for revenues to 892 billion above our expectations and up 11, 2% year over year.
Mary Anne: Acquisitions completed since a year ago period contributed about 169 million of revenue in Q4 net of divestitures, bringing full year net acquisition contribution to $529 million.
Mary Anne: Core pricing in Q4 of six 7% range from about 5% in our mostly exclusive market western region to about 7% in our competitive markets fuel and material surcharges were negative 50 basis points in the quarter on lower fuel costs.
Mary Anne: Solid waste volumes in Q4 were down two 7%, excluding 50 basis point negative volume impact impact at Chiquita, where we ramped down activity in advance of closing the site.
Mary Anne: Elsewhere volumes continued to reflect our focus on quality of revenue through shedding and purposeful tradeoff between price and volume as well as the timing of special waste activity some of which as noted last quarter was completed in Q3.
Mary Anne: Looking at year over year results in the fourth quarter on a same store day adjusted basis roll off polls were down 4% of.
Mary Anne: Total landfill tons were about flat.
Mary Anne: Adjusting for chicky that tons were up 3% year over year on MSW up 6% special waste up 2% and C. N D wave down about 6%.
Mary Anne: Over half of the MSW increase was attributable to storm clean up activity in Florida, or the internalization of tons from our northeast operations into our rail served arrowhead landfill in Alabama.
Mary Anne: Adjusted EBITDA for Q4 as reconciled in our earnings release was up 11, 6% year over year to 732 million or 32, 4% of revenue.
Mary Anne: As Ron noted, excluding the reduction in content Chiquita and the drop off in commodity driven revenues and FX rates during the quarter adjusted EBITDA margin was over 33%.
Mary Anne: Looking at the full year 2024, adjusted EBITDA of $2 902 billion was up 15% year over year with adjusted EBITDA margin up 100 basis points to 32, 5%.
Mary Anne: And as a reminder, that included a margin of 33, 7% during Q3, our seasonally strongest quarter.
Mary Anne: Given our decision to close Chiquita Canyon landfill as of year end, our Q4 results reflect our accounting for the related impacts the write down of $116 1 million in site costs, plus an adjustment of $488 million to increase our closure and post closure.
Mary Anne: <unk>.
Mary Anne: This amount includes a full forward of what we would describe as the customary outlays associated with landfill closure and post closure obligations scheduled to occur over a 30 year period. It also reflects an update to projections for outlays to address the E. T L alphabet, which totaled 224 million in <unk>.
Mary Anne: 2024.
Mary Anne: And are expected to step down in subsequent periods to about 100 million to $150 million and 25 and down to about $50 million in 2026.
Mary Anne: Total 2024 outlays outpaced our original expectations, primarily as a result of related regulatory permitting legal consulting and other indirect costs that were outside of the original scope as.
Mary Anne: As well as incremental requirements driving up the direct costs associated with leachate treatment.
Mary Anne: We continue to pursue strategies to mitigate these impacts and the related costs.
Mary Anne: In spite of those incremental outlays, our 2024 adjusted free cash flow of one point to one 8 billion exceeded our expectations.
Mary Anne: Capital expenditures of 1.156 billion reflect ordinary course, capex in line with expectations and slower than expected R&D project spend totaling about $60 million.
Mary Anne: As discussed on prior calls our sustainability related projects include about a dozen R&D facilities with a variety of ownership structures we.
Mary Anne: We continue to expect projects to be online by 2026, and expect aggregate capital outlays to approach $250 million.
Mary Anne: Before any benefit from investment tax credits.
Mary Anne: While RIN values will drive the payback period, our hybrid ownership approach Insulates us from volatility on about half the economics of these projects.
Mary Anne: <unk> capital expenditures $100 million to $150 million have been factored into our 2025 outlook, which I will now review along with our outlook for Q1 2025.
Mary Anne: 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 securities commissions or similar regulatory authorities in Canada, we encourage investors to review these factors carefully.
Mary Anne: Our outlook assumes no change in the current economic environment.
Mary Anne: Beyond the noted signed deals that were out with 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 Anne: Looking first at the full year 2025.
Mary Anne: Revenue in 2025 is estimated in the range of $9 45 billion to $9 $6 billion for solid waste, we expect expect price plus volume in the range of 4% to 5% excluding about half a point volume impact from closing Takeda, which by the way is how we'll communicate organic growth in 2025.
Mary Anne: On pricing of about 6%.
Mary Anne: Acquisition revenue contribution of about three 5% includes deal signed and expected to close during Q2.
Mary Anne: And the range of outcomes includes the potential for some recovery in commodity values and FX rates from recent levels.
Mary Anne: On that basis adjusted EBITDA in 2025 as reconciled in our earnings release is expected in the range of $3. One 2 billion to $3 2 billion or adjusted EBITDA margins in the range of 33% to 33, 3% up 50 to 80 basis points year over year.
Mary Anne: This positions us for peak quarterly margin in excess of 34% consistent with what we've discussed in prior periods in spite of lower commodity values rents and FX rate.
Mary Anne: Incremental acquisition activity and further improvements in commodity driven revenues would provide upside to our 2025 outlets.
Mary Anne: Adjusted free cash flow in 2025, it's also reconciled in our earnings release is expected in the range of $1 3 billion to 1.35 billion.
Mary Anne: Estimated capex of $1 2 billion to $1 225 billion includes $100 million to $150 million for R&D projects.
Mary Anne: And our adjusted free cash flow outlook also reflects 100 to 150 million for outlays associated with educate a canyon E T. L F <unk>.
Mary Anne: Adjusting for these discrete items 2025, adjusted free cash flow of over 1.55 billion is indicative of the jumping off point for growth going into 'twenty six when we expect to revert to our more normalized conversion rate of 48% to 50% of adjusted EBITDA or more.
Mary Anne: Turning now to our outlook for Q1 of 2025.
Mary Anne: Revenue in Q1 is estimated in the range of 2.2 billion to 2.225 billion.
Mary Anne: And adjusted EBITDA is estimated at 700 million to $710 million or 31, 8% to 31, 9% of revenue.
Mary Anne: Depreciation and amortization for the first quarter is estimated to be about 13, 4% of revenue, including amortization of intangibles of about $48 million or about 13 cents per diluted share net of taxes.
Mary Anne: Interest expense net of interest income is estimated at about $80 million on the tax rate for the first quarter is estimated at approximately 23%.
Ron: And now let me turn the call back over to Ron for some final remarks before Q&A.
Ron: Okay. Thank you Marianne come.
Ron: Coming into 2024, we emphasize the interconnectivity of relationships and results and our performance reflects the importance of both with financial excellence and record acquisition activity supported by notable improvement in operational statistics and employee engagement.
Ron: Even more importantly, they positioned us for continued outsized growth in 2025 in fact, we believe we're better positioned than ever and.
Ron: In 2025, we're focused on delivering excellence with humility, we're sticking to our model that has served us well for over 27 years, and which guides us as we grow to revenue of $10 billion and more while acknowledging the benefits of innovation and new ideas to ensure that the company is well positioned for the future.
Ron: Along these lines, we're excited to be working with partners to provide solutions for PFS treatment and expand renewable natural gas generation in Orlando.
Ron: We're introducing electric trucks as we build out our newest franchise market New York City.
Ron: And we're further digitizing the employee and customer experience to bring people closer together through technology.
Ron: We're already seeing the benefits of the use of AI higher productivity and output quality from robotics in our recycling facilities improve safety outcomes in routing efficiencies across our fleet.
Ron: Along with opportunities to drive sales and augment revenue quality just to name a few of the applications.
Ron: We'll always maintain a human centered design to inform and direct our approach to the use of technology.
Ron: But we'll also focus on opportunities to leverage and maximize the utility of our resources.
Ron: We're also humbled by the trust of many stakeholders from the communities, we have the privilege to serve to the private sellers and trusting us with their legacy.
Ron: And we are most grateful for the dedication of our 24000 employees, who embody the enduring values of waste connections and whose efforts truly set us apart.
Ron: We appreciate your time today I will now turn this call over to the operator to open up the lines for your questions operator.
Ron: Ladies and gentlemen, we will now begin the question and answer session.
Speaker Change: To ask a question you May press Star and then one on your Touchtone phones.
Speaker Change: If you are using a speaker phone, we do ask that you. Please pickup your handset before pressing the keys.
Speaker Change: So with your all your questions you May press Star two.
Speaker Change: But again that is star and then one to join the question queue, we will pause momentarily to assemble the roster.
Our first question today comes from Tyler Brown from Raymond James. Please go ahead with your question.
Tyler Brown: Hey, good morning, guys good morning.
Speaker Change: Tyler Tyler.
Speaker Change: Hey, lots of good detail as usual, but can we go back over some of the moving pieces on cash flow.
Speaker Change: Can we start with Green Capex, So I just want to make sure that I've got it so.
Speaker Change: 23, you spent maybe 40 million it sounds like in 'twenty four you spent 60.
Speaker Change: That's going to step up to about 125 at the midpoint and 25 is all of that basically right and then based on what we know shouldn't that basically sunset and that'll be more or less done in 'twenty six.
Speaker Change: Yes, you're you're you're correct everything you said, we'd agree with that bulk of the spending will get done in 'twenty five as you said, we've had those outlays out rather ready and will basically be done by 'twenty six what's unknown would be the benefits from incremental tax credits and so to the extent there's any good news there that would just make the net impact is smaller.
Speaker Change: Okay, and then the EBITDA contribution that kind of really ramps in 'twenty six 'twenty seven.
Speaker Change: That's right and as we've said to this point, there's just been nominal increases from the facilities that have come online. They the bulk of them will be online during 'twenty six and so you'll see it ramp during 26 for the full year and 27, and we said that's around 200 million in incremental EBITDA. So the revenues north.
Speaker Change: Of that but it's very high flow through and of course very high conversion of EBITDA to free cash flow.
Speaker Change: Right, Okay, perfect and then on Shaquille that again, just to kind of make sure I've got all this so I think again, you spent $23 million and 23. It sounds like you had a really large spend in 2014 and 24 million that number steps now and call. It 125, and then it steps down again in 'twenty six and then by the time, we get to 27.
Speaker Change: That should be kind of zeroed out you've got about right.
Speaker Change: Yes, Tyler I don't know if it will be zero, but it should be in that zero to $15 million to $20 million range is what we believe by then sort of just a maintenance level at most it could be zero, but you know I would say zero to 20.
Speaker Change: But big picture I mean, as we build through the end of this decade.
Speaker Change: The free cash conversion on a reported basis will materially step up.
Speaker Change: And I think you said 48 to 50 million in 2006, I think is what you said on a normalized basis, but that's not even including the benefits of the high flow through on here. So I mean, it could be pretty good as we get to 'twenty seven.
Speaker Change: Yeah.
Speaker Change: The idea.
Speaker Change: That's why we said this year if you take you know the what we've guided and you you assume we didn't do RMG or have Chiquita, which you can't do I understand it would be 1.55 billion would be the 20.
Speaker Change: Five free cash flow or right at about 50% for one and that is before Orangey EBITDA contribution as you just outlined.
Speaker Change: Alright, Okay last one here.
Speaker Change: I continue to get a lot of questions around volume it sounds like 25, even if I kind of take away. She keto, it's gonna be maybe the fourth year in a row of down volume.
Speaker Change: Can you just kind of help us wrong to think about that does cause that go positive into 26 is there still some intentional shedding do we just need a better industrial backdrop or a better housing backdrop to get there just any big picture thoughts on that we did a lot of questions on that thanks guys.
Speaker Change: Sure Todd.
Speaker Change: First off what I would point out that you know for analysts and investors you have to understand that not all companies report volumes Similarly, and that doesn't Wayne anyway is right or wrong. There just you can't really compare them to each other.
Speaker Change: We only report solid waste in our volume we don't we don't report changes in recycling and other business lines that we don't view as core or significant but but in fluids. The volume reported so ours is just solid waste so let's start with that.
Speaker Change: Number two we had a record year of M&A in 'twenty four we think that's a good thing we would love to have them planned to have a very strong year again in 'twenty five again, that's a good thing, but as we have said you know maybe 10 to up to 15% of the M&A revenue you acquire.
Speaker Change: If you look to shed over a one to three year period as contracts come up that are unprofitable. So you know again, we like we say follow the margin not volume because we are purposely shedding volume the and redeploying capital into more profitable contracts, we can bid.
Speaker Change: So you know for us for some for shedding to stop M&A would have to decelerate dramatically and we don't view that as something we're looking to do or see happening. The other thing. We have said is that look there is somewhere probably between a half and maybe up to a point of conscious trade off between.
Speaker Change: Price and volume you know again, you know others are talking about achieving 4%, 4.5% yield which is really our price.
Speaker Change: And and we're achieving have guided today to 6% plus price that yield.
Speaker Change: So very material difference in the pricing of cheap that comes along with some trade off we think in this environment that that trade off is very necessary as it was in 'twenty three and 'twenty four wall <unk> inflation is certainly coming down as we've recently seen its not fully down yet and so.
Speaker Change: We always focus on having 150 to 200 basis points spread.
Speaker Change: Not necessarily to the CPI, but to what we see our cost structure doing.
Speaker Change: And so so that's that's where we focus on price so.
Speaker Change: It's a long way around the barn to say, it's a conscious it's it's conscious between.
Speaker Change: <unk>.
Speaker Change: Purposeful shedding Ah it's conscious between of the trade off of price volume and then it's also that we just report solid weighs in.
Speaker Change: N or volume cow and so in that we have been in you know basically.
Basically a flat to almost negative economic environment for two and a half full years now really since the beginning of 'twenty. Two you know our numbers you bounce around between zero and one or 2% MSW growth I think that reflects and then C&D and special waste which are tough.
Speaker Change: Ride to construction event activity bounce around between negative 10, and positive turn in any given quarter of course, there are the smaller piece of things. So yes, there is a little bit of a need for improved.
Speaker Change: Economic activity, which we are optimistic was coming but that we have not yet seen that.
Speaker Change: Perfect. Thank you so much wrong.
Speaker Change: Okay.
Speaker Change: Our next question comes from Kevin Chiang from CIBC. Please go ahead with your question.
Kevin Chiang: Hi, Thanks for thanks for taking my question.
Kevin Chiang: Maybe I'll start off with you and congrats on a lot of the efforts.
Kevin Chiang: Efforts here on turnover.
Kevin Chiang: And some of the posting numbers in supply.
Kevin Chiang: Just on the back of record M&A.
Kevin Chiang: M&A.
Kevin Chiang: Any color on what you're seeing from an employee retention or turnover perspective in your acquired businesses just given the record amount of deal flow you've seen over the past, so well last year and even the past few years here.
Speaker Change: Yeah, Kevin I mean, I think as we've I think that's a very good question, particularly with someone who's active as we are look and that's something we're very pleased with to achieve a under 13%.
Kevin Chiang: Voluntary turnover number you have to understand that it is significantly higher than in <unk>.
Kevin Chiang: Wired M&A companies. It is not uncommon for that in the first year to be in that 30% to 35% level because of our really rigorous safety standard and Ah.
Kevin Chiang: Many tenured employees coming through private companies on the frontline Thats, a very hard adjustment for them behaviorally to make so that's captured even in that so it tells you our core company number is even lower.
Kevin Chiang: So you know we are focused very heavily on safety. It is not uncommon for us to drop the safety incident rate on acquired Standalone private company by three acts in the first 12 months.
Kevin Chiang: But that doesn't but that does come along with you know.
Kevin Chiang: Having to make some have some some frontline and supervision level changes at acquired companies.
Kevin Chiang: That's great color.
Kevin Chiang: Maybe just turning to your margin outlook of 30 to 50.
Kevin Chiang: Yeah.
Kevin Chiang: The margin expansion.
Kevin Chiang: Is there a way to think about what what.
Kevin Chiang: Our 360, <unk>, Canada might be contributing to that because you'll have a full full.
Kevin Chiang: Full year of secure and I think you were evaluating opening up some facilities there.
Kevin Chiang: Is that.
Kevin Chiang: And is that one of the foundational pieces driving that outsized.
Kevin Chiang: Outsized margin expansion in 2025.
Kevin Chiang: So Kevin.
Kevin Chiang: Really it's the strength of the underlying business is what's driving the outsized margin expansion. We are enjoying the benefits of a terrific acquisition of secure but as you. All recall, we had 11 months of that last year. So the rollover contribution is just one month and yes.
Kevin Chiang: As we've said that the performance there has resulted in incremental activity I'm looking at opening mothballed facilities, but to the extent that we're to contribute it would be very late in the year end and nominal so you're really going back to the 50 to 80 basis points of margin expansion is in spite of the drag.
Speaker Change: AG from commodities rents in FX, which you can think of that as down 20 to 50 basis points. So it implies underlying margins as up as much as 100 basis points and again that really speaks to all the things that Ron outlined that are working for us in the underlying business and yes, we're enjoying the benefits of a very solid.
Speaker Change: E&P waste business, but not a huge driver of incremental margins in 'twenty five.
Speaker Change: Okay. That's.
Speaker Change: That's very helpful and maybe just last one for me.
Speaker Change: You noted how your leverage ratio really didn't change despite the.
Speaker Change: The record M&A.
Speaker Change: Incremental growth Capex, which starts to roll off in the next couple of years.
Speaker Change: When you look forward.
Speaker Change: How does buybacks play a role.
Capital allocation.
Speaker Change: It seems like.
Speaker Change: You could probably add that to your.
Speaker Change: Or be more aggressive there just given where your balance sheet is in the free cash flow generation and the fact that people on the back of a record year you leverage that it wouldnt move that much I'm just wondering if that's something that.
Speaker Change: It didn't contemplate, especially that's free cash flow.
Speaker Change: Or is it more the next kind of 12.
Speaker Change: Two months.
Speaker Change: But we absolutely agree Kevin and the beauty of of debt sitting at 267 with as we said are approaching 1 billion in liquidity is we have tremendous optionality I mean, you put it all in context, you've seen us continue to grow our dividend as we have every year double digits on a 14% CAGR over the last 15 years and.
Speaker Change: <unk> seen us renew our NCI D that normal course issuer bid. So we have the flexibility to buyback up to 5% to preserve that optionality, we always say at some point M&A slows down, but I think to your point I mean, he doesn't even need to slow down for us to use that other sort of arrow in the quiver and we agree with you and Opportunistically that is.
Speaker Change: It's something we'll look at.
Speaker Change: Excellent that's it for me congrats on a good quarter here and a solid outlook for 'twenty.
Speaker Change: Thank you Kevin.
Speaker Change: Our next question comes from Toni Kaplan from Morgan Stanley. Please go ahead with your question.
Thank you so much I wanted to first ask on price, we've seen core price continue to moderate over the past few quarters, but still like holding up very nicely.
Speaker Change: You know, where where do you see price bottoming out and what are you thinking for trajectory into 2020 five in terms of how that looks.
Speaker Change: Sure. So the way to think about price. We said at about 6% is the way to think about price. You know of course, you have the two pieces, where you've got the CPI linked markets, which were in 2024 were about 5% those stepped down to about 4% and of course that is what CPI does will inform how that.
Speaker Change: That proceeds going forward. So whatever your view is of that but for 25, that's a good place holder and so doesn't that imply 77, 5% in the competitive markets to deliver that six or north of that.
Speaker Change: In terms of the cadence you should expect sort of our typical cadence where on a reported basis. It would start higher than that and moved down over the course of the year just the math of it and also as it is pretty typical for US will we do the majority of our price increases and the competitive markets early in the year and so by the time, we ripped.
Speaker Change: For Q1, you know a couple of months from now we'll be able to speak about the visibility we have really for the full year. Because this year is really not unlike any other where you know we will have 70% to 75% of the price increases either known because we're contractually provided for and we know what the numbers are or implemented and well.
Speaker Change: A sense of roll back early reads are that pricing retention is as strong as as usual and again I referenced that things that Ron raised about the strength of the underlying business and the benefits of full employment, if you will and and lower turnover to help with price retention.
Speaker Change: Great and Ron you mentioned working with partners on solutions for PFS treatment just wanted to hear the latest on the topic and and what you're doing there.
Ron: Well, we're doing a number of things Tony.
Speaker Change: There are.
Speaker Change: I would tell you, there's probably no less than a half a dozen providers that have <unk>.
Speaker Change: Real solutions.
Speaker Change: And you know most of it is a foam fractionation process that treats and by basically gathering the P. Faas and then solidifying it and then that is disposed of separately and and so these are.
Speaker Change: Both portable and permanent treatment facilities that are built or moved on site.
Speaker Change: And depending on the amount of leachate that'll landfill generates we're running it through that we have we are using different technologies at different sites to determine which we think performs best.
Speaker Change: We have them performing in Minnesota, and Pennsylvania, and New York as examples and other work in other places and you know the.
Speaker Change: Early results are very very good a reasonable Cal our capital allocation for the benefit of and a very low cost per gallon treatment cost overall.
Speaker Change: As you May know.
Speaker Change: Many of the gws in the nation.
Speaker Change: Are looking to require some form of pre treatment for P. Faas, if theyre going to continue to accept landfill leachate, So where we are treating it we are not having any issues of getting into P. Otw's.
Speaker Change: So it is it is working as planned so I would tell you that I think there is very real and and reasonably economical solutions available today, which we believe will continue to improve over time.
Speaker Change: Thanks, so much.
Speaker Change: Our next question comes from Brian Birchmeier from Citi. Please go ahead with your question.
Brian Birchmeier: Good morning, Thank you for taking the questions.
Mary Anne: Maryann, sorry, if I missed this.
Speaker Change: <unk> question, how how much did <unk> contribute to EBITDA in 2024, and then what do you assume for a target for 2025 guidance and then is there going to be maybe an opportunity to lock in RIN prices or do we expect to be using.
Mary Anne: The spot market this year.
Speaker Change: Sure so landfill gas sales.
Speaker Change: And the incremental contribution from facilities that came online really didnt changed dramatically, we're still running at that point to a point in a quarter of revenue or 100 million or around there 100 $110 million.
Speaker Change: There was some nominal incremental contribution in 'twenty four and basically that's the way you should think about it and in 'twenty five the real pick up for us as one of the facilities that we own come online in 26, given the fact that we have this hybrid structure.
Speaker Change: So ah.
Speaker Change: And I'm, sorry, you had a second piece.
Speaker Change: Oh and you asked if we could lock yeah, yeah, sorry about that thank you.
Speaker Change: You'll look we will opportunistically look to to lock as we have you know we had a a portion of our rems locked for most of 2024 at around $3 and when those opportunities present themselves. You should expect that we'll look to to continue to derisk that aspect of the business.
Speaker Change: As well as and when we can.
Speaker Change: Got it got it. Thank you and then Ron maybe just on M&A.
Speaker Change: For 2024, spending obviously blew past the kind of normalized a.
Speaker Change: Target that the waste connections provides and you've been in this business a long time. So I'm just curious if you think there's maybe greater urgency for sellers right now versus the last five or 10 years do you think maybe persistently high interest rates are touring some of the smaller players just curious.
Speaker Change: Maybe what drove the outsized selling in 'twenty four and your thoughts on 'twenty five thank you and I'll turn it over.
Speaker Change: Thanks, Brian well you know as we've always said there are at least certainly in our model a seven or eight out of every 10 deals are driven by sort of lineage transition a state planning matters that that happened in the natural course of the private ownership a family run companies.
Speaker Change: And so in that regard.
Speaker Change: External catalysts don't move things too much.
Speaker Change: You know.
Speaker Change: Now, having said that certainly the trajectory of interest rates over the last few years have helped.
Speaker Change: Private companies, who have a lot of sort of floating rate or lease rates that are more impacted with rising interest rates than certainly the public companies.
Speaker Change: And so that that affects them.
Speaker Change: Thank you.
Speaker Change: The fear at least of what election outcomes are and the threat of rising tax rates I think certainly.
Speaker Change: Affects things that probably is maybe at least for a period of time, a little more stable right now.
Speaker Change: Then than it had been in the run up to the election, depending on the outcome. So you know that I would say is neutral.
Speaker Change: Economic activity.
Speaker Change: Sellers want a private sellers want to sell their business when the economy is strong and they believe their business is fully valued and so I'd say again that has sort of been neutral to negative so as the economy, if and when the economy continues to improve I think that is a bit of an accelerant for M&A.
Speaker Change: You know and then you have your you have a group of sellers, who after living through a pandemic and hyper inflation just sort of said yeah I don't want to do that anymore going forward that those are those are risks I never thought I'd see so.
Speaker Change: So again I, you know that that one's a little harder to predict but I would tell you. We remain in a I would consider a very good M&A and market. Our pipeline is very full of all different types of transactions are standalone.
Speaker Change: Standalone franchises competitive markets are some E&P.
Speaker Change: So maybe if he tuck ins I should say.
Speaker Change: So you know.
Speaker Change: We remain.
Speaker Change: Bush, we're not going to sit here and say hey, we're going to repeat our best year ever which was last year at $750 million, but I think we're very comfortable sitting here, saying, we expect an above average year as we sit here.
Speaker Change: The early part of February.
Speaker Change: And our next question comes from Jerry Revich from Goldman Sachs. Please go ahead with your question.
Jerry Revich: Yes, hi, good morning, everyone.
Gary: Good morning, Gary.
Speaker Change: Ron I'm I'm wondering if you could just expand on the progress that you folks are making ramping up the rail shipments.
Speaker Change: Where do you expect volumes to get to exiting 'twenty five in.
Speaker Change: What are you seeing in terms of actual.
Speaker Change: Shipping costs versus what you folks we're modeling at the beginning of the ramp.
Speaker Change: Yeah.
Speaker Change: Sure Jerry so let's for those that are not familiar let's take you back our arrowhead transaction, which we did in August of 'twenty. Three so we've now owned about 15 16 months or thereabouts. When we acquired that that that set of assets that set of assets was doing about 2500 tonnes up to maybe 2700.
Speaker Change: Tons a day into the landfill. We are now at 7000 tonnes a day pretty consistently so we have you know not quite tripled it but we're getting closer the largest amount of that is coming from internalized markets on the northeast that we used to go externally or <unk>.
Speaker Change: May have gone to one of our east coast landfills, which freed up aerospace to market to third parties now.
Speaker Change: We believe as we come through 2025, we will get into that eight to 9000 ton a day range and so we will we will achieve the 24 months after ownership a tripling of of the volumes that came through that site relative to when we are.
Speaker Change: Wired it which is I think what we said and we believe long term, we will achieve 10000 tonnes a day or more you know over a multiyear period.
Speaker Change: Again, a very high amount of this will come through are internalizing.
Speaker Change: Our network on the East coast predominantly.
Speaker Change: As far as the cost structure, Jerry has remained very stable.
Speaker Change: One of the the great assets that came along with this was a very long term contract with Norfolk, Southern and that was something we spent a lot of time with to look at what the volatility could be in the cost structure because of the transport of volumes from the east coast to the South East is obviously the <unk>.
Speaker Change: Largest cost of things and we feel very good about that indexing it to effectively a national CPI.
Speaker Change: So a very good there are good cost structure at our utter intermodal facilities, along the eastern seaboard.
Speaker Change: So that asset is performing.
Speaker Change: You know as or better than expected I would say.
Speaker Change: Okay.
Speaker Change: Thank you for that update in terms of the M&A opportunity now that you have logistics runway and we're seeing more and more the landfill closures in the northeast are optimistic are you folks without significant.
Speaker Change: And any opportunity where you have a lot of value to add via the rail network in the northeast as you look at your pipeline for 'twenty five.
Gerry: You know I would I would say Gerry.
Gerry: Very very optimistic I mean, obviously, we had a very big year in 'twenty four and we had a big year in New York in 'twenty four.
Gerry: And I can tell you that in the transactions that are signed.
Gerry: A definitive agreements that havent yet closed there are more transactions in New York that we have done.
Gerry: You will hear about as we come through Q1.
Gerry: All of those are being internalized.
Gerry: So it is providing us.
Gerry: Say multiple bites out of the revenue dollar.
Gerry: Relative to what we had before potentially doing that transaction. So yes. It certainly has created greater white space. So to speak on the eastern Seaboard of markets that we are looking at and have entered into.
Gerry: In 'twenty four.
Gerry: And we will continue to do in in parts of 25 and beyond.
Gerry: So so no question about that you know it also helps remove or protect against volatility of permitting timeframes and things that happen, particularly as you get along the eastern seaboard, which can be as challenging as the as the you know the west coast and permitting timeframes.
Gerry: So it does provide us a lot of optionality.
Gerry: Okay Super and lastly, just conceptually as we look at the volatility.
Gerry: Cycled cardboard and plastic prices and good to see a stabilization, but if we were to take a leg down would you folks think about pushing pricing in the baseline waste business to offset the headwind to earnings. This year if that were to happen just conceptually how are you thinking about that given the.
Gerry: The lack of control on that part of the pricing scheme.
Gerry: Yes, I think what we see you know I don't know that we would necessarily but what I'm about to say you get to the same point of your question, but I don't know that we necessarily look to push.
Gerry: Our solid waste or other customers to offset or subsidize the decline in recycling. What we would look to do is raise the processing cost per ton through our recycled facilities now that obviously when you do it on third party you recall you also have to do it internally.
Gerry: So you in effect get to what you said, but.
Gerry: But that is really I think the entire industry has moved to much more of a model of reliance for returns in recycling being based on a processing cost per ton.
Gerry: For itself and for its third party customers and the commodities being.
Gerry: I'm going to use the word an upside or a float factor or something that theres, a rebate structure on above certain levels to a customer if they are willing to live with the volatility.
Gerry: I appreciate the conversation thank you.
Jerry Revich: Thank you Jerry.
Speaker Change: Our next question comes from Noah Kaye from Oppenheimer <unk> Company. Please go ahead with your question.
Noah Kaye: Okay. Good morning, Thanks for taking the questions.
Tony: Thanks, Tony.
Noah Kaye: A quick housekeeping one to start.
Tony: For our models.
Tony: So.
Tony: Volumes I E.
Tony: It implies down 1% to 2%, but actually Theres. Another 50 bps from Chiquita. So just so we all understand is it accurate that reported volumes.
Tony: Breaking down one and a half to two 5% right there right.
Tony: Thats, correct, Youre, saying, including Chiquita, Yeah, Okay, Alright, and then you know ITC it sounds like you're clearly not baking that in any any benefits. Obviously there was a pure that did the guidance has been kind of clarified from treasury around what's eligible so.
Tony: I guess first making sure you do you do you expect to be able to at least qualify for ITC benefits based on timing of startup construction.
Tony: And is it possible then to kind of give a rough range of estimates.
Tony: At least for the portion of Capex that is for facilities your oney.
Tony: You know what we'd say is yes to the first point that we believe we qualify and to that point, we benefited from a $10 million tax credit last year, and so we certainly understand the process and the dynamics it'd be premature not knowing what the qualifying equipment is precisely in the content, but we you know we look to match.
Tony: <unk> those benefits at.
Tony: Through making the decisions about.
Tony: The equipment and labor and we'll certainly keep you posted but our view is we communicate the outlays, excluding any of that benefit and let it be upside to anything we've told you.
Tony: And presumably just are at a point.
Tony: The claiming a this would really be coinciding with when facilities come online right. So I understand there's not that much for this year okay.
Tony: And then the last one and it's partly a modeling question, but really I think I'm trying to understand or underscore the pace of operating improvements.
Tony: Is the margin bridge right. So you gave us the impact of commodities and FX.
Tony: Love to understand how M&A factors into the margin bridge, but what I'd really love to get to here is kind of apples to apples what underlying solid waste margin expansion was in 'twenty four.
Tony: Where do you expect it will be in 'twenty, five and what drives that pace of improvement.
Tony: Yes.
Tony: <unk>.
Tony: So no. We would tell you that you know M&A was sort of flat to margin contribution wise was sort of flat to maybe down about 10 basis points. Now I'll also tell you that that is generally better than normal and that was based on a mix of deals. We would tell you in any given year.
Tony: <unk>, if we're doing an above average amount of deals you probably got about a 15 to 20 basis point margin headwind from the deals. So if you accept the 10 basis points. You know we reported a 100 basis point improvement for the year.
Tony: Mathematically right. There you were at 110, we took.
Tony: Some decline as we said in.
Speaker Change: In the fourth quarter up to 60 basis points between FX Rens commodities and Chiquita. So you were you were you know we would tell you. The underlying was probably about 122 plus basis points of margin expansion in the base business.
Speaker Change: If you look at the 25 guidance of 50 to 80.
Speaker Change: We've given you the impacts of those other items I think you'll obviously get to a number just a little lower than that so.
Speaker Change: So part of this is being led by driven by price led organic growth as we've always said and that's why we focus on the spread to the cost structure, but clearly part of it you know we would tell you we have achieved effectively close closing in on our 100 basis point Todd.
Speaker Change: Get a improvement to the operating cost structure.
Speaker Change: In all but one area.
Speaker Change: That is sort of insurance cost, which has been a headwind.
Speaker Change: Again that we've actually overcome some so.
Speaker Change: I look to Marianne to put more detail on that yeah, just to clarify a little bit on the rems and recycling. The interplay what Ron described that is really starts towards the end of the year and we've had the benefit early in the year. So we did have a benefit from recycling and rins for full year 2024, and I would say if you attributed about 30 days.
Speaker Change: At this point benefit there then it says the remainder to Ron's point is primarily underlying solid waste to get you to that 100 and as I said earlier, if you think about what we're talking about this year that that recycling and rins that flipped to a headwind right. So and what we've guided to it's down 20 to 50 basis points of being.
Speaker Change: A good guy up 30% down 20% to 50, along with with FX, which I think is sometimes underappreciated what it does to ever.
Speaker Change: Every penny of FX, just translation is almost $20 million in revenue and it's high flow through right because that's a 45% margin piece of the business. So it really speaks to the strength of the underlying business for all those reasons that Ron was describing and again as we've talked about think of that as 100 basis point.
Speaker Change: You know up to 100 basis points margin expansion is what we're guiding to in 'twenty five.
Speaker Change: So really a very consistent pace of improvement here. Thank you for all the detail.
Speaker Change: Okay.
Speaker Change: Our next question comes from <unk> Gupta from Scotiabank. Please go ahead with your question.
Gupta: Thanks for taking my question I just wanted to follow up on this margin question.
Speaker Change: Recently.
Speaker Change: So the margin expansion for Q1.
Speaker Change: You guys are expecting Powerpoint.
Speaker Change: And for the full year, it's 50 to 80 bps.
Speaker Change: So.
Speaker Change: Tenants either Q3, as you're used to be the biggest quarter, but just from sort of the moving parts perspective between the commodity and chiquita, etc.
Speaker Change: Is there a quarter, where you expect more sort of above average margin expansion in particular.
Speaker Change: Well, here's the way to think about it so we guided to 50 to 80 basis points and so and then we're giving you Q1 at arguably the low end of that range. If you think of what the dynamics are that would move us to the higher end of the range. They would include things like improvement in recycled commodities rents FX and now.
Speaker Change: Look at Q1, where of course, we're not assuming that and you've got for instance on FX. The toughest comp. It was 74 cents last year were 69 now so that's just one item.
Speaker Change: Tough comps also on recycled commodities rents and so as you can see you can put the pieces together to understand how much of a drag there is in Q1 from those comps and that theres the opportunity over the course of the year for any improvement in any of those metrics to ease the comparison.
Speaker Change: Which would over time gets you to the higher end of the range.
Speaker Change: Okay that makes sense.
Speaker Change: And then on the volume side. Thanks.
Speaker Change: Thanks for letting the pricing denims, but just on the volume side understanding the wanted to have two 5%.
Speaker Change: Your line, let's say for the full year, you guys talk a point of some cheetah, but.
Is it more skewed to the decline it's more skewed to the first half versus the second half and so you kind of start to lap some of those shut in comps.
Speaker Change: Yes, that's the right way to think about it I mean, if you think about the exit the exit speed and in Q4 right. So we can choose to have an extra kita that doesn't go away immediately because you're working through that shedding and so I would say I would sort of take the inverse if I were modeling at that price starts goes high to low and I'd say volume goes low to high.
Speaker Change: Okay, great. Thanks, and last one for me I would put them in the works.
Speaker Change: A&P side.
Speaker Change: The quarter's recently a piece, we're pretty strong from revenue standpoint, I know a secure assets, obviously contributed there, but like even your underlying business seems like its doing pretty well.
Speaker Change: You can think about the growth in this business this year.
Speaker Change: Sure. So you'll continue to see the rollover contributions not only from the secured deal right, which is one month rollover, but then we did a follow on acquisition in the second quarter in Canada, and we've done some additional activity in the U S and so I think you saw a total of 140 million.
Speaker Change: <unk> reported revenue in Q4 and that number continues to grow and probably approaching a run rate you know.
Speaker Change: More like $1 50 per quarter.
Speaker Change: And so again, it's really primarily rollover contribution from facilities, we put in place last year.
Speaker Change: Yeah, that's great. Thanks for taking time.
Speaker Change: Thank you.
Speaker Change: Our next question comes from Brian Butler from Stifel. Please go ahead with your question.
Brian Butler: Hey, good morning, and thank you for taking my questions.
Speaker Change: Thank you Brian.
Speaker Change: Just on the first one maybe maybe you want to talk about our internal inflation I mean, do you have pricing kind of running at 6%. So if you think about the 50 to 80 basis points of margin expansion you are looking at Where's internal inflation in your your estimates for 2025.
Speaker Change: Yeah, So you're right about 4.5% is a good way to think about it in and not just because that nicely ties to our 150 basis point spread by doing 6% price, but what we're really seeing in the business.
Speaker Change: Primarily led by the abating of the inflation in labor rates and you as you'll recall, we've been talking about this for the past couple of years the step down from 8% two years ago. We came down in Q4 to about four 5%, which is really right, where we would the way to think about it we think for two.
Speaker Change: <unk> thousand 25.
Speaker Change: And so that that's the primary mover.
Speaker Change: There and that is what's contributing to that that price cost spread that helps to drive the margin expansion in 'twenty five.
Speaker Change: Okay, Great and then we've already touched on M&A, but I thought I'd just I'd revisit it when you look at the pipeline how does it compare to where we were maybe a year ago and how does the competitive environment for deals compare and is there anything under the current administration that that actually could get done now that maybe over the last four years could not.
Speaker Change: Let's take the second part of that first.
Speaker Change: No we have.
Speaker Change: Never had fortunately are gone through a second request on an HSR and part of that's our model focus.
Speaker Change: So.
Speaker Change: I would we have not had an issue of deal flow under the prior administration. So I would not want to tell you that that should improve because we have had no restriction I know others based on their footprint may have so I don't I don't think that is any incremental improvement for us.
Speaker Change: At whatsoever.
Speaker Change: I would tell you that I think the pipeline is is very good as I've said.
Speaker Change: The only difference is remember that we came into early last year, having announced at the end of December of 'twenty three that we would be closing the secure acquisition in the first quarter and that was a couple of hundred million dollars of revenue. So we're not sitting here today with telling you that theres a secure.
Speaker Change: <unk> to do when the first quarter, but I will tell you within our pipeline of discussions in L. O wise there are deals approaching that size in that pipeline. So.
Speaker Change: That would be the only delta between as we sit here today and one year ago.
Speaker Change: Okay, great. Thanks for taking my questions.
Speaker Change: And our next question comes from Tobey Sommer from tourists. Please go ahead with your question.
Tobey Sommer: Thanks, I've got a follow up on the change in administration, you've touched on taxes and now.
Tobey Sommer: Permanent on whether the M&A regulatory regime matters for you are there any other.
Tobey Sommer: Elements of it.
Tobey Sommer: The change in administration that you have your eye on for your business and maybe comment on what it could do to your acquisition targets.
Tobey Sommer: Yeah.
Tobey Sommer: Look I think it's obviously early days.
Tobey Sommer: Toby and Theres a lot of moving pieces as you know.
Tobey Sommer: Aye.
Tobey Sommer: There's nothing that I'm at least or we or at least hearing that I think is a negative for acquisition activity.
Tobey Sommer: I think most everything we have seen and heard would be would be a positive.
Tobey Sommer:
Tobey Sommer: It's implemented or moves forward so.
Tobey Sommer: Nothing that would be a negative.
Speaker Change: You know I can't really speak necessarily for private sellers, but if there is a.
Speaker Change: A improvement in tax rates, that's an accelerant. If there is for M&A. If there isn't a decrease in interest rates I would tell you that's an accelerant.
Speaker Change: If theres, an improving economy that is a benefit.
Speaker Change: If there is.
Speaker Change: Tariffs that affect Capex.
Speaker Change: Private sellers, that's a benefit so again I'm not really theres really nothing Ah.
Speaker Change: If the if there's a a decrease maybe regulatory or enforcement environment.
Speaker Change: Say for for private sellers, that's probably neutral I would say that probably is a benefit to us overall so.
Speaker Change: You know if there is if there ends up being immigration reform of some.
Speaker Change: For my I don't know if that will happen, but if it does.
Speaker Change: That's a benefit to us as well.
Speaker Change: Because there's you know there's been really no path to immigration as you know and despite a large amount of people coming through to the southern border really us as a public company, we can't hire those people. They they don't have the ability to work in the U S. Legally. So if there was an ability for them to work in the U S legal.
Speaker Change: Through immigration reform that would be a benefit I think to the whole sector, So and service sectors in general. So again, we're you know we're not aware of anything that would be a negative at this point at least.
Speaker Change: Thank you very much.
Speaker Change: And ladies and gentlemen, with that we'll be ending today's question and answer session I'd like to turn the floor back over to Ron Mittelstaedt for any closing remarks.
Speaker Change: Okay. Thank you operator, 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 regulation G and applicable securities laws in Canada.
Speaker Change: Thank you again, and we look forward to seeing you at upcoming investor conferences or on our next earnings call.
Speaker Change: And thank you everyone for joining today's conference call and presentation has now concluded.
Speaker Change: Once again, we do thank you for joining.
Have a pleasant day.
Yeah.
Speaker Change: [music].