Good morning, everyone, and welcome to the Waste Connections Inc. Q4 2024 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please also note today's event is being recorded. At this time, I'd like to turn the floor over to Ron Mittelstaedt, President and CEO. Sir, please go ahead.

Thank you, operator, and good morning. I would like to welcome everyone to this conference call to discuss fourth quarter results and our outlook for both the first quarter and full year 2025. I'm joined this morning by Mary Anne Whitney, our CFO; and several other members of our senior management. As noted in our earnings release, Q4 provided a solid finish to year of extraordinary accomplishments for Waste Connections, both financially with double-digit growth in both revenue and adjusted EBITDA and operationally with accelerating improvements in employee engagement and retention, along with the integration of record levels of private company acquisitions, which totaled approximately $750 million in annualized revenue in 2024. Most importantly, our continued focus on human capital resulted in multiyear lows for employee turnover, now down over 1,000 basis points from 2022 with the associated improvements in operational execution, providing momentum for another year of outsized margin expansion in 2025. Price-led organic solid waste growth along with improving commodities and ongoing acquisition activity should position us at/or above the high end of our range of potential outcomes with normalized adjusted free cash flow in excess of $1.55 billion. Before we get into much more detail, let me turn the call over to Mary Anne for our forward-looking disclaimer and other housekeeping items.

Thank you, Ron, and good morning. The discussion during today's call includes forward-looking statements made pursuant to the safe harbor provisions of the US Private Securities Litigation Reform Act of 1995, including forward-looking information within the meaning of applicable Canadian Securities Laws. Actual results could differ materially from those made in such forward-looking statements due to various risks and uncertainties. Factors that could cause actual results to differ discussed both in the cautionary statement included in our February 12th earnings release and in greater detail in Waste Connections filings with the US Securities and Exchange Commission and the Securities Commissions or similar regulatory authorities in Canada. You should not place undue reliance on forward-looking statements as there may be additional risks of which we are not presently aware or that we currently believe are immaterial, which could have an adverse impact on our business. We make no commitment to revise or update any forward-looking statements in order to reflect events or circumstances that may change after today's date. On the call, we will discuss non-GAAP measures such as adjusted EBITDA, adjusted net income attributable to Waste Connections on both a dollar basis and per diluted share and adjusted free cash flow. Please refer to our earnings releases for a reconciliation of such non-GAAP measures to the most comparable GAAP measures. Management uses certain non-GAAP measures to evaluate and monitor the ongoing financial performance of our operations. Other companies may calculate these non-GAAP measures differently. I will now turn the call back over to Ron.

Thank you, Mary Anne. Please note as noted, 2024 was an extraordinary year at Waste Connections by any number of measures, including safety performance, employee engagement and retention, acquisition activity, financial results and ultimately value creation. Solid waste core pricing of 7.1% was supported by strong operational execution and record levels of acquisition integration to drive industry-leading margins for the whole company, that is not just solid waste of 32.5%, up 100 basis points year-over-year despite significant commodity, RINs and FX declines in Q4. As we have indicated, we maintain that the best leading indicator of performance is voluntary turnover, which has declined by 50% in less than two years to below 13% now. Over the same period, we have also seen a reduction of over 60% in open employee positions, with every region at or below targeted levels of 3% to 4%, down from 7.5%. Additionally, our 2024 employee engagement scores showed continuous improvement from an already high base on record levels of employee participation. We are seeing traction from higher staffing levels and expanded frontline training. We're sending more new and existing employees through our in-house commercial driver academies and realizing the benefits from that engagement in both improved retention and safety statistics. We're also reducing overtime as well as reliance on third-party services, improving service levels, customer satisfaction and employee morale while also maximizing the integration benefits from new acquisitions and providing more avenues for growth. In short, we've achieved the balance in service quality, pricing, retention and acquisition integration that we've been working towards over the past 18 months. The benefits of these improving trends were evident in Q4 when we delivered a 6.7% core price and overcame the FX of an additional 0.5 point of negative volume as a result of our decision to ramp…

Thank you, Ron. In the fourth quarter, revenue of $2.26 billion was up $225 million or 11% year-over-year, bringing full year 2024 revenues to $8.92 billion, above our expectations and up 11.2% year-over-year. Acquisitions completed since the year ago period contributed about $169 million of revenue in Q4, net of divestitures, bringing full year net acquisition contribution to $529 million. Core pricing in Q4 of 6.7% range from about 5% in our mostly exclusive market Western region to about 7% in our competitive markets. Fuel and material surcharges were negative 50 basis points in the quarter on lower fuel costs. Solid waste volumes in Q4 were down 2.7%, excluding 50 basis point negative volume impact at Chiquita, where we ramped down activity in advance of closing the site. Elsewhere, volumes continue to reflect our focus on quality of revenue through shedding and a purposeful trade-off between price and volume, as well as the timing of special waste activity, some of which, as noted last quarter, was completed in Q3. Looking at year-over-year results in the fourth quarter on a same-store day adjusted basis. Roll-off pulls were down 4%. And total landfill pounds were about flat. Adjusting for Chiquita tonnes were up 3% year-over-year on MSW, up 6%, special waste up 2% and C&D waste down 6%. Over half of the MSW increase was attributable to storm cleanup activity in Florida, or the internalization of tonnes from our Northeast operations into our rail-served arrowhead landfill in Alabama. Adjusted EBITDA for Q4, as reconciled in our earnings release was up 11.6% year-over-year to $732 million or 32.4% of revenue. As Ron noted, excluding the reduction in tonnes at Chiquita and the drop-off in commodity-driven revenues and FX rates during the quarter, adjusted EBITDA margin was over 33%. Looking at the full year,…

Okay. Thank you, Mary Anne. Coming into 2024, we emphasized the interconnectivity of relationships and results, and our performance reflects the importance of both with financial excellence and record acquisition activity supported by notable improvement in operational statistics and employee engagement. Even more importantly, they positioned us for continued outsized growth in 2025. In fact, we believe we're better positioned than ever. In 2025, we're focused on delivering excellence with humility. We're sticking to a model that has served us well for over 27 years and which guides us as we grow to revenue of $10 billion and more, while acknowledging the benefits of innovation and new ideas to ensure that the company is well positioned for the future. Along these lines, we're excited to be working with partners to provide solutions for PFAS treatment and expand renewable natural gas generation in our landfills. We're introducing electric trucks as we build out our newest franchise market, New York City, and we're further digitizing the employee and customer experience to bring people closer together through technology. We are already seeing the benefits of the use of AI, higher productivity and output quality from robotics in our recycling facilities, improved safety outcomes and routing efficiencies across our fleet along with opportunities to drive sales and augment revenue quality, just to name a few of the applications. We'll always maintain a human-center design to inform and direct our approach to the use of technology, but we'll also focus on opportunities to leverage and maximize the utility of our resources. We're also humbled by the trust of many stakeholders from the communities we have the privilege to serve to the private sellers entrusting us with their legacy, and we're most grateful for the dedication of our 24,000 employees, who embody the enduring values of Waste Connections and whose efforts truly set us apart. We appreciate your time today. I will now turn this call over to the operator to open up the lines for your questions. Operator?

Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] Our first question today comes from Tyler Brown from Raymond James. Please go ahead with your question.

Hey. Good morning, guys.

Good morning, Tyler.

Hey, Tyler.

Hey. Lots of good detail, as usual. But can we go back over some of the moving pieces on cash flow? Maybe can we start with green CapEx? I just want to make sure that I've got it. So I think in 2023, you spent you spent maybe $40 million. It sounds like in 2024, $60 million. That's going to step up to about $125 million at the midpoint in 2025. Is all that basically right? And then based on what we know, shouldn't that basically sunset and that will be more or less done in 2026?

Yes, you're correct. Everything you said we'd agree with the bulk of the spending will get done in 2025. As you said, we've had those outlays all ready and will basically be done by 2026. What's unknown would be the benefits from incremental tax credits. And so to the extent there's any good news there that would just make the net impact smaller.

Okay. And then the EBITDA contribution, that kind of really ramps in 2026 and 2027?

That's right. As we've said to this point, there's just been nominal increases from the facilities that have come online. The bulk of them will be online during 2026, and so you'll see it ramp during 2026 for the full year in 2027. And we said that's around $200 million in incremental EBITDA. So the revenue is north of that, but it's very high flow-through and, of course, very high conversion of EBITDA to free cash flow.

Right. Okay. Perfect. And then on Chiquita, again, just to kind of make sure I've got all this. So I think, again, you spent $23 million in 2023. It sounds like you had a really large spend in 2024 at $24 million. That number steps down, and call it to $125, and then it steps down again in 2026. And then by the time we get to 2027 that should be kind of zeroed out. Is that about right?

Yes, Tyler, I don't know if it will be zero, but it should be in that zero to $15 million to $20 million range is what we believe by then sort of just a maintenance level at most. It could be zero, but I would say zero to $20 million.

Okay. But big picture, I mean, as we build through the end of this decade, I mean the free cash conversion on a reported basis will materially step up. And that -- I think you said $48 million to $50 million, maybe in 2026, I think, is what you said on a "normalized basis", but that's not even including the benefits of the high flow-through RNG. So, I mean it could be pretty good as we get to 2027. I know -- that’s not the idea.

Yes. That's why we said this year, if you take what we've guided and you assume we didn't do RNG or have Chiquita, which you can't do. I understand, it would be $1.55 billion would be the 2025 free cash flow or right at about 50% for -- and that is before RNG EBITDA contribution, as you just outlined.

Right. Okay. Last one here. I continue to get a lot of questions around volume. It sounds like 2025, even if I kind of take away Chiquita, it's going to be maybe the fourth year in a row of down volume. Can you just kind of help us, Ron, think about that? Could that go positive into 2026? Is there still some intentional shedding? Do we just need a better a better industrial backdrop or housing backdrop to get there? Just any big picture thoughts on that. I get a lot of questions on that. Thanks guys.

Sure. Tyler, first off, what I would point out that for analysts and investors, you have to understand that not all companies report volumes similarly. And that doesn't mean any way is right or wrong. They're just -- you can't really compare them to each other. We only report solid waste in our volume. We don't report changes in recycling and other business lines that we don't view as core or significant, but influence the volume reported. So, ours is just solid waste. So let's start with that, number one. Number two, we had a record year of M&A in 2024. We think that's a good thing. We would love to have and plan to have a very strong year again in 2025. Again, that's a good thing. But as we have said, maybe 10% to up to 15% of the M&A revenue you acquire, you look to shed over a one to three-year period as contracts come up that are unprofitable. So, again, like we say, follow the margin, not volume because we are purposely shedding volume and redeploying capital into more profitable contracts we can bid. So, for shedding to stop, M&A would have to decelerate dramatically. And we don't view that as something we're looking to do or see happening. The other thing we have said is that look, there's somewhere probably between 0.5 and maybe up to a 1 point conscious trade-off between price and volume. Again, others are talking about achieving 4%, 4.5% yield, which is really our price. And we're achieving -- have guided today to 6% plus price. That's yield, okay? So, very material difference in the pricing achieved. That comes along with some trade-off. We think in this environment that, that trade-off is very necessary as it was in 2023 and 2024. While inflation is certainly coming down as we've recently seen, it's not fully down yet. And so, we always focus on having a 150 to 200 basis point spread, not necessarily to the CPI, but to what we see our cost structure doing. And so, that's where we focus on price. So it's a long way around the barn to say, it's conscious between purposeful shedding. It's conscious between of the trade-off of price volume. And then it's also that we just report solid ways in our volume calc. And so in that, we have been in basically a flat to almost negative economic environment for 2.5 full years now, really since the beginning of '22 in our numbers. You bounce around between 0% and 1% or 2% MSW growth. I think that reflects -- and in C&D and special waste, which are tied to construction event activity bounce around between negative 10% and positive 10% in any given quarter. Of course, they are a smaller piece of things. So yes, there is a little bit of a need for improved economic activity, which we are optimistic is coming, but we have not yet seen that.

Perfect. Thank you so much, Ron.

Our next question comes from Kevin Chiang from CIBC. Please go ahead with your question.

Hi. Thanks for taking my question. Maybe I'll start off with you, congrats on a lot of the efforts here on turnover and some of the posting numbers you supply. I guess on the back of record M&A, I guess any color on what you're seeing from an employee retention or turnover perspective in the acquired businesses, just given record amount of deal flow you've seen over the past -- or last year and even the past few years here?

Yes, Kevin, I mean I think as we've -- I think that's a very good question, particularly with someone who's active as we are. Look, -- and that's something we're very pleased with, to achieve under 13% voluntary turnover number, you have to understand that it is significantly higher in acquired M&A companies. It not uncommon for that in the first year to be in that 30% to 35% level, because of our really rigorous safety standard and many tenured employees coming through private companies on the front line, that's a very hard adjustment for them behaviorally to make. So that's captured even in that. So it tells you our core company number is even lower. So, we focus very heavily on safety. It is not uncommon for us to drop the safety incident rate on an acquired stand-alone private company by 3x in the first 12 months. But that doesn't -- but that does come along with having to make some frontline and supervision level changes at acquired companies.

That's great color. Maybe just turning to your margin outlook, sorry, 50 to 80 basis points of margin expansion. Is there a way to think about what, I guess, R360 Canada might be contributing to that because you have a full year secure. And I think you're evaluating opening up some facilities there. Just is that one of the, I guess, foundational pieces to driving that outsized margin expansion in 2025?

So Kevin, really, it's the strength of the underlying business is what's driving the outsized margin expansion. We are enjoying the benefits of a terrific acquisition of Secure. But as you'll recall, we had 11 months of it last year. So the rollover contribution is just one month. And yes, as we've said, the performance there has resulted in incremental activity and looking at opening mothballed facilities. But to the extent that were to contribute, it would be very late in the year and nominal. So really going back to 50 to 80 basis points of margin expansion is in spite of the drag from commodities RINs and FX, which think of that as down 20 to 50 basis points, so it implies underlying margins up as much as 100 basis points. And again, that really speaks to all the things that that Ron outlined that are working for us in the underlying business. And yes, we're enjoying the benefits of a very solid E&P waste business, but not a huge driver of incremental margins in 2025.

Okay. That's very helpful. And maybe just last one for me. You noted how your leverage ratio really going to change despite the record M&A and you have incremental growth CapEx, which starts to roll off in the next couple of years. I guess, when you look forward, how does buybacks, I guess, play a role in your free cash flow allocation? I mean, it seems like you could probably add that to your -- or be more aggressive there, just given where your balance sheet is and your free cash flow generation and the fact that you've been on back of a record year your leverage by to move that much. I'm just wondering if that's something that can contemplate, especially as free cash flow just start to step up even more in the next kind of 12 to 18 months?

We absolutely agree, Kevin. And the beauty of the -- sitting at 267 [ph] with, as we said, we're approaching $1 billion in liquidity is we have tremendous optionality. I mean to put it all in context, you've seen us continue to grow our dividend as we have every year, double digits and a 14% CAGR over the last 15 years. And you've seen us renew our NCIB, that normal cost issuer bid. So we have the flexibility to buy back up to 5% to preserve that optionality. We always say at some point, M&A slows down, but I think to your point, M&A doesn't even need to slow down for us to use that other arrow in the quiver, and we agree with you and opportunistically, that is something we'll look at.

Excellent. Thanks for the premises and congrats on a good quarter here and all the best for 2025.

Thank you, Kevin.

Our next question comes from Toni Kaplan from Morgan Stanley. Please go ahead with your question.

Thank you so much. I wanted to first ask on price. We've seen core price continue to moderate over the past few quarters, but still like holding up very nicely, where do you see price bottoming out? And what are you thinking for trajectory into 2025 in terms of how that looks? Thanks.

Sure. So the way to think about price, we said about 6% is the way to think about price. Of course, you have the two pieces where you've got the CPI-linked markets, which were in 2024, we're about 5%, and those step down to 4%, and of course, what CPI does will inform how that proceeds going forward. So whatever your view is of that. But for 2025, that's a good placeholder. And so then that that implies 7%, 7.5% in the competitive markets to deliver 6% or north of it. In terms of the cadence, you should expect our typical cadence where on a reported basis, it would start higher than that and move down over the course of the year, just the math of it. And also as is pretty typical for us, we do the majority of our price increases in the competitive markets early in the year. And so by the time we report Q1, a couple of months from now, we’ll be able to speak about the visibility we have really for the full year, because this year is really unlike any other, where we'll have 70%, 75% of the price increases either known, because we're contractually -- they're provided we know what the numbers are or implement it. And we'll have a sense of rollback. Early reads are that pricing retention is as strong as usual. And again, I referenced the things that Ron raised about the strength of the underlying business and the benefits of full employment, if you will, and lower turnover to help with price retention.

Great. And Ron, you mentioned working with partners on solutions for PFAS treatment. Just wanted to hear the latest on the topic and what you're doing there?

Well, we're doing a number of things, Toni. There are I would tell you there's probably no less than half a dozen providers that have real solutions. Most of it is a foam fractionation process that treats and by basically gathering the PFAS and then solidifying it. And then that is disposed of separately. And so these are both portable and permanent treatment facilities that are built or moved on-site. And depending on the amount of Leachate that a landfill generates, we are running it through that. We have -- we are using different technologies at different sites, to determine which we think performs best. We have them performing in Minnesota, in Pennsylvania, in New York, as examples and other places. And the early results are very, very good, a reasonable capital allocation for the benefit and a very low cost per gallon treatment costs overall. As you may know, many of the POTWs in nation are looking to require some form of pretreatment for PFAS, if they're going to continue to accept Landfill Leachate. So where we are treating it, we are not having any issues of getting into POTW. So it is working as planned. So I would tell you that, I think there's a very real and reasonably economical solutions available today, which we believe will continue to improve overtime.

Thanks so much.

Our next question comes from Bryan Burgmeier from Citi. Please go ahead with your question.

Good morning. Thank you for taking my questions. Mary Anne, sorry if I missed this in Tyler's question, how much did RNG contribute to EBITDA in 2024? And then, what do you assume for 2025 guidance? And then, is there going to be maybe an opportunity to lock in RIN prices? Or do we expect to be using the spot market this year?

Sure. So landfill gas sales and the incremental contribution from facilities that came online really didn't change dramatically, we're still running at that point to 1.5 point of revenue or $100 million or around there, $100 million, $110 million. here was some nominal incremental contribution in 2024. And basically, that's the way you should think about it in 2025. The real pickup for us is one of the facilities that we own come online in 2026, given the fact that we have this hybrid structure. So -- and I'm sorry, you had a second piece. Oh and you asked we could lock. Yes. Sorry about that. Thank you. Look, we will opportunistically look to lock as we have. We had a portion of our RINs locked for most of 2024 at around $3. And when those opportunities present themselves, you should expect that we'll look to continue to derisk that aspect of the business as and when we can.

Got it. Got it. Thank you. And then, Ron, maybe just on M&A, the 2024 spending, obviously, Blue pass the kind of normalized target that Waste Connections provides and you've been in this business a long time. So I'm just curious, if you think there's maybe greater urgency for sellers right now versus the last 5 or 10 years? Do you think maybe persistently high interest rates are deferring some of the smaller players? Just curious maybe what drove the outsized selling in 2024 and your thoughts on 2025? Thank you. I will turn it over.

Sure. Thanks, Bryan. Well, as we've always said, there are -- at least, certainly in our model, 7 or 8 out of every 10 deals are driven by sort of linear transition, estate planning matters that that happened in the natural course of the private ownership of family run companies. And so in that regard, external catalysts don't move things too much. Now having said that, certainly, the trajectory of interest rates over the last few years have helped private companies, who have a lot of sort of floating rate or lease rate debt are more impacted with rising interest rates than certainly the public companies. And so that affects them. I think, the fear at least of what election outcomes are and the threat of rising tax rates I think certainly affects things. That probably is maybe at least for a period of time, a little more stable right now than it had been in the run-up to the election, depending on the outcome. So that, I would say, is neutral. Certainly, economic activity. Sellers want -- private sellers want to sell their business when the economy is strong, and they believe their business is fully valued. And so I'd say, again, that has sort of been neutral to negative. So as the economy if and when the economy continues to improve, I think that is a bit of an accelerant for M&A. And then you have a group of sellers who, after living through a pandemic and hyperinflation just sort of said, yeah, I don't want to do that anymore going forward. Those are risks I never thought I'd see. So again, that one is a little harder to predict. But I would tell you, we remain in, I would consider a very good M&A market. Our pipeline is very full. Of all different types of transactions, stand-alone franchises, competitive markets, some E&P some imaging tuck-ins, I should say. So we remain very bullish. We're not going to sit here and say, hey, we're going to repeat our best year ever, which was last year at $750 million. But I think we are very comfortable sitting here saying we expect an above-average year as we sit here in the early part of February.

And our next question comes from Jerry Revich from Goldman Sachs. Please go ahead with your question.

Yes. Hi, good morning, everyone.

Good morning, Jerry.

Good morning, Jerry.

Ron, I'm wondering if you could just expand on the progress that you folks are making ramping up the rail shipments and where do you expect volumes to get exiting in 2025 and what are you seeing in terms of the actual shipping costs versus what you folks were modeling at the beginning of the ramp?

Yeah. Sure, Jerry. So let's -- for those that are not familiar, let's take you back, our Arrowhead transaction, which we did August of 2023. So we've now owned about 15, 16 months thereabouts. When we acquired that set of assets, that set of assets was doing about 2,500 tonnes up to maybe 2,700 tonnes a day into the landfill. We are now at 7,000 tonnes a day pretty consistently. So we have not quite tripled it, but we're getting closer. The largest amount of that is coming from internalized markets on the Northeast that we used to go externally or may have gone to one of our East Coast landfills, which freed up airspace to market to third parties. Now we believe as we come through 2025, we will get into that 8,000 to 9,000 tonne a day range. And so we will achieve in the 24 months after ownership, a tripling of the volumes that came through that site relative to when we acquired it, which is, I think, what we said. And we believe long term, we will achieve 10,000 tonnes a day or more over a multiyear period. Again, a very high amount of this will come through our internalizing network on the East Coast predominantly. As far as the cost structure, Jerry, has remained very stable. One of the great assets that came along with this was a very long-term contract with Norfolk Southern. And that was something we spent a lot of time with to look at what the volatility could be in the cost structure because the transport of volumes from the East Coast to the Southeast is obviously the largest cost of things. And we feel very good about that indexing it to effectively a national CPI. So very good there, a good cost structure on our intermodal facilities along the Eastern Seaboard. So that asset is performing as or better than expected, I would say.

Ron. Thank you for that update. And in terms of the M&A opportunity now that you have that logistics runway, and we're seeing more and more landfill closures in the Northeast? How optimistic are you folks about significant M&A opportunity where you have a lot of value to add via the rail network in the Northeast as you look at your pipeline for 2025?

I would say, Jerry, we're very, very optimistic. I mean, obviously, we had a very big year in 2024, and we had a big year in New York in 2024. And I can tell you that in the transactions that are signed definitive agreements that haven't yet closed, there are more transactions in New York that we have done, and you will hear about as we come through Q1 all of those are being internalized. So it is providing us I would say, multiple bites out of the revenue dollar relative to what we had before potentially doing that transaction. So yes, it certainly has created greater white space, so to speak, on the Eastern seaboard of markets that we are looking at and have entered in 2024 and will continue to do parts of 2025 and beyond. So no question about that. It also helps remove or protect against volatility of permitting time frames and things that happen, particularly as you get along the eastern seaboard, which can be as challenging as the West Coast and permitting time frames. So it does provide us a lot of optionality.

Super. And lastly, just conceptually, as we look at the volatility in recycled cardboard and plastic prices and good to see a stabilization, but if they were to take a leg down, would you folks think about pushing pricing in the baseline waste business to offset the headwind to earnings this year, if that were to happen, just conceptually, how are you thinking about that given the lack of control on that part of the pricing stream?

Yes. I think what we see -- I don't know that we would necessarily -- by the way, what I'm about to say, you get to the same point of your question. But I don't know that we necessarily look to push our solid waste or other customers to offset or subsidize the decline in recycling, what we would look to do is raise the processing cost per tonne through our recycled facilities. Now that, obviously, when you do it on a third party, you recover, you also have to do it internally. So you, in effect, get to what you said, but that is really -- I think the entire industry has moved to much more of a model of reliance for returns in recycling being based on a processing cost per tonne for itself and for its third-party customers and the commodities being -- I'm going to use the word an upside or a float factor or something that there's a rebate structure on above certain levels to a customer if they're willing to live with the volatility.

Appreciate the conversation. Thank you.

Thank you, Jerry.

Our next question comes from Noah Kaye from Oppenheimer & Company. Please go ahead with your question.

Good morning. Thanks for taking the questions.

Good morning.

Quick housekeeping one to start for our models. So volumes, I think it implies down 1% to 2%, but actually, there's another 50 bps from Chiquita. So just so we all understand, is it accurate that reported volumes you're expecting down 1.5% to 2.5%, is that right?

That's correct. You're saying, including Chiquita. Yes.

Okay. All right. And then ITC, it sounds like you're clearly not baking that in, any benefits. Obviously, there was a pure that did -- the guidance has been kind of clarified from treasury around what's eligible. So I guess, first, making sure do you expect to be able to at least qualify for ITC benefits based on timing of start-up construction? And is it possible then to kind of give a rough range of estimates, at least for the portion of CapEx that is for facilities you're running?

What we'd say is, yes, to the first point that we believe we qualify. And to that point, we benefited from a $10 million tax credit last year. And so we certainly understand the process and the dynamics. It'd be premature, not knowing what the qualifying equipment is precisely in the content. But we look to maximize those benefits through making the decisions about the equipment and labor and, we'll certainly keep you posted. But our view is we communicate the outlays excluding any of that benefit and let it be upside to anything we've told you.

Yes. And presumably, just to add a point, the claiming of this would really be coinciding with when facilities come online, right? So I understand there's not that much for this year. Okay. And then the last one, and it's partly a modeling question, but really, I think, trying to understand or underscore the pace of operating improvements is the margin bridge, right? So you gave us the impact of commodities and FX would love to understand how M&A factors into the margin bridge. But what I'd really love to get to here is kind of apples-to-apples, what underlying solid waste margin expansion was in 2024 where you expect it will be in 2025, and what drives that pace of improvement?

Yes. So Noah, we would tell you that M&A was sort of flat to margin contribution-wise, was sort of flat to maybe down about 10 basis points. Now I will also tell you that, that is generally better than normal, and that was based on mix of deals. We would tell you in any given year, if we're doing an above-average amount of deals, you probably got about a 15 to 20 basis point margin headwind from the deals. So if you accept the 10 basis points, you know we reported 100 basis point improvement for the year. Mathematically, right there, you're at 110. We took some decline, as we said, in the fourth quarter up to 60 basis points between FX, RINs, commodities and Chiquita. So you were -- we would tell you the underlying was probably about 120 to plus basis points of margin expansion in the base business. If you look at the 2025 guidance of 50 to 80, we've given you the impacts of those other items. I think you'll obviously get to a number of just a little lower than that. So part of this is being led by -- driven by price-led organic growth. As we've always said, and that's why we focus on the spread to the cost structure. But clearly, part of it, we would tell you we have achieved effectively closing in on our 100 basis point target of improvement to the operating cost structure in all but one area, and that is sort of insurance cost, which has been a headwind, again, that we've actually overcome some. So I look to Mary Anne to put more detail on that.

Yes. Just to clarify a little bit on how the RINs and recycling the interplay, what Ron described, that was really sort of towards the end of the year, and we've had the benefit early in the year. So we did have a benefit from recycling and RINs for full year 2024. And I would say, if you attributed about 30 basis points benefit there, then it says the remainder to Ron's point, is primarily underlying solid waste to get you to that 100. And as I said earlier, if you think about what we're talking about this year, that recycling in RINs that flips to a headwind, right? So in what we've guided to, it's down 20 to 50 basis points. So being a good guy up 30 to down 20 to 50, along with FX, which I think it's sometimes underappreciated what it does to -- every penny of FX, just translation is almost $20 million in revenue, and it's high flow-through, right? Because that's a 45% margin piece of the business. So it really speaks to the strength of the underlying business for all those reasons that Ron was describing. And again, as we've talked about, think of that as 100 basis points -- up to 100 basis points margin expansion is what we're guiding to in 2025. Q – Noah Kaye: Yes. So really a very consistent pace of improvement here. Thank you for all the detail.

Our next question comes from Konark Gupta from Scotiabank. Please go ahead with your question.

Thanks for taking my question. I just wanted to follow up on this margin question recently. So the margin expansion for Q1, I think you guys are expecting 0.5 point and for the full year, it's to 80 bps at least. So [indiscernible], I know Q3 is your usual to be the biggest quarter. But just from sort of the moving parts perspective between the commodities and Chiquita, et cetera, is there a quarter where you expect more sort of above average margin expansion in particular?

Well, here's the way to think about it. So we guided to 50 to 80 basis points. And so -- and then we're giving you Q1 at arguably the low end of that range. If you think of what the dynamics are that would move us to the higher end of the range, they would include things like improvement in recycled commodities, RINs, FX and now look at Q1 where, of course, we're not assuming that. And you've got -- for instance, on FX, the toughest comp. It was $0.74 last year, were $0.69 now. So that's just one item. Tough comps also on recycled commodities, RINs. And so as you can see, you can put the pieces together to understand how much of a drag there is in Q1 from those comps and that there's the opportunity over the course of the year for any improvement in any of those metrics to ease the comparison, which would, over time, get you to the higher end of range.

Okay. That makes sense. Thanks. And then on the volume side, thanks for providing the pricing, but just on the volume side, understanding the 1.5%, 2.5% decline, let's say, for the full year, I guess, 0.5 point is from Chiquita, but is it more skewed to -- the decline is more skewed to the first half versus the second half as you kind of start to lap some of those shedding comps?

Yes, that's the right way to think about it. I mean you think about the exit speed in Q4, right, so even 27 [ph] ex-Chiquita that doesn't go away immediately because you're working through that shedding. And so, I would say -- I would sort of take the inverse if I were modeling it, that price starts goes high to low, and I do say volume goes low to high.

Okay. Great. Thanks. And last one for me before I turn over. On the E&P side, I think this quarter recently at least were pretty strong from a revenue standpoint. I know secure assets obviously contributed there. But like even your underlying business seems like it's doing pretty well. How should we think about the growth in this business this year?

Sure. So you'll continue to see the rollover contributions not only from the secure deal, right, which is 1-month rollover. But then we did a follow-on acquisition in the second quarter in Canada, and we've done some additional activity the US. And so, I think you saw a total of $140 million in reported revenue in Q4, and that number continues to grow and probably approaches a run rate more like $150 per quarter. And so again, it's really primarily rollover contribution from facilities we put in place last year.

That’s great. Thanks for taking the time.

Thank you.

Our next question comes from Brian Butler from Stifel. Please go ahead with your question.

Good morning. Thank you for taking my questions.

Thank you, Brian.

Just on the first one, maybe when you talk about internal inflation, I mean, you have pricing kind of running at 6%. So if you think about the 50 basis points to 80 basis points of margin expansion you're looking at, where is internal inflation in your estimates for 2025?

Yes. So right about 4.5% is a good way to think about it and not just because that nicely ties to our 150 basis point spread by doing 6% price. But what we're really seeing in the business, primarily led by the abating of the inflation in labor rates. And as you'll recall, we've been talking about this for the past couple of years, the step down from 8% two years ago. We came down in Q4 to about 4.5%, which is really right where we would the way to think about it, we think, for 2025. And so that's the primary mover there, and that is what's contributing to that price/cost spread that helps to drive the margin expansion in 2025.

Okay. Great. And then we already touched on M&A, but I thought just I'd revisit it. When you look at the pipeline, how does it compare to where we were maybe a year ago? And how does the competitive environment for deals compare? And is there anything under the current administration that actually could get done now that maybe over the last four years could not?

Let's take the second part of that first. We have never had fortunately, I've gone through a second request on an HSR. And part of that's our model focus. So I would -- we have not had an issue of deal flow under the prior administration. So I would not want to tell you that, that should improve because we have had no restriction. I know others based on their footprint may have. So I don't think that is any incremental improvement for us whatsoever. I would tell you that I think the pipeline is very good, as I've said. The only difference is remember that we came into early last year, having announced at the end of December 2023 that we would be closing the Secure acquisition in the first quarter, and that was a couple of hundred million dollars of revenue. So we're not sitting here today with -- telling you that there's a secure to do in the first quarter. But I will tell you, within our pipeline of discussions and LOIs, there are deals approaching that size in that pipeline. So that would be the only delta between as we sit here today and one year ago.

Okay. Great. Thanks for taking my questions.

And our next question comes from Tobey Sommer from Truist. Please go ahead with your question.

Thanks. Going to follow-up on the change in administration. You touched on taxes, and now you commented on whether the M&A regulatory regime matters for you. Are there any other elements of the change in administration that you have your eye on for your business? And maybe comment on what it could do to your acquisition targets.

Look, I think it's obviously early days, Tobey, and there's a lot of moving pieces, as you know. There's nothing that I’m at least or we are at least hearing that I think is a negative for acquisition activity. I think most everything we have seen and heard would be a positive, if it's implemented or moves forward. So nothing that would be a negative. I can't really speak necessarily for private sellers. But if there is an improvement in tax rates, that's an accelerant, if there is for M&A. If there is a decrease in interest rates, I would tell you that's an accelerant. If there's an improving economy, that is a benefit. If there is tariffs that affect CapEx for private sellers, that's a benefit. So again, I'm not really -- there's really nothing, if there's a decrease maybe regulatory or enforcement environment, I'd say for private sellers, that's probably neutral. I would say that probably is a benefit to us overall. So -- and if there is if there ends up being immigration reform of some form, I don't know if that will happen, but if it does, that's a benefit to us as well, because there's been really no path to immigration, as you know, and despite a large amount of people coming through the Southern border, really us as a public company, we can't hire those people. They don't have the ability to work in the U.S. legally. So if there was an ability for them to work in the U.S. legally through immigration reform, that would be a benefit, I think, to the whole sector, so -- and service sectors in general. So again, we're not aware of anything that would be a negative at this point at least.

Thank you very much.

And ladies and gentlemen, with that, we'll be ending today's question-and-answer session. I'd like to turn the floor back over to Ron Mittelstaedt for any 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 the call today. Mary Anne and Joe Box are available today to answer any direct questions that we did not cover that we are allowed to answer under Regulation FD, Regulation G and applicable securities laws in Canada. Thank you again, and we look forward to seeing you at upcoming investor conferences or on our next earnings call.

And thank you, everyone, for joining today's conference call and presentation. It has now concluded. Once again, we do thank you for joining. Have a pleasant day.