Republic Services, Inc.

Good afternoon and welcome to the Republic Services first quarter 2020 investor conference call. Republic Services is traded on the New York Stock Exchange under the symbol RSG. All participants in today's call will be in a listen only mode. Should you need any assistance please signal the conference specialist by pressing the star key followed by zero. After today's presentation there will be an opportunity to ask questions. To ask a question, you may press star then 1 on your touchtone phone. To withdraw your question, please press star then 2. Please note, this event is being recorded. I would now like to turn the conference over to Nicole Giamdinotto, Senior Vice President of Communications and Investor Relations.

Thanks, Rachel. I would like to welcome everyone to Republic Services' first quarter 2020 conference call. Don Slater, our CEO, John VanderArk, our president, and Chuck Sirianni, our CFO, are joining me as we discuss our performance. I would like to take a moment to remind everyone that some of the information we discuss on today's call contains forward-looking statements, which involve risks and uncertainties and may be materially different from actual results. our SEC filings discuss factors that could cause actual results to differ materially from expectations. The material that we discuss today is time-sensitive. If, in the future, you listen to a rebroadcast or recording of this conference call, we should be sensitive to the date of the original call, which is May 5, 2020. Please note that this call is the property of Republic Services, Inc. Any redistribution, retransmission, or rebroadcast of this call in any form without the express written consent of Republic Services is strictly prohibited. I want to point out that our SEC filings, our earnings press release, which includes GAAP reconciliation tables, and a discussion of business activities, along with a recording of this call, are all available on Republic's website at republicservices.com. Finally, I want to remind you that Republic's management team routinely participates in investor conferences. When events are scheduled, the dates, times, and presentations are posted on our website. With that, I would like to turn the call over to Don.

Thanks, Nicole. Good afternoon, everyone, and thank you for joining us. I hope you are doing well and staying safe and healthy. This is, of course, an unprecedented time for all of us. So before we get into a discussion of our results, I want to first review the steps we are taking in light of the ongoing COVID-19 pandemic. As you know, Republic Services provides an essential service. Our team is working tirelessly to serve our customers and communities, and I want to sincerely thank them for all their efforts. As always, the safety and well-being of our people is our top priority, and we are supporting them by continuing to provide all field employees with role-specific PPE and masks, implementing enhanced cleaning protocols, adjusting processes, procedures, and physical spaces to enable proper social distancing, rebalancing the workload to keep all people working by reducing overtime, providing supplemental paid time off and enhancing medical benefits to cover all COVID-related out-of-pocket costs. And finally, finding new and creative ways to keep our 36,000 employees engaged, motivated, and connected. Last month, we launched our $20 million Committed to Serve initiative to recognize our frontline employees, while also helping to support our small business customers and the communities we serve. We are providing weekly on-site meals to employees and have sent home weekly dinners for their families. These meals are being purchased from our local small business customers. We are also providing $400 worth of gift cards to each Frontline employee to help them and their families. We're encouraging them to use these cards with our small business customers. In doing so, we are not only supporting our people, but also our customers by providing them with what they need most, additional revenue. Lastly, we are donating $3 million to the Republic Services Charitable Foundation. Through its National Neighborhood Promise Program, the foundation is focused on rebuilding, revitalizing, and restoring local communities. The $3 million will be used to fund the foundation's long-term nonprofit partners, who support local neighborhoods and small businesses as part of their mission. I'm not surprised by our team's ability to quickly mobilize in a time of crisis. Over the past decade, we've been investing in our business to advance our strategy and enhance long-term shareholder value. Some of these investments include developing standardized processes, implementing innovative technology, consolidating our customer service operations and building a world-class procurement organization and business continuity function. Through these investments, we've built a solid foundation and even a more resilient business. These investments were the driving force behind our superior results in 2019 and our strong start to 2020. Importantly, these foundational improvements have enabled us to be more agile, as we navigate the current environment. For example, through our investment in innovative routing and workforce planning tools, we've been able to quickly adjust our routes for changes in demand. And our investment in technology and collaboration tools allowed us to successfully transition approximately 6,000 of our people to work from home in a matter of days. And we did so without disruption to our customers or productivity. As you can see, our company was well prepared. Furthermore, our management and business continuity teams are experienced in navigating difficult times. For example, during the Great Recession, we successfully adjusted our business to changes in demand and continued to generate strong cash flow. And following some of the most tragic weather events, such as hurricanes Harvey and Maria, we were the first waste company back up and running in our markets. Fast forward to today, the investments in our people, processes, and technology have better prepared us to manage through this unprecedented time. Next, I'd like to give you some perspective on what we are currently seeing in the business. We started the year strong in January and February. In mid-March, some customers in our large container and small container businesses began adjusting their service by decreasing the frequency of pickup or temporarily pausing service. Service decreases continued in late March through mid-April and have moderated since then. In the last couple of weeks, we've begun to see customers re-engage with us as they plan to reopen their businesses. Assuming these trends continue, we believe the worst is behind us and volumes will sequentially improve from here. This perspective is consistent with current GDP consensus estimates, which call for a decline in the second quarter and sequential improvement in the third and fourth quarters. With this outlook, we still expect to generate over a billion dollars of free cash flow in 2020. Lastly, before turning the call over to John, I'd like to briefly discuss capital allocation. Despite the current pandemic, our balanced approach to capital allocation remains unchanged. We continue to believe that disciplined investment in acquisitions with attractive returns is the best use of free cash flow to increase long-term shareholder value. After investing in growth, we will continue to return our remaining cash flow to shareholders through dividends and share repurchases. During the first quarter, we invested over $60 million in acquisitions. Our deal pipeline remains strong. and conversations with potential sellers continue to be active.