Q4 2024 GFL Environmental Inc Earnings Call

February 25, 2025

During the presentation you can register your question by pressing Star followed by one on your telephone keypad. If you change your mind. Please press star followed by do we ask that you limit yourself to one question and one follow up on the I will now hand over to your host Patrick <unk> founder and CEO to begin. Please go ahead.

Thank you and good morning, I would like to welcome everyone to today's call and thank you for joining US. This morning, we will be reviewing our results for the fourth quarter in providing our guidance for 2025.

I am joined this morning by Luc <unk>, our CFO, who will take us through our forward looking disclaimer before we get into the details.

Luc: Thank you Patrick good morning, everyone and thank you for joining we filed our earnings press release, which includes important information in the press release is available on our website.

Luc: During this call, we'll be making some forward looking statements within the meaning of the applicable Canadian and U S securities laws, including statements regarding events or developments that we believe or anticipate may occur in the future. These forward looking statements are subject to a number of risks and uncertainties, including those set out in our filings with the Canadian and U S Securities regulators any forward looking.

Hello, everyone and thank you for joining as a G F L fourth quarter 'twenty 'twenty four earnings call. My name is Marie and I will be coordinating your call today. During the presentation. You can register your question by pressing Star followed by one on your telephone keypad. If you change your mind. Please press star followed by Dude.

Patrick: We ask that you limit yourself to one question and one follow up on me I will now hand over to your host Patrick <unk> founder and CEO to begin. Please go ahead.

Luc: The statement is not a guarantee of future performance and actual results may differ materially from those expressed or implied in the forward looking statements. These forward looking statements speak only as of today's date and we do not assume any obligation to update these statements whether as a result of new information future events and developments or otherwise.

Patrick: Thank you and good morning, I would like to welcome everyone to today's call and thank you for joining US. This morning, we will do with anybody in our results for the fourth quarter in providing our guidance for 2025.

Luc: This call will include a discussion of certain non <unk> measures. A reconciliation of these non <unk> measures can be found in our filings with the Canadian Securities regulators I will now turn the call back over to Patrick. Thank you look.

Patrick: I'm joined this morning by little below Sea, our CFO, who will take us through our forward looking disclaimer before we get into the details.

Speaker Change: Thank you Patrick good morning, everyone and thank you for joining we filed our earnings press release, which includes important information. The press release is available on our website.

Luc: The quality of our asset base and our strong execution of our committed employees once again drove industry, leading organic growth for the year in Q4 for the second quarter in a row, we saw 300 basis points of margin expansion at the same time, we exceeded our internal expectations for growth across revenue adjusted EBITDA and adjusted free cash flow.

Speaker Change: During this call, we'll be making some forward looking statements within the meaning of the applicable Canadian and U S securities laws, including statements regarding events or developments that we believe or anticipate may occur in the future. These forward looking statements are subject to a number of risks and uncertainties, including those set out in our filings with the Canadian and U S Securities regulators.

Luc: The momentum of our financial performance gives us conviction in our key value creation strategies.

Speaker Change: Any forward looking statement is not a guarantee of future performance and actual results may differ materially from those expressed or implied in the forward looking statements. These forward looking statements speak only as of today's date and we do not assume any obligation to update these statements whether as a result of new information future events and developments or otherwise.

Luc: One generating durable price cost spread to focusing on the quality volume three benefiting from improvement in employee turnover for optimizing our platform through improved asset utilization five realizing contribution from our sustainability related investments and six capturing synergies from <unk>.

Speaker Change: This call will include a discussion of certain non <unk> measures. A reconciliation of these non <unk> measures can be found in our filings with the Canadian and U S Securities regulators I will now turn the call back over to Patrick.

Luc: Accretive M&A within our existing footprint.

Luc: We believe our continued focus on these strategies will provide significant runway for further value creation over the coming years.

Speaker Change: Luke.

Luc: The previously announced sale of our <unk> business is on track to close on March 1st as we said in January of this transaction facilitates the acceleration of several of our key financial objectives, while preserving the opportunity to participate in expected material upside through our retained equity in the business.

Speaker Change: Many of our asset base and our strong execution of our committed employees once again drove industry, leading organic growth for the year in Q4 for the second quarter in a row, we saw 300 basis points of margin expansion at the same time, we exceeded our internal expectations for growth across revenue adjusted EBITDA and adjusted free cash flow.

Luc: The sale leaves us with an enhanced balance sheet that will provide us with incremental capital deployment optionality, creating capacity for additional M&A activity and also for the first time and allowing us to do share buybacks and increased dividends to become meaningful drivers of our shareholder value creation.

Speaker Change: The momentum of our financial performance gives us conviction in our key value creation strategies.

One generating durable price cost spread to focusing on the quality volume three benefiting from improvement in employee turnover.

Luc: Higher return on invested capital organic growth initiatives will continue to be prioritized, we deployed $300 million of incremental growth investments in 2024, consistent with our 2024, our capital allocation framework, we intend to deploy $325 million of incremental growth capital in 2025, mainly comprised of the final investments.

Speaker Change: We're optimizing our platform through improved asset utilization five realizing contribution from our sustainability related investments and six capturing synergies from accretive M&A within our existing footprint.

Speaker Change: We believe our continued focus on these strategies will provide significant runway for further value creation over the coming years.

Wired for the EPR contracts, we've been awarded.

Speaker Change: The previously announced sale of our Es business is on track to close on March 1st.

Luc: By the end of 2025 cumulative investments of the EPR will total approximately $600 million with approximately $50 million remaining to be spent in 2026 and 2027.

Speaker Change: As we said in January of this transaction facilitates the acceleration of several of our key financial objectives, while preserving the opportunity to participate in expected material upside to our retained equity in the business.

Luc: This material step down will free up cash flows for other deployment opportunities such as share repurchases.

Speaker Change: The sale of leaves us with an enhanced balance sheet that will provide us with incremental capital deployment optionality, creating capacity for additional M&A activity and also for the first time and allowing us to do share buybacks and increased dividends to become meaningful drivers of our shareholder value creation.

Luc: M&A activity in 2024 was lower than what we would have done as we focused on balancing both accretive organic growth investments and deleveraging our balance sheet.

Luc: We've closed 11 transactions all of which were small except for the vertically integrated asset we acquired in Florida in the second quarter.

Speaker Change: Higher return on invested capital organic growth initiatives will continue to prioritize we deployed $300 million of incremental growth investments in 2024, consistent with our 2024, our capital allocation framework, we intend to deploy $325 million of incremental growth capital in 2025, mainly comprised of the final investments required for.

Luc: This asset was highly complementary to our existing footprint in the fast growing Florida market. In Q4. We also saw the positive volume contribution from the broader network. We have created in Florida that facilitated a higher level of participation hurricane cleanup efforts.

Luc: Our pipeline remains robust and we see many similar opportunities to densify, our existing networks and improve asset utilization through tuck in M&A across our existing footprint for.

Speaker Change: The EPR contracts, we've been awarded by.

Speaker Change: By the end of 2025 cumulative investments into EPR will total approximately 600 million with approximately $50 million remaining to be spent in 2026 and 2027.

Luc: For 2025, we are once again guiding industry, leading organic growth across all of our financial metrics recall that in 2024, we laid out extent extremely detailed plan raise that guide multiple times throughout the year and beat our expectations on all fronts, we see multiple avenues of upside to our current guide that gives us confidence in our ability.

Speaker Change: This material step down will free up cash flows for other deployment opportunities such as share repurchases.

Speaker Change: M&A activity in 2024 was lower than what we would have done as we focused on the balancing both accretive organic growth investment and deleveraging our balance sheet.

Luc: To meet and potentially exceed the expectations for the year that Luc will walk through in detail.

Speaker Change: We've closed 11 transactions all of which were small except for the vertically integrated asset we acquired in Florida in the second quarter.

Luc: And we view 2025 is just the beginning we believe we have an exceptional multi year outlook and we look forward to walking through the details at our Investor Day on February 27th at the New York Stock Exchange.

Speaker Change: This assay was highly complementary to our existing footprint in the fast growing Florida market. In Q4. We also saw the positive volume contribution from our broader network. We have created in Florida that facilitated a higher level of participation hurricane cleanup efforts.

Luc: I will now turn the call over to Luke for additional color on the quarter and the 2025 guide and then I will have some closing remarks before we open it up for Q&A.

Speaker Change: Our pipeline remains robust and we see many similar opportunities to densify, our existing networks and improve asset utilization through tuck in M&A across our existing footprint for.

Luke: Thanks, Patrick consolidated revenue for the quarter of $1 98, $6 billion was ahead of our guidance fourth quarter solid waste organic growth accelerated to 7%, excluding the impact of the divestitures driven by solid waste pricing of 6% and volume of positive two 3% 75.

Speaker Change: For 2025, we are once again guiding industry, leading organic growth across all of our financial metrics recall that in 2024, we laid out extent extremely detailed plan raise that guide multiple times throughout the year and beat our expectations on all fronts, we see multiple avenues of upside to our current guide that gives us confidence in our ability.

Luke: Basis points better than plan and a 310 basis point sequential improvement over Q3.

Luke: The return to positive volumes was expected in the fourth quarter as we anniversaried most of the impacts of our targeted volume shedding initiatives.

Luc: To meet and potentially exceed the expectations for the year that Luc will walk through in detail.

Luke: Hurricane cleanup activity and the accelerated commencement of EPR related activity were the main drivers of the volume of performance versus plan.

Luke: Increases in energy prices reduce fourth quarter revenues from fuel surcharges as compared to the prior year and lower commodity prices in the quarter were a headwind to revenues as compared to our guidance, although to a lesser extent in the historically would have experienced as our transition to EPR continues to mitigate our exposure to commodity price fluctuations.

Luc: I will now turn the call over to Luke for additional color on the quarter and the 2025 guide and then I will have some closing remarks before we open it up for Q&A.

Luke: Environmental services revenue was down two 2% compared to the prior year inclusive of the impact of lower used motor oil pricing lower soil volumes and a tough comparison arising from large scale event driven revenue realized in the prior year period exclude.

Luke: Basis points better than plan and a 310 basis point sequential improvement over Q3.

Luke: Excluding the impact of these three items segment revenue was up 2% versus the prior year.

Luke: The return to positive volumes was expected in the fourth quarter as we anniversaried most of the impacts of our targeted volume setting initiatives.

Luke: Adjusted EBITDA margins were 29, 1% for the quarter 300 basis points higher than the prior year consistent with our guide.

Luke: Hurricane cleanup activity and the accelerated commencement of ECR related activity were the main drivers of the volume of performance versus plan.

Luke: Solid waste adjusted EBITDA margins were 33, 4%, a 270 basis point increase over the prior year inclusive of the dilutive margin impact of the extra workday as compared to the prior year and increased cost of risk as well as the impact of reclassification of certain costs that were recognized in the corporate segment in the prior year period.

Luke: Increases in energy prices reduce fourth quarter revenues from fuel surcharges as compared to the prior year and lower commodity prices in the quarter were a headwind to revenues as compared to our guidance, although to a lesser extent in the historically would have experienced as their transition to EPR continues to mitigate our exposure to commodity price fluctuations.

Luke: Commodity and fuel prices, FX and M&A and the impact of recent divestitures were tailwind to margins.

Luke: Environmental services adjusted EBITDA margins were 28, 9% 390 basis points ahead of the prior year. Despite headwinds from used motor oil pricing recall, we had a fire at one of our facilities in December of last year and that reduced Q4 2023 profitability. The lapping of this event was a tailwind to margins as was the timing of it.

Luke: Excluding the impact of these three items segment revenue was up 2% versus the prior year.

Luke: Incident claim cost and performance compensation accruals.

Luke: Adjusted EBITDA margins were 29, 1% for the quarter 300 basis points higher than the prior year consistent with our guide.

Luke: Adjusted free cash flow and adjusted net income were $360 million and $86 million, respectively. Both ahead of expectations Q.

Luke: Q4 cash collections were negatively impacted by Canadian postal strike in December, creating a headwind to working capital in the quarter and the investment we expect to recover in 2025.

Luke: We deployed $51 million of incremental growth capex during the quarter, bringing the total for the year incremental growth capex of $298 million together with the approximately $590 million, we deployed to M&A total capital deployed into these growth initiatives was $890 million in line with the $900 million cap REIT.

Luke: Commodity and fuel prices, FX and M&A and the impact of recent divestitures were tailwind to margins.

Luke: Guided to in our initial capital allocation framework, the beginning of 2024.

Luke: With the significant strengthening of the U S dollar versus the Canadian dollar in the fourth quarter, our net leverage at the end of the year increased to $4 six due to the translational impact of revaluing, our year end debt stack at the year end FX rate of 144.

Luke: Incident claim cost and performance compensation accruals.

Luke: Adjusted free cash flow and adjusted net income were $360 million and $86 million, respectively. Both ahead of expectations Q.

Luke: If you recast the year end balance sheet and the full years adjusted EBITDA at the asset X rate of 135 on which our guidance was originally based year end net leverage would have been $3 85 exactly in line with the target we committed to at the beginning of last year.

Luke: Q4 cash collections were negatively impacted by Canadian postal strike in December, creating a headwind to working capital in the quarter and investment we expect to recover in 2025.

We deployed $51 million of incremental growth capex during the quarter, bringing the total for the year incremental growth capex of $298 million together with the approximately $590 million, we deployed to M&A total capital deployed into these growth initiatives was $890 million in line with the $900 million cap REIT.

Luke: As Patrick said, we expect the Es transaction that closed March FERC as previously indicated we intend to repay approximately $375 billion of long term debt. Shortly after the closing of the sale, giving rise to annual cash interest savings of just under $200 million.

Luke: We also plan to use up to $2 billion to $5 billion of the proceeds to Opportunistically purchase repurchases of GFS shares with a view to reducing the current overhang as well as reducing our current diluted share count.

Luke: Guided to in our initial capital allocation framework, the beginning of 2024.

Luke: With the significant strengthening of the U S dollar versus the Canadian dollar in the fourth quarter, our net leverage at the end of the year increased to 4.06 due to the translational impact of revaluing, our year end debt stack at the year end FX rate of 144.

Luke: Pro forma for the planned use of the proceeds net leverage is expected to be approximately three times.

Luke: Looking forward the strength with which we are exiting 2024, and our outlook for 2025 sets up guidance better than the initial framework. We provided in Q3 in the press release, we provided guidance both on a status quo basis as well as pro forma for the divestiture of Es as we have a high degree of conviction that the ESP.

Luke: If you recast the year end balance sheet and the full years adjusted EBITDA at the exit rate of 135 on which our guidance was originally based year end net leverage would have been $3 85 exactly in line with the target we committed to at the beginning of last year.

Luke: As Patrick said, we expect the Es transaction that closed March one as previously indicated we intend to repay approximately $375 billion of long term debt. Shortly after the closing of the sale, giving rise to annual cash interest savings of just under $200 million.

Luke: We'll close this coming weekend the focus of our guidance will be ex U S and that is what I will walk through now.

Luke: Top line growth is expected to be 6% to 7%, yielding six 5% to 655 billion of revenue.

Luke: Underpinning this growth is $5 25 to five 5% price, which we are implementing in response to our expected cost inflation of low to mid fours.

Luke: We also plan to use up to $2 billion to $5 billion of the proceeds to opportunistically.

Luke: Repurchases of GFS shares with a view to reducing the current overhang as well as reducing our current diluted share count.

Luke: As we have said, we believe price cost spreads over the next five years can be structurally higher than they were in the past due to the highly disciplined industry backdrop as well as incremental pricing opportunities unique to GFS given the relatively nascent stage of our price discovery versus our peers that are more mature in this area.

Luke: Former for the planned use of the proceeds net leverage is expected to be approximately three times.

Luke: Looking forward the strength with which we are exiting 2024, and our outlook for 2025 sets up guidance better than the initial framework we provided in Q3.

Luke: Partially offsetting the price growth is 30 basis point headwind from commodity prices and fuel surcharges.

In the press release, we provided guidance both on a status quo basis as well as pro forma for the divestiture of Es as we have a high degree of conviction that the sale will close this coming weekend. The focus of our guidance will be ex U S and that is what I will walk through now.

Luke: Note that the continued deterioration in commodity prices since November has created a headwind versus when we provided our initial framework for 2025, albeit to a lesser extent than typical thanks to the reduced commodity price exposure, resulting from our PR transition.

Luke: Top line growth is expected to be 6% to 7%, yielding six five to $6 55 billion of revenue.

Luke: On volume, we are assuming roughly flat at the midpoint, plus or minus 25 basis points for the year.

Luke: This growth is $5 25 to five 5% price, which we are implementing in response to our expected cost inflation of low to mid fours.

Luke: The volume assumption underlying the initial 2025 framework provided in November was slightly higher than this but we're being conservative in light of the severe winter we are seeing across many of our markets that we will expect will impact Q1 volumes.

Luke: FX is assumed to be one for one which adds 200 basis points and net M&A contributes negative 80 basis points, which is largely the result of the Michigan divestitures that we completed in Q2, partially offset by the small rollover of the modest M&A. We did in 2024, excluding the impact of the 2024.

Luke: Partially offsetting the price growth is 30 basis point headwind from commodity prices and fuel surcharges.

Luke: Divestitures expected revenue growth is over 8%.

Luke: Note that the continued deterioration in commodity prices since November has created a headwind versus when we provided our initial framework for 2025.

Luke: For the third year in a row, we're guiding an industry, leading 100 basis points of adjusted EBITDA margin expansion.

Luke: To a lesser extent than typical thanks to the reduced commodity price exposure, resulting from our ETR transition.

Luke: <unk> adjusted EBIT margin is expected to be 29, 7%.

Luke: Solid waste margins are expected to be 33, 8% to $33 nine and corporate costs of $4, 1% to four 2% of revenue.

Luke: On volume, we are assuming roughly flat at the midpoint, plus or minus 25 basis points for the year the.

Luke: The volume assumption underlying the initial 2025 framework provided in November was slightly higher than this but we're being conservative in light of the severe winter we've seen across many of our markets that we will expect will impact Q1 volumes.

Luke: The step up in corporate cost intensity is not due to an increase in cost, but rather reduced revenue as a result of the sale of the EES business we.

Luke: We expect meaningful leveraging of the corporate costs segment as we grow our top line, both organically and through M&A over the coming years.

Luke: Commodity prices and the RMG Itc's previously recognized in the P&L in 2024, or 45 basis point headwind, whereas M&A rollover that Michigan divestitures, and FX are 45 basis point tailwind.

Luke: Divestitures expected revenue growth is over 8%.

Luke: Meaning the 100 basis points as effectively underlying organic margin expansion.

For the third year in a row, we are guiding an industry, leading 100 basis points of adjusted EBITDA margin expansion.

Luke: Again, as we've transitioned to EPR, our recycling business is structurally less sensitive to commodity prices due to the higher proportion of overall recycling revenues derived from processing fees.

Luke: <unk> adjusted EBIT margin is expected to be 29, 7%.

Luke: Solid waste margins are expected to be 33, 8% to $33 nine and corporate costs of $4, 1% to four 2% of revenue.

Luke: Adjusted free cash flow is expected to be $750 million for the walk from adjusted EBITDA. We expect normal course, capex of $700 million to $725 million net of cash interest of approximately $350 million approximately $200 million lower than what it would have otherwise been as a result.

Luke: This step up in corporate cost intensity is not due to an increase in cost, but rather reduced revenue as a result of the sale of the.

Luke: That business we.

Luke: We expect meaningful leveraging the corporate cost segment as we grow our top line, both organically and through M&A over the coming years.

Speaker Change: Yes proceeds and $125 million of other cash flow items, meaning arrow and cash taxes.

Luke: <unk> prices in the RMG Itc's previously recognized in the P&L in 2024, or 45 basis point headwind, whereas M&A rollover.

Speaker Change: The $325 million of planned growth capital is excluded from the guidance.

Speaker Change: Free cash flow conversion as a percentage of adjusted EBITDA increased 230 basis points to 38, 7% as we push towards our near term goal of free cash flow conversion that starts with a four.

Luke: Michigan divestitures, and FX are 45 basis point tailwind.

Luke: Meaning the 100 basis points as effectively underlying organic margin expansion.

Speaker Change: We believe we have a clear line of sight to industry, leading rates of improvement to our free cash flow conversion, which will be a key focus of our discussion at this week's investor day.

Luke: As we have transitioned to EPR, our recycling business is structurally less sensitive to commodity prices due to the higher proportion of overall recycling revenues derived from processing fees.

Speaker Change: As Patrick mentioned, the post Es de Levered balance sheet allows for the recognition of our M&A strategies that had been tempered over the past 18 months.

Speaker Change: Our pipeline remains robust and the incremental M&A completed during the year will be upside to our guide.

Speaker Change: I want to highlight that our M&A program can be executed without having a significant impact on leverage thanks to the power of our financial model, which provides dependable organic delevering each year through adjusted EBITDA growth and consistent strong free cash flow generation.

Luke: The $200 million lower than what it would have otherwise been as a result of the use of proceeds and $125 million of other cash flow items.

Luke: And cash taxes.

Luke: The $325 million of planned growth capital is excluded from the guidance.

Speaker Change: Specifically as it relates to the first quarter of 2025, we expect consolidated revenues of approximately $1 $5 2 billion at approximately 27, 1% adjusted EBITDA margin, which implies a 100 basis point expansion over the prior year pro forma for the Es sale.

Luke: Free cash flow conversion as a percentage of adjusted EBITDA increased 230 basis points to 38, 7% as we push towards our near term goal of free cash flow conversion that starts with a four.

Luke: We believe we have a clear line of sight to industry, leading rates of improvement to our free cash flow conversion, which will be a key focus of our discussion at this week's investor day.

Speaker Change: Q1, adjusted free cash flow pro forma debt to Es sale occurred in January one is expected to be about mill less than the prior year largely on account of the timing of cash interest payments and anticipated investments in working capital and Capex.

Luke: As Patrick mentioned, the post Es deleverage balance sheet allows for the recognition of our M&A strategies that had been tempered over the past 18 months.

Patrick: I'll now pass the call back to Patrick will provide some closing comments before Q&A.

Luke: Our pipeline remains robust and the incremental M&A completed during the year will be upside to our guide.

Patrick: Thanks, Lou as we said in January.

I want to highlight that our M&A program can be executed without having a significant impact on leverage thanks to the power of our financial model, which provides dependable organic delevering each year through adjusted EBITDA growth and consistent strong free cash flow generation.

Patrick: Don't think our setup has ever been better we have proven that we can execute on our strategic plan and we believe that we have laid out the foundation for long term growth and value creation for all shareholders.

Patrick: Our go forward strategy remains simple and clear we're going to continue to generate industry, leading organic growth and part from a near term ramp up from <unk> and the other help self help strategies I described in my opening remarks, we're going to improve free cash flow conversion execute on a robust M&A pipeline, while maintaining leverage in line with our targa.

Luke: Specifically as it relates to the first quarter of 2025, we expect consolidated revenues of approximately $1 $5 2 billion at approximately 27, 1% adjusted EBITDA margin, which implies a 100 basis point expansion over the prior year pro forma for the Es sale.

Patrick: And continuing to progress towards an investment grade credit rating.

Luke: Q1, adjusted free cash flow pro forma debt to Es sale occurred in January one is expected to be about mill less than the prior year largely on account of the timing of cash interest payments and anticipated investments in working capital and Capex.

Patrick: We're going to broaden our capital allocation strategy to include share buybacks as well as increased dividends at.

Patrick: At our Investor Day, we will expand on each of these items and demonstrate why we believe that <unk> is uniquely positioned for industry, leading financial performance over the near term.

Patrick: I will now pass the call back to Patrick who will provide some closing comments before Q&A.

Patrick: I always wanted to end with thanking our employees. Our continued success would not be possible without their tireless hard work and dedication and I want to thank each and every one of them for their continued contributions I will now turn the call over to the operator to open the line for Q&A.

Patrick: Thanks, Lou as we said in January.

Patrick: I don't think our setup has ever been better.

Patrick: We have proven that we can execute on our strategic plan and we believe that we have laid out the foundation for long term growth and value creation for all shareholders.

Patrick: To ask a question. Please press star followed by one on your telephone keypad now if you change your mind. Please press star followed.

Patrick: When did they do ask a question. Please ensure that your devices are needed will be asked.

Speaker Change: Thank you kindly limit yourselves to one question and one follow up only.

Khan: Our first question comes from <unk> Khan of RBC capital markets. Please go ahead.

Patrick: And continuing to progress towards an investment grade credit rating.

Patrick: We're going to broaden our capital allocation strategy to include share buybacks as well as increased dividends at.

Speaker Change: Okay.

Speaker Change: Thanks, and good morning, maybe before getting into the operation just a broader question on capital allocation here to give guidance at the time of the announcement was for our pro forma leverage to be around three times, maybe if you can just update us on sort of the capital allocation priorities. As we look ahead to the closing on March and kind of.

Speaker Change: Therefore it thanks.

Speaker Change: Yes. Thanks.

Speaker Change: As we said in Luke mentioned in his comments.

Speaker Change: We expect to.

Patrick: To ask a question. Please press star followed by one on your telephone keypad now.

Speaker Change: Close on on the first.

Speaker Change: And receive the capital on March 3rd.

And your mind. Please press star followed by the winter dying to ask a question. Please ensure that your devices are needed locally.

Speaker Change: I think it was going to be two fold initially as we said $3 $75 billion roughly is going to go to repay.

Patrick: The defined limit yourselves to one question and one follow up only.

And that's going to be a combination of revolver term loan.

<unk> Khan: Our first question comes from <unk> Khan of RBC capital markets. Please go ahead.

Speaker Change: As well as.

Speaker Change: Some payable bonds.

Speaker Change: I mean, the term loan a revolver will be done fairly instantaneously. The bonds will take a couple of weeks, but certainly before the end of the quarter that that debt will be repaid and then we're going to turn our attention to share buybacks.

Patrick: Okay.

Patrick: Thanks, and good morning, maybe before getting into the operation just a <unk>.

Patrick: <unk> question on capital allocation here to give guidance at the time of the announcement was for our pro forma leverage to be around three times, maybe if you can just update us on sort of the capital allocation priorities as we look ahead to the closing on March and therefore it. Thanks.

Speaker Change: I think from our perspective, and the board's perspective.

Speaker Change: The stock continues to be undervalued here, we think when we look out later into 'twenty five.

Speaker Change: <unk> to 'twenty six given all the investments we've made around <unk>.

Patrick: Yes.

Patrick: Yes. Thanks.

Patrick: As we said in Luke mentioned in his comments.

Speaker Change: I mean, we've given a conservative guide and what the organic expansion, we're expecting coupled together with the M&A.

Patrick: We expect to close on the first.

Speaker Change: The board thinks that the stock is materially undervalued here so well.

Patrick: And receive the the capital on March 3rd.

Speaker Change: What youre going to see from US is two fold.

Patrick: I think it was going to be two fold initially as we said $3 $75 billion roughly is going to go to repay.

Speaker Change: Youre going to see most likely the next 24 to 48 hours normal course, issuer bid, which we've applied for Exemptive relief to get to buyback up to 10% of the public float.

Patrick: And that's going to be a combination of revolver term loan.

Patrick: As well as.

Speaker Change: So that and then it will be a combination of doing that and I think from our perspective.

Patrick: Some payable bonds.

Patrick: I mean, the term loan a revolver will be done fairly instantaneously. The bond will take a couple of weeks, but certainly before the end of the quarter that that debt will be repaid and then we're going to turn our attention to share buybacks.

Speaker Change: Active we can depending on the rolling volume calc on the U S line. We can typically will be buyers of probably 350 to 500000 shares a day up to that on the Canadian line, we can by probably up to $65 to 70000 shares a day on the Canadian line.

Patrick: I think from our perspective, and the board's perspective.

Patrick: The stock continues to be undervalued here, we think when we look out later into 'twenty five.

Speaker Change: In conjunction with that we are also <unk>.

Patrick: <unk> to 'twenty six given all the investments we've made around <unk>.

Speaker Change: Finalizing now that we have clarity on the closing we expect to have clarity on how we're actually going to buyback.

Patrick: I mean, we've given a conservative guide and what the organic expansion, we're expecting coupled together with the M&A.

Speaker Change:

Speaker Change: <unk> shares that Luke referenced in terms of the overhang from the private equity shareholders.

Patrick: <unk> thinks that the stock is materially undervalued here so.

Patrick: Youre going to see from us is twofold.

Speaker Change: Meaning, Ontario teachers GIC and.

Patrick: Youre going to see most likely in the next 24 to 48 hours normal course, issuer bid, which we've applied for Exemptive relief to get to buyback up to 10% of the public float.

Speaker Change: <unk>.

Speaker Change: And BC partners. So we expect clarity on that from the OFC over the next sort of week or two as well. So that will also be a combination so between the two of those.

Patrick: So that and then it will be a combination of doing that and I think from our perspective, we can depending on the rolling volume calc on the U S line, we could typically will be buyers of probably 350 to 500000 shares a day up to that and on the Canadian line, we can by probably up to <unk>.

Speaker Change: Between the two of those we expect that we will be able to buy back the $2 $25 billion worth of shares that we articulated when we announced the transaction.

Speaker Change: Okay, Great and then maybe just on some of the margin commentary that Luc shared for 2025, maybe you can just dig a little bit deeper into the maybe.

Patrick: $65 to 70000 shares a day on the Canadian line.

Speaker Change: Maybe the self help levers I know, you'll get a bit more.

In conjunction with that we are also finalizing now that we have clarity on the closing we expect to have clarity on how we're actually going to buyback.

Speaker Change: Detailed at Investor day, but maybe for 2025, what are some of the levers that are driving this margin improvement for this year and maybe the stuff that we should wait for I guess over the next few years that you can maybe talk later this week. Thanks, that's it for me.

Patrick: Hmm.

Patrick: <unk> shares that Luke referenced in terms of the overhang from the private equity shareholders.

Speaker Change: Yes, it's great question. So obviously, we're really pleased with the setup and being able to come out with industry, leading margin expansion. Yet again, if you think about the drivers as you know I always like to talk about the exogenous factors. If you will and if you think about the guide of 100 basis points.

Patrick: Ontario teachers GIC and.

Patrick: And BC partners. So we expect clarity on that from the OFC over the next sort of week or two as well. So that will also be a combination so between the two of those.

Speaker Change: Underlying solid waste margin, if I think about commodities and fuel with where we sit today. It's about a 20 basis point drag and then last year the sort of recognition of RMG ITC that ended up in EBIT is about another 25 basis point drag so you've got 45 basis points on against you know good guys Emma.

Patrick: Between the two of those we expect that we will be able to buy back the $2 $25 billion worth of shares that we articulated when we announced the transaction.

Patrick: Okay, Great and then maybe just on some of the margin commentary that Luc shared for 2025, maybe you can just dig a little bit deeper into the maybe.

Speaker Change: Albeit a small amount is accretive and that's five basis points to FX today is five basis points and it got sort of a 30 35 basis point benefit from the Michigan divestitures.

Patrick: Maybe the self help levers I know, you'll get a bit more.

Patrick: Detailed at Investor day, but maybe for 2025, what are some of the levers that are driving this margin improvement for this year and maybe the stuff that we should wait for I guess over the next few years that you may be talk later this week. Thanks, that's it for me.

Speaker Change: So the good guys and bad guys articulated there a bit of a wash so really leaving a 100 basis points of underlying is really organic margin expansion.

Patrick: Yes, it's great question. So obviously, we're really pleased with the setup and being able to come out with industry, leading margin expansion. Yet again, if you think about the drivers as you know I always like to talk about the factors. If you will and if you think about the guide you know you have a 100 basis points.

Speaker Change: Appointing the self help levers I mean, if you think about our price cost spread and how we're thinking of the cost inflation sort of low to mid fours against that sort of price number of that kind of low to mid fives to banking on a 100 basis points of spread there, which effectively gives you 60 basis points of margin expansion coming out of that spread so you really haven't understood.

Patrick: Underlying solid waste margin, if I think about commodities and fuel with where we sit today. It's about a 20 basis point drag and then last year the sort of recognition of RMG ITC that ended up in EBIT is about another 25 basis point drag so you've got 45 basis points on against you know good guys Emma.

30 to 40 bps coming from the self help levers and what I'd say its hard to look at those excited it's not any one thing it's really all of the things contributing right and so you have the benefits of EPR in R&D rolling on.

Speaker Change: The benefits of continued sort of fleet and asset utilization and the benefits of employee turnover the quantification of which is multi fold, but you see it from the onboarding cost, but productivity cost of risk et cetera. So what gets US excited is the sort of incremental contributions from <unk>.

Patrick: Albeit a small amount is accretive and that's five basis points to FX today is five basis points and you've got sort of a 30 to 35 basis point benefit from the Michigan divestitures.

Patrick: So the good guys and bad guys articulated there a bit of a wash so really leaving a 100 basis points of underlying is really organic margin expansion.

Speaker Change: Each of these levers working in concert to yield sort of industry, leading results. So on Thursday, we will talk about each of those levers a little bit sort of more detail as to what we think the out of the possible can be but.

Patrick: Appointing the self help levers I mean, if you think about our price cost spread and how we're thinking of cost inflation sort of low to mid fours against those sort of price number of that kind of low to mid fives, you're banking on a 100 basis points of spread there we expect that to get to 60 basis points of margin expansion coming out of that spread so you really haven't understood.

Speaker Change: Safe to say, we have a high degree of conviction that the realization of those benefits ratably over the next couple of years is going to continue to deliver exceptional results at the margin and more importantly, free cash flow conversion line.

Patrick: <unk> 30 to 40 bps coming from the self help levers and what I'd say its off and what gets US excited it's not any one thing it's really all of the things contributing right and so you have the benefits of EPR in R&D rolling on.

Speaker Change: Thanks very much.

Speaker Change: We have a question from Patrick D Brown Raymond James Please go ahead.

Speaker Change: Hey, good morning, guys Tyler.

Patrick: The benefits of continued sort of fleet and asset utilization you have and the benefits of employee turnover the quantification of which is multi fold, but you see it from the onboarding cost, but productivity cost of risk et cetera. So what gets US excited is the sort of incremental contributions from <unk>.

Speaker Change: Good morning.

Speaker Change: Good morning, Hey can.

Speaker Change: Can we just start a little bit more on the EBITDA bridge.

Speaker Change: So if we started pro forma solid waste plus corporate I think you're at call. It 176 billion, which is how much is FX and then how much is the EPR in the R&D lean in this year.

Patrick: Each of these levers working in concert to yield sort of industry, leading results. So on Thursday, we will talk about each of those levers a little bit sort of more detail as to what we think the out of the possible can be but.

Speaker Change: Maybe some corporate.

Speaker Change: A little bit that goes with es as well, but can you talk a little bit about the puts and takes.

Patrick: Safe to say, we have a high degree of conviction that the realization of those benefits ratably over the next couple of years is going to continue to deliver exceptional results at the margin and more importantly, free cash flow conversion loss.

Speaker Change: Yes, so that's right Tyler I think if you take out the bridge of revenue and then we can talk about margins, but if you take about a starting point bridge you have roughly $61 50 of revenue last year pro forma if you back out yes, right now you have a $100 million roughly from the Michigan diverse.

Patrick: Sure.

Patrick: Thanks very much.

Speaker Change: We have a question from Patrick D. Brown of Raymond James. Please go ahead.

Richard do you want to sort of normalize you would take that out.

Speaker Change: And so you are at roughly this sort of $60 50 sort of ex yes. So from that what we're saying at the topline as I said, it's five in the quarter to five 5% price.

Tyler: Hey, good morning, guys, it's Tyler.

Speaker Change: Good morning.

Speaker Change: Good morning, Hey.

Speaker Change: Can we just start a little bit more on the EBITDA bridge.

Speaker Change: And youre getting volume of sort of plus or minus 25 bps, so assume that sort of mill at the midpoint.

Speaker Change: If we started pro forma solid waste plus corporate I think you had call it $1 76 billion.

Speaker Change: And commodity price.

Speaker Change: How much is FX and then how much is the EPR in the R&D lean in this year.

Speaker Change: That's sort of minus 25 bps now that would have been significantly higher when you think about how the actual underlying indexes move, but as we've said the benefit of sort of EPR.

Bob: Thank you Bob maybe.

Speaker Change: Corporate.

Speaker Change: A little bit that goes with es as well, but can you talk a little bit about the puts and takes.

Speaker Change: PPR transition into fixed speed processing Marvell is shielding us from some of that volatility but.

Speaker Change: Yes, so that's right I think if you take out the bridge of revenue and then we can talk about margins, but if you take about a starting point bridge you have roughly 61 50 of revenue last year pro forma if you back out yes, now you have a $100 million roughly from the Michigan divested.

Speaker Change: But nonetheless, you got about 25 bps drag from the commodity price component.

Speaker Change: <unk> rollover is it 80 bps, which is really an 80 bps positive.

Speaker Change: From the small amount of M&A offset by the 160 bps of Michigan. So depending on if you start with the 61 50 number or $60 50 feet, how you treat the divestitures.

Speaker Change: So if you want to sort of normalize you would take that out.

Speaker Change: So you add roughly this sort of $60 50 sort of ex yes. So from that what we're saying at the topline as I said is five and a quarter to five 5% price.

Speaker Change: And then on top of that to your point you got FX of two two points right. So, we're saying and FX assumption at 141.

Speaker Change: Now realize that is lower than where we are at today.

Speaker Change: Youre getting volume of sort of plus or minus 25 bps, so assume that sort of Neil at the midpoint, you're adding commodity price.

Speaker Change: And as.

Speaker Change: As we set our guidance, we always like to sort of take the prevailing interest rate and use that as the basis for the guide.

Speaker Change: So at a minus 25 bps now that would have been significantly higher when you think about how the actual underlying indexes move, but as we've said the benefit of sort of.

Speaker Change: There's been a lot of volatility in FX as of late and there continues to be so with a bit of a balancing target for conservative purposes. We just took that sort of one for one right.

Speaker Change: EPR transition into fixed fee processing Marvell is shielding us from some of that volatility.

Speaker Change: But nonetheless, you got about 25 bps drag from the commodity price component.

Speaker Change: Worth noting.

Speaker Change: Reminding folks that the sensitivity of the revenue line is about $30 million per point of FX.

Speaker Change: M&A rollover is it 80 bps, which is really an 80 bps positive from.

Speaker Change: But it sort of right round numbers $10 million at the EBIT line. So if you were to recast. This guide I'd say you know something I think today's FX might be closer to one four for that sort of three three.

Speaker Change: From the small amount of M&A offset by the 160 bps of Michigan, So depending on if you start with.

Speaker Change: 61, 50 number or $60 50, how you treat the divestitures.

Speaker Change: <unk> three point difference would yield an incremental roughly $100 million.

Speaker Change: And then on top of that to your point you got FX two points right. So, we're saying and FX assumption at 141.

Speaker Change: Of revenue and over $30 million EBITDA, just for sort of context. There. So that's the sort of revenue bridge, saying, you're putting it altogether at the EBITDA line. I think you are right you start with roughly $17 60 of EBITDA in 2020 for pro forma for the removal of Es and then you can think of a natural fall through.

Speaker Change: I realize that is lower than where we are at today.

Speaker Change: And as.

Speaker Change: As we set our guidance, we always like to sort of take the prevailing interest rate and use that as the basis for the guide.

Speaker Change: Each of those components.

Speaker Change: There's been a lot of volatility in FX as of late and there continues to be so with a bit of a balancing target for conservative purposes, We just sort of one for one right.

Speaker Change: Work towards the EBIT line.

Speaker Change: RMG and EPR the specific items, you called out are ramping up and their contribution.

Speaker Change: RMG will go from a sort of roughly 30% to about $30 million contributor in 'twenty for upwards of $50 million in.

Speaker Change: Worth noting.

Speaker Change: Reminding folks that the sensitivity of the revenue line is about $30 million per points of FX.

Speaker Change: 25, and then EPR as we said we're going to have to we originally thought we'd have about 10 million Bucks in 'twenty four with the outperformance we had in Q4 and the weight from the commodity price movements.

Speaker Change: But it sort of right round numbers $10 million at the EBIT line. So if you were to recast. This guide I'd say something I think today's FX might be closer to one four for that sort of three three.

Speaker Change: Closer to sort of $20 million realized in 2004, as we said he gets sort of roughly 35% to $40 million list of incremental coming into 'twenty five and.

Speaker Change: <unk> three point difference would yield an incremental roughly $100 million.

Speaker Change: Again, that's at sort of a crude.

Speaker Change: Help me with the sort of margin walk and then the last piece just to note is what ETR is uniquely doing is it a shielding us from the downward pressure, we would have otherwise seen as it relates to the commodity price decline. So we're still feeling some of it but not as great as we otherwise would have effectively get this incremental lifts or preservation.

Speaker Change: Each of those components as they were.

Speaker Change: Work towards the EBIT line.

Speaker Change: RMG an ETR the specific items, you called out are ramping up and their contribution.

Speaker Change: <unk> of your EBITDA base by virtue of that moved to the sort of 60 processing model.

Speaker Change: RMG will go from a sort of roughly 30% to about $30 million contributor in 'twenty for upwards of $50 million in.

Speaker Change: So those are the moving pieces, obviously, there's many other puts and takes underneath that but those are the sort of broad strokes. Do you think are working out to that guy who just laid out.

Speaker Change: 25, and then EPR as we said we're going to have than we originally thought we'd have about 10 million Bucks in 'twenty four with the outperformance we had in Q4 and the weights in the commodity price movements.

Speaker Change: Excellent Okay lots of good detail I appreciate that very much hey, Patrick can we talk real quickly about G. IP can you just give us some updated financials, there maybe EBITDA leverage profile and then.

Speaker Change: Closer to sort of $20 million realized in 2004, as we said he gets sort of roughly 35% to $40 million list of incremental coming into 'twenty five.

Speaker Change: Now that you've got kind of EES behind you, what's the plan to monetize that asset maybe over the next couple of years. Thanks guys.

Speaker Change: Again, it sort of a crude.

Speaker Change: Sure.

Yes, So 2024 was a great year.

Speaker Change:

Speaker Change: <unk> finished in sort of low 200 millions of EBITDA.

Speaker Change: We have a plan this year for approximately 225 million of EBITDA as the plan, we have three M&A transactions lined up.

Speaker Change: For that business.

Speaker Change: <unk> of your EBITDA base by virtue of that moved to the sort of 60 processing model.

Speaker Change: So again back on plan, which is great.

Speaker Change: Interestingly enough, we have had a significant amount of reverse inquiry into that.

Speaker Change: About that business, particularly on the success.

Speaker Change: That came from the Es transaction.

Speaker Change: So.

Speaker Change: It is something we're going to look at and explore.

Speaker Change: Would it be a full outright sale no because I think there's a significant amount of value creative creation opportunities within that business, particularly coming out of this crazy inflationary environment.

Speaker Change: Now that you've got kind of EES behind you, what's the plan to monetize that asset maybe over the next couple of years. Thanks guys.

Speaker Change: Sure.

Speaker Change: But it is something we're going to explore and maybe there is a there is a partial liquidity event that comes with that business, but we're going to explore that post closing.

Speaker Change: Yes, So 2024 was a great year.

Speaker Change:

Speaker Change: <unk> finished in sort of low 200 millions of EBITDA.

Speaker Change: We have a plan this year for approximately $225 million of EBITDA as the plan, we have three M&A transactions lined up.

Business, but it's on track performing great valuations in the sector sort of Ive never been better so.

Speaker Change: We're feeling very good about it and I'm very confident about it.

Speaker Change: For that business.

Speaker Change: So again back on plan, which is great.

Speaker Change: Okay perfect. Thank you.

Tyler: Thanks Tyler.

Speaker Change: Interestingly enough, we have had a significant amount of reverse inquiry into that.

Speaker Change: We have a question from Kevin Chiang of CIBC Wood Gundy. Please go ahead.

Speaker Change: About that business, particularly on the success.

Kevin Chiang: Hey, good morning, everybody. Thanks for taking my question.

Speaker Change: That came from the Es transaction.

Kevin Chiang: Look maybe just on the margin guide for the year and maybe for the first quarter I think you're calling out about 100 basis points.

Speaker Change: So.

Speaker Change: It is something we're going to look at and explore.

Would it be a full outright sale no because I think there's a significant amount of value creative creation opportunities within that business, particularly coming out of this crazy inflationary environment.

Kevin Chiang: For both.

Kevin Chiang: I guess, what I think the margin cadence through the year I would imagine Q1 would have been been tougher just you've called out winter.

Kevin Chiang: Correct.

Kevin Chiang: Commodity prices.

Kevin Chiang: <unk> helps here, but commodity prices.

Speaker Change: But it is something we're going to explore and maybe there is there is a partial liquidity event that comes with that business, but we're going to explore that post closing.

Kevin Chiang: The comps are probably tougher to start off 2020.

Kevin Chiang: How do I square.

Kevin Chiang: A pretty good margin lift in Q1.

Speaker Change: S business, but it's on track performing great valuations in the sector sort of Ive never been better so.

Kevin Chiang: Which looks maybe as your challenge most challenging seasonal quarter.

Kevin Chiang: The full your outlook also being 100 basis points.

Speaker Change: We're feeling very good about it and very confident about it.

Speaker Change: Yes, it's a great question, Kevin Thanks for it I mean, so if you think about each one versus age to the acute each one has the benefit of this Michigan divestiture right and it just goes to show the power of Patrick mentioned, the comment about focusing on quality of volume right and the benefit in Q1 of not having that sort of lower quality.

Speaker Change: Okay perfect. Thank you.

Tyler: Thanks Tyler.

Speaker Change: We have a question from Kevin Chiang of CIBC Wood Gundy. Please go ahead.

Kevin Chiang: Hey, good morning, everybody. Thanks for taking my question.

Speaker Change: <unk> is roughly sort of 65 basis points right. So providing a lot of support to offset I think when the commodity and other sort of exogenous type factors, but also the sort of seasonal component now if you think about the commodity ramp for last year I think disciplined understand the cadence there because recall it was really a.

Kevin Chiang: Look maybe just on the margin guide for the year and maybe for the first quarter I think you're calling on about 100 basis points.

Kevin Chiang: For both.

Kevin Chiang: I guess, what I think the margin cadence through the year I would have imagined Q1 would have been been tougher just you've called out wind turbine.

Kevin Chiang: Correct.

Kevin Chiang: Commodity prices.

Kevin Chiang: <unk> helps here, but commodity prices.

Speaker Change: Q2 into Q3 ramp when the prices took off so Q1 over Q1, we actually have a slight lift on commodities at the margin level and that actually turned sort of negative as you get into those sort of back end of the year.

Kevin Chiang: The comps are probably tougher to start off 2025.

Kevin Chiang: How do I square.

Kevin Chiang: A pretty good margin lift in Q1.

Kevin Chiang: Which looks maybe as your challenge most challenging seasonal quarter.

Kevin Chiang: The full year outlook also being 100 basis points.

Speaker Change: And it's also just the sort of quality of the underlying sort of margin expansion, that's happening sort of ratably right and so you're seeing that.

Kevin Chiang: Yes, it's a great question, Kevin Thanks for it.

Speaker Change: So if you think about each one versus <unk> to the acute each one has the benefit of this Michigan divestiture right. It just goes to show the power of Patrick mentioned, the comment about focusing on quality of volume right and the benefit in Q1 of not having that sort of lower quality volume is roughly sort of 65 basis points right. So <unk>.

Speaker Change: Come through in each of the quarters, where you anticipate being able to have.

Speaker Change:

Speaker Change: The right term of industry, leading I keep saying, but these very impressive organic growth across each of the quarters. I think Q3 is going to be the toughest just by virtue. If you go back and look at what you are lapping that was a record breaking quarter for us, but the H. One is certainly benefiting from again.

Speaker Change: In a lot of support to offset I think one the commodity and other sort of exogenous type factors, but also the sort of seasonal component now if you think about the commodity ramp for last year I think it's important understand the cadence there because recall it was really a Q2 into Q3 ramp when the prices took off so Q1.

Speaker Change: Outsized contribution from this one of the divestitures as well as just the cadence and timing of some of the exogenous factors on commodity.

Speaker Change: That's very helpful color.

Speaker Change: Q1, we actually have a slight lift on commodities at the margin level and that actually turned sort of negative as you get into those broader back end of the year.

Speaker Change: I apologize if I missed this I did notice a step up in your organic growth in the U S.

Speaker Change: 5.8%.

Speaker Change: And it's also just the sort of quality of the underlying sort of margin expansion, that's happening sort of ratably right and so you're seeing that come through in each of the quarters, we anticipate being able to have.

Speaker Change: Because on a pro forma basis.

Speaker Change: Versus what you are talking in Q3, and I think to the first half of 2014 anything to call out there in terms of the step up.

Speaker Change: In the fourth quarter.

Speaker Change: Yeah, Kevin I would say if you look at the U S sort of specific I mean, both markets have been contributing sort of at the price line.

Speaker Change:

Speaker Change: In a very sort of satisfactory manner to us a little bit of outsized price in Canada as Youre getting new municipal contracts rolling on and you get into sort of price increase would have benefit from that I'd say that really.

Speaker Change: Strong story in the U S. In Q4 was the sort of volume piece right and again as you lap these sort of intentional shedding and you think about how that's materializing in volume I mean, the U S volumes increased 360 basis points sequentially from Q3, Q3 was negative $1 nine an increase of one 7%.

Speaker Change: Outsized contribution from this one the divestitures as well as the cadence and timing of some of the exogenous factors on commodities.

Speaker Change: That's very helpful color.

Speaker Change: I apologize if I missed this I did notice a step up in your organic growth in the U S.

Speaker Change: Q4, and a part of that was the anniversary part of it was strong success in the sort of hurricane cleanup effort that we're able to participate in thanks to our.

Speaker Change: 5.8%.

Speaker Change: Because on a pro forma basis.

Speaker Change: Versus what you are talking in Q3, and I think to the first half of 'twenty anything to call out there in terms of the step up.

Speaker Change: Optimized platform in those regions.

Speaker Change: So that certainly sort of contributed to the step up there.

Speaker Change: In the fourth quarter.

Speaker Change: Where you were otherwise seeing negative volumes during the year.

Speaker Change: Yeah, Kevin I'd say, if you look at the U S sort of specifically I mean, both markets have been contributing sort of at the price line.

Speaker Change: That's super helpful. Thank you for taking my questions.

Thanks, Kevin Thanks, Kevin.

Speaker Change: We have a question from Brian Birchmeier of Citigroup. Please go ahead.

Brian Birchmeier: Hi, Good morning, Thank you for taking the question.

Speaker Change: Maybe just digging into R&D a little bit.

Speaker Change: Do you expect to lock in any RIN pricing for this year and are you able to provide an earnings sensitivity to.

Speaker Change: RIN prices just so we can.

Speaker Change: Mark to market that throughout the year and then after the $325 million of gross Capex.

Speaker Change: Part of that was the anniversary part of it was strong success in the sort of the hurricane cleanup effort that we are able to participate in thanks to our.

Speaker Change: Is it possible to say how much do you think could be left for 'twenty six 'twenty seven.

Speaker Change: Yes. So this is Luc speaking I'll speak on the first point or the second comment about sensitivity. If you look today, we're assuming RIN pricing and around the sort of $2 40 level roughly with what we have online every 50 of RIN prices would drive roughly $15 million of EBITDA now at maturity every 50.

Speaker Change: Optimized platform in those regions.

Speaker Change: So that certainly sort of contributed to the step up there.

Speaker Change: Where you were otherwise seeing negative volumes during the year.

Speaker Change: That's super helpful. Thank you for taking my questions.

Speaker Change: Thanks, Kevin Thanks, Kevin.

Brian Birchmeier: We have a question from Brian Birchmeier of Citigroup. Please go ahead.

Speaker Change: Grain prices drive about $50 million of EBITDA, but obviously with the sort of lower volume of MB to use that we've yet to have in the system today sort of sensitivity is a little bit lower op asset is what Patrick as you think about sort of locking in at pricing, yes. So long term locked in our pricing and obviously you don't feel like today is the right time, but.

Brian Birchmeier: Hi, Good morning, Thank you for taking the question.

Brian Birchmeier: Maybe just digging into R&D a little bit.

Brian Birchmeier: Do you expect to lock in any RIN pricing for this year and are you able to provide an earnings sensitivity to.

Speaker Change: Fear Progressive Tim Burton the last Trump administration, we think that it will find out.

Brian Birchmeier: RIN prices just so we can.

Speaker Change: Level set in place okay.

Brian Birchmeier: Mark to market that throughout the year and then after the $325 million in gross Capex.

Speaker Change: From an industry perspective.

Speaker Change: $2 75 to $3 is probably still a long term number that's what all the <unk>.

Brian Birchmeier: Is it possible to say how much do you think could be left for 'twenty six 'twenty seven.

Speaker Change: People smarter than me think.

Speaker Change: That being said, we're going to forward sell all of our ratings for the year. So our expectation is that we don't see much volatility from that because everything will be pre sold for the year in the near term and Brian on the last one the capex piece.

Brian Birchmeier: Yes. So this is Luc speaking I'll speak on the first point or the second comment about sensitivity. If you look today, we're assuming RIN pricing and around the sort of $2 40 level roughly with what we have online every 50 of RIN prices would drive roughly $15 million of EBITDA now at maturity every 50.

Speaker Change: Each year the sustainability spend has been roughly two thirds EPR and other and then it sort of third R&D. If you look after this year, there's probably another sort of 100 under $50 million of sort of net capex is going to come out of our pocket as it relates to RMG over this would've 26 through 28 levels I think that overall spend.

Brian Birchmeier: Grain prices drive about $50 million of EBITDA, but obviously with the sort of lower volume of MB to use that we've yet to have in the system. Today. So the sensitivity is a little bit lower I'll pass it as sort of Patrick as you think about sort of locking in at pricing, yes. So long term locked in our pricing obviously, we don't feel like today is the right time, but.

Speaker Change: Comes down considerably from today's levels.

Speaker Change: <unk> be some as it relates to finalizing those last R&D project.

Brian Birchmeier: The year progressing similar to the last Trump administration, we think that it will find out.

Speaker Change: Okay understood. Thank you very much detail and then last question for me and then I can turn it over is I know.

Brian Birchmeier: Level set in place and I think I think.

Brian Birchmeier: From an industry perspective.

Brian Birchmeier: $2 75 to $3 is probably still a long term number that's with the <unk>.

Speaker Change: Guidance doesn't have any kind of incremental M&A in there just curious if you've either closed any deals yet this year.

Brian Birchmeier: People smarter than me think.

Brian Birchmeier: That being said, we're going to forward sell all of our ratings for the year. So our expectation is that we don't see much volatility from that because everything will be pre sold for the year in the near term and Brian on the last one the capex piece.

Speaker Change: And then if you think maybe last years $600 million of spending it seems like a decent proxy for 25 or maybe we should just hold tight until the investor day for more details. Thank you I'll turn it over.

Brian Birchmeier: Each year the sustainability spend has been roughly two thirds EPR and other and then it sort of third R&D. If you look after this year, there's probably another sort of 100 under $50 million of sort of net capex is going to come out of our pocket as it relates to RMG over this would've 26 through 28 levels I think that overall spend.

Speaker Change: Yes.

Speaker Change: We've closed one small deal this year the expectation is post getting the dollar.

Speaker Change: The M&A program is going to ramp up to what it was before and I think.

Speaker Change: We've typically guided to somewhere between a spend of sort of anywhere between $5 million to $700 million.

Speaker Change: Upside case is probably closer to $1 billion.

Brian Birchmeier: Comes down considerably from today's levels.

Speaker Change: But in that ZIP code is what our expectations are getting back to a normal year versus last year. Obviously last year was an abnormal year, just because we had the capital allocation framework balancing.

<unk> be some as it relates to finalizing those last R&D project.

Brian Birchmeier: Okay understood. Thank you very much detail and then last question for me and then I can turn it over is I know.

Speaker Change: EPR RMG.

Speaker Change: Spends coupled together with M&A, coupled together with Delevering.

Brian Birchmeier: Guidance doesn't have any kind of incremental M&A in there just curious if you've either closed any deals yet this year.

Speaker Change: Now that that's all behind US, we'll get back to normal course.

Speaker Change: Do what we do best and continue executing on the strategy that we've deployed over the last 17 years.

Brian Birchmeier: And then if you think maybe last years $600 million of spending it seems like a decent proxy for 25 or maybe we should just hold tight until the investor day for more details. Thank you I'll turn it over.

Speaker Change: But we'll have a very good update for you.

Speaker Change: On Investor day on Thursday.

Brian Birchmeier: Yes.

Brian Birchmeier: We've closed one small deal this year the expectation is post getting the dollar.

Speaker Change: We have a question from Jerry Revich of Goldman Sachs. Please go ahead.

Brian Birchmeier: The M&A program is going to ramp up to what it was before and I think.

Brian Birchmeier: We've typically guided to.

Brian Birchmeier: Somewhere between a spend of sort of anywhere between $5 million to $700 million.

Speaker Change: Hi, Good morning. This is Adam on for Gary Today, just wanted to follow up on M&A. It sounds like the pipeline remains robust can you just talk about the mix of opportunities in the M&A pipeline from a standpoint of solid waste business lines or geography.

Brian Birchmeier: The upside case is probably closer to $1 billion.

Brian Birchmeier: But in that ZIP code is what our expectations are getting back to a normal year versus last year. Obviously last year was an abnormal year, just because we had the capital allocation framework balancing the EPR RMG.

Speaker Change: Okay.

Speaker Change: Yes, it's going to be a combination of U S and Canada in existing markets, where we're currently operating that densify existing markets, where we already own a substantial amount of post collection assets.

Brian Birchmeier: Spends coupled together with M&A, coupled together with Delevering now.

Brian Birchmeier: Now that's all behind US, we'll get back to normal course.

Brian Birchmeier: Do what we do best and continue executing on the strategy that we've deployed over the last 17 years.

Speaker Change: And I think youre going to see that.

Speaker Change: Move throughout both Canada and the U S.

Speaker Change: I think from a dollar weighted perspective, youre going to see more dollars get deployed into the U S. Just because of the size of opportunity.

Brian Birchmeier: But we'll have a very good update for you.

Brian Birchmeier: Investor Day on Thursday.

Speaker Change: And where we're looking to expand about those operations again around markets, where we have landfills recycling snowy transportation.

Speaker Change: We have a question from Jerry Revich of Goldman Sachs. Please go ahead.

Speaker Change: But my expectation is probably something like 70, $525, 75% of dollars going to be about 25% automotive Canada.

Speaker Change: Great and then can you just talk about your assumptions for recycling prices and the guide and update us on how we should think about sensitivity to recycling prices based on risk sharing mechanisms in place today.

Speaker Change: Okay.

Yes, it's going to be a combination of U S and Canada in existing markets, where we're currently operating that densify existing markets, where we already own a substantial amount of post collection assets.

Speaker Change: Yeah, Adam It's Luc speaking I mean, we exited 2025 at roughly about $180 Canadian for sort of Canadian ton when you look at where the sort of markets where.

Speaker Change: And I think youre going to see that.

Speaker Change: I think one thing to note when you look on a year over year comp is that during periods of price volatility I mean, we ultimately sell at a spread above the market price right and when you have periods of rising prices, we're often able to sort of increase that spread that we were able to realize and then the in versus prices decline and why I highlight that.

Speaker Change: Move throughout both Canada and the U S.

Speaker Change: I think from a dollar weighted perspective, youre going to see more dollars get deployed into the U S. Just because of the size of opportunity.

Speaker Change: And where we're looking to expand about those operations again around markets, where we have landfills recycling transportation.

Speaker Change: When you look at the 2024 average rate.

Speaker Change: But my expectation is probably something like 75% to $5, 75% of dollars going to be about 25% automotive Canada.

Speaker Change: It's about 200 $205 per ton Canadian per Canadian ton.

Speaker Change: 25 dollar Delta and when I think about the $180 exit rate, but our realized rate during 24 was significantly higher than that because of that sort of price volatility and youre looking at more like a sort of 40 to $45 Delta.

Speaker Change: In terms of the sort of pricing year over year.

Speaker Change: Yes, Luke speaking I mean, we exited 2025 roughly on about $180 Canadian for sort of Canadian ton when you look at where the sort of markets where.

Speaker Change: Our guidance now at roughly 1 million tons that we have that would have implied like a $45 million headwind. The reality is today, we are seeing a significantly lower headwind than that because again as I mentioned fixed away from volatile commodity based contracts.

Speaker Change: I think one thing to note when you look on a year over year comp is that during periods of price volatility I mean, we ultimately sell at a spread above the market price.

Speaker Change: Feed processing model. So today, where we said it's roughly every $10 change is going be about a $5 change in EBITDA flow through.

Speaker Change: When you have periods of rising prices, we're often able to sort of increase that spread that we were able to realize and then the in versus prices decline and why I highlight that is when you look at the 2024 average rate.

Speaker Change: We progressed through 'twenty five 'twenty six.

Speaker Change: That exposure will reduce even further from there, but that's how I would think about the setup for 2025% as we sit today.

Speaker Change: It's about 200 $205 per ton Canadian per Canadian ton.

Speaker Change: About $25 Delta when I think about the $180 exit rate, but our realized rate during 24 was significantly higher than that because of that sort of price volatility and youre looking at more like a sort of 40 to $45 Delta.

Speaker Change: Great. Thanks, so much.

Speaker Change: Yes.

Speaker Change: We have a question from Devin Dodge of BMO. Please go ahead.

Devin Dodge: Yes. Thanks, good morning, So I wanted to start.

Speaker Change: In terms of the sort of pricing year over year.

Devin Dodge: Ask a question about the TPP appointed director Stefan down I think the Investor rights agreement.

Speaker Change: Which our guidance now at the roughly 1 million tons that we have that would have implied that $45 million headwind. The reality is today, we are seeing a significantly lower headwind than that because again as I mentioned fix away from volatile commodity based contracts to fixed fee processing level. So today, where we see.

Speaker Change: A lot of teachers to appoint a board member as long as that no more than 5%.

Devin Dodge: Just based on the buyback.

Devin Dodge: Proceeds from yes that you've talked about before I don't think teachers would fall below that threshold. So just wondering if you could provide a bit of color around the board change and if theres any read through to the planned buyback activity.

Speaker Change: It's roughly every $10 changes would be about a $5 change in EBITDA flow through and as we progressed through 'twenty five 'twenty six.

No no change in the region or I think.

Devin Dodge: From our perspective, as we said.

Speaker Change: That exposure will reduce even further from there, but that's how we think about the setup for 2025% as we sit today.

Speaker Change: Looking at board composition, we've approached.

Speaker Change: Both of the sponsors and thinking about what the long term view is on the board.

Speaker Change: Great. Thanks, so much.

Speaker Change: Okay.

Speaker Change: How that board representation is going to play out, particularly given that the levels that they're going to be.

Speaker Change: We have a question from Devin Dodge of BMO. Please go ahead.

Speaker Change: Post the.

Speaker Change: The buyback.

Speaker Change: Yeah. Thanks, Good morning, So I wanted to start I ask a question about the TPP appointed director Stefan down I think the Investor rights agreement.

Speaker Change: And then allowing the company has set itself up to go out and think about our long term board and again recruiting individuals that.

Speaker Change: I would go on the board in replacement.

Speaker Change: More of a sponsor type right.

Speaker Change: Good teachers to appoint a board member as long as there are no more than 5%.

Speaker Change: And as I said previously our expectation was that Ontario teachers would come off in sort of early 2025, which is happening now.

Speaker Change: Just based on the buyback.

Speaker Change: With the proceeds from yes that you've talked about before I don't think teachers would fall below that threshold. So just wondering if you could provide a bit of color around the board change and if theres any read through to the planned buyback activity.

Speaker Change: And obviously with the sell down our expectation is that one of the BC members will come off as well so.

Speaker Change: I think the way the Investor rights agreement because they have the right to appointment it's not enough.

Speaker Change: No no change in the region I think.

Speaker Change: From our perspective, as we said the looking at board composition.

Speaker Change: Not a necessity and then just given how close Dolby to the threshold post the buyback.

Speaker Change: We've approached.

Speaker Change: The expectation was it.

Speaker Change: Both of the sponsors and thinking about what the long term view is on the board.

Speaker Change: We got one of them out of the way now we expect the other one.

Speaker Change: In process now of working with our external advisers as well as the current board on what that board is going to look like and what new members will be appointed to the board. So that's all process as per plan.

Speaker Change: How that board representation is going to play out, particularly given that the levels that they are going to be.

Speaker Change: Post.

Speaker Change: The buyback.

Speaker Change: And then allowing the company has set itself up to go out and think about our long term board again recruiting individuals that.

Luke: Okay. Thanks for that good context, and then maybe just a modeling question might be for Luke here, but.

Speaker Change: We'll go on the board and replacement now.

Luke: The repayment of lease obligations on the cash flow statement, there's been a fair bit of quarter to quarter volatility I think it was almost zero in the quarter. Just wondering if you could provide some color on what's driving some of that noise in that line item.

Speaker Change: More of the sponsor type right.

Speaker Change: And as I've said previously our expectation was that Ontario teachers would come off in sort of early 2025, which is happening now.

Luke: That should be on a go forward basis, and the mix between operating and finance leases.

Speaker Change: Obviously with the sell down our expectation is that one of the BCC members will come off as well so.

Speaker Change: I think the way the Investor rights agreement reads as they have the right to appoint a it's not and that's.

Luke: Yeah, Devin it's Luc speaking on a go forward basis. If you think about it roughly like 100 million $120 million per year amounts and I say that is the U S. Dollar denominated you get some FX sort of volatility in that.

Speaker Change: Not a necessity and then just given how close BELBUCA the threshold post the buyback.

Speaker Change: The expectation was.

Speaker Change: We've got one of them out of the way now and we expect the other one.

Luke: The operating versus finance as you know like it doesn't really sort of exist under IRS per se.

Speaker Change: In process now.

Speaker Change: Working with our external advisers as well as the current board on what that board is going to look like and what new members will be appointed to the board. So that's all process as per plan.

Luke: Classification that we have readily available I think of it sort of roughly call. It 75% what do you think about operating which is building.

Luke: Buildings, primarily like offices in some of our key facilities that are leased.

Speaker Change: Okay. Thanks for that good context, and then maybe just a modeling question so might be for Luke here, but.

Luke: And the average balance would be equipment type financing.

Speaker Change: The repayment of lease obligations on the cash flow statement look theres been a fair bit of quarter to quarter volatility I think it was almost zero in the quarter. Just wondering if you could provide some color on what's driving some of that noise in that line item.

Luke: Okay, and maybe just the volatility.

Luke: I understand.

Luke: The timing of payments or what's driving some of that quarter to quarter volatility. This year, what you had as equipment specifically corporate aircraft lease that you had had typically under a lease and you had upfront payments for replacement aircraft being need and then you've received a reimbursement in Q4 as it into a regular loan for those.

Speaker Change: That should be on a go forward basis, and the mix between operating and finance leases.

Speaker Change: Yeah, Devin is blue speaking on a go forward basis, if you think about it roughly like $100 million $120 million per year amounts and I say that is the U S. Dollar denominated you get some FX sort of volatility in that.

Luke: Payments and so you just had some puts and takes within the quarters as a result of those amounts.

Speaker Change: The operating versus finance as you know it doesn't really sort of exist under IRS per se.

Speaker Change: Classification that we had readily available I think of it sort of roughly call. It 75% what do you think about operating which as you know.

Speaker Change: Okay got it thanks for that I'll turn it over.

Speaker Change: We have a question from Kunal <unk>.

Speaker Change: Buildings, primarily like offices in some of our key facilities that are leased.

Speaker Change: Of Scotiabank. Please go ahead.

Speaker Change: Thanks, and good morning, just wanted to understand Luke what's your expectations for the curtains for net leverage as the year progresses and I'm asking this from a perspective of you have obviously the capital deployment for the sustainability. The Es sales will happen in the next month or so.

Speaker Change: And the average balance would be equipment financing.

Speaker Change: Okay, and maybe just the volatility.

Speaker Change: I understand.

Speaker Change: The timing of payments or what's driving some of that quarter to quarter volatility. This year, what you had as equipment specifically corporate aircraft lease that you had had typically under a lease and you had upfront payments for replacement aircraft being need and then you've received a reimbursement in Q4 as it into a regulated low and for those.

Speaker Change: And then you have some M&A as well happening. So I mean, how do you see the ebb and flow of something that leverage as.

Speaker Change: As the year progresses. Thanks.

Speaker Change: Yes, it's a great question, and obviously something we're going to pivot towards being very proud to report on as opposed to historically.

Speaker Change: Payments and so you just had some puts and takes within the quarters as a result of those amounts.

Speaker Change: Maybe it wasn't always the case, but if you think pro forma for the transaction you have roughly sort of returns right out the gate and then as you go forward from here I mean ex M&A I'll start it's just the sort of natural sort of deleveraging that happened throughout the year.

Speaker Change: Okay got it thanks for that I'll turn it over.

Speaker Change: We have a question from Kunal <unk> of Scotia Bank. Please go ahead.

We in Q2 Q3, and then Q4, you bounce around in and around that but you're going to end the year otherwise at two nine times on an organic basis, and that's inclusive of the sort of growth Capex et cetera, now the actual sort of cadence from each of the periods typically each one is a bit of a heavier investment on both working capital and Capex.

Kunal: Thanks, and good morning, just wanted to understand Luke what's your expectation for the cadence for net leverage as the year progresses.

Speaker Change: Asking this from our perspective.

Speaker Change: You have obviously the capital deployment for the sustainability.

Speaker Change: One would be roughly $100 million working capital investment.

Speaker Change: Sales will happen in the next month or so.

Speaker Change: And so whatever.

Speaker Change: And then you have some M&A as well happening so I mean, how do you see the ebb and flow of something that leverage.

Speaker Change: 55% to 60% of your total Capex spend so you know from a free cash flow perspective, each one is a little bit more of investments you will see a slight uptick in Q2 on that sort of pro forma number and then that rate of libre recovers through Q3 Q4.

Speaker Change: As the year progresses. Thanks.

Speaker Change: Yes, it's a great question, and obviously something we're going to pivot towards being very proud to report on it as opposed to historically.

Speaker Change: Inclusive of potential M&A, which would be all be additive to the guide at the EBIT level.

Speaker Change: Maybe it wasn't always the case, but if you think pro forma for the transaction of roughly sort of returns right out the gate and then as you go forward from here I mean ex M&A I'll start just a sort of natural sort of deleveraging that happened throughout the year.

Speaker Change: That equity back leverage depending on the timing of when those deals close however, what I would say and I highlighted in the prepared remarks.

Speaker Change: The relative impact of M&A because of the size and overall sort of EBIT and free cash flow generation of the business is much more muted today at the leverage line specifically when you look at it you could spend about $500 million at 758 times on M&A and that would impact leverage by roughly 215 basis points.

Speaker Change: In Q2, and Q3, and then Q4 you bounce around in and around that are you going to end the year otherwise at two nine times on an organic basis and thats inclusive of the sort of growth Capex et cetera, now the actual sort of cadence from each of the periods typically each one is a bit of a heavier investment on both working capital and Capex in each one.

Speaker Change: That's part of our excitement of the story of this inflection point, that's been reached whereas you can execute on the M&A strategy and still maintain leverage at the desired level.

Speaker Change: It would be roughly a $100 million working capital investment.

Speaker Change: <unk>.

Speaker Change: 55% to 60% of your total capex spend so from a free cash flow perspective, a little bit more of investments you will see a slight uptick in Q2 on that sort of pro forma number and then that rate of libre recoveries through Q3 Q4.

Speaker Change: Nothing that we've historically been able to do and it gives us great conviction in our ability to sort of balance.

Speaker Change: There is sort of interesting driving equity value creation as we report.

Speaker Change: Inclusive of potential M&A, which will be all be additive to the guide at the EBIT level.

Speaker Change: Yeah.

Speaker Change: That's great color.

Second follow up maybe I have seen them.

Speaker Change: That equity back leverage depending on the timing of when those deals close however, what I would say and I highlighted in the prepared remarks is the relative impact of M&A because of the size and overall sort of EBIT and free cash flow generation of the business is much more muted today at the leverage line specifically when you look at it.

Speaker Change: One of the companies in Canada was trying to re domicile in the U S. And then they pull back just wondering like you know with the <unk> sale transaction.

Speaker Change: So any consideration do not change anything on the headquarter side of things so from accounting perspective, whether to go to U S GAAP amount.

Yes, im not saying.

Speaker Change: You could spend about $500 million at 758 times on M&A and that would impact leverage by roughly 215 basis points. So that's part of our excitement of the story.

Speaker Change: Nothing no decisions, obviously have been made.

Speaker Change: You know again in the Investor Day, I think you'll see us lay out what the two paths are for that.

Speaker Change: I think.

Speaker Change: From our perspective.

Speaker Change: This inflection point, that's been reached whereas you can execute on the M&A strategy and still maintain leverage.

Speaker Change: Index inclusion would be great.

Speaker Change: I think when you look at where are we sort of sit in the rankings for the TSS 60, I would say, we're pretty close in Canada.

Speaker Change: Iron level, something that we've historically been able to do.

Speaker Change: Gives us great conviction in our ability to sort of a balance.

Speaker Change: Probably being one of them, obviously industrial names that would go into the <unk>.

Speaker Change: Areas sort of interest in driving equity value creation as we go forward.

Speaker Change: Obviously, there are some larger companies like Fairfax, and particularly shall epic on the technical side Fairfax on the financial side.

Speaker Change: Okay.

Speaker Change: That's great color.

Speaker Change: Second follow up maybe I have seen.

Speaker Change: One of the companies in Canada was trying to re domicile in the U S. And then they pull back I'm, just wondering like with the <unk> sale transaction.

Speaker Change: Looks like we would be next from what everybody send it in terms of data going into <unk>, obviously, industrial whom PSX fishery you're underwriting today.

Speaker Change: So any consideration.

Speaker Change: Not change anything on the headquarter side of things so from accounting perspective, whether to go to U S. GAAP.

Speaker Change: So it would seem to be a question of what the committee there thinks in terms of what goes into that.

Speaker Change: Yes nothing.

Speaker Change: But given our market cap and trajectory and sort of flow.

Speaker Change: Nothing no decisions, obviously have been made.

Speaker Change: Where it's moving to our expectation is that.

Speaker Change: Again in the Investor Day, I think you'll see us lay out what the to pass off of that.

Speaker Change: And someone comes out we're probably one of the next two or three that would go in maybe the next one that goes and we don't know.

Speaker Change: I think.

Speaker Change: From our perspective.

Speaker Change: Index inclusion would be great.

Speaker Change: As far as.

Speaker Change: I was looking at it obviously was a substantial amount of our revenue now in the U S that is probably the <unk> Avenue, that's available to us as well.

Speaker Change: I think when you look at where are we sort of shift in the rankings for the TSS 60, I would say, we're pretty close in Canada.

Speaker Change: Although it's not as clear obviously, we would never reincorporate in the U S.

Speaker Change: Probably being one of them, obviously industrial names that would go into the PSX 60.

Speaker Change: Obviously, there are some larger companies like Fairfax, and particularly <unk> on the technical side Fairfax on the financial side.

Speaker Change: That's not possible I mean anything is possible, but from a tax efficiency perspective, it's not efficient so that we never happened, but there are past and there are there are other examples of companies that are reincorporating their head offices to get U S industry inclusion as well as checking the box of about eight other things.

Speaker Change: And it looks like we would be next from what everybody sensitive in terms of data going into <unk>, obviously industrial <unk> you're underwriting today.

Speaker Change: So it would seem to be a question of what the committee there thinks in terms of.

Speaker Change: <unk>.

Speaker Change: So again, that's something we're obviously actively looking at today.

Speaker Change: What goes in that but.

Speaker Change: But given our market cap and trajectory and sort of float.

Speaker Change: It's a question of what opens.

Speaker Change: What opens the broadest base of investors.

Speaker Change: Where it's moving to our expectation is that.

Speaker Change: I think it's either path is good I think currently were focused on the Canadian PSX 60 path, but.

And someone comes out we're probably one of the next two or three that would go in maybe the next one that goes and we don't know.

Speaker Change: But at the same time post CES divestiture, and we will look at both and we'll make a determination as to what.

Speaker Change: As far as.

Speaker Change: I was looking at it obviously is a substantial amount of our revenue now in the U S that is probably the <unk> Avenue, that's available to us as well.

Speaker Change: Where we see the most amount of value that can be added to our name.

Speaker Change: Over time, and where we can get the most amount of flows.

Speaker Change: Although it's not as clear obviously, we would never we incorporate in the U S. We think thats not possible.

Speaker Change: Of buyer then shareholders into our niche so all both in progress and give you a pretty good summary.

Speaker Change: Anything is possible, but from a tax efficiency perspective, it's not efficient so that we never happened, but there are past and there are other examples of companies that are reincorporating their head offices to get U S. HRC inclusion as well as checking the box of about eight other things.

Speaker Change: At the Investor day on Thursday.

Speaker Change: Yeah, that's great. Thanks, guys I appreciate it then so you touched it.

Speaker Change: Thank you.

Speaker Change: We have a question from Chris Murray of ATB capital markets. Please go ahead.

Speaker Change: So again, that's something we're obviously actively looking at today.

Speaker Change: It's a question of what openings.

Speaker Change: What opens the broadest base of investors.

Speaker Change: Chris Your line is now open. Please go ahead.

Speaker Change: I think it's either path is good I think currently were focused on the Canadian PSX 60 path, but.

Speaker Change: But at the same time post CES divestiture, and we will look at both and we'll make a determination as to what.

Speaker Change: I see you are not getting any audio from for some time, we will move on to the next question. We have a question from Brian Butler from Stifel. Please go ahead.

Speaker Change: Where we see the most amount of value that can be added to our name.

Speaker Change: Over time, and where we can get the most amount of flows.

Brian Butler: Hey, good morning, Thanks for taking the questions.

Speaker Change: Of buyer then shareholders into our next so all both in progress and give you a pretty good summary.

Brian Butler: Just first one starting off on maybe pricing when you talk about you gave good color.

Brian Butler: All are on on kind of cadence on some items can you just talk maybe about pricing cadence through the year for 2025 and that five to five in a corner.

Speaker Change: At the Investor day on Thursday.

Speaker Change: Yeah, that's great. Thanks, guys I appreciate it then so you folks do.

Brian Butler: Yeah.

Brian Butler: Yeah, Hey, Brian Great question is look you're speaking I mean, I think in a typical year youre going to see the cadence come out with the highest print in Q1, and then kind of Ratably stepped down from there.

Speaker Change: Thank you.

Speaker Change: We have a question from Chris Murray of ADB capital markets. Please go ahead.

Brian Butler: Now obviously, that's predicated on our current assumptions of how the year played out but I think as we've demonstrated before to the extent cost inflations behaves differently than anticipated, we will go back and revisit that sort of strategies because again, we're going to continue to ensure that we get paid an appropriate sort of rate of return on the services that we're providing but where.

Speaker Change: Chris Your line is now open. Please go ahead.

Speaker Change: I see you are not getting any audio from for some time, we will move on to the next question. We have a question from Brian Butler from Stifel. Please go ahead.

Brian Butler: We sit today you kind of start at.

Brian Butler: Higher fives middle of Q2, and Q3 as in that sort of mid fives and you end the year at that sort of lower fives, and thats whats going to blend to that sort of five and a quarter to five and a half. The one thing I'd just remind everyone on pricing. It's just the way the pricing heated worse, you already have sort of 70% to 75% of those price dollar.

Brian Butler: Hey, good morning, Thanks for taking the questions.

Brian Butler: Just first one starting off on maybe pricing when you talk about you gave good color on kind of cadence on some items can you just talk maybe about pricing cadence through the year for 2025 and that five to five in a corner.

Brian Butler: Yes, Hey, Brian Great question is look you're speaking I mean, I think in a typical year youre going to see the cadence coming out with the highest print in Q1, and then kind of Ratably stepped down from there.

Brian Butler: Pretty much locked in Q1, so again I think the downside on that number is de Minimis and it's really a question.

Brian Butler: Weather cost inflation behaves as anticipated that will drive the need to potentially explore incrementals.

Brian Butler: Now obviously, that's predicated on our current assumptions of how the year played out but I think as we've demonstrated before to the extent cost inflations behaves differently than anticipated. We will go back and revisit that sort of strategy because again, we're going to continue to ensure that we get paid an appropriate sort of rate of return on the services that we're providing but were.

Brian Butler: Perfect great.

Brian Butler: And then second you again.

Brian Butler: Super strong outlook kind of going into 2025.

Speaker Change: What do you guys see as kind of the biggest challenges for 2025 being that fundamental good place a lot of self help levers to pull.

Brian Butler: We sit today, you kind of start at <unk>.

Brian Butler: What kind of needs to be overcome if there is anything.

Brian Butler: Higher five middle of Q2, and Q3 as in that sort of mid fives and you end the year at that sort of lower fives, and thats whats going to blend to that sort of five in the quarter to five and a half. The one thing I'd just remind everyone on pricing. That's just the way the pricing works you already have sort of 70% to 75% of those price.

Speaker Change: Yeah, I don't think I see anything material.

Speaker Change: In front of US you know I think the business has become very predictable as you've seen quarter after quarter after quarter.

Speaker Change: I would say whether maybe in in Q1, a little bit more impactful than probably the previous last three years, particularly in Canada and northeast, but again, just looking at how the business performed even through that.

Brian Butler: Pretty much locked in Q1, so again I think the downside on that number is de Minimis and it's really a question.

Speaker Change: We're almost.

Brian Butler: Weather cost inflation behaves as anticipated that will drive the need to potentially explore incremental.

Speaker Change: Two thirds of the way through basically Q1, so we feel pretty good we will feel very good about Q1, I would say the only unknown out there potentially in August.

Brian Butler: Perfect great.

And then second you did.

Speaker Change: This tariff noise again.

Brian Butler: Super strong outlook kind of going into 2025.

Speaker Change: From our perspective, we think it is a de minimis impact on anything.

Speaker Change: What do you guys see as kind of the biggest challenges for 2025 being that fundamental good place a lot of self help levers to pull.

Speaker Change: Does it change.

Speaker Change: Potential capital.

Speaker Change: Requirements, depending on Oems after product through some incremental surcharges, what's been happening with forced us to go back to the markets push through more price, but other than that we feel very good about what we put forward again from our perspective pretty simple again.

Brian Butler: What kind of needs to be overcome if there is any.

Brian Butler: Yes, I don't think it's anything material.

Brian Butler: In front of us.

Brian Butler: The business has become very predictable as you've seen quarter after quarter after quarter.

Brian Butler: I would say, whether maybe in Q1, a little bit more impactful than probably the previous last three years, particularly in Canada and northeast, but again, just looking at how the business performed even through that.

Speaker Change: <unk> put out industry, leading organic margin expansion, which again as Luc said, Ken Conservative our expectations are we're going to do better organic growth.

Speaker Change: Same vein again from a free cash flow conversion perspective, again post repaying the debt.

Brian Butler: We're almost.

Brian Butler: Two thirds of the way through basically Q1, so we feel pretty we feel very good about Q1, I would say the only unknown out there potentially in all.

Speaker Change: We put out on the street is sort of like $38. Seven again, our expectation is doing better we want to get that into the sort of low forties as we've talked about and again the M&A pipeline zeros model. So.

Brian Butler: This tariff noise again.

Brian Butler: From our perspective, we think it adds a de minimis impact on anything.

Speaker Change: Again multiple levers for upside to the guide feeling very good about where the year started.

Brian Butler: Does it change.

Speaker Change: Potential capital.

Speaker Change: <unk> put ourselves in a great place and then you know it'd be RMG and EPR investments that we've made over the last two years come into fruition really starting in sort of 'twenty six.

Speaker Change: Requirements, depending on Oems after product through some incremental surcharges look that would force us to go back to the markets push through more price, but other than that we feel very good about what we put forward again from our perspective pretty simple again.

Speaker Change: Again see multiple levers for growth and that's why the board.

Speaker Change: And the position that they have an authorized sort of normal course issuer bid and allowed us to be post receiving $1 on the first to be active buyers in the market of our of our own stock, which is a first for us. So we think we are feeling very good about 'twenty five and things are shaping up.

Speaker Change: <unk> put out industry, leading organic margin expansion, which again as Luc said, Ken Conservative our expectations are we're going to do better organic growth.

Speaker Change: Xactly the way we anticipated.

Speaker Change: Same vein again from a free cash flow conversion perspective, again post repaying the debt.

Speaker Change: Perfect. Thank you very much for taking the questions.

Brian: Thanks, Brian.

Speaker Change: We put out on the street is sort of like $38. Seven again, our expectation is doing better we want to get that into the sort of low <unk> as we've talked about and again the M&A pipeline zeros model. So.

Speaker Change: We have a question from Tobey Sommer of curious Securities. Please go ahead.

Brian: Yeah.

Brian: Hey, good morning, this is Sid on for Tobey.

Speaker Change: Again multiple levers for upside to the guide feeling very good about where the year is starting.

Brian: Believe the guidance assumes cost inflation in the low to mid 4% range I'm curious if that's what you saw in <unk> or if you're anticipating some easing there. Thanks.

Speaker Change: Put ourselves in a great place and then.

Speaker Change: The RMG and EPR investments that we've made over the last two years come into fruition really starting in sort of 'twenty six.

Luc: Hey, it's a great question. This is Luc speaking you know again, if you think about.

Speaker Change: Again see multiple levers for growth and that's why the board has taken the position that they have an authorized sort of normal course issuer bid and allowed us to be post receiving $1 on the first to be active buyers in the market of our of our own stock, which is a first for us. So we think we are feeling very good about 'twenty five and things are shaping.

Luc: What drives our sort of overall cost inflation, mostly sort of labor and transportation related costs, we've seen sequential easing as we move through 2003, and then into 'twenty four.

Luc: We're being I think appropriately conservative in the 2025 guide.

Speaker Change: Exactly the way we anticipated.

Luc: Just by nature of the current sort of uncertainty on the trajectory of inflationary paths right as we.

Speaker Change: Perfect. Thank you very much for taking the questions.

Thanks, Brian.

Luc: The direction of downward seems to have sort of stabilized and you know I think there is talk of potentially things with it moving back the other way so.

Speaker Change: We have a question from Tobey Sommer of curious Securities. Please go ahead.

Luc: Say it is based on what our current experiences and we're exiting but not necessarily giving consideration of potential incremental reductions from here. So if you see a lowering cost inflation as we go forward that could that could yield some sort of upside to the guide.

Speaker Change: Hey, good morning, this is Sid on for Tobey.

Speaker Change: I believe the guidance assumes cost inflation in the low to mid 4% range I'm curious if that's what you saw in <unk> or if you're anticipating some easing there. Thanks.

Luc: Hey, it's a great question. This is Luc speaking again, if you think about what.

But as we said the theme that sort of conservatism I don't see a lot of sort of risk to that number are playing up being materially higher absent as Patrick said, some tariff potential causing issues, but that would likely be more on the capital side right. Because that is potentially are concerned. If there is a tariff situation that maybe some of your capex in the short.

Luc: What drives our sort of overall cost inflation, mostly sort of labor and transportation related costs, we've seen sequential easing as we move through 2003, and then into 'twenty four.

Luc: We're being I think appropriately conservative in the 2025 guide just by nature of the current sort of uncertainty on the trajectory of inflationary paths right as we <unk> the.

Luc: Term gets a little bit more expensive, but I think the risk that the cost inflation is materially higher than that sort of low to mid fours, it's pretty de minimis, where we sit today.

Luc: The direction of downward seems to have sort of stabilized and I think there is talk of potentially things with it moving back the other way.

Luc: Alright, great. Thanks.

Speaker Change: We have a question from Stephanie more of Jefferies. Please go ahead.

Luc: I would say is based on what our current experiences and we're exiting but not necessarily giving consideration of potential incremental reductions from here. So if you see a lowering cost inflation as we go forward that could that could yield some sort of upside to the guide but.

Speaker Change: Hello. This is Karl on for Stephanie more so.

Speaker Change: So I guess on the progress to investment grade rating.

Speaker Change: Yes transaction when you go down to three times pro forma leverage so I guess what else needs to be done.

Speaker Change: As we said the theme that sort of conservatism I don't see a lot of sort of risk to that number are playing up being materially higher absent as Patrick said, some tariff potential causing issues, but that would likely be more on the capital side I think is that as potentially a concern if there is a tariff.

Speaker Change: As you guys move to that aggression grade rating.

Speaker Change: Obviously, you collected capital from the divestiture.

Speaker Change: Yeah, not at our control obviously, when we've got obviously the expectation is we're going to get significant upgrades.

Speaker Change: <unk> that maybe some of your capex in the short term gets a little bit more expensive, but I think the risk that the cost inflation is materially higher than that sort of low to mid four is pretty de minimis, where we sit today.

Speaker Change: In time, when ultimately when we get to investment grading investment grade credit rating is really going to opt to Moody's and S&P typically they like to see the numbers roll through over sort of a 12 month period.

Speaker Change: In the meantime, we'll get material.

Speaker Change: Alright, great. Thanks.

Speaker Change: Credit rating upgrades so.

Speaker Change: We have a question from Stephanie more of Jefferies. Please go ahead.

Speaker Change: A little bit unknown, but obviously.

Speaker Change: Squarely.

Speaker Change: In our sight now post the debt repayment.

Speaker Change: Hello, This is Karl on for Stephanie more.

Speaker Change: Sweet.

Speaker Change: So I guess on the progress to investment grade rating.

Speaker Change: Got it.

Speaker Change: Just on the guide.

Speaker Change: Yes transaction, you get down to three times pro forma leverage so I guess what else needs to be done.

Speaker Change: What are you seeing an open book pricing versus restricted book and then on the volumes and other are expected to be flattish, but if you could talk about.

Speaker Change: As you guys move to that.

Speaker Change: <unk> shedding versus you know expectations on specialty waste.

Speaker Change: Aggression grade rating.

After you collected capitalist.

Speaker Change: Sheila are you expecting an improvement improvement there you expected, especially recent C&D volumes to remain kind of in.

Speaker Change: Sure.

Speaker Change: Yeah, not at our control obviously, when we've got obviously the expectation is we're going to get significant upgrades.

Speaker Change: 2024 levels. Thank you.

Speaker Change: In a time when alternative and we get the investment rating investment grade credit rating is really going to opt to Moody's and S&P typically they like to see the numbers roll through over sort of a 12 month period.

Luc: Yes, Harold Luc speaking so on the pricing side.

Speaker Change: You're definitely seeing the collection, which is really your open market commercial collection businesses stepping down from the levels you realized in 'twenty three 'twenty four as can be expected in response to that sort of cost inflation stepping down so youre still at a sort of 6% plus number on your blended collection, which is higher than.

Speaker Change: In the meantime, we'll get material.

Speaker Change: Credit rating upgrades so well.

Speaker Change: A little bit unknown, but obviously.

Speaker Change: Squarely in.

Speaker Change: In our sight now post that debt repayment.

Speaker Change: Commercial and industrial book, and a little bit lower than your residential the residential tends to be that CPI linked.

Speaker Change: Sweet.

Speaker Change: Got it.

Speaker Change: Just on the guide.

Speaker Change: I would call restricted and then the part that gets us.

Speaker Change: What are you seeing an open book pricing versus restricted book and then on the volumes and other expected to be flattish, but if you could talk about.

Speaker Change: Excited is the continued sort of new floor level.

Speaker Change: Close to mid single digits on post collection right because historically the post collection piece has been the one that sort of dragged down your blended pricing and I think you hear this confident narrative from the industry that we can't give away our sort of post collection assets.

Speaker Change: Tension on shedding versus expectations on specialty waste.

Speaker Change: Sheila are you expecting an improvement improvement there you expected, especially racing C&D volumes to remain kind of in line with.

Speaker Change: <unk> at below par.

Speaker Change: 2024 levels. Thank you.

Speaker Change: Cost of services in those lines of business.

Speaker Change: Yes, Harold Luc speaking so on the pricing side, we really you're definitely seeing the collection, which is really your open market commercial collection businesses stepping down from the levels you realized in 'twenty three 'twenty four as can be expected in response to that sort of cost inflation stepping down so youre still at it.

Speaker Change: We continue to see strength in both the collection and the post election line.

Speaker Change: <unk> stepped down from 24, and 23 and doing so in conjunction with the step down in cost inflation in terms of the volume.

Speaker Change: Say intentional shedding activities are largely behind us.

Speaker Change: Theres always some but relatively de minimis, where we sit today of whats baked into 'twenty five guide as you ramp up back to M&A. You, obviously gave rise to incremental volumes that don't meet your sort of thresholds and so that could give rise to some incremental but the guide today is really I think you articulate really around the specialties right weather.

Speaker Change: Sort of 6% plus number on your blended collection, which is higher than your commercial industrial book and a little bit lower new residential residential tends to be that CPI linked.

Speaker Change: Call restricted and then the part that gets us.

Speaker Change: Excited is the continued sort of new floor level.

Speaker Change: Close to mid single digits on post collection rate is historically that post collection piece has been the one that sort of dragged down your blended pricing and I think you hear this confident narrative from the industry that we can't give away our sort of post collection assets.

Hurricane cleanup reduced general sort of special waste that puts or takes.

Speaker Change: Little bit of uncertainty with how the market is in 'twenty five as it brought us some caution to that to the extent there is.

Speaker Change: Ups incremental volumes that will all be sort of upside.

Speaker Change: <unk> at below par.

Speaker Change: We think about the margin walk there is about a 50 basis point drag.

Speaker Change: Cost of services in those lines of business.

Speaker Change: We continue to see strength in both the collection and the post election line.

Speaker Change: As a result of our assumptions around special waste. So there could be even more incremental upside to what we had previously said if that does play out.

Speaker Change: Stepped down from $24 93 and <unk>.

Speaker Change: Doing so in conjunction with the step down in cost inflation in terms of the volume.

Speaker Change: At this time.

Speaker Change: Say intentional shedding activities are largely behind us.

Thank you.

Theres always some but relatively de minimis, where we sit today of whats baked into 'twenty five guide as you ramp up back M&A, obviously, you could rise the incremental volumes that don't meet your sort of thresholds and so that could give rise to some incremental but the guide today is really I think you articulate really around the special waste right weather.

Speaker Change: We currently have no further questions. So I'll hand back to Patrick for closing remark.

Patrick: Thank you everyone and much appreciated for joining the call and look forward to seeing everyone on Thursday at our Investor day, and as always if any of them have questions. Please feel to reach out and we're looking forward to it.

Patrick: Speaking to everyone. After Q1.

Speaker Change: Hurricane cleanup reduced general sort of special waste this puts or takes.

Patrick: Another such successful quarter. Thank you so much.

Patrick: This concludes today's call. Thank you for joining you may now.

Speaker Change: Little bit of uncertainty with how the market is in 25 has the broadest and caution to that to the extent there is.

Speaker Change: Ups incremental volumes that will all be sort of upside.

Speaker Change: We think about the margin walk there is about a 50 basis point drag.

Speaker Change: As a result of our assumptions around special waste. So there could be even more incremental upside to what we had previously said if that does play out.

Speaker Change: Okay.

Speaker Change: Thank you.

Speaker Change: We currently have no further questions. So I'll hand back to Patrick for closing remark.

Speaker Change: Thank you everyone and much appreciated for joining the call and look forward to seeing everyone on Thursday at our Investor day, and as always if anyone has any questions. Please feel to reach out and we're looking forward to.

Speaker Change: Speaking to everyone. After Q1.

Speaker Change: Another such successful quarter. Thank you so much.

Speaker Change: This concludes today's call. Thank you for joining you may now disconnect your lines.

Speaker Change: [music].

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