Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2: You're listening to Bloomberg Business Week with Carol Masser and
Speaker 2: Tim Stenoveek on Bloomberg Radio.
Speaker 3: Well shares of Waste Management surged as much as five
Speaker 3: and a half percent today. It's the most intra day
Speaker 3: going back to late January. This after the garbage collection
Speaker 3: and recycling company posted second quarter results that beat estimates.
Speaker 3: It was held by strong landfill volumes that benefited from
Speaker 3: wildfire cleanup in California. There's no other way to say it.
Speaker 3: John Morris loves trash. He's president and COO of WM,
Speaker 3: it's formerly known as Waste Management. Just to give you
Speaker 3: an idea of the context and how big this company is.
Speaker 3: It's got more than five hundred solid and medical waste facilities,
Speaker 3: more than two hundred and sixty active solid waste landfills,
Speaker 3: more than one hundred recycling facilities, close to five hundred
Speaker 3: hauling operations, and more than sixty thousand employees. John joins
Speaker 3: us from Houston, Texas, where Waste Management is headquartered. John,
Speaker 3: good to have you with us. How are you.
Speaker 2: I'm good, I'm great. Thanks for having me today.
Speaker 3: Hey, thanks for joining us. Carol and I love talking
Speaker 3: to executives in this space. We did. We find it
Speaker 3: super interesting, especially given the way that the companies do
Speaker 3: or don't respond to economic conditions. So just give us
Speaker 3: an idea about the way you can you can. I
Speaker 3: don't know think about the economy right now from the
Speaker 3: perspective of trash well, I think.
Speaker 2: It's a great question. I think a lot of ways
Speaker 2: we're assession resistant business, but there are certainly segments of
Speaker 2: the business where I think we're lagging and leading. And
Speaker 2: you mentioned our landfill VOUM. That's certainly one where we
Speaker 2: had a strong quarter and really a strong number of quarters,
Speaker 2: which would suggest there's still some strength in the economy
Speaker 2: if you looking at MSW volumes or construction volume. So
Speaker 2: we're pretty strong for the quarter, and as you mentioned
Speaker 2: some of the special waste lines, we're particularly strongness quarter
Speaker 2: as we benefited from some of that, some of the
Speaker 2: event work you mentioned.
Speaker 1: Thing that in terms of presidential policy and things being done,
Speaker 1: whether it's the EPA and other environmental issues that certainly
Speaker 1: play into your space, any of it that's going to
Speaker 1: change your business dramatically.
Speaker 2: I think for the most part, Carol, we're regulated at
Speaker 2: a state or provincial level. If you look at our
Speaker 2: business up in Canada from an EPA perspective, the one
Speaker 2: topic that gets one acronym that gets a lot of
Speaker 2: tension is p FOS. So we've follown that at a
Speaker 2: federal level very closely to make sure that we've got
Speaker 2: a seat at the table in terms of the which
Speaker 2: way the legislation may or may not go and how
Speaker 2: that would affect the industry and more importantly, our customers.
Speaker 1: What does it mean having a seat at the table.
Speaker 1: What is it that you want to see happen, and
Speaker 1: what are you guys doing to protect all of us?
Speaker 1: Because I think we've done some reporting here at Bloomberg
Speaker 1: about various landfills and seepage and what it does, and
Speaker 1: ground fires and different things that certainly impact environments.
Speaker 2: Sure, what I would tell you is, as you mentioned,
Speaker 2: we have over two hundred and sixty active landfills in
Speaker 2: the portfolio and we're super proud of our environmental record
Speaker 2: with those facilities. The one area I mentioned PFOS really
Speaker 2: has to do with some contaminists that could make their
Speaker 2: way into some of the materials we manage. But we're
Speaker 2: very confident in our ability to handle inside of our
Speaker 2: facilities and make sure that they don't leave our facilities.
Speaker 2: And pfos is one of those top it's got a
Speaker 2: lot of attention, And when I see seed at the table.
Speaker 2: The one thing we've been very active in is making
Speaker 2: sure that there's this concept of a passive receivership, which
Speaker 2: we've been very vocal about. We don't produce pfos, we've
Speaker 2: never produced it, but we manage a lot of material
Speaker 2: that can have some of it in there. So we
Speaker 2: want to make sure that you know, the EPA has
Speaker 2: recognized our landfills as being a repository, safe repository for
Speaker 2: those We just want to make sure that this passive
Speaker 2: receivership concept gets some attention in those conversations.
Speaker 1: And in case you don't know, in case you know,
Speaker 1: pfos are these man made chemicals, they don't break down,
Speaker 1: they're in nonstick cookware, they're in food packaging, there and
Speaker 1: a lot of things. But when you say about containing
Speaker 1: and what does that mean, are they stored somewhere and
Speaker 1: really thick concrete.
Speaker 2: Well, it depends that nobody's ever actually showed me a
Speaker 2: load of p fos. But as you mentioned, it does
Speaker 2: come in some of the materials that we manage, and
Speaker 2: when you think about our landfills, we look at those
Speaker 2: as safe repositories where we manage the material goes in.
Speaker 2: And with respect to this conversation, more importantly, we can
Speaker 2: contain those materials inside the facility and make sure that
Speaker 2: there's not a release of those contaminants.
Speaker 1: But that basically means they're stored somewhere, either underground or whatever. Correct,
Speaker 1: and the idea is that it never gets broken and
Speaker 1: never comes out.
Speaker 2: There are some technologies that we're working with right now
Speaker 2: in order to manage some of the waste to make
Speaker 2: sure that that PFOS doesn't escape from inside of our facilities.
Speaker 2: But to your point, the question is whether if they're
Speaker 2: coming in in a waste stream that we can make
Speaker 2: sure we can safe if we contain those inside our
Speaker 2: facilities and make sure that either through air or through
Speaker 2: the liquids, we manage that it doesn't leave the facility.
Speaker 1: John, I got to ask you. I've got a twenty
Speaker 1: two year o year old at home. It already is
Speaker 1: telling me how my generation is messing up the world
Speaker 1: for them, so I have to ask these question.
Speaker 3: Thanks girl, you're welcome and I thank you to your
Speaker 3: daughter though, but yeah, because she's going to fix it all.
Speaker 1: She's a tough cookie.
Speaker 3: So, John, you know, this is a very acquisitive business.
Speaker 3: And in fact, there's an entire page on WM's website
Speaker 3: about acquisitions and divestitures that asks people if they're thinking
Speaker 3: of selling their company right now, and there's a Western
Speaker 3: tier to get in touch with, in an Eastern tier
Speaker 3: to get in touch with. How are you thinking about
Speaker 3: acquisitions for the remainder of this year and for next year.
Speaker 2: Well, as you probably know, we've been a public company
Speaker 2: for over fifty years, and a big part of our
Speaker 2: growth strategy over five decades has been the fact that
Speaker 2: we've been an inquisitive company. We've been very disciplined about
Speaker 2: where and how we've been acquiring companies, certainly over the
Speaker 2: last number of years, and this year we've, as we
Speaker 2: mentioned earlier today in the earnings call, we expect to
Speaker 2: be over half a billion dollars of sort of what
Speaker 2: we would call tucking acquisitions, where we're buying smaller or
Speaker 2: regional companies and benefiting from some of the synergies that
Speaker 2: come from the SG and A lines and also from
Speaker 2: the operating operating lines as.
Speaker 3: Well geographically what areas are of interest to you?
Speaker 2: You know, honestly, we kind of keep an open aperature.
Speaker 2: But what we want to do is look for acquisitions
Speaker 2: where we can you know, one on one equals more
Speaker 2: than two if you will. We've got a team of
Speaker 2: business development folks who work with our sixteen regional vice
Speaker 2: presidence or we call them areas across the US and
Speaker 2: Canada to make sure that as we're looking at these
Speaker 2: companies that they do fit into a portfolio concept that
Speaker 2: you know, we're going to get more leverage out of
Speaker 2: them than simply buying the company and bolted onto our
Speaker 2: existing business.
Speaker 3: The Stereocycle acquisition, which was completed back in twenty twenty four,
Speaker 3: gave you entry into medical waste. Is that an area
Speaker 3: that you wish to grow in?
Speaker 2: Well right now, we just obviously we purchased what we're
Speaker 2: calling WM Healthcare Services, which was formerly Stericycle. Terrific set
Speaker 2: of assets, great team of folks. Our focus right now
Speaker 2: is really digesting that business. And if you listen to
Speaker 2: the call today, a lot of the conversation was about
Speaker 2: between now in the end or working through some RPIE
Speaker 2: system issues that we knew when we bought the company,
Speaker 2: and more importantly, making sure that we're thoughtful about how
Speaker 2: we integrate those debt team and those assets into our
Speaker 2: network and make sure that we build the right customer relationships.
Speaker 2: I would tell you those are our focal areas right
Speaker 2: now with regard to the healthcare business.
Speaker 1: How does technology and I'm just thinking about AI, like,
Speaker 1: what's the role of it in your world?
Speaker 2: You know, it's a great question, Carol. We've talked a
Speaker 2: lot about that. We had an investor day handful of
Speaker 2: weeks ago up in New York, and a lot of
Speaker 2: what we talked about was using technology, whether you define
Speaker 2: it through AI or automation or optimization. There's a lot
Speaker 2: of phrases you used around it. But one of the
Speaker 2: things that's unique is, you know, we still see, although
Speaker 2: it's moderated, there is still a lot of pressure on
Speaker 2: what we would call these trade type jobs, which we
Speaker 2: have obviously probably about forty thousand of those. So we've
Speaker 2: been looking at ways to take technology broadly and use
Speaker 2: that to augment our labor. Worse one, we can upscale
Speaker 2: a lot of the folks we have on our team today.
Speaker 2: What the reality is that we have seen a strain
Speaker 2: in terms of what that workforce is going to look
Speaker 2: like in the future. So this has really been about
Speaker 2: future proofing our business in the short term, but also
Speaker 2: over time, using automation, using technology actually to structurally lower
Speaker 2: the cost of our operating model and as we've said,
Speaker 2: modernize it to give us a long term differentiated advantage
Speaker 2: in the space.
Speaker 3: Tyl and I are obsessed with self driving cars, and
Speaker 3: I'm wondering when this technology, if you're testing it when
Speaker 3: it comes to WM vehicles that haul trash, are we
Speaker 3: getting to a period of time where we're good this
Speaker 3: part will be automated.
Speaker 1: Because I also saw like I was recently outside Charleston,
Speaker 1: South Carolina, and I think it was the recycling There
Speaker 1: was somebody driving, but it was all automated. It just
Speaker 1: picked up the trash container and just put it in
Speaker 1: like this person didn't even have to get out. I
Speaker 1: was kind of I know, I could have been on
Speaker 1: the beach, but this is what I was watching.
Speaker 2: Well, I happen to have a home in Charleston. That's
Speaker 2: a great part of the country. I would tell you
Speaker 2: that there's different phases. So to answer the question to
Speaker 2: the technology out there, if you think about autonomy, it's there.
Speaker 2: If you look at the mining industry, in some of
Speaker 2: those places, there's autonomous equipment running out there. Now we're
Speaker 2: actually piloting some remote heavy equipment operations at a few
Speaker 2: of our facilities. And I think there's also over the
Speaker 2: road technology, probably more for the long haul tractor trailer
Speaker 2: combination where that technology is more advanced. But I think
Speaker 2: the answer your question is we are looking at opportunities,
Speaker 2: whether it's on remote equipment operation or certainly the pathway
Speaker 2: to autonomy. But to your point, there's also the point
Speaker 2: of Cara made is an important one. There's also components
Speaker 2: of the jobs that used to be very manually reliant
Speaker 2: are now being automated. And I think the example you
Speaker 2: gave is a great one where you used to have
Speaker 2: two folks on the back of a truck you're kind
Speaker 2: of tossing the material into the back, when now we
Speaker 2: have one person in there and it's a fully automated job.
Speaker 2: And that's important because it does a couple of things. One,
Speaker 2: it makes the job less physically demanding. Its certainly reduces
Speaker 2: our labor dependency, and it also makes the job a
Speaker 2: little bit more appealing. And when you look at what's
Speaker 2: happened to the company. We are experiencing the lowest turnover
Speaker 2: rates we've seen in an industry that's been twenty five
Speaker 2: to thirty percent. We're now SOB twenty. So there's a
Speaker 2: confluence of where all these technology advancements started are benefiting us.
Speaker 2: And I do think down the road we're going to
Speaker 2: continue to press on remote operation as well as autonomous capabilities.
Speaker 1: All right, John, just got about forty fifty seconds left here.
Speaker 1: I mean, I've got a recycling bin, I've got another bin.
Speaker 1: I know Tim's got a compost bin. How much really
Speaker 1: gets recycled because we've had some reality techs here, And
Speaker 1: forgive me for just giving you about forty seconds here.
Speaker 2: No, that's okay. Well, we are and have been the
Speaker 2: largest recycler in North America for decades, and we manage
Speaker 2: about twelve million tons a year. About half of that
Speaker 2: get's processed directly in one of our facilities, and half
Speaker 2: of it we manage for some of some of our
Speaker 2: big customers. Generally, when you put material into one of
Speaker 2: our traditional single stream recycling facilities. We've actually done a
Speaker 2: great job in partnership with our customers and the technology
Speaker 2: providers to really get that residual rate down south of
Speaker 2: twenty percent. So think about one hundred percent of the
Speaker 2: recycling that goes in, about seventeen or eighteen percent could
Speaker 2: come out as residual. The rest of it, Carol, though,
Speaker 2: in our facilities is absolutely recycled.
Speaker 1: Good to know. I'm going to save you ten fifteen
Speaker 1: seconds if you have one piece of advice about what
Speaker 1: we do with our garbage, that would make it a
Speaker 1: better process for you guys and maybe help clean up
Speaker 1: our environment. What would it be real quickly, I think.
Speaker 2: Is what you just mentioned is the fact that we
Speaker 2: can do a lot in partnership with our customers, both
Speaker 2: residential and commercial to recycle right. And you know, one
Speaker 2: of the things we talked about is we're always working
Speaker 2: for sustainable tomorrow.
Speaker 1: John Morris, thank you so much, so appreciate a President
Speaker 1: chief operating officer at WM joining us on Business Weekdaily