Good morning, everyone. I'm Adam Bubes from Goldman Sachs, and I'm delighted to host Waste Management today. With us from Waste Management, we have Jim Fish, President and Chief Executive Officer of Waste Management, and we also have David Reed, newly appointed Chief Financial Officer of Waste Management. Congrats, David. Thank you. And thanks for joining us today. We're going to run the discussion as a Q&A format. To start, since 2022, legacy Waste Management margins are up 300 basis points. And we historically thought about this business as 30 to 50 basis points of margin expansion annually from price cost, which sort of goes to show just the magnitude of operational efficiencies you've been able to achieve over the last three years. Just help us understand what's going on to drive that significant margin expansion, and how much runway is there left from here? There's probably one David or I could take. I'll take a quick shot at it and then turn it over to David. Well, first of all, I think you'll see if you think about that we've made tremendous improvement in margins over the last few years, as you say, but we still have, we think, a lot of runway left for a couple of reasons. One is because we're adding a business, meaning the renewable natural gas business, that already has higher margins than the average. So those plants coming online will certainly be a positive for our margins. And then secondly, as we think about the technology that we've discussed for the last five or six years, adding technology to particularly the operating side of our business has provided support for margins, whether it's on recycling or whether it's on our collection fleet. All of those are still in, probably to use a baseball analogy, recycling is probably in the ninth inning because we're just about to finish building out those recycle plants. The collection fleet's probably in the third or fourth inning right now in terms of being able to add technology to establish greater efficiency, and that all flows through to the bottom line. Yeah. And just to pick up on that one, on route optimization, we started with the most complex routes, which are industrial routes, and then seeing some nice improvements. It's still early stages where we're tweaking with that model, but then we're going to roll that into our commercial and residential lines of business as well. So lots of opportunity. And then on the SG&A side, it's similarly looking at technology and processes and standardization and centralization to find ways to lower our cost to serve to help on the cost side, but then also using price to continue to make margin improvement. I think in the last meeting, we talked about landfill pricing. I mean, on Investor Day, we talked about the fact that landfills, there is this kind of coming wave of landfill closures. They just are coming to have a natural end to their lives. The good news for us is that our average life is longer at our landfills than the rest. So whether it's our competitors, whether it's municipal landfills. All of that gives us the ability to use price as well there. I mean, it becomes a precious commodity. I think you'll see, I would say 20 years ago, landfill price was maybe 50 or 100 basis points. That was it. It won't surprise me to see landfill price continue to. Right now, I think last quarter MSW price was 6.5%, something like that, yield. That feels like kind of a minimum number, and maybe that number ends up being more like 8% as we see this capacity come offline. Super interesting. A lot to unpack there. Maybe we'll start on the landfill side of things because it's only recently that your yield in landfills has surpassed collection. It wasn't like that three years ago. So what's changed? Is that a sustainable trend? It sounds like it is. And then you've talked about potential closure of, I think, 400 landfills at your Investor Day over the next many years. How are you positioned from a capacity standpoint? How do you see what does Waste Management's reserve life look like 10 years from now versus today? I think we recognize that this trend is coming, and so if I use South Florida as an example, we have two landfills in the Miami area, and so, but recognizing that those landfills have a pretty limited life, we've done a couple of things. One is working to expand the footprint there, which is not cheap, as you can imagine. I mean, South Florida is expensive property, and the second thing we're doing is I was just there about three weeks ago seeing this operation, but we've signed an agreement with a second-tier rail line to move volume out of South Florida at actually a lower cost than it would cost us to put it on a truck to move it out up to a big landfill that's got 110 years of life, so this bigger landfill is in Central Florida. And so what it does is help preserve some of that airspace in South Florida. We're doing those types of things to preserve the airspace, particularly at those super well-positioned landfills. Those South Florida landfills are an example. You can think about GROWS landfill. It's not GROWS anymore, but Fairless in Philadelphia. That's by far the closest located landfill in that area of the country to the city center of Philadelphia. So we're also working to preserve that space, whether it's moving volume away from it for now and saving it for a later date, whether it's raising price, which has the effect of moving volume out. But our sites do have, A, we have the best positioned landfills, 16 of the top 20, I think is what we've talked about in the past, of the top 20 MSAs, we have the best positioned landfill. At the same time, we have to make sure that we preserve that space. We're doing things like I mentioned. Terrific. And then just unpacking some of the margin levers that you alluded to, I think the route optimization opportunity is really interesting. As you talked about, you've rolled that out on industrial. You still have commercial and residential left. So can you just contextualize the degree of efficiencies that you're able to see when you put in technology to help optimize the routes? What does the opportunity look like from here? Yeah. I think the biggest opportunity is in the industrial side. And I mentioned we're still tweaking with it. We're working with real-time traffic patterns to make sure that on any given day, we're sending our trucks in the most optimized route possible. And it's able to adjust based on changing a customer's orders or whatever is another key aspect. But I don't have a specific number in terms of how much it'll improve efficiency per se, but that's the biggest opportunity. I think it also improves the experience for the driver as well and also safety. And so that's another key attribute as well. I think one area where we do have a more specific number is in residential when you transition from a traditional rear loader to an automated side loader. Because we're picking up today, our average number of homes that we pick up per day with a rear loader is about 700. And we go to 900-1,000 homes per day with an ASL. And you can understand why. I mean, there's a lot more labor involved with a rear loader. There's a person on the back, and that person has to jump off the truck and load the trash. With an ASL, it's just literally pulling up to a stop and operating a joystick and picking up. And so you can understand why it's more efficient. It is significantly more efficient. And so while we talk about moving from ASLs or from rear loads to ASLs and how it is a safer operation for us, we don't talk as much about the pickup in productivity, and it's a significant pickup. Sure. And you gave the baseball analogy earlier. What inning are we in on the? Yeah. So I think David, we're about 70% of the way there on the rear load to ASL conversion. Okay. Is that residential specifically? Yes. Residential. So what is that in baseball terms? I don't know. Six inning. We'll call it six inning. Terrific, and so beyond cost efficiencies, pricing is, of course, as you talked about, a key margin driver. As you folks are making pricing decisions for 2026, can you just talk about what level of inflation you're embedding? Recycled cardboard prices continue to decline sequentially. Is that part of the decision and budgeting process when you set pricing for a given year? Yeah. I mean, we'll give more formal guidance in January, but I mean, you can expect that we're looking to price about 150-200 basis points above what we experience as the cost to our business. And so that's kind of the mindset we have. Obviously, whether it's technology or other efforts, we're always trying to lower the cost to operate. But in terms of how we price, it is to cover our expected inflation. So that's one key aspect. The other thing around price is we've gotten a lot more sophisticated over the years in terms of looking at customer lifetime value. And as opposed to transactional increases in pricing, we're really looking on a customer basis. What has that customer's experience been with us over the last year? And then how do we price that accordingly? Can you just talk about some of the more analytics that you're doing on that front? Is there more tools to roll out, or is that sort of optimized at this point? There's probably always more to go, but we've made great headway. For example, a customer, for instance, if we had a missed pickup in the last year, we're going to know that before we have the pricing conversation. Or if they've had a billing issue, we'll know that kind of the experience that they've had recently. And so in terms of we want to keep those customers and reduce churn as much as possible. And so we're using those customer analytics to influence how we approach that customer from a pricing standpoint. Sure. I think it also maybe another example is the dynamic routing component of this business. So you end up with, I mentioned, 700 customers on the residential side, which is more than any other type of route. But even with roll-off, you may have a roll-off driver may pick up seven accounts. They may have seven, maybe eight, if we're really good. And so making sure that you're properly routing that. The old way of routing it was really almost leaving it up to the driver him or herself to do their own routing. And most of them know their own cities. And so they would say, "Well, I'm going to pick up the Home Depot, and then I'm going to take that in, and it's an emptying return." And so there's some complexity to it that couldn't possibly be fully optimized just through the driver's kind of knowledge. That's part of what we've done is optimize this through use of dynamic routing. That has made a pretty significant difference. You talked about the 100-200 basis points spread to internal inflation. When you look at internal inflation, is that sort of including the net of the productivity capture that you're having, or is that just pure same-store sales cost inflation that you're experiencing? It would be from a dollar standpoint, like what's the actual cost to the business, but hopefully, over time, as we reduce cost to serve, it makes us more competitive in terms of the volumes that we're able to attract and price appropriately. Sure. Adam, I don't think we answered your question about commodity prices. You did mention commodity prices. And we've looked back. We've been in the business a long time, so in the recycling business a long time. So typically, what we've seen is about a 24-month period peak-to-peak in terms of commodity prices. If you believe that the peak was kind of June-ish, second quarter of 2024, then that would imply that on average, we would be back to the next peak of commodity prices in the middle of 2026. I think this might be a little bit longer cycle. But still, talking to some folks that know quite a bit about it and are really looking at the markets, particularly in China, but in Europe as well, they seem to think that the rebound starts more in Q3. So, as opposed to peak-to-peak being two years, it's probably both of the folks that I've talked to have said we're probably at the bottom at this point. And so that recovery probably starts from here. By the time we get to Q3 or Q4, you could see us maybe not at the next peak, but certainly on an upswing. This has largely been a supply-driven price impact, less demand-driven. There is a demand component to it, but more of it's been supply as a lot of this supply moved from overseas to stateside. And so there's been this kind of overcapacity condition that we've been in. Those plants are starting to right-size. And we think that'll be fully accomplished by end of next year or into 2027. Super. And then keeping with the margin improvement theme, you've also outlined ambitious cost reduction on Stericycle, which is, of course, the medical waste provider you acquired in November of 2024. I think the target is $250 million annual run rate cost synergies. Can you just update us where we are along that journey on the cost synergy side and your updated thoughts on the cadence thereof realization? Sure. For this year, I think we had guided to $80 million-$100 million of cost synergies, and we're kind of towards the high end of that for this year. Like you said, $250 million is our latest estimate overall, and that's double of what it was when we first announced the transaction. SG&A is a great example where prior to acquiring the company, we were at, or Stericycle is at, call it 25% SG&A as a percent of revenue. We've made sequential improvement quarter in, quarter out since we've owned the business. I think we're in the high teens right now. The amount that we underwrote for the 250 is actually, sorry, I forgot where we're at right now, but the amount that we underwrote for the 250 is to get to about 17% as a percent. But we see a pathway longer-term to getting closer to our enterprise level, which is 9%-10%. So it's a tremendous opportunity there. Some of it's priced into that cost synergy estimate, but there's more room to run as well. Interesting. And you alluded to it a little bit, but Healthcare Solutions margins, I think, are tracking towards the 17% range for the full year. And $250 million is sort of the low-hanging fruit cost synergies. But where could margins get to in this business on a longer-term basis as you roll in pricing, as you reduce SG&A to the range you talked about? We definitely see a pathway to get it to the mid-20s in the kind of near term, like two to three years. And then beyond that, there could be more room to run as well. And so it sounds like the cost improvement story is trending nicely here. But in the latest quarter, you did see some revenue headwinds. And I think you cited churn and some deferred price increases and credits. So can you just talk about the revenue side of things? When do you expect revenues to stabilize in that business and sort of return to growth and your updated views on the top-line growth algorithm in that business? Yeah. Maybe I'll shoot at this one because I've been very bullish on this business for all the reasons we've talked about many times: the secular trends in the space, the aging population, all of that. The fact that this business has one of the reasons we were so interested in it for so many years, we started looking at it a decade ago, is because of their market position. And their market position remains very, very solid, particularly as you think about these big customers. They literally don't have another competitor that can adequately compete against them for these national footprint customers. Compare that to our legacy business, where when we go bid on a Lowe's, there are probably five, maybe as many as seven competing companies that can provide service across North America to a Lowe's or a Home Depot. When it comes to a large, similar kind of national account in the healthcare space, there's one, and it's us now. And as those businesses have consolidated over the last 10 years- 15 years to bigger companies, then that benefits us. The downside has been that Stericycle is not providing a good invoice for those customers. And as part of the ERP, that's been a challenge that we're aggressively tackling. So I think we had said internally that on December 1st, all of our A and B customers, we kind of categorize these in A through F. And A and B are the big ones. Those are the ones I just talked about. And those customers would have a good invoice, all of them would have a good invoice, by December 1st. And I have a call on Friday to make sure that that's what happened. But I think what happens in terms of top-line is that there was a couple of things going on. And we referenced it on the call. I think it largely was overlooked. But some of the top-line impact was from those credits that we were giving. So when we inherited the business, when we took over the business, we inherited some of these billing issues and an outsized past due number. So the DSO, just to put it in perspective, our DSO for our business is like 46 days, something like that. Their DSO was north of 80 days. And some of that's apples to oranges because some of these customers just typically are, the larger the customer, the longer out the DSO is going to be. But still, having one that was close to 2X our own DSO didn't make sense. And we have aggressively reduced that DSO. Part of that has been taking care of these past dues. And there is an active workstream going on to take care of past dues. But you couldn't really take care of a past due account if I come to you and say, "Adam, look, you got to your DSO is 180 days. We need to take care of that." Your answer is going to be, "Give me a good bill, and then I'll start to take care of it." Now you have a good bill. And so we're taking care of that quickly. It happens in two ways. It happens through cash collections, and it also happens through credits. It was more heavily weighted towards credits on the front end of this process, this collections process. Now it's more heavily weighted towards cash collections. So there still are some credits that we're giving to customers to resolve the DSO issue. But a much bigger percentage now is cash versus credits. And so what I think was overlooked on the call in October was that a portion of the degradation in top-line was those credits because it's essentially a contra revenue, is what it is. And that number ends up being a tailwind for us as we get into 2026 because we won't have those credits. Not to say we'll never give another credit memo out, but most of those credits were one-timers to clean this up. So that ends up being a tailwind for us next year. I feel we, not just me, but we feel really good about the free cash flow generating effect of this business in 2026. Free cash flow is going to be a good story for us across the board. We talked about the 3.8. But included in that 3.8 is a real nice pickup in free cash flow for the Healthcare Solutions business. Some of that comes from top-line growth. Some of it comes from improved pricing, which we weren't able to get a lot of pricing last year just because it's hard to go to a customer and say, "Okay, here's your price increase when we're not giving you a good invoice." Now that we're giving you a good invoice, we can normalize pricing. So there's a number of reasons why. And then to David's point, synergy capture, there's a lot of reasons why that business is going to show really nice EBITDA and free cash flow growth year-over-year. And so maybe to end the Stericycle discussion, we'll pick up on that theme of pricing because historically, Stericycle had struggled with pricing, but you and others in the waste industry are sort of leaders in capturing that customer lifetime value appropriately. So talk to us about the opportunity there. What's the impact Waste Management can have on the medical waste industry, and how does that work with pricing for Stericycle? I know they have some longer-term contracts. So what does the opportunity look like? There were a couple of things going on in pricing that, setting aside just kind of where we think the right level of price should be, I mean, there were a couple of things going on there that were negatively impacting price for them. One of them was that the systems had some real glitches in them where you could put a price increase in, and then the system, whether it was a human error or whether it was an actual system error, would effectively undo the price increase. And so for whatever reason that was happening, that's been a workstream that we've been fixing. We don't want to have a system that's working against our price efforts. So that was one of the things that was happening. And then secondly, Stericycle had no idea what the customer profitability, even for their large customers, did not understand customer-by-customer profitability. That's very important to us, particularly as we think about pricing. In addition to that, it's important to understand how we're doing from a service standpoint. And David talked about it in the last meeting, but on our legacy business, look, if we miss a customer's pickup two out of three weeks and they happen to be due for a price increase, we recognize that. And we know that the chances of them churning out of the business if we give them a price increase right after we miss their service two out of the last three weeks are pretty high. And so we can put data and analytics to work on that. Stericycle had no kind of idea about that. And so bringing those types of analytics to that business really helps us capture price in the right place. And then just overall, I think the fact that they have, first of all, they're in a business where if I were to ask you, "What's your healthcare cost doing at Goldman Sachs?" It's got to be a 10% increase every year. Maybe Goldman's better than Waste Management. But I know my healthcare cost goes up every year. And so that's a business that should get higher than the average. It should get higher than trash and recycling services. So we think we've got opportunity there as well to really get a pretty nice level of price increase to David's point that clearly outpaces our cost levels. Some of these customers, honestly, have gone for three or four years without a price increase. And so once we give them a good invoice, which I think we're there, then we can expect to go back to them and say, "Okay, time to get a price increase. Terrific. And these businesses are fully integrated into our area structure now. And so one of the other things that I think is an added benefit by being part of the WM network is we're actually looking at profitability in that line of business all the way down to the site level. They didn't do that before. And so to the point of how do you know what the right cost is to serve a customer, we just have way more insights now at a much more local level than they had before. Sounds like a lot of opportunities there and look forward to seeing it play out. Another opportunity for you is landfill gas that's in the process of ramping. I think this year it's going to contribute something like $150 million-$160 million to EBITDA to growth projects. That's ramping up to more of a 470-500 range by 2027, I believe. Can you just give us an update on that ramp? How are the projects progressing as they come online? How is performance tracking versus expectations? Yeah, this has been a really, really nice story for the company. And we have a little bit of a differentiated model just because of our long-standing history of managing beneficial use of landfill gas. And so we picked 20 projects, which were the largest and most economical, easiest to get to market projects. It's a $1.6 billion over a number of years. So we're on track in terms of building out those plants. The pricing that we underwrote those is still intact as well, which is nice to see both on the RIN side and also on the natural gas, the brown gas side. So that's been a nice story. Sometimes people ask, "Well, what's next?" You get the 20 done. We do have another list of investments that we'll evaluate. We're going to compare those in terms of where do we spend that next incremental investment dollar. We're going to have the same return hurdles and things of that nature. We're also looking at things like power demand is dramatically increased in the U.S. with all the data centers and everything. That's also something that we can evaluate as that market develops too. And so it sounds like these projects are progressing nicely. As you alluded to, D3 RIN prices are above the target that you laid out. But there is some volatility in that credit scheme by the EPA. Can you just talk about how you folks are approaching the volatility management in this business? Sure. So the biggest piece, when we talk about the RINs market, we're able to capture the RIN credit because we have a CNG fleet that we're able to basically close the loop and to be a beneficiary of receiving that credit. The Set Rule that came out recently, the positive of it was it was longer. It was, I think, multi-year, so it provided some stability to the market, and so that was actually a benefit. We're still trying to negotiate to get more capacity just because of the way that the market's designed, but as we roll through our fleet, which I think next year we're saying about 45% of our gas volumes is going to be attributed to the RINs market, then you shift to the voluntary market where you're working with another party for an offtake agreement. We have a healthy market right now. And we have risk mitigation plans in place to where basically as we enter into a calendar year, so as we head into next year, we try to lock in 80% of that calendar year's volume at the beginning of the year. And then over the year, we'll dollar cost average to get to the full allocation. And then for year two, it's 40%. Year three, it's 20%, ± 10% on each of those years. And so we feel like we're proactively sourcing buyers for those volumes so that we have more certainty as we're trying to manage our guidance around this business year in, year out. I think on a related note, I mean, David mentioned there is another kind of tranche of these that we will evaluate. We haven't made any commitments. But I don't think you should expect to see us make another big announcement saying we're building out another 20 for $3 billion. I think certainly in 2026, what you'll hear us do is really harvest a lot of the cash from these and return it to shareholders. $3 billion, both in the RNG business and in the recycling business, has been a substantial investment of dollars. And so we look at 2026 and potentially 2027 as being harvest years. I mean, if you think about it as a farmer, there's planting years and there's harvest years. This is going to be a harvest year because you'll see free cash flow. We talked about 3.8. That's a 31% increase in free cash flow year-over-year. Some of it comes from that reduction in CapEx, both on the legacy business and on these sustainability projects. Some of it comes just from pure EBITDA growth in the overall business. So I want to get to that free cash flow point that you just made. But quickly before that, I want to talk about the other contributor to that inflection, which is recycling. And so I think you have a $1.4 billion recycling investment plan to generate close to $300 million in incremental EBITDA through automation, upgrading existing plants. I think the cost efficiencies are pretty well documented in the productivity that you're realizing here is well understood at this point. What's next for the recycling business? Are there more opportunity, more investment runway? How do you see the next leg of the process? I think the rebuilds, we're largely through with the rebuilds. We had targeted 31 plants in that $1.4 billion. 29 of the 31 are now rebuilt. And we're seeing kind of a 35% reduction in labor there. When you go to those plants, I mean, there's very few people there. When you would go to one of our old plants, there was a lot of kind of pickers on the line. And a lot of those pickers have gone away now. They're being replaced by automation. Most of that automation is done now with 31 plants, 29 of them complete. Where the growth comes from in that business would be in finding kind of new markets where we don't have a presence. And we've already done some of that. We committed to building 12 new plants. I think 8 of them are complete. So we have four plants left to build. Some of those are in, they're not just in the U.S., some in Canada. But to the extent that we want to grow that business, we'll continue to look for those kind of white spaces. And as you alluded to, as growth CapEx steps down next year, you've talked about potential free cash flow of up to $3.8 billion, I think is the number. Can you just help us parse out the drivers of that free cash flow step up next year? I think growth CapEx piece is clear, but what are the other pieces? Is maintenance CapEx normalizing with lower fleet purchases? Just a moving driver there. So if I take the midpoint of our free cash flow for 2025, it's about a $950 million benefit heading into next year. Jim alluded to about a 33% increase in free cash flow. The biggest piece is the sustainability CapEx step down, which is about $400 million improvement year-over-year. And then another area on the truck purchase side, the last three years, we've been buying about 2,000 trucks per year. Part of that is a little bit of catch-up from supply chain issues post-COVID. And then also just as we've been automating some of our fleet, converting rear load to ASLs, we've been accelerating that to get the savings and the safety benefits from that as well. So that's about a $140 million improvement. Then you're also just going to have natural EBITDA growth, partially offset by higher cash taxes, are really the rounding out pieces. Then to Jim's point, investors have been patient with these sustainability investments. So the harvesting for next year and 2027, you're going to see a more balanced capital allocation approach next year. Typically in December, we have a board meeting and we outline with a press release our expectations for shareholder returns for the following year. So that's a couple of weeks out. But you can expect that it's going to have a pretty balanced approach to capital allocation. We're going to get our leverage back to our long-term target, which is 2.5-3 times. That's what we've communicated with the rating agencies and we're committed to that. But you should also expect that after 22 years of sustainably growing our dividends, we'll likely do that again next year. But the biggest change will be turning back on our share repurchase program during the year. So you could expect that. So maybe to end the discussion, you talked a little bit about sort of the near-term capital allocation view, but free cash flow is going to be stepping up significantly over the next two years. These growth investments are going to sort of be reaching the end of their plans. What's next on the capital allocation front? Is it accelerated returns to shareholders? Is it further M&A in some of your newer verticals? Just help us think how you're thinking about capital allocation. As far as M&A goes, I don't think you'll, I mean, I don't think you're going to see us go and buy another healthcare solutions company. I think we'll be good with the one we have. You'll continue to see us do tuck-ins. Tuck-ins are, you are seeing consolidation happening in our space, in the solid waste space. Between us and some of our competitors, there is an outsized amount of consolidation going on there with the small guys. Part of the reason for that is the small guys are having real labor challenges and have had them, not just related to the CDL thing or immigration, but have been having challenges just because the pool shrinks. And my daughter's 22 years old, people that age don't really want to drive trucks anymore for whatever reason. So the pool's shrinking. And so therefore, these small companies are having a hard time finding drivers or heavy equipment operators or technicians. So that is lending to permanent consolidation. It used to be these folks would sell and they'd sign a non-compete. And the day their non-compete was up, they'd jump it back in. Not as many of them doing that. When they sell, they sell permanently and then they're out. So I think you'll continue to see that trend and we'll be a participant there. Terrific. Well, Jim, David, thanks so much for joining us today. Really appreciate the discussion. Thank you. Thanks. Hope it's helpful. Hope it's helpful.