Good afternoon, and welcome to the Republic Services Q3 2021 investor conference call. Republic Services is traded on the New York Stock Exchange under the symbol RSG. All participants in today's call will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your touch-tone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Stacey Mathews, Vice President of Investor Relations. Hello. I would like to welcome everyone to Republic Services' Q3 2021 conference call. Jon Vander Ark, our CEO, and Brian DelGhiaccio, our CFO, are joining me as we discuss our performance. I would like to take a moment to remind everyone that some of the information we discuss on today's call contains forward-looking statements, which involve risks and uncertainties and may be materially different from actual results. Our SEC filings discuss factors that could cause actual results to differ materially from expectations. The material that we discuss today is time sensitive. If in the future you listen to a rebroadcast or recording of this conference call, you should be sensitive to the date of the original call, which is October 28th, 2021. Please note that this call is the property of Republic Services Inc. Any redistribution, retransmission, or rebroadcast of this call in any form without the express written consent of Republic Services is strictly prohibited. I want to point out that our SEC filings, our earnings press release, which includes GAAP reconciliation tables and a discussion of business activities, along with a recording of this call, are all available on Republic's website at republicservices.com. I want to remind you that Republic's management team routinely participates in investor conferences. When events are scheduled, the dates, times, and presentations are posted on our website. With that, I'd like to turn the call over to Jon. Thanks, Stacey. Good afternoon, everyone, and thank you for joining us. We are pleased with our strong performance in the Q3. We continue to execute on our strategic priorities of customer zeal, digital, and sustainability to drive growth and value for our stakeholders. During the Q3, we delivered revenue and EBITDA growth of approximately 14% compared to the prior year, generated adjusted earnings per share of $1.11, which represents an increase of 11% over the prior year, and produced $1.4 billion of adjusted free cash flow on a year-to-date basis. We continue to effectively allocate capital by investing in value-creating acquisitions and returning excess cash to our shareholders. Year-to-date, we've invested over $900 million in acquisitions to further enhance our market position and increase free cash flow. This is the highest level of acquisition investment in over a decade. On August 31, we completed the acquisition of ACV Enviro. This strategic acquisition broadens our capabilities and offerings in the environmental services industry. It also provides us with a platform to pursue additional growth. We are excited to welcome ACV to the Republic team. Our acquisition pipeline remains robust, with opportunities in both the recycling, solid waste, and the environmental solutions businesses. We now expect to invest over $1 billion in acquisitions for the full year. In addition to investing in acquisitions, we have returned $622 million to our shareholders through dividends and share repurchases. We continue to prioritize customer zeal to drive profitable growth. This includes increasing customer loyalty, driving willingness to pay, and attracting new volume as the provider of choice. Our customer retention rate remains at a record-setting level of 95%. During the Q3, we delivered outsized revenue growth throughout our business. Total core price remained at an all-time high of 5.2%, and average yield increased to 3.2%. Volume increased 4.3% compared to the prior year, which exceeded our expectations, and acquisitions contributed an incremental 350 basis points to total revenue growth. The outlook for organic and acquisition growth for the remainder of the year is strong. Turning to digital, we continue to realize the benefits of our investments in technology. In the Q3, we made meaningful progress on the rollout of the next phase of our RISE Platform. We have now implemented tablets in approximately 70% of our large and small container fleet. We expect to be substantially complete by the end of this year, with plans to further deploy to the residential fleet beginning in 2022. Next, turning to our sustainability platform. We continue to partner with developers to capitalize on landfill gas to energy opportunities. We currently have 17 projects in the pipeline, with more opportunities thereafter. On top of the royalty revenue these plants will generate, a majority of equity investment opportunities to further participate in the project economics. We also recently opened a solar project on one of our closed landfills in Belleville, Illinois. This project consists of 30,000 solar panels and will produce enough energy to power 2,200 homes annually. We remain committed to increasing the recycling and circularity of key materials as part of our ambitious 2030 sustainability goals. We recently opened the first solar powered compost facility in California to further our progress and address the growing community needs. This facility will provide critical organic processing capabilities to residents and businesses in the Greater San Diego area. Our strong financial and operational results would not have been possible without our dedicated Republic employees. We continue to invest in developing both existing and new talent and creating innovative solutions for the increased demand for skilled workers. We recently unveiled our Republic Services Technical Institute, which is the industry's first ever diesel technician school. This subsidized program is already building a strong pipeline of high demand technician talent for Republic. Additionally, graduates will have upskilling opportunities to further grow their career with Republic. These types of innovative investments in talent lead to external recognition for our company. Republic was recently certified as a great place to work for the fifth consecutive year. This is a meaningful achievement as employee recruiting and retention remains a prominent focus in today's labor market. Finally, turning to our outlook for the remainder of the year. Given the continued strength in our business, we now expect to exceed the full year guidance we upwardly revised last quarter. Accordingly, we are increasing 2021 full year financial guidance as follows. Adjusted EPS is now expected to be in the range of $4.10-$4.13, and adjusted free cash flow is now expected to be in the range of $1.475 billion-$1.5 billion. I will now turn the call over to Brian. Thanks, Jon. Core price during the Q3 was 5.2%, which included open market pricing of 6.5% and restricted pricing of 2.9%. The components of core price included small container of 8.2%, large container of 5%, and residential of 5%. Average yield was 3.2%, which increased 60 basis points from the Q2. Q3 volume increased 4.3%. The components of volume included an increase in small container of 5.4%, an increase in large container of 3.9%, and an increase in landfill of 6.6%. For reference, small container and MSW volumes in the Q3 were both above a 2019 pre-pandemic baseline. Moving on to recycling. Commodity prices increased to $230 per ton in the Q3. This compares to $99 per ton in the prior year. Recycling, processing and commodity sales contributed 100 basis points to internal growth during the Q3. Next, turning to our environmental solutions business. Q3 environmental solutions revenue increased $27 million from the prior year. This was driven by both organic growth from increased activity and the contribution from acquisitions. On a same store basis, environmental solutions contributed 20 basis points to internal growth during the Q3. Adjusted EBITDA margin for the Q3 was 30.4% and increased 10 basis points over the prior year. This included a 90 basis point increase from recycled commodity prices, a 50 basis point headwind from net fuel, and a 30 basis point headwind from the impact of recent acquisitions, primarily driven by deal and integration costs. SG&A was 10.2% of revenue. This represents an increase of 20 basis points over the prior year, which was exclusively due to higher incentive compensation accruals. Year-to-date adjusted free cash flow was $1.4 billion, and increased $247 million or 22% compared to the prior year. This was primarily driven by EBITDA growth in the business. With respect to our full year cash flow guidance, we expect to spend a disproportionate amount of our full year CapEx and cash taxes during the Q4. It should also be noted that we increased our expected full-year capital spending in our upwardly revised guidance by over $50 million. This increase relates to capital to support growth opportunities. Free cash flow conversion through September continued to track ahead of our original expectations and increased 330 basis points over the prior year. During the quarter, total debt was $9.3 billion, and total liquidity was $2.4 billion. Interest expense decreased $11 million due to refinancing activities completed last year, and our leverage ratio was 2.8 times. With respect to taxes, our Q3 adjusted effective tax rate was 25.5%. We had an equivalent tax impact of 27% when you include non-cash charges from solar investments. We expect our Q4 equivalent tax impact to be approximately 25%. This includes the effective tax rate and non-cash solar charges. I will now turn the call back over to Jon. Thanks, Brian. We continue to create value for our stakeholders by executing our strategic priorities, which drives profitable growth and increases returns. We are expecting the positive momentum in our business to continue to produce profitable growth in 2022. At this point, we anticipate producing above average revenue growth, leading to high single-digit adjusted free cash flow growth compared to our full year 2021 performance. As usual, we will provide full year detailed 2022 guidance on our Q4 earnings call. With that, operator, I would like to open the call to questions. We will now begin the question-and-answer session. To ask a question, you may press star then one on your touchtone phone. In the interest of time, we ask that you limit yourself to one question and one follow-up question today. If your question has been answered and you would like to withdraw your request, you may do so by pressing star two. If you are using a speakerphone, please pick up your handset before pressing the keys. Our first question today comes from Tyler Brown with Raymond James. Hey, good afternoon, guys. Good afternoon, Tyler. Hey, Brian, thanks for the detail on the 10 basis point improvement. One, kinda, how should we think about margins in Q4? Will they likely hold sequentially? Number two, I know you'll give more details on this, but big picture, you've got a strong CPI rollover, you've got a rational open market. Do you expect in 2022 to make progress on that 32% margin goal? Yeah. Tyler, let me kinda answer your the first part of your question there. I think you embedded two or three questions in there. At least with respect to sequentially, there's a normal step down sequentially from Q3 into Q4, as well as, you know, we talked about the fact that we're doing, you know, more deals than originally anticipated, so we expect the highest level of deal and transaction and integration costs in the Q4. You know, again, while we expect to see in the underlying business, we're expecting to continue to see really strong performance. We do expect a sequential step down Q3 to Q4. Then in your second part of your question, Tyler, yes, you know, outlook is strong for next year. Certainly, we've been strong on pricing in the open market portion of our business already, and we'll continue to do that. Then as some of these escalators kick in, you know, the lag effect of 12-18 months. Some of them kick in in 2022. That provides more upward pressure on pricing, which we think will lead to margin expansion in 2022. Okay. Just from a modeling perspective, how much revenue today would likely roll over next year? If you just take a look at the deals that have been completed through September, it's 160 basis points. Okay. My last one here. Jon, it's interesting. If you look at the big three, I think you guys posted actually the best volume growth this quarter, and you actually had the toughest comp. I'm not asking you to necessarily compare and contrast you with the peers. Was there a line or a vertical that just gave you this outside strength that you saw? Just, I'm just trying to. It's not really your strategy to prioritize volume over price. I just wanna make sure that that's, make sure I've got that all straight. Well, you certainly have the last part straight, which is we're always gonna start with price over volume, right? I mean, the thesis broadly of our company and the industry is that we can price ahead of our cost inflation, and I think we've proven to do that in a you know kind of rapidly changing environment this quarter. We certainly feel good about that in the short term and the long term over time. On the volume side, listen, we certainly left some volume on the table. If we had more labor, we would've gone after some more opportunities on that front. Very strong demand environment, and I think the GDP print was at 2% for the quarter. A lot of that's on the consumer side. I think the industrial side of our economy is very, very strong right now. Our volume is a pretty broad base, pretty strong across the board. Okay. All right. Thanks, guys. You bet. Our next question comes from Hamzah Mazari with Jefferies. Hey, good afternoon. My first question is just on SG&A leverage going forward. Maybe you could just walk through, you know, any potential COVID-related costs that, you know, came out of your system that are now coming back. Maybe there's some costs that are permanent in nature, you know, post sort of looking at the business through COVID that you've instituted. Just give us a sense of how to think about that going forward. Yeah. I'd say there's some modest puts or takes, and we're already seeing some of that. For example, small container, right, weights are coming back, and long term, that's a good thing 'cause it's a positive sign for demand. But that's certainly a financial headwind for us in a very short-term period that we already saw some of, and we think that modulates over time. Certainly some with the Delta variant, we had some you know, elevated PTO costs, right, in the quarter of people who were sitting out and still getting paid over time. So that's a headwind that abates over time. You know, listen, as traffic patterns come back, does that slow us down a little bit? Maybe. I would have guessed we would have seen a lot of that, but our RISE Platform is really delivering a lot of productivity into the business. Then, you know, more from a central function standpoint, you know, we'll shrink our real estate footprint, you know, incrementally here as we have some of our more transactional colleagues working from home permanently. That's pretty modest broad strokes. You know, again, a little bit of travel will come back, but we'll also take advantage of Teams and do things in different ways over time. Again, lots of individual puts and takes, but I don't see, certainly I don't see any big structural headwinds that are gonna come after us. Hamzah, to your question specifically on SG&A, we've had a number of those costs come back into the system, you know, as far as, you know, some of the travel-related costs. We're seeing that in the current period. As I mentioned in my prepared remarks, you know, most of the increase we saw really had to do with incentive compensation, really didn't have to do with any of those ongoing SG&A expenses. We feel pretty good about our performance and our ability to leverage, right, SG&A going forward as we continue to grow the top line and migrate towards that 10% of revenue. Got it. Very helpful. Just my follow-up question. You know, you mentioned landfill to gas. You mentioned 17 projects in the pipeline. You know, historically, I think you've just outsourced and taken royalty revenue. I think you referenced that, you know, you have equity stake opportunities. Is that something you've done before? Why not just bring them in-house given some of the ROIC and strong sort of margin profile of some of those projects? Thank you. Yeah. No, it's a great question. Historically, again, we've been more opportunistic and site by site in this. As you know, the world is moving into a more sustainable operation, we're certainly doing our part and hopefully leading the way. This has become more critical for us going forward. Not only do we have the 17 projects, but we've got another slate behind that we're evaluating. We'll participate in a different way than we have historically, probably in an equity basis, but probably not full ownership. You know, why I say that is we have a limited number of landfills. This is a great growth opportunity for us to pursue, but there's a ceiling to it. Once you've kind of built it out on all the landfills that make sense, that's it. When we you know we like to put our you know all of our financial capital and our human capital in places that we think grow in an evergreen way. That's where we'll put our attention. Combine that with the fact that there's a lot of external financial and human capital resources who are anxious to partner with us, and we think that's probably gonna be the winning combination for us going forward. Yeah. The other thing too, Hamzah, is that, you know, partnering up with a, you know, a third party, we can actually move faster than if we were to sit there and go our own way. That's one of the reasons we wanna move quickly on this opportunity. Got it. I just had a clarification question. Do you historically, I think at Q3, you've talked about preliminary 2022 sort of maybe top line. Is that a change in sort of how you're thinking about guidance or maybe historically you haven't done that? Yeah. No, Hamzah, I think we talked in, you know, in our remarks as well. What we talked about here was, you know, providing visibility into where we see free cash flow going at this point. But that said, I think you also hear the tone. We're, you know, optimistic and about the momentum in pricing. Volume is strong, and there's additional opportunities. And again, when you look at just the acquisition rollover as well as the pipeline of acquisitions that are there, we feel that 2022 is gonna be very strong on that front as well. Contribution from multiple facets that at least relative to a historical growth rate, we feel it's gonna be outsized. Got it. Thank you. Our next question comes from Jeffrey Goldstein with Morgan Stanley. Hey, good afternoon. Thanks for taking my questions here. Labor expense has clearly been a key topic in the quarter, but within your COGS, labor, I noticed, actually declined as a% of revenue year-over-year. Maybe you can just talk about how you've managed to contain that. Is it primarily from raising price? Is there anything around scheduling or maybe doing proactive wage increases that you'd call out? Maybe just talk a little bit more about the success managing that in the quarter. I guess, going forward, is there any reason to think you won't be able to manage it as well? Yeah, thanks for your question. I think you have to look way back to low CPI environments. We've always had this fundamental belief that we wanna give our people a fair and certainly steady increase every year. We were raising their wages at 2% or 2.5%, even in low CPI environments. People have been focusing in parallel on employee engagement and making sure this is the place that the best people come to work. You put those two things together, and we think our employee value proposition has been really strong. While turnover has been elevated, it's been modestly elevated. All right? We've really taken more people if we could to pursue some incremental growth opportunities, but our retention has been really strong. Now, that being said, we're facing the same pressures of the macro environment. We've looked and done surgery in targeted markets where we think we weren't as competitive or maybe turnover was elevated. You kind of take those cost increases, and you offset it with what we think is our digital ops and our RISE platform, which is really driving productivity. If we look at our performance kind of in the quarter versus 2019, right? We're just seeing we're getting more work right out of the same labor hour, and that's been really productive. I think you're seeing it hold in a very challenging environment. On top of that, of course, we're pricing because the market bears it, and we wanna support future wage increases for our employees. Okay, that all made sense. Now that you've had Santek for a few months, I think it closed back in May. I'm curious for the path forward on bringing those margins back up to Republic levels and any sense of synergies you'd expect out of that business. Remind me, in terms of pricing within the Santek book, was that in a place you were happy with, or is there room to reprice some of that business as well? Just an update there would be helpful. Yeah, we're really excited about that acquisition. Great set of assets. Gets us into certainly some geographic markets that we weren't in before, and that creates a basis or a platform for further growth, both organic and additional tuck-in acquisitions. As Brian mentioned, there's always startup costs in the first year, and the bigger the deal, the more the startup cost because we really then have to get multiple sites and the systems integrated, and there's a lot of, you know, employee benefits and related costs. We really try to front load all those and get all those done at once. A, to get those behind us, but B, to create a great employee experience. If those linger forever, they feel like they're not really part of the company. We think that leads to higher turnover over time. We get after that and have a very proactive intentional plan, and we're ahead of that plan. I think you'll see in 2022 that'll be a nice certainly tailwind for us as those costs come behind us. Again, given the nature of that company and being fairly landfill-centric, the margins are really attractive. Okay, thanks for the color. Our next question comes from Walter Spracklin with RBC Capital Markets. Yeah, thanks very much, operator, and thanks for taking my questions, everyone. I'd like to turn back to acquisitions for a moment. When you look at the pipeline, which you mentioned is quite robust right now, I was wondering if you could be able to provide a little bit of color on that pipeline, you know, perhaps discuss whether are these all smaller tuck-ins. Are there any larger chunkier targets in markets that interest you? And as a follow-up, you know, is the regulatory review and scrutiny at all impacting your ability to do deals in this environment right now? Thanks very much. Yeah, no, I mean, the performance has been very strong this year, and the pipeline looking forward is very strong. I would say the towering characteristic about it is it's very, very balanced, right? It's balanced certainly, you know, weighted more heavily toward recycling and waste, just given that's where the bulk of our business is, but certainly plenty of opportunities in the Environmental Solutions portion of our business as well. It's certainly balanced across size, plenty of small tuck-ins. I think a number of what we'd call medium-sized deals. Then, listen, we maintain a perspective on everything. Could there be some larger deals that come through over time? Yeah, those are obviously more episodic and can be, you know, could be challenging from a regulatory review. You know, on balance, we have a very crystal clear point of view of where the regulation sits. If we think there's a deal that really is not gonna get through, we just don't spend energy and time pursuing that opportunity. Or if we do have limited regulatory scrutiny on a deal, we bake that right in. We understand what we probably have to divest, and we go right to the regulators and say, "Here's our perspective." They'll draw their own perspective, but we plan that right into the model, so we're never surprised on the back end of that. Yes, there is heightened scrutiny versus four or five years ago on larger transactions, but more broadly, it's not slowed us down at all from, I think, what is a different level of acquisition than we've historically done. Okay. As my follow-up on special waste, it looks like it was a good quarter for you on special waste. Had some nice tailwind there, but it can be lumpy business. How do you look at contribution from special waste from quarter to quarter? Is there any flags that you would give us in terms of how we model it in, you know, quarter to next? Or are you fairly confident that that's gonna be a good tailwind for you here over the next several quarters? Yeah, I think it's a good tailwind. Again, we saw kind of, you know, we were active as ever. We saw times of uncertainty. I think if you go back 20-25 years, special waste typically pushes, right? Jobs get, you know, sold and they get confirmed, but they just don't drop and get delivered. I think what you're seeing now is those things are starting to move. I feel good about that. The pipeline is very robust going forward. It's a project-based business, so by definition, right, there's gonna be quarters that are a little higher versus others. I think the outlook for the next, you know, 12-18 months is very, very strong. That's fantastic. Appreciate the time as always. Thank you. Our next question comes from Michael Hoffman with Stifel. Good afternoon, and thank you for taking my questions. Yeah, the challenge when you have two is can you actually ask a question with 14 different questions in it? You're quite good at that, Michael. I trust you. My attempt to do that is on organic growth, thinking about a baseline exit momentum going into 2022, and you parse price and volume. Are we in the right neighborhood if we're starting with a three handle on price and then volume ex special waste lumpiness still has momentum from new business formation, service interval trends being positive, but we haven't seen a peak in that activity, so that creates tailwind. That's the right way to think about going into 2022? Yeah. Certainly on the pricing, we would expect something starting with a 3. On volume, you know, listen, we're coming out of a, you know, we're in a V-shaped recovery, and obviously the further along you get, just arithmetically, right, that slope starts to flatten. I think there's still plenty of momentum. I talked about the labor side and being a little constrained there. You know, versus a pre-pandemic year, you're gonna see outsized volume growth in 2022 from us. The follow-up to that, though, is probably not as high, though, as what we're gonna see in 2021. It's somewhere in between. Yeah, I couldn't hear you, Brian. Could you say that again? No, I just said, to Jon's point, most of 2021 was a recovery of units that were lost during the pandemic. My only point was that the volume, at least the way we're thinking about it right now, would be somewhere in between what we're doing in 2021 or what we're gonna deliver in 2021 and that, you know, historical average. Got it. Last one for me is on free cash flow. When you think about a baseline of a conversion ratio, and you've talked about getting into the mid-forties, it appears that you're gonna be there this year. Is that now the new you've gotta hit? In that context going forward, you're spending more CapEx this year, but did you pull any forward? Or should I think of CapEx as the same rate of spend% of revs in 2022? Yeah, I think that, CapEx is really more a function of growth, incremental CapEx. You know, these acquisitions we do, oftentimes there's a plan and there's development projects associated with those, which are great. Which, those are more one-time in nature, right? Then you get the benefit, the returns of those in future years. From a free cash flow conversion standpoint, yes, right? We think we've hit a new baseline, and we have plans to further expand that going into 2022 and beyond. Okay. How'd I do? Did I get enough questions in there too? That was excellent. Thanks. Thanks, Michael. Thanks, Michael. Our next question comes from Jerry Revich with Goldman Sachs. Hi. Good afternoon, everyone. Hey, Jerry. How are you? Hi. Can you talk about what pricing announcements you've made to your open market customers in October? You know, as you folks look at the inflation that everyone across the industry is seeing, you know, how much do you feel like you need to push open market pricing, you know, over the next couple of months to make sure we've got, you know, enough room to execute as we hit the meaty part of the inflation cycle? Yeah, I would say that, again, you gotta look back, right? We've already done that. We jumped on that, you know, pretty much, you know, in the mid to end part of the Q1. Mm-hmm Understanding where inflation was going. You're seeing our open market, you know, another 100 basis points of incremental pricing versus the prior quarters, right? Because we're pricing not only existing customers, but also new customers, right? Our capture pricing tool, as we saw steel go up, for example, on containers, right, we just put that right in. Immediately we're selling a different price on the street, right, to cover the cost of that incremental steel, right, with a return against it, so we're not diluting returns as we price that through. Listen, we're priced. We're putting more price out. That price is being realized in the marketplace. Again, we have a good broad backdrop, right, when, you know, things like, you know, bacon is doubling and all kinds of things are going crazy, rental cars. From just a consumer purchasing standpoint, where prices are going, right, these price increases are relatively modest against that backdrop, and I think that's a good reason why they're holding. Yeah. Jerry, you know, just to follow up there, again, we've been quick to act in the open market. You really haven't seen the contribution yet from the restricted portion of the business. That's still to come in 2022 with some rollover benefit into 2023. Just to clarify, so you know, the current level of core price increases for open market, you know, 6.5%, and obviously we'll see the restricted acceleration from here. But is the 6.5% now at a high enough pace to cover this heightened level of inflation, or should we look for open market increases to be higher than the 6.5% we're posting now? Yeah, you could see that incrementally tick up, but we're also managing costs in a way, right, where we're taking the price and the cost inflation and expanding margins, right, as we go. Not only looking back, right? We're almost at 200 basis point expansion if you look back a couple years, and we think we've got more room to run in that going forward. Keep in mind, we price to existing customers. It's not a one-time event, right? We price ratably, kind of in our open market, roughly a twelfth of a book goes out every month, right? Our ability to be, you know, flex up on that is really, really high. Okay, great. You alluded to recycling investment opportunities in the pre-press release. Can you just expand on that? What's the range of opportunities in terms of building facilities organically or seeing recycling rate increases out of your existing footprint versus acquisitions? Can I trouble you just to flesh out that opportunity set, please? Yeah, we think there's five or six core markets we're in that we would like to have an asset. That was one over time we'll probably build. If we could buy it, that would also be an opportunity, but it's probably something we'll build. Certainly seeing acquisition opportunities, smaller ones, for recycling centers as we do some more medium-sized deals going forward. In part because we wanna make sure we've got, you know, a place to take the material off of our back and not always be dependent on a third party in those markets, and in part because we think these resources have increasing value over time, right? In a world where, you know, plastics, for example, the consumer packaged goods companies, right, are really in a need for post-consumer content. We have it, and we're an aggregator. Over time, that material is more value, and we think we're gonna be able to capture a piece of that as we move forward. The other thing I'd add, Jerry- Terrific - there's plenty of opportunities on our existing facilities to drive in, you know, more automation to kind of change the CapEx-OpEx trade-off. Those are tough jobs. Those are higher turnover jobs. It allows us to, you know, reduce the labor force just incrementally in those facilities, but then also produce a better product with more state-of-the-art equipment. I appreciate the discussion. Thanks. Thanks, Jerry. Our next question comes from David Manthey with Baird. Good afternoon. Thank you. First off, could you give us some early thoughts on CapEx for 2022? I don't know if you expect that to drop back into 11%-12% of revenues range, and if you're willing to share with us a couple of your spending priorities for next year. Yeah. David, look, we'll get into details, you know, when we're, you know, back together in February on the components, you know, within the free cash flow. I would sit there and say, as you think about over time, right, as Jon mentioned, we've made really good progress on free cash flow conversion. We expect to continue to make, you know, progress and start to drive that free cash flow conversion into the, you know, the high 40% range. Some of that is gonna be by reducing our CapEx as a percent of revenue. Okay. Second, how do you think about your commodity basket as you move into next year? I mean, do you budget for flat or do you assume it's going to be lower than that? Just how do you think about the commodity basket broadly as you look to the out year? Yeah. Just right now, right? What we're kind of looking at is more of, in line with, a year-to-date average as compared to current pricing. Again, once this plays out and we have a couple more months under our belt, we'll be able to give you a better perspective when we're back together in February. Sounds good. Thank you. You bet. Our next question comes from Sean Eastman with KeyBanc Capital Markets. Hi, team. Nice quarter. A couple modeling ones for me. I think, Brian, you mentioned 160 basis points of acquisition rollover. Is that a net number or a gross number? Secondly, I guess it's safe to assume that, you know, you guys are gonna do something better than that because you're indicating that next year is gonna be an elevated level of deal activity as well. Is that correct? Yeah. The $160 is essentially both gross and net, quite honestly. Yes, if you think about that only includes deals that have been closed through September. Okay, got it. Okay, so we'll have more upside there by the end of the year and then whatever you guys do next year, we'll layer on to that. Correct. Got it. Just drilling down on margins. You know, I don't want to paint you guys into a box before you're given the guidance, but maybe just thinking about the normative 30-50 basis points of operating leverage in the business just naturally. I mean, what would be the, you know, moving pieces to think about relative to that? I mean, you know, maybe recycled commodities are a tailwind in the first half. I'm not sure, maybe the acquisitions you've done are, you know, modestly dilutive into next year. You know, just trying to think through those moving pieces, that would be helpful. Yeah. I mean, the core of the business, right, you should think of margin expansion or pricing ahead of our cost inflation, which we're certainly very committed to doing. Then there's some other pieces on that, right? Commodity prices, right, could create a drag depending on where that basket goes. Right. Fuel was a drag in the quarter, right? You know that in general, we price fuel and our fuel recovery fee is a pretty good broad hedge to fuel. You know, we have a little bit of drag as we go up, and then it happens to have a little bit of lag as we go back down, so depending on where fuel goes. I'd say there's probably more chance that's a, you know, neutral or tailwind headed into next year. Then acquisitions, right, like I said, right, we kind of load up all those integration costs in the first year, and so we expect that to be a little bit of a headwind to the overall margin for our portion or that the headwind in the equation into next year, but nothing dramatic, right? We're still committed to expanding margins next year with all those pieces put together. Okay, excellent. Very helpful. I'll turn it over. Thanks, guys. Thank you. Great. Thank you. Our next question comes from Noah Kaye with Oppenheimer. Hi. Good afternoon. Thanks for taking the questions. You know, I think your footprint just seems to align naturally with some population and demographic trends, and so, you know, that may partly explain, you know, just the great organic growth trends we've seen from you. But I wonder if you could talk a little bit about new business formation and new business origination for the company. And specifically, you know, Jon, how you might be leveraging your digital platform to help drive that new business formation or rather the new business origination for the company. You know, is there anything that you're doing differently now at Republic than you might have done in years past to help identify and build new business? Yeah, we've certainly advanced the cause with our digital tools. I mean, our, you know, sales team is on the Salesforce platform, and got a lot of lead generation tools across the different verticals in our business that populate new leads going forward. We've certainly seen some of that. Frankly, I think there's more of that to come, right, as we get through Delta and, you know, consumer confidence even gets higher here and we "get back to traveling and back to business." We're optimistic there's more upside of that going forward. We think we're getting certainly our fair share of the growth or more because we've got, you know, 1,000+ sellers out there, you know, working very local markets to find opportunities one at a time. Okay, thanks. And then I guess in the context of the ACV Enviro acquisition, I wondered if you're able to share your vision for what kind of scale you wanna have in this segment over time. Obviously you've talked about environmental services TAM being around $20 billion and the fact that the customer base wants to kind of consolidate who it uses for services given sustainability and other drivers. You know, do you want this to be a billion-dollar business within a few years? Is that out of range of what you're thinking? Can you talk a little bit about your ambitions? Yeah. No, I think that's actually a really good starting point. I think, you know, $1 billion in, you know, three-ish years, I think is a reasonable target. We certainly will not race or reach to get there by any means. We certainly wouldn't be afraid to clear that if we think we have the right opportunities going forward. It will be a mix of organic growth and acquisitive growth, more acquisitive than organic, just in a percentage basis as we scale that business. Listen, that's been a really good fit for us in the early days. Not only have they performed well, but, you know, we expected to see a lot of integration opportunities with our waste and recycling business. You know, we're seeing a lot of those come through. Opportunity to internalize disposal, cross-sell with customers, and it's just gonna strengthen the value proposition of both sides of our business. Okay. Thanks so much. Thanks, Kyle. Our next question comes from Kyle White with Deutsche Bank. Hey, good afternoon. Thanks for taking the question. I wanted to go back to special waste volumes as well as C&D. Just curious, are you guys seeing any impact on these volumes from the tight labor market and kind of the stressed supply chain across the business and the environment? No, not really. I mean, listen, the supply chain is impacting us in weird ways, like, you know, we have a solar project we're putting in and we can't get some of the equipment is trapped on a boat outside of Long Beach, so that project might not go in this year. Those are more incremental and one-off things. Again, we're blessed to be in a business that is a service-based business, right, and not materials-based, or we would be probably suffering like some of these other companies are. We feel good about that, but not in the special waste or C&D side. We think there's more demand coming back in that business without question, but I don't think the supply chain disruptions that attach anything to that part of the business right now. Got it. Then on the solar investments, I think initially you were targeting $120 million-$125 million for this year. Is that still the right target? Should we expect that target to go higher next year? It might be modestly more than that. As Jon mentioned, you know, we've got, you know, some of these projects right now. It's all based on what gets placed in service by the end of the year. I would say, you know, a good number to use through the cycle is in that 150-175 range. All right. Appreciate it. I'll turn it over. Yeah. Predicated on, you know, some of the tax laws that are in place today. Again, if you have a question, please press star then one. Our next question comes from Michael Feniger with Bank of America. Hey, guys. Yeah, thanks for taking my questions. I appreciate the outlook raise, but just to put a finer point on it, I might have missed it. Is EBITDA margins up year-over-year on the Q4, or is there just a lot of integration and acquisition costs that kinda creates some noise on the quarter? Yeah, I think it's a couple things. You know, it's, yes, what you said on kinda the integration cost, but also when you take a look year-over-year, we've consistently seen since the Q4 of last year, heavier container weights, that sort of thing. That probably will put a drag on the performance relative to the prior year. Okay. Got it. You know, just to be clear, I'd like Brian, just on the 32% margin target. You guys might have already fleshed it out. Is this the track to 2024, is that how to think about it? Can it be much earlier? Or is some of this inflationary pressure and just a lot of this acquisition, obviously it's lower than you integrate, I get it, you're moving higher. Just like how do we think about the margins, you know, in the context of that 32% target? Yeah. Listen, I think it's, you know, we're not gonna put a specific year on it, but we are certainly trending in that direction, and I think you're gonna see steady, ratable improvement, right? I don't think you're gonna see any big jump, or I don't think you're gonna see us flatten. It's gonna be a consistent set of levers, which is we are gonna continue to grow. We're gonna price ahead of our cost inflation and, you know, give our people a fair wage increase but drive productivity right alongside that. Listen, we're growing at a different way than we ever have before. Over time, we think that gives us leverage on SG&A, which further helps with the margin expansion. Good. Just like last, if I could squeeze it in. When I think about these acquisitions, the solid waste and the environmental services, can you just help us, Jon, is like the environmental services, is this a lower than average margin when we think of some of this stuff outside of the oil and gas, more of the downstream? Is that lower margin you guys can bring it up over time? Just kinda thinking about that portion of the business that you guys are growing relative to like, you know, non-hazardous solid waste. Yeah. We start with everything on intrinsic value and returns, right? That's where we start from a fundamental standpoint. Any deal we do is gonna have to clear that hurdle, right, individually and then, you know, naturally, collectively it will over time as a platform. You know, these businesses in general do have a lower margin profile than recycling and solid waste. They also have a different capital intensity. When you think about free cash flow conversion, right, it looks very similar. We do think there's certainly an opportunity to raise those margins over time. Again, we have been incredibly consistent over the last decade on our commitment to pricing, right? That we won't flinch or back off of that, right? As we grow in the broader environmental services space, right, we are going to be able to price 'cause we're gonna provide a differentiated service, and that supports us not only giving a fair wage increase to our employees, but then, you know, expanding margins and providing great returns to our shareholders over time. Thank you. At this time, there appear to be no further questions, so I'd like to turn the call back over to Mr. Vander Ark for some closing comments. Thank you, Hailey. In closing, we are pleased with our Q3 performance. We delivered double-digit growth in revenue, EBITDA, EPS, and free cash flow. We continue to manage the business to create long-term value for all stakeholders and expect continued profitable growth in 2022. I would like to thank all our employees for their continued hard work and commitment to our customers. It is our team of dedicated employees that make these results possible. Have a good evening and be safe. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.