Outlook on 2025-2027 Growth
Q: Will growth exceed 5-7% in 2025?
A: Management expects outsized growth in 2025-2027, surpassing the typical 5-7% organic EBITDA growth, driven by sustainability investments, reduced CapEx leading to increased free cash flow, and higher synergies from the Stericycle acquisition. " They anticipate most sustainability plants coming online in late 2024, with full EBITDA impact realized by 2027, targeting $800 million in EBITDA. "

Sustainability Investments and CapEx
Q: Is the sustainability CapEx increasing?
A: CapEx for sustainability projects has increased from an original $2.8-$2.9 billion to about $3 billion, mainly due to cost inflation in renewable natural gas plant construction and higher utility interconnect costs. " " By the end of 2024, they expect to have spent 75% of the $3 billion total CapEx. "

Recycling Investments Return
Q: What are the returns on recycling investments?
A: Recycling investments are yielding strong results, with labor cost per ton improving by 30%, gross operating expenses decreasing by 17%, and commodity blended value increasing by 17%, leading to faster payback periods of 6-7 years. " These investments now have among the best returns on invested capital in their portfolio. "

Stericycle Acquisition Synergies
Q: Any update on Stericycle synergies?
A: After 4.5 months of diligence, management is more optimistic about Stericycle, believing initial synergy estimates of $125 million over 3 years are conservative. " " They see opportunities to reduce SG&A expenses significantly, given Stericycle's SG&A is 22% of revenue compared to WM's 8.9%. "

RNG Contracting Strategy
Q: How are you managing RNG price risks?
A: WM is contracting more of its renewable natural gas volumes, with 40% of 2025 volumes already secured, to mitigate price volatility and political risks. " They plan to expand contracted volumes through long-term offtake agreements and forward selling of RINs. "

Solid Waste M&A Activity
Q: How significant is recent M&A activity?
A: WM closed nearly $800 million in acquisitions, potentially reaching $1 billion, focusing on strategic markets like Arizona, Carolinas, Florida, and Long Island. " They expect a rollover benefit of $150 million to revenue and $35 million to EBITDA in 2025 from these acquisitions. "

Price-Cost Spread and Automation
Q: How is pricing strategy progressing?
A: Management remains disciplined on pricing, achieving objectives despite CPI declines. " They are investing in automation to offset wage inflation of 4.5%-5.5% in frontline roles, not refilling over 2,200 positions since 2022 through attrition. "

Volume Trends and Economic Outlook
Q: Any concerns about volume trends?
A: Core business volumes, particularly in commercial collection and MSW, remain strong. " Industrial hauls are lighter than expected, but management anticipates potential improvement after election clarity. " They see no "storm clouds" in the economy. "

Sustainability EBITDA Contribution
Q: What is the expected sustainability EBITDA for 2024?
A: WM expects $120-$130 million in EBITDA from sustainability-related businesses in 2024 " , with year-to-date delivering $92 million. " They initially guided $115 million plus $15 million from commodity prices. "

Residential Volume Strategy
Q: What's the plan for declining residential volumes?
A: Residential volumes are down 2.9% by design, as WM lets go of underperforming contracts to improve efficiency and margins. " They aim to make residential business competitive with other collection lines, potentially returning to flat volumes by end of 2025 or early 2026. "