Hello, welcome to the GFL Environmental 2023 Q1 earnings call. My name is Elliot, and I'll be coordinating your call today. If you would like to register a question during the presentation, please press star followed by 1 on your telephone keypad. I would now like to hand over to Patrick Dovigi, Founder and CEO. The floor is yours. 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 first quarter. I am joined this morning by Luke Pelosi, our CFO, who will take us through our forward-looking disclaimer before we get into details. Thank you, Patrick. Good morning, everyone, and thank you for joining. We have filed our earnings press release, which includes important information. The press release is available on our website. We have prepared a presentation to accompany this call that is also available on our website. During this call, we'll be making some forward-looking statements within the meaning of applicable Canadian and U.S. securities laws, including statements regarding events or developments that we believe or anticipate may occur in the future. These forward-looking statements are subject to a number of risks and uncertainties, including those set out in our filings with the Canadian and U.S. securities regulators. Any forward-looking statement is not a guarantee of future performance, and actual results may differ materially from those expressed or implied in the forward-looking statements. These forward-looking statements speak only as of today's date. We do not assume any obligation to update these statements, whether a result of new information, future events and developments, or otherwise. This call will include a discussion of certain non-IFRS measures. A reconciliation of these non-IFRS measures can be found in our filings with the Canadian and US securities regulators. I will now turn the call back over to Patrick. Thank you, Luke. Our exceptionally strong first quarter performance once again showcases the quality of our assets and the capabilities of our team and sets us up for another year of industry-leading organic growth. Exceeding our own expectations for revenue, Adjusted EBITDA, margin, and free cash flows, our results clearly demonstrate the highly successful execution of the value creation strategies we've been communicating to you since we went public. For the fifth quarter in a row, we realized double-digit organic revenue growth across both our segments, contributing to nearly 30% top-line growth in the first quarter. Solid waste core pricing was 12.6%, the highest in our history, and an acceleration of 270 basis points over the record pricing we realized in the fourth quarter. The impact of our open market pricing strategies, fuel surcharge initiatives, and the acceleration of price increases on CPI-linked revenue all combined to yield a core price level higher than we anticipated, setting us up to exceed the 8% minimum price level on which our 2023 guidance was based. The positive solid waste volumes we realized in both of our geographies were also ahead of our expectations and speak to the quality of our market selection and the resiliency of our business. Additionally, the rollover of 2022 solid waste M&A also exceeded our plan. Our environmental services segment once again delivered results significantly ahead of our internal expectations, realizing over 25% organic growth in the quarter and continuing to demonstrate the merits of our strategy in this segment. Our previously discussed focus on pricing, quality added to the substantial double-digit volume growth that has been ongoing since the second half of 2021. As I said last quarter, we remain extremely optimistic on this segment's growth prospects and operating leverage opportunities given our focus on quality of revenue and asset utilization. Adjusted EBITDA grew 24% in the first quarter, and margins were nearly 50 basis points better than planned as our diligent focus on optimizing pricing and on our cost base continues to drive our higher underlying profitability. The $441 million of Adjusted EBITDA was ahead of our expectations and attributable to the broad-based revenue outperformance and operating leverage across both segments. The margin impact of higher fuel costs that were a focus on most of 2022 continued to be mitigated by the ongoing implementation of our fuel cost recovery program, which allows price increases to drive operating leverage. The quarter saw almost double-digit unit cost inflation, which was in line with expectations and is expected to ratably step down as the year progresses. With that said, repair and maintenance cost headwinds continue to linger. Our record price increases overcame these cost pressures and drove nearly 200 basis points of organic solid waste margin expansion when excluding the impact of fuel and commodity prices. As we look forward to the balance of the year, we're seeing positive signs in labor and commodity prices which would shape us up to have a tailwind to the guide. The strength in the first quarter further solidifies our high degree of visibility on the widening spread between price and cost inflation and makes us optimistic that we should be able to meet or exceed the high end of the already industry-leading margin expansion we included in our full-year guidance. For adjusted free cash flow, Luke will talk through the moving pieces, but at a high level, the front-end loading of working capital investment and capital expenditures result in a plan that was negative in the first half and positive in the second half. The first quarter results were better than our plan. We are actively trying to pull forward receipt of every truck and piece of equipment we can in response to the repair and maintenance cost pressures, a strategy that we anticipate will drive incremental profitability as we move forward. In addition to outstanding financial performance, the first quarter also saw material progress on our portfolio rationalization initiative. On our last call, we told you that we had identified 3 distinct non-core markets for divesture. As of this week, we have signed definitive agreements for all 3. We now anticipate total gross proceeds of CAD 1.6 billion, over CAD 100 million more than we had said on our February call. We expect 1 of the transactions will close as early as next month. The other balance of the 2 to be closed by the end of Q2 or the end of the third quarter. The net proceeds from the transactions will be used to pay down our floating rate debt. The divested assets represent approximately $110 million of Adjusted EBITDA at mid-20s margin. The transactions are expected to be immediately free cash flow accretive as the interest in CapEx savings more than offset the divested Adjusted EBITDA. Because of the mid-teens multiple we were realizing on these sales, the transactions are delevering by nearly half a term. The high degree of visibility that we now have on the transaction timing, combined with our exceptional first quarter operating performance, solidifies our conviction that we will end the year with net leverage that is less than four times. We are committed to achieving this leverage target by year-end and expect further deleveraging in 2024 and beyond. We think that this will position us to secure an investment-grade rating over the medium term. On the ESG front, in Q1, we continued to make progress on our RNG project pipeline, with the largest of these projects, our Arbor Hills facility in Michigan, is expected to start production in Q2 of this year. We hired our first director of diversity, equity, inclusion, and belonging. This month, we expect to begin to see positive impact on employee retention and engagement as we continue to roll out our DEI&B roadmap and the other employees-focused programs that we talked about in our last sustainability report. Also this month, we announced the appointment of Sandra Levy to our board of directors. Sandra is a great addition to the board with her HR and legal background, combined with her experience as an Olympian. We expect she will be able to provide some good insights to management as we continue to foster our already strong culture at GFL. Joy Grahek, our EVP of Strategic Initiatives, who has been with GFL since the early years, will be recognized as one of the five inaugural women who inspire at WasteExpo next month. To sum it all up, the quarter delivered industry-leading financial performance that exceeded our plan and at the same time saw material advancement of our ESG-related initiatives. Once again, I want to thank each and every one of our 20,000 employees for all that they do to allow GFL to continue to achieve these exceptional results. I'll now pass the call over to Luke, who will walk through the quarter in more detail, and then I'll share some closing comments before we open it up for Q&A. Thanks, Patrick. Our company investor presentation provides supplemental analysis to summarize our performance in the quarter in a consistent format to what we previously provided. Page three summarizes the bridge between our guidance and actual revenue, with outsized underlying price volume fundamentals combining with M&A outperformance to drive a result more than $100 million above the original guide. Note that the M&A outperformance is primarily related to the rollover of 2022 M&A as the contribution from new 2023 M&A, excluding the Heartland deal, which was included in the base guide, was approximately only $5 million. While environmental services continues to materially outperform and consistently surprise to the upside, the quarter's overall outperformance was almost equally driven by solid waste, where pricing, volume, and M&A rollover were all ahead of our expectations. Core solid waste pricing accelerated 270 basis points from Q4, with double-digit pricing in both our geographies and high single-digit price in the typically lower-priced residential collection and post-collection service lines. This result is largely attributable to CPI-linked revenue finally starting to reset at prices commensurate with the cost inflation environment, a dynamic that is expected to provide pricing support for quarters to come due to the inherent lag in the mechanics of the underlying contracts. As Patrick said, the strength of the first quarter pricing provides conviction that we'll be able to do better than the 8% pricing that was included in the guide for the year as a whole. Page 4 shows the bridge for solid waste Adjusted EBITDA margins compared to the first quarter of 2022. As anticipated, the decline in commodity prices in our MRF business was a 125 basis point headwind to margins year-over-year. Our guide assumed commodity prices remain at January 2023 levels. This pricing was broadly in line with first quarter actuals, any improvement from here will be upside. Fuel costs decreased sequentially from Q4, the increased diesel costs over the prior year continue to be a margin headwind. The ongoing improvement of our fuel cost recovery strategies yielded a 35 basis point improvement to the net margin impact from higher diesel prices as compared to the fourth quarter. Excluding the impact of commodity and fuel prices, solid waste margins expanded 190 basis points on a same-stores basis, a 65 basis point acceleration over the spread in Q4. As Patrick said, a result that reinforces our optimism in being able to meet and exceed the already industry-leading margin expansion we included in our base guide. While the positive benefits of using fuel surcharges to mitigate the margin impact of fuel price volatility are clearly evident in our results, page 5 highlights that we still see a substantial opportunity for further improvement in this area. We remain highly confident in our ability to conclude the first phase of this initiative by June of this year, two quarters ahead of the original plan. We remain committed to pursuing the additional upside of phase 2 throughout the second half of 2023 and beyond. We continue to lag the industry in this area due to the rapid growth of our platform in recent years that anticipate meaningful improvements to margin stability and quality as we close the gap to industry peers. Adjusted free cash flow for the quarter was negative $55 million, approximately $35 million better than planned, despite $25 million of unanticipated cash interest payments solely due to timing. On this point, interest rate volatility during the quarter led to the decision to accelerate the timing of our variable rate interest payments, which resulted in effectively four months of cash interest payments in the first quarter. This is purely just a timing difference. In Q2, we'll see cash interest $25 million less than planned, and the first half as a whole will be in line with the guide. When thinking about the cadence of free cash flow, in addition to the seasonality and Adjusted EBITDA, the quarterly variances in free cash flow are primarily attributable to working capital and capital expenditures timing. On working capital, we typically see an investment in the first quarter, a larger investment in the second quarter, and then a substantially equal and offsetting recovery in the second half, predominantly in the fourth quarter. The current year first quarter investment was anticipated to be greater than the prior year in light of the material revenue growth, particularly environmental services, which has a higher DSO profile. For capital expenditures, we typically see a front-end loading in the first half and then a ratable step down in the second half. For the current year, the front-end loading was expected to be even more pronounced by virtue of the $50 million rollover from 2022 and the active strategy to take delivery of new trucks and equipment early as mitigation to lingering R&M pressures. Incremental CapEx tied to recent M&A that is effectively purchase price, but as it was incurred post-closing, also presents itself as CapEx in our reporting. As a result of these dynamics, the adjusted free cash flow is expected to be negative $90 million in the first quarter. The actual results are significantly better than our plan. Reported net leverage was 4.97 at the end of the quarter. Looking forward, achieving Adjusted EBITDA and adjusted free cash flow at plan would organically reduce year-end leverage to low 4s. The divestiture transactions will reduce leverage an additional 40 basis points, resulting in year-end net leverage that starts with a 3. This is the starting point to achieving an investment-grade rating in the medium term. In the meantime, once our leverage is reduced and maintained at these lower levels, we anticipate material credit rating upgrades prior to the maturity of most of our existing debt, providing opportunity for near-term borrowing costs and improved free cash flow conversion. We will wait until the second quarter to update our guidance. Based on the strength of Q1, we certainly see a path to be at or above the high end of our ranges. In relation to our expectations for the second quarter, we typically realize just over 25% of annual solid waste revenues in the second quarter and 26%-27% of the revenue plan for environmental services, which translates to approximately $1.975 billion of consolidated revenue expected for the second quarter. In terms of margins, with the toughest margin comp behind us, we remain optimistic that margins can accelerate to the low to mid 27s or approximately 70-90 basis points expansion over the second quarter of 2022. At the segment level, this assumes solid waste margins of between 30.5% and 31% and environmental services margins of almost 30%, with corporate margins comparable to Q1. The guide then contemplates further margin expansion in the third quarter before stepping down in the fourth quarter as per the typical cadence of the business. That yields a Q2 Adjusted EBITDA expectation of $535 million-$545 million. To continue the walk to Q2 adjusted free cash flow, in Q2, we are expecting CapEx of approximately $300 million, cash interest of $110 million, and an investment in working capital and other operating cash flow items comparable to Q2 of the prior year, or about $130 million combined, for an adjusted free cash flow of about nil. It's worth noting that this back-end loaded free cash flow cadence, primarily driven by working capital seasonality and CapEx timing, is in line with the expectations and assumptions underlying our original guidance to which we remain committed. I will now pass the call back to Patrick, who will provide some closing comments before Q&A. Thanks, Luke. I want to conclude with a few thoughts on where we are today and where we are headed. We've now reported as a public company for 13 quarters. With each quarter, the impact of the strategies that we have been talking to you about since our IPO in March of 2020 have been clearly demonstrated. We have always been confident in our strategy and our ability to execute. I've said this many times before, and I will say it again. We have built the best team in this industry. We are all driven to make the business better every day, and we deliver on what we say we are going to do. That's our culture, and it can be felt across GFL. All of these pieces, including the effective strategies we use to lever the cumulative impact of both organic growth and M&A programs, these have been in place for a long time. We didn't adopt a new strategy when we went public. We are consistently applying the same strategies that we have used to create billions of dollars of value for shareholders over the past 15 years. When you look at what's in front of us, here's what I see. The optimization of pricing to provide sustainable, durable price-cost spread. The rationalization of the portfolio to focus on the most attractive markets, the de-leveraging and associated financial leverage, the ramp-up of RNG, all the self-help levers we can pull to improve asset utilization and cost efficiency, and the runway for further M&A, and the opportunity for industry-leading growth, along with material improvements to our margins and free cash flow conversion, is undeniable. From where I sit, I would say we're just getting started. I will now turn the call over to the operator to open the line for Q&A. Thank you. If you would like to ask a question, please press star followed by one on your telephone keypad. If you would like to withdraw your question, please press star followed by two. When preparing to ask your question, please ensure your device is unmuted locally. Our first question today comes from Kevin Chiang from CIBC Capital Markets. Your line is open. Hey, Patrick and Luke. Thanks for taking my question here. Congrats on a Q1. I know you're gonna update the outlook when you report Q2, and actually the details on what Q2 looks like. If I just looked at what you did in Q1, and if I take the implied seasonality you inferred on the Q4 call in terms of what first quarter could look like, it does suggest an EBITDA on a full year basis, you know, maybe closer to $2.1 billion-$2.2 billion, obviously excluding any of these asset divestitures. Just wondering if there's anything wrong with that simplistic math, I guess, just based on how much y'all performed in the first quarter here. Kevin, it's Luke speaking. I'd say, yeah, we're thinking there's opportunity to exceed the high end of the guidance we put on based on the strength of Q1. You know, I think it is premature to just simply roll forward 100% of the outperformance of Q1 and add that on, and that's why we wanna hold off until Q2 before we formally update the guidance. I mean, you know, in Toronto, you were there this season, it was very mild. No doubt you had some pull forward that benefited and the... Obviously, with the strength of the pricing and the quality of the cost optimization that we're seeing in the results, we're feeling very bullish, and there's gonna be an opportunity to revisit. We do wanna get Q2 under the belt, but I'd say you're probably not thinking about it wrong. Okay. That's helpful. Just my second question, looking at, I guess it'd be slide 4, your kind of waterfall graph on the solid waste margins. The 29.5, as I think through some of the headwinds that dissipate as we get through this year and into next year and beyond, you're obviously clearly through 30%, then you have the RNG projects, which I believe you've called up in another couple of 100 basis points of EBITDA margin. Is this approaching a mid 30% EBITDA margin when I look at some of the puts and takes and you kinda lap some of the headwinds you've experienced year or so within your solid waste business? I mean, we've been consistent in saying that we think, you know, over time, there's still another 250-300 basis points of opportunity within the solid waste business. Yeah, could that be revisited with the moving up of sort of RNG and others? For sure. The continued pricing initiatives? For sure. The continued cost rationalizations? For sure. The focus on sort of higher margin, more accretive markets? For sure. I mean, you know, we're not gonna stop at that incremental sort of 250-300 basis points. You know, over time, you know, like we said, there's no reason that this business couldn't push closer to the mid-30s over time. Yeah. Kevin, if you think about the guide, the original guide, we were saying solid waste was gonna be like 30.5% margin in and around that area, and that was inclusive of the material headwind to margin from commodity prices. Commodity prices alone normalizing something brings that number closer to 31. Obviously, the strength of the Q1 and the continued durable spread of pricing costs could provide upside on top of that number as well. Never mind going forward to RNG and, you know, the other market densification optimization that Patrick spoke to. I think just within this year alone, there's an opportunity to meaningfully sort of close that gap. Yeah, we're very excited on the solid waste, and obviously, environmental services is the other segment in which we believe there's a lot of runway at the margin level as well. Perfect. That's it for me. Congrats on a great start to the year. Thank you. Thanks, Kevin. Our next question comes from Tyler Brown from Raymond James. Your line is open. Hey, good morning, guys. Morning, Tyler. Can you hear me? Oh, hey, sorry. Sorry about that. Yep. Hey, I just wanna come back to price. Obviously pricing was very solid, but can you just remind us what percent of the book is restricted versus open? I think you've got maybe a little bit more tilt towards the open market. Then, Luke, I think you mentioned what the trends were. Could you refresh that, what open market and restricted pricing was? On an annual basis, Tyler, as you said, in the solid waste book, we have about $1 billion-$1.1 billion that's tied to, you know, more of that CPI-linked type revenues. Mostly in the residential collection, but we also see it in post-collection and some of our MRF processing type contracts. You know, we're now seeing, and we saw in the first quarter, that restricted book resetting at 7%-8% price increases, which is obviously much healthier number than what we've seen historically. You're just catching up for the cost pressures that you were effectively eating, but it's certainly nice to sort of feel that relief. On the open market piece, you know, where you're seeing pricing in the sort of mid-teens. Again, this is the catch up in response to the cost environment. We do expect that that will moderate as the year progresses, but you should have continued to have broad-based support on the CPI linked revenue as those resets continue to occur throughout the balance of 2023 and honestly even into 2024. Right. Okay, that's helpful. I've been kind of asking all the companies this just to level set it, but what are you expecting or what is embedded in the guidance today from a unit cost inflation perspective? Our guide start of the year, we said it was around a 6% number, and it was really a tale of two halves, right? As Q1 was gonna be a high single-digit and then moderating to a lower single-digit by the time you got to Q4 by virtue of the lapping. Now if you look at labor, you know, labor cost is a 5.5% to low 6% number today. That is right in line with the expectation of the guide and seems to be moderating and or easing in line with expectations. We don't think there's any material deviations there. R&M continues to linger the cost pressures associated with that. Now, its ability to move the blended number is more limited, but, you know, that is the one area that we're watching. Otherwise, we think this year is gonna be that sort of just above mid-single digit and really entering into Q4 and therefore into 2024 at now a sub-mid single digit level. Okay. All right, good. This kind of brings me to my last question. There's a lot of talk about pricing, a lot of talk about unit cost inflation and this idea of spread. If you look back over the past, what do you think that that spread to unit cost inflation has been? Where do you think it is today? Do you think that we could see a structurally wider spread as we think about it off into the future? I don't know if that's a forever thing, but maybe over the next couple of years. Just any thoughts on that. Appreciate it. I mean, I think historically, Tyler, the industry was trying to get somewhere between 100, 175 basis of spread and then a sort of 38% margin business, you know, that would drive your sort of 30-50 basis points of annual organic margin expansion. I think what happened in 2022 is everyone was trying to catch up with the cost inflation and that spread compressed. Now we're coming out the other side of that, and you're seeing that spread widening. I think 2023 is gonna be characterized by an exceptionally wide spread, particularly as you get in the second half of the year, and I think that carries into 2024, at which point you'll have some sort of moderating. I think the question you're asking is the right one in that where does that spread now settle out as we go forward over the medium and longer term? Our perspective is that it's a better spread than it was before. I think when you look at the continued discipline on pricing in the industry, the need to earn appropriate returns on the invested capital in this highly regulated business coupled with the continued consolidation, I think those are all supports to retain what is going to be a structurally higher spread. I think it's difficult to say what exactly it will be, but I think it is clear the industry has demonstrated we will price at the required level in response to the cost environment we see. In doing so, we're gonna ensure that that spread is there to earn the appropriate return. Okay, perfect. Thank you, guys. Thank you, Tyler. Our next question comes from Michael Hoffman from Stifel. Your line is open. Good morning, Luke. I hope that's spring allergies and not a cold. Not me, actually. It's actually Mr. Dovigi. I'm healthy today, Michael. Oh, okay. Very good. 12.6 less 190 is 10.7. That's the first quarter inflation heads to 4 or 5 in the fourth quarter. You add that up on an average basis, there's your midpoint. That's what you're. Yeah. I would just say the 10.9%, Michael, I mean that doesn't factor in the fact there's incremental cost investment when you think about the IT spend that we've spoken about, et cetera. You technically have to back that out if you want to get your real unit cost inflation. In doing so, the puts and takes, you get to more like a sort of 9%, low to mid-9% number. Okay. All right. Are you starting to see it ease, or is it still persistently high in April? Is the evidence of an ease happening? The evidence of the ease of the cost inflation is certainly happening. You're seeing it in reality, and you're seeing in the math of just the comparison. If I look month by month, round numbers, the January margin was backwards like 200 basis points plus. By February, that was about 50 basis points. By April, you were actually ahead, I'm saying on a year-over-year basis. I'm sorry, by March you were ahead. In April, you're expected the spread to even widen. We're certainly seeing it, and I think it's a combination of both the actual unit cost inflation moderating, as well as just the year-over-year comping fact. That's the point I was gonna make is you did your wage increases, the big ones, all through the spring, and so we're comping against that and this starts to ebb. You think that for us, we had the second half of the year, we had significant incremental cost inflation from some of our third party suppliers that were then finally just catching up on their own wage and fuel related headwinds that then got passed on, right? Q1 in the first half is a materially more difficult comp than the second, and we're seeing that play out as anticipated, which further gives, you know, the optimism we have in the guide that we put out. Okay. what do we pay down with from the CAD 1.2, CAD 1.3? What instruments are we paying down? You'll pay your variable rate debt, right? You have your Term Loan B, and you have your revolver balance. They have a comparable coupon. Depending on the timing of receipt, you'll look at your revolver, and you'll evaluate how much pay down should happen there in conjunction with the free cash flow generation of the business to preserve an appropriate level of liquidity. The majority of those dollars will go against the Term Loan B, which is the highest coupon component of our capital structure. What are the rating agencies telling you today about what they need to see for a period of time in order to get that investment grade? It's not just the leverage. What else do they need to see? Well, the leverage will be the primary gating item. They'll want to see sustained leverage at the lower level. In addition, over time, they'll want to see sell down from the sponsorship growth to a level slightly below where they are today. That's just because as long as the sponsor continues to own, in the size that they do, there's an incremental perspective on the sort of financial policies of the business. Those two things have to happen, but the major gating item is simply getting the leverage to that below 3.5 level for, you know, more than just a moment in time. Okay. That's sort of without you knowing necessarily when or what, how much they want to do. It's sort of reminding everybody that the sponsors are gonna seek to monetize and haven't done so since November of 2021. This starts happening again. It'll happen, Michael, just a question of when. I mean, I think the shareholders perspective, at least on our side, I mean, they just see a material disconnect in sort of evaluation today. I don't think anyone's rushing to do anything sort of anytime soon, particularly given, you know, the value disconnect that the shareholder group continues to see. I don't, I don't think it's anything happening anytime soon, but, you know, as we continue to deliver and as we continue to perform, and the thesis continues to play out, in theory, the stock should move up and the valuations should trend, you know, closer to where the sort of industry comps are, then I think, you know, you might see some of that. Until then, it's gonna be pretty quiet. Okay. Given the really healthy start to ES, is there a corollary to what's happening at Green Infrastructure Partners? Does that speed up the timing on when you might be able to monetize that? No. I mean, listen, as you know, on Green Infrastructure Partners, you know, sort of slow and steady, there. Obviously last year with the big ramp up in cost inflation, you know, we were cautious about what M&A we did, just getting our hands around the business to make sure that, you know, we didn't have any headwinds that were material. We got through that and obviously, as you know, we ramped up the M&A program this year in that business, actually closing sort of our largest acquisition, on May 1st, which is, you know, the Aecon road building business. You know, we'll spend time getting that integrated, and we have a couple of other things under LOI. You know, still on track to meet the targets. You know, my goal is sort of in the course of the next year and a half to get that to, you know, $300+ million of EBITDA. We'll get that to $300+ million of EBITDA, and then we'll look at sort of, you know, some strategic alternatives for that business. I don't foresee anything happening with that business in 2023. Okay. Last item for me is you didn't model commodities in as part of the guide, which I think is the right thing to do. What are your recycling people with Steve, Miranda and Stephanie, so they're seeing in the trends that might also contribute to why you have confidence about high end, not just on price? I mean, their perspective, you know, has always been from the beginning of the year, Q1 and most of Q2 was gonna be pretty soft. We are seeing increased demand for the recycled products. You know, I think their perspective is that, you know, late Q2 and into Q3, and particularly into the latter half of Q3, we'll start seeing some movements, up in the right direction. That's been their assessment from the beginning of the year. I mean, obviously things are subject to change, but there's certainly demand. It's now just moving price to the, to the right spot. Great. Thank you so much. See you in New Orleans. Thank you, Michael. Thank you. Our next question comes from Jerry Revich from Goldman Sachs. Your line is open. Yes. Hi. Good morning, everyone, and nice quarter. I'm wondering if we could just talk about how you folks are initially thinking about price cost in 2024, given the outsized gains this year. Does that impact at all in terms of the price cost that you would target in 2024? Yeah. Good morning, Jerry. Look, then similar to Tyler's question, I think our perspective is we are going to have a wider spread throughout back half of 2023 and into 2024 than, you know, what is going to be the new structural norm. The exact quantum of that, I think remains to be seen, but we have a high degree of conviction and visibility that 2024 pricing is still going to be, you know, better than mid-single digits at a minimum when you think about the rollover effect of the residential and CPI linked book of work. Cost inflation from the trends we're seeing should moderate to something at a low single digits, lower, like, lower than mid-single digits. You put that together, is there somewhere between 200-300 basis points of spread available? I think so, we are going to reserve until we get to, you know, the end of the year to put a finer point on that. We think it is underestimated the degree to which this cost price spread dynamic will continue into 2024 in a favorable manner. That's good to hear. You're seeing good acceptance pricing. Then, you know, can we talk about the other moving pieces in 2024, you know, the landfill gas projects. You folks had expected, I think $60 million of contribution in 2024. Can you update us on how those projects are going, and should we still think about that as a tailwind, 2024 versus 2023? Yeah. I mean, we put out the summary, in the Q4 report where we laid out the pages. We have actually replicated it into this presentation, and that remains our current view in terms of the timing of those MMBtus coming online. Recall that we did that at roughly $2 RINs, right? To the extent there is recovery or appreciation in the value of RIN, that is all upside to those numbers. The cadence of the development and the commercialization of the plants remains as previously, guided to the extent there's recovery in that sort of underlying value of the green gas, that will be upside above and beyond what we had previously said. There's also some, you know, there's some investigations going on on our side regarding sort of the EPR program and some of the facilities that we had slated, you know, for RNG and some that are already under sort of electrical utility fit contracts. We're also assessing those too, Jerry. We'll have an update once we see the legislation in June. Yeah, Patrick, I'm glad you brought that up. Yeah, can you say more on what you feel like the value capture will be for the industry versus the auto OEMs? How are those conversations going? You know, what can you remind us how much power are you folks generating now, just so we can contextualize what RINs could mean for you folks at existing facilities? Yeah. It's unclear for us exactly, 'cause we have to make an assessment of our existing sort of fit contracts. We're literally deep in the throes of it now. You know, I have pretty good conviction that we'll be able to come back to you with a pretty concrete perspective after Q2. We look forward to it. Thank you. Can I ask one last one, environmental services, outstanding performance. Can we just talk about what part of the portfolio is driving that performance? How broad-based is it? You know, should we be thinking about any tough comps as we head into 2024, given just the magnitude of our performance this year? Yeah. I still think there's continued... I mean, remember, that business is significantly levered to Canada, right? You have almost 80% of the revenue out of that business is definitely coming out of Canada. As you know, we put the two largest players together in Canada, ourselves and Terrapure, put that together, coupled together with coming out of the COVID recovery in sort of early 2022. There continues to be just a lot of demand of people, you know, getting caught back up of work that, you know, they had been slower over the last couple of years during, you know, the material aspects of COVID. That continues to be coupled together with amount of synergies, and obviously those two businesses had, you know, different service offerings. Now the ability to cross-sell those services between the two businesses that we put together is sort of driving this material revenue growth. You know, do I think it'll stay out at these levels? No. It'll definitely stay sort of at above average. More importantly, we now have the ability to start pushing price in a more material way and focusing on the quality of revenue in that business. I think you'll continue to see fairly healthy sort of margin upticks coming from that line of business as, you know, you've seen with some of our peers rece ntly. Yeah, Jerry, in re-reference to the comment on 2024 comp, I mean, as Patrick said, this has largely been a volumetric growth story with price discovery in the very early stages. We, like our industry peers, are actively initiating on the pricing front. And I think that is going to provide a tailwind that despite what we expect to be very impressive margins in the current year, you know, as we've said, we see this blended business getting to 30% in the near future on that price-driven growth strategy. We don't see, where we sit today, material concern about, comps of on the margin level in 2024, despite what we expect to be very healthy 2023 results. Yeah, Jerry. I think what's also underappreciated post these divestitures for 2024 is just the free cash flow walk, right? When you take out, you know, close to $80 million-$90 million of interest costs, we're set up pretty well for a very big sort of free cash flow number, growth number going into 2024 and sort of not getting into 2024 guidance, but I can see even with some cash taxes, you know, that number very easily conservatively is somewhere between $875 million-$900 million. You know, which is a material step up from sort of what people are thinking today when you sort of put the different pieces together, coupled together with the outperformance, you know, of the business and where we see that going over the next little while. You know, I think we've positioned ourselves very well for a very healthy and solid 2024 year. Excellent. Appreciate the discussion. Thank you. Thanks, Jerry. Our next question comes from Walter Spracklin from RBC Capital Markets. Your line is open. Thanks very much. Good morning, everyone. I just wanted to focus in on that M&A strategy post your 3 handle leverage. You know, as you get into 2024, you'll have a credit upgrade, it'll further lower your borrowing costs. You'll be of size then. I think, Patrick, you mentioned $875 million-$900 million and then en route to $1 billion of free cash flow generated organically without recourse to debt. I think all this has been a great strategy in terms of how you're proceeding here. Just curious, once we get to 2024, how do you look at your total addressable market for M&A? Like, when you look at the total market that's in private hands, you know, how much of that is in your wheelhouse so that we can frame kind of the cadence of what you would ramp up to, and for how long could you run at that rate given the, you know, your organic free cash flow that's fueling that strategy? Sure. How long can you go in at that run rate? Yeah. I think we've been pretty vocal. You know, I think when you sort of look at analyst consensus numbers out there today for free cash flow, it's somewhere between $800-$825 for 2024. I think, you know, the reality is post these divestitures that we just talked about now, that number moves up, you know, somewhere between $875-$900 pretty conservatively. You think about how we reinvest that $875 million-$900 million in 2024, and that's without further M&A or anything we do this year. That's just sort of taking the base number this year. You know, I think consistently we've responsibly deployed capital into M&A, and I think you will continue to see us do that. Obviously, with the large focus on continuing to move leverage closer to the mid threes. If you just look at what the base business does, the base business organically, even in 2024, will delever, call it 70 basis points. If we finish high threes, if we finish at high threes, at the end of 2023 going into 2024, business delevers, you know, call it into the low threes, over the course of 2024. The first $900 million of spend obviously next year is all delevering. You know, you can conservatively even spending closer to $1 billion to $1.2 billion in 2024, that will delever. That'll still keep us under sort of 3.5 turns of leverage for 2024. That number just continues to ramp up. If you look at the free cash flow in 2025, that is $1.1 billion+, closer probably to $1.2 billion with organic growth. It just keeps stepping up pretty ratably from there, particularly when all the free cash flow from the RNG starts hitting in 25 and 26. I think our program will continue the exact same way it continued before, albeit with the target leverage sort of sub 3.5, so we can move to that investment-grade rating sort of over the next, you know, couple of years. The pipeline, just to go back to pipelines. That's fantastic. I've said this multiple times. Listen, you look at Canada, you know, Canada, there's $7.5 billion-$8 billion or sorry, $11 billion-$12 billion market today. Leads the big three today do call it $3.5 billion-$4 billion of that. This is just in solid waste. You know, you still have $6.5 billion-$7 billion unconsolidated through probably 2,000-2,500 companies in 10 provinces in Canada. All of that is sort of white space for us. Then you look in the US, I mean, you know, target markets is we, you know, we think there's $5 billion-$7 billion of revenue in the markets where we wanna continue expanding sort of materially in. I think for the next 10-12 years, we are gonna be sort of continuing to move at this pace, albeit obviously our business profile changes substantially with the amount of free cash flow we have, but we will continue that M&A program as we move forward. That's fantastic color, Patrick. On, maybe one for Luke here. CapEx guide for the full year, I think is at $300 million-$500 million. I think, Luke, you said that would be $300 million in the second quarter. You know, does that mean we're gonna be closer to the $500 million for the full year? Does that at all impact your guidance for the free cash flow of $700 million for the full year? Just curious on that. Hi, Walter. I think a little confusion there. $300 million-$500 million was the articulated number in M&A deployment, so dollars spent into M&A. The CapEx guide for the year was, I think, about $830 million at gross. You know, with the recent M&A, as I said, there's probably another $20 million-$30 million of land purchases that are coming on some deals we just did. That number is probably $850 million-ish. We're always just trying to articulate with the approximately $250 million-$260 million spent in Q1. Three hundred million in Q2, you do have sort of 60%-65% of your CapEx plan happening in H1. That was the front-end loading I was trying to speak to. The $300 million-$500 million was articulated as the art of the possible in proceeds deployed into M&A, by virtue of, as Patrick characterized, you know, a bit of a lighter year. Yep. Sorry, I was looking at the wrong note there. Yeah, but, you answered my question in terms of cadence. It doesn't, the cadence of the front-end CapEx guide is not impacting your full year free cash flow target at all? Correct. I'm reading that right. Yeah. Correct. Perfect. That's all my questions. Thank you very much for the time. Thanks, Walter. O ur next question comes from Rupert Merer from National Bank Financial. Your line is open. Hi. Good morning. Thanks for taking the question. Just to follow up on that last question. I think you're showing acquisitions of $217 million in Q1. Can you talk about how the M&A market is shaping up, and are you still comfortable you'll fall in that $300 million-$500 million range for this year? Rupert, this is Luke. Just one clarification. You'll recall we purchased the Heartland facility from Vertex in the first week of January or the very beginning of January, and that was about $130 million of M&A spend that we actually included in our base guide by virtue of the earliness in the year in which it had to occur. When we're talking about spending $300 million-$500 million, that was gonna be incremental to the Vertex spend. In reality, excluding Vertex, we spent about $100 million this year. You know, to Patrick's point on the quality and opportunities in the pipeline, yes, we anticipate we will be in that range of that incremental, call it $500 million to deploy into M&A. That'll be on top of the Heartland, so on the financial statements it will present as a $600 million spend because we're always talking about increments to Heartland, and we're able to do that without any implications to our stated goals and commitments around leverage. Okay. Perfect. Thank you. If we could talk about volume trends in solid waste near term and long term. In the near term, I think you talked today about pulling forward some volumes into Q1 and maybe comps are getting tougher in some markets. How should we think about volumes the remainder of the year? Then in the long term, we can talk a little about what the business model looks like post 2024. What do you think is going to be a good run rate for volume growth? How do you well do you think you are positioned in some of your target markets? I'm looking at the population growth in Canada. You seem to be well positioned there. How do you see that impacting your growth? Yeah. I think, you know, what we've communicated is sort of flat to up 1%. Obviously, there's puts and takes across, you know, the various parts of the country and in Canada and the U.S. Yeah, I think there's a little bit too much of a focus sort of on what the volumes, you know, plus 1 or minus 1 doesn't really move the needle all that much, sort of in the business. I think where we sort of sit today, particularly in Canada, I think, you know, Canada will be more flattish, I think, for the next little while, just given, you know, we have a smaller component of C&D volumes that come into the landfills, et cetera. You know, obviously, with the lag that'll happen sort of in, you know, late 2023 and into probably the first half of 2024, that we think we'll see in some of those C&D-related volumes. You know, that'll slow down a little bit, but again, it doesn't materially move the number. In some markets, we'd actually like volume potentially to back off a little bit so we could take some of our worst trucks off the road, some of our not-so-great drivers off the road, and just have a significantly more efficient operation like we saw in sort of parts of COVID. I think using sort of, you know, maybe down a half to up 1 is sort of the range that you're seeing sort of over the long term is probably the right place to be. Rupert, just to clarify on your comment about pull forward of volume from Q2 into Q1. You know, we're not necessarily saying there was a pull forward, but as you know, with our exposure to the sort of winter belt, if you will, you know, across Canada, but also into Wisconsin, Michigan, et cetera, you just never know exactly how the spring is gonna play out, and that's just why we always wanna reserve until Q2 to actually see if there was pull forward or not. Not necessarily saying that's the case, but just would appreciate the incremental time to fully formalize our view on that. Just wanted to clarify that point. Yeah. I appreciate that the numbers are pretty small compared to what we're seeing on pricing. Great. I'll leave it there. Thank you. Thanks, Rupert. Our next question comes from Stephanie Moore from Jefferies. Your line is open. Hi. Good morning. Thank you. Good morning. Good morning. This is a good follow-up to the previous question. You didn't note any of this, and your results kind of speak for themselves, just curious if through the course of 1Q, you saw any maybe volume weakness either in the U.S. or Canada on the solid waste side. I think some of your peers have called out maybe a little bit of slower activity, just love to get some color on what you're seeing. Thank you. I think it's clearly moderated, you know, not shooting the lights out at sort of anywhere specifically. Obviously, sort of on roll-off pulls in specific markets, a little bit lower, particularly around, you know, C&D-related pulls. Albeit sort of it's under sort of 5% of our revenue. You know, you still see a slowdown in some of the larger primary markets, particularly in Canada. In the US it's sort of moderate. I mean, we don't, we don't have a lot of exposure to the West Coast, so we didn't, you know, have the West Coast sort of weather impact that, you know, maybe some of the others have. That's just, you know, I would say to a certain extent, lucky just in terms of where we were this year, that we didn't operate in some of those places. You know, that'll come back for everyone in the industry. I think, you know, by and large, we haven't seen any material slowdowns sort of anywhere outside of, you know, some of the C&D stuff in some of the larger primary markets in Canada. Great. Thank you. You know, Luke, you mentioned this, I think, earlier in your remarks about the margin opportunity and maybe some of your investments in, you know, new technology or automation. Could you maybe just give us an update on some of those investments expected for 2023? Yeah. Stephanie, what I would say is what we're seeing and realizing thus far is without any substantial incremental dollars in there. You know, we've spoken about both of the, you know, truck CNG conversion, automation, and some of these capital spends that have attractive return profiles and how we've been more limited in deploying capital into them as there's been this perception around, you know, leverage constraints, if you will. Our current guide, as we previously said, just assumes normal course replacement schedules, yes, favoring CNG where we can, but nothing out of the ordinary in terms of incremental spend that would help accelerate the realization of some of those opportunities. They're real, they're there, and, you know, once we perhaps get leverage to a level that is more consistent with what the expectation set looks like, you'll see an opportunity to revisit profitable high return, you know, investments like that and others. As of now, there's been just the normal course and mostly what you're seeing on the margin is before including what we expect to be the significant benefit once we start implementing, you know, more initiatives around those areas. Great. Thank you so much. Thank you. Thanks, Stephanie. Our next question comes from Stephanie Yee from sorry, JP Morgan. The line is open. Hi, good morning. Good morning. I want to ask about the first quarter pricing outperformance. Did you get less customer pushback from the pricing that you rolled out, and that's what drove the outperformance? Can you just kind of comment on how the conversations with customers went, in implementing those pricing? Yeah, I think it wasn't a question of whether we could get more because it was just, I think, some of the outperformance came from the initial realization of the fuel and surcharge program that the customer is contractually obligated to be charged, right? It was less of a conversation versus just charging them and level setting them to what they're contractually obligated to sort of pay. I think we, you know, communicated that through Q3 and Q4 of last year that the initial realization of some of those surcharge environmental would sort of fall into base price, and that's why you saw the outperformance at sort of base price. Okay. To put it back, customer churn has been at all-time lows. You know, just catching up has got us there, but customer churn is at all-time lows. Okay. That's great to hear. Just on M&A, do you feel like you have to evaluate the M&A opportunities differently because maybe you have to hold back on some opportunities given the leverage commitment? Yeah. I mean, I think what we've communicated historically and what we've communicated today is, listen, we're gonna deploy the dollars that we see fit, and we're gonna deploy them into markets where we have a significant amount of fixed base cost facilities, where we can lever those fixed base cost facilities with incremental volumes. That's looking at markets where we have a lot of post-collection operations, you know, that maybe we acquired through other businesses or we got through the divestiture packages, where they're running at sort of 60%, 70% utilization and we wanna push those to 100% utilization. That's where the, you know, the lion's share of those dollars are gonna be deployed this year. As we get through this year, we will look at sort of, you know, expanding in tertiary markets around, you know, those existing platform type markets we have, within the same geography. Yeah, I mean, the focus definitely this year is sort of small tuck-ins that we can buy at significantly lower values that we can leverage that, you know, fixed cost-based, post-collection operations that we currently own today that are running at not 100% utilization. Okay. Makes sense. Thank you. Our next question comes from Chris Murray from ATB Capital Markets. Your line is open. Yeah, thanks, folks. Going back to some of the pricing that you guys were talking about for Q1, how much of the price for the rest of the year do you feel is already kind of in place today? How much do you think is left to get for the rest of the year? Good morning, Chris. I'd say you probably have 85% to 90% of the price just in the typical seasonal cadence, that being most of our price occurs in Q1 with another you know, pricing event that happens in Q3. Where we would sit, that would normally be the level of comfort. When you think about our guide of at least 8%, when you think about the strength of Q1, I would say you have probably 100% visibility that you're going to achieve your guide. The question now will become, you know, the extent to which there's upside above that number. Okay, fair enough. I'm not sure who wants to take this one, but you were talking about, the fuel surcharge program, and you were talking about getting to the first phase of the plan, a second phase, into 2024. Can you just maybe elaborate on what you're talking about in terms of different phases for the fuel surcharge, and any thoughts around this actually being accretive as perhaps you get these surcharges into pricing in the next few quarters? Chris, all we were simply saying is, what we're looking today is to cover our direct fuel costs with a surcharge mechanism, such that for every $1 change in diesel price, I can recover my $1 plus my margin. That's what we really perceived as phase one, get to that point where we've effectively neutralized the margin impact from fuel cost changes in our P&L. The reality is we are subject to fuel costs in indirect manners through a whole host of, you know, lines on the P&L. It could be third-party trucking support, it can be plastic containers and other items that are impacted by petroleum costs. You know, I think we will continue to pursue the overarching industry approach whereby there's a path to recover all of those types of costs beyond just our direct energy, and that's what we mean really by sort of phase 2 and beyond. I think this is all margin accretive in that the initial recognition of these surcharges is effectively there's a certain tranche of it that's just like incremental permanent base price, and that's what you're seeing sort of come through in the results. We're happy to now substantially be at the place where we've achieved phase 1, and we will continue through our pricing discovery to optimize the surcharge program in conjunction with our normal course pricing practices as we go forward from here and beyond. Okay. That's all folks. Thanks, folks. Thank you. Our next question comes from Devin Dodge from BMO. Your line is open. Thanks. Good morning. I wanted to start with more of a modeling question and apologies if I missed it earlier. Once the divestitures are completed, how does that impact the timing for when GFL is expected to be a cash tax payer? Sorry, Devin, we're having a really difficulty time hearing. I think you said a mention about cash taxes associated with the divestitures. Yes, as you know, we currently have significant net operating losses that have provided us tax shield on a regular basis. The divestitures will consume a significant component of those operating losses and accelerate the pace at which you become a sort of cash taxpayer. Now, obviously, with our capital deployment and M&A deployment, there's opportunities to continue to minimize what is due at the cash taxes level. Starting in late 2024 and now into 2025, which is probably about half a year earlier than previously anticipated, you'll start having a ramp-up in cash taxes to the extent there is not mitigating factors such as, you know, M&A, et cetera. Okay. Makes sense. I'll leave it there. Congrats on the strong start to the year. Thank you, Devin. Thanks, Devin. Our next question comes from Michael Feniger from Bank of America. Your line is open. Hey, guys. Thanks for just squeezing me in. You guys are showing areas of addressing the low-hanging fruit as you build this company. The fuel surcharge program is a great example. Just curious over time, do you think you could create less seasonality with that free cash flow could smooth out over the next few years? Yeah. Good morning, Mike. It's Luke. I think the answer is yes. You know, the CapEx, we're always gonna respond with capital expenditures, you know, to what we see out there. This year, pulling forward, I think was just prudent in light of what you're seeing on the R&M side. The working capital swings that we have, we'll always have a certain degree of it, coupled with by virtue of, you know, the Canadian or winter climates and environmental services. I think there's a meaningful opportunity to standardize and harmonize our processes and programs there, and you think about all the sort of payables associated with businesses that have come on and sort of the generator of it, and get to a point where you have more muted amounts from quarter to quarter. I think it's a great question. I think it's something that will represent an opportunity for us as we go forward with what is now a more sort of, you know, stable size core that will allow for that sort of harmonization of those practices. Great. Just to sneak one last in, the environmental services side, another big player reported a great quarter there with volume and price. Do you sense that this side of the waste industry is becoming more rational and disciplined? If project activity and volumes there start to soften, do you think pricing will stay disciplined on this area of the waste industry? Thanks everyone. I do. I mean, it's been my thesis for almost 16 years now. I think, you know, it's probably 15 years behind where the solid waste business is. I think over time and, you know, in those businesses are particularly our facilities that are, you know, very difficult to replicate today. Again, think about it as a landfill, fixed cost base materials come in on a route-based collection network, come in, process those, discharge those wastewaters or solidify them and put them into a sludge and send it to one of our sort of landfills. You know, I think where we're sitting is that, you know, the market and the competitors are realizing what the actual cost is to do that work, and it's becoming significantly more rational. As we've said, you know, our business, we anticipate will be a mid-20s margin business this year, and we think we can push that closer to 30% over the coming years. Yes, we are of the same thesis. I believe that to be true, and I think you're seeing that sort of come through in some of the competitors' numbers as well. Perfect. Thanks, guys. Thanks, Mike. Our final question comes from Michael Hoffman from Stifel. Your line is open. Hey, thanks for the follow-up. I meant to ask this before and I forgot. The U.S. House has passed a debt ceiling bill, and they have pulled the RNG investment tax credit that was in the IRA out of it. Now it's got to get through the Senate. Assuming that goes away, you'd still do all of this RNG investing, but how does it impact the cash numbers you've been sharing? Michael, you'll recall our previous conversation around this was we were gonna use the ITC off the initial jobs to serve as the equity investment in the subsequent ones. We're gonna have this opportunity to recycle that nicely. To the extent that goes away, what it will require will be a little bit more equity than we were previously anticipating. Again, as you well know, the returns on that equity and the overall profile of these are still probably one of the most compelling opportunities that we've seen in this industry or in this business. Nothing changes. It potentially changes the timing of our sort of CapEx into those. We don't anticipate there being a material shift for this year's guide, but we'll obviously sort of stay close to it as we go forward and think about 2024. Yes. Just to remind everybody was developing these before the IRA was even in Congress's line of sight. Correct. The last one, what do you care about more: free cash flow, compounded average growth rate, and conversion of the P&L versus margin? I think it's one and the same from my perspective, because, you know, if we can drive out the incremental sort of margin organically out of the base business, you know, all those dollars are gonna flow down in the sort of free cash flow line. I think it's from my perspective, one and the same. Michael, the thing we talk about is the growth of free cash flow per share, right? That's where we believe we have a unique opportunity in an industry that's a great compounder of free cash flow per share with the idiosyncratic operating leverage opportunities available for us, compounded by then the financial leverage. We just think we have a very compelling growth of free cash flow per share for the next, pick your duration, but mid to long term that is highly compelling and doing that should create material value. Right. I guess what I was trying to get at is there's a point where margins find a level and then the incrementals on those get tighter, but there's a almost continuous opportunity to maximize capital asset utilization that drives even more cash. I get- Of course, all those self-help opportunities are gonna continue driving more cash. The transfer of wealth from the debt side of the balance sheet to the equity holders, right? As that moves, all that value is gonna transfer from the debt side of the sort of balance sheet to the equity side. You know, you put those two things together, that's gonna drive sort of material, sort of free cash flow growth. Yep. Okay. Great. Thanks. Thanks for taking the follow-up. Thank you, Michael. This concludes our Q&A. I'm gonna hand back to Patrick Dovigi, Founder and CEO, for any final remarks. Thank you very much, everyone for joining the call this morning. We look forward to speaking to you after Q2. Again, thank you to everyone for their sort of continued support. Always available to take calls, et cetera, for the balance of the day. Thank you very much. Ladies and gentlemen, today's call is now concluded. We'd like to thank you for your participation. You may now disconnect your lines.