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spk00: Welcome to the GFL environmental fourth quarter earnings call. My name is Juan, and I will be coordinating your call today. If you would like to ask a question during the presentation, you may do so by pressing star 1 on your telephone keypad or the flag icon if you have joined us online. I will now hand over to your host, Patrick Dobiji, founder and CEO of GFL environmental. Please, Patrick, go ahead.
spk09: Thank you and good morning. I would like to welcome everyone to today's call and thank you for joining us. This morning, we will be reviewing our results for the fourth quarter and providing our guidance for 2022. I am joined this morning by Luke Pelosi, our CFO, who will take us through our forward-looking disclaimer before we get into the details.
spk08: Thank you, Patrick. Good morning, everyone, and thank you for joining. We have filed our earnings press release, which includes important information. The press release is available on our website. We've prepared a presentation to accompany this call that is also available on our website. During this call, we'll be making some forward-looking statements within the meaning of applicable Canadian and U.S. securities laws, including statements regarding events or developments that we believe or anticipate may occur in the future. These forward-looking statements are subject to a number of risks and uncertainties, including those set out in our filings with the Canadian and U.S. securities regulators. Any forward-looking statement is not a guarantee of future performance, and actual results may differ materially from those expressed or implied in the forward-looking statements. These forward-looking statements speak only as of today's date, and we do not assume any obligation to update these statements, whether as a result of new information, 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.
spk09: As we look back and reflect on what we accomplished in 2021, I have to say I've never been prouder of the entire GFL family. While we had all hoped that COVID would be behind us with the vaccine rollout in Canada and the U.S., I think we can all agree it hasn't been as smooth as we would have liked, particularly here in Canada. Add to that the labor shortages in some markets, building inflationary pressures, and overall supply chain disruptions, there's been a lot of challenges to deal with. And as a result, we have overcome all of these challenges. The quality of our asset base and market selection continues to be the foundation of our growth. The strength of our brand supported our talent retention, and the dedication of our team allowed us to excel. GSL now stands with more than 18,000 employees, nine provinces, and 26 states in the U.S. Every day we go out and we drive to win. I think it's safe to say that no one will outwork us, and I believe that's what distinguishes us from others. Count on us not to take the easiest path, but to take the most accretive path. The proof is in the headline results. Revenue for the year grew by over 30%. Our adjusted EBITDA grew closer to 40%. Adjusted free cash flow grew over 50%. And we have exceeded expectations for eight consecutive quarters as a public company. How are we able to consistently achieve these results? I believe that GFL is different. The collective equity ownership of our management team far exceeds that of any others in our industry, and I believe that alignment drives a relentless focus on long-term value creation. We are laser focused on the levers of our growth strategy that have guided us since our IPO. Drive organic growth and margin expansion, rationalize our balance sheet to optimize our asset base, and reduce debt costs and execute on strategic accretive acquisitions. ESG continues to be a focus. It is core to our organic growth strategy. We released our updated sustainability report for 2020 in Q4, and we will be releasing our sustainability action plan with our ESG targets goals and objectives in our 2022 sustainability report later this year as well as we'll discuss later in more detail later on the call topics in 2022 includes investments in our recycling business in fleet conversion to cmg and an rng project at our landfills to support our sustainability action plan commitments in the face of the pandemic we deployed 2.3 billion on 46 acquisitions With our focus on rationalizing our balance sheet, we were also a seller of assets when it makes sense to ensure we are achieving the highest and best return from our asset base. In 2021, we sold non-core assets in three separate investors from which we realized approximately $260 million in proceeds, giving us additional capital to deploy into higher organic growth opportunities in our base business. Later in this call, we will discuss our plans for our infrastructure services business, which is more involved in the investors we have done to date, but the underlying strategy is consistent. Taking the path that we believe will drive the greatest value for our shareholders from our assets. As I mentioned, rationalizing our balance sheet also means focusing on our capital structure. So I'll touch briefly on our view of the impact of higher interest rates. I think you need to look at GFL differently than other industry players who are already investment grade. As our credit quality continues to improve with our increasing free cash flow, we still have lots of room to decrease our cost of capital. We believe that the spread compression on rates we can realize as a result of that improvement in our credit quality will mitigate the risk of higher interest rates. In pulling this all together, I believe that 2021 is another example of GFL executing on what we said we were going to do when we went public. We buy when we see creative opportunities. We prune when we see opportunities to deploy our capital. And we invest when we see opportunities to add complementary lines to our business, like R&G, and doing all of that, we create value for our shareholders. I'll now pass the call over to Luke, who will take us through the financial results and guidance.
spk08: Thanks, Patrick. I'll pick up on page five of the presentation. Revenue for the quarter increased over 25% compared to the prior year period, which was $125 million greater than the guidance we provided in November. While the outperformance was primarily driven by contributions from M&A, we also exceeded our targets for solid waste pricing and volume, which came in at 5.1% and 3.4% respectively. The price growth was 80 basis points better than Q3 and was supported by a pull forward of price increase plans in certain U.S. markets to respond to cost inflation. Included in the volume growth is the impact of some opportunistic and ancillary revenues we picked up in our Western Canadian operations. Commodity prices softened versus the peak we saw in Q3, so that was a modest drag on the quarter as compared to guidance. Specifically on M&A, we saw meaningful volume in the TerraPure liquid business continue straight through to December, a deviation from the typical seasonality profile. We also saw growth exceed expectations in certain of the new U.S. markets that came through the Q4 2020 acquisitions. It's not uncommon to have imperfect information on the contribution cadence of recent M&A, and as of late, COVID-related disruptions and then subsequent catch-ups have compounded some of this forecast uncertainty. Infrastructure and solar remediation continue to see delays in the startup of new projects, but our pipeline of new opportunities remains robust, and our outlook for this segment, as we finally get the other side of COVID restrictions, is exceptionally positive. On page 6, you'll see adjusted EBITDA for Q4 of $388.3 million at a margin of 25.2%. The decline in commodity prices, outperformance of the relatively lower margin M&A contributors, and the ancillary Western Canadian revenues all combined to partially offset the base number for margin that was largely in line with guidance. While internal cost inflation continued to rise and now sits around four, we view this quarter as a continued demonstration of the capacity of our platform to respond with price levels that not only cover the cost escalation, but drive organic margin expansion as well. Looking at each of the segments, solid waste margins were 30% or better every quarter this year, a first for the company and a result that is all the more impressive when considering the inflationary backdrop under which it was achieved. Excluding the impact of M&A, macro headwinds, and certain one-time post-collection volumes, margins expanded organically 20 basis points quarter over quarter, driven by pricing and overall operating leverage. The margin drive from rising fuel prices was partially offset by benefits from commodity pricing. For the year as a whole, solid waste margins expanded 90 basis points, with organic margin expansion in both of our geographies. Liquid waste margins were 21.7% for the quarter and were impacted by the outsized and dilutive revenue contribution from TerraPure. TerraPure margins are right in line with expectations and we continue to see a path to bring the TerraPure liquid revenues up to and then above the average margin for the liquid segment. For the year as a whole, liquids margins increased 80 basis points, overcoming 100 basis point headwind from M&A and demonstrating the operating leverage associated with post-COVID volume recoveries that we had forecasted. Infrastructure and soil margins improved over 400 basis points, period over period, as the soil volumes recovery continued and we were able to leverage the relatively fixed cost structure of the segment. While the first part of 2022 will be challenging on margins from a quarter-over-quarter comparison perspective, we are confident in our ability to completely use our pricing levers as well as cost and asset-based optimization to drive sustained and ongoing margin expansion over the near and longer term. On page 7, you can see adjusted cash flow from operating activities of $321 million, a 33% increase over the prior period. We completed another asset divestiture during the quarter, bringing total proceeds from asset disposals for the year to approximately $260 million. As previously discussed, we are redeploying these dollars into attractive high-return growth initiatives within the base business. Because the success of our portfolio rationalization efforts outpaced our ability to redeploy the proceeds into the business, we have a timing difference between dollars received and dollars deployed. As such, for the annual adjusted free cash flow reconciliation, we've included an adjustment to exclude the excess proceeds realized from asset disposals with the intent of burdening the adjusted free cash flow number with a normalized level of capex. When we discuss our guidance for 2022, we'll provide additional colors to how we're thinking about the treatment of these excess proceeds. During the quarter, we normalized for an incremental $5.6 million of working capital related to recent M&A that we believe is better characterized as part of purchase price. We believe our cash collection toward the end of December were modestly impacted by disruptions from the rapid spread of Omicron over the holiday period. And also, our working capital was negatively impacted by just under $10 million as a result of the required repayment of 2020 payroll taxes previously deferred under the CARES Act. Despite this $10 to $20 million working capital headwind, we realized over $540 million of adjusted free cash flow for the year, a result ahead of our guidance and representing over 50% growth as compared to the prior year, an outcome that we believe continues to demonstrate the attractiveness of our ongoing free cash flow growth opportunities. Turning to page 8, in terms of net leverage, we ended the year as anticipated at 4.75 times, in part due to the previously announced issuance of $300 million U.S. dollars per bird equity. We deployed approximately $1 billion into 17 acquisitions during the quarter. Now, over $900 million of this was completed when we last spoke in November, so it was about $90 million deployed into nine tuck-ins as the net new number since we last spoke. For all the acquisitions completed during the year, we expect to generate annualized revenues of approximately $785 million. We previously guided towards a rollover of approximately $450 million related to M&A. We still believe that to be an accurate net number, as the new $50 million of revenue acquired since our last guidance is largely offset by the timing differences related to Terpure and the incremental negative rollover from incremental divestitures. From a liquidity perspective, we start the year with nearly $200 million of cash on hand and an undrawn revolver, which we think is an ideal setup, providing maximum optionality as we evaluate growth opportunities for 2022.
spk09: Picking up on page 10, we wanted to highlight what we believe to be the final significant step in our near-term portfolio rationalization initiatives. Our infrastructure and solar mediation segment is comprised of two divisions with two different margin profiles. a mid-team service component, and a high-20 soil division. The soil division is a service line that the entire industry participates in, but the services division has a different investment profile relative to our core solid and liquid weight businesses. We believe that our services division leadership team is best in class and would thrive if given the opportunity to invest incremental growth capital into its business. That investment has been tempered under the GFL as we've been focused on deploying capital into our solid and liquid waste businesses. On page 11, we outline our plan. We will bring together our services business with COCO Paving to create a leading infrastructure services growth vehicle called Green Infrastructure Partners. COCO is a leading vertically integrated civil infrastructure company with highly complementary assets and service offerings to our existing infrastructure business. I will be the chairman of a new entity and oversee the new management team, which will be a mix of existing GFL and COCO leaders. With $180 million of pro forma EBITDA and meaningful M&A pipeline, we see a highly attractive value creation opportunity by spinning off the infrastructure services business and allowing it to capitalize on the value creation that we believe will far exceed its value with the inside GFL. The form of the transaction will see us sell the infrastructure business to green infrastructure partners for cash and equity interest in the new entity. When complete, we will no longer recognize the result of infrastructure services within GFL's financial statement. Instead, we will carry our investment in green infrastructure partners that we can monetize over time as value is created. While the timing of the infrastructure services divestiture is still a moving target, we intend to execute the plan in the near term. Page 12 illustrates the impact of the divestiture to GFL post-transaction. In summary, the weight of solid waste in the portfolio increases, even our margins increase, and the retained soil remediation division will be combined with our liquid waste segment and renamed environmental services, simplifying our overall segment reporting. And finally, while not listed on the page, we think there's an opportunity to take the cash component of the consideration we brought to the infrastructure business and redeploy it into near-term M&A opportunities to backfill the divested infrastructure services EBITDA. With the increase in the weighting of solid waste and the opportunity for near-term M&A, this reaffirms our conviction that there is still a lot of opportunity for growth within our solid waste business, both organically and through accretive acquisitions. I'll now pass it back to Lou to talk about further while reviewing our guidance.
spk08: So starting on page 15, we've laid out the details for the guide. We followed the same format as last year, so hopefully that makes it easy to follow. Page 15 reiterates the levers Patrick mentioned earlier that we intend to continue to pull and create equity value. We believe we have demonstrated capabilities in each of these areas since we went public. We think the opportunity set looking forward is even greater than what we've accomplished to date. Looking at page 16, we've laid out how we see it all coming together on the top line. Solid waste pricing at high fours, a full 100 basis points better than the prior year in response to inflationary cost pressures. There could be upside to the pricing number depending on retention rates and actual CPI levels of the time that each of our various resets get calculated. Solid waste volume at a point to a point and a half. We expect to anchor at the high end of this range with the opportunity to beat if Canada can once and for all move beyond the lingering lockdown disruptions. Commodity prices are plus 0.25%, whereas non-recurring commodity volumes that we benefited from in 2021 are just over a half a point headwind. So the net commodity impact we expect to be about a 40 basis point drag. The commodity forecast assumes January's net basket price of approximately $170 Canadian per metric ton, which was about $25 less than where the basket was when we provided our outlook in November, a decrease that has an impact of about $20 million to revenue EBITDA and free cash flow. liquid and infrastructure expected to generate five to six percent top line growth largely unexpected volume recovery associated with the reopening the net m a rollover including the approximate 40 million dollar negative rollover from divestitures is expected to be around 450 million the guidance assumes an fx rate of 1.26 versus the 1.25 average in 2021. that brings you just over 6.3 billion of revenue at the midpoint or just over 15 growth excluding the negative drag from divestitures in the last step of the bridge you can see that we have backed out the standalone guidance for the infrastructure services business that we plan to spin out as patrick said the timing of the spin out is still a moving target but we intend to execute the plan in the near term and we'll segregate the results from this division until the transaction is consummated the last bar on the page which excludes contribution from infrastructure services shows 5.875 as the midpoint and this is the number we would highlight is 22's 2022's base revenue guide Turning to page 17, you'll see that revenue ranges listed on page 16 convert to $17.10 of adjusted EBITDA and $6.80 of adjusted free cash flow, including infrastructure. As I mentioned previously, the contribution of adjusted EBITDA and free cash from commodity prices is about $20 million less than we provided our preliminary outlook in November. Those are the numbers for the business as a whole. We've also presented in the blue highlighted column the guidance excluding our infrastructure services, 1645 of adjusted EBITDA and 640 of adjusted pre-cash at the midpoint. Again, these are the base numbers that we think you should be expecting for 2022 before considering the impact of any net new M&A, which we'll touch on in a moment. In terms of the walk from adjusted EBITDA to adjusted pre-cash, against the 1645 of EBITDA We're expecting net capex around $615 million, cash interest expense of approximately $340 million, neutral working capital, and other net drags of approximately $50 million. No incremental M&A, and all free cash flow is used for delevering, the result of which you can see at the bottom of the page, with leverage ending at low fours. On page 18, we unpack our CapEx for both 2021 and 2022. In 21, we had normal-course CapEx of about $540 million. Offsetting this amount was $260 million of proceeds we received from the divestitures, and as anticipated, we were able to redeploy just over $110 million of these proceeds into growth initiatives within our business. The remaining $150 million proceeds that we did not deploy during 2021 are normalizing as excess proceeds and expect to invest these dollars in 2022. Looking at the 2022 bridge at the bottom of page 18, we've identified approximately 150 million of incremental growth opportunities, substantially all of which will be funded with the excess proceeds from 2021. These investments are centered around new and material upgrades to existing recycling facilities, continued investment in the infrastructure and asset bases of certain new markets, and R&G development. Again, all this investment is being funded by the proceeds from our rationalization program. So another way of thinking about these dollars is simply a timing difference between when the cash was received and when it will be spent. This bridge does not reflect any cash proceeds received for the sale of infrastructure division, as we intend to reinvest those dollars into M&A. Consistent with past practice, our guidance does not include any impact from future M&A. As Patrick mentioned, our M&A pipeline is robust, and page 19 has summarized how we are thinking about the landscape. There is one larger transaction within our footprint that could largely backfill the infrastructure services EBITDA we have carved out in our guidance. This opportunity would be immediately accretive and actionable in the first half of 22. Then on top of this larger opportunity, we anticipate continued execution of our regular tuck-in M&A program. We highlight this opportunity as $250 to $300 million of incremental revenue across 25 to 30 transactions. The history has shown that there's upsides to this number. If you think about those as potential upside opportunities, page 20 shows that if executed, we could exit 22 with adjusted EBITDA of $1.8 billion and adjusted free cash flow of $730 million on a run rate basis.
spk09: Page 21 has an overview of our RNG opportunities, and while not highly relevant for our 2022 guidance, we wanted to frame how this ties into how we're thinking about 2023. We are contemplating using the 50-50 joint venture structure arrangements with third parties in the development of the landfill sites where we think there are viable RNG projects. Using conservative assumptions, we think our portion of the aggregate incremental free cash flow from these sites could be $150 to $200 million per annum. We have finalized arrangements for the first four sites during the process of finalizing the next five sites, and the expectation that our portion of adjusted pre-cash flow from these nine sites will be 105 to 125 million per year. Our portion of the expected capital outweighed for these nine projects is 150 to 180 million, the majority of which will be spent in 2023. We see RNG as a great add-on to our core business, but it will not distract us from our focus on continuing to invest in the fundamental organic and M&A levers to drive our continued growth that we highlighted earlier. On page 23, you will see we start with our potential 2022 run rate. Add this conservative estimate of the RNG opportunity to normal course and to normal course organic and M&A assumptions for 2023, and we end with an adjusted free cash flow run rate in the big 900, setting a clear path to exceed $1 billion in 2024. As many of you have followed GFL through our history, we think you'll see that there is a consistent theme when we have these calls with you every quarter. As owners, our senior management team is fully aligned with our shareholders. Our 2021 results, again, reaffirm how that alignment drives this management team to achieve industry-leading results, even in the face of the most challenging times. I'm very proud of what we've achieved so far, and I've never been more optimistic about what GFL's future holds. I will now turn the call over to the operator to open the line for questions.
spk00: Thank you. As a reminder, if you would like to ask any question, please press the star followed by one on your telephone keypads now or the flag icon if you have joined us online. When asking a question, make sure your phone is unmuted locally. The first question comes from Hamza Masiri from Jefferies. Please, Hamza, your line is now open.
spk01: Good morning. Thank you. My first question, maybe for Luke, is just on free cash flow. It looks like the sector organically grows free cash flow in general high single digits. Maybe if you add M&A, maybe it's 10% or slightly higher. Your free cash flow profile and growth appears much higher than bears and and you know we it looks like it's approaching a billion in the out here maybe walk us through you know what you're doing differently how sustainable is this You know, do you just feel like your markets have less competition? I know there's some mixed differences in Canada versus U.S., but just walk us through, you know, confidence level in that free cash flow profile and why your numbers are a lot higher than peers.
spk08: Yeah, thanks, Hans. Good morning. I mean, I think it's a great question. It's one that we sort of sit around and think about a lot when we look at where the sort of stock price is and try and correlate the sort of two of them. I mean, I think you're right. The normal model in this industry is you have mid-single-digit top line with a little bit of margin expansion, and at the bottom line, it equates to sort of high single-digit pre-cash flow. i think when you look at our business because of the sort of market selection quality of the asset base and all the opportunity we have in the middle we see an opportunity before considering you know the capital structure to beat that through the margin expansion so even at a sort of five percent top line growth i think we can eke out a little bit of incremental margin year over year which is going to help drive a bigger number at the free cash flow line and when you couple that with what i think is a unique opportunity solely for gfl which is the de-levering profile right if you think today about that interest costs, as we're able to leverage that interest cost line going forward as we've reached the inflection point of self-funding, you know, our growth, there's a meaningful accretion at the pre-cash flow line that comes from that. And I think you put those factors together, you can take what a normal course grower is at sort of eight or nine, and organically you can see that at low to mid sort of teens as a result of what I think is that unique advantage for GFL, you know, tied to the markets and the cap structure. Then on top of that, when you look at, you know, what we've been able to achieve and look to continue to achieve in these sort of organic redeployments, I think you have another sort of five to seven basis points easily if sustainable for the next few years on that piece, right? And that's now all of a sudden brought free cash flow growth up to a sort of, you know, high teens, low 20% number. Then you layer on M&A on top of that, and you look at the numbers we're suggesting. This year it was 50%. Next year it's 30% with this concern. the year above is another 30%. I think there's a real unique opportunity that's compounded by not just the outsized M&A and other, but just an organic opportunity You know, I think in time, as, you know, I've heard people say the results are noisy, but as that noise subsides, I think you'll clearly be able to see this organic growth rate of the free cash flow far in excess of peers, and then complemented, if you will, by all this other value-added items we've been looking at.
spk01: Got it. You know, the other question would just be on the infrastructure side. announcement um you know it's pretty clear but but could you just talk about um you know what what kind of proceeds do you expect is it too early um you know is is what does your equity pickup look like in terms of you know percentage ownership you want to keep i know i know patrick you're going to be chairman of that business uh You know, is that distracting? You know, is that business going to grow to be much larger? Is BC Partners going to be involved in that? Just, you know, any more detail around, you know, the execution of that?
spk09: Sure. So, I mean, for some people that don't know the story, I mean, we organically built that business starting really in late 2009, early 2010. and have grown that business really over, you know, an eight-year period between 2010 and call it 2018, free us thinking about starting to go public and, you know, what that would look like in the public realm. And, you know, grew that from zero to, you know, revenue today in excess of $500 million, you know, on the combined sort of infrastructure business. It's always been my view that there's a significant opportunity to create a GFL 2.0 in the infrastructure services business. When we were a private company, we were doing that ourselves, and it was less relevant to how we sort of looked and felt compared to the industry peers. i think we had a best-in-class management team in that in that business line um you know young hungry very successful guys industry leaders in canada um and we just saw this opportunity i mean the easiest path would be just you know we could just sell it but i think from my perspective why would we sell something where we know there's a significant amount of value to be created um for us as shareholders That team reports to me today already, so it's not as if I'm getting more reports. They have lots of great ideas, and Coco being one of the great ideas we've had over the last couple of years, being an industry leader in Canada, one of the most successful, best family-run businesses in Canada. right down the middle of the fairway of what GFL likes to do. And, you know, it worked. And, you know, that got the brain sort of thinking on my side about what we do, and this created the opportunity to sort of spin that out. I think when you look at what makes sense for us, You know, the thought process is, like we said, spin it out, keep it leverage neutral. So, you know, get back, you know, what I would call for round numbers, a quarter of a billion dollars of proceeds, and then get left with just under a 50% equity stake in the new entity. And we're going to go and build it. And I think over time as we build it, You know, we're going to create significant value for our shareholders and, you know, starting with a, you know, pro forma EBITDA of just roughly 180 million. I don't see any reason why we can't take 180 to a billion over sort of five, six years. There's a significant amount of opportunity, significantly underserviced. and highly fragmented. And when you start with a business, the quality of ours, if you look at industry comps, this combined entity will have margins that are 400 to 600 basis points higher than the industry norm because of the quality of the two businesses. So, it's a very unique opportunity. It'll be a great opportunity for our investors to participate in that have followed the GFL story. And, you know, for GFL shareholders that have been a part of it that are going to contribute out of the gate, it's a great opportunity as well. So, I think it's a win-win for everybody, and I think we'll just create a lot more value than we probably could have if we just would have sold it off.
spk01: And then just last question, I'll turn it over. You know, you have a lot going on. You have these free cash flow numbers in a lot of detail after 2023, and, you know, people can probably project beyond that. You've been public for two years, Patrick. Stock's been volatile. It's been a good stock last year. Obviously, the market does what it does. But maybe talk about your role at GFL. Do you plan to see this see this whole thing through? Do you plan on being here over a decade? How are you thinking about, you know, your role, you know, given obviously you have a lot of network tied into this, but also you've created a ton of value in the private market for yourself and others over, you know, the last decade plus.
spk09: Yeah, I mean, a lot is sort of unpacked there, but I think So where we sit today, you know, I think, you know, we get a lot of, I can't control the stock price, right? Like, there's certainly a lot of control. All I can control is allocating capital, making the right decisions for the business that I think are going to create value over the long term. That's what I've done here for sort of 15 years, and I don't think that's going to change anytime soon. You know, I think as we continue getting respect from, you know, the industry as this thing continues to season, I'm not going to be happy until I see this stock go from, you know, wherever it's 32, 33 US to 100 US. And I think that's at the tip of our fingers. I think, you know, I think you know, there's always been sort of the under promise and over deliver approach. I think you see that. I think we've, you know, investors have asked us what the pieces of the puzzle look like. And I think that's why we came out and gave you the pieces of the puzzle. I don't think there's a more attractive story in the industry today. We're in an amazing industry with amazing peers that have been successful over a long period of time. there's no better industry that I'd want to be in today than this one. And I think there's a significant amount of value that can be created here over the next little while. And at the end of the day, I'm here because I want to win. I don't need to be here for a paycheck and, I have enough money. But like anything, I'm here to make money and make more money, and I'm going to make more money for everybody that's on this call. So we're going to take the 33, and we're going to get to 100, and we're not going to stop until we get there. And when we get to 100, then we'll realign our goals, but that's where I sort of feel the opportunity is here and where we're going to go.
spk01: Got it. And you're still a young guy, so you have a lot of time. Thank you.
spk09: I'm not ready to go to the mall and hold hands with my wife yet. We're going to keep working until we get there.
spk01: All good. I'll turn it over. Thank you.
spk00: Thank you. Our next question comes from Michael Hoffman from . Please, Michael, your line is now open.
spk05: Hi. Thank you very much. So I'm going to tackle green infrastructure for a second. Just so you're putting in your $55 million, you're getting half of the value you put it in for cash, and then the equity interest. Beth, help me if I've got these numbers right. You then got $180 million starting number, EBITDA. Grow it, call it 4% or 5% organically, add $20 million of EBITDA from M&A. That's a 210 number. Take it public. The peers are 10 to 12. That's a $2.1 billion enterprise value. I don't know. You can elaborate four and a half times, take out $900 million. That's sort of $1.16. 45% of that is $520 million. That's your value plus the cash. Is that the right way everybody should think about that?
spk08: Yeah, Mike, I think that math is very good. I mean, I think there's probably more of an opportunity. It all depends on when you would actually want to take the thing public. But, yeah, and if you do that, you're getting close to sort of 2x on your equity. And so while it may look on the face of it today that maybe, you know, the 55 isn't getting maximum value, following that logic you just described, we think you could end up monetizing that at a significant premium. to what you would otherwise get for today. And that's the exact rationale. And if things go well, it could be multiple higher than what you just said.
spk05: Right. And I'm using all the low end of things. I'm not trying to overstate it, take a conservative view. That's how you create the incremental value for the shareholders. It's not the, are you sure you could sell 55 at 12 times or something? This is creating in a relatively short window of time how to calculate what the path to the upside is. Correct. Okay, good. All right, 2022. You know, part of being a young company and in the development mode and all the growth, I get the adjustments. That's the noise people talk about. It's 30% of your adjusted free cash flow at the midpoint, our adjustment. How do you get that number sub-10 and when?
spk08: Yeah, I hear people talk about adjustments. I mean, it's a level set. I mean, really what we're adding back, never mind blowing up the cap structure in past years of the IPO, really what we're adding back is sort of $25 million a year at this pace of rebranding where we're painting everything bright green, and you can see that as you travel all over the country. And, you know, that's a strategic decision that we do with this M&A, and, you know, you can debate that, but we say, look, that is unique as we're in growth mode, and there's that $20 million. Then you have $60 million a year roughly of transaction costs. I mean, you look at the last four years – We've done over 125 deals and deployed over $11 billion. And across all of that, about $60 million a year in transaction costs. So $240 million in aggregate over four years in transaction costs that deploy $11.2 billion. I mean, that's like 2%. So, you know, what I've said to folks is if we're deploying capital at these levels, there's going to be transaction costs associated with that. I mean, we don't pay bankers. We, you know, put these lawyer fees and et cetera, sort of add up, and that's what it is. I'd say if you look at the last three years, I think that number has been like $60 million every year, and the free cash flows went from a negative to $300 to $500 on its way to $900. I think the relative quantum of that number is naturally going to decrease through the growth of the free cash. And obviously, if we're not growing free cash at 50% a year, you know, augmented with the M&A, that number is going to come down. But if we're deploying this year $2.3 billion across 46 transactions, I think $50 to $60 million is, you know, a fair number of where that's going to shake out. So, I mean, that's the way I think about that. I do think, though, your comment about the percentage, that's naturally just coming down in meaningful steps as the base number is growing.
spk05: Great. I think that helps clarify how to think about how dissonant that noise really is. You introduced the idea that we ought to think about margins, first half, second half. Do you want to walk us through the cadence so everybody gets that right and the street numbers don't end up with a .
spk08: So starting form, we included in the deck like a pro forma for recapping 2021 if you back that infrastructure. So just so we can have a sort of right level set comparison. We're not going to give the quarterly guidance. Look, historically, it's sort of 22% to 23% of annual revenue in a normal seasonality cadence. Now, as I said, seasonality is sort of getting a little bit wonky. You know, in Canada, with the COVID starts and stops, but, you know, if you take 22.5%, 22.5% times the midpoint of the revenue range, that's $5.9 billion. I think that's a good sort of revenue number for Q1. i think you know typically q1 is the sort of lowest margin quarter here the tune of 150 200 basis points you know so if you're thinking about high 27s as the blended number for for next year um you know you'd see q1 it's sort of you know call it high 25s i really think if you unpack that you have you know solid will be a tough comp last year if you look at last year q1 Solid US was the highest margin of the year, which is very atypical for Q1. So normalizing for that, you know, salt's going to have a tough comp. Liquid, you know, the new liquid will have some expansion. And, you know, you can bank on the corporate cost bucket being about sort of 3%. So that's how I see Q1 shaking out. Then Q2, Q3, and Q4, I think we'll follow that sort of typical seasonality cadence, you know, peak margins in Q3. and rounding up the year, ending at that high 27, low 28, as per the guide.
spk05: Patrick, I don't think you're going anywhere. I think you have four kids under the age of 10, so you're going to go to work every day. More importantly, talk about your bench strength. I mean, listen, I mean, yeah, we're going to do an investor day.
spk09: Yeah, it's been obviously being public, you know, a week before COVID hit in March of 2020. We haven't really had the opportunity to sort of showcase the team. And, you know, where I sit today, from my perspective, I don't know the other teams, but what this team's been able to accomplish, at the end of the day, I'm here, I'm a cheerleader, right? I'm cheering on, you know, starting with sort of Greg Yorston through to sort of, you know, Luke and his team, to the HR team, to the integration team, the BD team, you know, general counsel. As we go through the whole list, From my perspective, where I sit, there's a hand-picked team, best-in-class management team that have delivered exceptional results quarter after quarter for a long period of time. And when we look at that, I think that is a big thing. When you look at the solid waste, which is a lion's share of our business, if you look at the results, that this team's been able to put and execute on in the amount of M&A in the face of all these inflationary pressures and all the other things. I think it's exceptional. And, you know, I look forward to showcasing that team when we do our investor day in May. You know, we haven't picked a date exactly yet because we're just waiting to see what happens with COVID, but I think When that onion gets peeled back and people get to look under the hood, you know, if Patrick gets hit by a bus tomorrow, I think it's going to be pretty clear that GFL is going to be just fine. So, you know, I think we have all of the relevant pieces of that management team in place, and they're just doing and executing and continue to do great things. It's really amazing to watch because, you know, from, you know, starting on a scale, being on a scale, to sort of sitting where I am today and then being able to watch, you know, these guys execute the playbook, it's pretty amazing. And, you know, I take my hat off to them because, you know what, there's guys that are doing a better job than I did when I was in the seat. And, you know... If it wasn't for them and me sort of handing over the reins, we wouldn't sort of be where we are. So, you know, I'm thankful to all of them for actually making that happen. But I look forward to showcasing that entire team in May when we do that investor day.
spk07: Okay. Thank you. Thanks, Michael.
spk00: Thanks, Mike. Thank you. Our next question comes from Tyler Brand from Raymond James. Please, Tyler, your line is now open.
spk06: Hey, good morning, guys. You guys hear me? Oh, hey, sorry. Hey, obviously pricing was really, yeah, it's really solid. You know, it sounds like you pulled forward some PIs into Q4, but given the pull forward and the fact that CPI will layer in over the course of the year, just how does pricing look as the year plays out? Does it start high and fade, or should it be pretty consistent as the year plays out?
spk08: Yeah, so I still think we're anticipating the start high and then walk down, but with less fade than a sort of normal year. I mean, Q1 and January particularly, we have about 40% approximately of our CPI resets are hitting then. And then just a bunch of our open market stuff is focused at that time as well. So Q1 will definitely be the biggest number. You know, we've guided sort of the high fours. I think there's maybe opportunity to beat, and I think Q1 will tell that tale. So if you can see Q1, and it'll be dependent on how the CPI resets actually hit and what the retentions are like. But if you see Q1 at a high fives, you know, I think that's going to set the stage for, you know, a beat for the year. But, you know, we'll see how that actually shakes out. But I think, you know, Q1 is the majority step down in Q2 and then consistently Q3 and Q4, albeit perhaps not as big of a step down as you would have seen in the sort of pre-COVID environment because we will have good support from large CPIs that hit in Q3 primarily in our U.S. book of businesses.
spk06: right okay that's helpful and then just real quick on rng so to be clear you know despite the the jv structure that rng capex will flow through the actual capex line is that is that right um so
spk08: As the structures aren't all finalized, that's still sort of in flux. But, you know, either way, we'll parse it out so you actually see the sort of apples to apples. If to the extent it manifests itself on certain transactions as investment in JV, we'll be sure to sort of ring fence and isolate so people can actually see the real underlying economics.
spk06: Okay. And then kind of in the same – along the same thinking here, but how in 23 – Will you account for the unconsolidated share, the EBITDA from those plants? Will there just simply be an add-back to EBITDA, or how will you show that financially? I know it's probably still in flux, but just any thoughts there?
spk08: Yeah, I mean, again, in flux just because all those agreements aren't sort of done. But, I mean, if you look in practice, I mean, you know, you end up picking up your proportionate share of the sort of results of the JV. And, you know, if you look at those guys who in practice are already doing this, they exclude that and they add back, you know, their share of the EBITDA. Right. So there's, you know, other if you look at other RNG players, I mean, Darling, just as an example, is one I was looking at that has a bunch of these, you know, has what the precedent might look like. But, yeah, I think there's something about backing out the normal course accounting and then just layering in your share of the EBITDA is probably how that ends up shaking out.
spk06: Okay, that's helpful. This is my last one. And I appreciate the pro formas and the appendix, but when you layer in TerraPure just for modeling purposes, will that new environmental services line be about a billion dollars in revenue? Is that kind of a good placeholder?
spk08: Yeah, that's a perfect place. I think about 2022 is a billion dollars in environmental services and 4.9 of solid, you know, on the base guide. Okay. Okay, perfect. All right.
spk00: I appreciate the time. Thanks, guys. Thank you. Thank you. Our next question comes from Walter Spracklin from ABC Capital Markets. Please, Walter, your line is now open.
spk04: Thanks very much. Good morning, everyone. So I want to come back on the renewable energy approach, and Patrick, your strategy on how to tap that resource that you have. And we've seen your competitors take or discuss and reveal some other ways to do it, more of a go it alone, invest it all, invest and own the entire thing, but then subject a little bit to some of the volatility that would come with that higher level of investment you're going to partner approach I'm hearing positive feedback on that relative to the other approach perhaps talk a little bit more about what led to your decision and how would you how would you characterize the goat alone which being much more upside but perhaps with some more volatility
spk09: Yeah, I mean, initially when we started talking about this, I think if you went back, if you sort of rolled back the clock eight months ago, I would say we knew very little about how to actually harvest dollars from this RNG. I think some of those other companies that have been going at it alone have significantly more internal resources. um that have been looking at this for a while so i think that was one thing yes we could go and figure it out i'm not looking at this as a core pillar of you know we're at the end of the day we're we're an environmental services company rng is something we sort of found That was not going to be sort of, you know, a new business line where we were going to stop doing exactly what we've been doing for the last 15 years. It was just like, how do we realize dollars as quickly as we can with experts that know how to do this, that can get a shovel in the ground as quickly as possible, that have inventoried you know, inventory to build out the parts that they need to build out one of these facilities as quickly as possible, have the engineers on site and get it permitted, and most importantly, find, you know, the best back end to be able to maximize profitability on the sale of the actual RNG. Those were all things we didn't know anything about six to eight months ago. Coupled together with A lot of our sites had, you know, they already had gas rights that were given away. We had loyalty agreements, you know, which required our consent to switch those from, you know, the typical, you know, electric or flaring model to, you know, RNG. So that opened the door to have a discussion about, hey, R&G certainly makes more sense in these old sort of electrical subsidized agreements. Let's go R&G, but let's split them 50-50 and, you know, make sense. I think it's fair. I think it'll get us to the market as quickly as possible with experts that do this every day. For summer, we didn't have any, in a division that we don't have expertise in. And, you know, it's hugely profitable. So I think you sort of couple that together. I think we learned a lot. I think if we have to go at it on our own today, we probably could on some of these sites. But at the end of the day, it's just something we're not set up to do. And let the expert do it, because they're going to do it better than we're going to do it. It was just my perspective.
spk04: Yeah, that makes a ton of sense. OK, switching gears here to pricing, service, and churn. Clearly, you're driving price, as are your competitors. When a customer gets a big price increase, they may have to take it, but I think their lens gets a little more focused on getting the right service with the higher price, all things considered. Are you seeing either any – are you getting worried at all about any trends in churn within your own organization, and or are you looking at any opportunities – for churn in other of your competitors that could see you grow market share as a result of this kind of very extreme pricing dynamic we're seeing emerge continuing into this year?
spk09: Yeah, for me, it's an interesting time in the market, right? Because even for us as, you know, companies, we're all having to be very selective about new business and ensuring that we're getting paid the appropriate price to collect new business just for the simple fact that You know, it's a challenging labor market. It's challenging to get new equipment. Everything, you know, has been slower. I think we've all navigated the situation as an industry very well. And I think the market is, we've all as competitors been very disciplined to ensure that we continue getting, you know, price to at least cover our, you know, these internal costs and inflation measures. I don't think anyone's seen, you know, I saw today inflation, you know, high since it's been since 82. I think there's very few industries like ours that have been able to sort of pass that on like we have. So I don't think the focus of ours is not, you know, trying to go out and grab as much market share as we can based on some of the PIs that are going through the market. I think our customer base knows that, you know, the price is needed for us to be able to, you know, remain competitive and provide that service. And, you know, they want to make sure that it's picked up. on time and, you know, I think the luxury of our business is, you know, that the lion's share of our accounts are between $200 and $500 a month, right? So, you know, even if they're getting a, you know, high single-digit price increase, I mean, it's not a material amount for them. I think they have other bigger fish to fry than they normally would. So I'm not seeing any – I think the market is understanding of it. Clearly, the headlines every day in the papers around inflation and driver shortages and fuel and insurance – and R&M and supply chain shortage, you know, backlogs, all of those sort of coupled together have remained intact. I think all of us in the industry is, you know, a pretty loyal sort of customer base today. And it's not people aren't driving to go out and win new market share just at any cost because it just doesn't make sense today just given what's sort of happening in the industry. But I think that's where it sort of sits today, but nothing that worries me in any really rich way today.
spk04: Perfect. Okay. As always, appreciate the time, Patrick.
spk09: Thanks, Walter.
spk00: Thank you. Our next question comes from Kevin Chang from CIBC. Please, Kevin, your line is now open.
spk07: Thanks for taking my question. If I could just clarify, I think Luke, in your prepared remarks, you talked about when you did the bridge for 2022 and you highlighted the the upside to solid waste volume, but you made a comment on basically Canada and maybe there's upside if we see more of a reopening. Just wondering, what are you building in for recovery within your solid waste? Is it what we're seeing today in Canada, which is obviously pretty challenging, or do you see we kind of get back to some level of normalcy through the year?
spk02: Yeah, Kevin, it's a good question.
spk08: To be honest, we're sort of getting tired of trying to pin the tail of the donkey in Canada. So it's really, you know, I think, you know, you're sitting here in Toronto with me today. We seem to be in the right direction. It's assuming we continue this. We get back in another two weeks. He lets us have full restaurants, et cetera, and we continue on this progress. If we all... you know, sort of get completely locked down again, obviously that would be a headwind. And if by this summer we can actually be fully enjoying life again, that could be a tailwind. So, you know, I think it's sort of middle of a fairway right now. I do think there's upside to the number because I'm very hopeful we don't go backwards from here. But, you know, we've tried to guess for the last two years and been wrong. So sort of just taking a conservative approach this time.
spk07: Yeah, I hear you. I've stopped wearing suits and I'm only wearing track pants because I've been stuck at home as well. Just on your free, when I look at your 2023 run rate, you know, you're implying about a 49% free cash flow conversion. If I go back to the presentation you had this time last year and you talked about, you know, what 2023 could look like, you know, I think it was about mid-40s. Just wondering, as we kind of look up maybe past 2023, Do you see yourself being a north of 50% free cash flow converting company? And I guess I ask that because it does seem like you have incremental free cash flow opportunities from R&G, which I suspect convert at a higher rate here. Any color there would be helpful.
spk08: yeah so kevin i think there's a little that page you're looking at there's some footnotes that i think are relevant because really the rng for simplicity on that page has just been layered into the free cash number you can see the table on the page before that tees that up and the footnotes that you're dividing the pre-cash into the ebitda but it's not apple so when you do that it would be more along that line in the mid 40s But to your point, you know, we don't think that's the ceiling. You know, as you go forward from here, you heard Patrick say it. I mean, we think this can, you know, go above mid-40s, and, yeah, we're going to break through the 50% level and keep going from there. You know, I think when you look fundamentally at the opportunity set that lies in front of us and where the industry as a whole is going to echo Patrick's comments, you know, I don't think there's a ceiling there. And the asset base we have and the opportunity, we see it past, you know, continuing, you know, that march to a point where we think we can be industry-leading.
spk07: Excellent. You know, I'll leave it there. Thank you very much for the clarification.
spk00: Thank you. Thanks, Sean. Thank you. Our next question comes from Mark Neville from Scotia Bank. Please, Mark, your line is now open.
spk07: Hey, good morning, guys. Appreciate all the tools. Good morning, Mark. Maybe just on the remaining environmental service business, I mean, is that something that you would consider sort of core long-term? Is it saleable or sort of would you sort of anticipate participating in consolidating that market as well?
spk09: I think, you know, as long as we can keep creating value. I mean, obviously, we'll have this equity interest and, you know, I think the plan is to take that entity public and let people participate it in from the beginning and we'll keep it. And, you know, again, we have... There's a very good plan behind that to significantly grow the equity value of that business for the post-IPO, but, you know, I think we have the ability to monetize that over time, and we'll do that once, you know, we create significant value. Sorry, you were talking about liquid.
spk07: The liquid, the stub that will be left, the liquid and the soil.
spk09: Oh, sorry. My fault. I misunderstood that. Oh, the liquid business is, you know, It's great. I mean, like I said, I'm a shareholder first. Someone can pay a big number for it. I think, you know, looking at what Republic paid on the face of it for U.S. Ecology, I think, you know, U.S. Ecology was a, you know, high-teens business. You have our business that sits at high, you know, mid-20s margins, going to go to high-20s margins, you know, great. similar comparable sort of asset base. You know, they paid sort of over 14 times for that. So I think from our perspective, you know, we think we have a similar business. Could be better in some ways, maybe not in other ways, but at least it sort of sets the benchmark of what sort of, you know, what value that's worth sort of in the base case. But I think we're going to keep it. I think it's a great business. You know, very comparable pre-cash flow margins to our existing business. There's no reason not to keep it, you know, largely sort of focused on the Canadian market today. So I think we're of opinion. We're going to keep it. It's a great business. Why not? And we'll keep growing it with an exceptional management team with industry-leading margins as well in that business. So no thoughts to get out of that anytime soon.
spk07: Just on renewables, just – You gave some numbers, I think, for your capital investment. To get to the $150,200, roughly what's sort of your investment required, or should we just kind of look at linear leaks?
spk09: It's a little bit of a moving target because we're negotiating. I think some of the benefits of what we're working on today, the future capital commitments will be significantly less than the original deals, and that's how some of the developers are differentiating themselves. So I think there will be minimal capital required from us for the future project that you see, so I don't think there will be much more required given what we're negotiating with today.
spk07: Maybe just one final point of clarification. When you report Q1, even if the infrastructure hasn't closed yet, the plan would be to report with that excluded. Is that correct?
spk08: yeah mark that's correct whether it's officially done in the financial statements proper or i need to sort of pro forma do it in the report it's still sort of tbd but either way we will get you a clean sort of segment presentation x infrastructure all right all right thanks guys appreciate it thanks mark thank you our next question comes from jerry rubits from goldman sachs please jerry your line is now open
spk10: Yeah, thanks. Good morning. Patrick Luke, on the seven and a half million MMBTU of landfill gas projects, I'm wondering if you could talk about what proportion of that you expect to use as you build out your CNG vehicle fleet versus other RIN 3 eligible applications and what proportion you expect to go to industrial non-RIN 3 applications based on the offtake plans.
spk09: Yeah, so we need, we need about 10% of that volume, you know, and that'll slightly grow that we're gonna have to put in the, you know, into our own vehicles and the sort of transportation market. And then it's a lot of 90. So we're in process, you know, and have negotiated some long term arrangements, but I think I think what you'll see is most likely, you know, 50% of that, the remaining balance going into the sort of industrial-commercial long-term agreement half, and then the other 40 will continue into the transportation sort of ring market today.
spk10: Got it. And, Patrick, when we last spoke about the topic, you had mentioned that industrial market price is in the 20s. Is that where it's shaking out? Any update as you've spent more time with the industry?
spk09: So it's still there. Obviously, as the ring pricing's moved up, the pricing's moved up a bit. But what we're seeing now is the ability to – actually share in the upside if, you know, for example, if ring pricing went from, you know, it's called $3.20 to $3.40 and ran to $4 or $5, whatever that, wherever it may go, these new agreements are now, you have a, a sharing agreement that's sort of correlated to RIN pricing. So if they go up higher, then the long-term supply agreement has to pay more and they have to pay a portion back. So it's even getting a little bit more lucrative than we originally anticipated back, you know, three, four months ago.
spk10: Terrific. And then, you know, in terms of the plan to roll up the infrastructure and asphalt industry, you know, there's not a lot of assets out there that can post mid-teens, EBITDA margins. Can you just expand on what the M&A pipeline looks like for that part of the portfolio? You know, how much heavy lifting will you folks need to do to get, you know, acquired businesses to the margin profile that your business and certainly COCO is running at?
spk09: Yeah, so I think it comes down to exactly what we did on the solid waste and liquid waste business, right? It's, you know, how are our assets performing sort of the way they are? And I think at the end of the day, you know, it comes down to market selection and finding the right markets and the right places to go. And I think the beauty of us operating in nine provinces in Canada and 26 states in the U.S., we generally know what markets to be in, and I think you'll see us focus on markets that have better margin profiles than others, right? So with that backdrop, I think it'll be the exact same playbook that you've seen with sort of GFL and the margin profile of GFL, and it's liquid waste business and it's solid waste business, so I think you'll um continue to see that and i think you'll continue to see us be very selectful about the markets we go into with that business and the quality of businesses that we acquire under that profile so we'll continue to be you know our perspective industry leading business um and uh it should go pretty well okay great and lastly you know nice to see the pricing pull forward on the solid wayside you know i'm wondering as you look at the absences from
spk10: Omicron, in the first quarter, you know, any new actions that you folks have implemented given, you know, higher overtime and other costs? Luke, you alluded to it in potential for pricing to be higher than what you're guided to. I'm wondering how did that look through Jan and Feb as you folks have dealt with those constraints?
spk08: Yeah, look, obviously, the beginning of Jan, the sort of labor constraints, I think Omicron, fortunately, had a very sort of short fuse, and, you know, a lot of that sort of got behind us quite quickly. You know, I think... Look, the pricing in Q1 is coming in sort of strong, as I said, at some of our strongest sort of levels. And if this is where it keeps up throughout the quarter, you know, I think there's an opportunity to beat, you know, the high end of that guide that we had provided. Look, I think it's important to understand the low end of the guide at 4.5, that's enough to cover the cost of inflation. So even at the low end of the guide, we're sort of, you know, we're good overall. I think the opportunity is to beat, you know, ever achieve the high end or beat the guide. And as I said, you know, in one of the earlier comments, I think Q1 will sort of tell the tale. First, you know, January and February is looking promising in terms of sort of retention, but we'll see by the time we get to the end of the quarter. Again, if that's sort of a high fives number, you know, or a six, I think that sort of sets us up for the opportunity to sort of beat the guy through the air. But I think people should rest assured that even the low end of the guide more than covers the current cost of inflation we're seeing.
spk10: Terrific. Appreciate the discussion. Thanks. Thanks.
spk00: Thank you. Our next question comes from Rupert Merrer from National Bank. Please, Rupert, your line is now open.
spk03: Thank you. Good morning, guys. Patrick, on GIP, you mentioned $250 million cash GFL should receive from divestment of the infrastructure assets, and you gave us a rough estimate for the ownership stake in GIP. Can you tell us what's left to do to finalize the economics on the deal when you might have that final plan?
spk09: Yeah, I mean, it's going to come together sort of over the next, you know, five to six weeks. You know, we're just looking at a bunch of sort of structures, et cetera, you know, leading up to sort of, you know, getting that entity public in September. So that's all pretty fluid now, but that's generally the parameters of what you'll see.
spk03: Okay. You do expect to be minority interest and have a joint venture accounting kind of along the lines of what you explained on R&G. Is that fair?
spk08: I know the equity accounting, it won't be a joint control as an unlikely outcome. As Patrick said, it's still fluid, but it's probably non-controlling interest just to have regular way equity accounting as opposed to actually joint venture accounting.
spk03: Okay, great. And then You mentioned your asset rationalizations largely done. Are there any assets out there, any regions you might consider non-core? Do you anticipate seeing any other asset sales in 2022?
spk09: Yeah, there's a few things left to do, which we'll expect to get done Q1 and early Q2. sort of well underway, you know, anticipate proceeds probably in the sort of $50 to $60 million range.
spk03: Great. Given those were quick, if I could lob one more quick one at you, the RNG projects. Sure. What's the timing on those? I know we're looking at them in 2023. Are you thinking early 2023, mid, late? How should we think about the cadence? I think we're...
spk09: Simplicity modeling purposes is you basically get 50% of those revenues in 2023. The reality is we probably, we're going to shovel ready and starting construction on some of them in March. So, you know, typical construction time on those is like 12 to 12 and a half months. So I think, you know, late Q1 or early Q2, we should be online, particularly with the largest one, which is a landfill in Michigan. That's like a 10,000 FCFM site. So we hope to have that up and running, you know, sort of April-ish next year.
spk03: Excellent. Thanks very much. Thanks, Rupert.
spk00: Thank you. We currently have no further questions. I will hand over back Patrick to BG for any final remarks.
spk09: Thank you so much, everyone, for joining the call. And, again, appreciate your continued support. And I was always available today to jump on the phone if there's any further questions. Thanks so much.
spk00: This concludes today's call. Thank you so much for joining. You may now disconnect your lines.
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