Investor Relations, Waste Connections. Waste Connections is the third-largest waste service provider in North America, operating in 46 states and six provinces, as well as providing E&P waste treatment and disposal. Joe joined Waste Connections as Head of Investor Relations in 2018. Waste Connections has 260 million shares outstanding, trades around $197 for a $51 billion market cap and $8 billion of net debt. We'll sit down and have a nice chat with Joe. Thank you very much, Tony, for having Waste Connections and including us this year. We appreciate it. Yeah. This is great. Great you're here, Joe. Maybe for those less familiar, maybe you could just sort of give a quick overview of the Waste Connections model and sort of how you have been able to achieve your high performance in the industry. Absolutely. It's a great spot to start. Waste Connections, we're the third-largest solid waste player in the U.S. and Canada. We operate across 46 states and six provinces in Canada. We're of the opinion that we're differentiated because we take a very specific market-based approach. If you look at our market breakdown, we're about 40% in franchise or exclusive markets, where we essentially have 100% of the waste stream. It's tied up in very long-duration contracts, very profitable contracts. The other 60%, we've been very purposeful, where we've selected primarily secondary and rural markets, where we can effectively be a big fish in a small pond. By doing that and either owning the only landfill in the market or owning maybe one of two landfills in that market, because we have the most density there, we typically have the lowest cost structure, and it allows us to push price and retain it. When you put those two market structures together, ultimately what it's led to is pricing that's led the industry by 200+ basis points, margins that have led the industry by 200, 500 basis points, and free cash flow conversion that has normally been upwards of 500-1,000 basis points above our peers. We've talked about inflation this morning. From a cost inflation standpoint, what are you seeing there? Any notable changes in the environment? If there is a change, how do you guys respond to that? I certainly appreciate you letting me present right as the market opens on a pretty volatile day. I saw that. You did pretty well, though. You're compared relatively. That's good. What are we at right now? It was a touchdown. Okay. That's good. Look, I mean, we'll obviously find out as these tariffs play out. What we've incorporated into our outlook for the full year has been something like 4.5% cost inflation. Clearly something that is north of what we're seeing from a CPI- based. I think it's fair to say it's moderating relative to what we've seen over the last several years. I mean, we were experiencing inflation in the high single digits back in 2022. We saw that moderate last year toward the five-ish type range. It continues to moderate down. That's in line with what we're seeing relative to labor. If you look at frontline labor, it's our largest cost. It's about 30% of our cost directly or 50% indirectly. That's really the best bogey to look at. Maybe let's just jump into the tariff issue. Obviously, we heard before, on a relative basis, you guys are somewhat insulated. Maybe you could break it down and just give some color on how that does impact your business, good or bad. Sure. No, it's a great question. That's probably question one or two that we're receiving from investors these days. I think the good news is tariffs are relatively minimal. We actually don't have any cross-border transactions that are occurring. If you look at our fleet, there would be some amount of exposure. It's minimal. The majority of equipment that we are ordering is being ordered and delivered in the same market that's being consumed. There's probably a small portion of chassis that are coming from Mexico. Again, it's not the norm. It's a small portion. Obviously, there's components on our fleet that are coming from other markets like Asia. There would be some exposure there. On the base of a CapEx number that's approximately $1 billion in total fleet and total CapEx, you're probably looking at $10 million-$15 million of risk as we understand it today. Nothing material, I'd say. Maybe we can jump now into sort of your sweet spot, I'd say. You highlighted on your fourth quarter call that you expect an outsized amount of deal activity. Are you seeing any slowdowns or changes in mentality from potential sellers in the market? I know this sort of runs the maestro here, but I'd love to hear what your thoughts are. Sure. I appreciate that. Yeah, again, we provided some commentary six weeks ago when we reported Q4, so still relatively fresh. I do think it's fair to say that the pipeline continues to be extremely attractive. We had said when we reported Q4 at that time that we had already closed or had signed and expected to close in Q2 about $75 million. That's a pretty good head start relative to what we would define as a normal year of M&A being something like $200 million-$250 million of annualized acquired revenue. We know there's a lot behind that. The typical business that we're buying, solid waste business, maybe $10 million of revenue would kind of be our average. Clearly, we do some stuff that's larger than that, but they're not really feeling the impact to the macro. Again, we will have to see how this all plays out. As of right now, they do not have a ton of tariff exposure. The reasons that they are selling have not changed. Therefore, they continue to be very much engaged in the selling process. You mentioned the pipeline. Maybe you could sort of tease that out a little bit and talk about, I mean, you obviously have a few different businesses. You could talk about what kind of businesses are in that pipeline. I guess maybe I missed it a bit, just the pipeline size or just the general size of that. Sure. Sure. Maybe I could address that and then come back to what's in it. From an overall pipeline size standpoint, we're focused on the solid waste business. We know what's worked for us for the last 27 years. We're going to continue down that path. From a size standpoint, I'd say that there's probably about $20 billion in private companies that are between the U.S. and Canada. Not all of that meets our specific market criteria, where it's either franchise or exclusive or in a secondary or rural market. About $4.5 billion-$5 billion of that does. That's actively what we're engaged in and we're working toward. I think the good news is that $4.5 billion- $5 billion is growing, probably growing at at least a mid-single-digit clip, meaning if we're only doing something like $200 million- $250 million of acquired annualized revenue in a normal year, that would mean that we're effectively buying the growth rate of that TAM. It could go on for quite some time. The one other thing that I would mention is this year, we said, "Look, we expect it to be another outsized year from an M&A standpoint." Last year, it was tremendous. It was actually a record year from a private M&A standpoint, where we had acquired $750 million of annualized revenue. We wouldn't expect it to be a repeat of that record. Could it be something that is north of that $200 million- $250 million and something kind of in the $250 million $500 million range? It certainly could be. That seems pretty realistic given what we know today. To your second point about what's in the pipeline, or your second question, it's primarily solid waste deals. It's broad-based across a number of geographies. As you all know, we report in six different regions. There will be activity across each one of our regions this year, which de-risks the M&A integration to a certain extent because you're spreading it out. We also have some opportunities within the E&P business, which is a niche for us. You saw us last year acquire a business that was divested from Secure. That was about $225 million of the $750 million. You'll probably see us continue to be a little bit active in that space this year. That's a lot of deals, Joe. That's good stuff. You guys have always put out your metrics around your employee loyalty, very strong momentum and operating metrics of voluntary turnover. Maybe you could sort of talk about how that's going and what does that mean for the business, how that goes? Sure. Just to set the table for you here, if Ron were here today, he would tell you that if you were to parachute into any one of our 500-600 districts, the single most important metric to look at that would tell you about the health of that individual location would be voluntary turnover. Clearly, it's going to have an impact on everything from safety to margins to employee morale to customer satisfaction to ability to integrate deals effectively across the system. It is of critical importance. When Ron came back about 18 months ago, his first initiative was to double down on human capital and really try to reduce the voluntary turnover from it was as high as 25% in 2022 to bring that down to something like 10-12%. Candidly, we've seen a lot of good progress on that. It's down about 50% from where we started. We've seen progress even post-2024. We ended the year a little bit sub-13 and we're certainly closer to 12 now. Continued progress on that front. What we've said is, look, just by bringing down that number, the benefit that could occur in the margin is upwards of about 100 basis points just from reductions in things like overtime or cost of risk. We've seen probably about a third of that, and there's probably two-thirds to go. Dynamite I couldn't agree more. My former life flying, the most squadron with a bunch of experienced pilots are way better than a bunch of newbies. Normally, you point out price-led organic growth in 20, 40 basis points of margin expansion. Last year, you were up around 100 basis points. This year, I think you said you're looking to 50-80 basis points.. Can you sort of just talk through that and just give some more granularity there? I think that's a great question and a good point. What we would tell folks is the algorithm that our business creates, because of the model that we have, we are focused on price-led organic growth. Typically, it produces something like 4%-6% organic growth, obviously being price-led. If you're pricing in excess of your cost, what you should expect from a normal margin expansion standpoint would be something like 20-40 basis points. It's clearly been outsized. If you look at last year, we put up 100 basis points of margin expansion from $31.5 million- $32.5 million. Part of that was the benefit of price-led organic growth. Part of that was the benefit of shedding some less profitable contracts. Then probably 30-40 basis points of that was the benefit of turnover and driving that number down. I would be remiss not to mention that the acquisitions that we completed last year were actually accretive to the margin as well. We did have some tailwinds from commodity prices last year to get to that 100 basis points. Clearly, that's an outsized amount of margin expansion. As you think about this year, that 50-80 basis points is actually more like 100 basis points of underlying margin expansion because we did start to see commodities and RINs and FX weaken in the fourth quarter. Arguably at the lower end of our range at the 50, you're talking about 50 basis points of drag from those items. The 100 basis points of margin expansion that we're expecting this year on underlying, it's really more of the same items. It's that price-led organic growth. It's the shedding of less profitable. It is probably another 30-40 basis points of turnover-related benefits that we expect to get this year, which would leave another 30-40 basis points of benefit as you move into next year to kind of extract that full 100. Apples- to- apples, your guys are doing pretty well so far. Well done. There are a few items you expect to spend on in 2025, the Chiquita Canyon landfill mitigation and some more for our RNG. Maybe you could talk about how that sort of plays out in future years. Sure. Yeah. It's a great question because I'd mentioned right at the outset that typically our free cash flow conversion has exceeded our peers by 500- 1,000 basis points. Typically, what we produce is about, or we convert about 48%- 50% of our EBITDA into free cash flow. That number has been lower over the last year, and it's expected to be lower in 2025 because we are spending on two unique items. One, we're expecting to spend about $100 million- $150 million on a reaction that's occurring at one of our landfills in Southern California that we're trying to mitigate. That number is expected to step down to about $50 million next year and then some negligible amount in future years. The second thing that you would want us to spend on is RNG. We're actively engaged in developing about a dozen RNG sites. On a third of those, we are going to put up all the capital and keep the economics. That is about a $240 million-$250 million spend over a couple of years. It just so happens that the bulk of that spend is expected in 2025. Call it $100 million-$150 million this year. If we spend $150 million, just say the high end this year, then there is probably some negligible amount that rolls over into next year. Meaning when you get into next year, you are anniversarying or you are experiencing moderation in these costs. Once you get into 2027, they are effectively gone. At that point, you are looking at free cash flow conversion that arguably could be north of that normal range of 48%-50% because our RNG projects that come online actually come online at a very accretive free cash flow conversion. Maybe a switch to volume update. Obviously, you have a different business with your franchise model, but maybe you just still could discuss what you're seeing geographically and maybe by line of business. Sure. Sure. What we've said is, look, over the last three years, we've seen essentially no growth in the macro. It's interesting. If you go back to the comparison of the pandemic, right when it anniversaried in Q1 of 2022, we've effectively seen between down one and up one on all of our key operating metrics, whether it's landfill tons or roll-off pools. It's largely oscillated in that tight range. Again, if we're in 46 states and six provinces and we have this market-based model, we're going to see the volume if it's there. It hasn't been there. As you moved into the back half of last year, as you started to get some political uncertainty just going into the election and maybe some question marks around the trajectory for future interest rates, we did start to see a little bit more of a moderation or a movement below that range on roll-off pools in particular, which is our more construction-centric business, and it represents about 10% of our overall book. That had been trending in the, call it, down mid-single digits in fourth quarter. We are not really seeing much of a difference so far year to date here in 2025. Tony, I would say we really have not seen much. From a macro standpoint, it'd be nice to actually go back to a period of 3% growth with legitimate consumption of goods and population growth and net new business formation because we feel like we really haven't seen it over the last three years. Yeah. I guess that would sort of play into, obviously, the special waste business as well. Any potential for sort of pent-up demand on the special waste side? Sure. That's a great follow-up. On the special waste side, so everybody's aware, special waste for us would generally be contaminated soils that come into our landfills. It could be as much as 25% of the tons at a landfill, but it's really only about 2-3% of our total revenue at the company. It can be economically sensitive because it's usually some speculative development or industrial work that's happening. It's been subdued, just like all other kind of growth metrics that we've seen. I think the good news is it's coming from a fairly low perch in 2024. Any incremental activity that we see would just be upside. Maybe I'll open the floor up to the audience. If not, I got a lot more questions. Joe, you did just briefly talk about housing market and C&D, but maybe you could go in a little more color. Sort of what you said, what you're seeing currently is pretty muted, but obviously going forward, again, there's probably a lot of opportunity there depending upon interest rates. Maybe you just could give your company's view on how you're looking at that. Yeah. We never try to place a bet one way or the other. We always like to give you kind of the status quo of where things are at, and then we'll let you know where the percentage of the business is and what the sensitivity could be. I think it's completely fair to say that we've underbuilt housing for a long time. Given our broad exposure from a geographic standpoint, any housing construction or increase in starts that we see, we would benefit in terms of incremental roll-off pools. It's hard for us to sit here and say whether there's going to be upside or not. I think we clearly haven't baked it into our guidance. If you were to see some upside from a volume standpoint, that would be incremental. Maybe we could switch over to the recycling sustainability side. Obviously, you talked about, or you already talked about commodity prices and sort of how that has impacted margins and going forward. What are you seeing on recycling? We obviously had a company just previously talking about packaging. Maybe you could just sort of talk through all the different aspects of it. Yeah, absolutely. To set the table, recycling for us, we offer it to 50% of our customers. It's clearly a very core service that we want to provide to our customers. As a percentage of revenue, it's approximately 2%-3%. What you're looking at when you see our line of business breakdown is the tons that we're processing through our recycling facility, and then we are selling those tons on the back- end. The most impactful piece would be fiber, which represents about two-thirds of the basket, specifically old corrugated cardboard or OCC, which would be probably 50% of the overall basket. There, we actually saw some price degradation as we moved into the back half of last year. OCC was around $145 a ton in 2Q. You saw that exit the year closer to $100 a ton. I think there were a number of unique variables that drove that price down. One was actually the port strike. Two was the threat of tariffs. What we were seeing and what our internal team is telling us is that it's actually quite balanced in the market right now. Therefore, as we seasonally move into a stronger period from a mill production standpoint, and we move into a period of less generation of OCC that's being provided to the mills, there could be some upside to OCC pricing. Normally, we wouldn't make any sort of call relative to pricing, but it does feel like the market's in balance and we could see some seasonal lift. Obviously, I'll caveat that by saying, let's see what happens to the macro post today, but we feel like it's a little bit of a different environment than what we've seen. Just to go maybe one more get out of you, going back to RNG, you talked about a third. You essentially sponsored a third. You backed a third. Just maybe just quick thought process on backing versus being essentially supporting in a supporting role and letting a third party come in. How do you look at that? Sure. On the dozen projects or so that we're developing, it really comes down to several different things. One is risk and attractiveness. If there's a low-risk project where we're aware of the gas stream and the construction is also lower risk, that might be something that we would cherry-pick and do on our own. The second thing that we would look at is the existing structure. We currently have about 20 electrical generating facilities, which is really the older way of how the industry processed gas over the last 25 years. Those 20 facilities are tied up in contracts with partners. Because of that structure, that really dictates what the structure would be going forward. I mean, what we experienced was a number of those partners came to us and said, "Look, hypothetically, you might have 10 years remaining on this contract. If you'd be willing to partner with us on a new RNG project, we will rip up this old electrical generating contract and effectively all share in the upside of a bigger pie. You are seeing us do that on a number of projects as well. That is ultimately what has determined that two-third, one-third. Very interesting, Joe. Great job. Company's doing obviously very well, has done very well. Thank you for coming every year, and we appreciate your support and hope to have you back next year. Thank you. Thank you for the interest, and thank you for everybody's attention.