Waste Management, Inc.

Good day and thank you for standing by and welcome to the Waste Management Inc. At this time, all participants are in the listen-only mode. After the speaker 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 our speaker today, Ed Eggle, Director of Investor Relations. Please go ahead.

Thank you, Faith. Good morning, everyone, and thank you for joining us for our fourth quarter 2021 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 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, as updated by our subsequent Form 10-Q filings. Drum will discuss our results in the areas of yield and volume, which are less otherwise stated or 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 fourth quarter of 2020. Net income, EPS, operating EBITDA and margin, operating expenses, and SD&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 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 February 16th. 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 4865157. Unsensitive information provided during today's call, which is occurring on February 2nd, 2022, 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.

All right, thanks, Ed, and thank you all for joining us. 2021 was another very successful year at WM. Our strong operational and financial performance continued throughout 2021, delivering full year results that achieved or exceeded our financial guidance, which we increased from our original expectations twice during the year. We also successfully integrated the advanced disposal operations, generating synergies that have already exceeded our initial expectations with further synergies to come. During 2021, We focused on driving disciplined organic revenue growth, advancing technology investments focused on customer retention and growth, and cultivating our people first culture. Execution on these priorities came together to produce record growth in full year adjusted operating EBITDA and cash from operations. It can't be overstated how impressive it is that we generated more than $5 billion of operating EBITDA in a year like 2021. This robust operating EBITDA translated into all-time high cash from operations of over $4 billion, which allowed us to return a record of $2.3 billion to our shareholders. Contributing to our operating EBITDA was our pricing, where we finished 2021 on a very strong note as we made steady progress on covering the cost inflation in our business with excellent core price results across all lines of business. John will provide more details here But we had record core price in both our landfill and residential businesses, two areas we've been particularly focused on over the last couple of years. Strong core price translated into the best collection and disposal yield that we've seen in more than a decade. Another great story about our pricing efforts is that we're still seeing strong volume growth and improvements in churn. 2021 churn of 8.4% is an all-time low. As 2022 kicks off, we're fully focused on recovering inflationary cost increases through our pricing programs and through the aggressive management of our cost structure. Our revenue management team is hard at work executing on 2022 pricing plans so that we can recover the inflationary cost pressures in our business and deliver another successful year. In fact, we've recently seen several large customers who have historically been very price sensitive or new at significant increases. On the cost front, a big part of that management of our cost structure will be to materially improve our labor efficiency through the application of the technology investments we made over the last 18 months. Our expectation is to attrit between 5 and 7,000 positions over the next four years without replacement as these positions have become difficult to source and we expect that will continue to be the case. At the same time, we continue to focus on providing the best workplace for our employees and leveraging our asset network for growth. Regarding our 2022 financial outlook, Davina will provide more details, but at a high level, we expect to deliver total company revenue growth of approximately 6%, driving operating EBITDA growth of approximately 7% in 2022. It's fair to point out that both our revenue and our operating EBITDA guidance are at or above the high end of the ranges we targeted for the long term at our investor day in 2019. We expect margin expansion in the second half of the year with full year operating EBITDA margins expected to be flat to up 40 basis points compared to 2021. This sets us up for another year of robust cash generation. The extraordinary cash generation of our business positions us to plan a 13% increase in our 2022 dividend while at the same time making substantial increased investments in high-return renewable energy and recycling projects. Tara Hammer was appointed as our Chief Sustainability Officer last summer, and she's charting a path to an aggressive long-term growth for our sustainability businesses. In light of our very strong cash generation, we plan to invest approximately $275 million in 2022 to expand our network of renewable natural gas plants with incremental investments in 2023 through 2025 totaling approximately $550 million. We expect to build 17 RNG plants over the next four years, which would grow our RNG generation by six times. With conservative assumptions, these projects are expected to generate operating, annual operating EBITDA, run rate operating EBITDA of more than $400 million by 2026. And at today's higher prices, that operating EBITDA more than doubles. In the recycling business, we expect to invest $275 million in 2022 in MERV technology with incremental investments in 2023 through 2025, totaling approximately $525 million. These investments accelerate our automation of recycling process, processing to reduce costs and improve product quality, as well as expand our single stream recycling footprint. Together, these projects are expected to generate annual run rate incremental operating EBITDA of approximately $180 million by 2026, assuming $125 per ton blended commodity price. These growth projects further WM's sustainability leadership by increasing the renewable energy generated from our landfill network, expanding single stream recycling capacity, and automating recycling processing to reduce costs and improve product quality. They also are expected to generate excellent returns that are superior to those of solid waste acquisitions. In closing, we delivered a fantastic year in 2021, overcoming the challenges the year presented. As we look ahead to 2022, we remain committed to advancing technology investments that differentiate us, automating our processes to reduce our cost to serve and leveraging our sustainability platform for growth. Our success would not have been possible without the best employees in the business And I want to thank all 50,000 of our team members for their contributions. I'll now turn the call over to John to discuss in more detail our operational results.