Good morning. My name is Dennis, and I will be your conference operator today. At this time, I would like to welcome everyone to the Waste Management National Services First Quarter 2017 Earnings Release Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. I will now turn the call over to Mr. Ed Egl, Director of Investor Relations. Please go ahead, sir

Thank you, Dennis. Good morning, everyone, and thank you for joining us for our first quarter 2017 earnings conference call. With me this morning are Jim Fish, President and Chief Executive Officer; Jim Trevathan, Executive Vice President and Chief Operating Officer; and Devina Rankin, Senior Vice President, Chief Financial Officer and Treasurer. You will hear prepared comments from each of them today. Jim Fish will cover high-level financials and provide a strategic overview. Jim Trevathan will cover price and volume details and provide an operating overview. And Devina will cover the details of the financials. Before we get started, please note that we have filed a Form 8-K this morning that includes the earnings press release and is available on our website at www.wm.com. The Form 8-K, the press release, and the schedule from the press release include important information. During the call, you will hear forward-looking statements which are based on current expectations, projections or opinions about future periods. Such statements are subject to risks and uncertainties that could cause actual results to differ materially. Some of these risks and uncertainties are discussed in today's press release and our filings with the SEC, including our most recent Form 10-K. Jim and Jim will discuss our results in the areas of yield and volume which, unless stated otherwise, are more specifically references to internal revenue growth or IRG from yield or volume. During the call, Jim, Jim, and Devina will discuss our earnings per diluted share which they may refer to as EPS or earnings per share, and they'll also address operating EBITDA and operating EBITDA margin as defined in the earnings press release. Any comparisons, unless otherwise stated, will be with the first quarter of 2016. The first quarter of 2017 results have been adjusted to enhance comparability by excluding certain items that management believes do not reflect our fundamental business performance or results of operations. These adjusted measures in addition to free cash flow are non-GAAP measures. Please refer to the earnings press release footnote and schedules which can be found on the company's website at www.wm.com for reconciliations to the most comparable GAAP measures and additional information about our use of non-GAAP measures. This call is being recorded and will be available 24 hours a day beginning approximately 1:00pm Eastern Time today until 5:00pm Eastern Time on May 10. To hear a replay of the call over the internet, access the Waste Management website at www.wm.com. To hear a telephonic replay of the call, dial 855-859-2056 and enter reservation code 94449507. Time-sensitive information provided during today's call which is occurring on April 26, 2017 may no longer be accurate at the time of the replay. Any redistribution, retransmission or rebroadcast of this call in any form without the express written consent of Waste Management is prohibited. Now, I'll turn the call over to Waste Management's CEO, Jim Fish.

Thanks, Ed, and thank you, all, for joining us this morning. 2017 is off to a terrific start. Our strong first quarter results continue to demonstrate the effectiveness of our strategy of improving core price, adding profitable volume in a disciplined manner, and controlling costs as we met or exceeded all our internal targets. In the first quarter, we saw revenue grow by more than 8%. Operating income grew by 10% and operating EBITDA grew 8%. Our operations produced $0.66 of earnings per share in the first quarter despite a $0.02 impact from executive severance which was an increase of almost 14% when compared to the first quarter of 2016. We've built a strong foundation and have the momentum to continue to generate growth throughout the remainder of 2017. In the first quarter, our revenues grew by more than $260 million or 8.3%. Almost all of this increase was organically driven, and our first quarter revenue was the largest organic growth we've generated in over a decade. One of the drivers of our success was the disciplined execution of our pricing programs. In the first quarter, our collection and disposal core price was 5.1% and our yield was 2%. Looking at volumes, our traditional solid waste volumes were positive 1.9% in the first quarter. We've been keenly focused on delivering excellent customer service and directing our sales efforts and growth capital on the portions of the U.S. economy that are seeing the strongest economic development. And in the last five quarters, we've seen these efforts result in volume growth that is generating strong incremental earnings and cash flow. Jim will discuss our customer service focus in more detail, but we continue to see improvements in our churn which finished the quarter at 8.3%; that's the lowest number we've seen since…

Thanks, Jim, and good morning. Our revenue growth in the first quarter of 2017 reflected the continuation of the strong execution of our price, customer service, and disciplined growth strategies that we saw throughout 2016. Revenues in the quarter were $3.44 billion, an increase of $264 million or 8.3% when compared to the first quarter of 2016. First quarter revenue growth in our collection and disposal business from the combined impact of price and volume was $113 million. First quarter revenues also benefited from higher recycling commodity prices which drove a $111 million increase in recycling revenues. Fuel surcharges and foreign currency fluctuations increased $25 million and acquisitions also increased revenues for the quarter by $12 million. Looking at internal revenue growth in the first quarter, our collection and disposal core price was 5.1%, consistent with the fourth quarter of 2016, and yield was 2%. Both total volumes and traditional solid waste volumes improved 1.9%. On a work day adjusted basis, total volumes and traditional solid waste volumes were 1.4%. Our continued focus on customer service is having a positive impact on volumes as we achieved the lowest churn since the third quarter of 2002 at 8.3%, an improvement of 90 basis points from the first quarter of 2016. Our field collection, call centers, sales, and technology teams are aligned around improving service to our customers in a world-class manner and our results demonstrate this alignment. We also saw service increases exceeding service decreases for the 13th consecutive quarter, supporting continued commercial volume growth. Price rollbacks improved 60 basis points compared to the first quarter of 2016 and the combined positive price and positive volume led the total company income from operations growing $50 million, operating income margin expanding 20 basis points to 16.2%, and operating EBITDA growing $66 million.…

Thanks, Jim, and good morning, everyone. For the first quarter of 2017, as a percent of revenue, SG&A costs were 11.3%; that's a 10-basis point improvement from the first quarter of 2016. On a dollar basis, SG&A costs were $390 million in the first quarter or $28 million higher than in the prior year period. SG&A costs during the quarter included $13 million of executive severance costs, most of which was non-cash. These charges negatively impacted EPS by $0.02 per share and SG&A costs as a percent of revenue by 30 basis points. The remaining increase in SG&A dollars during the quarter primarily relates to the timing of incentive compensation accruals which we do not expect to meaningfully impact the comparability of our SG&A costs for the full year. So when we consider these one-time charges and the impact of timing differences, our SG&A costs were essentially flat in dollars, positioning us very well for SG&A costs as a percentage of revenue to approach 10% for the year. Turning to cash flow. In the first quarter, cash provided by operating activities was $721 million compared to $732 million in the first quarter of 2016. We saw the business generate operating EBITDA growth of $66 million in the first quarter, and that's an 8% increase compared to the first quarter of 2016. As Jim discussed, this operating EBITDA growth was driven by the performance of our core solid waste operations and complemented by strong recycling commodity prices. Our cash flow from operations also benefited from reduced interest payments as well as our focus on working capital optimization, and we're very pleased to see that we continue to convert more of our revenue dollars into cash. These cash flow benefits were offset by a couple of items. As you likely remember, in…

And your first question will come from the line of Michael Hoffman with Stifel. Please go ahead. Michael E. Hoffman - Stifel, Nicolaus & Co., Inc.: Thanks for taking my questions, Jim, Jim, and Devina.

Good morning. Michael E. Hoffman - Stifel, Nicolaus & Co., Inc.: Good morning. Of the $59 million in volume sale growth in the quarter, how do I think about the mix from MSW versus construction and the special waste? I know you gave me percentage changes year-over-year, but I'm curious to understand the trend line like in commercial as there's still this upside from new business formation and then service interval upgrades that's playing out.

Yeah. So if you look at the quarterly numbers by line of business and then you look at those waste streams, commercial has – and I hope I'm answering your question as you're asking it here – but the commercial continues to be strong, it looks strong even as we head into month of April. And it's been on that kind of continuous improvement track as Jim said for about five quarters. Then when you look at, well, industrial as well, and I would tell you that industrial has been higher than the 2.7% that we finished in the first quarter, but sequentially we were up from a 1% number to a 2.7% number from Q4 to Q1, and that one also continues to look good into April. Part of that is our energy services business, Michael. It looks like it's starting to pick up a little bit. Might have the first quarter of year-over-year improvement in two years in the energy services business by the time we get to the second quarter. And then when you look at those waste streams within the landfill business, MSW was strong and it's been strong. MSW volume has been strong and I think our focus is not only on the volume side but also on the price side of MSW. We can talk about that a little bit as well but the only weak waste stream for us, and weak is kind of a comparative term here because it was weak by comparison to other quarters, but still 2.6% on special waste. With that said, the pipeline looks good with special waste. C&D has been incredibly strong. I think that demonstrates the strength of the housing business around the U.S. and Canada, but that's a pretty good, I think, overview of what our volumes look like and the mix of those different waste streams. Michael E. Hoffman - Stifel, Nicolaus & Co., Inc.: Okay. So if I just parse one thing specifically, commercial in particular is one of your best margin businesses. And how would you think about the service interval cycle on a same store basis today...

Yeah. Michael that is – sorry, go ahead. I'm sorry. Michael E. Hoffman - Stifel, Nicolaus & Co., Inc.: Well, compared to what that looked like, what that same service interval look like before the great recession. So are we back to those levels or...?

Yeah. The right question, Michael. I'll start with container weights in the commercial line of business, and our container weights in Q1 were up at a higher percentage than previous year quarter, more than we've seen in over a decade. Residential line of business as well, container weights are up. I think it signals well for the economy and for our collection business itself. On the roll-off side, the weights were about at the same level of 2016. As I've mentioned earlier, we saw service increases outpace the decreases for the 13th consecutive quarter. It's a really good sign for us. We don't measure it versus the great recession, but I would tell you we're in the, I would guess, the middle innings of that growth in the commercial line of business especially we're seeing good opportunity for us. We're really focused on higher margin side of it. We've seen good growth in the national account business. The multi-location, commercial customer, it started in the second half of last year. So you'll see that in the second half of this year anniversary. So we may not be at that 2.5% level but we'll still be positive and making progress. Michael E. Hoffman - Stifel, Nicolaus & Co., Inc.: Okay. Switching gears and Jim Fish, you alluded to this. I was going to ask are you seeing any signs of a recovery in the E&P drilling world and I gather you are?

Well we are. I mean, look, it's heaviest and the rebound is heaviest in the Permian Basin where we don't have a presence. But we're encouraged to see that's, in the month of March, first month – when we look at it on a monthly basis – the first month that we've seen year-over-year improvement in the Marcellus and the Niobrara in two years. So we think that that portends a pick-up on a quarterly basis when we get to the second quarter. So we're pretty encouraged with the pick-up we're seeing. It's still is more heavily weighted here in West Texas but it's starting to show up in places where we have a presence. Michael E. Hoffman - Stifel, Nicolaus & Co., Inc.: Okay. Another gear switch. On the recycling side, one of the things that sometimes I think it's overlooked, you have a pretty big brokerage business which has got a great cash generator in return on capital basis but relatively low margin. So can you frame, of this positive trend in recycling, how much came from the brokerage side so we put in perspective the margin?

Yes, Michael, absolutely. The brokerage side of our recycling business, it's about 41%, 42% of the total volume, and that's relatively flat. I think one year it was 41% and this year, 42%. Last year it was 41%, so we're roughly in the same place as a percentage of the revenue. And you're right, the margin is at mid-single-digit margins, but as you stated it's very – there's no capital expense involved, so the ROI is really high and it really gives us leverage in the sale of commodities in addition to just providing more value to our customers, more stickiness with customers that have both large commodity volumes and other waste service needs. So we're very pleased with that business but it's relatively flat with prior year on a volume basis. Michael E. Hoffman - Stifel, Nicolaus & Co., Inc.: Okay. But that accounts for, as strong as the whole recycling pie was, why we've got really great free cash flow leverage but not as much margin leverage. We shouldn't get as hung up about the margin, we should be paying attention to free cash.

Yeah. We won't get margin leverage there. We pass through a percentage. We make a percentage on those transactions and that will continue. It won't go down or up much at all.

Maybe a couple of basis points, but not much.

But not enough to move the needle of the whole company and yet still really good business for us when it connects with all of the other lines of business. Michael E. Hoffman - Stifel, Nicolaus & Co., Inc.: Okay. Last question. You said in your comments that you exceeded your own internal expectations for free cash flow. I'm curious by how much?

Well I would say when we look at free cash flow, really, where we're focusing is the EBITDA growth that we saw, and so EBITDA of 8% in the first quarter exceeded our expectations. But as Jim and Jim have said, we're waiting to see the seasonal uptick with regard to core collection and disposal business and then how recycling commodity prices impact the second quarter before we update our guidance for the full year. So the EBITDA piece of it, as a reminder we expected full year EBITDA growth to be $240 million to $290 million and it's typical for us to see more of that in the second and third quarters than in Q1. And if you use Q1 and extrapolate it, it would imply that we're well on our way to be at the top end of that. But we're waiting to see how the full year or the second quarter unfolds before we give an update on full year guidance. Michael E. Hoffman - Stifel, Nicolaus & Co., Inc.: Perfect. Thanks for taking my question.

You bet.

Your next question is from the line of Noah Kaye with Oppenheimer. Please go ahead. Noah Kaye - Oppenheimer & Co., Inc.: Thanks for taking my question. Good morning, Jim, Jim, and Devina. So just to dig a little bit more into the recycling. First, we had been hearing about recent volatility in the international market especially following China's crackdown on waste exports. Can you just talk about what you're generally assuming for price trends over the balance of 2017 and how we should think about kind of the sensitivity there? You mentioned you had some bias to the upside for the business?

Yeah. First, I would tell you that it's pretty tough to predict commodity prices. We have a hard time predicting 30 days out, let alone eight or nine months out. But we did build into our guidance $0.03 of improvement in the recycling business. We kind of use the rule and it still holds that for every $10 move it's worth about $0.04, so that would tell you that we built about $7 or $8 of improvement in for the year. Obviously, it was better than that in the first quarter. But then when we look at the second quarter with the real volatility, OCC down 10%, ONP down 40% in one week's time, it kind of reminds us that don't get too giddy about the commodity prices because they can come back pretty quickly. Noah Kaye - Oppenheimer & Co., Inc.: Yeah, yeah. And then switching gears. You mentioned that you're going to be hiring a Chief Technology Officer. You talked a little bit about the new wm.com and trying to position closer to customers. I wonder where do you see sort of the low-hanging fruit at this point certainly as we watch technology diffusion across the industry? I mean, you guys have been doing route optimization and other innovative data management techniques for many years now. So where do you kind of see the incremental improvements at this point? Where do you see the possibilities there?

Right. No, it's a good question though, and technologies is a big umbrella. I mean, there's a lot underneath the umbrella. There's data, there's equipment, there's customer-facing solutions, Internet of Things. I think to answer your question, you're right. We've put a lot of effort into the on-board computers and then the resulting efficiency improvement that we see out of those. But you'll start to see us using big data in a much more sophisticated way. We're already starting that with our pricing. But you'll also see it with things like predictive maintenance as we look at how do we predict, and we've just started down that path, but how do we predict when things like hydraulics on vehicles will give. And then as opposed to waiting and handling our maintenance in a reactive manner, we handle it more proactively and that is much more cost-effective for us.

Jim, that predictive modeling begins to pay off and we absolutely see signs of that and have real test underway with real application. It'll affect, to your question though, it'll affect not just the operating cost side of the house but service to customers...

For sure.

...as we keep more trucks out on the route...

That's right.

...and improve that consistency of delivery and not have as many road calls, for example, on the cost side of the house. So it'll affect both the operating costs – it has affected operating costs – and the service to our customers as well.

Now, if you can imagine though our truck that goes down on the road unexpectedly with a hydraulic hose going out, we're probably paying overtime there to the driver, we've got to pay a towing charge, we may have some type of clean-up charge and, to Jim's point, we have a customer service interruption. So if we can do this predictably then all of that goes away and it's better for our bottom line and better for our customers. Noah Kaye - Oppenheimer & Co., Inc.: Great. And if I could just sneak in one more. Are you still confident in getting to that 50-plus bps of operating EBITDA margin expansion year-over-year? It seems, just going back to your SG&A comments, that you don't need to squeeze much juice on the operating expense side to get there despite some of the fuel headwinds. But just want to make sure that that kind of modeling assumption for the year is still holding.

Definitely. I think we guided a 50 to 100 basis points of improvements in margins there and we're still comfortable at that range. And to your point on SG&A, as Devina mentioned we said we'd like to approach 10% and we still feel like we have a shot at that. Noah Kaye - Oppenheimer & Co., Inc.: Okay, great. Thank you so much for taking my questions.

You bet.

Your next question is from the line of Andrew Buscaglia with Credit Suisse. Please go ahead. Andrew E. Buscaglia - Credit Suisse Securities (USA) LLC: Hey, guys.

Hey, Andrew. Andrew E. Buscaglia - Credit Suisse Securities (USA) LLC: Can you talk a little bit about your fuel expense? You guys had the surcharge and the catch-up in the quarter. Tax credit went away. How do we think about this going forward in terms of modeling fuel?

So our fuel costs were up a total of $32 million in the quarter on a year-over-year basis, and that's a combination of our direct costs, our fuel surcharges that we pay to our subcontractors, and then also the fuel tax credit going away. And the increase in revenue that we saw in the fuel surcharge side was only $20 million, so that $12 million delta is what's driving that $0.02 impact. When we look at the full year, what we've seen with diesel cost prices leveling out, if our expectation is that those level out then we think about $0.01 of the headwind in Q1, we should get back over the remainder of the year as the lag in the fuel surcharge part of the revenue equation hedges up. The piece that we can't provide any clarity on whether or not we'll get back is the extension of the fuel tax credit and with tax reform and it's kind of infancy from a conversation perspective. It's too early for us to say whether or not we'll get that back. And so the $0.01 that we saw in headwind for that in the first quarter, you could extrapolate to the remainder of the year of having up to a $0.04 impact for the full year.

Yeah. Andrew, if you look at the tax credit itself, the expectation from our contacts in DC, if the comprehensive tax reform happens we don't think we'll see that fuel tax credit. It'll be bundled in with other corporate tax reductions. If that falls apart, then I think you'll see that happen, they'll go ahead and pass those extenders. Who knows what's going to happen in DC today.

But we'll be happy to give up the fuel tax credit for a term for a rate reduction in corporate tax rates.

We will be happy. Andrew E. Buscaglia - Credit Suisse Securities (USA) LLC: Okay. All right, that's helpful. And just switching gears on your volumes. You guys didn't really call out anything pertaining to weather in the quarter. I would've thought that would've helped you. I mean, can you just talk about that? It sounds like it probably got offset with poor weather in other areas.

You know the weather was good for the first quarter; I would tell you that that's last year though. A part of the reason we didn't say anything is because you can always talk about the weather and we try not to talk about it too much. But last year was really unusually mild. So in an odd sort of way, even though we had a good winter this year, it wasn't as mild as last year. So we had a few shutdowns this year in the Northeast, a couple in the Midwest. I don't recall any shutdowns in the winter of 2016. Whereas last year, we actually did talk about the fact that we were concerned we might've borrowed some volume from Q2 in Q1. I don't think we have that feel and it looks to be the case when we look at our April numbers. Andrew E. Buscaglia - Credit Suisse Securities (USA) LLC: Okay.

The other thing I would say about weather is in California in particular we did have an impact from all of the rain that that region saw. And so we did see a bit of a negative impact on those businesses, but that was isolated and minor to the quarter. Andrew E. Buscaglia - Credit Suisse Securities (USA) LLC: Okay. That's helpful. Thanks, guys.

Thank you.

Your next question is from the line of Hamzah Mazari with Macquarie Capital. Please go ahead. Hamzah Mazari - Macquarie Capital (USA), Inc.: Good morning. Thank you. The first question is just around customer churn. It's improved obviously over the last couple of years. Could you give us a sense whether 7% is realistic there or whether you have a target there that you think is achievable and where does that come from?

Hamzah, good to hear from you. 8.3% is a really good number. That's pretty close to what we had targeted for the whole year. But I'll tell you there's still room for improvement and we would never say otherwise. We've been in the upper 7s before but it's been over a decade ago as we began to roll out service machine internal initiative, and we're back in that vicinity now. So we'll continue to seek improvement, we'll look for improvement but upper 7s, lower 8s is a pretty good number given our history and given the opportunity in the marketplace. We think that we'll continue to see small improvements but that are big with regard to the impact on the business from the commercial line of business especially at keeping those high-margin, high-ROI customers. Hamzah Mazari - Macquarie Capital (USA), Inc.: Got it. And then just on the share buyback. It seems like leverage is low. If you get tax reform, cash flow goes up. You already have cut SG&A over time. What does your M&A pipeline look like and just remind us what verticals you guys consider core?

Yes. So good morning, Hamzah. When we think about M&A, we're certainly interested in core acquisitions. And to your question, we would define core as being, of course, core solid waste, industrial, hazardous, potentially energy services, even recycling; all of those, we throw in that core bucket. So anything that would be a good strategic fit for us within those core buckets at a fair price, we would consider and we continue to look for those. Hamzah Mazari - Macquarie Capital (USA), Inc.: Okay, got it. Last question and I'll turn it over. You guys mentioned the brokerage volume on recycling. You've also done some contract work around your recycling business. Could you just remind us, is the operating leverage in your recycling business lower than what it's been historically? OCC pricing was up a lot but it seems like the flow through wasn't very high. So just trying to get a sense of is there anything different around the rebate structure, contract structure or anything else versus history?

Yeah. Hamzah, we believe the recycling strategy that we laid out a couple of years ago was to reduce the risk in the Atlanta business, and we've done that through the contract renegotiations and renewals. We now charge a processing fee that we believe provides our shareholders with a reasonable return, accretive return, and yet gives customers what they want. But yet we were not rebating at the same level with floors in place like we had before. You saw that in Q1 our recycling rebates to customers were up but yet our margin was accretive to the company and it was very positive for us. So the whole goal was to reduce the risk and yet still play in that marketplace and provide customers what they expect from us, and we've done that.

I think, Hamzah, the restructuring of the contracts that you mentioned, you'll see that show up most when we're down at the low end of commodity prices and, to Jim's point, we've derisked the business down there. When you're kind of in the middle or in the upper end where we've been in the last couple of quarters, you don't see the change from the contract restructuring so much when prices are where they are.

And part of, Hamzah, the continuous improvement for the whole company, we're really focused on the operating side. And if you compare us back today versus two or three years ago, the gross operating expense per tonne is consistently lower quarter-by-quarter. So we're in good shape there, Hamzah, on a long-term basis. Hamzah Mazari - Macquarie Capital (USA), Inc.: Okay, great. Thanks so much.

Your next question is from the line of Brian Maguire with Goldman Sachs. Please go ahead. Brian Maguire - Goldman Sachs & Co.: Hi. Good morning, everyone. Congrats to Devina and her move in the interim tech (43:52).

Thank you. Brian Maguire - Goldman Sachs & Co.: Making it official. Great. You had really strong volumes again and you'd mentioned some of the regional impacts. But I was wondering if you could maybe just step back and look at the country more broadly and talk about what kind of regional trends you saw and where the strength was a little bit better than average or maybe was held back by some factors?

Sure, Brian. Particularly as if you look at C&D for example, C&D was very strong in the quarter and has been strong for probably five or six consecutive quarters. Regionally, that's where you would expect to see it. It's in the South, it's in the West. But, really, it's hard to find a place where C&D showed weakness honestly. It wasn't as strong in maybe the Midwest and the upper Midwest as it was in Florida, but I wouldn't characterize it as being weak. So when you look at C&D that, I think, demonstrates that the housing market and maybe the overall economy seem to be somewhat optimistic and on an upswing. And then when you look at our – we talked about our industrial business or the industrial piece of our business that is related to energy services, that's been starting to show some real signs of recovery as well, and of course those are in those areas of the country where we have energy services operations, specifically Pennsylvania, Colorado, and Texas. It's somewhat limited there. You don't see it in areas where we don't have energy services. Brian Maguire - Goldman Sachs & Co.: Okay. Thanks for that. And recycled commodity prices, particularly recycled fiber, tends to be a little volatile. And I think one of the theories for why it spiked so much over the last couple of months was maybe just a shift in trends from retail, brick-and-mortar to e-commerce and changes that might have on collection patterns. In essence, you guys are a little bit more on the forefront of that. Just wondering if you've seen that and kind of how your recycled fiber volumes have trended over the last couple of months? We know the pricing has been up a lot, but just kind of a look at how the volumes have been.

Yeah. I mean, the volumes have been – I think we're up 1% in volumes for the quarter. Definitely over the long-term, it's going to move or the shift that we're seeing in retail is going to affect volumes. It's hard to see it on a quarter-to-quarter basis though. And when we look at pricing of commodities, the volatility is greatest where the Chinese have the greatest impact. So for us, for example, virtually all of our newsprints goes to China and so when the Chinese decide they're not going to buy newsprints as they did a couple of weeks back, it really dramatically impacts the price of ONP, hence the drop of 40%. We end up selling about maybe 30% of our OCC to China, so while they still have a big and material impact on price that one was only off about 10% a couple of weeks ago. So, really, the pricing is probably driven as much by what the Chinese do and then the volume is much more of a longer-term trend. Somehow to your point, it will be a result of the shift in the retail business. Brian Maguire - Goldman Sachs & Co.: Okay. Thanks. And just one more if I could. You mentioned a little bit about the fuel tax credit as a bit of a headwind. Just wondering, tied to that, if there's any change in some of the energy credits that you get off of the landfills or pricing on some of that that may have changed in the last couple of months?

That would affect the tax line and you'll see with the 36.8% that we basically came in right at our guidance. So we've not seen a negative impact on that at this point. Brian Maguire - Goldman Sachs & Co.: Okay. Thanks very much.

Your next question is from the line of Al Kaschalk with Wedbush Securities. Please go ahead.

Good morning, Waste Management team.

Good morning Al.

Good morning.

I wanted to come back to recycling and the energy piece but I think Jim Trevathan has talked a little earlier about the strategic process or changes you guys have made. It strikes me as, I don't know, just curious I guess that a $10 move now only has $0.04 benefit to you which is similar to others in the industry. I mean, I understand you're trying to do, and properly do, is minimize the risk but why would you give up so much of the upside in a business that your customers are demanding versus you may be necessarily seeing the ROIC for the investments?

Al, we haven't given up any of the upside with all of our contract renegotiations; we've just minimized the downside risk and that's where, as Jim said earlier, where you'll see that impact. But we've always said for the last handful of years that that $10 price change is about a $0.04 impact to EPS. That's not been changed from previous conversation on these calls or in person. So I think the business is much better set than in the past. For those years like we had, what, it in 2011 and 2012 when commodity prices dramatically went down and we weren't charging for processing to cover our cost, and now we do, we absolutely price all of our contracts to cover the processing cost plus an accretive margin to the company with a really healthy ROI, extremely healthy ROI in fact. But yet, we've reduced that downside risk and yet kept customers engaged by giving them roughly the same upside that they've always had.

I just remember $175 to $200 of OCC pricing, the numbers were something more like $0.10 to $0.12, and it was clear that the industry, not just Waste Management, but the industry was over-earning at that time. And so to me, we are back not necessarily to those levels but we're up. But it doesn't seem like the flow through particularly in Q1 is where, I guess, maybe a lot of us were thinking it would be, at least in particular this analyst. So, all right. Switching gears. The comment on waste diversion technology that you wrote off, could you just talk about, well, obviously it's probably not significant anymore, but what's the nature behind that?

Sure. We were in a joint venture to build a gas-to-liquids plant on one of our landfills in Oklahoma, and the focus of that joint venture was to take methane and natural gas and convert it into a higher-value hydrocarbon. And as with many energy-based commodity-driven investments, the financial outlook for those investments has changed as energy prices has been relatively low over the long-term. And as we looked at this project and prospects for building this project further from the one plant in Oklahoma, those became less appealing. And so as a result, we went ahead and impaired that investment to our view of the fair value of the assets that are on our site.

Right. Okay. Thank you for that, Devina. Finally, on the energy side. Historically, I think you've had more traditional landfills taking in waste given the market conditions and the improvement that you've had in the cash flow and the balance sheet and the longer-term opportunity. Should we not see maybe a little more strategic investment there specifically in the disposal capabilities directly related to tailings and energy by-product?

Yeah. As to one of the earlier questions, we did mention that when we think about core investments, definitely energy services is one of those. It's not for lack of looking around. We've looked at energy services opportunities, but it's got to be the right strategic fit for us. It's got to be the right place particularly when we think about energy services. It's got to be the right geography for us and it's got to be fairly priced. So it is definitely an area that we are exploring from an M&A standpoint. It just has to be the right strategic fit for us.

Got it. Thanks a lot, Jim.

You bet.

Your next question is from the line of Michael Feniger with Bank of America. Please go ahead.

Hey, guys. Thanks for taking my questions. First question, I just was hoping if we could just dive into a little bit on the incremental margin. So for the last two quarters, it appears there's been some one-time costs in there that may have weighed it down, limiting that margin expansion. I know growth of free cash flow exceeded your internal expectations. I'm just curious how you're thinking about those incrementals. So, like, what is keeping you from getting to the top end of the range of the 50 to 100 bps of expansion in this type of backdrop?

Well, I don't think anything is keeping us from getting there. We still have an expectation that we will get 50 to 100 basis points of margin improvement. I think when you look at the first quarter and you say, well, on the surface it looks like we were flat on our reported numbers, then you have to consider the $0.02 that we had in executive severance that really is a one-time impact to us, and consider the $0.016 for fuel that Devina went through, really, it's about a quarter lag there for us on fuel between when we see the increase in the price of fuel and our fuel surcharge catch-up to that. And so with those two, you're looking at as much as 100-basis point improvement in EBITDA margins if you take those two out, and that doesn't consider the timing difference that she mentioned in her script of incentive comp that amounted to as much as a $0.015. So we think that that 50 to 100 basis points, while it didn't show up in Q1, it really was because of a couple of those either timing-related issues or the one-timer with executive severance.

Jim, I might mention a couple of things that I did earlier in the prepared comments. But if you look at some of the controllable operating expenses, we improved labor 50 basis points; transportation and disposal each 50 basis points; the risk part of our business, 30 basis points improvement; and our subcontractor costs, 30 basis points. So there's real leverage there that offset a couple of those uncontrollables.

Yeah. And if you combine that with what we think about SG&A going forward, I think that probably demonstrates why we are still confident in the 50 to 100 basis points.

Perfect. And lastly, I'm just curious how you're viewing your current balance sheet especially in this gradually improving environment. What's the leverage range that you're most comfortable with and do you think to some extent your balance sheet might be like "too strong" in this backdrop?

With a 2.4 leverage, we're certainly comfortable that the balance sheet is in really good shape for us to think about opportunistic acquisitions as a priority, and that's really how we look at our leverage as optimal. And we're certainly at the low end, but we could see that tick down from here as EBITDA grows and if we don't have strategic M&A that's a good fit for us and at the right price to go execute. And I think what is most important and how we message that is that we really want to be positioned so that we can execute at the right time, at the right price, to contribute to the long-term growth of the organization. And so we're not going to chase the leverage up as EBITDA grows.

Okay. That's fair enough, I guess. When we think about the $100 million to $200 million guidance on the M&A, can you talk about how that's trending and how the pipeline's looking?

Sure. We actually meet later today. We meet once a month as a team to look at the pipeline. And I would say the pipeline is strong and we see opportunities across the landscape that Jim was describing. It's interesting to see valuations at this point in the market. And one of the things that we're committed to is being diligent users of our shareholders' capital to be sure that we prudently spend dollars at the right valuations. And so that's really what comes into play when we look at the M&A landscape today.

Just to make sure you're clear on the $100 million to $200 million, those are really tuck-ins. We've had several questions today about what types of businesses we would be interested in and we went through what we consider to be core. When we think about that $100 million to $200 million, those are really typically small tuck-ins pretty much solely in the solid waste space.

Perfect. Thanks, guys.

Your next question is from the line of Corey Greendale with the First Analysis. Please go ahead.

Thanks. This is Ken Wang on for Corey. Just for the first one. Just wondering if you can talk a little bit about any, just for modeling purposes, year-on- year work day discrepancies for each of the remaining quarters in 2017?

Sure. So we have an additional work day of 0.7 work days in Q1. We give that back in the third quarter of this year to be flat by the end of September. And then in the fourth quarter we'll actually have a work day difference that goes the other way. So all-in for the full year, we'll have about one less work day.

And just FYI, that when we think about work days, the extra work day, the 0.7 work days that Devina mentioned, typically work against us because you have the labor cost in most of your lines of business. The only lines of business where it works for you are with landfill tons and roll-off. And when you get that extra work day in the first quarter which are lighter than the other three quarters in terms of roll-off and landfill tons, it does work against you. We think that it could've been as much as $5 million to $6 million of headwind. We haven't talked about that at all in Q1 for us this year. But no reason to talk about it because we get it back and then some at the end of the year, with this year not being in a leap year obviously.

Thank you. That's very helpful. And then just going back to the big data remarks that you had earlier. Can you give us a sense of your IT infrastructure specifically given your roll-off strategy. Do you have all the systems in place to pull all of this data together? And if not, can you give us a sense of what type of investment it would require to do so?

Yeah. So we acquired a group about four years ago that's strictly an OR group. And that group is the team that's pulling together the example that we went through with predictive maintenance. That's the team that's doing a lot of that predictive maintenance analytics. So we feel that we have absolutely the right group to do that. And they're not just focused by the way on maintenance, that's the group that's been doing all of our automation of routes, they're also doing things like looking at our safety data and taking a predictive approach to that so that we can proactively train. There's a number of things they're focused on, but that all falls under our operations research group.

Thank you.

You bet.

Your next question is from the line of Joe Box with KeyBanc Capital Markets. Please go ahead.

Hey. Good morning, everyone.

Hey, Joe.

So maybe just a dovetail into the prior balance sheet question. I think you guys have earmarked about $500 million or so for share buyback in 2017. Any thoughts on the timing on that $500 million or even any plans to do another accelerated buyback?

We continue to have that in our plan for the back half of the year because we're wanting to see how that M&A pipeline shapes out. And with regard to how we execute it, we certainly look at ASRs as an efficient way to execute our share buyback. But that $500 million continue to be in our forecasts and right now it's all forecast for the second half of the year.

Okay. And could that theoretically go away based off the size of a deal that you do?

Theoretically, yes.

Okay.

Sure, sure. I mean, I think, Joe, when you look at capital allocation, I mean, first and foremost dividend and what we've said about the dividend is we want to see kind of a confirmation of that higher base of free cash flow that we've talked about over the last couple of quarters in 2017 before we make a decision to do anything with the dividends in early 2018. And then, of course, we've talked on this call a lot about the fact that the leverage ratio continues to go down and that really, as Devina said, is in the hopes that we find a strategic fit for us. But you're right. In theory, depending on the size of that, sure, you could absolutely see share buybacks go away completely for a period of time depending on the size of an acquisition.

And then switching gears. I know it's obviously not a big line of business for you, but curious if you've noticed any sort of uptick in your hazardous waste business largely from the inflection that we've seen in both industrial production and crude production?

Yeah, Joe. That business is a really strategic line of business for us because it connects with most of the other lines and we're very pleased with it. We have seen at specific sites some real growth there along the Gulf Coast. The West Coast with all of the rain that Jim mentioned earlier, it slowed down a little bit of the project work that we typically do in that line of business that's on customers or cleanup sites, and that was a little slower in Q1 given the rain and especially in California, Southern Cal, and that one large site for us, Kettleman, has been a real producer for us. It was a little slower in Q1, but in general it's a very well-performing business and we see upside. When you look at the commitments to investment from the petrochemical industry along the Gulf Coast, from Texas across to Florida, you see huge dollars planned for the next decade in the petrochemicals side of the house. That bodes well because we're so well-positioned with the Texas business but with that site in Louisiana, with sites in special waste in Louisiana as well along the Gulf Coast and then in the Alabama hazardous site. So we're extremely well-positioned there and expect that business to continue to grow for us.

Yeah. I would just, Joe, add to what Jim said there and say that both our hazardous and our non-hazardous special waste were a little slower than we would like. But I think the outlook is pretty strong. Obviously, if some type of infrastructure build could get passed out of Congress, that would be positive for us on both sides of that, both haz and non-haz. So while both hazardous waste and special waste were not weak but not super strong, I think the outlook is where we're encouraged.

Understood. Thank you.

Your next question is from the line of Tyler Brown with Raymond James. Please go ahead. Patrick Tyler Brown - Raymond James & Associates, Inc.: Hey, good morning.

Hey, Tyler.

Good morning. Patrick Tyler Brown - Raymond James & Associates, Inc.: Hey, I know the call has been long so I've just got one here. So Jim, I know there is a lot to talk about tax reform out there. If we just kind of set that aside for a sec. I think back in 2010, you guys made some investments in low income housing and such. I surmise that was designed to lower the corporate tax rate, but I am curious. One, assuming no reform, when would we expect those credits to sunset, driving a more normalized tax rate? And two, if we do get reformed to a simplified code would that potentially drive an impairment in those investments as I assume you wouldn't be able to take those credits?

All very good questions, Tyler. I'll take that. So we expect a sunset of both the low income housing tax credit investment and the alternate fuel tax credit investment that we've made to sunset I think beginning in 2018, 2019, and we can get more details on that. But the normalized tax rate without tax reform wouldn't happen until probably around 2019. And then when we think about whether or not there'll be an impairment associated with any of that, we're still looking into that. But I can tell you that the way that those deals have been structured is in addition to the investment that we have. We also have future cash flow obligations that we kind of account for as debt on our balance sheet. And so we think impairment impacts would be limited because that assets goes away but so does the liability, but it's not expected to be material. And as Jim mentioned earlier, all-in we think that tax reform would be a net benefit to us even with those investments going away. Patrick Tyler Brown - Raymond James & Associates, Inc.: Sure. Okay. All right. Thank you.

Thanks, Tom.

Your next question is form the line of Barbara Noverini with Morningstar. Please go ahead.

Hey. Thanks. Just a quick one from me. But, Jim, because you've mentioned publicly in the past that there's a lot of interesting recycling technology out there but, of course, many lack scale and given your strong cash flow recently, what's your appetite at this time for either acquiring or investing in any of these technologies kind of as an industry leader maybe to support building that scale? I guess is there anything out there that you may have your eye on that's interesting from a technology perspective?

Hi, Barbara. Yeah, good question. We recently had a leadership strategy meeting, and one of the things we talked about at that meeting was what does the recycle facility of the future look like. So when we think about investing in recycling, I think I would tell you that investing just in the same type of technology that we have today would be less interesting to us than investing in improved technology that helps improve recycling rates for us.

Got it. Thanks.

You bet.

And at this time, there are no further questions. Please continue with any closing remarks.

All right. Thank you. So in closing here, we're obviously pleased with the quarter from a financial results perspective but we're pleased with the cultural shifts we're seeing internally at Waste Management because of our focus on our people, our customers, and our technology. And that was best demonstrated I think on the people side with the succession, planning, and the promotion of three high-performing leaders into the AVP roles that I mentioned. Also on the customer service results that Jim Trevathan talked about, this obsession with the customers is something that I think you'll see Waste Management really focus on. And then a lot of conversation this morning around technology, around pricing, and routing and logistics, and the sophistication of data that we're beginning to bring to our business, we think it's the beginning of this path that we're on for cultural change and I think it makes us the right choice when it comes to an employer, as a service provider or a partner or an investment of choice. Thanks, everybody, for joining us this morning and we will see you next quarter.

Ladies and gentlemen, thank you for joining today's call. This call will be available for reply beginning at 1:00pm Eastern Time today through midnight on Wednesday, May 10, 2017. The conference ID number for the replay is 94449507. Again, the conference ID number for the replay is 94449507. The number to dial for the replay is 855-859-2056 or 404-537-3406. This does conclude the Waste Management National Services' First Quarter 2017 Earnings Release Conference Call. You may now disconnect.