Waste Management Q2 2022 Earnings Call Transcript

Quartr
Provided by Quartr
July 26, 2022

There are 14 speakers on the call.

Operator

You for standing by, and welcome to the WM Second Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentations, there will be a question and answer session. At this time, I'd like to turn the call over to your host, Ed Egl, Senior Director of Investor Relations. Please go ahead.

Speaker 1

Thank you, Valerie. Good morning, everyone, and thank you for joining us for our Q2 2022 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 Devina 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, Gerard will cover an operating overview and Devina will cover the details of the financials.

Speaker 1

Before we get started, please note that we have filed a Form 8 ks this morning that includes the earnings press release and is available on our website at www.wm.com. The Form 8 ks, the press release and the schedules of the press release include important information. During the call, we will give 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 ks.

Speaker 1

John will discuss our results in the areas of yield and volume, which unless stated otherwise, are more specifically references to internal revenue growth or IRG from yield or volume. During the call, Jim, John and Devita will discuss operating EBITDA, which is income from operations before depreciation and amortization. Any comparisons, unless otherwise stated, will be with the Q2 of 2021. Net income, EPS, Operating EBITDA margin and operating and SG and A expense results have been adjusted to enhance comparability by excluding certain items that management believes do not reflect Fundamental business performance or results of operations. These adjusted measures, in addition to free cash flow, are non GAAP measures.

Speaker 1

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 This call is being recorded and will be available 24 hours a day beginning approximately 1 pm Eastern Time today. To hear a replay of the call, access to the WM website at www.investors. Wm.com. Content and information provided during today's call, which is occurring on July 27, 2022, may no longer be accurate at the time of a replay. Any redistribution, retransmission or rebroadcast of this call at any form without the express written consent of WM is prohibited.

Speaker 1

Now I'll turn the call over to WM's President CEO, Jeff Fish.

Speaker 2

Thanks, Ned, and thank you all for joining us. The strength and resiliency of our business was clearly on display in the Q2 as we built on our Q1 momentum to deliver results that exceeded our expectations. Our teams remain focused on recovering inflationary cost pressures with our strongest ever core price and yield results. Our pricing results combined with volume growth and sustainability contributions drove quarterly revenue above $5,000,000,000 for the first time. Our robust revenue growth translated into operating into adjusted operating EBITDA growth of 7.8%, Which is above the upper end of our long term growth profile of 5% to 7%.

Speaker 2

Cash from operations remained strong in the 2nd quarter, positioning us To return more than $500,000,000 of cash to our shareholders to bring the year to date total of shareholder returns to more than $1,000,000,000 You'll hear more details from Devina, but our strong start to the year gives us confidence to increase our 2022 outlook for revenue, Adjusted operating EBITDA and free cash flow. In the Q2, we continue to see strong volumes, An encouraging sign for economic activity across the areas we serve. Currently, our key business indicators for continued positive economic activity. That said, WM is well positioned in any economic environment. Our resilient business model is underpinned by our diverse customer base and essential nature The essential nature of our service and the annuity line characteristics of about 75% of our revenue.

Speaker 2

We continue to advance our long term strategic priorities of providing the best workplace for our employees, investing in technology and automation That differentiates WM and permanently reduces our cost to serve and leveraging our sustainability platform for growth. Investing in making WMA a great place to build a career, while also reducing our labor dependencies through attrition And automation together position us to navigate this tight labor market. In our sustainability growth journey, we achieved Two exciting milestones in the 2nd quarter. We opened our 5th WM owned and operated RNG plant in Oklahoma, The first of the 17 new RNG facilities we announced that are expected to add 21,000,000 MMBtu of RNG to our renewable energy We expect to complete construction on the next RNG facility by the end of the year. On the recycling front, we brought online our Houston Murph, the 6th redesigned recycling facility utilizing advanced technology To reduce labor and improve product quality.

Speaker 2

Our advanced technology MRFs are yielding tangible benefits, Resulting in about a 30% labor cost savings per ton compared to the rest of the single stream network.

Speaker 1

In the second half of

Speaker 2

the year, we expect to open 2 additional advanced technology recycling facilities and enter a new recycling market, keeping us on track to meet our recycling investment goals. I want to take a moment to discuss our capital allocation priorities, particularly related to M and A. Our strong operating EBITDA growth has allowed us to absorb the $4,600,000,000 acquisition of Advanced Disposal and quickly return our balance sheet We consider a typical M and A year to be between $100,000,000 $200,000,000 of acquisitions. This year, we have the strongest pipeline we've had in a long time and expect to close between $300,000,000 $400,000,000 of acquisitions. We will remain disciplined in our approach to traditional solid waste tuck in and recycling acquisitions To maintain our strong financial position and generate industry leading returns, our cash generation plus our strong balance sheet Afford us the ability to allocate capital to our priorities, investing in organic growth and sustainability initiatives, Predictably growing our dividend, completing accretive acquisitions and returning cash through share repurchases.

Speaker 2

In conclusion, I want to thank the entire WO team for their hard work and dedication. I'm excited about the remainder of 2022 as we continue to deliver our commitments To our team members, customers, communities and shareholders, I'll now turn the call over to John to discuss our operational results for the quarter. Thanks, Jim, and good morning, everyone. Once again, we achieved exceptional organic revenue growth in the 2nd quarter, led by collection and disposal yield of 6.2%. Our pricing accelerated sequentially as we continue to address persistent inflationary cost pressures throughout the business.

Speaker 2

2nd quarter core price increased 20 basis points from the Q1 to a record 7.5%. Core price was strong across every line of business and we had Standout performance of 10.6% in our Industrial business and 9.4% in our Commercial business. Customer receptivity to our pricing remains strong as 2nd quarter churn adjusted for the intentional loss of an unprofitable national account contract was 9%. We remain confident that our pricing strategies are appropriately responsive to rising costs while prioritizing customer lifetime value. Our teams continue to be focused on disciplined pricing in the second half of the year and we now expect 2022 core price up more than 7% And collection and disposal yield approaching 6%.

Speaker 2

Key indicators in our business continued to signal healthy Economic activity in the quarter. 2nd quarter collection and disposal volume grew 2.3% with commercial volumes growing 1.6% And special waste volumes up more than 19%. Additionally, new business exceeded lost business and service increases continue to outpace service decreases by a wide margin. 2nd half volumes are expected to remain strong and for the full year we expect collection and disposal volume growth of about 2.5%. Our teams remain focused on controlling operating costs.

Speaker 2

Adjusted operating expenses were 62.4% of revenue in the 2nd quarter, 130 basis point increase from the Q2 of 2021. The year over year increase in operating expenses as a percentage of revenue was largely driven by Fuel and commodity price impacts. 70 basis points from higher fuel costs, 30 basis points related to the alternative fuel tax credits received in 2021 That have not yet been renewed for 2022 and 30 basis points from the impact of higher commodity prices on our recycling brokerage business. In the Q2, we again saw high single digit inflation in our costs and we are managing through this with both pricing and cost controls. Our core price is recovering our cost of inflation in each line of business except residential where the impacts of higher labor costs are most pronounced.

Speaker 2

In that line of business, our conversion of approximately 2,000 railroad routes to automated side loaders will both reduce labor and significantly improve efficiency. This is one of the ways we are investing in technology to reduce our dependency on certain high turnover positions. Additionally, early results from our pilot programs to Fully optimize our roll off routes, we're showing efficiency gains in the range of high single to low double digit percentage increases. As we move into the second half of the year, we expect inflationary cost pressures to ease on a year over year basis given the proactive steps we took to raise frontline wages in the second half 2021. As Jim mentioned, we're excited about growth opportunities in our recycling and renewable energy businesses, And both businesses continue to deliver strong results.

Speaker 2

Together, recycling and renewable energy contributed $19,000,000 of operating EBITDA growth in the 2nd quarter. The recycling business is on track to deliver results on par or modestly higher than the record earnings we achieved in 2021. Our blended average recycling stream commodity price was $131 per ton in the second quarter and we continue to expect a full year average of $125 per ton. In the Renewable Energy business, better pricing for renewable natural gas, electricity and environmental credits is driving our full year outlook for this business higher And our original guidance by $35,000,000 to $45,000,000 Overall, our 2nd quarter results exceeded our expectations as we demonstrated our ability on our disciplined pricing programs and manage costs. I'm extremely proud of how the entire WM team work together to provide I'll now turn the call over to Devina to discuss our financial results in further detail.

Speaker 3

Thanks, John, and good morning. The strong operating and financial results of the Q2 confirmed a number of important indicators we saw emerge in Q1, Positioning us to increase our full year financial outlook. I'll cover our updated guidance in a moment, but want to give a little more color around our 2nd quarter and year to State financials first. As John discussed, our results have been driven by robust organic growth, led by our disciplined pricing focus as well as diligent cost management. Proactive management of our SG and A has been an important element of those cost management efforts.

Speaker 3

In the Q2, adjusted SG and A was 9.4 percent of revenue, a 20 basis point improvement over the same period in 2021. We accomplished this result in spite of an increase in incentive compensation due to our focus on controlling discretionary SG and A spending and leveraging technology investments to reduce the cost of our sales and back office functions. We are on track to deliver SG G and A as a percentage of revenue of about 9.6% for the full year. Operating EBITDA increased more than $100,000,000 in the 2nd quarter, driven by an increase in the operating EBITDA of our collection and disposal business of $107,000,000 Operating EBITDA margin in the quarter was 28.1%, a 50 basis point improvement from the Q1 of 2022. We are confident in our ability to achieve our full year margin outlook, which is a particularly strong result given the dilutive impacts from rising fuel costs, which we now estimate could be about 60 basis points for the year.

Speaker 3

Year to date, cash flow from operations is up $142,000,000 We're about 6.5% from the prior year, which has been driven by operating EBITDA growth of over 9%. Cash flow from operations growth was slightly muted relative to operating EBITDA growth due to higher cash taxes, which will continue throughout the year and working capital pressure that we expect to moderate over the remainder of the year. Through the first half of the year, we've invested $856,000,000 in capital to support the business, and we An additional $112,000,000 to support the strategic growth of our recycling and renewable energy businesses. Our year to date free cash flow, which includes the impact of capital outlays to support our sustainability growth investments is $1,350,000,000 putting us on pace to exceed the upper end of our initial 2022 guidance of $2,050,000,000 to $2,150,000,000 While the pace of capital spending has been slower than expected in the first half of twenty twenty two, we currently expect truck deliveries, landfill construction And sustainability capital projects to ramp in the second half of the year. We're encouraged to see supply chain constraints in certain asset Categories begin to show promising signs of improvement, so we are proactively managing the business in anticipation of the longer delivery schedules We've experienced over the last year.

Speaker 3

We will revisit capital and free cash flow guidance in more detail next quarter. As Jim discussed, we are well positioned to allocate free cash flow among all our capital allocation priorities. In addition to increased acquisition expectations for the year, we now expect to allocate our full $1,500,000,000 authorization to share repurchases. Turning now to our updated 2022 guidance. We expect revenue growth of approximately 10% And adjusted operating EBITDA in the range of $5,500,000,000 to $5,600,000,000 The $175,000,000 increase And operating EBITDA guidance is driven by more than $325,000,000 from increased price and volume performance and $40,000,000 from better performance in the Renewable Energy business.

Speaker 3

Those things are partially offset by approximately $190,000,000 Higher costs, which are driven by a combination of inflation pressure and incentive compensation. Note that this outlook assumes fuel prices remain at levels for the second half of the year equating to a 60 basis point drag to full year operating EBITDA margin. Even so, we expect to deliver margin of 28.1% at the midpoint of our guidance. We remain optimistic that the alternative fuel tax Credits will be approved in 2022 and continue to include the approximately $55,000,000 benefit We would expect to receive in our outlook. In closing, our excellent first half performance sets us up to deliver another year of Strong financial growth in 2022.

Speaker 3

We can't thank the WM team enough for all their contributions to our success. With that Valerie, let's open the line for questions.

Operator

Thank you. One moment please. Our first question comes from Tyler Brown of Raymond James. Your line is open.

Speaker 4

Good morning.

Speaker 5

Good morning, Tom. Hey,

Speaker 4

Devina. You guys threw out quite a bit in the prepared remarks, but I just want

Speaker 2

to make sure I have

Speaker 4

So on the down 120 basis point on the margin walk, it was 70 basis points from fuel, 30 from the CNG credit and 30 Commodities, is that right?

Speaker 3

That's right. And that's looking at the operating expense line. So we would also For the EBITDA margin, and I think it's important in thinking about EBITDA margin in 2 pieces. So one is, How did we perform relative to the expectations that we laid out at the beginning of the year? And what we can say there is that we're extremely pleased.

Speaker 3

And Really, our outperformance relative to expectations is in 2 places, and that's our traditional solid waste business That outperformed expectations by about 40 basis points and the Renewal Energy business that outperformed expectations by 20 basis points. As we've mentioned, we've had a couple of headwinds relative to our initial expectations and those headwinds are fuel And the alternative fuel tax credits as well as incentive compensation. But when we put all of that together and think about our outlook for the full year And our performance in the first half, particularly relative to our original guidance, we can say that we're 60 basis points ahead of expectations on base performance and that's a really strong outlook. When we look at Q2 specifically, The walk forward between the 29.3% that we achieved in Q2 of 2021, which I'll remind everyone is the best Quarterly performance that we've had in our history from a margin perspective to what we delivered at 28.1% Today, for Q2, really fuel is the story there in terms of that walk forward. So what you saw And that 120 basis points is 80 basis points led by fuel.

Speaker 3

And that 80 basis points is 50 basis points from Higher fuel costs, 30 basis points from the alternative fuel tax credit. Recycling was 40 basis points negative. That was in line with expectations, Jim's 30 basis points of that is from the brokerage business that we talk about where it's effectively passed through revenue. So higher commodity Prices just translate into pretty much a dollar for dollar increase in cost. And then the other piece of that was Higher incentive compensation costs at 30 basis points.

Speaker 3

So really happy with the strong performance of the solid waste business. And I think that's The highlight when you look at the margins for the business in the quarter.

Speaker 2

That's why she's the CFO, Tom.

Speaker 3

Yes. I was about

Speaker 4

to say that was extremely helpful, very detailed. So real quickly, not to focus too much on the margins, but it does feel like you're looking for a margin uplift in the back half, I think somewhere circa, call it, 50 basis points. But I just want to kind of think about it conceptually. So is it that the pricing contribution will kind of hang around the same place, But your unit cost inflation kind of eases because I think John talked about it, you pulled some frontline wages, I believe Ford in the back half of 'twenty one. Is that kind of how that will work?

Speaker 2

Yes, I think that's right, Tyler. I mean, listen, We got out front of the labor issue kind of Q2, Q3 last year. So we feel like while we're still seeing labor inflation, it's not going to be At the same rate. There's other obviously inflationary pressures, but I think you got it right.

Speaker 4

Okay, great. And just my last one, John, just real quick. Can you remind us what percent of your revenue is, call it, temporary roll off in C and D landfill volumes? Just I'm getting some questions about housing, just kind of your exposure there.

Speaker 2

Yes. We're not really exposed too much there, Tyler. The temp C and D business is low single digits.

Speaker 4

Okay, perfect. Thank you so much.

Operator

Thank you. Thanks Tyler. Our next question comes from Jerry Revich Of Goldman Sachs, your line is open.

Speaker 6

Yes. Hi. Good morning, everyone. Nice quarter. I'm wondering if we could trouble you just for an update on how pricing is tracking now that your Landfill gas facilities are coming online.

Speaker 6

Jim, how are you feeling about the pricing point relative to the mid-20s that you underwrote And is the offtake market developing? Thanks.

Speaker 2

So I thought you were going to go down the solid waste pricing path. But on RNG, Look, I think our expectation here is that, we built in $2.80 Jerry for the back half of the year. We think That's pretty comfortable. As you know, based on our discussions from where we're with you that the business Was pro form a at much lower numbers and even at those lower numbers, dollars 2 Per RIN and 250 in natural gas, even at those lower numbers, this is an outstanding business in terms of the returns. But specifically for the back half of twenty twenty two, our expectation is that we'll see $2.80 In RIN pricing, and

Speaker 1

we feel comfortable with that number.

Speaker 6

And Jim, in terms of the offtake market, is that developing? What's Your level of imbalance for folks that are looking to lock in long term agreements and can you comment on how those conversations are going?

Speaker 2

Yes, Jerry. I would tell you that we're obviously the RIN market is what it is and it's a part of our portfolio, but we have Sorry, as we commented, I think last quarter or the quarter before, started to do some direct off takes for renewable natural gas and we're seeing good momentum in some of those contracted rates.

Speaker 6

Okay, super. And Jim, since you want to talk about solid waste pricing, can we talk about that? So big CPI Tailwind into next year, obviously, positive revision to pricing over the course of this year. As you look at the Book of business today, what's your best sense for how pricing might look in 2023? It feels like just with CPI pricing rolling and timing of C and I increases, you probably have 5 points of core price already in your back pocket entering 23, but I'm wondering if you could Comment on that?

Speaker 2

Well, you're absolutely right, Terry, about the tailwind on those businesses that are driven by An index type increase. The 12 month lag that we've talked a lot about Really starts to help us most significantly in the Q1 of next year. So if we believe that CPI has gotten pretty close to the top here at 9.1%. Then we would See pricing, let's just assume for the sake of discussion that inflation starts to taper back down. I think you'd see pricing And those open market businesses follow that down, but not exactly.

Speaker 2

I think we've kind of talked about it Compared to banks, for example, where their spreads are better at lower rates. And I think that's what you would See with our pricing is that if inflation starts to really taper back down that you'd see a bigger percentage of our price go to margin improvement, Not just cost recovery. Right now, we're kind of in a street fight trying to cover cost, up at 9.1% CPI. And then with respect to your initial question, yes, when we get to really the first half of twenty twenty three And recall that what we said about those index driven price increases is that about 70% of that Takes place in the first half of every year and 30% takes place in the second half of the year. So we will see some tailwind In the second half of twenty twenty two from CPI, but it's just not as pronounced because only 30% of the revenue is getting it.

Speaker 2

When we get to the first half of twenty twenty three is when we get the real tailwind in resident and it's primarily residential Because also that's the line of business that is most tied to an index.

Speaker 6

Super. I appreciate the discussion. Thank you.

Operator

Thank you. Our next question comes from Michael Hoffman of Stifel. Your line is open.

Speaker 7

Jim, I'd like to follow-up on the price conversation because I think this is one of the most critical issues the industry has going for it. So tackling what you just said and summarizing it, you're about sixty-forty open market versus index and I get the weighting First half, second half, but if CPI goes to 3, you're still going to get a good spread to it, call it 100 basis points, 150 basis points in your open market. And then you're going to have your index at an 8 something, maybe closer to 9. And just the algebra formula there is I'm at greater price in 2023 than I am in 2022 before I factor in churn. That's the math, right?

Speaker 2

I think you're spot on, Michael. I mean, look, we're not crazy about 9.1% inflation. And as I said, we're doing everything we can with price Doing a good job with it, but to cover our cost, if inflation comes back down to a more reasonable number, let's call it 3% over the next Kind of 2 to 3 quarters that I think we have a greater percentage of our price that actually goes to margin improvements And not just focused on cost recovery, which is kind of where we are today with the open market pricing.

Speaker 1

Right. And Thanks for that, Matt. I was just

Speaker 2

going to say, Michael, I think the one Aviat to that is what we're specifically doing in residential and you can see that we continue to make progress on the core price side and the yield side and We're still being pretty deliberate about what volume we're going to keep and what volume we're not going to keep. That would be the one caveat to what Jim commented on.

Speaker 7

Yes. And I get that and I keep trying to convince the market they're supposed to pay attention to price not volume because at the end of the day you'll have better quality business. The other part of the price question that keeps coming up and we try to help the market understand Is how sticky unit prices are? So the rate of change in open market might go from a 7 core to a 5 core, But the underlying unit prices are high very, very sticky price per yard, price per ton, price per pull. Can Can we help everybody appreciate the significance of that as well?

Speaker 2

Yes. We consider our business to be very price In Elastic. And the reason is that it's such a small percentage of the customer's overall cost structure. I mean, we've estimated it It differs a little bit whether you're a residential customer versus a business customer, but it's probably 0.5 percent Of a small businesses overall spend. And then when you add to that, what we're doing to truly differentiate ourselves, those two things Cause pricing to be pretty darn sticky for us.

Speaker 2

So you're right, it is we tend to hold on to more of it than maybe other businesses might.

Speaker 7

Right. And my point being is, if all of this unwinds from an inflationary standpoint or there's a recession, you don't walk back unit prices. You hold on to the unit price Plus, I've got the favorable trend of higher price versus underlying internal cost inflation in 2023. The power of that's pretty compelling.

Speaker 2

Yes. No, that's right. I mean, the unit price stays where it is. And then it's just about the percentage, which is yield or core price. Those are percentage growth figures and we think that the percentage growth figure as I've said does kind of taper down as inflation comes down, But the spread improves a bit.

Speaker 2

So we have a little bit more that goes towards margin improvements at 3% CPI than we do at 9.1% CPR.

Speaker 7

All right. The RIN recycling upside of $35,000,000 to $45,000,000 I'm assuming that's mostly all weighted in the first half because The RIN is coming down, recycling has come down sequentially. And so the benefit of that's already been captured.

Speaker 3

So I'll take that in 2 pieces, Michael. On the recycling side of the business, we were better in the first half about $28,000,000 We expect actually to give some of that up in the second half of the year. So we expect about $20,000,000 to $25,000,000 of Earnings pressure in the second half just because of where commodity prices were in the second half of twenty twenty one relative to what we Expect them to be in the second half of twenty twenty two. On the renewable energy side, we have captured $27,000,000 in the first half Of 2021 or 2022, and we expect another $10,000,000 to $20,000,000 of incremental earnings in the back half. So when you net those 2, We expect to be down in the call it $10,000,000 to $15,000,000 range.

Speaker 7

Okay. That's very helpful. And then, Devina, on the guide at the beginning of the year, You framed it as negative 100 basis points of headwind first half, plus 100 to 140 second half, sort of 0 to 40 up. You were actually pretty close to the negative 100, a little less actually, but you're now telling us it's less than positive 100, 140 in the second That's if I'm revising part of the messaging, that's the other part of it?

Speaker 3

That's right. But what I would say is the Plus 100 to plus 140 now

Speaker 7

Jing, that's the other part of it?

Speaker 3

That's right. But what I would say is the Plus 100 to plus 140 now looks more like, call it, plus 80 to plus 120. And when you consider the impact of At 60 basis points, that really does speak to the strength of the underlying fundamentals of solid waste and the incremental Benefit as the Renewable Energy business relative to our initial expectations.

Speaker 7

Fair enough. And just to be clear, that 60 basis points is just a pass through math. It's not a real cost impact. It's you offset the cost increase with the surcharge, it's just the pass through math.

Speaker 3

Yes, that's right. From an earnings perspective, fuel really should be a zero sum game for us. What we see on the fuel surcharge side of revenue growth, what we had in Q1 For Q2, I'm sorry, was $129,000,000 We expect similar levels, maybe a moderate decrease in the second half of The year on a quarter by quarter basis, but that effectively is a dollar for dollar offset of higher operating costs, Both for direct fuel and or indirect costs from subcontractor costs and other transfer elements of the business.

Speaker 7

Okay, great. Thanks for taking the questions.

Operator

Thank you. Thank you. Our next question comes from Hamzah Mazari of Jefferies. Your line is open.

Speaker 8

Thank you. My first question is just maybe you could frame for us how this business You think we'll perform in a new recession. I know the business is pretty resilient. I know most companies are not Seeing a downturn either yet, but just the reason I asked that question is the sector is pretty different from 2009 when volumes fell 10% And took a lot longer to recover. And then most investors kind of have the COVID year in front of them where your Internal revenue growth, I guess, was negative 3%.

Speaker 8

That was more of a shock to the system. But just frame for us how your business is different. We're clearly seeing pricing, how the sector is more disciplined. Just frame for us your downturn playbook and just resiliency of this business. I know it also lags going into a downturn.

Speaker 2

Thanks, Thomas. So you really kind of talked about it Primarily volume, right, but there's a couple of different components to your question here. I'll tell you what gives us Cause for optimism here. We knew that 99% of the focus on this call is going to be about forward looking statements. So a couple of things.

Speaker 2

First of all, I mentioned that on the price side, to Michael's question, we have a very priced in Elastic, inelastic customer base, that's a real positive in terms of the stickiness of price And price is one of the big three. If I think of the big three being price, volume and cost control, we feel really good about price. If we think about volume a little bit and so just maybe a little bit of inside baseball here, we just had our 16 Area Vice Presidents on for their quarterly reviews And almost to a person, they're feeling really optimistic about their own individual areas. And when we look at our July numbers, in terms of volume, they look pretty good. I mean, they look basically Like we saw in June, you have to kind of consider that we had one less work day, 4th July this year was on Monday last year was on Sunday.

Speaker 2

So there's a little bit of we have to consider that. And we also are on the commercial side considering things like We intentionally shed a big national account that affected us by almost a percentage point. But if we factor those one time things out, Volume still looks pretty good and the most forward looking component of our volume is special waste. It was up 19% for Q2, but as we look out towards what the pipeline is telling us in for the remainder of the year, it still looks really good. Our volume In the 1st 3 weeks of July looked good in that special WayStream, so that's 2 of the big three there.

Speaker 2

And I would also tell you Hamzah, So your question about why we're different from other industries, I don't know that we're different from other industries necessarily, but our company, we do believe that we're starting to take some shares. It's a tough operating market, a really tough operating market for a lot of companies. John talked a bit about this labor shortage and I I think that's a short term trend. That is a long term trend. That's why we've talked about kind of the third of the big three, which is cost control And taking advantage of the attrition in our business, the cost categories that we're looking at Not backfilling for have some of them have 50% turnover.

Speaker 2

So why go through that hamster wheel every single day? Why not use technology to let some of those jobs that trip away and actually use that to our benefit? And there are most other companies out there in our space just don't have the technology or the wherewithal. So some of this that ultimately Makes us look better even in a recessionary environment is that we feel good about taking share in a tough operating climate.

Speaker 8

Got it. Very helpful. And just you had flagged An above normal M and A year, I know it's still sort of $300,000,000 $400,000,000 figure, but just maybe frame for us What's driving that? How long do you think an above normal M and A environment could last and any change in valuations you're seeing in the private market?

Speaker 2

Yes. So I just talked about the fact that it is a bit of a tough operating environment out there for a lot of companies. So what we don't want to do, and we've said this on several of our previous calls, we don't want to bail somebody out of a problem. I mean, we're still going to be conservative when it comes to valuations. But we think there's some really good companies out there that are not asking for Ridiculous prices, purchase prices and those are attracted to us and we see enough of those to say That's in the solid waste space and in the recycling space, we feel more like a $300,000,000 to $400,000,000 year versus more of our 100 to 200 is appropriate.

Speaker 8

Got it. Just a clarification question, I'll turn it over just for Devina. Yes. I think you had flagged $129,000,000 sort of out of the $153,000,000 that's fueled surcharge recovery in Q2. Just comparing that number, did you mention sort of how much fuel increased for you when we're looking at that $129,000,000 number?

Speaker 8

What did your cost increase for fuel, just comparing the 129,000,000? Was it over $100,000,000 or less than 100,000,000 Just any sense there. Thank you.

Speaker 3

It was effectively equal.

Speaker 5

So it's

Speaker 3

a combination of direct fuel and indirect. So the indirect will show up in lines like the subcontractor category. So you can think of it effectively like a dollar for dollar offset.

Speaker 8

Got it. Thank you.

Operator

Thank you. Our next question comes from Sean Eastman KeyBanc Capital Markets. Your line

Speaker 2

is open.

Speaker 9

I just wanted to come To inflation, last quarter you guys quoted, I think, around 9%. Wondering what that was in the 2nd quarter? And just this dynamic around comping the heavy wage increases last year, it's interesting how we think about how that Part of the inflation algorithm trends into the second half, but what else Should we be aware of in terms of what's happening under the hood in terms of inflation? I mean, outside of wages, are things still ramping, Cooling off, any color on that element would be helpful.

Speaker 2

Yes, Sean, I think the commentary on labor, we got out Last year, we see, while it's not going all the way down, it's going to moderate in the back half of the year because of the intentional steps we took last year. Divina touched on it, but we're still seeing inflationary pressure on third party on maintenance and repair. Subcontractors is one that That sticks out and clearly whether it's by rail or by truck, we're seeing the fuel impact there as well. That's a big chunk of the indirect Pressure we're seeing. And I think the commodity piece runs through that a little bit as well.

Speaker 2

When you think about 3rd party maintenance and repairs, there's a commodity element to that. So I would tell you that I feel like it's peaked, generally speaking, and I think the benefit we'll see is in terms of what we did with our labor, which I do think, Sean, that Devina touched on it in her remarks, but The supply chain itself, I mean, she mentioned that we're seeing a little bit of easing there and that is true, but that's pretty important to us, particularly as you think about The delivery of trucks to us, I mean, last year we didn't get the trucks that we ordered. And so far this year, we have not gotten the number that we expected. We're hopeful that in the back half of the year, we start to see a pretty significant ramp up there in the vehicles that we've ordered. That's a pretty important part of the inflation picture because as John mentioned, maintenance cost is not insignificant as a cost Line item and that obviously is impacted as you're having to keep older trucks in the fleet.

Speaker 9

Okay. That's interesting. And kind of a segue into my next question, I think in the prepared remarks, you guys had mentioned that Capital spending is running a little below expectations in the first half. Maybe you'd revisit that guidance next quarter. I mean, is it really just trucks we're talking about here?

Speaker 9

I wondered if some of these capital spending delays also Are being seen around the sustainability investment program and whether there's any risk to that Incremental EBITDA, we're expecting to see rollout of those investments into next year.

Speaker 3

Yes, great question, Sean. 1st and foremost, I would say it's important to hear the message that we are very confident with The rollout of our sustainability initiatives and those investments are on track. We talked about both the renewable energy facility and the recycling facility Coming online and expectations for the remainder of the year there, it continued to be strong relative to our initial expectations. So when we look at capital being below our guidance levels, it really is more in the traditional solid waste space And specifically for trucks, as Jim just mentioned, our truck deliveries in And even after we saw Q1 unfold, we revised those expectations and they're still below what we had Expected at that point in time. So as we look at how we spend our capital, we're adapting for that slowdown on the Truckfront and we're looking at places across the rest of our business to proactively pull forward capital, Whether it be in the landfill line of business where we've seen strong volumes, particularly in special waste or as we look at other parts of the business that are Performing well and have continued investment opportunities because those returns have been strong.

Speaker 3

So overall, what I would tell you is we still need Q3 Ready to unfold before we can give you the additional detail on the traditional capital part. I would tell you at this point, we Completely expect to stand firm on the sustainability capital at about $550,000,000 for the year.

Speaker 9

Understood. Thanks guys. I'll turn it over there.

Operator

Thank you. Our next question comes from Noah Kaye of Oppenheimer. Your line is open.

Speaker 10

Actually, that last question really feeds into what I wanted to Which is kind of the medium to longer term planning for some of the investments that Jim and John you Talked about in terms of ramping up ASLs percentage within the fleet, of course, the recycling automation, but just generally, These investments that are helping to reduce your labor intensity. Can you kind of outline for us, you talked about where you want to be in 4 years. How should we think about maybe the next couple of years? Hopefully, you put some of these supply chain constraints behind us. But Can you just talk maybe about a 24 to 48 months, sorry, a 12 to 24 month type expectation for Where you think you can get to?

Speaker 2

So, I think, Noah, you're talking about your question is really around Is it where we expect to be with respect to capital or is it about what we think the impact will be From an operating standpoint, by not backfilling some of these roles.

Speaker 10

Yes, thanks for

Speaker 5

being clear.

Speaker 1

Just to be clear.

Speaker 10

It's both, right, because we understand that You know, one will follow the other.

Speaker 2

Okay. Well, so let's talk about the capital piece first. And if I just think about kind of the big buckets around where I've talked about 5000 to 7000 positions that we wouldn't refill. The big buckets, as John mentioned, shipping from a rear load truck to an ASL truck. There's about if you think about a rear load being Maybe a $280,000 $300,000 truck and ASL is maybe $100,000 more.

Speaker 2

So there is some additional capital going to an ASL. But really, if you think about that, that pays itself off almost in 1 year's time because you're taking a helper off the back And you're picking up a pretty significant chunk of productivity there. We've done this many times moving from reload to ASL And the pickup in efficiencies is about 15%. And then you take a helper off the back, the all in costs, a lot of those are actually temp laborers. So we're paying a temp firm, might be $75,000 to $100,000 all in for that person on the back of the truck.

Speaker 2

So it pays itself back almost in a year's time. That's bucket 1. So there is some additional CapEx for the truck, but the OpEx goes away pretty fast. If we think about another buckets, we've talked a lot about recycling and we've said kind of somewhere in the neighborhood of 1,000 to 1200 positions there. As we and I mentioned in my prepared remarks that we've seen 30% reduction in labor costs At those first five that we've done and we think it's anywhere between 30% 50% Reduction.

Speaker 2

So one of the plants that we rebuilt was in Salt Lake City. That one actually was closer to 50% reduction in labor. So It's a range of how much labor comes out and the capital is already accounted for. We've already talked about The $800,000,000 ish over a period of 4 years, that's in that number. And then we also I guess an improved quality of the material at the back end of the plant and that doesn't show up in That shows up in top line revenue.

Speaker 2

I'll use Salt Lake as an example that previously before we rebuilt the plant, They were having to sell all their mixed paper as a low grade paper. Now they're able to separate it and they have a pretty big component of high grade paper that obviously comes at a higher price. Yes. So the only thing I would add, Jim, I think as Will said is, we're taking kind of a total cost of operation view. Residential is a good view of that between capital and OpEx.

Speaker 2

And I would tell you, No. The other thing that's happening is when we started down this path a few years ago, recycling and residential are two good examples. Kind of the calculus we were doing then in this labor inflationary environment, those investments are getting better as we go along. As Jim mentioned, I don't think any of us think This labor shortage or the labor wage pressure is going to abate anytime soon. So as we continue to invest, these pro formas actually look better as time goes on.

Speaker 2

Yes. So to kind of complete the answer there and good color, John, thank you, is what do we expect this impact to be? I mean, look, put a number on put whatever number you want on those 5000 to 7000 positions that don't get refilled. The good news is that it's this is not your traditional, okay, we're going to risk 10% of the workforce. That's not at all what this is.

Speaker 2

This is a very strategic approach to reducing our labor dependency by taking advantage of these very high turnover Numbers in some of these jobs. And so the cost the exit cost is very low. The capital cost is largely accounted for and the operating improvements, whether it's SG and A or operating cost, If it's 5,000 jobs, let's put a number on that of $50,000 to $100,000 per, It's a big it's a material impact to OpEx and to SG and A. If it's at the higher end of that job range, 7,000, then it becomes even better.

Speaker 10

Yes. That's great color. Thank you. Just wanted to get a little bit Color as well on the M and A pipeline, and good to see you coming back in greater force to the market. But is this primarily Traditional solid waste, is it recycling?

Speaker 10

Can you

Speaker 8

give us a sense

Speaker 10

of the mix in terms of where you're seeing the opportunities?

Speaker 2

It's a little bit of both. I mean, we kind of consider we consider recycling to be traditional solid waste, but it's a bit of both. We announced the continuous BestFunds, last quarter or a couple of quarters ago and which is taking low value plastics We weren't getting paid a lot for and some of those mixed papers that I mentioned that are low value as well and combining them and making a roofing material. And So there's a little bit of both in this. How do we take material that is, for example, coming into the landfill today that really Doesn't add a lot of value that maybe is light.

Speaker 2

I mean, if I'm thinking about plastics, plastics are very light, but plastics are also very recyclable. And so what's We're already doing everything we can with things like PET, HDPE going through a traditional single stream. Are there other things we can do with plastics They come into the landfill, taking them out of the landfill where it doesn't decompose for 700 years or something and doing something that's both environmentally And economically favorable to the existing model. And then you're right, the other piece is just Very traditional solid waste acquisitions, tuck ins that where we may have kind of a hole in our network or we've got something That's, feels like it's, it would be additive and makes a lot of sense for us at a reasonable valuation.

Speaker 10

Thank you so much. Okay.

Operator

Thank you. Our next question comes from Walter Spracklin of RBC. Your line is open.

Speaker 11

So I'd like to keep on the M and A front. You're doing 2 to 3 times This year, what you would do in a normal year, when you look at the addressable market for acquisitions And look at what's not held by the majors. Do you see that entire market as being in your sites Or would you consider some lower portion of that as being where you would focus your attention over the coming and I'm not saying this year over the coming Yes, 5, 10 years in scope.

Speaker 2

Yes, I guess if we're talking geography, We're a North American company. So we really haven't looked outside of North America for big for any type of salt and waste acquisition. Obviously, that doesn't meet the definition of a tuck in anyway because we don't have operations overseas. So yes, within North America, When we look at these acquisitions, we're always looking at where it makes the most sense strategically for us And where we can bring since by the way, Walter, as part of what's why we're excited about this Reduction in labor dependency, it enables us if we believe that our competition can't do the same thing that they're not able To use technology to reduce their labor dependency, then it gives us the ability to bring more synergies to the table when we acquire A company. So I think we're everything would be on the table within North America.

Speaker 2

And And then of course, if it requires a filing of some type, then we will have Justice look at it. But We always feel like, we want to be conservative on valuations and that's maybe the single most important piece is, does it meet our strategic goals And is it valued properly?

Speaker 11

I guess, not only does it bring in more synergies, Jim, it also makes it harder for those mom and pops to compete with you and perhaps Drive more to you given that they can't match your technological investment. Is that fair to say?

Speaker 2

Yes. Look, I mean, it's I don't think it's against the rules to say that trying to reduce our cost structure It is something that's very important to us. And to the extent that somebody else can't do that, that's their problem, not ours. I mean, but it does present an opportunity. It's why we're seeing a pretty robust pipeline here.

Speaker 2

I think there's a lot of companies out there that say, look, I'm not going to I don't want to be an HR coordinator 20 fourseven And I don't want to make the investments in technology to try and do the same thing that WM is doing. So I'll turn around and sell to them at a reasonable valuation and that's okay.

Speaker 11

That makes sense. As that market kind of gets acquired by yourselves and the larger majors, I know, Jim, you've talked a little bit about the potential for going a little further afield and possibly into hazardous. And Is that still an option for you? And would you go even further? I mean, we always worry a little bit about getting beyond Our core competency, so just curious your view on what is an addressable market for waste management outside of Solid or even outside of hazardous waste?

Speaker 7

No, I think we're kind of

Speaker 2

staying away from just Strictly kind of a services type business. And yes, there are some ancillary businesses That might be interesting to us, but at this point, there's as we've talked about, there's such a nice Robust pipeline of just traditional solid waste that we feel like we can focus there and then add to that a little bit of the recycling type That I mentioned earlier and that should take up all of our time.

Speaker 11

Yes. That's great color. Appreciate the time. Thank

Operator

you. Our next question comes from David Manthey One moment. Looks like our next question is going to come from Michael Feniger. Your line is open. One moment please.

Speaker 2

Good job of answering the questions.

Speaker 6

One moment.

Operator

Okay, one moment please. So our next question comes from Kevin Tine. Your line is open.

Speaker 5

Hi. Can you hear me?

Operator

Yes, sir. Your line is open.

Speaker 8

Yes, perfect.

Speaker 5

There are times of charm here, I guess. Congrats on a good quarter. Maybe just a couple of quick ones for me. It sounds like you're feeling You're kind of moving past peak inflation here, but I guess who knows how long it will take to get back to normal inflation And obviously, you've been pricing to offset inflation dollars. But I'm wondering, has there been a push to capture more of that inflation It will be a core price versus using a surcharge program.

Speaker 5

I presume and correct me if I'm wrong, If you can kind of capture more of that inflation through the core price, it just ends up kind of being stickier as inflation starts to roll over and CPI starts to come down here?

Speaker 2

I think it's I think I heard you right, but it's a little bit of a combination of the 2. I mean, there's some Surcharges there. We don't really we don't capture fuel in our core price or our yield numbers. It truly is designed to just be a pass through for us. We do have an environmental fee, and that environmental fee does get captured In our price figures, but if that was your question, it's a combination of core price increases.

Speaker 2

And then also there's a second component to that, which is holding on to those price increases. And that's there's always a little bit of I've given take and pricing and that's been the model as long as I've been with the company and as long as we've been in existence, I think. So Holding on to a higher percentage of those price increases is an important component.

Speaker 5

No, that's helpful. No, that's exactly what I was looking for. And then just last one for me. You're talking about some of these the repricing of index contracts, you talked about this 12 month lag. Some of the other industries I cover, just given How acute inflation has been?

Speaker 5

There's been a push to shrink, I guess, that timeline between when they start seeing that acute pressure to When they can start repricing for it or start getting compensated for it, has there been any push on your end to shrink that lag? Has there been any desire From your customers' perspective to shrink that lag, what we've seen in maybe some other industries?

Speaker 2

Yes. I think Residential is probably a great example of that. If you look at what our core price and yield results have tracked at the last 6, 8, maybe even 10 quarters, It's certainly outpaced up into the last couple of quarters what CPI has been. That's not the case the last handful of quarters, which kind of shows you, Kevin, what we're doing On the pricing side to find to strike the right balance between what we're seeing in our contracted rate escalators, What we're willing to accept going forward. So I think the most encouraging thing is when you look at that residential line of business, that's probably the best example Of that index, we've outpaced what CPI has been and I said the exception is the last couple of quarters.

Speaker 2

And we've also in terms of We don't want to necessarily shed the volume, but we want to be profitable. And when you look at the volume trade offs we did and what's happening on the price side, you're seeing that strategy And just one last point, the 12 month lag that you talked about is really contractual with these big Valerie, so there's not really an option for us to change that unless they choose to change their bid specs.

Speaker 5

Okay. No, that's helpful color. Thanks again and congrats on the quarter.

Operator

Thank you. Thank you. Our next question comes from Michael Feniger of Bank of America. Your line is open.

Speaker 12

Apologies about that. My main question, I know we're up on the hour, Jim, Your margin is going to finish this year at 28.1%, 5 years ago, it was 28.3 percent. So it's basically been kind of range bound, yet now you have a very profitable sustainability business With renewables, your pricing is very strong in Q2. Does it feel like 2023 is when this margin range really breaks out 50 basis points or higher just based on where this business is today compared to even where it was 5 years ago?

Speaker 2

Yes. I mean, I think there's been a couple of things that have happened As we've kind of shot for this aspirational number of 30% or whatever it is, obviously, ADS had an impact on Margin, that business was more like a kind of a 24% margin business when we were 28%. So digesting that Has had an impact on margin, but look, it's been a great acquisition for us. And then all of a sudden, we kind of finished digesting ADS and then we get this big headwind from fuel. And Devina did a nice job of talking about the fact that it's really it's margin destructive, but it's not earnings destructive.

Speaker 2

It's Designed to be, excuse me, neutral from an EBITDA standpoint, but it does hurt us on the margin line. So to the extent that you see a couple of things going on, one is you see us continuing to raise the ADS business Up to our level of kind of margin that will help us. As you see fuel come back down, Nothing that we're really doing there to affect margin, but it does have a positive impact on us. And then the other thing that we've talked a lot about It is 2 other things. One is we talked about pricing right now basically covering cost And starting to as you see inflation coming down, a bigger component of price Goes to margin accretion.

Speaker 2

So that's number 1. And then number 2 is this whole cost piece. As we take permanently take cost out of the organization And become less labor dependent, that definitely has an impact on margins. So all of that gives me reason for optimism that as we Think about 2023 beyond, that we will really see margin improvements in the overall business.

Speaker 3

Jim, I think that color was fantastic. The one thing I would emphasize, Michael, in terms of looking at the total company Margin over that 5 year period, in addition to what Jim outlined specifically for commodity based impacts and the ADS acquisition, Is that when you think about the investment we're making in technology, it's showing up in our SG and A in a different way than it would have had we Effectively decided to have SG and A dollars be around the business model. And so what you see from us is that we have a different level of G and A than we otherwise would have if we weren't making these strategic investments that will provide significant returns over the long term. And so I really do think that you have to consider that aspect of how we have strategically changed over the last 5 years in terms of thinking about how our margins have adapted in that period.

Speaker 12

Thank you. That was helpful to give us context How to think about it over that 5 year stretch. And just lastly, Jim, I mean, what do you think is the right level Of CPI for the business, what is the sweet spot? Because obviously CPI of 1% For like that decade, clearly doesn't feel like that's a great place for the industry and for your operations. Now CPI at 9%, that's another story.

Speaker 12

Is there a sweet spot that you feel like is the right number where It helps you get good pricing resets on those contracts, yet you guys can also handle the cost inflation on the business In terms of also getting productivity savings every year, what would be that CPI sweet spot for the business you think?

Speaker 2

I mean, it's a good question. I'm not sure I know what the right number is. I can tell you the wrong number is 9.1. So I don't know where we we have talked about the fact that as we see inflation drop off and I compared it to banks. I mean, Banks probably try and do that math as well.

Speaker 2

Where's the sweet spot for me in terms of race? And I don't know where the sweet spot is on CPI. It might be 2% or 3%, if I had to kind of pick a number. But I don't know for sure and we haven't really done the math. There was no reason to do the math until a year and a half ago because it had been the same.

Speaker 2

It's kind of been sub 2% for most of my career, but now there is Reason to try and answer that question and we'll do a bit of work on it.

Speaker 5

Thanks everyone.

Operator

Thank you. Our next question comes from Toni Kaplan of Morgan Stanley. Your line is open.

Speaker 13

A macro question, you're not seeing a slowdown within the business at this point despite maybe some Increased caution on the macro environment in general, but are there any dealer industries within commercial, for example, That are just being a little bit more cautious that the conversations have changed a little bit.

Speaker 2

Well, You're right, Tommy. I mean, there's a ton of speculation out there about what this when does the recession hit? How deep is the recession? How long is it? I mean, The good news for us is that we are pretty I mentioned 75% of our business It's pretty resilient to a downturn.

Speaker 2

So we perform well in any environment. We've talked a lot about special waste the last couple of quarters. And most of our revenue is kind of a more of a lagging indicator, but special waste Is the one leading indicator, we have maybe a couple of leading indicators. One might be our construction and demolition, but that's as John said, it's a Small part of our business. Special waste is leading because it's largely industrial type jobs And those industrial companies have some discretion as to when they spend a lot of those dollars.

Speaker 2

And we're not seeing them turn that off. So Our special waste was very strong for Q1. It was very strong for Q2. And we continue to be optimistic About special waste, even when we look at our numbers in the month of July, we still are seeing very positive comparisons in special waste. So as I think about the macro economy overall, I do think there is a recession coming.

Speaker 2

I'm not going to kind of buck Trend there because everybody is saying there's one coming. But I just feel like we're in a great industry to weather the storm. And ultimately, Well, some of the things we're doing with technology and reducing our labor dependency come out of this thing better than anybody else.

Speaker 13

Sounds good. And then just as a follow-up, strong results, pricing and the outlook Obviously, raised there. Just wondering if you could talk maybe one more time just commercial and industrial pricing this quarter sounded great. Just how are you thinking about pricing commercial, industrial landfill

Speaker 3

as the year goes on? Thank you.

Speaker 2

Specific to landfill pricing, landfill pricing has been a focused area for probably 3 or 4 years for us. It was very good in Q2 and Q1. So we're pleased with the fact that we're able To put Lanto pricing through and you're asking kind of more specifically around commercial and industrial pricing. Commercial and industrial pricing has been excellent as well. I would tell you that pricing really across the board, I can't find a weak spot in terms of how we're performing on the price front, whether it's residential or commercial, industrial landfill.

Speaker 2

Everybody seems to be able to put price through. I think part of that is that the customer is watching they're watching these Business shows on TV as well and they know inflation is out there. They know it's real and because it's a small because our business is a small percentage of their overall They're willing to take the price increase.

Speaker 13

Super helpful. Thank you.

Operator

Thank you. I'm showing no further questions at this time. I'd like to turn the call back over to Jim Fisch, President and CEO for closing remarks.

Speaker 2

Great. So thanks for joining us today. Just quickly to conclude, At a time when there's so many questions about the outlook from a macro standpoint, We're really proud to be somewhat of a symbol of stability and strength to our investors. We stress today That's the short term outlook looks good for WM. But I think, maybe more importantly, we're very excited about and Confident in the long term outlook.

Speaker 2

The long term strategy is playing out just as we have expected, just As we communicated way back in 2019 at our Investor Day and we expect that to play out through not only the end of 2022, but 2023, 2024 and So thanks again to everyone for joining us this morning and we will talk to you next quarter.

Operator

Thank you. Ladies, this does conclude today's conference. You may all disconnect. Have a great day.

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Earnings Conference Call
Waste Management Q2 2022
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