Michael Hoffman: So in the K, one, when will it be recent? Two, will we get quarterly data for all of ‘22 and all of ‘23 and then three years of forecast so we can we build our models in this format?
Devina A. Rankin: So, the K will be released early today and we’re in good shape for that. So, thank you to the team. With regard to the quarterly data, you’ll get that over the course of the year. It’ll have the full-year data. The quarterly recast will come quarter-by-quarter.
Michael Hoffman: Okay. Thank you.
Operator: Thank you. One moment for questions. Our next question comes from Stephanie Moore with Jefferies. You may proceed.
Stephanie Moore: Hi, good morning. Thank you.
Devina A. Rankin: Good morning.
Stephanie Moore: So, just kind of just looking at the 2024 guidance assumption, it looks like you’re assuming RINs at about $3 which makes sense given where RINs are today, but digging into a little bit more, can you maybe talk about in terms of what contracts that you have already signed and kind of where you’re able to lock in those prices going into the year? I think you said a sustainability day that you were looking to have 70% to 90% locked in any given 12-month period. So, any update on where that stands for 2024 to get to that $3 RIN? Thank you.
Tara J. Hemmer: Sure. So we have about two-thirds of our off-take locked in for 2024. And when we think about what’s locked in, it is a mix of long-term contracts and also RINs that we purchased really sold on the forward side into 2024 which would have been at a higher rate than $3. So, on a blended basis, you sort of get a lower average there. And then the third that we would be selling in 2024 that’s what’s at the $3 RIN guide. The other thing I want to just mention is those longer term contracts that we have in place, there is a mix anywhere from five to 20 years, so we’re really trying to take an approach where we have different tenors that we’re locked in at.
Stephanie Moore: Got it. No, that’s very helpful. And then maybe sticking on the sustainability front, you talked about some incremental investments included in your updated outlook and you noticed that that involves two projects in Canada. Can you talk a little bit about the opportunity? I’m assuming that those are probably related to EPR changes in Canada. If that is the correct assumption, maybe just what how EPR might change the margin or growth opportunity compared to maybe your more traditional U.S. recycling business, so how are you thinking about those incremental opportunities? Thanks.
Tara J. Hemmer: The two Canadian projects are related to extended producer responsibility and I think this is a great example where we were able to really showcase our automation investments and how differentiated our assets are really taking the pro to some of the facilities that we have across the United States. And so, that’s a great example where we’re able to win more business based on those investments. Extended producer responsibility in Canada and the structure that we have there, it really is around us using those assets as manufacturing plants and really it’s a fee for service model. So, it’s a great example of how we can leverage this technology differentiation for more business in the future.
Stephanie Moore: Understood. Thank you so much.
Operator: Thank you. One moment for questions. Our next question comes from John Mazzoni with Wells Fargo. You may proceed.
John Mazzoni: Thanks for taking my question. Maybe just a quick one in terms of the sustainability EBITDA timing. Is this just really kind of a knock on impact of some of the 2023 project delays, I think we noticed change to run rate versus kind of in ‘26, any color would be appreciated? Thank you.
Devina A. Rankin: So there’s two key things that I would want everyone to bear in mind as you think about our trajectory. The first is in 2024, we’re going to have roughly 40 projects under construction at any given time. So, that really gives you a sense of how we’re building and we have a lot of momentum in the ramp. The second key piece is really exiting 2024, we’re going to be approaching roughly $300 million in run rate EBITDA which gives you a sense of where we’re headed on that ramp to the $800 million. So, what we’re really seeing in 2024 is a true build of momentum on reaching that $800 million target.
James C. Fish: And John, those supply chain constraints are not that different from what we’ve seen on the fleet side of our business either. The good news is that as you heard, John Morris, talk about it, we started to see that free up a bit and so Tara seeing the same thing on the RNG and recycling side, but we definitely had some supply chain constraints that contributed to this bit of a slowdown over 2022 in particular, but also the front half of 2023.
John Mazzoni: Great color. Thank you.
Operator: Thank you. One moment for questions. Our next question comes from Tobey Sommer with Truist Securities. You may proceed.
Tobey Sommer: Thanks. Wanted to get your sense for acquisition expectations. So, how are the favorable trends in your business, which is a pretty long list of price, cost, yield, new investment production, etcetera, different than those at the smaller players with whom you have a dialogue for acquisitions.
James C. Fish: So, look, we said that our acquisition pipeline was robust. I think what you’re seeing is that some of those, and I’m speaking just from this is somewhat anecdotal and speaking to some of those folks that we have acquired, is that, there’s kind of a multitude of challenges for them, some of which we face and some of which we don’t face. So, one that we might not face is a lack of a succession plan for some of these folks. Their kids have just decided they don’t want to run the business. They’d rather go take the money and live in Italy. And so, that’s not something we face fortunately, but they’re also having challenges with labor. We’re addressing that as you’ve heard today through automation and in some cases they are as well, in some cases they’re not able to do that.
So, there’s a number of different reasons why there’s a growing list of willing sellers. We’re going to take advantage of that. But at the same time, we’ve invested heavily in these organic growth projects, and we want to make sure that we have similar returns before we go invest heavily in tuck-ins.
Tobey Sommer: Good to hear. I’m glad you’re not going to go chase the [trust and sun] (ph). So, appreciate that. With respect to the fleet, after a full allotment last year, where are you in terms of being able to just renew the fleet at what might be considered a normal cadence? Do you still have some catch up to do?
James C. Fish: Yes. Tobey, we got about, we’ve delivered about 1,700 units this year, which was a little light of what we had planned for, but that would be really considered a full lot. And we probably have another 300 units on top of that to deliver. So, I would say that by the end of ‘24, we’re fully caught up. What I would tell you is, team has done a really good job of not compromising the quality of our fleet had shown up in our service and it’s really starting to show up in the back half of the year in terms of our operating performance and we see that continuing into ‘24, and certainly as we get the benefit of some additional vehicles.
Tobey Sommer: Thank you very much.
Operator: Thank you. One moment for questions. Our next question comes from Kevin Chiang with CIBC. You may proceed.
Kevin Chiang: Good morning. Thanks for taking my question. Maybe just a clarification on the updated sustainability investments and EBITDA profile as we look up to 2026, I think if I, if memory serves me correct, when you had the Sustainability Investor Day, I think you had about a 90% free cash flow conversion in 2026 from EBITDA into free cash flow. Is that still the rule of thumb we should be thinking about on the $800 million of EBITDA in 2026 in terms of the free cash flow potential from these investments?
Devina A. Rankin: We can specifically confirm that number for you. We didn’t refresh that.
Kevin Chiang: Okay.
Devina A. Rankin: But the key takeaway for us there, whether it’s 70% or 90%, and that’s kind of the zip code that I think we should be thinking about. The free cash flow conversion in these businesses is stronger because, the maintenance capital is lower. And so, it is right to think about that being a really strong fundamental contributing factor to the long-term yield of this business.
Kevin Chiang: That makes a ton of sense. And just on the, I guess on the two facilities in Canada related to EPR, are these in Ontario? And just as you think of, I guess, EPR throughout the country as multiple provinces look to implement this, just what that pipeline of opportunity looks like from an EPR perspective and investing in more cycling facilities, I guess, coast-to-coast in Canada?
Tara J. Hemmer: You’re exactly right. Those two are in Ontario and this is something that we’re actively tracking throughout Canada and then of course looking at where there is pending legislation in the United States as well. There’s obviously Colorado as an example, which is on the front and making sure that we’re well-positioned to respond to the PROs when they eventually implement.
Kevin Chiang: Excellent. Thanks for taking my questions.
Operator: Thank you. One moment for questions. Our next question comes from James Schumm with TD Cowen. You may proceed.
James Schumm: Hey, good morning. Can you help me understand the monetization of the D-3 RINs credits? Is there a meaningful difference in price if you internalize or use the RNG in your own fleet versus selling it as a transportation fuel to someone else? And I know you’ll reduce your fuel cost and emissions if you internalize the RNG, but just curious if there’s a monetization benefit as well?
Tara J. Hemmer: The way to think about it and what is really unique about WM, is because we have our own fleet of compressed natural gas vehicles. We’re in a very unique spot where we are able to close the loop. We produce renewable natural gas. We can allocate that renewable natural gas to our fleet to generate the RIN, so we don’t have to give up any of our RIN value. That’s probably the most significant advantage with WM as compared to others in the space. And that’s how we monetize and create RINs ourselves versus others having to really tie it to someone else’s fleet.
James Schumm: So Tara, just to clarify that, so when we see the D-3 RINs prices, I mean, I think some people have talked about, well, the actual monetization is a little bit lower than the price that I maybe see on the screen. Is that the case for you guys as well or no?
Tara J. Hemmer: No. I think —
James Schumm: Do you get that full value?
