Greetings and welcome to the Waste Connections first quarter 2022 earnings conference call. During the presentation, our participants will be in a listen-only mode. Afterwards, we'll conduct a question and answer session. At the time you have a question, please press star one on your telephone. If at any time during the conference you need to reach an operator, you may press star zero. As a reminder, this conference is being recorded today, Wednesday, May 4, 2022. Now, I would like to turn the conference over to Worthing Jackman, President and CEO. Please go right ahead. Thank you, operator, and good morning. I'd like to welcome everyone to this conference call to discuss first quarter results and to provide a detailed outlook for the second quarter. Joining me this morning is Mary Anne Whitney, our CFO. As noted in our earnings release, we're extremely pleased by our strong start to the year, with record solid waste pricing growth driving underlying margin expansion in spite of inflationary pressures. Our 50 basis points year-over-year decline in adjusted EBITDA margin in the quarter included 90 basis points combined margin impact as expected from 10 million of COVID-related frontline support in January and acquisitions completed since the prior year period. Looking ahead, further sequential improvement in solid waste pricing growth, increasing E&P waste activity, and strong operational execution should continue to differentiate our performance. We're on track to meet or exceed our full year adjusted free cash flow outlook of 1.15 billion, and the elevated cadence of solid waste acquisition activity has continued, with approximately 175 million in annualized revenues closed year to date, confirming our expectations for another outsized year of such activity. Before we get into much more detail, let me turn the call over to Mary Anne for our forward-looking disclaimer and other housekeeping items. Thank you, Worthing, and good morning. The discussion during today's call includes forward-looking statements made pursuant to the Safe Harbor Provisions of the U.S. Private Securities Litigation Reform Act of 1995, including forward-looking information within the meaning of applicable Canadian securities laws. Actual results could differ materially from those made in such forward-looking statements due to various risks and uncertainties. Factors that could cause actual results to differ are discussed both in the cautionary statement included in our May third earnings release and in greater detail in Waste Connections' filings with the U.S. Securities and Exchange Commission and the securities commissions or similar regulatory authorities in Canada. You should not place undue reliance on forward-looking statements as there may be additional risks of which we are not presently aware or that we currently believe are immaterial, which could have an adverse impact on our business. We make no commitment to revise or update any forward-looking statements in order to reflect events or circumstances that may change after today's date. On the call, we will discuss non-GAAP measures such as adjusted EBITDA, adjusted net income attributable to Waste Connections on both a dollar basis and per diluted share, and adjusted free cash flow. Please refer to our earnings releases for a reconciliation of such non-GAAP measures to the most comparable GAAP measures. Management uses certain non-GAAP measures to evaluate and monitor the ongoing financial performance of our operations. Other companies may calculate these non-GAAP measures differently. I will now turn the call back over to Worthing. Thank you, Mary Anne. In the first quarter, we delivered solid waste price plus volume growth totaling 7.6%. All-in price of 7.1%, including about 80 basis points in fuel and material surcharges, marks our highest reported price and range from about 4% in our mostly exclusive market Western region to between 7.5% and 8.5% in our competitive markets. Up 140 basis points sequentially from Q4, our Q1 pricing was 60 basis points above our outlook and ramped during the quarter as we continued to address the accelerating inflationary headwinds during the period. Looking ahead at Q2, we expect another sequential increase in both core price and surcharges, with all-in price growth exceeding 8%. Our pricing strength continues to reflect our purposeful approach to addressing the headwinds of inflation and the resilience of our market model, both of which are hallmarks of our strategy. Moreover, the differentiated level of price is a testament to the execution and accountability of local leadership in our decentralized operating structure and the visibility on cost, which informs our approach to pricing. Reported volume growth of positive 50 basis points also exceeded our outlook. As noted last quarter, reported volumes reflect about 80 basis points impact from the expiration of two poor-quality municipal contracts, thus implying underlying volumes up about 1.3%. On a normalized basis, volumes were up in all regions and continue to be strongest in our Western region, which was up 2.6% in the period. Looking at year-over-year results in the first quarter on a same-store basis, commercial collection revenue was up 12% year-over-year. Roll-off pulls per day were up 5% on revenue per pull up 7%. Landfill tons were up 4%, led by a 12% increase in special waste, with MSW tons up 2% and C&D tons up 1%. Special waste activity was broad-based in both Canada and in several U.S. markets, including Colorado, Illinois, and Minnesota, including some markets where favorable weather may have accelerated the timing of some jobs otherwise planned for Q2. Looking at Q1 revenues from resource recovery, that is recycled commodities, landfill gas, and renewable energy credits or RINs, excluding acquisitions, collectively, they were up about 35% year-over-year due to higher values for both recycled commodities and RINs. Resulting in a margin tailwind in the period of about 60 basis points. Prices for OCC, or old corrugated containers, averaged about $163 per ton in Q1 as expected, and rents mostly stayed in the range of $3 to $3.25, slightly below the levels we were seeing earlier in the year. Finally, on E&P waste activity, we reported 40.8 million of E&P waste revenue in the first quarter, up 65% year-over-year and up 19% sequentially from Q4 on a pickup in activity during the quarter from increased drilling, as well as remediation jobs, primarily in the Permian Basin. Given the backdrop of higher rig counts and elevated crude pricing levels, we are encouraged by the improving trends we saw during Q1 and which continued into April, bringing the quarterly run rate to about 45 million. We are similarly encouraged by the cadence of acquisition activity. Year-to-date, we've closed approximately 175 million in annualized revenues, all in solid waste and in both the U.S. and Canada. Through four months, we've already completed what we would consider an above average year for us, and the pipeline remains robust. As always, we remain selective about the markets we enter and the multiples we pay as we maintain our focus on long-term value creation. To that end, we continue to take an opportunistic approach to share repurchases. We repurchased $425 million of outstanding shares in early Q1. We also accessed the capital markets early this year to lock in more long-term debt at an attractive rate and free up capacity on our bank facility. Given the strength of our balance sheet, with leverage about 2.6 times on a net debt EBITDA basis, we remain well positioned to capitalize on this period of outsized acquisition activity with optionality around our continued return of capital to shareholders. In addition to share repurchases, we would expect to maintain our established practice of increasing our annual per share dividend when we undertake our typical review in October. Now I'd like to pass the call to Mary Anne to review more in depth the financial highlights of the first quarter and provide a detailed outlook for Q2. I will then wrap up before heading into Q&A. Thank you, Worthing. In the first quarter, revenue was 1.646 billion, about $36 million above our outlook and up 250 million or 17.9% year-over-year. Organic growth was 10% in the quarter, and acquisitions completed since the year ago period contributed about 112 million of revenue, or about $110 million net of divestitures. Adjusted EBITDA for Q1 as reconciled in our earnings release was 502.1 million and 30.5% of revenue. As a reminder, this reflects 60 basis points impact from the $10 million in COVID-related support that we provided in January, plus 30 basis points drag from acquisitions. Normalizing for this unique supplemental expense and the margin dilutive impact of acquisitions, adjusted EBITDA margin would be 31.4%, up 40 basis points year-over-year. Reported margins also reflect the impact of higher diesel costs during the quarter. Fuel expense in Q1 was about 4.0% of revenue, up about 70 basis points year-over-year, including the benefit from hedges on about half of our fuel purchases, mitigating the impact of higher prices. We averaged approximately $3.30 per gallon for diesel in the quarter, up about 30% from the year ago period and up about 12% sequentially from Q4. Margin impacts reflect the quick run-up in fuel prices during late February and into March, which drove incremental costs of about $4 million for a drag of about 30 basis points beyond our expectations in February. Looking on a reported basis at Q1 year-over-year margin drivers. The 60 basis point benefit from higher commodity-driven revenues described earlier was more than offset by the 70 basis point fuel headwinds also noted, resulting in a net drag of about 10 basis points. Higher E&P waste revenues accounted for about 40 basis points margin expansion. As expected and noted, acquisitions resulted in a drag of about 30 basis points, and the $10 million in COVID support from January accounted for a 60 basis point drag. Underlying solid waste margins expanded by 10 basis points, demonstrating the power of price and the importance of a proactive approach. To reiterate, in the face of record levels of inflation, which not only persisted but accelerated during the quarter, we achieved underlying margin expansion in solid waste hauling, transfer, and disposal. Finally, we delivered adjusted free cash flow of approximately 320 million or 19.5% of revenue in Q1, up 10.6% year-over-year in spite of capital expenditures up over 55%. As such, we are well-positioned to meet or exceed our full-year adjusted free cash flow outlook of 1.15 billion provided in February. I will now review our outlook for the second quarter of 2022. Before I do, we'd like to remind everyone once again that actual results may vary significantly based on risks and uncertainties outlined in our Safe Harbor statement and filings we've made with the SEC and the securities commissions or similar regulatory authorities in Canada. We encourage investors to review these factors carefully. Our outlook assumes no significant change in underlying economic trends. It also excludes any impact from additional acquisitions that may close during the remainder of the year and expensing of transaction-related items during the period. Revenue in Q2 is estimated to be approximately 1.785 billion. This includes solid waste price plus volume growth of 7.5%-8.5%. As Worthing noted, we expect pricing growth to increase sequentially to a range of 8%-8.5% and reported volumes of flat to down 0.5 point. Similar to Q1, our reported volumes will reflect about 80 basis points drag from expired contracts, thus implying continued positive underlying volume trends. E&P waste revenue is estimated at approximately $45 million, and recovered commodity values are expected to remain largely in line with current levels. Adjusted EBITDA in Q2 is estimated at 31.2% of revenue, or approximately 557 million. This reflects an expected 40 basis point margin dilutive impact from acquisitions completed since the prior year period, implying margins to be flat year-over-year, excluding such impact. Depreciation and amortization expense for the second quarter is estimated at about 12.8% of revenue, including amortization of intangibles of about 37.5 million, or 0.11 per diluted share, net of taxes. Interest expense, net of interest income, is estimated at approximately $45 million. Our effective tax rate in Q2 is estimated at about 22.5%, subject to some variability. Now let me turn the call back over to Worthing for some final remarks before Q&A. Thank you, Mary Anne. We're extremely pleased with our start to the year, particularly given the challenges of record levels of inflation magnified by geopolitical events, ongoing supply chain disruptions and labor constraints, as well as the overhang from COVID-related variant impacts. As has been our focus throughout the pandemic, we have continued to provide outsized levels of support for the health and welfare of our employees and their families. To that end, we're also getting back to our regular cadence of in-person training and other opportunities to be together for shared celebrations, recognition, and collaboration. We believe we're well-positioned for the remainder of 2022, with record solid waste pricing, underlying volume growth, further growth in E&P waste, and easing cost comparisons. In addition, acquisitions completed year-to-date, coupled with a robust pipeline, suggests we are solidly on track to meet or exceed our full year 2022 outlook. That said, we'll stick to our typical approach and wait until our Q2 earnings release to update our outlook for the full year. Q1 is a fitting start to our 25th anniversary year, a year in which we remind ourselves that our intentional culture, intentional strategy, and intentional value creation have driven our success through the years. We appreciate your time today. I'll now turn the call back over to the operator to open up the lines for your questions. Operator? Thank you very much. If you'd like to register a question, please press one followed by four on your telephone. You will hear a 3-tone prompt to acknowledge your request. If your question has been answered and you'd like to withdraw your registration, it is one followed by three. Once again, on the phone for any questions or comments you may have, it is one, four on your telephone keypad. One moment please for our first question. We'll get to our first question on the line from Toni Kaplan with Morgan Stanley. Go right ahead with your question. Thanks so much. Wanted to ask about if you could talk about attrition trends versus history. Obviously, you're in, you know, really exclusive secondary markets, an attractive, you know, strategy for attrition. Just wanted to understand if pricing has had any impact on it or not really because of, you know, basically the strategy that you have. Good morning, Toni. With respect to attrition or pricing retention, you know, said another way, you know, as we've observed really for the past several quarters, throughout last year and into this year, the retention rates have really been at historic highs. We've. You know, I think the fact that we keep continuing to deliver price in excess of the way we guide, reflects that, as well as the fact that we did incremental price increases. Some people have asked if we see a difference across geographies in terms of the receptivity to price increases, and the short answer is no. We've seen a very broad-based, highly receptive, environment for price increases. That's super. Separately on recycling, wanted to hear if just long term, you know, what do you see recycling sort of growing to as a% of revenue? What would be the main objective there that you have? It won't move too much as a percentage of revenue to what you see currently. Obviously, the commodity values drive a portion of that. As you may know, we have two more facilities that are under construction now that should come online before the end of next year. That'll add nominally to total recycling revenue. Again, the pace of acquisition activity will continue to keep that in check as a percent of the total. That's great. One last one for me. Just sort of a broad question around volume. I know you've had more of a price-focused strategy. I know volume's being impacted by the expiring contracts this year. Just long term, you know, should we think about your volume growth in line with the market, or is there something about the selectivity of your markets that should lead to, you know, a lower volume level than the market? Thanks. Well, yeah, you know, through the years, we've always said that we think of this industry as being, you know, a 1%-2% volume growth industry. Obviously, there are periods where it exceeds 2% and some periods where it might be below 1%. You know, the thing you got to remember here is, especially, in our model, given the geographies we do cover, you know, so much of our business is a fixed pay system. The actual calculation of volume growth is on, you know, likely closer to being impacted by 15%-20% of our revenue, but for new contracts, it might be 1% episodically. To be reporting, you know, between 1%-2% volume growth, you know, you're reporting between 10%-15% growth on that 15%-20% of revenue that's really impacted, that's really impacting reported volumes. That's really meaning roll-off activity and third-party tons across our scales. Super. Thank you. Thank you very much. We'll go to our next question on the line. It's from Walter Spracklin with RBC Capital Markets. Go right ahead. Thanks very much, operator. Good morning, everyone. Morning. I wanted to turn to acquisitions here and I know, you know, we've kind of touched on this before, but just wanted to double-check here that your competitors are starting to look into adjacent markets, you know, highlighting the lower capital intensity, but the strong returns. It's a compelling case. It opens up and widens the purview of potential acquisitions in a time when perhaps deals are getting either a little less attractive or in terms of valuation or in terms of availability. Just curious, Worthing, your view on the propensity to go into adjacent markets on the merits of that thesis there, that it is still high return and still somewhat consistent with the markets you're in right now. Sure. Again, this will be the third call in a row that we get the question. It'll be the third call in a row that we're consistent with the answer, and that is. Look, we have a long runway forward within the solid waste space. You know, many of the deals we're getting done are transactions that we've been chasing for a couple of decades. Again, as you know, in our model, most of the deals we're getting done, you know, it's sellers that are determining when it's right to sell, right? And the relationship that creates a sole, negotiated transaction. We can't pick the timing. It's the seller picking the timing, so we need to be ready to execute on that. Again, the pipeline that you see us you know that's actionable is a multiple of the $175 that has already been closed year to date. The runway is long for us. Obviously, you know, many of our transactions that you see here, these are new market entries, anything of size. You know, there's less of an issue with regards to DOJ concerns that maybe some of the larger nationals might have. As it relates to returns, the return profile is still very attractive. Again, you going to remember we do cash-on-cash analysis here, and we're buying businesses with great cash flow and resilient cash flow. I mean, a lot of adjacencies in this to this industry are lower margin, lower barrier to entry businesses. You've seen, you know, the volatility of those businesses through the ups and downs of economic cycles. We see no reason to change our stripes and who we are and on our march to 10 billion. That's great to hear. The repeated question, though, I guess, always wanting to make sure that nothing's changed and it's great to hear. In terms of staying on that theme of acquisitions here, you know, obviously when an acquisition opportunities comes about, it's there and then it's gone unless you transact on it. Therefore, does it ever look, you know. Are you ever tempted to, or would you consider in this environment where deals come up and, you know, once they're gone, they're gone, that perhaps you look at being a little bit more aggressive? I know there is you know there are peers out there at least one that's willing to go a you know red line it a little bit more to get those deals done. You know, you've come through a pandemic, you've gone through recessions, you've proven your resiliency. Would you consider going you know above three times perhaps, for example, on leverage in order to take advantage of these kind of you know unique and short-term opportunities or temporary opportunities that go away pretty quickly to be able to grow a little faster through the M&A front? Well, first off, again, with, you know, over 900 million of free cash flow after the dividend, you know, the first 900 million we spend is deleveraging event, right? Because that's adding EBITDA to, you know, to the equation. It takes a lot of acquisition activity to move the needle to 3x or higher, right? When we're doing a lot of transactions where remember, 20-40 million of revenue is considered still a big acquisition in our model. Now we've got a handful that are larger than that, but it's rare that you cross 100 million in revenue for a transaction within our model. It takes a lot to move the needle. We've got to spend close to 2 billion to move the needle appreciably on leverage and even try to approach three times. I'd say what's important from a transacting standpoint is look, it's. We are, we're very mindful. I can't speak about everyone else's approach, but I'm sure they are as well, in that when you see labor spiking the last two years as we've seen, when we're now seeing fuel spike and third-party logistics costs spike. Anyone that we're buying, we need to make sure that the plan is already executed or implemented to overcome the current realities of inflation, or that the plan is actionable in the very near term to do it. The last thing we want to be doing is valuing someone on 2021 results in the face of an underlying 8%-10% cost pressure. It's you know, the folks we're transacting on, we need to make sure we can check the box on that because to your point, we don't want to see the multiples move up. Great. Just a final one for me here for Mary Anne. Margin expansion a little more muted than what we had seen in the past. I know you flagged the employee comp on 60 basis points and the acquisitions on 30. Is that pretty much it? You know, would we see you get back to more the 50 to, you know, to call it 75, 80 basis points improvement that you would normally get now that you're passing some of, you know, at least the employee comp aspect, or could we see that carry through to the year that may put a little bit more pressure on margins than what you would otherwise report in a normal period? Sure. Well, we'll certainly. You know, I appreciate your acknowledging the 90 basis points, which as we've tried to make the point, you know, think about our reported margins would have been 31.4%, but for those discretionary, you know, those decisions to add those costs and then, of course, the opportunity to do deals. You know, certainly, the other thing that stands out would be the impact of fuel and the 70 basis point headwind, and then the fact that we still drove underlying margin expansion in solid waste in spite of the fact that we had a headwind like that. You know, sure, if there weren't these kind of pressures, would margin expansion have been greater? Absolutely. That being said, we wouldn't have needed as much price. I think as you look ahead to Q2, the observation could be that underlying margin expansion, you know, based on what we're seeing now, should be greater in Q2 than it was in Q1. Also, you got to remember, looking at in about 8% inflationary environment, if all a company does is recover the dollar impact of that's about 140 basis points dilutive to margins. Okay. The fact that as we're guiding in Q2, net of acquisition activity, that we're flat year-over-year, to me, that's up 140 on a to get that back, right? The fact is that I'd say right now in this environment, we're doing much better than the, you know, the 30-50 basis point margin expansion just to be running flat year-over-year. As the, you know, inflationary pressures ease, the starting point of down 140 narrows and you start seeing, you know, reported margin expansion in future periods. Yep. Makes a lot of sense. Thank you very much. Appreciate the time. Thank you. We'll get to our next question on the line from Jerry Revich from Goldman Sachs. Go right ahead with the question. Yes. Hi, Worthing, Mary Anne, good morning. Morning. Good morning, Jerry. I'm wondering if you could talk about the leading edge inflation indicators that you look for in your business and, you know, how are they trending? You know, we're going to be coming up on comps where, you know, we started to see pretty high inflation in the back half of last year. I'm just wondering, are those comps at a point where we might see the percent inflation slowing in the business potentially in the back half of the year? Can you just talk about what you're seeing since you folks were among the first to see inflation accelerating to the upside? Sure. That's a good question because, look, just like the use of the word transitory last year, that wasn't our view is inflation. You got to be prepared for inflation to be sticking around at these levels for you know, a couple more quarters, and run the business assuming that. Now, if we're wrong because, you know, we start anniversarying you know, higher levels in the prior year, and it does ease a little bit, as we've always said, that's upside for us. You know, our expectation that it could be running, you know, at more elevated levels for longer, meaning through this year or most of this year, is that some people relate to realizing inflationary pressures last year, believe it or not. I mean, we look at vendors even this year that are trying to play catch up for what they didn't do last year. They're just waking up to the realities of, gee, higher labor and wages that they're paying wasn't transitory, right? You know, we're still seeing price increases, especially at certain vendors that even today are ranging up to upwards of low teens%. You know, we're going to run our business assuming that that is the environment until it's not. You know, with regards to wages, our wages were up about 8% year-over-year in Q1. Q1 was our toughest comp because you know, we really started pushing wages heavily in Q2 of last year. Our kind of wage pressures will start easing. With regards to inflationary pressures from third-party vendors and stuff, we're still seeing that in the macro. Look, fuel should be a known right now. When you say labor and is mostly known and you know and fuel is known, then it should start to ease, but we're going to, again, run our business assuming it's not until it does. Super. Can we just talk about in your recycling business, you know, we're seeing strong interest from chemical companies on procuring recycled plastics. Wondering if you can comment on what the pricing point is for recycled plastic for you versus virgin plastic, and, you know, what's the potential that we might see a meaningful premium develop in that market over time? Sure. I'd say let's start with sort of, you know, framing where the value of recycled commodities is, and it's, you know, it's really been primarily in the fiber. When we talk about that basket, it's really been 50%-70% of the value sits in fiber. It's moving up toward the higher end of that range as OCC has come back and, you know, you're at this 160-165 type of level for OCC. I mention that because, yes, plastics are part of the equation, but they're a small piece of the equation. The reality is that it's not as though there's a price point at which our interest changes. It's that this is this basket of commodities, and to the extent there's greater value in a piece of it, we'll do better. Now, have we seen some differentiation among different grades of plastic? Yes. There is greater demand for some than others, and so that's a good thing. It just increases the value of the basket. Frankly, if it increases the interest in doing more recycling, whether it's from a consumer standpoint or a manufacturing standpoint, that's all additive and good timing since we're adding recycling capacity. Also, as you know, I mean, look, if the refiners want to get in the plastic business, we applaud them. Just to be clear, we're not going to get in the refinery business. Are you seeing an improvement in, you know, what you're selling, the plastic at versus what virgin plastic would look like? Has that started to happen yet? Because obviously, in the past, there used to be a discount. I'm just wondering if you're starting to see that discount narrow at all. Is that something that It's certainly narrowing, yes. Is possible to flesh out? Yeah, it's certainly narrowing. As I said, certain grades have outperformed, and there's a general lift in plastic values overall. Okay, great. Thanks. Thank you. We'll get to our next question on the line from Michael Hoffman with Stifel. Go right ahead. Thank you. Good morning, Worthing and Mary Anne. I'd like to come back to the volume to ask it from a different perspective. Does the data that you're looking at support a thesis that new business formation, so that's small container service interval trends are being positive, neither of those have peaked? That's one of the factors that you alluded to that market growth is 1%-2%, but things contribute to why it can be higher. What's your data telling you about the underlying business activity? Let's see. Q1, net new business for us doubled year-over-year. That's measuring what's happening through our sales force, which obviously sits in competitive markets. Right. Okay. That's a good positive statement. We hear equipment is on allocation. All right, we know labor's tight. Are you seeing potentially less competition for that piece of growth? Somebody puts a, you know, a store in and, you know, a new business in, needs a garbage service because the competitor is sitting there going, "Where do I get the equipment? Where do I get the labor? I don't think it's as much on that type of business. You know, I think you're seeing some municipalities that, you know, are maybe trying to rebid their contracts because they're end of term. You know, in the old days, they may have had 6-month lead times or 8-month lead times on the bid. You know, if it's large enough bid, you know, they're finding it's tough for people to come compete because it's hard to go get 40 trucks to show up in six months, right? You know, you're seeing some municipalities oftentimes just trying to extend the existing contract a year and put more time on the RFP process. If you have the business, renewal rates are up a little bit, and that's good for you. Renewal pricing is up dramatically, as well. Oh, cool. I know you were asked this inflation question and from one perspective, I was going to ask it slightly differently. Do you think the components underlying inflation have peaked and leveled off? They're not continuing to rise. I get we have an anniversary-ing cycle, but we've sort of settled into where they are. Yeah. I think they've. It feels like they're peaking. You know, we're getting fewer and fewer double-digit increases from vendors, I'd say that. So to that end, it seems like they're peaking. But obviously, we're going to be prepared for them to persist until they don't. Okay. Last one for me. Is the E&P improvement narrow? It's Texas and Gulf of Mexico, or is it at $100? Are we starting to see other basins reactivate? I mean, it's mostly the Permian where we're seeing. Yeah. things pick up. The Haynesville is up a little bit. Eagle Ford is up. The good news is we are finally seeing some rigs return to the Gulf. I mean, the Gulf has been, you know, impacted or was impacted heavily from the hurricane season last year. You know, we're finally seeing some of those negative impacts abate. All right. Terrific. Look forward to seeing you next week in Las Vegas. Great. Thank you. Thanks. Thank you very much. We'll get to our next question on the line. It's from Hamzah Mazari with Jefferies. Go right ahead with your question. Hi, this is Mario Cortellacci on for Hamzah Mazari. Could you just comment on how you're thinking about your U.S. Northeast exposure, particularly in light of the larger deals you've done there in Massachusetts? Can you just remind us what your long-term strategy is there? Well, again, it's just replicating what we've always done when going into such markets, which is, and you've seen us do it in other markets in the Northeast. You've seen us do it in the Midwest, and other geographies as well. I mean, we had a strategy to go in and, you know, try to build a nice, you know, $200 million-$300 million-dollar business, you know, in New England. And obviously, you've seen us work on the integration and some internalization benefits that we have with some of our sites, also in the Northeast, whether they be in New York and Pennsylvania. It's just us executing our playbook. You know, we entered Massachusetts last year, late last year. You know, we've done another handful of acquisitions just given the fact that we had to back out of Harvey. It's just the same playbook you've seen again in other markets and New England's no different. Look, we know there's certain areas in New England that make no sense for us, that do not fit our model. You know, we're not going to. Just 'cause we're there doesn't mean we go everywhere. Understood. Just for my follow-up. It looks like the energy business is finally kind of coming back a little more, that rig counts up. I guess just could you give us a sense for whether the revenue base for that business can get back to its prior peak? What would you need to see for that to happen? Could you just remind us of what your exposure is to various basins and what the margins are within the energy business? Starting with the second piece, if you think of when you say exposure in terms of the percentage of revenue that comes from each of these basins, the largest is the Permian, call that 50-60% of our revenue. Next is Louisiana onshore, offshore, which is 20-25% of revenue, pretty much evenly split onshore, offshore. After that, it quickly jumps down to kind of between 5% and 10% of revenue in a smattering of other basins, including the Eagle Ford, for instance. In terms of getting back to prior peaks, I'd say the more recent peak of kind of a run rate of about $65 million per quarter would be the right comparison because the prior peaks beyond that included the Bakken, which really is not a factor. You know, here we sit at 45 million. You can do the math to see what it would take to get up there. You know, I'd say the biggest change since prior peaks is, although there's more activity in the Permian, there's more competition as well. I'd factor that into any expectations about how quickly we grow and to what level. As you know, the macro environment from the drilling standpoint is different now, right? You don't have. You got what? About half the rigs from a rig count standpoint versus the peak, you know, eight, 10 years ago. You know, the amount of drilling activity has changed dramatically. I mean, the propensity for a lot of drillers to spend like drunken sailors in the prior years, that's changed, right? There's different external pressures on the drillers. It's you know, never say never on the prior peak, but it's hard to see, you know, us getting back to almost twice the amount of revenue that we're doing right now. Got it. Just on the margins. Right. Well, overall, again, it's a landfill-based business. Again, this is landfill-type margins, which is in that 50%-60% range. With the incremental higher than that. Awesome. Thank you very much. Thank you. We'll get to our next question on the line from Kyle White with Deutsche Bank. Go right ahead. We may have lost connection. We'll get to our next question on the line from Sean Eastman with KeyBanc Capital Markets. Go right ahead. Hi, guys. Thanks for taking my questions. Hey, Sean. Could we address the inflation topic from a capital spending perspective? You know, I'm wondering, you know, how would you characterize where we're running versus budget on CapEx, just, you know, with maybe inflation potentially offset by, you know, delayed deliveries, et cetera. Could you walk us through that? Sure. I mean, you've got. To your point, I think you spelled it out. I mean, in some cases, you know, some pricing points for whether it be construction or certain units that weren't already locked in from pricing standpoint, you know, are up this year, above original expectations. Also you've got some delays likely in number of units as you look back later on this year, that will likely happen. In some cases, you've got delays that basically create an air pocket to backfill inflation. Now we're putting more capital in, because again, I think it's important to try to get our hands on as much fleet as possible in this environment, and also to have surplus fleet that we can wheel around for certain contracts as they come up. We're, you know, we're backfilling some of the delays with trying to access fleet earlier in the year. But to your point, I mean, look, CapEx has inflation, too. You just don't recover inflation within the P&Ls. We've always said you got to focus on margins to make sure you're covering it in the capital side as well. To that end, for us to be, you know, indicating that we're going to still plan on meeting or exceeding our cash flow guidance for the year. It means as we come around in July and update our guidance, there'll be more revenue and more EBITDA to accomplish that. Okay. Very, very helpful. I'm just trying to think about fuel, the impact of fuel on margins over the balance of the year. I mean, it sounds like the whole 30 basis point shortfall versus the guidance in the first quarter was fuel. You know, part of that was maybe a catch-up dynamic. Part of that is sort of a, you know, higher passthrough revenue dynamic. You know, if fuel just stayed here over the balance of the year, how much dilution would there be on the full year margin expectations? Q1 is a pretty good indicator of what that full year would be, to your point, you know, the incremental 30 basis points. You know, looking ahead to Q2, it's similar, a little worse, in terms of what the headwind appears to be. As Worthing said, until we see it otherwise, we're going to assume things stay the same. You know, comps get a little easier. Again, if at a high level, you know, I think that 30 basis point drag is a fair indication of what we're looking at right now. Yeah. The drag in Q1 was more about the timing, given the fact that the spike happened, you know, so late in February and throughout March, and the pricing was already on the street. That's why you see some of the step up in Q2 is us, you know, recapturing that as well as adjusting for a full quarter impact of that. Okay, helpful. Then one last quick one. The underlying core solid waste margins were essentially up 10 basis points in 1Q. What is that number in the 2Q margin guidance? That number is north of that, is the way we think about it. You know, maybe it's 20 or 30 basis points, something like that, but directionally higher. Okay, excellent. Thanks. I'll turn it over there. Thank you very much. We'll get your next question on the line is from Kyle White from Deutsche Bank. Go right ahead. Hey, thank you. Appreciate it. Not sure what happened there before. I actually wanted to follow up on the fuel question. I'm still a little confused. Thirty basis points headwind relative to your expectation. Maybe can you just remind us your strategy on fuel relative to, you know, others using a fuel surcharge? How much was hedged going into this year? And then how are you recovering those costs given the acceleration we saw in diesel prices late in the quarter? I guess my confusion is it a 30 basis points headwind for the remainder of the year, or is it going to be this kind of 70 basis points headwind for the balance of the year in these quarters? Sure. I guess what we're talking about are two different things. One is relative to original expectations, right? Because, of course, we gave guidance in February. What I was referring to is probably a fair way to think about the incremental headwind associated with what we've seen thus far and what we're expecting to see in Q2, and assuming that persists in terms of the levels of fuel costs that we're seeing. With respect to our strategy, we have about 50% of our fuel hedged, and the numbers we're giving you reflect the impact, the mitigating impact of hedging below market rates. The $3.30 that you're seeing in Q1, for instance, would have been about $1 higher, for instance, had we not put these hedges in place. These fixed purchase contracts. With respect to how we recover it varies in our model. In some markets, we do get fuel surcharges, which is why you saw that step up in fuel surcharges. As we look ahead to Q2, the number steps up from the 80 basis points we got in Q1, it goes higher in addition to core going higher, which is the other part of the strategy, since we've used higher core to recover, you know, all different cost pressures, including fuel in some markets. Then, of course, we have our CPI-linked markets where we're not able to make additional, you know, adjustments. We would look to see some recovery next year in the form of higher CPI-linked price increases. Got it. That's very helpful. Then I wanted to go back to inflation. Clearly, it's there in the OpEx side, but curious, on the CapEx side, what you're seeing on inflation and how you guys are managing this in order to, kind of, maintain or increase your returns on invested capital, especially in the context of your more decentralized model. Sure. I mean, it starts with margins, right? I mean, that's how the margins are keeping up, so are the ROIs. You know, it's when you see folks that are down on margins year-over-year on a same store basis, that's where you start having the impact of higher CapEx, you know, diluting the year-over-year returns. We're not seeing that here. Got it. Thank you. I'll hand it over. Thank you very much. Got our next question on the line from Noah Kaye from Oppenheimer. Go right ahead. Yeah, thanks for taking the questions. So last year in 2Q, you started adding back discretionary and medical costs that were stripped out during 2020. Are those discretionary costs, would you say, fully back? Is there any incremental headwind this year? Well, just taking a step back, there certainly were different buckets of, quote, "discretionary costs." As you said, they're things like medical costs, which I'd say we're at a more normalized run rate, generally speaking. With respect to things like travel, meetings, you know, that has stepped up. You know, as we said, as Worthing said in his prepared remarks, you know, we're happy to be back together, and we are spending money on those things. We didn't call them out in Q1, but they're part of what we've already reported and what we will report the way we're guiding Q2. Yeah, this will be a year where we're all in on discretionary costs. No, we're happy to be back. Obviously, there are a lot of celebrations going on throughout our company for our 25th. You know, as Mary Anne said, there's a handful of training sessions throughout the company every week. No, it's great to be together again. It may be a tailwind for next year. Who knows? Well, we'll see. But that's good to hear. Just on the labor situation, you know, where's turnover retention at currently? Would you describe it kind of short-staffed on, you know, any of your key regions or routes? Give us an update, if you can, on the retention rates. Sure. I mean, look, I think every company, I don't care what industry you're in, you probably, you know, you wish you had more labor, right? I say that because, you know, we've typically run about 4%-5% in any environment. 4%-5% down on what I would call full employment. That's fairly common. You know, in this environment, we're probably running 100 basis points higher than that, so 5%-6%. As you distribute an extra 1% or so of employees throughout so many locations, you know, if it's concentrated in one location, it's very impactful, but if it's distributed across, obviously we're getting by on that. Look, we've had a huge focus on how we hire, how we onboard, retention, stay interviews, you know, how are we doing on 30, 60, 90, 120 days to get our newest employees kind of over that hump, right? I'm pleased that we're seeing inroads in that and that turnover for newer employees, you know, is improving. You know, from an overall turnover standpoint, you know, we're back slightly above pre-pandemic levels. I think to just be there in this environment of the Great Resignation, of the society that we're living in right now, you know, I think I can only imagine what it could have been had we not been leaning into these past three, four years. That's a great color. Thanks, Worthy. Thank you very much. We'll get your next question on the line. Chris Murray from ATB Capital Markets, go right ahead. Yeah. Thanks, folks. Good morning. Just maybe going back to free cash flow, and your conversion in the quarter looked pretty strong. Just trying to think about all the moving parts as we kind of go through the year when we're talking about kind of hitting or exceeding guidance. I guess a few pieces of this, you know, anything to think about in terms of working capital. And then the other piece is CapEx, you know, looks like it was a little bit lower than at least what you're running into Q4. Should we be expecting that you'll probably have some catch-up? I mean, I think you alluded to the fact that you're having some trouble maybe getting equipment. If you can just give us an idea of some of the moving parts into your free cash flow thoughts right now, that'd be great. Yeah. Well, I'll start. I mean, first off, CapEx, obviously, we're up over 55% year-over-year, so Lord knows we're not having problems spending money. Look, we purposely front-loaded a lot on the chassis side both in Q4 and Q1 to stay ahead on the, you know, on the fleet deliveries, right? The biggest component of that increase year-over-year is the timing of chassis deliveries. I'd say we're at our expectation for the spend rate on CapEx. And obviously, you know, working capital shifts. You got, you know, buried within working capital, we had an acquisition-related item that we had to settle, so that gives you the optics of a use of working capital. It's just related to an acquisition right there. That's just ins and outs from a timing standpoint. Again, as you know, Q1, specifically the lowest tax payment quarter that we have in the year, and so that can influence the flow quarter to quarter as well. Yes, I would just echo that and add that, yes, so the conversion rate that you referred to in Q1, it's always a little outsized in Q1. That's pretty typical. The other observation I'd make, just with respect to working capital, it's a reminder that, you know, we like to come in with a cushion. We did this year as we had in the prior year, the outsized cushion. We like the optionality that gives us, but we certainly intend to end the year with some cushion as well. You know, I'd say the comments Worthing made about having more revenue to drive more EBITDA dollars to then drive the free cash flow. Certainly when we consider updating in July, we'll address that. Yeah. Okay. We shouldn't be just flatlining 20% across the board for the rest of the quarters is I guess my question? No. With respect to as a percentage of revenue? Of revenue, yes. No. It changes for those reasons that Worthing Jackman described, the timing of interest and taxes and other outlays. Construction projects could be heavier, you know, in the spring and summer seasons, right? Than you have in the winter season. There are all sorts of ins and outs. Okay. No, that's great. Just thinking about your guidance for Q2, can you just give us an idea what you think the cadence of the contribution from acquisitions and divestitures might be over the remaining part of the year? Sure. You know, it was 110 million in Q1. I'd expect that to step up to about 140 million in Q2, back down to probably around 110 million in Q3, and then stepping down from there to maybe 65 or 70 in Q4. Right. With any deals we close- Right. between now and year-end to be additive to that. Right. That's with what is done today. Yeah, no, that's fine. I'm sure we'll get to that as we get there. Okay, great. Thanks so much. That's all my questions. Thank you. Thank you very much. Once again, on the phone, so if you'd like to ask a question, it is the 1 4 on your telephone keypad. We'll get to our next question on the line from Kevin Chiang with CIBC. Go right ahead. Hey, thanks for taking my question. Maybe following up on an earlier question you got just on, you know, your M&A strategy and maybe what some of your peers are looking to do. Just wondering if you're seeing any impact on valuation multiples if some of your larger competitors are looking outside of solid waste, and you mentioned DOJ concerns as well, and maybe smaller players are also facing a more challenging operating environment. Is that creating any deflation in the valuation multiples you're seeing out there? Yeah. I'd say on an underlying standpoint, obviously they're down 21 from 2021 last year into this year. You know, I'd say geography can influence that as well because in a handful of the what I would call the larger acquisitions we've been doing both on the West Coast, the East Coast, and in Canada, what's unique in some of these transactions is the underlying real estate value, right? The underlying real estate value in many cases can be north of 25% of the consideration. That's unusual, right? You know, in some cases, sellers may want to hold on to the real estate and that's not in the deal, and so you've got a rent payment, right? Our view is, you know, in some of these geographies, owning the real estate is also a key component of our market presence. In those cases, you know, while the underlying multiples may have come down a little bit, you know, the step back look at the multiples, they really haven't changed too much because again, in those geographies, the real estate is worth so much. No, that's interesting color. Maybe just last one for me, you know, obviously good pricing in the first quarter, you know, sequentially you're going to continue to grind that higher here. You know, you have this decentralized model. I suspect a lot of us haven't seen inflation at these levels for decades. I'm just wondering, has that changed the feedback loop between, I guess, corporate and the regions to make sure they stay ahead of inflation? You know, 'cause I suspect the things they were tracking five years ago to figure out, you know, where costs were going, you know, is probably a little bit different today. You know, has that changed at all in terms of how you interact with the regions to make sure they're seeing the full inflationary picture? You know, does the decentralized model, you know, they're staying on top of this pretty good here? Look, I think a hallmark of our strategy has been the decentralized model with the feedback loop we've always had. I mean, we were early last year in communicating this. We're early in moving wages up last year. You've seen us been moving price proactively throughout this period. A lot of it is because of this decentralized nature and again the constant look at where we're at currently and the constant look ahead one, two, three months, and beyond now, looking at you know continuing rolling updates on a full year basis to make sure the magnitude and the weight of inflationary pressures is understood beyond just one day, one week, one month to three months, right? That hasn't changed for who we are and what we are. How we've run the business over time. You know, pricing is financials are a commitment that our local folks are willing to be held accountable to, right? Recovering wage pressures, recovering cost pressures, et cetera, it's what we do. I mean, it's how you run a business. No one ever said this is easy. Our folks do a terrific job in how they price the business, how they recover the realities of cost, both in the P&L and in capital, and how we measure value creation. Again, we mention that because again, we said it's been a hallmark of our strategy since day one, and you know, that's proven to be effective in a pandemic, in high inflationary environments, in the Great Recession, through really good times and bad. Nothing's really changed. You know, our visibility on price, remember we're still a company that gives quarterly guidance. We've done that since we went public at 30 million in revenue, and now here we are, you know, run rate of 7 billion or more. It's been a hallmark through the years, and again, it's pricing never surprises us when it comes to our ability to know what's on the horizon and what's happening in our business. That, that's great color. Thank you very much. I'll leave it there. Thank you. Thank you. Okay. Very good. We'll proceed with our next question on the line from Stephanie Yee with JPMorgan. Go right ahead. Hi. Good morning. I just wanted to ask about pricing as we kind of look beyond this year. I know this year we're expecting inflation to probably stay elevated. Who knows what next year is going to bring, but let's assume some of the pressures ease a little. Should we see some of the pricing kind of roll back, either from the comp issue, the year-over-year comp issue, but also just the prices that you've been pushing forward to customers. Would you kind of, I guess, you know, roll some of that back, just to give the customers a break as well as we're seeing some of these pressures ease across the board? Sure. So certainly, you know, we think about the two different types of markets, Stephanie. First, in the exclusive markets where we're CPI linked, you should expect that the 4% we're getting this year steps up next year, as I mentioned earlier, since it's typically a look back to the midpoint of the prior year. Whether that number is, you know, 5% or north of that next year remains to be seen, but it's certainly directionally higher and provides a boost to the overall reported pricing. The other thing that we'll keep in mind is, depends on where we exit the year, right? Because the rollover impact of price increases we do this year will impact next year. Then we'll consider the environment as we make our plans for the balance of 2023. To your point, to the extent there's not as great a need to push as hard, we'd consider that as we make our plans. Okay. Okay, great. Thank you. Thank you very much. Mr. Jackman, we have no further questions on the line. I'll turn the call back to you. Terrific. Well, if there are no further questions, on behalf of our entire management team, we appreciate your listening to and interest in the call today. Mary Anne is available today to answer any direct questions that we did not cover that we're allowed to answer under Regulation FD, Regulation G, and applicable securities laws in Canada. Thank you again. We look forward to seeing you at upcoming investor conferences or on our next earnings call. Thank you very much, and thank you, everyone. All right. Thank you. That does conclude the conference call for today. We thank you for your participation. As we disconnect your lines, have a great day, everyone. Thank you.