Waste Connections, Inc.

Welcome to the WAIS Connections, Inc. Third Quarter 2023 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a 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 one on your telephone keypad. To withdraw your question, please press star then two. Please note today's event is being recorded. I'd now like to turn the conference over to Ron Middlestad, President and CEO. Please go ahead.

Okay. Thank you, Operator, and good morning. I would like to welcome everyone to this conference call to discuss our third quarter results and to provide a detailed outlook for the fourth quarter, as well as some early thoughts about 2024. I'm joined this morning by Marianne Whitney, our CFO, as well as other members of our leadership team. As noted in our earnings release, we are extremely pleased by the durability of our financial and operating results in the quarter, with momentum for continued outsized margin expansion. Solid operational execution drove adjusted EBITDA margin of 32.5% in the third quarter. As expected, up about 140 basis points sequentially and up 120 basis points year over year, in spite of over 15 million in unforeseen headwinds. Moreover, normalizing for recycled commodity values from just over a year ago, underlying adjusted EBITDA margin eclipsed 33% in the quarter. And this is total company EBITDA margin, not just solid waste. During the quarter, we overcame elevated levels of risk-related expenses and other lighting effects of higher employee turnover in prior periods, as well as site-specific incremental operating expenses at one of our landfills in California. The expected Q4 and ongoing impact of this evolving landfill situation are currently being evaluated, along with the recent shorter-term development at a landfill in Texas, and as such, weren't anticipated in the full-year outlook we provided in August. We expect to get more clarity going forward, but currently estimate the range of outcomes in Q4 to include impacts of up to $20 million to revenue, adjusted EBITDA, and adjusted free cash flow. We remain encouraged by the pace of improvement in employee retention, which along with our differentiated strategy and execution should provide for above average underlying margin expansion and solid waste collection transfer and disposal in 2024. On that basis, we should be positioned for high single-digit adjusted EBITDA growth in 2024 on mid to high single-digit revenue growth, including approximately 150 million of revenue carryover from acquisitions signed or closed year-to-date, with upside potential from additional acquisition activity and any further improvement in commodity-related activities. Before we get into much more detail, let me turn the call over to Mary Ann for our forward-looking disclaimer and other housekeeping items.

Thank you, Ron, and good morning. The discussion during today's call includes forward-looking statements made pursuant to the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. including forward-looking information within the meaning of applicable Canadian securities laws. Actual results could differ materially from those made in such forward-looking statements due to various risks and uncertainties. Factors that could cause actual results to differ discussed both in the cautionary statement included in our October 25th earnings release and in greater detail in Waste Connections filings with the U.S. Securities and Exchange Commission and the Securities Commission or similar regulatory authorities in Canada. You should not place undue reliance on forward-looking statements as there may be additional risks of which we are not presently aware or that we currently believe are immaterial, which could have an adverse impact on our business. We make no commitment to revise or update any forward-looking statements in order to reflect events or circumstances that may change after today's date. On the call, we will discuss non-GAAP measures such as adjusted EBITDA, adjusted net income attributable to waste connections on both the dollar basis and per diluted share, and adjusted free cash flow. Please refer to our earnings releases for a reconciliation of such non-GAAP measures to the most comparable GAAP measures. Management uses certain non-GAAP measures to evaluate and monitor the ongoing financial performance of our operations. Other companies may calculate these non-GAAP measures differently. I will now turn the call back over to Rob.