GFL Environmental Inc.

future events and developments or otherwise. This call will include a discussion of certain non-IFRS measures. A reconciliation of these non-IFRS measures can be found in our filings with the Canadian and U.S. securities regulators. I will now turn the call back over to Patrick, who will start off on page three of the presentation.

Thank you, Luke. I would like to start by thanking all of you, both equity and debt investors, for sticking with us through one of the biggest stock market declines since the Great Depression. Given management's equity ownership, we are in this together for the long haul to continue creating shareholder value over the years to come. When we took GFL public at the beginning of March, none of us thought we were at the start of an unprecedented global health crisis that has brought the personal and economic disruptions that we have seen from the shutdowns and other measures taken by governments across North America to stop the spread of COVID-19. Despite the significant impact on general economic activity resulting from these measures, we delivered an exceptionally strong quarter, growing adjusted EBITDA by nearly 25% to $223 million and completing over $1 billion in M&A in the quarter. When we were on the road for the IPO in late February, our recurring message was about GFL's resilient growth profile. Our first quarter results are a testament to our ability to deliver on that profile. Let me first and foremost importantly that none of the success in managing through the pandemic would be possible without our employees. Our top priority since the start of this crisis was, and as we begin to navigate through the loosening of government restrictions, continues to be ensuring the health and safety of our more than 13,000 employees. To protect our employees, we took immediate steps including setting up risk management teams of our senior leadership, and operational leads to identify, assess, and respond to the changing internal and external dynamics on a daily basis, and to provide real-time direction to the field to address issues as they arose. We implemented and have continued to follow physical distancing protocols as recommended by public health authorities across all of our operations, including work from home arrangements where appropriate, and we eliminated all non-essential travel. We have invested in enhanced PPE and sanitation practices and increased the frequency and depth of cleaning of our facilities and our high-tech services at all of our facilities. As an essential service, many of our frontline employees have continued to come to work every day, and the measures we've implemented have proven successful in keeping them safe. The loyalty and dedication of our employees have continued to deliver our essential service during these unprecedented times is truly inspiring and something for which I am extremely grateful for. We have also been touched by the outpouring of support from our employees shown by our customers and communities. We have in turn given back to our communities by continuing our financial support of local charities, including through our Full Circle project, and a donation to local hospitals of medical grade masks that we had in stock to support local health care workers. In terms of COVID on our financial results for the quarter, the impacts we saw vary greatly by market and were largely dependent on the characteristics of the rules of the shutdown that were imposed in each market. The COVID related impact on our solid waste revenue in Q1 was mostly attributable to the reduced volume in our commercial and industrial collection business during the last two weeks of March. Restricted economic activity from regional shutdowns reduced demand for our IC&I collection services, with the timing and scope of the shutdowns driving the magnitude of their impact on revenue in each of the affected markets. Our residential collection business held up very well and actually outperformed in those Canadian markets where we are paid by the ton under municipal contracts. a relatively lower proportion of our revenues coming from volume-based post-collection activities, mitigating the overall revenue impact from the reduction in C&D and special waste volumes into our landfills in the quarter. We saw the greatest volume impacts in the primary markets in which we operate, most notably Toronto and Montreal, where stay-at-home orders were put in place earlier than other markets and covered a broader scope of service offerings. Volumes in our secondary markets where we generated almost two-thirds of our solid waste revenues were far less impacted. Our pricing during the first quarter was very strong, contributing 4.9% to revenue growth. We continue to see pricing discipline in the industry, and as of now, we have not experienced any significant pricing-related impact from COVID. As we said on our investor call in April, because of the high proportion of our revenues coming from our service-based collection, we have a highly variable cost structure. As volumes slowed, we reduced our operating costs by consolidating collection routes, parking trucks, and reducing overtime hours, while our disposal costs, R&M, and fuel costs naturally flexed down with reduced volumes. At the same time, we reorganized our workforce across our service offerings and business lines to minimize the disruption to our employees. Because of our focus on the safety of our employees, we did incur incremental costs in the quarter for the enhanced safety and hygiene protocols that we implemented that I described earlier. We also looked at our SG&A costs and have significantly reduced discretionary spending there as well. We have eliminated substantially all travel and entertainment costs as we postponed annual merit increase for salary employees. but not for our hourly employees until we have greater clarity on the impact of the virus on our operations. We have taken these measures to avoid incremental headcount reductions, recognizing that our employees are our number one asset, and we want to continue having our engaged workforce ready to carry on once we get on the other side of this pandemic. On capital expenditures, we have evaluated what can be eliminated or deferred for the remainder of the year. During the IPO Roadshow, the view for 2020 was a total spend of approximately $440 million on capital expenditures, which included a significant component of discretionary replacement and growth capital. As we have said before, because of our relatively lower landfill concentration, our replacement CapEx needs run at approximately 8% of revenue. And looking at our 2020 spend, we've identified $100 million of spend that we could eliminate for this year if we need to. Our actual spend will depend on how things evolve over the rest of the year. We plan to continue to capitalize on attractive opportunities that may arise, and like we have seen in the past, we expect that this crisis will generate opportunity. But we have this lever available to us ultimately to mitigate the impacts on the free cash flow line for the year if we need to use it. In terms of M&A, we completed eight acquisitions during the quarter. Five of these contemplated at the time of the IPO, including county and American waste. And we closed three additional tuck-in acquisitions around the beginning of March. We deployed $1.1 billion of capital on County and American and approximately $70 million of capital on the six tuck-in acquisitions. Although there have been some delays because of COVID-related travel restrictions, the integration of both County and American are progressing very well. With the highly successful financing that we completed last month, we have over $1.3 billion in liquidity and are ready to capitalize on opportunities as they arise. We have temporarily delayed the closing of a few smaller tuck-in acquisitions since the onset of the pandemic. But we continue to progress on several opportunities, and our pipeline continues to be robust. Our focus on creating long-term shareholder value has not changed. As we saw in managing through the downturns in 2008 and 2009, and again in 2015 and 2016 in Canada, times of uncertainty and increased volatility can create great opportunities. We expect that having a strong balance sheet, a flexible capital structure, and a very supportive group of both equity and debt investors will position us well to capitalize on these opportunities as they continue to arise. I will now pass it over to Luke, who will discuss the financial results for the quarter.

Thanks, Patrick. Turning to slide four of the presentation, revenue for the quarter was $931.3 million, a 29% increase compared to the prior year. Revenue from new acquisitions accounted for approximately $180 million of the increase, with the balance of the growth coming from organic price and volume. I will walk through the details of the price and volume growth by segment on the following page. Cost of sales as a percentage of revenue was 91.5%. Under IFRS, depreciation amortization expense-related operations is recognized within cost of sales. Cost of sales excluding DNA and acquisition-related costs was 67.5% of revenue as compared to 66.5% in the prior period. The year-over-year change is primarily attributable to the impact of acquisitions, both in terms of business mix and margin profile. The one extra day in 2020 attributable to the leap year also increased total cost of sales in an amount and in a percentage. Fuel costs as a percentage of revenue were 4.5% compared to 5% in the prior period, a decrease attributable to both revenue mix and diesel prices. Diesel costs vary by region, but were down approximately 4 cents as compared to the prior year. Commodity prices were down approximately 32% period over period, which resulted in higher amounts paid to third-party processors of recyclable volumes. COVID-related impacts, including decremental margins on volume losses, incremental equipment rental expense in our infrastructure business attributable to delays in receiving equipment, and additional spending on enhanced safety and hygiene activities, also increase cost of sales. SG&A expense, excluding IPO and acquisition transaction costs and depreciation expense. Again, IFRS requires us to recognize depreciation expense within SG&A. was 96.7 million for the quarter, where 10.4% is the percentage of revenue. Total DNA expense was 221.8 million, a period-over-period increase of $47 million, which was driven by the incremental DNA expense associated with tangible and intangible assets acquired organically and through M&A since the prior period. Interest and other finance costs were 269.4 million, an increase of 145.5 million as compared to the prior year. The increase is primarily attributable to refinancing costs incurred in relation to the IPO, all of which were contemplated in the IPO offering documents. The change in other income and expenses is primarily attributable to the non-cash foreign exchange fluctuations on our U.S. dollar denominated term loan and the mark-to-market revaluation of the purchase contract component of our tangible equity units. With respect to income taxes, the change in the deferred tax recovery is largely attributable to the costs incurred in respect of the IPO, For current income taxes, we continue to have minimal cash tax obligations. GAAP net loss was $0.77 as compared to a net loss per share of $0.64 in the prior period. On an adjusted basis, net loss per share was $0.03. Turning to page five, you'll notice summary of results by operating segment. In solid waste, price and surcharges drove 4.9% growth as compared to 4% in the prior year period. As we've told you before, our focus on pricing is going to lead to incremental growth in this lever as compared to prior periods, and this quarter's results are a testament to that. As we've also told you, our pricing activities are front-end loaded, so this level of PI will taper down throughout the year. Volume for the quarter was negative 0.1%, but the volume story needs to be split into a couple of parts to be fully understood. First, volume for the first 10 weeks of the year was running positive 100 basis points. So we view this entirely as a COVID-related impact. Second, the volume decline is largely attributable to our commercial and industrial collection businesses, as residential collection and the majority of our post-collection businesses were positive or flat in March. And third, the declines varied significantly by market, with the Montreal and Toronto markets seeing double-digit decreases starting in mid-March as compared to the prior year. Current trends, however, appear promising, with sequential volume increases week after week, and Patrick will speak more to that in a moment, but these were the impacts we realized in the last few weeks of the quarter. Solid weights suggest that EBITDA margin was 28.5% for the quarter compared to 28.9% in the prior year. Included in the current quarter margin is a 50 basis point decline from the extra leap day, a 40 basis point drag from commodity pricing, and about 120 basis points drag from acquisitions. a decrease primarily attributable to Canada Fiber's acquisition that has yet to achieve the anticipated margin profile. Excluding these items, the base solid waste business drove nearly 150 basis points of organic margin expansion over the prior year, consistent with our previously communicated expectations regarding the anticipated impact of our pricing and procurement initiatives, both of which we have discussed with you in the past. The disruptions from COVID, both in terms of lost margin on volume declines and incremental health and safety related costs, also served as a headwind of margins. Looking at soil and infrastructure, the success of our previously discussed strategy continues to be demonstrated as we realize 6% organic revenue growth during the quarter, despite certain projects being disrupted and or put on hold in response to government-imposed COVID mitigation measures. In terms of margins, The prior quarter benefited from several high margin specialty projects that did not repeat in the current quarter. Also, delays in the acquisition of planned equipment purchases to support the growth of the infrastructure and soil remediation business resulted in increased equipment rental costs as compared to the prior quarter. We believe these impacts to be the timing related in the margin profile of the business will return to the historical trajectory in subsequent quarters. Our liquid waste business was our most impacted segment during the first quarter. Revenue was impacted by not only COVID-related volume disruptions, but also depressed WTI prices and the impact on the used motor oil market, as well as some difficult comps in the prior quarter, where we benefited from an increased level of high-margin emergency response activities and a bulk sale of inventory of used motor oil that we had acquired in an acquisition in late 2018. Used motor oil selling prices were down 19% in Canada and 12% in the U.S. in the quarter. While we've modified our change for oil rates to mitigate the ultimate spread compression, there is a time lag which ultimately impacts current period results. While volumes sold in Canada were relatively comparable to the prior period, U.S. volumes were down 45% when considering the bulk sale in the prior period. Collected volumes in the quarter were down approximately 25% compared to the prior year, a decrease we believe is attributable to the COVID-19 disruptions. Turning to page six, Reported cash flows from operating activities were a use of $91.3 million in the current quarter as compared to $19.4 million in the comparable period of the prior year. The change was primarily attributable to costs incurred in connection with the IPO of $145 million. Excluding these IPO costs and the changes in non-cash working capital, cash flows from operating activities were positive $108 million, an increase of 34% compared to the prior period that's attributable to the increase in adjusted EBITDA. On the point of working capital, we have yet to see any material impacts on cash collection activities. We are actively monitoring our credit exposures, but to date have not seen any material changes. We did hold onto cash during the end of March, pushing up AP balances at month end. In terms of investing activities, as Patrick mentioned, we spent $1.1 billion on M&A during the quarter, the substantial majority of which was contemplated in the IPO offering documents. We also spent $100 million on capital expenditures in the period, which was below plan due to delays in receiving certain equipment from overseas. Cash flow from operating activities less capital expenditures was a use of $46 million when excluding the IPO costs, an improvement of 61% over the prior period. As we've said before, the seasonality of our business coupled with the front-end loading of our CapEx results in a free cash flow being generated in the back half of the year. With the IPO transaction costs behind us and our significantly reduced interest costs going forward, we see a clear path to material free cash flow generation by the end of the year. Cash flow from financing activities were the outcome of the IPO and the pre-closing capital transactions, all of which were detailed in our prospectus. Additionally, subsequent to quarter end, we issued a new U.S. dollar 500 million 4.25% five-year notes. This was an opportunistic financing that lowered our overall interest costs and bolstered our liquidity, which positions us favorably to capitalize on any opportunities that may arise. Turning to page seven, we have presented a summary of our net leverage at the end of the quarter. As forecast in the IPO offering documents, net debt and net leverage materially decreased as a result of the application of the IPO proceeds to debt repayment. Substantially, all of our long-term debt is denominated in US dollars and is hedged to Canadian at fixed rates. However, for financial reporting purposes, our US dollar denominated debt is revalued to Canadian dollars at the FX rate at the end of the period. During periods of foreign exchange volatility, such as that we experienced during the end of the first quarter, we may realize significant non-cash foreign exchange adjustments on our balance sheet that are in excess of the foreign exchange fluctuations realized on our P&L. The foreign exchange rate was 1.42 at quarter end as compared to 1.3 at year end, a change that resulted in an incremental $395 million of long-term debt recognized on our balance sheet. To facilitate a comparison of net leverage to the amounts that were presented as part of the IPO Roadshow, we have presented our quarter and long-term debt balances translated to U.S. dollars using the year-end foreign exchange rate, which you can see in the middle column yields the net leverage amount approximately four times at the end of the quarter. Not reflected on this balance sheet is the April bond offering, which was a leverage-neutral transaction. Considering that transaction, we have over $1.3 billion of liquidity on hand with no material debt maturities in the near term. I will now pass it back to Patrick, who will discuss the trends that we are seeing in the business.

Thank you, Luke. Despite the great first quarter, I know everyone is more interested in what we think the second quarter and the balance of the year are going to look like. Unfortunately, with the degree of uncertainty that still exists around the reopening of markets, It's difficult to forecast with a great deal of precision as to what the future holds. However, the current trends appear promising, so we wanted to shed some light on what we are currently seeing. If you look at page 8, as noted in our press release, April revenue was up 16% when compared to April of 2019. If you back out the M&A and FX adjustments, we saw a 9.9% revenue decline on a like-for-like basis. Looking at solid waste, as I said earlier, there is a greater disparity in the COVID-related impacts by market, with our Canadian IC&I business seeing the declines nearly four times greater than in our more secondary market-focused commercial industrial business in the US and Canada. The impact on Canadian revenue is primarily the result of business shutdowns in Ontario, Quebec, and British Columbia. I think it's important to emphasize that the revenue impacts we saw in April are heavily weighted towards our commercial and industrial collection volumes. Our municipal revenue in both Canada and the US has not been significantly impacted, and our relatively low landfill revenue translates to a lesser impact from the lost volume in that line of business. So if you look at the activities in the IC&I collection business starting in the third week of March, We saw roll-off halls start to decline week over week until approximately the beginning of the third week of April, at which point halls were down approximately 18% compared to the pre-COVID week. Since the third week of April, however, we have seen weekly hall counts increase sequentially, and although we are still not at the levels we saw in early March, we are moving in the right direction day by day. And it is a similar story if you look at our commercial collection activity. Starting in the second week of March, we were seeing service level decreases and temporary suspensions. And the decreases increased sequentially through to mid-April. Since then, we are now having customers re-engage as they are preparing to reopen, which is another sign we perceive as indicating the worst is behind us. Looking at our daily trackers, we expect this week's IC&I collection revenues to show an increase over last week, and next week to be even better, assuming that the governments continue to loosen restrictions on the timetables that have been announced. Again, ultimately only time will tell the full extent of the impact, but from where we sit today, we're feeling cautiously optimistic. Thinking about how these revenues impact translates to margin, I think there's a few points that need to be teased out. is the revenue profile of our business, with a larger proportion coming from the service-based collection activities. Our lower landfill concentration results in a lower blended decremental margin impact than if we had a meaningful portion of our revenue declines tied to our very high margin landfill volumes. As I said earlier, tied into that point is the highly variable cost structure that comes with our revenue profile. Since this began, we have reduced overtime hours by approximately 30 percent. We have consolidated collection routes and parked vehicles to improve asset utilization and in many markets have experienced improved productivity thanks to reduced traffic patterns. Our safety stats have also improved with April being the best month of the year and our absenteeism is at all-time lows. All of these factors together with natural flex of our disposal costs R&M, and fuel costs that I described earlier will contribute to mitigate the impact of margin on the revenue decline resulting from COVID-related volume reductions. Finally, we have some macro tailwinds which we believe will further mitigate the margin impacts. As you have heard from others, commodities have had significant run over the past six weeks, with OCC commanding over $200 a ton in certain markets. Fuel costs continue to be at historical lows, which provides a margin benefit in both our residential and post-collection service lines, and FX continues to be higher than last year, which improves our blended margin profile by translating the relatively higher margin US business into Canadian dollars at a higher rate. Looking at infrastructure and solar remediation, as we have previously said, the majority of the projects we are involved in have been deemed essential services and continue to progress. Based on what we're seeing today, it's looking like May will be better than April, and hopefully that trend continues. And finally, on liquid waste, as we previously told you, we expect this segment will be the most impacted by the current market conditions. On the used motor oil collection side of the business, suppression of the oil-related indices on which UMO selling prices are based, combined with the reduced volumes being generated as a result of COVID-related shutdowns, will continue to negatively impact revenues from this service line in the near term. Regarding the core industrial service component of the business, COVID-related shutdowns have had a negative impact on the portion of our customer base which would have been deemed non-essential and therefore temporarily shut down in many markets. The ultimate impact will depend on the nature and shape of the recovery in each of the markets we service, but again, the trend line we are seeing today continues to be very positive and encouraging. Before we open it up for questions, I want to end by saying thank you to all of the GFL employees who deserve all the credit for our great results in the quarter, and to all the investors who support us on the IPO and since then. We thank you for your time and look forward to speaking with you as the quarters continue to come. I will now turn the call over to the operator to open it up for any questions.

Thank you.

Ladies and gentlemen, if you would like to ask a question, please signal by pressing star 1 on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, press star 1 to ask a question. We'll pause for just a moment to allow everyone an opportunity to signal for questions. We'll take our first question from Tyler Brown with Raymond James. Hey, good morning, guys.

Good morning, Tyler. Good morning. Hey, appreciate the April details. But I do want to come back to the comments on pricing. I think the 4.9% pricing was quite strong. You kind of touched on it. The big picture, it feels that over the past couple years, pricing has accelerated. So I was hoping that you could talk a little bit about your go-to-market strategy and maybe philosophy around pricing as that changed with time. And maybe should we be expecting this general level of pricing into the future?

Yeah, so, I mean, you know, as we've discussed in the past, I mean, previous to 2018, you know, we didn't spend five minutes focusing on price as we were building the business. There was a, you know, we were much, there was much more of a cadence toward growing volume and growing market share versus growing price. And then post, you know, the acquisition of Waste Industries, and watching how they increased the margins from 23% to 24% up to 27.5% to 28.9%, we took that playbook and started rationalizing our entire book of business in the nine provinces in Canada and the 23 states in the US. you know, pricing continues to be strong. I think, you know, as we've rationalized the existing book and level set that existing book, you know, we're going to continue being focused on prices as we've, you know, discussed in the past.

Yeah. Okay. That's great to hear. And then Luke, so I appreciate the comment that you have a highly variable cost model, but there's a lot of moving pieces here. So maybe to boil it down for simple people like me, you know, Could you run through at a high level, maybe an incremental, decremental type of margin that we should think about by line?

Yeah.

I mean, there's a lot of moving pieces, Tyler, as you said, but I mean, if you take the residential line out of the equation, I mean, it's probably puts or takes, as we said on our April update call, that in Canada, maybe we're getting a little bit of benefit, but in the U.S., maybe the load's a little bit heavier And so maybe you think about the residential from a margin profile as a bit of a wash. So then left with commercial and industrial, obviously the industrial or the roll-off line of business, easier to flex by nature of the route days and what those look like. So if you look at the amount of trucks and how quickly we can park the vehicles and therefore defray all of that engine hour-related costs, much more variable cost structure on that line, and therefore a better ability to mitigate the sort of margin. Versus commercial, while we have been parking some trucks in the markets that have been most significantly impacted, as you know, not as nimble to flex the operating structure of those routes, and so you eat that a little bit more. So, and that's collection, and you think about our relatively lower landfill concentration, I mean, you listen to all the others, everyone is saying somewhere in the sort of 30% to 40% decrementals on a blended is what the margin is looking like. I think, given our cost structure, we're on the lower end of that range. But again, it's market-specific. And there's other factors that are offsetting some of this pain. You know, as Patrick had said, the lower traffic patterns as well as diesel, I mean, we're getting some benefits from that. So, you know, I think it's difficult to model it perfectly, Tyler, but hopefully that's helpful direction-wise.

Yeah, sorry, I was not as much within solid waste, but about the liquids and soil piece, would those be, you know, 20% decrementals? Good way to think about it, 25, something like that?

I mean, okay, we're not giving too much forward. I mean, if you look at infrastructure, I don't really see margin decreasing coming from that sort of line of business. I mean, that cost structure flexes, you know, very well. On the liquid side, I think when you think, you know, sort of, you know, what we're seeing, I think, yeah, I think a reasonable number on the liquid waste side is probably sort of 25% today. when I sort of look at April, and if that's the work that's going to get, hopefully it gets better from there, but that's what we're seeing today.

Okay, that's helpful. All right, guys, I'll turn it over. Thank you.

Thank you. We'll take our next question from Brian McGuire of Goldman Sachs.

Hey, good morning, Patrick.

Good morning, Luke.

Good morning, Brian. Glad to hear you. Glad to hear that we seem to have reached the bottom in April. I was just wondering if you could maybe provide a little bit of color on, you know, it's very early days, but the size and shape of the recovery so far, are we seeing a decent size rebound in some markets? I'm sure it's going to be varied, but, you know, in some of the harder hit markets like Toronto and Montreal, are we seeing a little bit of a snapback so far, or are you kind of seeing more of a gradual you know, a little bit of improvement, but it's going to take some time to be able to, you know, call it a snapback?

Yeah, so just, I mean, real data is sort of, you know, if you think about the, I mean, the biggest impact we've seen in those markets is definitely on the roll-off, you know, the roll-off line. When you think about that, if you think about the Toronto market, for example, that's a market where we would do somewhere between 450 and 475 lifts a day. That dropped in the peak of the low to somewhere around 250. So 250 lifts a day. And if I look at where we sort of sit over the last week, That has, you know, trended back up to 300 to 325 lists a day. So I think it's moving in the right direction. And I would say, you know, the governments here have been far stricter than they've been in the U.S. regarding the shutdowns. This wasn't an optional stay at home. You actually mandatorily had to stay at home. You know, as they roll out the phases here over the next six weeks, I anticipate those numbers will continue to grow. But it's been, you know, it's been decent. So I think over the next two months, we'll see, you know, a good chunk of that come back in Toronto and Montreal.

Okay, that's very helpful. And just on the topic of the dropping crude oil prices, I mean, you guys have touched oil in a lot of different ways. You know, the the UMO price, your own fuel costs, you know, some of the Canadian provinces have exposure to ENT and oil extraction. You know, just as you think about it, overall, you know, that's not something that was really contemplated at the time of the IPO either. You know, just how would you kind of frame the overall impact of the drop in oil prices, you know, to the bottom line or however you want to think about it? There's a lot of living parts there.

Yeah, so, I mean, when you look at, so first off, we have no exposure directly to E&P waste. So we have the macro exposure to what happens in Alberta, but as it relates to direct E&P exposure, we have none. So I'll start with that. Obviously, we have a natural hedge with our own our own diesel costs and dropping oil prices, but I would say, you know, the biggest exposure, and I would say Alberta, which is what people worry about, Alberta has been depressed since 2015 and 2016, right? All the small junior producers have been out. It's really been a business that's been run by the majors, and those guys are still producing today. Is there new development? No, there's not new development, but that wouldn't really affect our P&L anyways because we have virtually no exposure to that. And on the macro side, you know, since really the crash in 2015, 2016, you know, Alberta really hasn't recovered. You know, the biggest exposure on oil will be the U-mold collection business. And, you know, again, we can manage the spread, you know, as you've seen from Clean Harbors and others, you know, putting charge for oil in, et cetera, is accepting of the market and everybody's doing it. So if we're maintaining a spread, That's not an issue today. Really what the issue comes down to is if car dealerships aren't servicing because they're ordered to close and not deemed an essential service, you know, as we've seen volume declines on our collected volume of sort of 30% to 35%, you know, that's where the sort of the gap is going to come. That will recover. That will come back. It's just a question of when because at the end of the day, people are going to need to get their car serviced. as they start driving again. But when you think about that in context of the grand scheme of the business, I mean, we collect 75 million gallons, right? In the historical period, selling that at 60 cents a gallon, 60 to 70 cents a gallon, it's not a material number in the overall grand scheme of 4 billion of revenue. You're talking about, you know, 35 to 40 million dollars of revenue coming out of that service line. You know, it'll shift a little bit because we're going to be getting more of our revenue from the charge for oil versus the actual selling of the oil. But that's, you know, that's where we sort of sit today. You know, going back to Q1 was a really good comparative period because when we did that acquisition in the U.S., there was almost 4 million gallons we inherited that were on the owner's watch that we had to sell for them in Q1. So the numbers look a little off, but, you know, if you strip that 4 million gallons out, you know, the business performed, you know, relatively the same quarter over quarter. But that's, I don't see a big impact from oil dropping. I mean, I think at the end of the day, it'll be a net benefit. When you think about our overall fuel expense, we spend about $170 million on diesel in any one year. You know, if you look at diesel pricing today, down, you know, to the tune of almost 40%. that far offsets any degradation we would see on the used motor oil collection business.

Just to be clear on the diesel, a lot of the U.S.-based guys pass through surcharges pretty quickly. Do you think how much of the lower diesel do you get to keep versus how much do you have to pass through?

Yeah, so all the commercial... You know, that floats with surcharges. If it goes up, we pass it on. If it goes down, we give it back. I think where the benefit is is on some of these municipal contracts, you know, where you have lags on the surcharges up or down when they're annual adjustments versus monthly adjustments. You'll win on those. And obviously with post-collection operations, you're going to, you know, the fuel surcharge doesn't work exactly the same as it would on the commercial business.

All right, great. I'll pass it along. Thanks again.

Yeah. Thank you. We'll take our next question from Walter Sprackman of RBC Capital Markets.

Yeah, thanks very much. Good morning, everyone. Hi, Walter. So I think I'd like to come back to the contracts that you have and the volume-based ones that you're benefiting from here in Canada. Just curious, and I know one of your competitors has signaled their intention to go back to municipalities with an effort to move, to adjust their contracts before expiry. the more volume-based, and I was wondering if you have that opportunity among the U.S. contracts where you're not volume-based. Are you looking into or making efforts toward getting some adjustments to the contracts to be able to offset the higher costs?

Yeah, I mean, you know, it's a similar dynamic to what we experienced in 2018, really around the depressed commodity pricing. You know, some municipalities... You can rely on force majeure and other things that are in the contract to try and renegotiate, which is always an opportunity. And you'll get some municipalities that are open to realizing the issue and not wanting to get in an argument about it. And then there's others that just say, hey, the contract is the contract, and they're going to argue about it. I mean, when I look at our business, You know, if I think about Canada on the residential collection side, it's either neutral to a benefit with increased volumes just because of the contracted nature and the structure of the municipal contracts in Canada. So there's really not a negative impact on the Canadian residential book from increased volumes at the curb. On balance, it'd be potentially a bit of a positive. If you think about the U.S., 40% of our U.S. residential business is subscription. So we have the ability to move pricing on a monthly or quarterly basis if we see increased volume. And then you have that sort of balance of the 60% of the U.S. residential municipal contracts that are tied to house counts versus volume, where that could be a bit of a negative. But if you think about what we've seen, I think, again, regional specific, but if you look at the specific markets, You know, I look at Toronto, for example, which is a big market. You know, you saw increased volumes of, like, sort of 12% to 15% in the last two weeks of March, right? And then you've slowly seen that taper down, you know, as people move to a more normal state of, you know, not bulking up and staffing up at their house, where I think where we looked this, where we said this week, volumes have sort of sat around 6% to 7%. versus the sort of 12% to 15% we saw, you know, right when the shutdown happened. And in the U.S., you know, it's been a wide range where there's been virtually no impact, and then there's been other markets that we've seen increased volume of sort of 15% like we've seen in Michigan that has similar orders that they have in Canada. So we will work with the municipalities to try and get more money out of them, but if it's something I'm banking on, you know, given what we experienced in 2018, With the recycling, I'm going to say it would be all additive and bonus if we were able to get something.

Got it. Appreciate that, Collar. And just my second question here is on M&A trends. Patrick, can you give us a little bit of update on, since we last spoke, how the tenor of the conversations have been, how the logistics of enacting on a deal has improved or hasn't improved, and what your thoughts are on the advanced disposal trends. Has there been any update with regards to how enticing that might be to you and your ability to capitalize or take advantage of any of the divestitures out of the advanced disposal transaction? Thank you.

Sure. I won't comment on any specific M&A, but, you know, going into the IPO, our pipeline was very full. You know, it has been a thesis of ours since we founded. I mean, completing over 135 acquisitions since our founding, I think it's something we do well. When you looked at the pipeline before, you know, we closed on, you know, A-plus opportunities in Q1. As we said, as part of the COVID update calls, we were going to pause and have paused for the short of the last six to seven weeks. You know, just trying to understand what the impact would be on April, and I think You know, sitting here talking, I think we're one of the fortunate industries and businesses, and this is probably the reason why a lot of investors want to own this space, is because, you know, we're talking about revenues being off, you know, 9% on an organic level when, you know, the bulk of other industries are off sort of 50 to 90%. You know, from a free cash flow perspective, we believe that we can manage our free cash flow to the expectations that we saw as part of the IPO. So when you think about it from that perspective, I think we're starting to feel more and more comfortable about where the base business is going and where the free cash flow generation of the business is going for the balance of the year, which will allow us to sort of maintain leverage. So I think, you know, we're going to start re-engaging on M&As here sort of over the next two to three weeks and sort of get back on. I think, you know, when you think about acquisitions, listen, there's The way I think about it, there's gold, silver, and bronze. You know, people have asked about valuations. I think valuations for the gold, you know, I think is, as in gold is always gold, and I think, you know, valuations will not change much on some of those opportunities. I think when you think about the silver and bronze and where the opportunities are, you know, when you're thinking from a multiple perspective, maybe there's an extra sort of turn to turn and a half, and maybe you get some more willing sellers that don't want to live through another downturn like we saw in 2008, 2009, and 2015, and 2016. So it brings guys to the table, gets them a little bit more realistic, and, you know, I think we're seeing that on some of our pipelines today where we had a little bit of a price gap. I think the sellers are becoming a little bit more realistic, and, You know, I think that'll lend itself to a good bunch of execution opportunities over the next sort of six months here.

Okay. Appreciate the time. Hope everyone's staying healthy and safe. Thanks. Thanks, Walter.

Thank you. We'll take our next question from Rupert Murer of National Bank.

Good morning, guys. Congratulations on the results in your first quarters of public company.

Thanks, Rupert.

It may be too early to see, but do you have any sense of any permanent impairments of volumes that could come from the pandemic? Have you seen any abnormalities in terms of service cancellations?

So we've had very minimal service cancellations. You know, like we said, with our service-based revenue, we have contracts, whether there's a pound in the bin or whether there's 100 pounds in the bin or whether there's 1,000 pounds in the bin, you know, generally have to collect it. We're collecting that and charging for that. I think, obviously, we want the bulk of our customers to be a going concern. So as customers have called in and asked to temporarily suspend their service because they're closed, you know, we've worked with those customers on a case-by-case and a customer basis. So I would say there's been very little sort of out-and-out terminations. I think if you look at the customer base today, about 6% to 7% of the commercial customer base has called in and ask to either temporarily suspend or change their frequency. So I don't think there's a permanent impairment, but again, it's still early days, right? Like, people don't understand. I mean, I think our governments are struggling on actually how to reopen. It was easy to shut it down, but I think they're trying to understand how they actually reopen. But we are seeing sort of material upticks in people now wanting to get their service back online. It's going to take some time to get back to the service level that we're at, but I think all in all, from what we're seeing, there's been very little termination of the services.

Great. Thanks. Secondly, on cost, can you give us a little more color on the puts and takes of what you're seeing on costs? You talked about some cost savings and discretionary costs, but you've got increased cost of safety and hygiene. Can you give us a little more color on those costs and And then secondly, are there any sort of long-term benefits that could emerge from efficiencies you've realized over the last month?

Yeah, so Rupert, in terms of some of the puts and takes on the cost side, you know, the common incremental sort of enhanced PP&E, yeah, so there's incremental costs coming out of that. You see we didn't add any of that back because I think there's also some offsetting sort of benefits from this unique environment when you think about sort of traffic and some of the productivity, safety-related and traffic-level productivity. So, I mean, if you think of... How to quantify those exactly? I mean, the incremental PP&E costs, we can put a dollar on that in Q2, but the incremental productivity that's offsetting that. So don't have a COVID-related add back. Whether or not we will in the future sort of remains to be seen. But I think one of the most natural levers we've seen is on the overtime side. And really, if you think about our normal overtime hour being sort of 15 to 20% of total hours, I mean, we reduced overtime by about sort of 30%, where we should say 27% for the quarter, or 27% post-COVID impacts. So I think that's the most natural sort of cost flex that we've had in sort of response to this in addition to the, you know, reduced direct variable costs when you think about disposal fuel and R&M associated with the lower volume. So we'll continue to monitor and use that lever to mitigate the impacts, but the other puts and takes I don't want to say perfectly offset, but I think there's things that sort of go both ways there. And then, obviously, as we alluded to, some of the discretionary SG&A, those are very quantifiable dollars. There's no travel. There's been no merit increases, et cetera. Those are other levers that have been pulled to offset the free cash flow impacts of this.

Yeah, and one thing we didn't touch on earlier, but cash collections in April was a worry pre-March. The cash collections were on target for us. You know, we're worried about, you know, what the working capital impact on the business would be. But as we got through April, we were on plan and on target without a significant amount of any material defaults. So, you know, again, felt very good about the cash collection of the business over April. Great. Thanks.

I'll leave it at that. Thank you. We will take our next question from Michael Hoffman of Stifle.

Hey, Patrick, Luke. If we could circle back to the free cash flow and set some guardrails. So let's remind everybody what you thought it would look like for 2020 before the pandemic, and then how do you think about how that trends? I'm assuming that the the decremental on the cash isn't any different than the decremental on the EBITDA?

Yeah, so, Michael, I mean, pre-COVID pandemic, the IPO Roadshow, there was a view just for round numbers that sort of realized EBITDA in the year was $1,115 to $1,150. There was an interest expense on that of sort of $260 to $275. There was a CapEx expense on that of $420 to $440. And there was an other for ARO, you know, cash taxes, whatever, of another sort of $50 million. So that's where we were before. And that brings you down to the sort of pre-TEU, pre-dividend, free cash flow number. Where we sit today, I'm going to go backwards. I'm going to say we have an interest cost, never mind Q1, which had all this sort of noise, but really today, X the new bonds. You know, we have an interest cost today of $236 million. That's where we sit today. So I have that. I have a CapEx number of $340 to $350 is what we're looking at today when you look at what we've sort of paused or deferred for the time being. And then I have $50 million-ish of the sort of odds and sods on ARO cash taxes, et cetera. So now that's before considering working capital. So that brings me to a sort of $630 million cost against the free cash flow line, where I sit today, and then working capital. Now, in the quarter, we had a great Q1, materially better than the prior period from a working capital perspective. As many of you know, we're beginning to undertake a whole order to cash optimization process. We believe working capital is a place we can drive incremental benefit. With all that's happened, that's been sort of temporarily paused, but we still think there's an opportunity to drive working capital improvements. But even if we say it doesn't get any better for the balance of the year, so working capital isn't the source, I stick with my minus 50. I have a $630 million against whatever the EBITDA number is going to be. Now, we haven't come out and exactly said what the new EBITDA number is. I think the consensus estimate of the group today is somewhere around 1040, 1050. So if you apply those costs I said against that 1050 of EBITDA, I think that's a decent proxy for where your free cash flow is going to be on a normal 12-month run sitting where we sit today before considering the TEU and the dividend.

Terrific. And just to be clear, the actual reported will have to reflect the $150 million of IPO cash outflows and all that that were in the first quarter. But an adjusted number would be the... 10.45 less 6.30.

Yeah, correct.

Again, Q1, if you really want to adjust Q1, I mean, there's 2.33 of EBITDA. I mean, really the normal interest cost that should have been burdened against us was just under $60 million. So you think of our new sort of run rate and then the $100 million of CapEx and there was a $50 million of ARO and working cap, etc. That would be the real normalized number, but I think as you framed it for the year, that's correct before considering the IPO friction.

Okay, and then could you help us just appreciate the 30% reduction in the OT, but what was OT pre-COVID as a percentage of direct labor, just so we understand the scope of what's coming down?

From an hours perspective, about 15% of total hours, and the labor line low 20s in 2019.

Okay, and then do you think it's likely that you'll add incremental sales at a better incremental margin because you won't have to add costs as quickly? Is it, you know, getting lean like this has that kind of a benefit? Is let's add incremental costs lower than we add the sales?

Yeah, I think it will be a benefit moving forward on a multitude of fronts. These times that we're living in, when guys actually have to hunker down and look at every single expense, you really realize what you actually need to run the business. As the existing business that was temporarily suspended or temporarily lost comes back online and then you bolt on new business, yes, I think you could see some outside sort of margin expansion that comes from it. Do I want to quantify it today? No, but intuitively that would make sense.

Yeah, no, I'm just curious if you thought you'd be able to hold on to that in the manner we've just discussed. All right, thanks for taking the questions. Thanks, Michael.

Thank you. We'll take our next question from Mark Neville of Scotiabank.

Hey, good morning, guys.

Good morning.

Maybe just want to start following up on the commercial. At peak, it sounds like roll-off was off about 18%. It's come back a bit. I'm just curious if you had sort of similar round ballpark numbers for the commercial line.

Yeah, so when I look at the, when we look at the commercial line, I think it was, you know, far less, but thinking about 7% was where we saw the commercial sort of revenue stream come off, and, you know, that today is sitting at about 4, 4.5%.

Okay. That's helpful. I think, Patrick, last time we spoke, I think you talked about, you said roughly 80% of the sites you were on with an infrastructure or soil were up and running. I'm just curious if there's an updated number. I assume it's gone a bit higher, but I'm just curious where that's at now.

Today, yeah, today is about 85%. There's still some, but we're expecting those other sites to come back on line in the next two weeks. There's been a bit of a delay, truthfully, with some permits on some of the sites just because of the municipalities not fully functioning. So permit issuance on some of them has been slower than we would like. But again, as municipalities come back online here over the next week or two, hopefully that bottleneck removes itself.

Maybe just Just on the decrementals, I want to make sure I understood. Luke, I think you said within solid waste, sort of in the range of 30 to 40%, but sort of towards lower end, and then liquid waste around 25%. Do I understand all that correctly?

Yeah, so on the solid waste, what I'm saying, the decrementals of pure, the sort of COVID impact so that you take that lost revenue and you apply that. Now, there's a bunch of tailwinds offsetting that. If you look at the, peel it all back, look at the organic margin expansion we're having in the base business throughout the first sort of quarter. I think it's going to, you know, more than offset on a year-over-year basis. But, yeah, if you think about the volume loss on solid, that's the right way of thinking about it. And then similarly on, as Patrick said, on liquid. Liquid, you flex the rebate on the used motor oil side, which ultimately mitigates a lot of that. There is a bit of a timing difference, but at the end of the day, I think that's the right way of thinking about liquid margins.

Okay. And if I could maybe ask one last question. Just, again, last time we spoke, you talked about a COVID cleaning business. I appreciate it's small, but I'm just sort of curious how that's trended over the last six or seven weeks, and if it's something that maybe sticks around sort of for the next bit of time.

Yeah, I mean, it's become a new line of business, I think, as long as COVID's around. You know, where we've seen the biggest uptick in that, I mean, is really around, you know, large sort of industrial projects and industrial businesses. such as manufacturing plants where they've had a few cases of COVID and potentially are concerned about COVID outbreaks and they shut down most facilities and go in an extensive amount of cleaning. You know, I think if you look at what we've done in the last six weeks, it's sort of been in the range of about a million and a half to two million, so double what it was before. And I think as that continues to evolve and as businesses come back online, I think that's going to continue to be an opportunity because you know, as people actually start going back in offices and they want to do these deep cleans, it's going to continue to be an opportunity.

Thanks, guys, for all the comments. I'll leave it there and get back to you. Thanks. Thank you.

Thank you. We'll take our next question from Kevin Chang of VIBC.

Hi, Eric. Good morning. Thanks for taking my question, Patrick and Luke. Maybe just going back to the pricing question, if I were to ask it a different way, what percentage of your solid waste revenue do you think is underpriced? Or if I were to put it in buckets, what is the ultimate low-hanging fruit that you think, as you get through the crisis, you should be able to go out and get significantly above average pricing?

Yeah, so Kevin, what we had said at the start of this was halfway through the progress process of pricing, optimizing that existing book. And we said there was another $25 million to go out and get. We probably got about $5 million of that since we last sort of spoke about that. And so where we look is there's probably another $20 million to come out of that. So that's what we continue to view that opportunity to be. And as we realize that, I think that's going to help sort of produce some of this outsized pricing, at least for us. That's helpful.

And then just last one for me. When I look at the liquids waste business, it looks like about 10% of your revenue. It looks to be the most, well, it's proven to be the most volatile, I guess, when you look at what's happened through the crisis here. When you look out over the long term, just how important is this business as a growth vehicle for you, or does this naturally become smaller and make you focus on your more stable segments of infrastructure and solid waste here?

Yeah, I mean, it's obviously going to continue becoming a smaller and smaller piece, but I would say, you know, they were unfairly sort of penalized with what's happened just because it was things out of their control. If there was an issue with the business, particularly on the used mold oil side, you know, on managing the spread, then that's, you know, from my perspective as managing the business, that's an issue. Dealerships and everything were closed, which is normally open. I think it's similar to what you experienced on the solid waste revenue when you saw 25% declines in the commercial business. If you saw 25 to 30% less volume collected because dealerships were closed, I don't think it's a fair structural issue with the business. I just think it's a question of COVID-related issue with bad luck when it comes to the volumes that people couldn't collect and sell. The spread hasn't changed in the business. We've pushed on the charge for oil, so we're still going to maintain that spread faster than we did historically. As soon as WTI dropped as quickly as it did, we implemented those stop charges and charge for oil immediately. So it's really just we need the businesses to reopen so we can start collecting the volume again.

And, Kevin, if you look at that business, if you chart it out back to the beginning in 2011 and look at that, I mean, there's really been two material volatile spikes in it. It was 2015 when oil crashed and now. But if you look at those, they're really just a short-term intra-quarter or intra-month period. I mean, if you look at the chart in totality, that business continues to grow at very attractive organic growth rates. is a great free cash flow generator. And if you take out the noise of oil that seems to happen every sort of five years with these one-quarter spikes, you have a very nice predictable sort of growth line coming out of that business with attractive free cash flows and great returns on capital. And, you know, that complemented with how it fits in with our broader sort of solid waste service offering, I think, is what we view.

Yeah, and when you, just to put it in perspective, when you, you know, when you, if that is, you know, you sort of look at the analyst model, and that is budgeted sort of, you know, just over $7 million of EBITDA for April. I mean, even in the shutdown, that business did mid-fives of EBITDA. So it was off-budget, sort of like $1.5 million on the EBITDA line, because the cost structure is so flexible. So again, it's not something that went to zero. It was off a little bit, but from a materiality perspective, it was very minimal.

That's very helpful, Carlos. Thank you very much.

It will continue getting to be a smaller piece of the overall stream.

Makes a ton of sense. Thank you.

Thank you. We'll take our next question from Jeff Silver of BMO Capital Markets.

Thank you so much. I know it's late. Just had a quick question on the used motor oil business. Forgive me, I think you had mentioned in the prepared remarks, Luke, that the volumes in Canada were relatively stable, but they were down dramatically in the U.S. Just if you can confirm that, that'll be great. And I'm just wondering if that's true, why the discrepancy. Thanks. Thank you.

Yeah, so Jeff, you're accurate with what I said in the comments about the volumes, but the U.S. is really disproportionately impacted by what I'll call a sort of one-time event in Q1 of last year. And really, if you think about the U.S. business that we bought in November of 2018, came with that a huge amount of oil inventory that the former vendor was just stockpiling and didn't want to sell it during the transaction. So when we got into Q1, we had this excess inventory that we all sold in this one-time shot. So unseasonal large volume. So it just makes for a very tough comp. I think if you back that out, the U.S. volumes were slightly down, period over period, which is really the impact of late March as things started tightening up in and around the Midwest.

Okay, I appreciate you clarifying that. I thought for some reason there was some strange driving going on in the U.S. versus Canada, but I appreciate it. Thanks.

Thank you. We'll take our next question from Michael Finnegar of Bank of America.

Thanks, guys, for taking my question. Can you just help me understand how you can select your CapEx? I know you guys are a fast-growing business. You acquired a lot of different businesses that might not have had fleet or equipment as young as yours, but you guys also have lower landfill exposure, like you mentioned before. So can you help me understand how you can select your CapEx if we see a lower for longer type of demand environment?

yeah so mike if you think about you go back to our april sort of update deck where we sort of showed a sort of wheel if you will of where we normally spend our capex um with the lower landfill concentration just a lower need in that department and an overall lower base maintenance capex rate so i mean what we've said consistently is our maintenance capex spend is sort of seven half eight percent that's what we need now we've been growing as you said through m a and organically And we've been deploying a lot of strategic incremental growth capital above and beyond that. That's why our historical capex spend has been at levels above that. But if I have to keep the lights on, I can do so very easily with a sort of 7.5%, 8% spend, which is, again, largely just predicated on the lower dollars going into landfill cell construction. So when we looked at what we had in the plan for this year, we had some growth-oriented items, which are sort of more nice to have, we don't need to be doing. And then I think we've always asserted we have a very sort of, not aggressive, but our replacement schedule is we're maintaining, you know, what we believe to be. a great fleet and a great set of facilities. And so in an uncertain period such as this, we can defray some of that replacement capex, just a slightly different replacement schedule. And I think it's those two things together that gives us a lot of latitude within that original 440 number. That's very helpful.

And you mentioned that we're seeing customers starting to reengage as hopefully the economy reopens. As these customers reengage, are they asking for any type of price concessions or much lower service levels compared to pre-COVID? Have you seen anything specific with customer bases in the hotel or leisure space or education or airlines? That would be a note. Thanks, everyone.

Yeah, so no one priced. No one's asked for reduced pricing. Well, I shouldn't say no one. I'm sure everyone will ask if the opportunity presents itself. But we haven't seen a material issue in terms of people asking for price reductions. Again, they're contracted revenue streams for three to five years. Again, we are working with individuals that were maybe getting service three times a week And now, you know, they want to reduce to one or two times a week as things slowly come back online. You know, we are seeing, we don't have any real exposure to any of the airlines. We do have a couple of airport contracts, like in Denver, a part of the Vancouver airport, and a little bit at Pearson in Toronto. So obviously that has slowed. But again, it's insignificant in terms of dollars. We are seeing hotels come back online in, you know, again, our hardest affected markets were sort of Toronto and Montreal and even Vancouver. So, you know, even sort of in the pandemic, they went down, you know, the height of the pandemic were going down to sort of service about once a week. And we've seen in some of those, they're now moving to sort of twice a week, where historically there would have been three to four times a week. So, you know, again, it's all going to be dependent on you know how fast they open and how fast it's going to recover. But you know, we are seeing the uptick today and where they're moving.

Thank you.

Thank you. I think our last question from David Kenny of Iris and RD Group.

Hi guys, wonder if you can comment on any discussions you may have had with with your municipal or city clients with regard to smart city initiatives, something of which they're quite focused on these days, whether it's, you know, using technologies for data collection of garbage set out or other non-waste data collections. Have you had any questions in that regard? And to what extent is that something that may not be on the radar of being a participating client in those countries?

Yeah, I would say It's very early days on that. I mean, a Google-owned entity sort of has been the pioneer in terms of trying to actually design sort of smart cities. So there were some trials being done with Google, and we had done a JV partnership with them, and they'd utilized our single stream MRF to identify different sort of sort of cradle-to-grave recycling streams, particularly around the circular economy and extender-producer responsibility legislation that is coming out in Canada. I would say in the U.S. it's been very sort of minimal to date. But, you know, recently that smart city project that Google was going to do, they've recently pulled out of that. when COVID hit, so they're actually not going forward with that project. So I'm assuming that will subside over the next little while, but we have explored that with some of those providers.

Thanks, and just one more follow-up. Do you guys track or have a metric with regard to the number of volunteers your base vehicles cover, and whether you track that from period over period?

Sorry, can you repeat the question? It was muffled.

No problem. I'll repeat. Just I wonder if you have the metric on number of kilometers that your waste vehicles cover and whether you track that period over period. Number of road kilometers.

We definitely track it as part of our compliance, but I don't have that number at my fingertips.

Fair enough. Thanks.

OK, well thank you very much. If there's no more questions operator will conclude this call and as always Luke and I are available to answer questions over the course of the day.