Waste Management at 11th Annual Symposium: Strategic Growth and Innovation

On Thursday, 03 April 2025, Waste Management Inc. (NYSE: WM) presented at the 11th Annual Waste and Environmental Symposium, outlining strategic initiatives and future plans. The company highlighted its focus on pricing strategies in an inflationary environment, investments in renewable natural gas (RNG) and recycling automation, and the integration of its recent Stericycle acquisition. While optimistic about future growth, Waste Management also acknowledged challenges in certain sectors.

Key Takeaways

• Waste Management is shedding less profitable residential contracts to focus on higher-return opportunities.
• The company is investing $1.6 billion in RNG projects, expected to generate significant revenue by 2027.
• Recycling automation investments of $1.4 billion are aimed at improving labor efficiency by 30%.
• The Stericycle acquisition is set to expand service offerings and improve performance through synergies.
• Waste Management is prioritizing debt reduction following the acquisition.

Financial Results

• Revenue guidance for the year stands at approximately $25.7 billion.
• EBITDA guidance is projected at $7.55 billion.
• Volume growth in collection and disposal is guided at 0.25% to 0.75%, driven by cleanup activities in California.
• The RNG business is expected to generate $650 million in revenue and $500 million in EBITDA annually by 2027.
• Investment tax credits are expected to provide a $220 million benefit this year.

Operational Updates

• Pricing strategies aim for 100 to 150 basis points above internal costs, with a stable churn rate of 9%.
• Commercial business is performing well, while industrial volumes have slowed.
• Residential volumes continue to decline intentionally, with a 3%+ quarterly drop over the last 8-10 quarters.
• Seven RNG projects are completed, with eight more coming online this year.
• Recycling automation is progressing with 26 facilities being automated, targeting a 30% labor efficiency improvement.

Future Outlook

• The special waste pipeline remains strong, although contract releases may be delayed.
• The construction and demolition sector is weaker due to a focus on permanent housing.
• The RNG business is expected to grow, driven by renewable energy demand.
• Recycling growth is anticipated due to EPR initiatives and increased consumer awareness.
• Electrification of the fleet is being tested, with a potential shift over a ten-year period.

Q&A Highlights

• Tariffs may impact capital spending but could benefit recycling if demand for recycled content remains domestic.
• Electrification challenges persist for heavy-duty trucks, but Waste Management is exploring options for a gradual transition.

Readers are invited to refer to the full transcript below for a detailed understanding of Waste Management’s strategies and outlook.

Full transcript - 11th Annual Waste and Environmental Symposium:

Tony, Host: How how’s this? Okay. Sorry about that. I’d like to do introduce, Ed Eggel in, head of investor relations at, WM. WM is based in Houston, Texas.

It’s the largest waste service provider in North America and has the largest landfill network. Ed joined, WM in 1995 has been his incur his current role since 02/2014. WM has 400,000,000 shares outstanding, trades around $230 for a $93,000,000,000 market cap and 23,000,000,000 of net debt. They should do about $26,000,000,000 in revenue this year, almost $9,000,000,000 8 billion to $9,000,000,000 in EBITDA, and about almost $8 in earnings. Ed, welcome, and thank you for being with us today.

Ed Eggel, Head of Investor Relations, WM: Thanks, Tony. Appreciate the ability to present Walmart in person virtually. So I appreciate your accommodating me still being able to present there.

Tony, Host: That’s great. Well, we’re we’re very happy to have you. May maybe at a high level, Ed, I know we’ve I think people are very familiar with the brand. Obviously, you guys are pretty well known throughout the industry and throughout The U. S.

But you could just at a high level, tell us about what you do, maybe some more background.

Ed Eggel, Head of Investor Relations, WM: So I I wanna start by kind of correcting a little bit that you said there for our guidance for for this year coming up. You know, we’re gonna be around twenty five seven ish kind of at the midpoint of our guidance on the revenue side and about seven five five o roughly kind of at the midpoint for EBITDA just to to clarify that a little bit. But, look, we’re the North America’s largest environmental solutions service provider out there. We have a large footprint in our traditional collection and disposal operations. Think of commercial, industrial, residential picking up trash and disposing of it at our our landfills or transfer stations.

We’re the largest North America’s largest residential recycling company as well, so picking up residential waste and and sorting that at our facilities. You know, we just acquired, and I’m sure we’ll talk about this, a large medical waste business, Stericycle, that’s gonna add to our service offerings to allow us to have a a more complete service offering to our to our customers. And we’ve dabbled a little bit in some technology and automation in our recycling facilities and our renewable natural gas projects. So those are all things that are give us excitement going forward, you know, looking into the future.

Tony, Host: That’s great. Great overview. Maybe we could talk about the pricing environment and give an update there. You know, how have discussions with customers been going in a relatively inflationary environment?

Ed Eggel, Head of Investor Relations, WM: Yeah. If you think about it, most of our customers understand that we have to recover our cost of processing or our cost to serve them. And a lot of times, those customers our service to them is less than 1%, particularly on the commercial side, of their business cost. Right? So a restaurant, you know, less than 1% of their service to to them is what we’re gonna provide for them.

So they don’t really notice a lot of price increases across the board there. As long as you’re providing the the quality of service and providing differentiated service offerings to them, they’re not gonna really look at the pricing side of the business. So so we to focus on a hundred to a 50 basis points above our internal cost to serve those customers, above that to get pricing activities that are gonna cover those costs plus get some margin expansion. We haven’t seen much change in that. We focus on customer lifetime value here, meaning customers at our churn level in the commercial and industrial line of business of about 9% means they’ve those customers have been with us for ten plus years.

So they’ve gone through 10 pricing cycles, and we wanna make sure that we treat those customers with the respect that they deserve and price them appropriately, cover our costs, but make sure that we look at all the data and analytics for those customers so that we don’t intentionally shove them out of our portfolio. And it gives us a better view into how our service offerings combined with how our customers feel about us from our from our customer scores. It allows us to price more appropriately across the board, and we haven’t seen much pushback just yet on on that.

Tony, Host: And could you along that line, could you sort of discuss these, you know, these higher value customers you talk about in regards to your ability to use maybe, you know, rollbacks, extended contracts?

Ed Eggel, Head of Investor Relations, WM: Yeah. I think what we we first look at is how can we become a better partner with those customers. So so rolling back is is a tool that you could have rollbacks of pricing. We don’t like to go there, but we really look at how can we partner with them to increase the service levels that they have with us. Right?

So so they might just be a customer that just has a commercial can with us. How can we add recycling services to them, or how can we add the organics processing or some some other service levels there to to increase the stickiness of those customers across the board. And we do have the toolkits after the rollback prices, but we don’t use that as the first lever. We look at kind of being that long term partner with them to create value across the board for both us and them.

Tony, Host: And then, you know, discuss your ability for, you know, price discovery using your tools, strategies that you have with customers, sort of maybe some of the pricing tools you guys have.

Ed Eggel, Head of Investor Relations, WM: Yeah. So so we go back a long ways, particularly on the commercial and sorry, on the collection and disposal side. Right? We’ve been gathering data. We’ve had onboard computers on our trucks for a decade plus right now, gathering information about how we service that customer, how long it takes to serve a customer, any operational issues we have with them.

We also now use that technology to track kind of what their waste looks like as we’re dumping into the back of the truck. Right? So we know if they have a recycling can, for example, what their contamination level could look like. So we can provide that data back to them to under to help them understand why we are pricing the way we are. As everyone’s aware of, what, you know, labor costs continue to go up, inflationary environment still around today, That’s the easy bread and butter that people understand.

It’s really trying to get the customer to understand what we know about them and how we can provide the valuable service to them and how we can help them become a better customer for us if they’re recycling appropriately or throwing the trash away the right way.

Tony, Host: And and, Ed, you know, in capturing this this price, how does that translate to incremental margin improvement?

Ed Eggel, Head of Investor Relations, WM: So, again, we’d like to get that hundred to 50 basis points above our cost to serve those customers so we get that margin expansion across the board. It varies depending on lines of business. Right? So you you look at our open market business, which is about 60% of the pricing. 40% is tied to some sort of index on there.

We look to see what those returns are, you know, both on a margin basis and a return on invested capital. That’s I’m sure we’ll talk about residential a little bit and why we’re shedding some of the volume there, but that’s that’s why we look at that to make sure that we get that expansion that we expect to earn and our investors want us to see.

Tony, Host: Yep. And you you led me to my next question. Maybe talk about volumes now and discuss, you know, what what you’ve seen in in churn rate and and what has the trajectory sort of looked like.

Ed Eggel, Head of Investor Relations, WM: Yeah. So we we don’t really give inter quarter updates, but I’ll tell you from our, you know, fourth quarter earnings call, you know, churn was reasonable around 9%. We’ve seen it in that 9% level for a for a long period of time, and we’re proud of as a reflection of our service offering. Right? It’s not pricing isn’t a reason why customers leave generally.

It’s because of the service failures that we potentially have. So keeping that at nine is really good outcome for us. We’d love to see it a lot lower than that. Part of it’s structural that you’ll never be able to to get rid of. You know?

Businesses just go out of business, you know, once a year. So, you know, getting it lower would be opportunistic for us and and provide better value. From a volume perspective, you know, for the full year, we guided volumes to about point two five to point 75% in the collection and disposal business. That’s about 50 basis points at the midpoint. I’ll point out that all of that 50 basis points is really coming from the cleanup in California.

Unfortunately, in Southern California, the wildfires, that volume is about a 50 basis points impact to us positively. That means the rest of our business is gonna be essentially flat from a volume perspective, but you really need to pull back the layers on the different parts of our business. Commercial business seems to be doing okay, particularly with national accounts. We’re we’re seeing attracting those customers at better pricing and providing value to those customers. MSW landfill volume seem to be going okay.

Really, the shedding of the intentional shedding of the residential volumes are gonna drag that down, and we’ve been about three percent negative over the last, you know, eight or plus quarters there. And we’ve talked a little bit about our industrial side, seeing a slowdown both in housing and kind of the industrial services sector a little bit. You know, we we talked kind of you know, are we in a mini industrial recession right now? Don’t necessarily wanna call it that, but we’ve seen in the last two or three quarters negative volumes in the industrial side that gives us a little pause that there could be some challenges in that volume aspect going for the rest of the year.

Tony, Host: Yeah. And then, you know, Ed, you alluded to shedding, you know, shedding volumes. Could you sort of talk your decision matrix maybe for those less familiar? It obviously is a little bit of counterintuitive, but just maybe talk about how you go about, you know, deciding about shedding those and maybe talk about the national accounts business.

Ed Eggel, Head of Investor Relations, WM: Yeah. So the the shedding really comes from the residential line of business. And if you look probably five, six years ago before we started this process, operating EBITDA margins in that business were in high single digits, low teens, maybe call it eight to 12% EBITDA margins. And we looked at why is it that the case. Right?

I mean, these are large chunks of business that we should be able to get better returns on it. There’s no competition as you have these five to ten year contracts. So looked at it. A lot of it comes down to price escalators. Right?

A lot of them are tied to CPI, CPI U, water sewer trash, things like that that weren’t keeping up with our cost of inflation. So as John Morris says, the first day of the contract winds up being the the the best day of the contract. Right? Because our costs continue to escalate, but our price escalators aren’t keeping up with it. So we made the decision to start looking at that, looking at automating the residential line of business, right, going from rear loads to automated side loaders, reducing the dependency on labor there, increasing increasing efficiency, reducing safety incidents, as well as making sure we had the right price escalators in those contracts.

And as I mentioned, we’ve seen a decline of three plus percent kind of quarterly for the last eight to ten quarters. However, what I’ll tell you is our revenues continue to grow because we got the right pricing escalators in there, and we’ve seen our EBITDA margins grow to close to 20% EBITDA. Now we don’t wanna get rid of all of our residential business. Right? We wanna make sure we get the right returns and that that business competes for capital just like the rest of our businesses do.

Tony, Host: That’s a great overview. Thank you for that. Maybe switching to special waste. Obviously, there’s a lot going on, and some previous presenters talked about what they’re seeing. What are you seeing there?

Is there some pent up demand? Maybe what your pipeline looks like?

Ed Eggel, Head of Investor Relations, WM: Yeah. The pipeline looks strong and robust. It really comes down to the when the municipality or the agency is gonna want to let those contracts out, basically. Right? So you could see delays.

Right? And and in the first quarter, you’ll you’ll normally see a little bit lower special waste volumes, right, just the the nature of our business, the cyclicality of it. But that doesn’t mean those jobs have gone away. It just means there could be a delay of when we start seeing those volumes kick in. Our special waste volumes have been really strong over the last couple of years, and we think that will continue.

It’s just a matter of timing wise when people feel comfortable that they’re they’re wanting to continue those projects.

Tony, Host: Yeah. And then maybe over to c and d. You know, you’re the largest, obviously, operator. What are you seeing, currently in the real estate market? And then maybe what’s your what’s your, what’s maybe your outlook looking forward?

Ed Eggel, Head of Investor Relations, WM: Yeah. Right now, I think the construction and demolition side is a little bit weaker for us, and that’s primarily because we don’t play in the temporary housing, side. Right? It it’s our we we’re focused more on the permanent side of the business. We do have, obviously, temporary c and d business that we do on the on the industrial side, but it’s not that big.

When you look at the landfill lines, they have been negative here a little bit and see that as a continuing a little bit further.

Tony, Host: And then switching over to RNG, I saw you had a a great press press release last night with your RNG facility update. Maybe you could walk us through that and then just sort of maybe talk a little bit more about that business for you.

Ed Eggel, Head of Investor Relations, WM: Absolutely. I I think it’s a great opportunity for us and give us a lot of excitement over the next several years. We’ve gone been on this journey, investing about $1,600,000,000 by the time of this this tranche is finished. It’ll be about 20 projects that we’ll have up and running, generating about 25,000,000 MMBtu of renewable natural gas. Right now, we’ve had about seven projects complete through 2024.

Got about eight more coming online this year, and then the remaining five will come on in 2026. So we’ll be at the full run rate, you know, in 2027. That’s gonna generate 650 ish million dollars of revenue at about $500,000,000 of EBITDA rough rough numbers. $26 per MMBtu is our blended average that we’re using for that. That equates to about $2 a RIN and $2.50 for natural gas.

I should point out that that’s a blended average across all of our sales. Part of those sales are gonna go into the voluntary market, which might be a little bit lower than the $26, which means the RINs market will be a little bit higher than 26 so that we get the full blended average of $26. Really great investment for us. Three year payback on average without the investment tax credits, and we expect about $220,000,000 or so of investment tax credit benefit this year as well. So so really strong returns, strong profile, feeds our natural gas fleet, and there’s a lot of appetite as potential onshoring of manufacturing.

You have data centers coming on board. There’s gonna be a lot of energy needed, and our volume at the these facilities could provide some of that needed energy.

Tony, Host: Yeah. That’s a great review of that. And and maybe you could discuss some of this the the advantages that you have as as the as the largest, obviously, landfill, you know, landfill owner and the scale advantage that come that come with that in this business.

Ed Eggel, Head of Investor Relations, WM: Yeah. Absolutely. So, again, these projects we’ve been in the the landfill gas to energy business for over three decades right now, and it was really capturing that naturally occurring methane, converting it into electricity for the longest time. Right? Today, because of our natural gas fleet, and, you know, we might talk about this a little bit later, but we we knew that natural gas fleets wouldn’t necessarily be the be all end all kind of for carbon reduction across the board.

But we took the opportunity to to take the first step and reduce our emissions through natural gas. Well, when the RFS came out, we saw the opportunity there to continue to fuel our fleet and generate these RIN credits. You know, we have the expertise because we’ve been doing this for so long. We have the balance sheet capacity to do this, and that and we have the strength in our operations to to weather some fluctuations in commodity values. And we’re working on making sure that we have the appropriate level of risk built into our any given year where we’re gonna have 80 to 90% of that volume kind of locked up in the longer term contracts.

Over a three year period, about 50% of the gas will be locked up. So we can still participate in any upside that we see in the RINs value. But we’re well positioned based on our landfill footprint, our expertise, our natural gas trucks, all that really leads us to why we decided to go about it the way we did.

Tony, Host: Yeah. It’s a natural fit for for your company. Maybe switching to recycling, you know, your recycling plant investment. Because maybe give us an update there and and, you know, sort of what are you seeing in the supply and demand side of of that business?

Ed Eggel, Head of Investor Relations, WM: Yeah. Absolutely. So we went similar to our renewable energy side. We’re investing about 1,400,000,000.0 in a recycling outfit for for really automating our facilities. You know, we have by the time we’re done, we’re gonna have, you know, automated virtually all of our single stream recycling facilities, about 26 plants that will have fully automated.

The good thing about this, it’s really not dependent upon commodity values. Right? Because all of the value that we’re getting from these new upgraded automation mission plans or 60% of the value, I should say, is coming from reduced labor cost and reduced and improved throughput. And we’re also gonna get some value for selling cleaner material. Right?

So we get a premium with our normal sale of material. Right? So you have cleaner bales of cardboard, cleaner bales of paper. You get a premium for that. So so that’s really where the value is driving.

So the commodity price doesn’t really impact that, and we’re well on the way on that side. As far as the the rest of the investments that are coming up from new new marketplaces where we’re gonna invest in new plants, couple of things I’ll point to examples here. Austin, Texas, for example, we didn’t have a recycling facility there. And as as migration occurs from California to Texas or New York to Florida, where we don’t have this infrastructure, we’re investing in that infrastructure to meet the demands of our customers on that side. And then the other investment that we’re making is on EPR.

You know, we’ve won a couple of projects up in Canada and Ontario extended producer responsibility comes to The US. You’re seeing it in California and in Colorado and primarily on the West Coast. We’re well positioned to capture that volume opportunity as well. As far as what we’re seeing right now, recycling comes down to two things, making sure our customers upfront understand what they should be recycling. Right?

So we still see a lot of contamination in those loads, call it, you know, mid teens kind of contamination there. But we’re also still seeing a lot of the PET bottles going into the landfill. So what can we do to educate our customers to get that material through our plants? As well as the back end, you’re having that demand from the consumer packaged good companies wanting to use that recycled content is key as well. Right?

So and it’s still pretty strong there. And then when you have legislation, like minimum minimum content legislation coming on board, that’s gonna help drive the demand on the back end. So EPR, minimum content legislation, all of those things will help drive the back end. We still need to focus on the consumer upfront to make sure they recycle the right way, But this is a good marketplace, and it’s gonna enhance our leading capabilities here.

Tony, Host: That’s a good overview. Maybe talk about automation. I I know Jim, a couple years ago, you know, sort of brought up some pretty big numbers on you’re saying with labor improvements. How is automation going to benefit you guys in in the in the coming years on an operational basis and economics?

Ed Eggel, Head of Investor Relations, WM: Yeah. It’s a great point, and that’s what we’re seeing here on the war on talent. Right? Do you you have to attract driver. You have to retain those drivers, mechanics, things like that.

So so what we realized is there’s a lot of talent out there that we’re using through third party services, not necessarily WM employees that have high turnovers. I’m not talking 15%. I’m talking fifty, sixty, 70 percent turnover in some of these positions. So so what can we do to automate that? You know?

So the one area we talk a little bit about is on automation and residential reload routes, going from reload to automated side loaders. You can eliminate one or two helpers off the back of the truck that are contingent workforce, basically. You improve your safety because you don’t have to worry about that helper getting off the truck and may getting a soft back issue because they’re lifting the 75 pound can into the back of the truck, and you don’t have people standing on the back of the trucks where the public’s out there driving around. And they’re about 30% more efficient. You can pick up 30% more of the quicker using an automated than you can on a real load.

Right? So so that’s one area. We have about 4,000 routes that we could convert or or that are still reload. We’re about about half of that, a little more than that, we’ll be able to convert to to the automated side. Right?

Things like yard waste, you’re not gonna be able to convert because everything has to be containerized. So so there’ll still be some need for reload routes. Other things on the recycling, we talked about we touched on the recycling investment, seeing about a 30% labor efficiency improvement in those plants by automating. Right? You know, you have we have a plant here in Houston that we’ve taken investors to where before we automated, we probably had three shifts of 36 to 40 employees kind of sorting through materials.

Today, I’ve got three shifts with 36 employees total in that plant. Right? And those are hard to fill sorters on those lines, right, that that have a contingent workforce background. Right? They’re not necessarily WM employees.

And then the last thing I’ll talk about is kind of on the technology side is on routing and logistics. Right? What can we do to improve our efficiency? Right? Making sure that our our drivers are following the routes appropriately, that we’re able to add in on demand services or roll off customer calls in today.

And, you know, years ago, as you said, I started ninety five, thirty years ago. I remember having put pins in the back of dispatch. And if the customer called in for a change, you gotta take all the pins out and kinda reroute. Well, now can we do that dynamically? Right?

And the driver goes out on the route today. There’s 80 different decision points potentially that dispatcher would have to consider when they decide who’s assigned that to. Well, let’s let the computer do that and let the driver just know, okay. Here’s my first stop today. And then when they confirm that stop, the next stop pops up.

Right? So no one knows really what’s the future stops are gonna be, but it’s just more efficient for us to do that. So those are some of the things that we’re doing. We’ve also automated some sales force and how we go to market, and then call centers is the other thing that we’ve talked about for years of, you know, reducing the number of call centers and and having customers be able to self serve using technology.

Tony, Host: That’s a wonderful view. I got AI in there too. I like it.

Ed Eggel, Head of Investor Relations, WM: Yes. Thanks.

Tony, Host: Sterecycle. You know, obviously, you guys have been in the medical waste business for a long time. Sort of this obvious asset came to market. Maybe the strategic thought process, why now? Maybe give us a a review of that and then an update on how how the integration integration is going.

Ed Eggel, Head of Investor Relations, WM: Yeah. Absolutely. We’ve been very interested in the CyberCycle business for a decade or so. Right? And if you go back to that point in time, we were probably 12,000,000,000 market cap company.

They were an 8,000,000,000 market cap company. If we combine it, it’s gonna be a bet the company transaction. You know, when we did this deal, we’re $80,000,000,000 market cap, and they were 4,000,000,000. Right? So it’s not a bet the deal transaction at this point in time or bet the company transaction, I should say, at this time.

Really, what drove us to finally, you know, make this acquisition is real the inflection point that this business is at. Right? They they’ve had you know, they they’ve lost focus sometimes on buying companies that they shouldn’t have been bought, divesting those companies, really focused on running the business as much as possible, trying to clean up that that portion of the business that really didn’t make sense for them. You see them going through an ERP journey today, right, and trying to get that implemented. We’ve gone through our ERP journey, and we know how to to fix that and make sure that it’s running appropriately.

I think there’s an opportunity set here to take what we’ve learned from our pricing programs and apply it to their business once we have that data. We understand the data, once you start collecting it, we’re gonna be able to apply it to their business. And we think that this business really is gonna have potentially a higher growth volume rate than the collection and disposal business. Right? If if our collection and disposal business is trading at some discounted GDP or volume, right, you know, call it 75 50 to 75 basis points of GDP.

We think you could see a faster growth rate on the MepcoA side as the population continues to age. Right? So so it’s really a strong inflection point here where we think we’ve got the opportunity to take what we know from a traditional collection and disposal business because that’s what the Stericycle business is. It’s route based, picking up medical waste and disposing of it, and applying that what we’ve learned. Now different trucks, different processes have to do it, but we know how to collect and dispose of waste.

So applying that to that business is really gonna be beneficial. And then on and on top of that, you know, we double our synergies from one twenty five to two fifty. Right? A lot of that’s gonna be coming from s g and a, and that’s gonna bring their s g and a roughly to about 16% of revenue. As you know, today, we’re running around 9%.

Right? So in three years from now, there’s probably more opportunity to get that SG and A a little bit lower. None of these synergies contemplate cross selling opportunities as well. Right? There’s additional revenue opportunities here.

WM has a low single digit percentage, probably underrepresented of customer customer mix in our commercial and industrial line of business in the medical waste services field. Right? So whether it’s hospitals or doctor’s offices, like this, tattoo pars, things like that, We don’t service that as much as we probably should based on our size. So there’s a whole opportunity there for us to provide a value proposition to those customers to show how we can offer them medical waste, solid waste, recycling, organics, whatever their needs are to become a partner with them just like we did with the national accounts business. And you see how well that’s worked for us.

We continue to grow that business, higher pricing, higher EBITDA on those bid on that business, then we can take that what we’ve learned from that business and apply it to the Stericycle business to continue to grow there. I should throw in my plug here. Well, we haven’t given anything on revenue just yet, but in June, we’re gonna have our investor day in New York City. So more to come on potential opportunities from the cross selling opportunities then.

Tony, Host: I’ll see I’ll see you there for that. Maybe I’ll open it up to the audience for questions.

Unidentified speaker: Hi. Thank you. You spoke about RNG. You spoke about your automation on your on your routes. Can you talk about electrification with your trucks, particularly for recycling where it’s defined radius and a and a lighter load?

Ed Eggel, Head of Investor Relations, WM: Yeah. Absolutely. So we are testing the heavy duty equipment to to see, you know, where we can use it. That would be a market. We do have a large fleet of light duty trucks, right, support vehicles that we can definitely electrify.

The Stericycle business is an opportunity. Box trucks still electrify. From the solid waste perspective, we haven’t seen the full duty log necessary to service our customers. We think we’d have to add a bunch of routes potentially in certain locations because of the trash side. On the recycling side, again, we’re we’re still testing it to see.

Electrification is gonna come, and it’s gonna work eventually. But we just wanna make sure that we’re thinking about it the right way. I mentioned that we have the largest natural gas fleet right now, and we replace about 10% of our fleet every year. So over a ten year period, if we get to a point where electrification is the best opportunity, we can switch our fleet pretty quickly over that ten year period as well as we could, if we needed to, retrofit some of these natural gas plants to go back to electricity. Right?

So we have that’s one of the things that I didn’t use as why we’re doing the RNG projects the way we’re doing them. We have flexibility to change kind of how we want to designate those plants. If it comes around, that electricity is is better at that point in time. So just another benefit there.

Tony, Host: And then maybe we should just, you know, just touch on tariffs. Obviously, it’s such a, you know, a timely topic here. Are you guys looking at tariffs, you know, after yesterday’s announcement?

Ed Eggel, Head of Investor Relations, WM: Yeah. I think a lot you could see a potential impact on capital spending, right, as that’s where you’ll see it first. Don’t necessarily believe as a North American company, we’ll see a lot of tariffs impacting us. The good news is if companies see their business slow down, particularly in commercial, that’s really not gonna impact us as much, right, until those customers go out of business. Right?

COVID is kind of a good example of that year. Right? As businesses slow down a little bit, we still perform very well because you don’t lose that volume. Right? It’s still you just have less volume.

It’s better for us from a disposal perspective that you don’t have you know, you have a empty. So I don’t see necessarily a big impact on the collection side of the business from that that perspective. Good news, you could see some benefit on the recycling side on the commodity side as demand stays within The US for recycled content. You could see commodity prices go up a little bit higher there. So still early to tell, but I think capital spending will probably be one way you see inflated prices, and then you could see some benefit on the recycling side.

Tony, Host: And then maybe to get one more into capital allocation, could you sort of just walk through your capital allocation strategy, you know, buybacks, dividend, debt pay down, m and a?

Ed Eggel, Head of Investor Relations, WM: Yeah. Absolutely. In a in a normal year, we would say and we we’ve we’ve raised our dividend twenty five years in a row. You know, we grew at 10% this past year. I think dividends are first and foremost.

We’re gonna pay those first. And then what’s left over, historically, what we’ve done is look to grow the business through either m and a activities or organic investments like the recycling renewable energy investments we’ve made, and then share buybacks would be last. Debt repayments in a normal year would normally not be something that we would do because our cost of debt is so cheap. Right now, because of the Sarasackel transaction, our leverage ratio is a little bit higher than we ex want it to be. So two five to three is kind of the range we like to be at.

We expect that by the end of this year to be about 3.1 times, and then by, you know, early next year to be at a range in that range so that we can restart our share buybacks. But it’s still gonna be dependent upon what the m and a market looks like and what internal investments we can make to to continue to grow the business.

Tony, Host: Well, Ed, thank you so much for the time. I know everyone wants your time, and I appreciate you supporting us all these years and hopefully get you back next year. Thanks so much.

Ed Eggel, Head of Investor Relations, WM: Appreciate it. Thank you. Have a good day.

Tony, Host: Okay. Now we’ll have Hannah

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