Waste Management, Inc.

Ladies and gentlemen, thank you for standing by and welcome to the Waste Management First Quarter 2020 Earnings Release Conference Call. At this time, all participant lines are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone keypad. Please be advised that this conference is being recorded. If you require any further assistance, please press star 0. Your encore will be available two hours after the call has ended. I would now like to hand the conference over to your speaker today, Ed Eggle, Senior Director of Investor Relations. Thank you. Please go ahead, sir.

Thank you, Blue. Good morning, everyone, and thank you for joining us for our first quarter 2020 earnings conference call. With me this morning are Jim Fish, President and Chief Executive Officer, John Morris, Executive Vice President and Chief Operating Officer, and Davina Rankin, Executive Vice President and Chief Financial Officer. You will hear prepared comments from each of them today. Jim will cover our COVID-19 response strategy along with an overview of our results. John will cover an operating overview, and Davina will cover the details of the financials. Before we get started, please note that we have filed a Form 8-K this morning that includes the earnings press release and is available on our website at www.wm.com. The Form 8-K, the press release, and the schedules for the press release include important information. During the call, you will hear forward-looking statements, which are based on current expectations, projections, or opinions about future periods. All such statements are subject to risks and uncertainties that could cause actual results to differ materially. Some of these risks and uncertainties are discussed in today's press release and our filings with the SEC, including our most recent Form 10-K and subsequent Form 10-Qs. John will discuss our results in the areas of yield and volume, which, unless otherwise stated, are more specifically references to internal revenue growth, or IRG, from yield or volume. During the call, Jim, John, and Davino will discuss operating EBITDA, which is income from operations before depreciation and amortization. Any comparisons, unless otherwise stated, will be with the first quarter of 2019. Net income, EPS, operating EBITDA on margin, and SG&A expenses have been adjusted to enhance the comparability by excluding certain items that management believes do not reflect our fundamental business performance or results of operations, including costs incurred in connection with the pending acquisition of ADS. These adjusted measures, in addition to free cash flow, are non-GAAP measures. Please refer to the earnings press release and tables, which can be found on the company's website at www.wm.com, for reconciliations to the most comparable GAAP measures and additional information of our use of non-GAAP measures and non-GAAP projections. This call is being recorded and will be available 24 hours a day, beginning approximately 1 p.m. Eastern Time today until 5 p.m. Eastern Time on May 20th. To hear a replay of the call over the Internet... access the Waste Management website at www.wm.com. To hear a telephonic replay of the call, dial 855-859-2056 and enter reservation code 4950049. Time-sensitive information provided during today's call, which is occurring on May 6, 2020, may no longer be accurate at the time of a replay. Any redistribution, retransmission, or rebroadcast of this call in any form without the express written consent of Waste Management is prohibited. Now I'll turn the call over to Waste Management's President and CEO, Jim Fisch.

Thanks, Ed, and thank you all for joining us. Given the significant and widespread disruptions caused by COVID-19, we will use our time on the call to discuss our response strategy rather than focus on first quarter results. Our immediate priorities going into the shutdown were protecting our employees and providing safe and reliable service to our customers and communities. Having established a framework to achieve those early priorities, We're now focused on optimizing our business for the new environment, preserving our financial strength and flexibility, and progressing towards closing the acquisition of advanced disposal. We're taking steps to use the crisis to create a new normal. We're focused on opportunities to enhance our business, attracting top-quality talent, and developing customer-centric solutions. I'm extremely proud of how our team has worked together proactively to address the challenges we've faced during the last two months and how our frontline teammates continue to diligently provide essential services to our customers. As I've said many times, at Waste Management, we put our people first so they can take care of our customers, communities, and the environment, which will in turn benefit our shareholders. It should be no surprise that our top priority as a leadership team has been the health, safety, and financial well-being of our 45,000 team members. We wanted to ensure that our employees could focus on continuing to provide exceptional customer service and not worry about whether they'd be able to pay their bills. So the first and probably easiest decision we made was to indefinitely guarantee 40 hours of pay for full-time employees through the duration of the pandemic so that they know their jobs and pay will be secure even if COVID-19 reduces the number of routes or hours needed to service our customers. Of course, it's important to point out that while we took immediate steps to protect the jobs of 45,000 employees, we're managing the labor components of operating costs through significant reductions in overtime hours. Regarding health and safety, We're also working with vendors to make sure that we had appropriate personal protective equipment for frontline employees, including masks, gloves, and a hand sanitizer. We quickly made strict changes to our daily processes to follow social distancing guidelines for our frontline employees, and we transitioned about 20,000 of our office employees to a work-from-home environment in one week's time. This has been a massive change to how our team performs their jobs, and overall, it's been a very successful transition. We're also providing paid sick leave for our COVID-19-related absences for employees and have extended benefits for backup childcare in light of school closures. The team has responded commendably by continuing to provide essential services to customers and communities across North America. Our team has also been focused on supporting customers, especially small and medium commercial businesses that are the lifeblood of our economies. Even with the substantial support packages, small businesses will certainly need a helping hand coming out of the shutdowns. Given that, we've helped our customers right-size their service levels, reducing service where necessary, temporarily pausing price increases, and extending payment terms. In addition, as I've said publicly, in an effort to support those small businesses, Waste Management is giving a free month of service to qualifying open market small business customers as they resume their normal waste service and restart their businesses in a post-COVID-19 economy. Our customer teams are proactively contacting these small business customers in an effort to show our support and will continue to do so as states and provinces reopen across North America. We see this as the right thing to do and believe it will result in greater customer loyalty over the long term. We're optimistic that this enhanced customer loyalty, combined with the fact that we've seen less than 1% service cancellations in our commercial line of business since the start of the pandemic, are good signs for how our business will recover as businesses reopen and need our services. We're also working with our municipal customers to address increased residential weights per unit and helping them manage recycling challenges in areas where there have been processing disruptions. Turning to our financial results, for the first quarter, our business generated operating EBITDA of more than $1 billion. For the first two and a half months of the quarter, our operations were performing extremely well, putting us on track to exceed our first quarter goals. Of course, the whole world changed during the second half of March and we swiftly began to adapt our business and identify cost-saving opportunities. John and Davina will give more color on cost reductions, but I can assure you that we are maximizing our asset utilization and looking at all discretionary costs and capital spending. Maybe even more importantly, we're looking at this unprecedented event as an opportunity to permanently change our business processes, our customer service offering, our office work model, and application of digital business solutions, to name a few. WM has always been a very resilient business model, and we will make sure we come out of this pandemic stronger, more differentiated, and even more resilient than we were going in. Finally, it's been about one year since we announced our acquisition of Advanced Disposal. Despite the general business disruption caused by COVID-19, we continue to make progress and currently anticipate being in a position to receive final antitrust regulatory approval and proceed towards closing by the end of second quarter of 2020. We're looking forward to completing this transaction, integrating the ADS team and operations, and creating long-term value for our shareholders. In closing, despite the fact that solid waste is an essential service and many parts of the business remain recession resilient, we are suspending financial guidance we provided in February, given the uncertainty around the unprecedented impact of COVID-19. At this time, we cannot forecast with reasonable accuracy the duration of the COVID-19 disruptions or the pace of recovery, particularly for small businesses. There are just too many unknowns, and any guidance at this time would be an educated guess at best. Poor short-term visibility does not, however, alternate the very strong cash-generating ability of our business model. In past downturns, we've demonstrated the ability to flex spending, manage capital, and maintain solid pricing discipline, all in order to generate strong free cash flow and strong return to our shareholders. We expect to continue to do that in today's economic environment. And most notably, now more than ever, has been the right time to stand firmly behind our 45,000 team members and our small business partners to do our part to protect their futures. With that, I'll turn the call over to John to discuss our operational results for the quarter, as well as additional color on the impacts to our business from the pandemic.