Good day, ladies and gentlemen, and welcome to the Q2 2012 Waste Connections earnings conference call. My name is Deanna, and I'll be the operator for today. At this time all participants are in a listen-only mode. Later we will conduct a question and answer session. (Operator Instructions) As a reminder, this conference is being recorded for replay purposes. I would now like to turn the conference over to host, Ron Mittelstaedt, Chief Executive Officer. Please proceed.

Okay. Thank you, operator and good morning. I'd like to welcome everyone to this conference call to discuss our second quarter 2012 results and provide a detailed outlook for the third quarter as well as few updates for the full year. I'm joined this morning in by Steve Bouck, our President; Worthing Jackman, our CFO; and several other members of both our corporate and region senior management team. As noted in our earnings release, the first half of the year has played out about as expected as revenue, adjusted EBITDA, and adjusted free cash flow tracked within or ahead of our expectations. In the recent quarter, revenue slightly exceeded our outlook and adjusted EBITDA hit the midpoint of our guidance. More importantly, we have now delivered almost 60% of our full year free cash flow guidance for the year. Year-over-year margin comparisons are difficult. As expected due primarily to decreases in recycled commodity values and our decision to turn away lower price disposal volumes at our Chiquita Canyon landfill. And as we've been communicating for the past several months, these negative comparisons should be most pronounced during the third quarter. Likewise, year-over-year EPS comparisons are impacted by the negative drag from the increase share count resulting from our equity offering earlier this year. This drive will continue until that capital is deployed. With this year fairly well dialed in, we are focusing on the unknown. More specifically, to what extent, to a tepid economy, and further decreases in commodity values cause additional margin and volume headwind and what might be the timing of our capital deployment for acquisitions or share repurchases. Industry and investor dialogue more recently has focused on a volume-less recovery and potential increasing price competitive emphasis and churn rate, especially in urban markets. We believe our results in this environment once again highlight the benefits of our differentiated strategy and disciplined deployment of capital. Before we get into much more detail let me turn the call over to Worthing for our forward-looking disclaimer as well as other housekeeping items.

Thank you, Ron, and good morning. We must inform everyone listening that certain matters discussed in this conference call are forward-looking statements intended to qualify for the Safe Harbors from liability established by the Private Securities Litigation Reform Act of 1995, including statements related to expected volume and pricing trends, recycled commodity values, expectations regarding period-to-period comparisons, potential acquisition activity, share repurchases, the impact of the relocation of the Company's corporate headquarters from California to Texas, comparative results among our regions, and our third quarter and full year outlook for financial results. Such forward-looking statements are subject to various risks and uncertainties, which could cause actual results to differ materially from those currently anticipated. These risks and uncertainties are set forth in the Company's periodic filings with the Securities and Exchange Commission. Stockholders, potential investors and other participants are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements made herein are made only as of the date of this conference call, and the company undertakes no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances. On the call, we will discuss non-GAAP measures, such as adjusted operating income before depreciation and amortization, adjusted net income and adjust net income per diluted share, adjusted free cash flow. Please refer to our earnings release for a reconciliation of such non-GAAP measures to the most comparable GAAP measure. Management uses certain non-GAAP measures to evaluate and monitor the ongoing financial performance of our operations. Other companies may calculate these non-GAAP measures differently. Now I'll turn the call back over to Ron.

Okay. Thank you, Worthing. As noted earlier, revenue in the second quarter slightly exceeded our expectations. Revenue was $410.7 million, up 5.3% over the prior-year period. Internal growth in the quarter was a -0.2%, broken down as follows: +3.0% from core price; -2.2% volumes; -1% from recycling, intermodal and other services; and surcharges were flat. With the vast majority of price increases already implemented core price for the balance of the year should remain around 3%, and surcharges should be flat at current fuel prices. This strong core pricing has thus far offset the dollar impact from year-over-year declines in recycled commodity values, and our turning away of lower priced disposal volumes at Chiquita Canyon. Volume growth in Q2 was -2.2%, or slightly ahead of the midpoint of our -2%-2.5% outlook for the quarter, due to nominally better-than-expected special waste and exploration and production, or E&P disposal volumes. As expected the negative volumes were due primarily to three factors, which accounted for over half of this volume loss. Our decision to turn away lower price volumes at our Chiquita Canyon landfill, tougher year-over-year comps for special waste jobs, and increasing competitiveness within our more urban-like markets of Denver and Houston. This third factor while only affecting a small percentage of our markets reminds us of the benefits of our exclusive and our secondary market focus. From a macro standpoint, the necessary drivers for volume growth are increased consumption, increased construction activity, household formation, and new business starts. All of which are disappointing at this stage of the recovery. This tepid economy has made us a little more cautious on our volume outlook for the second half of the year. Changes in special waste activity will be the most notable driver of volume decreases in the second half of the year,…

Thank you, Ron. In the second quarter, revenue increased 5.3% from the prior year period to $410.7 million, 5.5% of which from acquisitions and -0.2% from organic growth. Adjusted operating income for depreciation and amortization in the quarter is reconciled in our earnings release, increased 2.7% to $131.5 million. As the percentage of revenue, this was 32%, or about 80 basis points below the year-ago period. Year-over-year, we estimate that about 55 basis points of this 80 basis point margin decrease was attributable to lower recycled commodity values. On a reported basis, the following are certain line items that moved a notable amount from the year-ago period as a percentage of revenue: Tires, repairs, and maintenance increased 50 basis points. Insurance expense increased 35 basis points. Labor expense increased 25 basis points. Leachate expense increased 20 basis points, and facilities and other property costs also increased 20 basis points. Almost half of these increases is percentages of revenue were offset by 35 basis point in decrease in fuel expense, a 35 basis point decrease in SG&A expense on lower incentive based compensation and a 25 basis point reduction in third-party disposal, transfer, taxes, and pass through expenses. Regarding fuel, which is almost 6.4% of revenue in the quarter, we average approximately $3.52 per gallon for diesel in Q2, or about $0.10 a gallon below the year-ago period. As a reminder, adjusted results for the period exclude cost associated with the relocation of our corporate headquarters from California to Texas and acquisition related expenses. These costs, which are all reflected in SG&A totaled 3.4 million in the current year period. We now believe our total relocation costs excluding any charge for the write off of our prior office lease, could be closer to $10 million rather than the $15 million we…

Okay. Thank you, Worthing. Again, we are pleased with our results in the first half of 2012, but are now more cautious about the remainder of the year given the increasingly challenged economic environment. The good news is we have strong visibility on core pricing growth and free cash flow for the year and recently completed acquisitions more than offset any potential softening in volumes. As such, we expect full year revenue to be between $1.62 billion and $1.625 billion, a $5 million to $10 million increase over our original outlook for the year. Adjusted operating income before depreciation, amortization and accretion is estimated to be about 31.8% of revenue for the full year reflecting current commodity values. And as noted earlier, free cash flow remains on target to be between $250 million and $260 million. Additional acquisitions or any improvement in the economy or recycle commodity values would provide upside to these estimates and/or platforms for growth in the upcoming years. We appreciate your time today and will now turn this call over to the operator to open up the lines for your questions. Operator?

(Operator instructions) And the first question comes from the line of Scott Levine, JP Morgan.

Hi, good morning, guys.

Hi, good morning.

Good morning.

So, it sounds like incrementally caught more cautious tone with regard to the cyclical and the volume outlook in general, however, it sounds like most of the incremental weaknesses in the special waste area, which we also thought... you know, used to thinking of as project-driven and lumpy. If you could characterize or maybe separate the general macro environment you're seeing and how much incremental weakness you might be seeing there versus the special waste activity. And then follow-up, is this special waste driven more by commercial real estate pulling back or pull back on government-sponsored projects? Additional color there.

Yeah. Okay, Scott. Let's see. First off there's two components to the special waste that are causing a year-over-year decline. One is just purely very good comps in last year's Q3 and a record amount of special waste. As you saw, we gave Q4 preliminary volume guidance and it was almost twice as good, if you will, as the third quarter guidance we just gave and special waste in Q4 is really at one of the worst times. So, part of it is just a comp issues, but the second part of it is that we're seeing more hold up on the government projects that we were seeing really flow in 2011, that latter part of '10 and even the beginning of '12, both federal, state and local. We're just seeing those sort of come... kind of a slowdown. In many cases they're being deferred for some period of time due to predominately budgetary constraints. So, that's where we are in the special waste. We would tell you that our view was is that we were seeing a pretty nominal but steady improvement sort of each quarter of 2011 as we marched along and the first quarter of 2012 and beginning in about June things seemed to slow down and not uptick seasonally the way we've traditionally seen and that has continued into July. Now that is geographic. That is not across the board. What we're seeing is that the mid west down into the panhandle and into Texas remains very strong and that is driven really by oil and gas and MP activity driving the economies there. We're seeing low unemployment there. But when we get either east or west of that, west of the Rockies or really sort of east of Nebraska, what we see is that things are slowing in those areas, nominally, but they're slowing and we just didn't see our normal seasonal uptick. So, again, if you take, as we said in our commentary, if you take special waste out we're seeing roughly a flat environment. We categorized that as sort of negative -.5 to -1, but the reality is between -1 and positive 1. That's only an $8 million swing in a quarter or $30 million in the year. So we would call that on $1.62 billion, we would call that flat, $30 million either direction. So that's what we're seeing right now.

Got it. One follow-up on cash deployment. So, another good quarter here. Like you say you're keeping full year guidance despite running at 60% of that target in the first half and your leverage. You're obviously following the secondary. It seems like your conditioning us to expect a typical bye-back cadence. Why not accelerate maybe the deployment and/or you're expecting an abnormally high level of M&A activity given what you see in the deal pipeline there.

Well, I think there's three answers to that, Scott. I mean, number one, we are still cautiously optimistic that we are going to see accelerated deal pace over the next 18 months based on what we're seeing in our pipeline right now. We've always said that our first and best use of cash and leverage is on appropriately priced strategic acquisitions. I think, secondly, we don't know what the ongoing weakness in the economy between now and the election is going to bring and whether or not there's going to be just an overall weak market as people sort of hunker down. And, thirdly, it seems like there's number of larger announcements in the sector going on that could affect this sector. So, as we look at those three things, we think its prudent to be paced rather than really and paced and opportunistic in a buy-back rather than necessarily aggressive immediately without knowing sort of the lay of the land over the next two to four months.

Got it. Makes sense. Thanks.

Your next question comes from the line of Hamzah Mazari, Credit Suisse.

Good morning. Thank you. On the commercial side of your business, maybe if you could just talk about what your seeing in new versus lost business, service increases versus decreases. Did that business get incrementally worse for you as the quarter went on and into July or is that still just very flat?

Yeah, Hamzah, I would say that it did not necessarily get incrementally worse in the quarter, but it's flat and the spread of decreases to increases is really not closing. It was closing and then as we've looked at the last two quarters that gap has sort of flattened out at about what it was last year. And the same thing with new business activity compared to closed businesses and lost business activity. That gap is just not incrementally improving in Q2 or the latter half of Q1 and the beginning of Q3 the way it had been. So it didn't get worse, but we didn't see the gap continue to close the way it had been.

Okay. That's fair enough. And then maybe if you could comment on, you know, you spoke about the acquisition pipeline, the Veolia asset deal is pretty much off the table. You spoke of being more aggressive on buy-backs. Maybe if you could just talk about in your pipeline what is the ratio of large assets like Harold LeMay versus small assets.

Well, I would tell you that we have two or three, again, by our model, fairly large acquisitions and I would characterize those a couple hundred million in annual revenue or better. So, that was the approximate size of the LeMay group and we have two or three of those that we are pretty active discussions with right now. And, then, the balances are typical transactions, which have tuck-ins ranging from $1 million to $5 million and sort of standalone and new market entries of $10 million to $30 million much like we just announced today with SKB and a tuck-in in Louisiana that was $5 million. So we've got a smattering of those as well as a few larger fish.

Great. Just last question and I'll turn it over. On franchise versus competitive pricing, if you could just tell us what that's running and what to expect to be your guidance.

Yeah, we're still running about the same, Hamzah. We're running between really about 2% and 2.2%. We have had a few larger recent franchise increases, where in some smaller markets there was a higher CPI, but if you use 2% to 2.2% that's a very good number of what we're running and then we're running about almost 4%, if you will, in our competitive and that's with a 52/48 blend between franchise and competitive. That's how you get to that mix of right at 3%.

Great. Thanks a lot.

Your next question comes from the line of Joe Ritchie, Goldman Sachs.

Good morning, everyone.

Thank you. Good morning.

Good morning, Joe.

Just following up on that pricing question, you're getting 4% in your competitive markets. Can you talk a little bit more, provide some anecdotal evidence on what your stating in your really urban competitive markets? You mentioned both Houston and Denver in your prepared comments. Like to hear how those markets are progressing.

Well, again, as you know in our business model we have a fairly nominal amount of what we would categorize as urban exposure just based on model design. I mean Houston and Denver were both parts of larger divested acquisitions that came along when we did those divestitures and we've made a run at those markets. I would tell you the pricing is quite different. I mean you think see that when waste and republic both report every quarter. In those markets we attempt to go out after a 4% type price, but the churn in those markets is dramatically higher. Churn in those markets is probably four times what the churn is in our typical secondary market. So that's estimating that the churn in those markets is probably between 25% and 30%, whereas in our markets we see more of a 6% to 10% churn. So, your net pricing doesn't end up being close to 4%. Your net pricing probably ends up closer to that 1% to 2%., which is, I think, what you've been seeing out of a larger urban-centered company. So we're certainly not doing better than that in our urban-centered markets.

That's helpful color and I know that you don't come up against Waste Management and RSG in most of your markets, but today in the markets that you do compete against them, are you seeing them getting more competitive? What's the trend been over the last three months?

No, I'd say that's been pretty stable. I mean, again, we're not a great barometer for either Waste Management or Republic. I'll remind you that we have about 20% revenue overlap with Waste Management and less than 10% overlap with Republic and those 10% and 20% are in the same geographies for the most part. So, again, an 85% plus of our revenue we don't compete with them, so we're not a great barometer. But where we do, again, we find that predominately the smaller private independents are the ones who are pursuing market share more aggressively and I would say that the larger public companies tend to be a lot more price disciplined overall than the privates.

Okay. Great. And I've got one more question on M&A. Can you provide some color on what you pay for the STP acquisition. The EBITDA margins for that business. And, then, also, I think you mentioned in the last call that there was potential for two privatization opportunities by the end of 2012. Any update there would be great.

Sure. Well, we're not, right now, just due to the confidentiality of it, we're not providing any of the details, but on SKB or specifics. But here's what I can tell you, if you assume we paid roughly 6.5 to 7 times EBITDA for this transaction and that it's margins are at our corporate average or slightly better and we gave your the $30 million revenue, you'll get to a number that's very close to the purchase price. Secondly, with regard to the two privatization opportunities, both are proceeding. We are in the midst of both. They are moving as privatizations often do, fairly glacially, but they are proceeding and we are in the midst of both of them.

Okay. Thanks for taking my questions.

Yes.

This question comes from the line of Michael Hoffman, Wunderlich Securities.

Hi, good morning and thank you for taking my question. Can you share with us, given the current business environment you’re looking at, how would you frame your outlook in 2013?

You know, Michael, I would tell you that we're cautious. We feel that right now you would see roughly flat volumes. You would see commodity pricing that, if it stayed at current, fairly nominally down. You should see pricing that is approximately at what pricing this year was, maybe down a little bit due to weaker CPI if the economy remains in this condition. And I think you would see surcharges roughly flat. So I would say that you get some benefit from comps next year, Michael, and so it looks a little better, but I would describe it as roughly flat volume with reasonable pricing. Not to mention this, but it has a lot to do with what happens in November. I really do. I just think that will affect sentiment in either direction. Right now you just have, in the business community, I don't think it's the waste industry. You're seeing it through all consumer manufacturers. You're seeing it through retailers. You're just seeing sort of a weak to floating along business sentiment that's going on due to really uncertainty at the federal and many state levels.

Okay. And, then, with regards to the deal pipeline, are the pace of the conversion, has it been impacted by just the capital gains delay, potential delay, or are people on the sidelines waiting to see what the pricing came out on DOE as well?

In the larger ones I think that they were certainly waiting to see what happened with a fairly visible and public Veolia. The smaller ones I don't think they really have the leverage to do that, but larger ones do. I would say the following; I think people are looking at that. I think in some cases some of the things we're looking, people were looking at the public markets and wondering whether they could possibly access capital through that. And that's been extremely volatile and there really hasn't been a "IPO" market of late, maybe for some technology companies only. And, then, I think people are wondering whether the tax cuts are going to be extended past January 1 perhaps to January 1 of '14 and do they have a longer window. So, I think it's just, again, uncertainty breeds conservatism and you're hearing that from us and I think we're hearing that from potential sellers.

And have you thought the combination of those, does the tax cut one weigh more heavily on lots of your small ones and so, theoretically, in '13 the pace should pick up since everybody agrees it's going up, it's just when?

Yeah, I think, certainly without question, the largest impact on the smaller deals is capital gains tax rates and state capital gains rates. I mean if you look at a state like California, remember their state income tax at 10% is applicable to capital, as well, and it's going to a vote of 13.3. So it's not just the federal rates.

Okay. Thank you very much.

Yep.

Our next question comes from the line of Al Kaschalk, Wedbush Securities.

Good morning.

Good morning, Al.

Good morning, Al.

Just a couple of broader questions if I may to the team here. First, and I realize it's a small percentage, but on Houston and Denver, are there strategic reasons you may need to stay there in terms of the urban market benefit? In other words, shifting or sharing volume. Maybe if you could just talk a little bit about that.

No. I mean, number one, there are not strategic reasons that we need to stay there or we need to stay anywhere necessarily. We look at every asset and mark it individually. I think it's important to understand how that saying that a market like a Denver or a Houston does not perform as well or has more competitiveness than our more traditional market does not mean our performance in that market is not acceptable, whether is be on a return on capital basis or a margin basis or anything. I think that's a critical differentiation. Yes, they may not be at our corporate integrated margins, but they're still better than most.

Yeah, what you find is the most competitive fees in those market, the residential, and we're primarily a commercial and (inaudible) company.

In those two markets.

So you can define a strategy within that kind of environment and make an attractive asset positioning and attractive returns.

But it is, without question, more volatile.

Okay. Does that imply or maybe you kind of said it, I'm a little slow here this morning, but that the ROIC and those markets may be lower than corporate average or lower than some of the other areas?

No, I don't think it does implies that. Remember, I mean, you can have lower margins and it depends what your input cost on the capital side is and in many cases, to give you an idea such as Denver, our input value was substantially lower than our corporate average. So you can have adequate or equal ROICs in those markets depending on what your input value was going in.

Okay. And, then, just a follow-up I think to how much you made in the past in trying to triangulate here with the volumes and the recycling and the other on the new guidance, so to speak. You had talked about the competitor ripping out some volumes as related to the Oak Leaf acquisition they did. Is that now fully incorporated in these numbers and is there any way to try to maybe isolate how much of the decline on your forecasting is in large part that?

Very good question, Al. Number one, the forecast does not include any of the potential Oak Leaf volumes that Waste Management may internalize to themselves at some point. It does not include any of that. Now, having said that, approximately 40% to 45% of those volumes that we thought we could lose we have negotiated contract extensions and swaps and other types of arrangements to retain in many of the markets the Oak Leaf volumes on a go-forward basis. So the potential number has been virtually cut in half from what we started at. Not quite. And there are still some ongoing negotiations about some potential other markets. So, maybe that number gets to (inaudible) maybe a little north. But that is not incorporated because we do not yet know when, specifically, they will choose to internalize those volumes.

So, in other words, if they decide to internalize it, you could be at a spot where that down 2% is down a little bit further?

Yes is the answer to that, but that number would not be a full percent, but it could be a half a percent in a quarter. If the remainder of what they had maybe decide tomorrow to, "Hey, we're going to internalize this volume."

Okay. And do you expect to hear or do you have a window of time you expect an update or are you just kind of... every day is a different day and you never know until that day?

No, we've had some ongoing scheduled discussions and we should know at some point in August what is the schedule that they plan to take over those customers or which of those they plan to take over and I would expect that to occur either in September or October if it's going to happen. So, the impact in the third would be de minimis because we'd be talking about less than a million or so dollars in the quarter, but then we would have it so that we could talk about what it is in the fourth quarter.

Okay. Thanks a lot, Al. I'll get back in queue.

Our next question comes from the line of Adam Thalhimer, BB&T Capital Markets. Adam Thalhimer - BB&T Capital Markets: Hi. Good morning, guys.

Hey. Good morning. Adam Thalhimer - BB&T Capital Markets: Have you seen any change in the competitive environment for new franchise contracts?

Well, I mean, that's a... there really are not new franchise contracts. What the franchises are very long term by description and we really don't see them turn over. They're predominately acquired through private companies and so we see very minimal amount of turn in them. Now, municipal contracts, which are component of our exclusive revenue and are what many companies call franchises. That's not what we call franchises. I mean, municipal contracts tend to be sort of five to seven years in nature. They go out for bid about 70% to 80% of the time at the expiration. They tend to be highly competitive. Now that is about a third of what we call exclusive revenue. It's a large part of what the other companies define as exclusive revenue, such as Republic, as an example. The competitive nature of those has been very high of late. We are seeing that, for the most part on those, whether, almost irrespective of whether it's a public or a private provider that they are rebidding those down in price between 1% and 25% to retain them. So, yes, the environment for the renewal or the bid of municipal contracts I categorize as highly competitive in what is sort of a volume less recovery. Adam Thalhimer - BB&T Capital Markets: And you think about those municipals contracts as about a third of your franchise revenue.

Yeah, what we call our exclusive revenue. So if that's 52%, call it at roughly a third of 52. Adam Thalhimer - BB&T Capital Markets: Got it. Okay. And, then, on the construction environment more broadly, you described as spotty. Where are you seeing strength? Where are you seeing weakness in construction?

Well, the west coast continues to be extremely weak. In fact, California went backwards in Q2 year-over-year and it just continues to be woefully weak across the board in construction in California. The Pacific Northwest has been very spotty at best. I'd categorize it as stable, but also still fairly weak. And we saw some weakness in the parts of the northeast that we are in, which is sort of upstate New York and then we saw strength really throughout the mid west. I mean everywhere that there is exploration and production activity going on, which is the Dakotas through Montana down through Colorado, Oklahoma, Nebraska, Iowa, Oklahoma, Kansas, Texas, we saw strength, and Louisiana and Mississippi. Very strong for us in roll-off activity and other. And, then, our new market entry into Alaska is also very strong. Again, a large exploration of production market area. So, that's what we've seen.

Okay, that's good color. Thanks, Ron.

The next question comes from the line of Corey Greendale, First Analysis.

Hi, good morning.

Hi, Corey, how are you doing?

Hi, Corey.

Good, how are you?

Good.

Just a couple quick questions, I appreciate you giving some thoughts on 2013. Is it fair to say that given the dynamics around Chiquita and Puente Hills, that the year is probably more back half loaded that you see, and given kind of the moving pieces that comps with special waste that you see [ph] volumes improving? Maybe still down in the first half of the year, and doing positive in the back half?

First off, I would say this. Certainly, Chiquita Canyon and the closing of Puente Hills, as you've seen this year, plays a large part. But remember, next year in the first half of the year, those comps are going to be flat. Right? In fact, as it sat today, they would be up next year in Q1 on Chiquita Canyon, because our volumes have improved throughout this year, and we chased the volume out at the end of Q4 last year. So, by Q1 of '13, our comps at Chiquita are going to just mathematically be better, and then improve throughout the year. So, I wouldn't necessarily say that it's reliant on the second half. I would say the second half should be better than the first, but mathematically we should just be better across the board on a comp basis, particularly with regard to Chiquita. Now, other sites, I mean again, Corey, I don't want to put too much into it, but you hear about this fiscal eclipse [ph] and stuff. I think it depends what happens in the election, what happens with Congress at the end of the year with regard to federal budgets and other things. Because again, on the special waste side, we've said that we're seeing the Government side sort of come to a halt. If things aren't freed up, that part will get worst in the first half of next year, relative to the first half of this year. So, it depends on what happens there as well. I think that the MSW side is going to get a little better just mathematically. The Special Waste side could get worst, depending on what goes on at state and federal level on the Budgetary side.

Okay. That's helpful. The other question is, without going into kind of excruciating detail, could you just give us a little bit on kind of your view of the Minnesota market you just entered, in your positioning? How many more markets are there like this that we would view as kind of cities that maybe would still fit your model?

Yeah. Well, first off, I would tell you that this is a unique set of assets because it's fairly rare to find a $30 million disposal-based asset as your anchor to go into the market. This has three landfills, industrial and C&D landfills, as well as two MSW transfer stations. This covers really four market areas throughout the state of Minnesota, which is anchored in the Twin Cities, but also has operations to the north and the south of the Twin Cities. That's a market we know very well, and is a market that is highly dominated for the most part by large independence, and has been for a number of years. I think that's fairly rare for more a large suburban or more urban market area. To answer your question of how many are there, again, I think markets like that are fairly rare. But as far as our ability to continue to open new market areas in the competitive footprint, again, there's substantial opportunity for that. I would tend to tell you there are not markets that look like the Twin Cities.

Okay. I appreciate it, thank you.

The next question comes from the line of Justin Maurer, Lord Abbett.

Good morning, guys.

Good morning, Justin.

Good morning.

Hey, Ron, I think in the ten years I've listened to your conference calls, you guys have talked more about the "big competitors", this call more than the prior combined. You mentioned in your prepared comments and just said, the markets haven't really changed, pricing hasn't really changed. So, I'm just kind of wondering, it just seems like there's a lot of discussion about that in recent months and on the call relative to history. It seems like you guys have done a nice job over the years telling people how you're differentiated than that model. Again, it doesn't seem like things have changed. It's not as though you're competing with them more than you have, correct? Other than the Denver and Houston example that you sited, albeit small. So, I'm just curious why this thing is kind of - the ball is starting to roll a little bit here.

Well, I think you and the investors and analysts, I'd say about eight of every ten questions relates to Waste Management or Republic that we get asked. So, most of that, what we get asked and the commentary that inbound chatter that we get, really doesn't relate to us. It's really asking us our opinion of what's going on with them. So, I think it's driven more by that than anything else, Justin. Again, we've been in Denver for 12 years. Denver is nothing new to us. We've been in Houston for four and a half years now. As I said in my commentary earlier when somebody asked a question that our overlap with Republic is 10%, our overlap with Waste is 20%, and they're in the same market areas, and combined our revenue overlap is 15%. So, nothing has really changed on our end of that with regard to our market strata or our strategic focus. I just think that there is a lot of inbound questions due to the variety of company-specific issues going on at those two companies, and we get asked.

Yeah. All right, it just seems like... I'm not pointing fingers at you or vice versa. It's just that it seems to have been kind of deflected in the past to say, "Hey, this is not a - Ask away, but it really doesn't affect what we do." Like you articulated in your comments, pricing is the same, market overlap is the same. It really hasn't changed your business model yet, it just seems to be more of a focus, but that's fine.

Yeah. I think what we say is, we just point to results.

Yep. The Chiquita direction, just so I understand, should it take another step down as we get closer to closure of the competitive landfill? Or is this kind of a run right now that you anticipate both in volume and price?

Yes. I do not believe it will take a step downward. If anything, it has taken an upward trajectory of late on both volume and price on both. We expect that trajectory to continue. I do not expect any downward step.

Okay. You said October of '13?

Yes, that's correct. Halloween of '13.

Okay. Once we get through this calendar year, though, the negative year-over-year impact should be pretty de minimus, because we've already felt that impact. Is that a fair statement?

Yeah. Well, that's what I was saying to Corey is that you don't have to wait until the second half of the year. In the first half of the year, the comps will be better next year because we took that in January of this year.

Got it, thanks. Then, lastly, just, Worthing, real quick, on the expenses and maybe just because you gave more line item detail than you normally do, it seemed like the different line items kind of bounced around a bit more than usual. Is that a fair description or no?

Yeah. This is Ron, Justin. I know you said to Worthing, but this is really just math when you peel a large part of it. If you peel off the 3 million in recycled commodities that just come off as just price, there's no cost differential. When you peel off the Chiquita volumes that we drove away, there's really no cost differential other than some DD&A with some of the competitive activity that we did site in both Houston and Denver, albeit a small part of our business, that's on the price side. So, your costs are the same. So, what you have is you have a degradation in the quality of revenue, and therefore your line items climb as a percentage of revenue.

Yeah, many of the line items were the similar ones we called down in Q1, and frankly, were anticipated. They've been anticipated for the past couple of quarters as we threw the budget together for this year because we're tracking what's going on in the Maintenance side. We know what's happening on the Landfill and Leachate side and some of the wet weather we've had. So anyway, these are things that are anticipated, and as you saw, we hit the midpoint of our EBITDA guidance because we're forecasting them.

Yeah. Okay. Thanks gentlemen.

Thanks, Justin.

Your next question comes from the line of Tony Bancroft, Gabelli & Company Tony Bancroft – Gabelli & Company : Good morning, gents. How are you?

Hey, good morning.

Good. Tony Bancroft – Gabelli & Company: This is a question on the SKB deal. Why now? Why did it happen now? Was it priced right? I mean, it sounds like after you talked about the deal a little more, it sounds like a pretty salacious business there. Do you think this could be a potential for - you said there's not many of them out there - but some more good deals or some of these pretty sexy assets out there?

Hold on. I've got to look up salacious. Hold on a minute. Tony Bancroft – Gabelli & Company: Actually, I just looked it up myself. It means a killing.

Well, thank God. Tony Bancroft – Gabelli & Company: Yes.

The answer of why now; this was a private company that was looking over the last year or so at the potential sale of the company, tax planning and estate planning was a very large driver for this family. The primary shareholder just turned 60 and was looking at retirement options over the next three to five years. So, this was driven by tax, the potential rise in capital gains tax, and estate planning as far as the timing. We can't really control - we don't force these things, if you will. The only way you force things is by price and when you do that, you overpay. So it needs to be when the seller has some motivation in addition to a fair value. So, that's really your answer to why now. I mean are there others that are attractive like this? Yes, absolutely. We think we've made a track record of delivering those year-in and year-out and building a network of those types of assets overtime. We're continuing to - there are still several of those that we're looking at. Tony Bancroft – Gabelli & Company: Got it, thank you so much.

This concludes the question and answer portion for today's conference. I would now like to turn the call back to Ron Mittelstaedt for closing remarks.

Okay, thank you operator. Well, if there are no further questions, on behalf of our entire management team, we appreciate your listening to and interest in our call today. Worthing and Mary Anne Whitney will be here to take your questions. Any questions that are direct that we did not cover that we are allowed to answer under Regulation FD or Regulation G they will both be around and available today to answer. Thank you again. We look forward to speaking with you at our upcoming investor conferences or on our next earnings call.

Thank you very much. This concludes today's conference. Thank you again for your participation. You may now disconnect and have a great day.