WEBVTT - Waste Management's Fish on Adapting to Recycling Crisis (Audio)

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<v Speaker 1>Broadcasting live to New York, Bloomberg eleventh Rio to Washington,

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<v Speaker 1>d C. Bloomber to Boston, Bloomberg twelve hundred to San Francisco,

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<v Speaker 1>Bloomberg nine to the Country series Exam General one nineteen

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<v Speaker 1>and around the globe the Bloomberg Radio plus David Bloomberg

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<v Speaker 1>dot Com. This is taking Stock. Coming up on taking Stock,

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<v Speaker 1>will take stock of Waste Management. They raised their twenties

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<v Speaker 1>sixteen earnings guidance. They reported better than estimated earnings. They

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<v Speaker 1>got a revenue boost from positive market conditions. Will speak

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<v Speaker 1>with Jim Fish, he is the president of Waste Management.

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<v Speaker 1>Just gott a quick give a quick heads up as well.

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<v Speaker 1>Movie star a TV star marine who is taking theater

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<v Speaker 1>to military bases around the world. Adam Driver. Also coming

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<v Speaker 1>up on Bloomberg Radio today. Now to We're on Katherine

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<v Speaker 1>Cowdery in the newsroom for a Bloomberg Business Flash. Thank you, Kathleen.

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<v Speaker 1>The stock market heading for its worst day since it's

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<v Speaker 1>so off following Britain's vote believe the European Union. Retailers

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<v Speaker 1>are posting their steepis losses in five weeks after sluggish

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<v Speaker 1>income growth. In June, men consumers had to tap into,

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<v Speaker 1>say things, to maintain their pace of spending. Coals and

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<v Speaker 1>Macy's are down about flat point four percent. Randy Fishman

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<v Speaker 1>at Deutsche Bank Securities on the decline in market volatility,

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<v Speaker 1>people get more comfortable with equities. As volatility goes down,

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<v Speaker 1>and it does create a bit of a feedback loop

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<v Speaker 1>in the market where you see markets not being volatile,

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<v Speaker 1>people get more comfortable investing. There are also structured products

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<v Speaker 1>that systematically will allocate back into equities as equities get safer.

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<v Speaker 1>I think that people are more and more focused on safety.

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<v Speaker 1>We check the markets every fifteen minutes throughout the trading day.

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<v Speaker 1>Down Industrial leverages down one hundred sixteen points two thirds

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<v Speaker 1>of a percent at eighteen thousand, two hundred eighty eight.

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<v Speaker 1>SMB five foundered down seventeen point three quarters of a percent,

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<v Speaker 1>trading at four then as Jack is down fifty three points,

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<v Speaker 1>the loss of one percent, trading at fifty one thirty less.

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<v Speaker 1>Texas intermediate crude oil down fifty five cents of barrel

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<v Speaker 1>one point four percent at thirty two. Spackled up thirteen

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<v Speaker 1>dollars ten tents anounce at thirteen seventy two, seventy ten

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<v Speaker 1>year Treasury down three thirty seconds, with the yield of

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<v Speaker 1>one point five three percent. Among today's top business story,

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<v Speaker 1>CBS Health will add thirty five products to its list

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<v Speaker 1>of excluded drugs. In it will no longer cover some

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<v Speaker 1>treatments for cancer and diabetes, and an aggressive move to

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<v Speaker 1>favor lower price treatments. CBS is targeting drugs with greater

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<v Speaker 1>than two price increases over three years. The Drug Benefit

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<v Speaker 1>Manager is expanding a strategy of excluding expensive products when

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<v Speaker 1>alternatives are available. It's two thirty two on Wall Street.

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<v Speaker 1>Let's get an update of some of the other stories

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<v Speaker 1>were following today right here on Bloomberg Radio. Thank you,

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<v Speaker 1>Catherine from the Bloomberg News Room. I'm Ramy in essentio.

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<v Speaker 1>New York City Police Commissioner Bill Bratton is stepping down.

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<v Speaker 1>He'll stay on the job until September. Brand's term has

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<v Speaker 1>been marred by complaints about his so called broken window policing.

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<v Speaker 1>President Obama was asked today whether he believes Russia was

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<v Speaker 1>behind the recent cyber security breaches of democratic emails. I

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<v Speaker 1>don't think that it wildly swings. What is a tough,

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<v Speaker 1>difficult relationship that we have with Russia right now? The

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<v Speaker 1>President also says if the breach was pulled off by

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<v Speaker 1>Russian hackers, it will not upset his relationship with Russian

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<v Speaker 1>President Vladimir Putin. Bottled water will be more popular than

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<v Speaker 1>soda for the first time in the US this year.

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<v Speaker 1>Here's Bloomberg's Bob Moon. It's not just convenient for the

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<v Speaker 1>switch from sugar age rinks from Nessle to PepsiCo bottling

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<v Speaker 1>companies of wodage. A decades long campaign against tap water.

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<v Speaker 1>Take this Fiji water commercial untouched, prompting skeptical comedian Lewis

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<v Speaker 1>Black to push back against the trend a few years back. Awa,

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<v Speaker 1>I think it means the end of water as we

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<v Speaker 1>know it. Maybe he was onto something. Bottlers and animals

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<v Speaker 1>safe hears over what's coming out of the taps, such

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<v Speaker 1>as Flint, Michigan's lead contamination crisis, are causing more people

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<v Speaker 1>to seek his safe and sealed source of drinking water,

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<v Speaker 1>Bob Moon, Bloomberg Radio and The state has approved a

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<v Speaker 1>plan to generate half of its power from renewable sources

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<v Speaker 1>by the year twenty thirty. The strategy involves big subsidies

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<v Speaker 1>to extend the operational life of upstate nuclear plans, while

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<v Speaker 1>the state expands its use of solar as well as

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<v Speaker 1>wind energy. While many environmental groups cheer that policy, some

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<v Speaker 1>oppose what they call a costly and unnecessary investment in

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<v Speaker 1>nuclear power. Global News twenty four hours a day, powered

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<v Speaker 1>by more than twenty six hundred journalists and analysts in

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<v Speaker 1>more than one d twenty countries. I'm Ramie in Essensio.

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<v Speaker 1>This is Bloomberg, Catherine, thank you. Now, let's get a

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<v Speaker 1>quick update of the benchmark. Stone Industrial leverages down one

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<v Speaker 1>hundred sixteen points at eighteen thousand, two hundred eighty eight,

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<v Speaker 1>smp F I funded down seventeen point four. Then Nassakistan

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<v Speaker 1>fifty three points at fifty one thirty. And that's a

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<v Speaker 1>Bloomberg business flash. You're listening to taking stock with Pim

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<v Speaker 1>Fox and Kathleen Hayes on Bloomberg Radio. Waste Management. It

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<v Speaker 1>raised its twenties sixteen earnings guidance. It reported better than

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<v Speaker 1>estimated earnings the trash collect just saying that market conditions.

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<v Speaker 1>In fact, it is the number one garbage disposal company

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<v Speaker 1>in North America. It said that market conditions were positive

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<v Speaker 1>for the company and for the industry. Here to tell

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<v Speaker 1>us more is Jim Fish he is the president of

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<v Speaker 1>Waste Management newly and pointed the president of Waste Management

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<v Speaker 1>joining us from Houston, Texas, Jim Fish, thanks very much

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<v Speaker 1>for being with us, Thanks for having me. Just give

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<v Speaker 1>people a little bit of an overview of waste management.

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<v Speaker 1>I know that you've got over twenty million customers, almost

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<v Speaker 1>two hundred and fifty landfills, but maybe just give people

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<v Speaker 1>an idea of the size and scale of your operation. Yeah,

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<v Speaker 1>so we have we're an integrated waste holler with what's

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<v Speaker 1>recycling as a huge component of what we do. We

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<v Speaker 1>collect trash from as you said, over over twenty two

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<v Speaker 1>million customers. We've got about two hundred and fifty landfills,

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<v Speaker 1>we have about a hundred and fifty recycled facilities, we

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<v Speaker 1>have over four hundred garbage collection facilities. So we're we're

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<v Speaker 1>a fully integer at player within North America. You know,

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<v Speaker 1>you just reported your earnings a week or so ago,

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<v Speaker 1>and even though some are saying look out tough times

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<v Speaker 1>recycling business, Waste Management continues to see its stock rise.

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<v Speaker 1>Your stock that is reaching a six month high recently,

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<v Speaker 1>uh well, up from fifty two on your stock press

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<v Speaker 1>at the start of year forty seven. This time last year.

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<v Speaker 1>What's the dynamic here? Well, yeah, almost a six month

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<v Speaker 1>time but also also close to an all time high. Um.

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<v Speaker 1>I think when you look at recycling, uh, you know

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<v Speaker 1>that that's it's almost kind of a good news and

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<v Speaker 1>the bad news here. You know, we're closer to the

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<v Speaker 1>trough and recycling we're making a lot of progress on

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<v Speaker 1>on you know, improving that business, but we're much closer

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<v Speaker 1>to the trough than we are to the peak, and

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<v Speaker 1>yet still producing strong cash flows and and and a

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<v Speaker 1>fifty two weeks or an all time high stock price.

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<v Speaker 1>So I think what you're seeing is that the rest

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<v Speaker 1>of the business, aside from recycling is is doing quite well,

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<v Speaker 1>and that's where the strength is coming from. Are we

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<v Speaker 1>seeing applications of technology to waste and recycling? I keep

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<v Speaker 1>thinking of robotics. I mean, is there a time when

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<v Speaker 1>we're going to see intelligent robotics systems process waste and

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<v Speaker 1>sort recyclable materials. Well, for sure, we We've actually have

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<v Speaker 1>a pretty automated recycled facility today with things like optical

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<v Speaker 1>readers that recognize the type of plastic that's coming up

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<v Speaker 1>a conveyor belt and and it shoots a stream of

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<v Speaker 1>air at that at that tide bottle and and uh

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<v Speaker 1>and shoots it into a bin. So so there's a

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<v Speaker 1>lot of technology and these recycled facilities today, and I

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<v Speaker 1>think that will only increase. So tell us a little

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<v Speaker 1>bit more about what has differentiated you from other companies

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<v Speaker 1>in this space. Well, I think first and foremost, Uh,

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<v Speaker 1>you know, we've taken a strong stance on pricing. And

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<v Speaker 1>you know the way we've referred to pricing in our

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<v Speaker 1>industry is there's there's not much the way of price elasticity.

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<v Speaker 1>Nobody says, Okay, now they've lowered the price low enough

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<v Speaker 1>that I'm gonna create more trash. It's not like big

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<v Speaker 1>screen TVs where you where you lower the price of

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<v Speaker 1>big screens and you might create enough demand to to

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<v Speaker 1>put you economically ahead. So really, the only right answer

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<v Speaker 1>with respect to our business is to increase price, and

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<v Speaker 1>we've taken a leadership role there. Does that mean that

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<v Speaker 1>you will forego certain, let's say recycling contracts because they're

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<v Speaker 1>not going to really help your margins? Well, no, I

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<v Speaker 1>think what we you know, we're looking at recycling as

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<v Speaker 1>as you know, in need of of improvements. Uh, doesn't

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<v Speaker 1>mean we won't renegotiate some of these contracts, and we're

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<v Speaker 1>doing that. We're probably away through renegotiation. I think what

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<v Speaker 1>we're doing with with municipalities, and we've done quite a

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<v Speaker 1>bit of it already, is saying, look, uh, the old model,

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<v Speaker 1>where you had commodity prices at hundred dollars, in our

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<v Speaker 1>processing costs at seventy, we were willing to pay you

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<v Speaker 1>your your share of the commodities on the back end

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<v Speaker 1>up front. When commodity prices are at seventy in our

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<v Speaker 1>processing costs is seventy, it doesn't there's nothing to share.

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<v Speaker 1>So we've we've you know, gone back and renegotiate the

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<v Speaker 1>contracts and said, look, uh, you know, irrespective of where

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<v Speaker 1>commodity prices are, we want to get paid our processing

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<v Speaker 1>cost and some acceptable margin up front and then will

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<v Speaker 1>split what's left with with the customer. Better be careful

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<v Speaker 1>you get too efficient, you won't have any business list.

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<v Speaker 1>But you know, if people be so efficient recycly, they

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<v Speaker 1>won't do it. But I'm as I'm thinking about growth

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<v Speaker 1>and where you go next, I'm wondering a bit more

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<v Speaker 1>about your gas to energy facilities in the United States,

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<v Speaker 1>because that's you know, the whole energy industry has been

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<v Speaker 1>under pressure where how how does that work for you

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<v Speaker 1>and how much is it adding to the profits? So

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<v Speaker 1>we we have gased energy at UM well over a

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<v Speaker 1>hundred and fifty of our landfills. UH. The only landfills

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<v Speaker 1>that don't have it are are very small landfills in

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<v Speaker 1>terms of volume. So at at all of our medium

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<v Speaker 1>and large landfills we have gas energy and those produce

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<v Speaker 1>h somewhere depending on the size of the landfill. We

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<v Speaker 1>have some lantils that that produce as much as tim

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<v Speaker 1>mega whites and mega wats of energy out of them.

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<v Speaker 1>We have some that are as small as three. But

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<v Speaker 1>but there's a fair amount of energy production going on.

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<v Speaker 1>And we do things like like UM power part of

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<v Speaker 1>the University New Hampshire and UH there's a fab facility

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<v Speaker 1>in South Carolina for automobiles that we power a portion

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<v Speaker 1>of that uh fabrication facility. So we really are producing

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<v Speaker 1>energy out of out of what we uh the trash

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<v Speaker 1>it's going to these landfills. Many thanks to Jim Fish,

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<v Speaker 1>president of Waste Management based in Houston, Texas, navigating the

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<v Speaker 1>twists and turns of the recycling garbage industry. You could

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<v Speaker 1>say effectively, and guiding his company to nearly record earnings

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<v Speaker 1>last week. I'm Kathleen Hayes along with Pim Fox on

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<v Speaker 1>taking Stock. This is Bloomberg coming up on taking Stock.

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<v Speaker 1>He was a jarhead and devil dog, a marine Adam driver,

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<v Speaker 1>also an actor. Featured in Star Wars episode seven. He's

0:11:11.600 --> 0:11:13.199
<v Speaker 1>bringing theater to the military.