Good day. Welcome to the Waste Connections Q1 2023 earnings conference call. All participants 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 telephone keypad. 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 Ron Mittelstaedt, President and CEO. Please go ahead. Okay. Thank you, operator, and good morning. I would like to welcome everyone to this conference call to discuss our Q1 results and to provide a detailed outlook for the Q2. As many of you know, I was reappointed recently to the role of CEO, which I had held from the company's inception 25 years ago until July of 2019, when I transitioned to Executive Chairman. I am pleased to have this opportunity to reconnect with so many of you that I have enjoyed working with over the years. I am joined this morning by Mary Anne Whitney, our CFO, and several other members of our senior management team. Looking at Q1. Record solid waste pricing growth, strong operational execution, and continuing acquisition activity provided a strong start to the year. While we recognized on our February earnings call that Q1 would be a difficult year-over-year comparison, given the precipitous decline in resource recovery values during the H2 of 2022, results in the period were further affected by extraordinary weather-related impacts to solid waste roll-off activity and landfill volumes, particularly on the West Coast. Underlying adjusted EBITDA margins were in line with our expectations, but acquisitions completed since the year-ago period were 30 points dilutive to reported margins or more than 20 basis points higher than we had expected, given the disproportionate weather-related impacts on the West Coast acquisitions. Continued visibility on pricing, improving trends in labor availability and retention, and recent normalization of weather patterns position us to deliver the full-year outlook we provided in February. As we also noted then, any additional acquisitions, reduction of inflationary pressures, or increases in values for recycled commodities or renewable fuel from the low levels we've seen since late last year would provide upside to this outlook. No improvement in those values was factored into our outlook. 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, Ron. 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 April 26th 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 Ron. Thank you, Mary Anne. In the Q1, we delivered solid waste price plus volume of 10.5%. Total price of 11.8%, including about 80 basis points of fuel and material surcharges, ranged from about 8% in our mostly exclusive market Western region, up to 13.5% in our competitive markets. Our pricing strength continues to reflect the resilience of our market model, our purposeful approach to addressing cost pressures, and the advantages of local decision-making, driving operational execution and accountability in our decentralized organization. Reported volume growth of -1.3% includes an estimated impact of about 50 basis points from the extreme weather events on the West Coast, including over a dozen atmospheric rivers, which impacted our operating locations primarily in California and resulted in a slowdown in roll-off and landfill activity. The associated incremental volume drag was partially offset by increases in other markets, including in Florida on hurricane-related cleanup activity. Beyond solid waste, revenues played out largely as expected in Q1. Recycled commodities, landfill gas, and renewable energy credits, or RINs, collectively were down about 40% year-over-year on commodity values that haven't moved materially off the bottoms established in late 2022. Similarly, E&P waste activity levels were as expected at $48 million. E&P waste revenue in the Q1 was down about 8% sequentially, reflecting what we would consider typical seasonality. Trends showed some improvement during the quarter, which should bring the quarterly revenue run rate back to about $50 million. Moving to acquisitions. We are encouraged by the cadence of activity as we continue to see high levels of interest from sellers of high-quality solid waste businesses, sustaining a robust pipeline and elevated levels of dialogue. We've closed approximately $45 million of annualized revenue year- to- date, most of which was included in our outlook, and currently expect that pace of activity to continue throughout the year. There is no change to our capital allocation priorities, starting with strategically attractive, appropriately priced solid waste acquisitions. 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 are also continuing the deployment of a number of sustainability-related projects outlined previously, including several renewable natural gas or RNG facilities, one of which is proceeding on schedule to be operational later this year. We look forward to the expansion of our RNG portfolio and continue to anticipate an incremental $200 million of EBITDA in 2026 from the projects in development on a commensurate outlay of capital. Given the strength of our balance sheet with leverage below 2.9 times, we retain tremendous flexibility as we continue to reinvest in and grow the business. We have optionality around debt repayment with over $1 billion in pre-payable debt, along with the expanding the return of capital to shareholders, including through opportunistic share repurchases and 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 Q1 and provide a detailed outlook for Q2. I will wrap up before heading into Q&A. Thank you, Ron. In the Q1, revenue of $1.901 billion was up $255 million or 15.4% year-over-year. Acquisitions completed since the year ago period contributed about $133 million of revenue in the quarter, or about $132 million net of divestitures. As Ron noted, we delivered total Q1 price of 11.8%, including core price of 11%. We remain well-positioned for full year 2023 core pricing of about 9.5%. In fact, given the pricing acceleration in competitive regions during 2022, plus the lagging benefit from higher CPI-linked market increases in 2023, we now have over 85% of that 9.5% price either already in place at this time or specified by contract. The expected sequential step down in reported price as we move through the year is the result of the combined impact of fuel surcharges turning negative, the anniversaring of outsized price increases in 2022, and the typical effect on seasonality on reported pricing. Moving to solid waste volumes in Q1. Adjusting for the weather-driven impact to our West Coast operations and the hurricane cleanup work in Florida, volumes were about as expected. Looking more broadly at trends and normalizing for these anomalies, we saw some moderation in activity levels over the course of Q1, most notably in March. We're still waiting to see a meaningful seasonal ramp in activity. We have, however, seen improvement in the most affected West Coast markets now that the sun is finally out. Looking at year-over-year results in the Q1 on a same-store basis. Commercial collection revenue was up 15% year-over-year due to price. Roll-off pulls per day were about flat on revenue per pull up 11%, and daily landfill tons were up nominally in Q1 on flat MSW tons. C&D tons were up 14%, offset by special waste down 6%. The increase in C&D waste is due to activity in Florida and lower special waste activity reflects both a tough comparison to last year and weather-driven slowdowns, most notably in our Western region. Prices for OCC, or old corrugated containers, averaged about $60 per ton in Q1, as expected, and RIN stayed mostly in the range of about $2. Adjusted EBITDA for Q1, as reconciled in our earnings release, was $567 million and 29.8% of revenue, including about 30 basis points margin dilution from the impact of acquisitions completed since the year-ago period. This was about 20 basis points more dilutive than expected, primarily due to the disproportionate impact from weather on acquisitions recently completed on the West Coast, including high-margin landfills. Otherwise, margins played out about as expected as we overcame the weather impacts to deliver underlying solid waste margin expansion of 110 basis points. Breaking the pieces down. Excluding acquisitions, adjusted EBITDA was down 40 basis points year-over-year in the face of 160 basis points in commodity-related headwinds, including 120 basis points from lower recycled commodity values, 20 basis points from lower RINs, and 20 basis points from higher fuel costs. Partially offsetting that, increased C&D waste activity contributed about 10 basis points. As noted, underlying solid waste margins expanded by 110 basis points on price-led growth. A reminder once again of the power and importance of anticipating, implementing, and retaining price increases. Interest expense in the quarter increased by $27 million over the prior year period to $68.4 million, due primarily to higher total borrowings resulting from acquisition outlays as compared to the prior year period. Including higher interest income from invested cash balances, net interest expense in Q1 increased by $24.5 million year-over-year to $65.6 million. Finally, adjusted free cash flow of $274 million was in line with our expectations and reflects a year-over-year increase in net capital expenditures of $32 million in the quarter, along with higher CapEx related payables from year-end and higher cash interest. As Ron noted, we remain well positioned to deliver our full year outlook as provided in February, including adjusted free cash flow of $1.225 billion. I will now review our outlook for the Q2 of 2023. 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, expensing of transaction-related items during the period, and executive separation costs. Revenue in Q2 is estimated to be approximately $2 billion. This includes solid waste price plus volume growth of about 8% with core price of about 10%. E&P waste revenue is estimated at approximately $50 million, and recovered commodity values are expected to remain largely in line with recent levels. Adjusted EBITDA in Q2 is estimated at approximately $615 million or 30.8%. This reflects continued headwinds from recovered commodity values in the year ago period and some margin dilution from acquisitions completed since the year ago period. Depreciation and amortization expense for the Q2 is estimated at about 12.5% of revenue, including amortization of intangibles of about $39 million or $0.11 per diluted share net of taxes. Interest expense net of interest income is estimated at approximately $66 million. Finally, 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 Ron for some final remarks before Q&A. Thank you, Mary Anne. Once again, I want to let all of you know how excited I am to reconnect with you and to reengage in those aspects of the day-to-day business that allow me to have greater impact on leadership at every level. It's an honor and a privilege to be back in this role, and I appreciate the trust that the board and our shareholders have placed in me and the company as much today as I have over the last 25 years. From our beginnings, Waste Connections has pursued a differentiated strategy focused on exclusive and secondary markets with a decentralized operating structure. Moreover, we have maintained that relationships drive results, and as servant leaders, we are field-focused and strive to set up for success those we have the privilege to lead. Nothing about that strategy or culture has changed in spite of the tremendous growth we have achieved. In fact, it's that growth that has magnified the importance of doubling down on human capital to focus on the development of our next generation of leaders. We are executing on a playbook that has served us well over the past quarter century and looking ahead to the next 25 years. We want to ensure you that the leadership team is in place to continue to drive the industry-leading results that are the hallmark of Waste Connections. In the near term, as we've discussed, we are on track to deliver the full year outlook we provided in February. Moreover, we are encouraged by several factors, including outsized visibility on our pricing for the full year, now at over 85%, improving trends in labor availability and retention, escalating dialogue on acquisitions, and finally, the recent normalization of weather, most notably on the West Coast. We remain well positioned for upside from increased recovered commodity values or reduced inflationary pressures, and we look forward to providing any updates to our full year outlook as we typically do on our July call. We appreciate your time today. I will now turn this call over to the operator to open up the lines for your questions about the quarter, our outlook, or whatever's on your mind. Operator? Thank you. We will now begin the question-and-answer session. To ask a question, you may press star, then one on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. Our first question comes from Tyler Brown with Raymond James. Please go ahead. Hey, good morning, guys. Morning, Tyler. Hey, so I just want to start with cost inflation. I think last quarter you guys talked about unit cost inflation maybe of 6%-7% embedded in the guidance. First off, can you just talk about where maybe unit cost inflation is trending in Q1? Secondly, can you talk more about how that's trending in some of those major buckets? You talked a little bit about labor, but what about R&M, maybe subcontractor hauling? It just feels like there's some disinflation pressure building there. I'm just curious if you're starting to see that in any noticeable way. Sure, Tyler. Why don't I start and then Ron can add some color to this. As you pointed out, coming into the year, we talked about the expectation of cost inflation in that 6%-7%. Specifically, we talked about labor being a big component of that, and that we were in kind of a 6%-8% increase environment starting the year closer to 8%, and we thought those pressures would abate somewhat, you know, moving down to 6% over the course of the year, perhaps. The update to that is that I'd say we're still at the high end of the range, and we're not surprised by that. The expectation would be that as we anniversary the outside increases we did last year, you'd see some of those pressures abate. Of course, there's also the observation that some of those pressures more generally on labor, as Ron mentioned in his remarks, we're seeing improving trends, and so you would look forward to, over the next couple of quarters, seeing those benefits realized in the actual decrease in the pressures moving through the P&L. With respect to third-party costs, we've talked about the fact that the really outsized ones in prior periods included things like third party brokerage and disposal. I can say we're seeing those pressures abate. They're still above headline inflation numbers, but they're stepping down and taking some of that pressure off. When you look at our 110 basis points of underlying solid waste margin expansion, those line items are a big component of that, I would say. Ron, did you wanna add to that? Yeah. I, Tyler, agree with everything Mary Anne said. I mean, we are generally seeing some, you know, on at least a percentage basis, some slowing of cost inflation, as Mary Anne mentioned. Look, brokerage was up last year every quarter over the prior year quarter in the teens to 20% plus level. It dropped down to being up about 10% on the nose, almost half of what it was. It's still up, but it dropped by, you know, almost 50%. The other issue that's probably a little outsized right now, although supply chain is getting better, without question, it's really still obviously not where it needs to be. Taking delivery of less trucks than is optimal at this point, but getting closer. Our outside repairs is running, you know, probably 50%-60% higher than we would expect, that is indicative of major repairs as on older equipment that you schedule for replacement that you're sending out because it's a complicated component relative to typical in-house repairs. That will continue to get better as well. Labor, although still elevated, is running in that 6%-8% increase range. Some of that's math comps, that will continue to, we believe, continue to flatten out and decline as the year goes on. Perfect. Okay. Lots of good detail in there. It, it does seem, though, really, kinda shift gears here. It does seem kinda clear from my transcripts and your commentary maybe about landfill tons and roll-off pulls that the economy feels to be slowing, like, call it real time. I mean, I know you guys don't have heroic assumptions in the guide, but the economy does feel shaky. Does it feel like the lower end is more at play at this point on the volume front? Well, you know, you know, Tyler, we've said that we expect this year to be, you know, back in February, to effectively be flattish. We define that as between, you know, -1 and 1, so effectively flat. You know, if you, if you look at this quarter and you take out weather, it would've been about 0.8, so sort of near the lower end of that -1. You know, if we look at, give you some real-time numbers, if we look at our, as an example, our landfill volumes, by month in the quarter, you know, January was up 2%. February was up 3%. March was down 3%. Okay? That's how you get to what you got for the quarter, flat effectively. April through, well, 26 days, we looked at this last night, is tracking to be 0%-1% up. You know, was March an anomaly due to weather, particularly on the West Coast? We think it was. You know, does things feel like it's slowing a little? You know, maybe in certain markets, but nothing certainly extreme that we've seen. Again, you look at roll-off, you know, January, you know, up 1%, February up 2%, March down 2. April through 26 days, back to approximately flat. Yeah, I... everything we're seeing in real time, gave you these numbers as backup, tells us that we're in that sort of, you know, I'd call it flat to -1, maybe a little hair over with some special waste comps. That's what's... we've got it. Okay. Perfect. My last one here, just real quickly, maybe this was for Monday's call, but clearly M&A is a really important aspect to your story. It always has been. This year is kind of unique in the fact that your prior head of corporate development, he retired. I think he's going off into the Hall of Fame, which is great. You've moved into the CEO role. You had been very instrumental in the West Coast acquisition success over the last couple years. Can you just talk about that corporate development team, the bench there, and your confidence on that front moving forward? Thanks. Yes. Rick Wojahn, a long-term head of business development, did retire, is going into Hall of Fame, as you noted, and well-deserved. You know, Rick was backfilled by a long-term internal executive of the company for 24 years, who has most recently been a regional Vice President. Prior to that, Divisional Vice President. He started in the company when we founded it in M&A. He has an M&A background, knows the industry very intimately. Private players, deal structure, has a financial background as well. His name is Phil Rivard. Worthing and I were in sync on asking him to step in and replace Rick. Below, below Phil and below Rick, we've got a pretty robust, very seasoned M&A group in the field. We've actually made two additions to that team in the latter half of 2022 to expand it. You know, I feel from a team standpoint, we're as solid as we've been, if not greater, with greater coverage. You know, it's tough to replace someone like Rick with his relationships, but we have his relationships, and Rick's still involved with us in assisting with those larger deals where he has relationships. We haven't lost that. You know, we feel real good about M&A. You know, M&A ebbs and flows, as you know. Incredible year in 2022. Incredibly strong year in the H2 of 2021, coming off the pandemic, sort of some pent-up demand coming out of the pandemic where things were slowed. We're very confident in M&A and nothing has changed in that arena. Excellent. Thanks, guys. Our next question comes from Kevin Chiang with CIBC. Please go ahead. Hi. Good morning. Thanks for thanks for taking my question. Maybe just turning to, there seems to be a lot of legislation. I know the EPA has one on commercial fleet emissions, basically looking to accelerate the adoption of, you know, low or zero emission vehicles, you know, across the board here. Just wondering, I know a lot of this is in proposal phases, and I know California is doing its own thing. Does this accelerate some of your fleet strategy in terms of pushing RNG or CNG or trying to electrify the fleet, just given some of the legislation you see coming through the pipeline here? Well, you know, Kevin, as you said, there's a lot of legislation being discussed. There's a lot of legislation currently being modified, sort of a little back from where it originally was. Let me start with this. Generally speaking, legislation and regulation is good for the well-capitalized public companies, including ourselves, and always has been for the last 20-plus years in this industry. While difficult to adopt, we've got the balance sheet to do it, to take advantage of it, and it typically leads to improved pricing, at a spread to the capital cost and expense of the legislation. Legislation does not concern us. It levels the playing field, with less well-capitalized companies, and it makes it a tougher playing field for them. It actually turns that into acquisition opportunity. We like the regulation as long as it's uniform federally or within a existing state. You know, as you're seeing with a lot of legislation that comes out in a variety of areas related to the environment right now, the legislation is a bit ahead of the product development to comply with that legislation. You know, some of that is in its infancy. Some of that is, you know, even if it was adopted today, is decades from being able to get fleets fully converted, if you're talking about illustratively electric or hydrogen. You know, we are taking a close look at this. Obviously, states where it is adopted already, like California, well, that's an easy decision. We're keeping a close eye on it. We have a balance sheet to deal with it. You know, I would say on the margin, it does move the needle in how fast you transition to some of these, you know, renewable type products, both in our fleet as well as use at our landfill for certain treatment and other. It's not gonna be, in my mind, a needle mover either direction. Okay. That's very helpful. Maybe just a couple of I guess maybe nitpicky questions. You know, if I look at the Q2 guide, Mary Anne, you know, so I have kind of the H1 of the year. It implies, you know, H1, H2 seasonality of kind of 47% of EBITDA in the H1. Historically, you've been about a point higher than that. I know it's a small number, but just Is that just a function of, you know, just as you mentioned, some of the inflationary pressures, decelerating to get to the back half of the year, so you get a little bit more earnings in the back half? Or, or is there something else you'd call out here, just given your Q2 guide versus maybe historical trends? Sure. Yeah. Fair question, happy to go through that. You know, you're right. You know, when we think about H1, H2, there's always the impact of seasonality. Certainly, the way we guided for Q2, just an observation right up front, is that, as we mentioned in our remarks, we look forward to seeing that seasonal ramp. You know, arguably, you could say maybe we guided to a little less than a fulsome seasonal ramp, and I think that would be a fair observation. More broadly, when I think about what happens in the course of, you know, the factor of seasonality, you typically see an increase, you know, sequentially of, call it, 100 to 150 basis points or more just in a typical year. Add on top of that the impact of recycled commodities, which are another 150 basis points, right? The headwind that starts in the H1 of the year, that abates by the H2 of the year, which would explain why you would have a little more of an outsized increase back half of the year. Kevin, this is Ron. The other thing I would say about that, and, you know, you noted the 1% differential between first and second. Remember, we just noted that there was about a 30 basis point drag, 20 basis points more than we thought from the acquisition close in the last quarter. As you know, we did a lot of M&A last year. M&A almost always comes on at a dilutive margin or a nominally dilutive, and at, you know, it takes us 4, 6, 8 months to get that to where we think it's gonna be. That's gonna be in the H2 of this year. Right. That's very helpful and a great point there. Maybe just last one for me and maybe another nitpicky question. You know, I notice you're gonna change your, I guess, some of your segments here, adding a new geographic region, I guess, starting here in the Q2. Any read-through? Is it just maybe one of the regions got too big or is it a reflection of maybe how you see some of the white space on the map here in terms of where you'd like to grow, you know, adding the Mid-South as a new reporting segment? Sure. I'd encourage you to think about it as a continuation of the strategy that served us so well, and that's our decentralized approach. Okay. The recognition that given the amount of growth we've had, and to your point, the expectation of continued growth, that we want to have that same kind of visibility. So it's an acknowledgement that you kinda, You re-rack and, you know, reshuffle the deck and distribute the regions accordingly. So that's the way to think about it. Perfect. That's super helpful. Thank you very much. Best of luck through the rest of the year here. Thanks, Kevin. Thanks, Kevin. Our next question comes from Sean Eastman with KeyBanc Capital Markets. Please go ahead. Hi, team. Thanks for taking my questions. I just wanted to make sure, I have the message on, you know, that elevated M&A dialogue, you know, how you see that translating into closed deals maybe over the next 12-24 months, just considering obviously we're coming off a very big 2022. Yeah. Well, you know, Sean, as I'm sure you know and I would tell you know, elevated dialogue ultimately turns into, you know, increased closings. It takes some time. We've got a lot of LOIs in process right now. So I would tell you to think about these as sort of expecting things to more come through the late third, early fourth quarter, you know, H2 loaded because you're talking about a 3-4 month process from when you start executing LOIs to when you actually close. Of course, there's always risk that we don't get some of those and that happens, and we understand that. We will have a successful hit rate, and we expect this to be, you know, at or above an average year, as we've said. You know, how much? Time will tell, because sellers have a decision in that process, obviously. We feel good about where we're sitting with what we've got, communicating out there right now. Okay, very helpful there. You know, great to hear that the, you know, labor availability, retention trends continue to improve. You know, I'm curious about the kinda operational leadership level, you know, how the challenge of, you know, turnover and retention has been at that level, how that's trended. Would be really curious to hear your perspective on that, Ron? Yeah, sure. Well, look, just to give you a couple of data points. Q1 over Q4, turnover decreased by almost 10%, 10 percentage points, number 1. 2. Or 10%, not 10 percentage points, excuse me. 2, open job requisitions that we're searching for dropped by about 6%. Those are both heading in the right direction. Still both well above historical and our expectations. You know, as how this works, when you are down frontline employees, be it drivers, landfill operators, maintenance personnel, what ends up happening to provide service quality is you are running routes longer, at all level, at all locations. You are running supervisors in vehicles to complete routes rather than being able to supervise. You're running operations managers in dispatch doing double duty on supervision, and everything struggles when you're doing that a little more than normal. You know, labor hours, safety reviews, more wear and tear on vehicles from longer routes being run than normal. It's sort of a, you know, a spiral that's difficult. As you unwind that spiral, those things get better. I would expect... It doesn't happen overnight, but it will happen in time. I would expect each of those things to get better. Our labor percentage, our safety results, our maintenance results, and therefore our service quality and our sales and retention and ability to get new business. We've got a ways to go, it's better now in the Q1 than it was in the second, third, or fourth of last year. Interesting stuff. Thanks, Ron. I'll turn it over. Our next question comes from Jerry Revich with Goldman Sachs. Please go ahead. Hi, this is Adam Bubes on for Jerry Revich today. Thanks for taking my question. Q1 margins of 29.8 and the Q2 guide of 30.8% on a seasonally adjusted basis looks to be around 30.4% versus the outlook for the full year of 31.1%. That implies a pretty sharp ramp sequentially in the H2 of the year compared to normal seasonality to hit your guidance. Is the original margin guidance still on track, and can you just help frame that sequential acceleration in margins in the back half? Sure. Thanks, Adam. Yes, to address that question first, yes, the original guidance is intact. As we said, we've reaffirmed our full year guidance and that included our margin. The, the walk from the H1 to the H2, just to reiterate, as I described earlier, it really is that two-pronged impact of, first of all, seasonality and the acknowledgement that the way we guided Q2 has a more muted seasonality than what we would typically see, and we look forward to delivering Q2. So there's a, you know, 100-150 basis points or more just from seasonality alone as you think about margins. Then overlay on top of that, the easier comparison on recycled commodities, which begin the year as a 150 basis point headwind, and that headwind fully abates since recycled commodity values haven't really moved off of year-end numbers from last year. Again, this is all before any upside from any of the factors we've described, like cost pressures abating to the extent those macro trends we're all observing as they make their way into the P&L, or any improvement in commodity values, incremental M&A, you know, again, as we've described. Thanks. You've laid out 10 landfill gas plants that are in development in the near term. Can you talk about the expected earnings ramp on those plants, and what's the pipeline beyond the 15-20 landfill gas projects that you've outlined in totality? Should we be thinking about further opportunities down the line, or is 15-20 the end of what's economically feasible? Sure. As you may recall, on our last call, we described the portfolio of projects, and we described an incremental $200 million in EBITDA in 2026. Although we didn't get specific about exactly how that layers in and exactly how the CapEx goes out, the comparable amount between 2022 and 2025, we said there's one project coming online this year that we own. Of course, that it's a portfolio of projects. About two-thirds of them we won't own. We'll be getting a royalty, and the other third we'll own. You know, you could layer them in that you get, you know, a partial year benefit from one this year, full year benefit from next year, some incremental contributions from things coming on in 2024. You know, you might wanna just stack them, you know, sort of layer cake them on, but be at $200 million in EBITDA. You know, that's very high flow through from the revenue, so not dissimilar, you know, by 2026. Beyond that, you know, I'd say let's get to 2026 and we'll, you know, we'll certainly update you in the meantime. We're, we're excited. As Ron said, we're committed to the development of this. We like our portfolio approach, and we'll continue to explore opportunities going forward. Thanks so much. Our next question comes from Michael E. Hoffman with Stifel. Please go ahead. Hey, thank you very much. Welcome back, Ron. Feels like a deja vu moment to hear your voice again. Yours as well. Yes. The question I have about price is managing a spread. We all know that this is gonna settle as inflation comes in, the rate of change settles. Talk to us about the strategy and the controls and the discipline through the model down to the decentralized, why we have confidence in holding on to the spread, as we settle into a new run rate of rate of change. Well, let's start with what we've already committed to for the full year and the fact that we've guided to 9.5% core price and told you we have 85% visibility on it, meaning it's done or it's contractually stipulated. Probably 200 or 300 basis points higher than what other people are talking about, to my knowledge. You know, we've talked about the cost pressures in the business being in that 6%-7%. You know, Michael, the reason we pushed that much harder on pricing, part of it was the headwinds from recycled commodities and RINs, and that's just math, that those pressures abate as we move through the year. You know, we focus on what is the underlying margin expansion in solid waste, and we delivered that 110 basis points in Q1. You know, as we thought about the year coming into the year, we thought the greatest headwinds are earliest in the year, so it's most important to have the highest reported price then. As to the extent any of those pressures abate, and we've already talked about wages and the expectation that we go from the high end of the range of 8% down to more like 6%. I think that's your math on how the spread is maintained as you move through the year. Looking ahead, of course, it'll be a function of what do inflationary pressures do as we move through the year, and therefore, how much pricing do we need on the competitive side of the business, knowing that the contractual side, the CPI-linked business, the PIs will be not dissimilar in 2024 to what we've seen in 2023, just based on the CPI that we've already reported. Michael, I would add to the second part of your question, just on the, you know, field responsibility, our model, et cetera. You know, look, as you know, we believe this is truly a local business. Thus, our decentralized model has a P&L responsible manager in every market, overlain by a divisional P&L manager, overlain by a regional P&L manager, because this business is so local. All of them are incentivized quite heavily in compensation on the performance of that local market against metrics for that local market, a large one being price, and margin. You know, we drive this down to the local level, you know, hold them accountable, allow them responsibility to make different judgments. It's very different by market. One size doesn't fit all. You know, in addition to our, as Mary Anne outlined, high percentage of our business being franchised, and they're very predictable. If you've got 42%-43% of your business that is, you know, contractually guaranteed, which we do, which is very different than anyone else out there, it allows us to heavily focus on that 56%-57% that's competitive. I think it's a difference in strategy, it's a difference in structure, and that's what leads to, you know, quite a different spread relative to anyone else out there in price. Thank you. What is the right size of regional business to manage? You've got a, you know, I'm not surprised you had a region because you're growing, and you grew pretty significantly over the last two years. What's the right regional size of business? Therefore, when you get to $10 billion, we're probably gonna have another region. Like, nobody should be surprised. Yeah. Well, first off, I think the way we thought through this, it's been in discussions for quite a period of time, Michael, over the last couple of years in thinking through where we wanna be, we're trying to think 5, 7, you know, 10 years out. What's the flow look like amongst regions and waste volumes? What's the regulatory environment within a geographic region? What's the M&A opportunity within a geographic region so that we're not redoing these things every 2, 3, 4 years? You know, we've taken a real hard look at that. You know, look, the answer is, it's a little different depending on how the geography is structured for waste. What do I mean by that? The franchise market takes probably less day-to-day oversight from a regional level than a highly competitive market on the East Coast or the Southeast, illustratively. You know, we think that around $1.5 billion to maybe up to $2 billion in the competitive market piece is a fair number. We think that can be run higher than $2.5 billion in the franchise component. It is a little bit different, and that's a conscious decision. If you wanna use $1.5 billion-$2 billion as a fair number, that's probably a good barometer. Okay, great. Then, the pace of M&A, I mean, if you take the $45 million multiplied by four, you're above average 'cause the average is $150. I mean, you're on a pace. You don't guide that M&A until it happens, but we're kind of on a pace of $180, right? As you know, we would tell you, look, you know, an average year is 150. I'm just using that, 'cause it's probably a fair number, 150, 175. We're already above the average year pace of, as I said in my comments, I think it is reasonable for us to expect an above average year, knowing what we know right now and what we've who we're talking to and what LOIs we have out there, that's what should be expected. Having said that, you know, if we didn't do more, and that's not the case, it would be because we're being very disciplined in our approach and in our market selection. That should be what investors expect from us. You know, that is not what I'm predicting, but that would be the only reason, is we're being disciplined on what we're doing. Yes, to answer your question, we're above it. I think what it does is, you know, if we have that type of year we're talking about and it is more H2-weighted, it sets us up incredibly well for 2024 to start with another large year of rollover, just like this year did from the ending of 2022. Okay. I wanna I should have finished my question about price margin, price spread and margin, and I didn't. I apologize. Mary Anne, you've laid this out that, you know, the recycling offsets and when we start the anniversary, but you also have a really healthy index price that leverages H2 2023, H1 2024. This momentum of margin carries right into 2024, almost regardless of what else happens. There's your own discipline around managing open market spread that then sustain it, assuming the macro thing's all leveled out. I know that was a mouthful, but we should see- Well, no. ... the beginning, a sustained period of margin improvement beginning in the H2 for a while, all else being equal. Sure. Joe, what we've said is it's a fair observation that pricing, we continue to get the lagging benefit from CPI-linked markets because remember, we absorbed all those costs when the spread went the other way in 2022. We're benefiting from that in 2023. You're right, mathematically, it says we'll get, as I mentioned before, a similar number or not dissimilar in 2024. The question becomes what's the environment and how much pressure is still needed, right, on the competitive book of business. As we've also said, we look forward to not needing to do the outsized increases. Yes, to answer your question, we're very much focused on that. To the extent it takes longer for inflationary pressures to abate, that would suggest that the same dynamic that we saw coming into this year would persist into next year, meaning it should get easier over the course of the year. Yeah. Michael, one other thing on that. Again, I know you're well aware of this. I say this more for people who might not be as familiar. Look, a lot of our CPI index business, particularly our franchise business, is set off government calendar year, which means it is priced in July's CPI of each year. For this year, 2023, we're getting mostly last July and January 1 CPI. We will get for next year, this July's CPI into next year. It's still elevated, even though the CPI is coming down throughout the course of 2023 into 2024. Yes, it supports exactly what you just said. Got it. Everybody wants to talk about projects on RNG, but it's really about MMBtu. One of the things they tend to forget to ask you, and you all have the best in class conversion of your total captured MMBtu into beneficial use in the group. You're at 60%. There's not like there's a whole lot left to do other than upsell electricity into RNG. You've been doing this well. Well, you know, I don't disagree with your characterization. You know, I think everyone's portfolio of landfills and the age and life of their landfills is different. We will continue to look forward to opportunities as we, you know, proceed. We've described the ones that are at hand and how we've approached them. Michael, I'll say it a little bit differently, and I agree with what your comment and what Mary Anne said. Look, we are very comfortable with the long-term forward-looking performance of our core solid waste business, standing up better than anything in the sector. Our RNG is an upside, not a bridge to get to a margin. Right. Got it. Thank you for taking the questions. Look forward to seeing you in New Orleans. You as well. Our next question comes from Noah Kaye with Oppenheimer & Co. Please go ahead. Thanks. I'll just ask a couple of questions. First, a health check on the customer base. You know, you had strong performance on DSO, so customers were clearly paying their bills and you saw sticky price. Can you give us what the churn rate was in the quarter, what you've seen in April, and where in the business there might be increasing price volume trade-offs? Sure. So fair observation. Yes, we have continued to see DSOs improve, and I'd say that's a combination of being proactive about it, and that speaks to the power of a decentralized model where you've got local controllers taking responsibility for that. Yes, we have not seen the kind of degradation which leads to increased issues on that front. We're encouraged by that. We're mindful of the fact that the overall economy is slowing down is something we pay close attention to. To your point about churn, you know, we would acknowledge that in our price that, you know, we've reported and the volumes we've reported, there is some price volume trade-off. There is some churn happening out there. I think the important thing is that the way we view it is it's an acceptable trade-off, and we're not surprised to see that tick up a little bit, as we move through the quarter. Okay, thanks. Any way to quantify what that rate looks like currently and where it benchmarked it? Well, sure. You as you know, in 40% of our business, we don't have any churn. In the other piece, you know, well, it's typically running sort of in that mid to high single digits where it might tick up a little bit. Overall, if it says it's mid single digits, that's probably a fair way to think about it. That's healthy. Last question, you know, just around truck deliveries. Obviously, the quicker you can get those fresh trucks in, the more it's helpful for your OpEx profile. What are you seeing on rate of truck deliveries and your confidence in being able to spend the full year budget? Sure. Well, I... You know, we're confident we can spend the full year budget. You know, that's... I don't know that that's been an issue, Noah. We also continue to see trucks slip. The reality is, you know, we sort of feel like the calendar has become somewhat arbitrary. We order trucks, maybe we expect them in 1 year, a portion slips into the following year, and some that we expect in that year slip into the subsequent year. So, you know, what are we seeing out there? We told you that there was a slug of trucks that we didn't get in 2022. About half of those we took delivery of in the Q1. We also know, and as I think we mentioned last quarter, that we'd already been told there are trucks, probably a like amount at least, that will slide from 2023 into 2024. Okay, great. Thanks for the color. Thank you. Sure. Our next question comes from Tobey Sommer with Truist Securities. Please go ahead. Hey, good morning. This is Jasper Bibb for Toby. I was just hoping you could give some more color around what you're seeing on the industrial collection side. Still look pretty strong in the quarter, but I guess I'm curious how much impact you might be seeing from, you know, slower housing and construction leading indicators. Sure. As we said, you know, as we think about the cadence through the quarter, month-over-month, March was really the first time we saw a little bit of a deviation, right? It's mildly positive to shifting to negative. You know, it's always a little lumpy on project-based business, and as we said, you know, you might have C&D activity, but that was exclusively associated or mostly associated with hurricane cleanup. You know, I would say it's generally a little bit slower. No material change to the trends we've seen, but we are seeing signs of a slowdown. Thanks for that. Maybe following up on the earlier comments about E&P waste, for the H1, any kind of comments around demand trends there or how that business is tracking relative to your initial expectations for 2023? Sure. I'd say it's tracking, in line with our expectations. We always anticipate a bit of a seasonal adjustment in Q1, and we saw that. The question is how much does it snap back? As we said, you know, we think it comes back to about that $50 million level. You know, rig count hasn't moved materially, so activity levels haven't really changed dramatically. We feel comfortable with communicating those sorts of levels would be the expectation as we move through the year. Jasper, this is Ron. Just 1 stat for you and for all listening. You know, the statistic we track that most closely and it relates to industrial activity in one way or another is probably our special waste volumes into our landfills, because much of that comes from industrial cleanups and industrial waste streams. Just as a, you know, couple numbers. That was down 5% in 2022 for the whole year, and it was down 6% in Q1. You know, not really any material change in the Q1 relative to all of 2022. We're not seeing per se yet the industrial deteriorating by any meaningful measurement. That makes sense. Thank you for taking our questions. Our next question comes from Toni Kaplan with Morgan Stanley. Please go ahead. Hi, this is Hilary Lee on for Toni Kaplan. Thanks for taking my question. Just wanted to ask about cash flows. We saw in Q1 that, you know, it was down around 14% year-over-year. It seems like, you know, it'd be a decent ramp through the balance of the year, especially in Q2, to get to that 5% guidance number. Could you give more of a cadence for cash flows for the rest of the year? Sure. And we actually said, observed last quarter when we gave our full year guidance that we expected it to step up over the course of the quarter. And, you know, really there are a couple of factors driving that, and the most important one I would say that's different in Q1 from the other quarters is really the hangover from all the CapEx we did late last year, some of which hit payables in Q1, and that's probably about $40 million. You know, if you, if you think about bumping up from here, you could kind of step it up over the course of the year from the amount we did in Q1. Got it. Thanks. Regarding pricing, obviously, you guys have had strong pricing year to date. you know, How have your conversations been with customers if you compare, like, this quarter to Q4 and last year? Has there been any more pushback given inflation is somewhat moderating? Well, the reality is that, you know, a lot of the price increases that you'd observe as hitting Q1 really were conversations that happened late last year. You know, because that's the timing of billing cycles. You know, it was purposeful to get ahead of pricing because, you know, everyone had talked about the possibility or the expectation that inflationary pressures would abate, and so it was better to get ahead of it. I can't say that there, we've seen any material difference in them, and I think that's reflected in the fact that pricing, you know, came in line with or better than what we talked about, which tells you that there wasn't a dramatic change in the, you know, the rollbacks that we experienced. That being said, as I said earlier, we acknowledge that there is some price-volume trade-off, and we're not surprised by that. Got it. Thank you. Just last thing from me. You know, you talked about the 9.5% core price and 10% pricing. Does that include the surcharges or just purely the core price? Sure. What we said when we gave full year guidance is that it would be essentially all core price because the expectation was that fuel surcharges, while they're a small part of our overall mix, that they would be positive in Q1, and they would flip to negative in Q2 for the rest of the year. When we talk about 9.5, that is, you know, it's both things. It's total and all core. Got it. Thank you so much. Sure. Our next question comes from Stephanie Moore with Jefferies. Please go ahead. Hi, good morning. Just one question for me and more so a follow-up from Michael's question earlier. You know, I think you talk about the opportunity for potential upside, just as, you know, cost pressures could abate. You know, from your lens, just looking at the first kind of four months of the year, you know, if these cost pressures do abate faster, do you think that would largely be due to, you know, potentially a macro slowdown? Do you see the ability for pressures to come down faster, and the economy still holds up? Then maybe taking that a step further, if it is because the economy slows, how would you manage, you know, any potential impact to volumes while also benefiting, you know, from the fact that, you know, the cost pressures do come down? I know that's a little long-winded, but just trying to think about those puts and takes. Thank you. Sure. Now, you know, it's the right way to think about it and it's important to remember, you know, this is the integrity of the model, and that so much is fixed pay in the solid waste industry in our book of business, that the exposure is pretty limited. Yeah, you see volumes slow down a little bit. What typically happens when you're in that environment, including in the extreme in the, you know, the Great Recession, is that margins on the collection side expand because of the nature of the fixed pay system. You know, that's a way to think about what the implications are of volumes going lower. Got it. I'll leave it at that. Thank you. Our next question comes from Walter Spracklin with RBC Capital Markets. Please go ahead. Yeah, thanks very much. Good morning, everyone. Just staying on the pricing, a little bit of a different tact on that. But just curious as to whether there's any real limit to your pricing. I know what the drivers are. You know, you've got higher costs, you got rational competitors, waste pickup is a low cost point. It makes it easier for you to put price increases through. Just curious if there's a limit there. You know, are customers at all pushing back on that limit? Flipping the last question around, What You know, in the event that you know, CPI comes down, but your... for whatever reason, your costs continue to stay elevated, either because of labor availability or what have you, are you worried at all about maintaining that spread that was discussed before if you've kinda hit the limit on price increases, and then in the following year might see some difficulty passing on cost increases through in maintaining the spread? Yeah. Walter, look, again, we have always maintained a 100-150 basis point spread minimum, in 25 years of doing pricing. Part of that is the beauty of our model, where 40-plus% is indexed, and we get that plus in that piece. The other is just the discipline of how we think about pricing and the spread necessary. You know, is there a limit? Well, number one, in 40-plus% of the business, there is a CPI limit or index. In there is. The open market, the other 56%, there is, you know, in theory, no limit. The reality is, what's the market and, you know, what are your peers doing as well? Yeah, there obviously is a limit. We believe that we've pushed price as is necessary. We don't anticipate having to do that further unless something changes in the inflationary environment relative to the flattening and declining we're seeing right now. If that was not the case, we absolutely can go back to our customer base. One, automatically, we would get the indexed business, and the other, we've shown you the ability to get. But that's not what we're expecting, nor is it what the economy is expecting, nor is it what the economy is showing right now. I mean, it's, I think, a theoretical question more than, you know, what the expectations would be. Yeah, absolutely. No, I appreciate that, Ron. Second question here and last one for me is, you know, one of your smaller competitors have started the process of selling assets. Just curious if you know, you've been very acquisitive over the last few years. Have any of your acquisitions kinda had a tag on market attached to them that you're just not interested in being in or growing in? If the sum total of those tag on markets lead to... It looks like these assets are selling at very attractive levels, and I know you guys have been pretty good stewards of capital. Just curious whether that's something that you would ever contemplate or not. First off, you know, the only real assets that had, to use your word, a tag on level of assets that really didn't fit our model, and we didn't find attractive, was after we did the large transaction with Progressive, and we did sell down or swap out of about 12% to 13% of the revenue that came along with that transaction. You know, most of our transactions, as you know, we hit, you know, singles and doubles. We are acquiring private businesses that are in generally in 1 to 2 markets, and they're very targeted, and there's not something that we're expecting to divest there. We're always gonna be looking at our book of business, examining the markets. Markets do change from time to time. If we can't, you know, create a sustainable barrier to entry that allows us to run our model and improve price, you know, we'll look at that. You gotta understand, you know, the assets that are for sale predominantly through other companies that you're referring to, those companies were built with large buckets of divested and sort of stranded assets. So you would expect there would be some that they would be looking to divest. It's also being driven by leverage issues, and we don't have any of those issues. Okay? So, you know, we looked at those assets, and they were not assets that, you know, at that price or even a price substantially lower, we found attractive or fitting our model. We will look at it, but it's not something that any investor should expect Waste Connections is out looking to do for any reasons relative to other companies in the industry. That's fantastic. Appreciate the time. Thank you. Your next question comes from Stephanie with JPMorgan. Please go ahead. Hi. Good morning. I'll just ask 1 question here. Just wanted to come back to the discussion around labor and the improvement you're seeing. Can you talk about what you're doing to retain people on the front line? Is it just wage increases, or are there other components? How do you motivate people on the front line? Well, Stephanie, it is not just wages, cause good employees can go get wages anywhere. You know, it's a very tight economy, labor market, at least in the economy, and particularly for qualified and skilled individuals. Certainly, wages and benefits matter, and we've continued to focus on improving those, as we always do, but particularly in 22 and as we head into 23. Look, you know, I think the beauty of our decentralized culture is that we put more leaders closer to the field, than a more centralized model, and those leaders are empowered to take care of their employees and retain those employees, you know, within reason, on their own. They're not having to run that through a corporate program or a corporate structure that is more one size fits all. We have given them a lot more flexibility in what they're able to do to take care of people as individuals. Quite honestly, that's the essence of what our servant leadership model is about, taking responsibility for the health and safety of our people at work and away from work. You know, you gotta be market competitive. You gotta make it a great place to work. You gotta give them an incentive to wanna be there beyond the compensation and benefits. That really comes down to the relationships that our leaders can build with them as individuals on the front line. That's really, I... the answer to that question and has been how we have focused on it for 18 years. Okay, great. Appreciate it. Thank you. This concludes our question-and-answer session. I would like to turn the conference back over to Ron Mittelstaedt for any closing remarks. Okay. Thank you, operator. 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 and Joe Box are available today to answer any direct questions that we did not cover that we are allowed to answer under Regulation FD, Reg D, G, and applicable securities laws in Canada. Thank you again. We look forward to seeing you next week at WasteExpo and at upcoming investor conferences or on our next earnings call. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.