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