Waste Management, Inc.

Ladies and gentlemen, thank you for standing by and welcome to the Waste Management Third Quarter 2020 Earnings Release Conference Call. At this time, all participants 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. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Ed Eggle, Director of Investor Relations. Thank you. Please go ahead, sir.

Thank you, Lindsay. Good morning, everyone, and thank you for joining us for our third 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 high-level financials and provide a strategic update. 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 8K this morning that includes the earnings press release and is available on our website at www.wm.com. The Form 8K, the press release, and the schedules to 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 forward-looking 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 in 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 Davina will discuss operating EBITDA, which is income from operations before depreciation and amortization. Any comparisons, unless otherwise stated, will be with the third quarter of 2019. Net income, EPS, operating EBITDA on margin, and SG&A expense results have been adjusted to enhance 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 recently closed 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 gap measures and additional information about our use of non-gap measures and non-gap 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 November 16th. 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 9177824. Time-sensitive information provided during today's call, which is occurring on November 2, 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 consent of Waste Management is prohibited. Now I'll turn the call over to Waste Management's President and CEO, Jim Fish.

Thanks, Ed, and thank you all for joining us. I'd like to open the call by welcoming the employees and customers of Advanced Disposal to the Waste Management family. We closed the acquisition last week and we're excited about the opportunity ahead to create value from this deal. We're also pleased with the concurrent close with GFL Environmental on the divestiture package. I'd like to give credit to Richard Burke and the Advanced Disposal team for the great job they did staying focused on operating their business safely and efficiently during the extended close period. The next phase of our journey, the hard work of combining these two great companies, has now begun. John will speak a bit more on this topic, but suffice it to say, we're very confident in the long-term value of the acquisition, and the integration is off to a great start. We're extremely pleased with our third quarter results, which were a testament both to our team's ability to optimize our business in the new environment, as well as the progress of the economic recovery in North America. We've consistently pointed to operating EBITDA as the best measure of the health of our business. And despite the challenging backdrop, we delivered third quarter operating EBITDA results in line with last year's record performance and expanded operating EBITDA margin by 70 basis points. It's been said many times that great companies are able to emerge from tough times stronger than they were going in. In that vein, WM has learned this year that we can permanently operate our business with a lower cost structure. Despite a 2.7% decline in our third quarter revenues, the team was able to improve operating expense as a percent of revenue by 110 basis points and hold SG&A expenses as a percent of revenue relatively flat. This is the second consecutive quarter where we've demonstrated this flexibility in a difficult operating environment. and we're committed to holding on to operating efficiencies and cost savings as our volumes turn positive again. In addition to proactively changing the cost structure of our business, we're taking steps that propel us forward as a stronger, more differentiated company in the eyes of our customers. As I discussed last quarter, our investments in customer service digitalization, or CSD, are unquestionably the right approach. and we've accelerated these investments to reap the benefits sooner. So far this year, we've made considerable progress on this effort that will fundamentally transform our business model by offering our customers greater choice in how to interact with us and by seamlessly connecting the front-end customer experience to our back-end processes, and we've started to see the benefits. Our online sales channel is our fastest-growing sales channel, and we've seen an increase in our conversion rates for customers signing up for new service when visiting our e-commerce site. We've also made progress in automating a variety of operational back office and customer communication processes, which are paving the way for efficiency gains, improved customer experience, and further cost reduction. To support our CSD journey, we modified our field sales structure to expand online and inside sales functions. while reducing and optimizing outside sales coverage. These adjustments are part of our long-term vision to position our team to engage with customers on the customer's terms, improving customer satisfaction and engagement. It also enables us to reduce our cost of new customer acquisition and improve sales performance at a more efficient cost. We're confident that these strategic sales coverage adjustments coupled with our digital growth strategy better support our customers as well as the long-term growth of the business. Recycling continues to show the improved results that we expected when we started to change the business model, providing stronger financial results in the third quarter. In addition to our new highly automated MRF in Chicago, we've opened a similar facility in Salt Lake City with another to open soon in Raleigh. Using advanced technology in our recycling facilities is the blueprint for improving our cost structure, producing a higher quality material, and being flexible to changing recycling in market demands. Recycling is only the beginning of our commitment to sustainability. Last month, we published our 2020 sustainability report, Building Value Together. The report describes how we are addressing challenges and opportunities related to ESG and doing so in close partnership with our customers, suppliers, and communities. Through the crisis of 2020, we've remained steadfast in our commitments to protecting the environment and contributing to a circular economy. WM is a leading voice in the call to create domestic in-market demand for recycled content. One of the ways we're walking the talk is our collaboration with Cascade Cart Solutions to develop and purchase residential carts made with post-consumer resin. Another way is our investment in continuous materials, a company which develops building materials from hard to recycle paper and plastics. Increasing the value of the material that we process increases the economic benefits from recycling, which drives volumes and benefits the environment. The shift in our operating model along with benefits from the acquisition of ADS and our progress in transforming the recycling business position us for a strong finish to the year with positive momentum heading into 2021. We've performed exceptionally well despite the difficulties presented with COVID-19. Our results in the first nine months of the year give us confidence. We can generate free cash flow in excess of $2 billion, exclusive of ADS transaction costs. As we also achieved the highest operating EBITDA margin in the company's history in the third quarter, we're confident we can exceed the high end of our guidance for full-year operating EBITDA margin of 28% to 28.5%. After all we've been through this year, what's most impressive is we expect to finish 2020 within a stone's throw of our all-time high 2019 operating EBITDA. For that, I'm eternally grateful to our teammates who have made it happen this year in the face of difficult circumstances. I'll now turn the call over to John to discuss our operational results for the quarter.