Waste Management, Inc.

Good afternoon. Thank you for standing by. Welcome to the Waste Management, Inc. Second Quarter 2021 Earnings 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. Please be advised today's conference is being recorded. If you should require operator assistance, just press star 0. Now, I would like to turn the call over to Director of Investor Relations, Ed Eggle. Please go ahead, sir.

Thank you, Holly. Good morning, everyone, and thank you for joining us for our second quarter 2021 earnings conference call. With me this morning are Jim Fisch, 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'll 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 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 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. 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 second quarter of 2020. Net income, EPS, operating EBITDA 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. 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 about 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 August 11th. To hear a replay of the call over the Internet, access the Waste Manager website at www.wm.com. To hear a telephonic replay of the call, dial 855-859-2056 and enter reservation code 6965743. Time-sensitive information provided during today's call, which is occurring on July 27, 2021, 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 Fish.

Thanks, Ed, and thank you all for joining us. Last quarter, we were feeling very good about the prospects for the year when we announced our Q1 results and raised our four-year guidance. Now, more than halfway through the year, all parts of our business have performed well above those revised expectations. In the second quarter, we achieved operating EBITDA of $1.31 billion, which we converted into strong cash from operations of more than $1 billion. First and foremost, this superb performance is a result of our outstanding core business model. In addition, this performance was driven by our contentiousness offering our employees a great place to work and driving sustainability through our business model. Our very strong results, in addition to our confidence in the transformative changes we're making to our business model, led us to increase our full-year guidance once again. The size of our revisions in each of these first two years In the back half of the year, we expect continued strong volume, pricing that offsets inflationary pressures, and record results from our commodity-based businesses. With all of this powerful momentum, we now expect to generate 2021 adjusted operating EBITDA of at least $5 billion with free cash flow of at least $2.5 billion, all while continuing to make growth investments in our sustainable solutions and technology platforms. At the core of these strong results is our recycling business, which is central to our sustainability and business strategy. Our efforts to improve the recycling business, combined with robust demand for recycled commodities, led to second quarter delivering the recycling business's best ever financial performance by a considerable margin. We've made substantial progress in de-risking our recycling business by shifting to a fee-for-service contract structure, which has lifted the floor for recycled returns and created an economically sustainable business model. We've also made significant technology investments to improve the cost structure and grow the business. At our automated facilities, labor costs were 35% lower in the second quarter compared to our other single-stream MRFs. These investments not only lower operating costs and improve plant efficiency, but also allow us to adjust our equipment to respond to evolving in-market demands. For example, We're now segregating out specific plastics that in the past were sold as a bundled lower-priced bale, reacting quickly as markets evolve for new recycled commodity types. The capability to efficiently sort these materials allows us to extract more value for these commodities as demand increases for recycled material. Overall, our investments in recycling technology are generating solid returns and we are accelerating our plans to roll out this new operating model across our MRF network. Sustainability has been a central part of our strategy for many years, so I want to take some time to highlight how we're advancing our sustainability journey. At the beginning of the month, Tara Hemmer transitioned into her new role as Senior Vice President and Chief Sustainability Officer, bringing together our sustainable solutions and ESG efforts under one umbrella. We believe this strong focus is critical to continuing to integrate environmental sustainability and social responsibility into a strategic business framework. Our supply chain goals, which include increasing our spending both with sustainable and diverse suppliers, are examples of how this focus is integrated in our day-to-day operations. Next month, we're hosting a supplier diversity initiative called Share the Green, which will give women-owned businesses the opportunity to become a supplier in the event. This three-day nationwide event will provide great opportunities for diverse businesses and help participating companies secure excellent suppliers. And finally, we continue to make real progress on our digital transformation to differentiate our customers' experience. In the past, I've mentioned our automated setup process that streamlines customers' orders and reduces our cost to serve. Through our advanced technologies, after an order is processed. This will save us several million dollars annually, improve setup accuracy, and increase customer satisfaction. This more accurate setup of customers also helps us to auto-route these customers, which increases operational efficiency and will optimize routes without manual processing. We are now connecting our advanced technologies to automatically insert 90% of our new commercial customers into existing routes. our speed to service. Our customer and digital teams continue to enhance the capabilities of our digital tools to provide a unique and engaging experience for our customers while at the same time connecting this front-end experience to our operational systems to allow for improved efficiency and lower costs. We expect that these investments in technology will continue to benefit us for many years to come. In conclusion, strong performance across all of our businesses collection and disposal, recycling, and renewable energy generated outstanding results so far this year. Our focus on discipline pricing and cost management helped to offset the inflationary cost pressures that we've seen. And we expect to continue this focus into the second half of the year to help us deliver on our newly revised outlook. I will now turn the call over to John to discuss our operational results for the quarter.