Good day, and thank you for standing by. Welcome to the WM third quarter 2022 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there'll be a question-and-answer session. To ask a question during the session, you'll need to press star one one on your telephone. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Ed Egl, Senior Director of Investor Relations. Please go ahead. Thank you, Catherine. Good morning, everyone, and thank you for joining us for our third quarter 2022 earnings conference call. With me this morning are Jim Fish, President and Chief Executive Officer, John Morris, Executive Vice President and Chief Operating Officer, and Devina Rankin, Executive Vice President and Chief Financial Officer. We will give prepared comments from each of them today. Jim will cover high-level financials and provide a strategic update. John will cover an operating overview, and Devina will cover the details of the financials. Before we get started, please note that we have filed a Form 8-K this morning that includes the earnings press release and is available on our website at www.wm.com. The Form 8-K, the press release, and the schedules for the press release include important information. During the call, you will hear forward-looking statements which are based on current expectations, projections, or opinions about future periods. All forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially. Some of these risks and uncertainties are discussed in today's press release and in our filings with the SEC, including our most recent Form 10-K. John will discuss our results in the areas of yield and volume, which, unless stated otherwise, are more specifically referenced to internal revenue growth or IRG from yield or volume. During the call, Jim, John, and Devina will discuss operating EBITDA, which is income from operations before depreciation and amortization. Any comparisons, unless otherwise stated, will be with the third quarter of 2021. Net income, EPS, operating EBITDA margin, and SG&A expense results have been adjusted to enhance comparability by excluding certain items that management believes do not reflect our fundamental business performance or results of operations. These adjusted measures in addition to free cash flow are non-GAAP measures. Please refer to the earnings press release and tables, which can be found on the company's website at www.wm.com for reconciliations to the most comparable GAAP measures and additional information about our use of non-GAAP measures and non-GAAP projections. This call is being recorded and will be available 24 hours a day beginning approximately 1 P.M. Eastern Time today. To hear a replay of the call, access the WM website at investors.wm.com. Time-sensitive information provided during today's call, which is occurring on October 26th, 2022, may no longer be accurate at the time of a replay. Any redistribution, retransmission, or rebroadcast of this call in any form without the express written consent of WM is prohibited. Now I'll turn the call over to WM's President and CEO, Jim Fish. Thanks, Ed, and thank you all for joining us. Our team delivered strong results in the third quarter, growing adjusted operating EBITDA by 11% compared to last year. The outperformance is driven by the strength and resiliency of our collection and disposal business. In a quarter where the preponderance of macroeconomic discussion is centered around signs of a slowing economy, WM's collection and disposal operating EBITDA grew by more than 12%, and margins expanded 60 basis points. Collection and disposal core organic revenue growth was 8.8%, elevating quarterly total company revenue to above $5 billion for the second consecutive quarter. The growth, excuse me, we delivered was driven by deliberate steps to grow revenue and efficiently manage costs, which together position us to overcome inflationary pressures. Our solid results through the first nine months of the year positioned us well to achieve the updated guidance provided last quarter, even with a recent downturn in recycling commodity prices. An important contributor to our improving trend in operating expenses and overall cost structure is the strategic decision to leverage through automation the tight labor market and high attrition. John will touch on this as he discusses our significantly improved turnover in more detail. By the end of 2022, we will have reached almost 1,000 full-time positions in difficult to source job categories that we've chosen not to refill, putting us well on our way to reducing our labor dependency by 5,000-7,000 jobs. We're pleased to see early benefits from our investments to reduce our cost to serve, while also differentiating WM by enhancing the customer experience. Continuing on this discussion of our 2023 and beyond strategy, we're very pleased with our investments we're making in both renewable natural gas and recycling businesses. On RNG, we continue to make great progress on building out our new plants as we expect 2023 to be the heaviest capital investment year. We're on track to see meaningful earnings contributions from 2022 and 2023 investments in 2024, with full incremental operating EBITDA contributions coming in 2026, which are conservatively estimated at $400 million. Our recycling business not only provides an important service that our customers want and need, it continues to be a profitable business generating solid returns. We worked hard to adjust our business model over the last several years. We saw the results of that in the third quarter, particularly in our automated facilities. Our five fully automated MRFs are now delivering differentiated results relative to our single stream network with about 30% lower labor costs, 13% lower total operating costs, nearly double the operating EBITDA margin, and most importantly, a 40% improvement in key safety metrics. We're on track to complete four automation projects and add one new MRF in 2022. The significant investments that we're making in growing and automating our MRF network are strengthening the business by reducing costs, increasing throughput, and improving product quality. As with our R&D investments, 2023 will be the heaviest year of capital spending in the rebuilding of our single-stream MRFs, with the biggest increase in incremental earnings coming in 2024, 2025 as the majority of the rebuild and new MRFs come online. Additionally, as part of our commitment to growing our recycling business, we announced that we are acquiring a controlling interest in Avangard Innovative's U.S. business. The planned acquisition will grow our plastics recycling capabilities by delivering circular solutions for films and clear plastic wrap used commercially. We expect to receive investment returns comparable to our recycling automation investments, yet on a more prolonged horizon, given that operations are in the early stages of scaling. We plan to provide a more detailed update during our fourth-quarter earnings call once the deal closes. Also on the M&A front, we completed more than $200 million of acquisitions in the third quarter, putting us well on our way to our full-year expectation of $300-$400 million. We closed two nicely sized solid waste tuck-in acquisitions in Indiana and Arizona during the quarter. These acquisitions are a complement to our existing operations, and we expect to generate solid returns and earnings contribution in 2023. Finally, I'm pleased to share that earlier this month, we released our 2022 sustainability report, providing details on our ESG performance and outlining our new 2030 priorities. These new priorities are strongly linked with our overall company strategy and directly support expansion of our recycling and renewable energy businesses. Even as we celebrate continued progress in our sustainability journey, we're already focused on driving improvements in the future. In closing, I want to thank the entire WM team for their hard work and dedication. We're focused on finishing 2022 strong while continuing to progress our investments in recycling, renewable energy, and automation to drive growth. I'll now turn the call over to John to discuss our operational results for the quarter. Thanks, Jim, and good morning. Exceptional organic revenue growth continued to be a key contributor to our strong results in the third quarter, led by collection and disposal yield of 7.1%. Robust core price across every line of business led to third quarter core price of 8.2%, up 70 basis points from the second quarter. We continue to prioritize customer lifetime value in our pricing strategies, and we maintained third quarter turn of 8.7% when adjusted for steps we took to intentionally shed three large unprofitable contracts. We remain focused on disciplined pricing in the fourth quarter, positioning us to achieve our full-year revenue growth guidance of about 10%. In the third quarter, volume remained at healthy levels as workday-adjusted collection and disposal volume grew by 1.7%, including special waste volume growth of nearly 15%. Commercial volume, adjusted for the contract losses I mentioned, was 1.4%. We continue to grow volumes as our teams focus on differentiating WM as a preferred service provider. In addition, our teams in Florida are rising to the challenges from Hurricane Ian, taking care of their teammates and communities. While there were increased costs from business disruption and property losses in the quarter related to the hurricane, we are well positioned to handle storm volume as cleanup activity ramp up in the fourth quarter. We remain focused on controlling operating costs. Adjusted operating expenses were 62.2% of revenue in the third quarter, in line with prior year. While we still see high single-digit inflation, our operating expenses as a percentage of revenue in the solid waste business improved 70 basis points compared to last year. Over the last year, we made significant investments in our people, including proactive wage adjustments, an improved benefit package, and increased training. Those investments are paying off as driver turnover improved 410 basis points in the past three months, and sequentially, the rate of increase in labor costs improved more than 400 basis points. Vehicle repair costs remain elevated and are being impacted by the slowdown in truck deliveries, a tight labor market for technicians, and higher costs for parts and third-party services. The impact of higher fuel costs increased operating expenses as a percentage of revenue by 50 basis points. This increase was completely offset by the Alternative Fuel Tax Credit realized in the third quarter related to the first half of 2022. While cost inflation appears to be easing, the inflationary environment only serves to reinforce our commitment to using technology and automation to reduce our labor dependency across the business and lower our cost to serve. As Jim discussed, we continue to have strong conviction in our recycling business. While global markets drive the value of recycled commodities, the steps we've taken over the past few years to shift about 85% of our third-party volumes to a fee-for-service model provides protection on the downside. While there is a level of earnings variability, the recycling business is profitable and generates solid returns in any economic environment. Our blended average commodity rate in the third quarter was about $94 per ton. We are assuming a blended commodity value of about $50 per ton for the fourth quarter of 2022, which compares to $132 in the same quarter of 2021. These recent commodity market moves, combined with persistent cost inflation, are expected to be about a $50 million year-over-year headwind to operating EBITDA in the fourth quarter. We're very focused not only on managing costs in recycling, costs in the recycling business, but also investing and automation across our MRF network to structurally lower the cost of processed material and achieve better quality, which further enhances the protections afforded by our fee-for-service model while providing profitability lift even in the toughest markets. In the renewable energy business, we continue to see strong performance with operating EBITDA in the first nine months growing $24 million. The second of our 17 new RNG plants announced at the beginning of the year is on track for completion at the end of the year and is expected to begin generating revenue in the third quarter following EPA certification to generate RINs credits. In closing, we are very pleased with our third quarter results, and we continue to operate our business with notable focus on disciplined cost control and responsible revenue quality improvements. I wanna thank the entire WM team for their invaluable contributions to our success. I'll now turn the call over to Devina to discuss our financial results in further detail. Thanks, John, and good morning, everyone. As we've seen all year, our team delivered strong results in the third quarter, driven by organic revenue growth, diligent cost management, and proactive steps to automate the business. We continue to see improvement in our collection and disposal business as our strategic focuses on fostering a people-first culture and investing in automation are driving really tangible results. Adjusted operating EBITDA in the collection and disposal business grew $174 million in the quarter, which contributed to total company operating EBITDA margin expansion of 50 basis points to 28.6%. Performance in the collection and disposal business net of fuels drove 120 basis points of margin improvement. Operating EBITDA margins also benefited 50 basis points from the passage of the Inflation Reduction Act, which secured Alternative Fuel Tax Credit through 2024. This 50 basis points relates to the catch-up adjustment we made in the quarter to recognize the benefits of these credits for the first half of 2022. Partially offsetting these very strong results were headwinds of 50 basis points from recycling commodity prices, 30 basis points from the impacts of higher fuel costs, 20 basis points from increased technology and automation investments, and 20 basis points from damage to some of our facilities and vehicles caused by Hurricane Ian. Proactive management of SG&A continues to be an important element of our business optimization efforts. In the third quarter, SG&A was 9.2% of revenue, a 50 basis point improvement over the same period in 2021. Through the first nine months of the year, SG&A was 9.6% of revenue, which is consistent with the full-year outlook we provided last quarter. Year to date, cash flow from operations increased more than 4%, driven by operating EBITDA growth of nearly 10%. Cash flow from operations growth is muted relative to operating EBITDA growth due to higher cash taxes, higher bonus payments, a delay in cash benefits from Alternative Fuel Tax Credit, and some moderation in working capital benefits from last year when we saw significant benefits from our new source-to-pay system. Through the first nine months of the year, capital expenditures have totaled $1.725 billion, with just over $1.4 billion of that related to normal course capital to support the business and the remaining $322 million related to the strategic growth of our recycling and renewable energy businesses. As I mentioned in July, we were starting to see some encouraging signs of improvements in truck deliveries and were gaining traction on our sustainability investment projects. These early indicators continued throughout the third quarter, and we're pleased with the increased pace of capital investment that our teams have secured. We currently expect this accelerated rate of capital to continue in the fourth quarter, positioning us to finish the year on plan for capital expenditures. Turning to our 2022 outlook. Our solid operational performance in the first nine months of the year positions us to achieve the guidance we provided last quarter. We continue to expect revenue growth of approximately 10% and adjusted operating EBITDA within the range of $5.5 billion-$5.6 billion, which represents an operating EBITDA margin of 28.1% at the midpoint. Our operational performance puts us on track to achieve our free cash flow guidance of greater than $2.15 billion. However, in the fourth quarter, we now anticipate making an additional cash tax payment of about $100 million related to a 2017 matter. Considering this payment, we expect 2022 free cash flow of between $2.05 billion and $2.15 billion. When we pull all of this together, we're pleased to report results that meet or exceed expectations across all key financial metrics. Combining this strong performance with the stability and certainty afforded by a healthy balance sheet gives us confidence in our ability to deliver on strategic priorities through the uncertain economic backdrop. At the end of the quarter, our leverage ratio was 2.65 x, and 19% of our debt portfolio had variable rates. In conclusion, we are very pleased with the company's performance in 2022. We have strong conviction that the investments we are making in growing our sustainability businesses and in using technology and automation to optimize our business are setting us up for future success. The team remains hard at work on delivering a strong finish to the year and setting a solid foundation for 2023. With that, Catherine, let's open the line for questions. Thank you. As a reminder, to ask a question, you'll need to press star one one on your telephone. Please stand by while we compile the Q&A roster. Our first question comes from Tyler Brown with Raymond James. Your line is open. Hey, good morning, everyone. Good morning. Hey, Jim, just to start, I know you guys mentioned that you broadly maintained the guidance for the full year. I think that included the EBITDA 5.5-5.6, but obviously that's a pretty big range with one quarter left. I know we've got a lot of movement in commodities. We've got a weak Canadian dollar. Are we kind of tracking more towards the low end of that range? Just any help would be appreciated just to kind of tighten up that range. I think we're tracking still around the midpoint, Tyler. I mean, it is a fairly broad range of $100 million, but we feel pretty comfortable about the midpoint. Some of it obviously depends on what happens in Florida. You know, Florida for the year is gonna be a little bit of a positive. I mean, actually I should say a little bit of a negative. We were $20 million you know cost for Q3 and Q4 combined is what we expected it to be. Right now we're estimating kind of a $15 million benefit. That will change. That's gonna help determine where we finish within that 5.5-5.6. I'd say it's a little bit of a negative. That is based on what we know today, but that number will certainly change. That's why we're thinking that the middle of the range is achievable. Okay, great. That's very helpful. Then Devina, I know it's just maybe a little too early to give too much, but when we start thinking about some of the puts and takes on free cash flow next year, number one, can you just kind of remind us what your floating debt mix is and at current rates, is that a headwind? Two, how do we think about cash taxes in light of this $100 million payment? And three, will some of the incentive comp bonuses be paid? Will that be a headwind or a tailwind as we think about 2023? Yeah, that's a great question, Tyler. I think in order to frame it the right way, I'd focus on how we finish 2022. 2022 has been a fantastic free cash flow year for us. Really we start that and look at it most importantly on EBITDA strength. When I look at what we expected for the year, we were expecting a $300 million-$400 million increase in EBITDA on a YoY basis, and we're gonna knock that out of the park and finish the year. We've already achieved $371 million of EBITDA growth through nine months. When you think of the fact that we should deliver another $100 million-$200 million of growth in the fourth quarter, it really does speak to the strength of the year. When we look at the headwinds, though, for the year ahead, it really is what's creating a little bit of noise in our 2022 free cash flow. Interest and tax is leading the way, but there is some working capital noise as well. On the interest and taxes line, we now expect a headwind on a YoY basis of about $250 million. We started expecting that headwind to be $75 million-$125 million. When I look ahead, the fourth quarter payment I mentioned relating to the 2017 matter really doesn't do anything to change the trend of cash taxes. The trend of cash taxes will be impacted by the step change in bonus depreciation. There's a 20% reduction in the amount of benefit from bonus depreciation in the year ahead. That will create some sort of impact. I haven't yet quantified that. We'll give you more color on that in the fourth quarter. Interest, on the other hand, will be more significant. As I mentioned in my prepared remarks, about 20% of our debt is at floating rates. When I look at that combined with the rate resets on maturing debt, you've got about $2.2 billion of our debt balances that will be exposed to some rate reset in the next twelve months. We're currently projecting that could be about $100 million headwinds in the year ahead, but more color, because candidly, that number's changed very dramatically in the last three months. Three months ago, I was looking at a $40 million annualized headwind. To see that move that much in just a three month period is quite significant. On the working capital side, through nine months, we've had a headwind of $22 million from not having cash from the Alternative Fuel Tax Credit. Right now, we expect that to normalize, and from 2022 to 2023, there should be no impact from that whatsoever. On the incentive comp side, that's a headwind this year of about $40 million. You know, incentive compensation is expected to be higher for 2022 performance than it was for 2021, so there could be an incremental headwind for that in the year ahead, but I don't have specific amounts to share. All in all, what I would say is those below the line headwinds are offset substantially by that growth that we're seeing in the EBITDA of the business, particularly from strong solid waste performance. As we continue to make capital investments in sustainability businesses, there will be noise associated with what that, you know, total free cash flow number looks like over the long term. We expect to see growth in core solid waste performance that tracks to those long-term trends and even exceeds the long-term trends that we've set forth. Perfect. Lots in there. Appreciate that very much. I'm sure there'll be some talk about pricing, so I'll go ahead and turn it over. Thanks. Thanks, Tyler. Thank you. Our next question comes from Toni Kaplan with Morgan Stanley. Your line is open. Thanks so much. Tyler just teed it up why I only talk about pricing. You know, this year, some of the strongest pricing we've really seen. How are you thinking about pricing in terms of a trajectory into 2023? I know some of that's already just based on the inflation this year, sort of locked in. Just, you know, just how are you thinking about the trajectory there? Yeah. Good morning, Toni. Obviously, pricing continues to be a key driver for us on the top line. All of the lines of business show really significant price strength. Commercial yield was approaching 10% at 9.8%, 11% for industrial, 6.3% resi. And then I guess 6.5% on the MSW line. I expect that price will continue to be an important driver of our earnings. We've kind of been using price to combat this inflation issue over the last 12 months, and so most of it's really been cost recovery. I'd love to get to a point where price is not just cost recovery, but also margin expansion. I think that's gonna be the theme for price going forward. We do expect that inflation will start to come back down a bit in 2023. I think we were asked the question last quarter, what's the ideal inflation number? You know, I don't know what the ideal inflation number is, but I said it's not 9%, I know that. I think you'll start to see us apply a little bit more price to margin expansion, not just cost recovery, and that's really what it's been. Even with very high price numbers, it's been something that we've had to do in order to cover the cost inflation. I will say this. I think maybe the piece of our earnings, and Devina and John have talked about how good solid waste was, but the piece that might have been the most surprising to us was volume, really. If you think about collection and disposal volume being + 1.7%, and there was a little bit of a headwind in there with the hurricane. But still, 1.7% at a time when everybody's speculating about see, you know, when's the economy gonna turn down, was really impressive to us. I looked at our numbers this morning. Special waste was still up 15%, last week. Our volume continues to be relatively good, and that was the positive part for us. I think you know, when we ask why are we seeing that, I think it's probably two things. Even in the face of really pretty heavy pricing, I think you're seeing us continue to take market share, and I also think you're seeing our service show up better than our competition, which is positive for us. Super. Wanted to ask also about the commodity basket. I know you talked about it and sized it in the prepared remarks, but could you just remind us, I guess. I know you have, in the past, had some sort of sharing agreements with customers to mitigate exposure to commodities. I guess, what percentage of contracts have that, or however you think about, you know, sort of the mitigation of being exposed totally to the price? I know you have the recycling brokerage business, and does that sort of mitigate you as well? I guess outside of OCC, which commodities are you most exposed to? Toni, on the brokerage piece, we've always said, you know, that that certainly augments what we do in our in the piece of the business that we actually process the material, and that's low margin, no capital, but from a return standpoint, makes a lot of sense and helps us leverage our ability to move all the material. We still feel good about that business. From a margin standpoint, it actually abates from the margin as prices go down. On the traditional side, we've talked about how we protect the business on the downside in two ways. One is floor pricing on for some of the fiber grades that we have, and that's certainly something we consider when we're talking about the movement in fiber prices and how it affects the overall P&L. The second piece is really what we've done from a fee-for-service model over the last couple of years. I think the takeaway is, while we're showing some variability and profitability at these prices that have taken such a precipitous drop, and it's really mostly the fiber side, the takeaway is the business is still performing well. We're still happy with it. It's making money, and it's not changing our long-term view of what we're gonna do in the recycling business. Yeah. Maybe one add there, and that is to give you a little bit of insight into what we've done with these contracts. Just to put this in perspective, if the price drops from 110, and this is our bucket of commodities, drops from 110 to 100, the impact on earnings is about $8 million, $8.1 million to be exact. If the price were to drop from 50 to 40, the impact is only about $3 million, a little bit more than that, a little maybe $3.5 million. You can see that as price drops, the negative impact on EBITDA really starts to slow. That is representative of all the changes we made contractually over the last five years. To John's point, even with a significant drop off in price for the third quarter and expecting that in the fourth quarter too. That we still had the ninth best recycling quarter in our history for Q3. I don't think we would have been saying that five years ago. Terrific. Thank you so much. Thank you. Our next question comes from Jerry Revich with Goldman Sachs. Your line is open. Yes. Hi. Good morning, everyone. Good morning. Can we talk about how you're thinking about collection and disposal pricing from here? Just conceptually, do you feel like with the headwinds in recycling, we now need to push pricing more on the collection and disposal part of the business to offset $100+ million headwind in EBITDA for recycling into next year? Said another way, do you feel like you've got enough pricing in place to continue to push percent margins as we think about what the next 12 months might look like? Yeah, I mean, I kind of think of them a little differently. They're such different businesses from a price perspective. I will say this about price in the solid waste business. I feel like there's room for price increases. You know, Jerry. We went for almost 15 years with kind of nothing. I remember talking about 1% price and 1% volume many years ago. The business really went for quite a long time without getting any price increases. Yet, now all we're doing is trying to recover this, as I said, this four-year high inflation. I think in the core business, in the solid waste business, you'll continue to see us use price in a significant way to cover cost, but also improve margins. At the same time, you know, as John and I have discussed, taking cost out of the organization, taking advantage of this tight labor markets through attrition. We saw a fair amount of that in 2022. We'll see more in 2023 and 2024. I think the other thing I would point out on the margin side, Jerry, is if you look at Q3 of 2022 as a barometer of how we're performing, we talked about solid waste improving on a YoY basis by 120 basis points based on where we are today. The impact from recycling commodity prices being 50 basis points of an offset to that. We're really happy to say that we delivered 28.6%. I think that's a great indicator of where we're starting 2023. That's with the headwind of recycling almost fully baked in. I think we're set up well with where the pricing levels are today. You know, we have continued expectations for price based on the rollover of our index pricing that happens in the first half of 2023 that sets us up well there too. Super. Can I just shift topics on the landfill gas side? Nice to see 30% of your volumes locked in. I'm wondering, can you just talk about the terms? You know, our CF prior to last week's announcement was talking about the market essentially being in the twenties with attractive escalators for long-term deals. Can you comment on is that similar to the structure that you're seeing or any additional context you could provide for us on the terms? Yeah, it's a great question. You know, for us, what we're looking at is the mix of business that we'll have over time. You know, if we look at our expectations for how this portfolio grows, we could see our renewable energy grow 6x from where it is today. With that level of growth, we've got to look at this as a portfolio. The step that we took and that you saw the results of in the third quarter to secure some of this pricing over the long term is an indication of our desire to ensure that we're securing returns as we outlined in our initial expectations. As Jim Fish mentioned, those are certainly conservative outlooks for how we see this business grow. I won't specifically speak to the terms of the contracts that we have in place, but as we have thought about it, these are on the longer end of what we expect to do as we manage this portfolio over time. They're more on the 10 year end, where we think that we will also be managing things with three to five year contracts as the portfolio grows. Okay, super. Lastly, can you just talk about how the voluntary landfill gas purchase market is coming in, so not non-RIN market. How is the marketplace developing? Obviously, on paper, a lot of folks have commitments to purchase landfill gas. I'm wondering, as you're having the conversations, how have the conversations played out versus your expectations on market depth? Yeah. You know, that's one of the key points that Tara and her team keep speaking to us about, that this is, you know, not just the transportation part of the market, it's the non-transportation part of the market. People in public utilities and large institutions who are looking to decarbonize are seeing the RINs market as an attractive place to help to achieve their goals and objectives, which I think is speaking to the strong demand and outlook for the years ahead. We do expect the other thing that will help bolster some clarity on the outlook for this business will be the EPA setting rule in Q4. Hopefully those things working together will give us better visibility as we set our expectations for the earnings contributions of this business in 2023 and beyond, which we'll give you color on in the fourth quarter call. I think, Jerry, it's important to point out that this big investment that we announced a couple of quarters ago really is only covering 17 new plants. We have close to 100, and we discussed this with you when we were on the road, you know, 100 landfills that could go into that bucket. Right now, we're really focusing on, you know, just 17. There's a lot of opportunity to grow the business beyond that. Super appreciate the discussion. Don't worry, we won't put the 100 in our models yet. Thank you. Okay. Thank you. Our next question comes from Noah Kaye with Oppenheimer. Your line is open. Thanks for taking the questions. First, just a little bit of housekeeping on the recycling impact in the quarter. Can you maybe help us understand, was there anything in the timing of how quickly the basket dropped in the quarter that impacted your profitability versus, say, a normalized run rate? 'Cause it does seem like the decrementals were a little bit higher, maybe in quarter than what you are talking about even for Q4 or on a run rate basis. Yeah, I think, Noah, certainly the precipitous drop, particularly in the fiber markets, there's a little bit of lag there. There was a little bit of an outsized impact on the quarter. I think what I would point to, though, is we looked at, not just the sequential, but the quarter-over-quarter change in pricing and how that affected the overall EBITDA headwind. I think what you're seeing is resiliency in the business that we would, to Jim's point, we wouldn't have seen four or five years ago. It's still profitable business. If you look at kind of the old calculation of what does $10 a ton mean, we've certainly separated from that. You can see that in what we did in Q3, and you can see it in Q4 going from 138 to 94 produced a $36 million headwind. For Q4, we're seeing $50 million a ton going from 131 to 50 is a $50 million headwind. As I pointed out, it's still a profitable business. I think we've achieved a big part of our goal. Specifically to your question, because of the precipitous drop, there's probably a little bit of a lag there. Yeah. I just wanna clarify, I think someone earlier talked about a $100 million headwind from where recycling is at today going into 2023, if we just sort of levelized today. Is that math correct? You know, I think Jim had mentioned the decrementals would actually get even better as we get to lower levels here. If we just take today's, you know, basket price and say, "Okay, here's where we're at for 2022 as we enter 2023, do we have a $100 million headwind or should it be something less? Yeah, no, I don't think it's gonna be $100 million. I think part of it is if we audit crystal ball, what are the prices gonna look like? We have a view of what pricing will do, and I think you'll see a little bit of improvement from Q4 to Q1, and then sequentially throughout the year. The level of improvements really is what's gonna drive that answer, but I don't think even in this environment, it's quite $100 million. Yep. Okay, great. One quick question on pricing and churn, if you don't mind. You talked about, you know, kind of continued headroom for pricing. That certainly makes a lot of sense. You know, can you talk a little bit about kind of the current customer discussions and whether you're starting to see any greater pushback on price? It would sort of point to some of the macro concerns that people have been raising. Yeah. If you look year-to-date and even QoQ, you can see the improvement that we've made both in core price and yield. We didn't talk too much about yield, but this is a good spot. When we look at, we're still growing volume in commercial industrial, when you take out a little bit of the noise I mentioned in my prepared remarks. The residential piece, again, we've got a strategy there that we've employed over the last couple of years. The other things we look at is obviously what's going on Net Promoter Score, customer receptivity, the pricing. We're looking at churn, we're looking at rollbacks, and rollbacks actually improved quarter-over-quarter. All indications are that the pricing activities we're engaged in, and we've taken a much more strategic look at that, Noah, over the last handful of years and uses some tools that we didn't have a handful of years ago, and I think that's why you're seeing the uplift in pricing performance without really conceding our ability to grow volume and take some share. All right. Perfect. Thanks so much for the color. Thank you. Our next question comes from Michael Hoffman with Stifel. Your line is open. Thank you very much. If we could come back to price, has core crossed the lines of business and yields peaked yet? If not, when do you think you start hitting a peak? Did you ask has core price peaked? Is that what you said? Yes. Right. Yep, core price and then the conversion to yield, which by the way, you had a very good conversion to yield this quarter. It's improved each quarter. I'm trying to understand the core and yield overall, and then that conversion ratio. Has it peaked? It's a tough question to answer just because I don't know exactly what happens with inflation. What we did say is we expect inflation probably starts to come back down, which then would imply that the core price has peaked. If inflation went to 15%, which nobody expects, then I would tell you the answer is no. For now, I think you could say that core price has peaked. I think the most important aspect, though, of pricing is the point that we've made a couple of times, which is instead of just recovering costs, we'd love to be able to add a little bit of margin with price. For most of 2022, it's been kind of fighting this inflation battle with pricing. I think your point, Mike, on Go. Sorry, Devina. Go ahead. Sorry. Your point on the conversion of a core price seller to a yield dollar is a great one, and I think it goes to what John was speaking about just recently on customer receptivity to rollbacks. We do really think that all of that is being benefited by what's a tough operating environment right now in the hard work that the men and women who pick up the garbage for all of our communities every day are doing. You know, it's a tough labor environment. Operators are seeing challenges, and we are differentiating our services and continue to be a go-to service provider. When price is most effective in translating to yield, it's when we hold on to existing customers. Because our service levels are differentiated, and because small competitors are having a hard time meeting the needs because driver availability has been a challenge, we are holding on to more and more of our customers and differentiating ourselves each day. I think that will continue to be a strength for the business in the year ahead. Okay. The segue for me on all of that is, your entry price going into 2023 basically should reflect your exit price coming out of 2022. You are alluding to there's structurally a point, at least, of volume. We're having a conversation says you're somewhere around 8% on the top, and I'm asking for directional, not guidance, just am I in the right neighborhood? You're 8% on the top before you get the M&A rollover, which we'd love to hear what your current thought is on your M&A rollover. Costs are coming down. I think there is a wider than normal spread setting up between where you're going to report a price and where your actual costs are gonna play out over the course of the year. That would lead you to above average margins. Devina, you suggested we should start with the 28.6% as sort of a baseline, and then it can improve. If I do that, looking at this year, you're having above average margin expansion year in 2023. Have I thought about that correctly? I think when you think about the solid waste business in isolation, that is absolutely correct. We have talked about the recycling line of business and the headwind it creates, and that will be a drag on margin, particularly in the first half of 2023. I think your overall thesis about pricing and exiting 2022 and crossing over into the beginning of 2023 is the right one. The flow through of that to earnings expansion, to Jim's point about wanting to see more of that really start to be margin accretive rather than just covering our costs. I think we'll start to see better traction on that in 2023. I'll give you two data points because I think you kind of asked for them in your question. One being the rollover benefit of M&A. It was about $200 million of acquisition during the quarter. That's $135 million of annualized revenue. The rollover benefit's a little south of $100 million to 2023. The other point is on the index pricing. Our index pricing, we look at that's the 40% mix. Our current projection is that with the twists and shakes between what's CPI-based, which is fixed, and what is capped, we think that that'll be at about 5.5% in the year ahead, which is pretty consistent with what we were seeing in the back part of this year. We're pleased that that gives us strength going into the rollover of overall core price starting in Q1 of 2023. Okay. One last piece on that then. What I'm hearing is sales are up, EBITDA are up, sort of somewhere in an 8%-10% zone based on what you just shared. Based on an earlier question about free cash, free cash all in capital spending, including above average growth, is probably flat to down, given the headwinds. All-in capital spending is flat to down? Is that what you said? No, no. no. All in free cash flow. All in free cash flow with all in capital spending, meaning all growth spending, not just normal growth. You're flat to down. No, I think. Yeah, look, I think we'll give a lot more detail here in a couple of months, but I- Yes, you will. It's not gonna be a surprise to anybody when we come and say free cash flow for 2023 is gonna be down all in versus 2022 because you've got, as I mentioned in my prepared remarks, the biggest year of CapEx for these RNG plants and for the rebuilds of the recycling plants is gonna be 2023. We're talking about something on the order of $1 billion of CapEx for those versus $550 million, I think, is the exact number for this year. It's gonna be $450 million or $500 million of additional CapEx just for that. If we're looking at free cash flow all in for 2023, it's gonna be down. Okay. I think just everybody needed to understand that directionally. It's just so there are no surprises, right? You're gonna have a great solid EBITDA trend. Free cash is what it is for all the growth, and then I'm gonna get a real nice bump in that free cash come 2025, 2026. Yeah, that's right. That's right. One quick add to what Devina said about, she talked about index-based pricing. We've said a lot, several times that because of the 12 months look back on a lot of these contracts, the two biggest quarters for adjustment will be Q1 and Q2 of 2023. So we are looking forward to that. Last thing on the RNG, just so I understand this, you have shared that in 2021 you did about $40 million of contribution from that, and then you've added new projects in 2022. That $24 million improvement is partly spot market rates plus the new, or is it all new projects? No, it's some spot market rate increase. As a reminder, RINs pricing in the first half of 2022 was really strong above $3. You know, there was a big piece of that was RINs pricing. There was some that was electricity, and then some was incremental contribution from project development. Okay. Again, managing expectations. I know the $400 million, it's a good number, no question on that, but it's really weighted heavily back-ended 'cause the two bigger driving projects of this are later in the development cycle. You got a whole bunch of little ones early and then a couple really big ones later. 2020- We should all remember that, right? Sure. That's right. Well, look, 2025 for RNG, this thing really takes off like kind of a space shuttle in 2025 because so many projects are coming online in 2024, and a lot of that CapEx is being spent in 2023. If we think about kind of inflows and outflows of cash, you know, we started it in basically in 2022, maybe a little bit before, but 2022, the big outflow on a CapEx side for RNG plants is in 2023. These things have there's a bit of a you know, a lag with respect to construction. A whole lot of those plants, I think 11 to be exact, come online at some point during 2024. Some of them are, you know, and they're pretty much spread throughout the year. The big inflows really start in earnest in 2025, and then we get to a full run rate in 2026 for RNG. It's a little bit sooner for recycling. Right. Got that. I realize you're still in budgets, Devina, but you shared with us bonus depreciation is changing things. How do we think about the effective tax rate for next year? Is it up, down, flat? Effective tax rate we've guided at around 24.5% generally. I expect it'll be a little higher next year. As we've talked about, I don't have specifics. Yep. I got it. I just then need to directionally tune the model. All right. Thank you very much. Nice job on the price, folks. Keep it up. Thank you. Thank you. One moment. Our next question comes from Sean Eastman with KeyBank. Your line is open. Hi, everyone. Thanks for taking my questions. I wanted to just come back to the sustainability, you know, sustainability growth investment program, how that translates into EBITDA over the next couple years. I feel like the discussion with Michael there gave us a good idea on the RNG piece, just as we think about when these projects are kicking in. If we move over to the kind of recycling automation side, maybe help flesh that part of it out a little bit. Even beyond the sustainability element, my understanding is there's another automation bucket in terms of more back office elements and, you know, understanding how that kind of EBITDA benefits flows into the model in terms of timing. Anything around this would be very helpful. I’ll take a little bit of it and then maybe John can add on here, Sean. You’ve kind of touched on the strategy there, which is really reducing our labor dependency, taking advantage of the tight labor market and attrition. That’s one bucket. We’ve said that’s, you know, we think that number can be as many as kind of 5,000-7,000 positions. We’ve gone through what those different buckets are. Some of them come out of recycling. These rebuilds are worth somewhere between 30%-40% reduction in labor. Most of that, by the way, is third party because a lot of those are pickers on the line, and that’s what those are in large part third party. As John talked about, third party has been a pretty big source of inflation in our costs over the last year. There's that bucket. There's our customer experience bucket. By the way, Sean, our calls are down almost 27% YoY. That's a sign of our improving customer service. At the same time, as we've used technology within customer experience, we're just simply not replacing some of these positions. We've had as high as almost 50% attrition in customer experience. While we don't like that number, it's an awfully high number. It makes it challenging for our management team to kind of staff. This is an opportunity for us to use the technology that we put in place to take advantage of that attrition, and we have done that. By the end of this year, there will be, as I said, you know, about 1,000 jobs that we won't have chosen to replace. Then that goes from a thousand up to as many as 5,000 - 7,000. That's kind of bucket one. Then we talked a lot about RNG, as you said, and kind of gave you a bit of a layout there. With the recycling investments, there's really three forms of earnings uplift there. The earnings uplift comes from the 30%-40% reduction in labor. It comes from improved quality at the back end of the plant, and then it comes from increased throughput. As you add all this technology, optical sorting technology, you really start processing a lot more material. One of our big plants in Wisconsin plans on going from 12,000 tons a month to 18,000 tons a month. The throughput is going up by almost 50%. As you look at the rollout of that, as I said in my script, we think that the EBITDA pickup is maybe a year sooner than RNG. We think RNG kind of gets to full run rate by 2026. We think it's probably maybe 2025 for these rebuilds. We're kind of rebuilding as quickly as we can. Fortunately, haven't seen a lot of pressures, John, on the supply chain side for equipment coming in. At the same time, Sean, we're also building some new plants where we have a need. We are taking a sharp pencil to that in today's low commodity price environment. There are some markets, even with low commodity prices, where we definitely have a need. I think what you'll see is the big CapEx coming in 2023, the EBITDA continuing to show up in 2023, but really the big EBITDA bump will come in 2024 or 2025. Okay. That was very detailed. I really appreciate that, and I'll turn it over there. Yeah. Thank you. We have a question from Walter Spracklin with RBC. Your line is open. Yeah, thanks very much, operator. Good morning, everyone. My question is coming back to, I know, Jim, you and the team were talking about what you've done within your contracts on the recycling side to limit when commodity prices go down, the negative impact on EBITDA, kinda contracts as prices go down, which is great. I'm wondering if there's, you know, as the industry consolidates, as the desire for recycling goes higher, and Jim, your own comment about getting your recycling margins up to more your average margin. Finally, given the increased volatility in your earnings stream associated with commodity prices from recycling and natural gas conversion or waste-to-energy conversion, is there anything more you can do with regards to your contracts akin to, say, what a transport company will do with a fuel surcharge and effectively pass the entire price change on to the customer? Is that something you could envision that it will be a pure fee-for-service and, you know, you will relinquish or get rid of any of that exposure that you have to commodity prices via some kind of surcharge program that you could adjust in your current pricing? Just curious as to what you're thinking about further changes to contracts that would allow for that? Walter, we've talked about that a little bit in generalities, but I think specifically to your question, that's what you're seeing show up in our results. When you look at the numbers I referenced about Q3 to Q3 and Q4 forecast to Q4 actual and Q4 forecast, a couple of things. One, that business is still generating healthy margins and great returns. We've talked about returns in the recycling business, not just EBIT, EBITDA margins. I think the reason why you're seeing that is because we've kind of repriced, if you will, about 85% of our third-party processing agreements. We've got a little bit of room to go there. The way we're doing that, you've heard us talk about the revenue structure, but also this battle against contamination and the phases of revenue levers that we've pulled to make sure that folks look at our processing plants as just adding processing facility, where we're gonna get paid to process and we're gonna get a fair return on top of that before we really start to engage in what the revenue share is. While none of us are happy about the drop and how precipitous the drop was, I think what we're all taking inventory of is the fact that our recycling business and our MRFs are still producing good returns, good cash flow and margins. That's why you hear conviction about us, in particular on the automated capital we're gonna invest, because that's not really commodity-based. That's really driving down OpEx and positioning us, I think your earlier point, to be able to continue to grow that business even in a down environment. Perfect. That's great color. Appreciate it. Thank you. Our next question comes from Michael Feniger with Bank of America. Your line is open. Hey. Hey, everyone. Thanks for squeezing me in. Just to clarify the $50 a ton assumption in Q4, Devina, is that what your basket looks like in October? Or is that assuming maybe some recovery in November, December to get to that $50 a ton number? It's a projection of our blend over the three-month period, and there has been basically a continued decline, so we projected that. Okay, great. Just on RINs, like I think they're now at $2.50. Just so we understand the moving pieces there, because it was flat contribution this quarter. It's been a positive on a year-to-date. If RINs stay where they are, Devina, and that's below the first half of next year, does that mean this is a headwind to EBITDA in 2023, or because of maybe some projects coming on that offsets that? Just trying to think about the RIN being at $2.50, and that's below what we saw, a very strong RIN in the first half of this year. Just to level set what that means for 2023. That's a great question, and you're thinking about it the right way. Because RINs has come down from the highs we saw in the first half of 2022, our current outlook for 2023, although preliminary, would be that you could have some EBITDA headwind associated with the market prices. The offset, as Jim's talked about, for earnings growth associated with new plants coming online, doesn't really start to materialize in any material fashion until more like 2024. 2023 is still meaningfully construction-oriented, not significant impact from new capacity. Got it. Jim, you know, a while back, you laid out these targets: revenue growth 4%-6%, EBITDA growth 5%-7%, with a cost inflation of 3%-4%. When you look today with the cost inflation obviously high, what should we kinda be thinking about these ranges and what cost inflation could kinda look like for 2023 since that cost inflation is one of the factors you were talking about that kinda drives your guys, you know, pricing decisions in the open market? Thanks, everyone. Yeah, Michael, I mean, we're going through that exercise right now, looking to see what cost looks like for 2023. We have some pretty aggressive goals we've discussed internally. I think there's 5,000-7,000 positions that we will choose not to refill with technology. That helps us get there. The pushback on that on the other side is inflation. Hopefully we get a little bit of help from inflation that starts to come down. We do feel like the business can run at a lower cost structure, whether it's an operating cost structure or an SG&A number. You heard Devina talk about our SG&A number for the quarter, which at 9.2%, I don't know that anybody would have thought about that number for a quarter, you know, a few years back. It's pretty impressive that we're there. Some of that is attributable to some of these positions that have come out. It's a little bit of kind of both categories, OpEx and SG&A, where these positions have come out over 2022. We do think that cost and cost efficiency is gonna be a very important part of our strategy going forward. Of the three that you articulated, Michael, the most important of those is the EBITDA growth outlook. If we look at 2022's performance, that traditional range that we guided to of 5%-7%, we have meaningfully exceeded that in a year where this business grew organically, and it was managing the toughest cost environment that we've ever seen. We're really pleased to see EBITDA dollars up 11% in the quarter. We're revisiting what that long-term range should be. Makes sense. Thank you. Thank you. Our next question comes from David Manthey with Baird. Your line is open. Yeah, thank you. Sorry, I jumped on the call here a little late, but if you covered these, I can follow up offline. As we're looking down the cost stack here, just a couple of minor questions. You may have commented already, but on hiring and retention, what type of labor inflation are you seeing currently, kind of on a per person basis before these productivity-related attrition trends and so forth? You just talk about that. Then second, wondering about maintenance and repairs. I'm not sure if you manage that top-down or bottom-up, but are you seeing any delays there because of parts or labor shortages and any kind of update you can provide on the level of routine maintenance activity today? Yeah, they're great questions. Basically, from a wage inflation perspective, a year ago, we were at around 11%. We've seen that come down to about 7%. That's that 400 basis point improvement that we're talking about. Very happy to see where we are today, and we think the proactive steps we took a year ago are paying dividends today. On the repair and maintenance side, I would tell you we manage it both top-down and bottom-up. We manage it in every direction, and it's something that we have collaborative approaches on across the business, and it's the toughest cost category for us. It's got a lot of different factors that result in it being so difficult, one being delayed trucks, and that's one of the places that we really need to see some traction on, and we're working with the manufacturers to be sure that we get the trucks that we plan for when we expect them. The other things that are happening is technicians in the marketplace are very valuable across the transportation space. So making sure that we are the preferred employer has been a priority. We have made investments there and will continue to invest in the future. Aside from that, the things that are really driving increases are commodity-based inflationary pressures that we've seen on lubes and parts and supplies. We are seeing some moderation there that gives us some hope that in 2023, there will be some moderation from the high levels we saw in 2022. Sounds good. Thank you for the detail. Of course. Thank you. There are no other questions in the queue. I'd like to turn the call back to Mr. Jim Fish for closing remarks. Okay, thank you. I do know that some of our Florida team are on the call listening today, and I just wanna let them know how proud of them we are during this recovery from Hurricane Ian. A tough hurricane, particularly with the storm surge coming in as much as it did. We did lose property. We've talked about that. Our folks lost some property as well. Fortunately, everybody was safe. Everybody on the Florida WM Florida team was safe. You should all know that we're standing right next to you and standing next to Floridians in general during this recovery. Thank you, though, for your efforts throughout this, particularly there in Southwest Florida. Thanks again to everyone for joining us today, and we'll talk to you next quarter. This concludes today's conference call. Thank you for participating. You may now disconnect.