Good day, and thank you for standing by. Welcome to the WM First Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker’s presentation, there’ll be a question-and-answer session. Please note that today’s conference may be recorded. I will now hand the conference over to your first speaker today, Ed Egl, Vice President for Investor Relations. Please go ahead.

Thank you, Olivia. Good morning, everyone, and thank you for joining us for our first quarter 2025 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. We will hear prepared comments from each of them today. Jim will cover high-level financials and provide a strategic update. John will cover an operating overview, and Devina will come into details of the financials. Before we get started, please note that we filed a Form 8-K that includes the earnings press release and is available on our website. The press release and schedules include important information. During the call, you will hear forward-looking statements 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. 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 Devina will discuss operating EBITDA, which is income from operations before depreciation and amortization. References to WM legacy business are total WM results, excluding the WM Healthcare Solutions segment. Comparisons will be with the prior year period unless otherwise stated. Net income, EPS, income from operations, and margin, operating EBITDA and margin, and operating expense and margin have been adjusted for comparability by excluding certain items that management believes do not reflect our fundamental business performance. Please refer to the earnings press release for reconciliations to the most comparable GAAP measures. This call is being recorded and will be available for replay on our website. Time-sensitive information provided today may no longer be accurate at the time of a replay. Any redistribution or rebroadcast of this call without the expressed written consent of WM is prohibited. Now I'll turn the call over to WM's President and CEO, Jim Fish.

Okay. Thanks, Ed, and thank you all for joining us. The WM team again delivered quarterly results that exceeded our expectations. The one thing I'm most proud of over the past few years is that we've truly become a predictably strong performer quarter-in and quarter-out. Once again, I'm pleased to report that we had a strong start to the year with first quarter results exceeding our expectations on several fronts. Total company operating EBITDA grew by more than 12% in the first quarter compared to the first quarter of 2024, driven by solid operational performance in the collection and disposal business, meaningful contributions from WM Healthcare Solutions, and increases in our sustainability businesses largely related to our growth investments. Our momentum so far, as well as our demonstrated operational execution and the strength and resiliency of our business model, gives us confidence in our ability to achieve all of our financial guidance we outlined last quarter. Our focus remains on growing customer lifetime value while leveraging technology to optimize our cost structure, delivering on our strategic investments in sustainability and attracting increased value from our acquisition investments. At a time when the US workforce is aging and shrinking, quickly deploying technology to supplement our workforce could prove to be a significant differentiator for WM. At the same time, the leadership position we've taken with our very profitable sustainability investments is positioning the WM brand to be synonymous with sustainability, a status not easily matched by our competitors. Of course, we continue to identify opportunities to scale the core business through acquisitions. We have a robust pipeline of tuck-in opportunities and anticipate another outsized year of solid waste M&A. Turning to our sustainability businesses in Q1, combined operating EBITDA from recycling and renewable energy grew by over 20% year-over-year, keeping us on track to meet full year targets. Automated recycling facilities delivered nearly double the operating EBITDA margin compared to our non-automated facilities. We added two new facilities in California and Texas with seven more next-gen recycling plants scheduled to come online in 2025. In renewable energy, growth was fueled by new RNG plants brought online in late 2024 and strong pricing for natural gas and renewable electricity. We're currently advancing construction on eight additional RNG facilities, all on track for completion this year. The strategy is working, as our investments in sustainability are delivering strong, high-return growth. During the first quarter, we also made significant progress in our integration of WM Healthcare Solutions into the broader WM organization. Our new customers are excited by the expanded level of environmental expertise that WM brings to their organizations, including an industry-leading reporting and analytics platform and an unmatched asset network that will help healthcare industry customers manage and track their waste streams more efficiently. We remain focused on identifying and capturing synergies and are on track to achieve $250 million of annual run rate synergies in 2027. We're pleased with the progress we've made in a short period and are excited about the long-term value we're creating. In closing, I want to thank our employees for their dedication and hard work. Your efforts drive our success, and we're grateful for your commitment. Looking ahead, I'm excited to share more about our strategic priorities and long-term vision at our upcoming Investor Day in June. We hope you'll join us in New York or tune in via webcast. I'll now turn the call over to John to discuss our operational results.

Thanks, Jim, and good morning. The first quarter further demonstrates the consistent progress we've made in our core collection and disposal business. Through our focus on customer lifetime value and optimization of our cost to serve, we grew both operating EBITDA and margins in the quarter. First quarter operating EBITDA for the collection and disposal business was up almost 5%, with margin expanding 10 basis points. We achieved this growth in what we knew would be the most challenging quarter from a comparison standpoint. The success is particularly impressive when you consider the impacts of tough winter weather in our Southeast and Gulf Coast regions during the quarter, and the expiration of alternative fuel tax credits. Revenue has once again grown across all lines of business, driven by collection and disposal yield of 4% and core price of 6.5% with churn remaining stable at around 9%. We continue to achieve solid pricing across all of our revenue streams. Commercial collection, transfer stations, and landfill core price were particularly strong in the quarter, as we continue to leverage data-driven decision-making to offer pricing that reflects the value of our service, the strength of our asset network, and our commitment to providing differentiated customer solutions. Regarding volumes, our first quarter collection and disposal results were flat on a workday-adjusted basis. Positive landfill and commercial collection volumes were offset by our strategic exit from the low-margin residential business as well as continued economic pressure on the temporary segment of our industrial business. While the California wildfire cleanup positively impacted our special waste volumes in Q1, these gains were largely offset by the impacts of winter weather events I mentioned earlier. Overall, we remain confident in our volume outlook for 2025 because our special waste pipelines remain strong, service intervals remain positive, and we expect fire volumes in Southern California to continue through at least the end of the third quarter. Turning to operating costs and margin. Q1 marked our sixth consecutive quarter with operating expenses as a percentage of revenue below 61%. We delivered operating expenses at 60.5% of revenue, a 40 basis point improvement from Q1 of 2024. Our commitment to the operating fundamentals of WM continues to drive margin improvement. The first quarter's performance was driven by our focus on frontline retention and the use of automation and technology to drive efficiency. The investments we've made in our people, including human-centered leadership, coaching, and facility upgrades, continue to deliver improved driver retention with Q1 seeing an 80 basis point improvement compared to the prior year. Enhanced retention benefits safety, customer service, and efficiency. We also continue to optimize our cost to serve with the ongoing adoption of automation and technology, including routing and resource planning tools. Cost optimization combined with targeted contract renegotiation and the intentional shedding of low-margin customers in the residential line of business continue to deliver strong results. This is evident in our first quarter operating EBITDA margin in the residential line of business which grew more than 130 basis points, achieving 20% for the first time in six years. We remain confident in our ability to execute our plans and achieve our full year targets, including operating EBITDA of between $7.45 billion and $7.65 billion. In closing, I would like to extend my sincere gratitude to our employees for their dedication over the last quarter. Their hard work and commitment to excellence have been instrumental in our success. I'll now turn the call over to Devina to discuss our 2025 financial results in further detail.

Thanks, John, and good morning. We're pleased with our strong start to 2025, which is particularly evident when looking at the drivers of our first quarter operating EBITDA margin results. WM's legacy business achieved a 30% margin for the fourth consecutive quarter. This is an increase of 40 basis points compared to the first quarter of 2024, and the improvement was driven by a 50 basis point contribution from favorable price to cost spread in the collection and disposal business, which is due to our success in optimizing and flexing our cost structure. We also saw a positive 20 basis point contribution from our recycling automation projects. These margin expansion contributions were partially offset by a 30 basis point headwind from the expiration of the alternative fuel tax credit that benefited the prior year. Total company margin was 28.5% in the quarter due to the 150 basis point impact from the addition of WM Healthcare Solutions. With our focus on optimizing this business, including through synergy capture, we've expanded the margin of WM Healthcare Solutions by 20 basis points in just one quarter. There is a clear path to additional cost optimization, and we are on track to achieve our full year expectations. As Jim mentioned, we're pleased with the progress we've already made as we begin to integrate and optimize the medical waste and secure information destruction businesses within WM's comprehensive offerings. As in other parts of our business, we're committed to using technology to make processes and people more efficient. We have a cross-functional team engaged to optimize the ERP system as a tool to improve all elements of the customer journey from onboarding to service delivery and then from billing to cash collections. The team is off to a great start, and we're encouraged by their early progress. Turning to cash flow results. Operating cash flow was $1.21 billion in the first quarter. This is a decrease compared to the first quarter of 2024, but it is in line with expectations as we had a planned increase in cash interest payments due to additional debt issued last year to fund the acquisition of Stericycle. We also faced a headwind from working capital due in part to particularly strong customer receipts at the end of 2024. We remain confident in our outlook for cash flow from operations for the full year. Capital expenditures totaled $831 million in the quarter, with both capital spending to support the base business and our investments in sustainability growth in line with expectations. Given tariff and trade negotiations, it's worth mentioning that we are particularly well-positioned to complete our sustainability growth investments at targeted capital investment levels because we've been deliberate in procuring the equipment needed for these projects ahead of time. We're also well-positioned for fleet replacement with the first quarter of 2025 being a particularly strong quarter for truck deliveries. First quarter free cash flow of $475 million is also on plan, and we're on track to achieve our full year free cash flow outlook of between $2.675 billion and $2.775 billion. In the first quarter, we returned $336 million to our shareholders through dividends. Share buybacks are currently paused as we focus on getting back to a targeted level of leverage through a combination of earnings growth and debt reduction. That said, we continue to focus on identifying tuck-in acquisitions in our core business and currently expect to close on more than $500 million of solid waste acquisitions in 2025. This represents a notable step change relative to our typical $100 million to $200 million of tuck-in acquisitions each year, showing our continued confidence in identifying attractive transactions at the right price. Our leverage ratio at the end of the quarter was 3.58 times. When considering our earnings outlook, disciplined approach to capital allocation, and the healthy acquisition pipeline I mentioned, we expect leverage will be approximately 3.15 times at the end of 2025. In closing, I want to extend my sincere thanks to the entire WM team for all of their hard work thus far in 2025. Our continued ability to deliver strong operational and financial performance positions us on track to achieve all of our financial guidance, which is a testament to the team's dedication, focus, and talent. With that, Olivia, let's open the line for questions.

Certainly. Our first question is from Bryan Burgmeier with Citi. Your line is now open.

Good morning, Bryan.

Thank you for taking my questions. And maybe to start a question for Devina. I was wondering if you could shed a little bit more light on your outlook for 2Q. I know you don't normally give quarterly guidance, but just trying to think through, I suppose, the normal seasonality for healthcare, considering that's a new business? And then if you have any detail on maybe the quarter-over-quarter margin improvement for solid waste relative to normal seasonality, that would be helpful.

Sure. Great question. So what I would tell you is there's not anything we're seeing from a seasonality perspective that is really unusual, with the exception of the impacts of the California wildfires. In terms of what will drive margin expansion, what I mentioned is that the solid waste business contributed 50 basis points of EBITDA margin expansion in the quarter. And when you consider that, overcoming 30 basis points from the alternative fuel tax credit, you're looking at an 80 basis point year-over-year expansion in margins for traditional solid waste businesses. You combine that with the strong execution on recycling automation of another 20 basis points, and that shows you 100 basis points of margin expansion from the base business. So, when we look forward to Q2, we're really optimistic that we'll see another step change in margin on a year-over-year basis and normal seasonal uptick in the operating margins of the business. When I think about the Healthcare Solutions business, it's not so much seasonality in the revenue outlook that we're looking at. It really is continued momentum in synergy capture and the realization of incremental value from optimizing the cost structure that will start to accelerate as we approach the second quarter. We think that Q3 will be our strongest quarter from a margin perspective, demonstrating momentum behind the traditional business, combined with value capture running at peak levels for full realization over the course of the year of that $85 million to $90 million in total synergies for the Stericycle business in 2025.

Got it. Got it. Thank you for that detail. And then maybe a question for John. You're just curious how yield in the solid waste business in 1Q compared to your expectations. It just seems like the spread maybe between core price and yield is widening a little bit. So if you can shed any light on kind of what's taking place there, maybe it's a function of mix or region. But any detail you had would be great. Thank you.

Yes, Bryan, I think it dropped about 400 basis points in the quarter. But what I would point to is that if you look at our core price performance, it was really strong across all lines of business, and it translated to margin expansion. There were some anomalies in there on the yield conversion. I mentioned some of the California wildfire volume, which impacts special waste, which runs through volume. There was a little bit of pressure from some of the industrial business that was a little softer in the quarter. But what I will tell you is even though that trend was negative, it was better quarter-over-quarter. So we're seeing some sequential improvement. That's part of why we feel confident to make some comments about how we feel going into Q2. So the yield conversion is one data point, but margin and core price performance is really where we're focused.

Thank you. And our next question coming from the line of Kevin Chiang with CIBC. Your line is now open.

Good morning. Thank you for addressing my question. I'd like to ask about yield as well. I noticed that the year-over-year increase in your commercial yield was basically unchanged compared to the growth rate from the fourth quarter. However, residential and industrial yields were down a little, approximately 100 to 150 basis points sequentially from Q4. Can you highlight any specific aspects of the commercial pricing strategy that contributed to a relatively better performance on a sequential basis?

So what I'd point out is that our pricing strategy is strong across all three of those lines of business. It really is a mix difference that John was mentioning that has led to some of the variability, and that's about unit differences, particularly in the industrial business as we've seen some variability in temporary roll-off. We see that as being largely weather-related. When we think about 2024 and the trends we were seeing, we had some enthusiasm because we cycled through the worst of those trends, and we're looking for moderation in those levels this year. When we look at March and April, in particular, we're happy to say that those trends are proving to be consistent with our expectations coming into the year, and the extreme winter weather that we saw in February really had more of an outsized impact on Q1, but we're moving past that. The other thing I would mention on commercial conversion of core price to yield that was particularly interesting for us, and it did have some impact on industrial as well, was some unexpected losses from large national accounts customers that experienced bankruptcies and therefore in-store closures that we hadn't anticipated in our guidance.

Okay. That's super helpful. And maybe just my second question. It looks like the healthcare Stericycle revenue was down year-over-year. I know you don't report everything the same way Stericycle did. But maybe you can just speak to the volume and pricing trends you saw in the quarter versus last year, appreciating that you didn't own the business then? And was there any purposeful shedding as you look to improve the revenue quality within Stericycle or improve the overall margin performance within the healthcare business?

Certainly. This is Rafael. I'll take that one. I just want to remind the group that during the quarter, we shed our Spain and Portugal businesses, which accounted for the majority of the revenue decline. In actual regulated medical waste, we are slightly up, ahead about 1% in regulated medical waste stops, for example. The churn in the national and hospital channels is consistent at around 3%, despite some ERP challenges mentioned earlier. We feel confident in the revenue side. We did see a dip in the secure information destruction side, but we believe that it wasn't structural and related to some weakness on the event work. We've got a good plan to connect our sales and operating folks better to improve performance and recapture those volumes.

That’s great color. I appreciate it. I’ll get back in the queue. Thank you very much.

Thank you. And our next question coming from the line of Tyler Brown with Raymond James. Your line is now open.

Good morning.

Good morning, Tyler.

Hey, Rafa, just on that, how much synergy capture was in the $95 million of reported EBITDA in Q1? And I know this is splitting hairs, but I think you guys said the updated synergies are $80 million to $100 million from up to $100 million. Are you messaging anything with that?

Not really. Look, we're feeling very comfortable with achieving the midpoint of the range right now. We produced about $16 million in value capture in Q1, which drops straight into the P&L. That came primarily from our execution on rationalization of SG&A, particularly on the sales coverage side. The confidence in delivering results stems from executing our planned sales coverage optimization and internalization goals, which when they come to fruition, will start paying dividends toward the latter part of Q2 and throughout the second half of the year.

Okay.

And then, Tyler, just really quickly, what I would tell you is we wanted to clarify with the investor community that our targeted execution on value capture for the year is $90 million. And so our midpoint of the range is always our best estimate of the outcome. We think $90 million is the most likely outcome.

Okay. Perfect. We love clarity. So Devina, and I don't know if Tara’s in there as well, but I think you guys were expecting about $190 million of incremental EBITDA from RNG and recycling. Does it feel like maybe that's a little bit behind schedule in Q1? So I guess a couple of questions. One, are you still confident in that number? And two, I think you addressed this upfront, but at this point, you don't expect any RNG CapEx-related delays or increased spend due to tariffs. Would that be correct?

Yes. I am in the room, Tyler. I'll take the back half first. We are very confident because we've had both of our equipment delivered well in advance of even any of these tariff discussions happening. So no impacts related to project schedules due to tariffs or capital costs. Regarding performance, we're performing according to plan. The recycling line of business contributed about $11 million in EBITDA performance from those growth projects, which was the majority of the benefits seen in recycling. We are delivering on what we anticipated: 30% improvement in labor and 20-plus percent improvement on operating costs, and these transformative assets are delivering improved volume to the communities that need it.

Okay. Okay. So it sounds like it's largely tracking.

Yes.

Real quick. Yes. Okay. Perfect. And then, Devina, just real quick, the 30 basis point drag in CNG, that's going to be every quarter of the year based on what we know today. Is that right?

That's correct. And the 30 basis point impact for the full year was included in our guidance for EBITDA margin for 2025.

Yes. Okay. All right. Thank you for your clarification. Thank you, guys.

Thank you.

Thank you. Our next question coming from the line of Trevor Romeo with William Blair. Your line is now open.

Appreciate you taking the questions. I had one on M&A, I guess. If I heard you right, Devina, it sounds like you're now expecting around $500 million or so of solid waste acquisitions, which is up from last quarter. So one, is the full $500 million included in your guidance now? And then two, would just love a qualitative update on what kind of opportunities you're seeing? Are you finding in this type of environment with some additional economic uncertainties, is there more willingness to sell from some of these smaller companies?

Sure. I'll take the first part of the question, then turn it over to John for the second part. When we came into 2025, a lot of this pipeline had developed, but we were in DOJ review processes and contract negotiations. The pipeline was available, but we didn't have it fully closed. We're happy with the progression of the transactions in our pipeline and can say that these transactions are above our guidance relative to the midpoint and were contemplated based on today. Incremental tuck-in acquisition revenue could now be in the ballpark of $80 million to $125 million, which represents an increase from about $35 million to $80 million in our original guidance midpoint.

Trevor, I would just add to what Devina said. One, there is some uncertainty out there, and the cost of labor and scarcity is certainly pressuring some of the organizations we're looking at. In addition, the long-term outlook for disposal options may be pushing some folks to the forefront, making them more ready to sell. As Devina mentioned, the pipeline is strong. We did about $800 million last year, and we have a good runway to close more of these deals by the end of the year.

Great. That's super helpful. Thank you both. And then, for my follow-up, maybe one for Rafa, I guess on the Healthcare Solutions business. It's still early, but just wondering if you could share any anecdotes from conversations with customers about the combined value proposition, any early wins or new opportunities? Just we love to hear what customers are saying and how that's tracking.

Absolutely, Trevor. I participated in an entire West Coast swing recently and talked to several very large hospital networks there. A lot of folks are excited about the increased ability to help them in their sustainability journey, including providing best-in-class reporting and analytics tools that will help them manage their waste better. I've been surprised by how patient the customer base is, which is largely because WM is stepping in as the owner and providing an increased level of confidence. A lot of conversations centered around fixing the ERP. We've communicated transparently that this involves analyzing the entire customer journey and having workstreams that will facilitate the collection, billing, and service delivery. So, while we're still working on playbooks and waiting to have the right fixes on the ERP, the shared wallet customers we have right now, with solid waste and regulated medical waste is only about 17% of our total customer book, not including customers that neither of us have.

All right. That's great. Thank you very much.

Thank you. And our next question coming from the line of Sabahat Khan with RBC Capital Markets. Your line is now open.

Great. Thanks and good morning. I just wanted to get a bit more color on the residential margins and the journey there. It sounds like it's something you've been working on for a while. Can you talk about how those discussions are going, how if there's more volume to shed? Or is it more from a pricing perspective that you want to maybe add those margins higher? Where are we in that journey with the margins now in and around 20%?

Well, I believe getting back over 20% for the first time in six years has been a good milestone. There’s been a lot of work done to achieve this on both the revenue quality and operating expense side. I would tell you, I think for 2025, we're going to see probably the same level of negative volume, give or take, 50 basis points. We've always said we want the residential line of business to compete with others in terms of margin and return. While we've made a lot of progress, we still have some work to do. In 2025 and into early 2026, we'll see some additional negative volumes. Shedding 3% volume while revenue and EBITDA are up remains the right path for us.

Great. And then just one quick one. I think, Devina, you mentioned earlier that some of the larger lifting on the synergies related to the Stericycle side is going to be in Q2 and Q3. Should we expect Q2 or Q3 to be the biggest quarter for EBITDA flow-through of that business? And can you share some initiatives you plan on taking midyear that will drive that?

Sure. When we think about value capture, it really is a second half of 2025 ramp for us. Some actions will start in Q2, bringing much of that momentum into Q3. We’re focused on streamlining back-office processes, and as an example, migrating our systems for human capital will unlock more incremental value that starts late in Q3. We've made progress moving towards our target of 15% SG&A.

I want to add that this effort is not just about value capture at the end of the year, but also about process and operational discipline. We're optimizing our McCarran incinerator, which is now handling 70% of our incineration waste on the West Coast, reducing extensive transportation costs. We expect to internalize 100% of waste by the end of the year. Improved fleet management and reducing spare ratios are also in progress, although we laid the groundwork for that in Q1.

Okay. Thanks so much for the color.

Thank you. Our next question coming from the line of Toni Kaplan with Morgan Stanley. Your line is now open.

Thank you so much. I want to start with a broad question, looking at the company and its resilience versus prior downturns. Can you share your updated thoughts on that overall, and how you would expect the sustainability business and the new healthcare business to perform in a potentially slower macro environment?

Great question, Toni. Part of the reason we're happy with our sustainability investments and the healthcare investments is that they provide a level of diversification that we may not have had as much of with just a solid waste company. We like the growth trajectory of both. It tends to be viewed as a bit higher than solid waste. This business, whether it's this company or this industry is very resilient to economic downturn. We don't see an economic downturn, and January and February were just very bad weather months.

Great. And then as a follow-up, Devina, you mentioned you're in good shape on the fleet for this year. How should we think about potential impacts if tariffs are implemented? Would it be a more 2026 CapEx question?

Toni, we're in good shape from a truck delivery standpoint. We've front-loaded our schedule, delivering about a third of our trucks. We don't see cost pressure, and we worked with the supply chain to assess tariff impacts, estimating little low single digits in a few buckets. We’re comfortable for 2025 without immediate tariff effects.

Single digits, you mean in the millions, not $7?

Yes, correct.

Thank you. And our next question coming from the line of Noah Kaye with Oppenheimer. Your line is now open.

Thanks for taking the question. Hopefully, you had a chance to look at the EPA release around PFOS. It seemed the language was constructive around protecting passive receivers and adhering to a 'polluter pays' principle. I wonder if you've had a chance to review that, your thoughts on that and what it may mean for the solid waste landfills?

Our team is still looking at it, Noah. We've been clear that a passive receiver exemption would be positive for the industry and is warranted for multiple reasons. We still view PFOS broadly as an opportunity for WM, considering special waste and other industrial waste that could come in.

Thanks. Just a bit of housekeeping. I want to clarify the Q1 synergies number for WHS. Rafe said $60 million of value capture. Are we talking about $16 million of synergies captured in the quarter, or is it annualized?

Those are $16 million of synergy value that's actually dropped into the bottom line in Q1. Does that help?

Yes, 16, right?

Yes.

Okay, great. And I assume sorted office paper prices have a modest impact on the secure information destruction line. Can you confirm that? And will you talk about your game plan for reducing commodity exposure or raising profitability?

Yes, there was an impact on the commodity side. A little bit of an impact, as I referred to earlier, primarily from the event work being down a bit. We've discovered that, that was mostly a breakdown between the sales and operational channel for delivery of on-time service. We've corrected that. We expect to be at or slightly above budget on that front in April and beyond. Stericycle had begun to limit exposure, but we experienced driving a full fee-for-service model, and we're exploring how to implement it effectively.

All right. Thank you very much.

Thank you. And our next question coming from the line of Konark Gupta with Scotiabank. Your line is now open.

Thanks and good morning. Just a quick question on revenue cadence for the full year. The first quarter seasonality was pretty much in line with what you had last year, despite some headwinds from weather. How should we think about pricing and volume ahead? Should we expect to follow a similar seasonal pattern as last year?

Yes. The only item causing unusual seasonality is the impact of the L.A. wildfires, which I mentioned earlier. We think the second quarter is a peak for that. Regarding revenue guidance for 2025, we remain confident in achieving core price programs in the range of 5.8% to 6.2%. We had flat volumes in Q1, but we're optimistic about approaching the midpoint of our volume guidance for the year.

I want to add on the price side. We’ve been expecting a decrease, as CPI has come down since the peak in 2022. Price is anticipated to decline slower than cost, resulting in continued margin growth, which is what we've seen.

That's great color. Thanks. And quickly on Stericycle. If I heard correctly, you expect around $190 million of incremental EBITDA from RNG and recycling. Should we think of that as behind schedule in Q1?

So we believe we’re still on track for solid growth in the second half of the year, as we're ramping up on the operations side. Disposal costs and fleet costs did mute the margin expansion from Q4 to Q1.

That’s great. Appreciate the time. Thank you.

Thank you. And our next question coming from the line of Tobey Sommer with Truist. Your line is now open.

Thanks. Many of my questions have been answered already. From a high level, what are the learnings you have from Stericycle? What are a couple of surprises from the transaction?

Well, I don't know that there's been a huge surprise. We anticipated significant opportunity on the SG&A side and have been pleased with how quickly we've optimized sales coverage on the secure information destruction side. The customer base remains strong, and our ability to cover all waste streams provides resiliency. We expect to expand our Rx-PRO initiatives as we increase capacity in our incineration network.

The only point I would add is we haven’t found any negatives that went unseen, which is a positive. Rafa's numbers are verifying our strategic approach to the business as it presents a stronger growth trajectory than solid waste, which is exciting.

Thank you. Can you comment on whether we should anticipate ongoing and incremental international divestitures as you look at the portfolio?

We are happy with the trajectory of our UK and Ireland business, which offers improvement potential. Our smaller business in Western Europe, including France and Germany, requires evaluation to see how it fits within the overall portfolio later.

Thank you. Our next question coming from the line of Jerry Revich with Goldman Sachs. Your line is now open.

Yes. Hi. Good morning, everyone. I want to ask on the legacy business. The costs were really impressive in the quarter, backing out the alternative fuel tax headwind. Is it fair to think about inflation slowing as the comps get easier, especially considering your comments about having costs locked in regarding tariffs?

Yes. We were pleased with our first quarter operating expense margin and expected inflation to continue tracking down, supporting our confidence for margin objectives for 2025, aiming for upper-end growth in our long-term margin range.

Super. And can I ask, Tara, in terms of what we're seeing on voluntary market pricing for landfill gas, looks like that's steady in the low-20s even as rent prices have come down. Is that consistent with what you're seeing?

Yes, we're tracking closely what's happening with the renewable fuel standard. Pricing has been in the low-20s, with a holding pattern among buyers right now. We expect that to re-emerge once the administration updates their new RVO, as these are somewhat interconnected.

Got it. Thank you.

Great.

One other piece of color, we've locked in about 75% of our volume for 2025, which is an increase from our last update. The $0.25 change in RIN pricing now only represents about $5 million.

Super, Tara. So based on the royalty disclosures and the pricing updates, it looks like your volumes were up about 50% in the quarter year-over-year. Is that right?

Yes, when you look at monetized volumes, it's an even better number considering how much RNG we generated, ensuring strong performance for the year, with more improvements expected as we ramp up operations.

Thank you. And our next question coming from the line of David Manthey with RW Baird. Your line is now open.

Yeah. Thank you. Good morning. I want to clarify on tariffs regarding OCC or other materials in your commodity basket. Should we be thinking about pricing as we go forward?

We're tracking tariffs, which could positively impact some materials. We monitor impacts on OCC and fiber closely, as we also ship to markets in Southeast Asia and India. Our brokerage team has a wide variety of markets to tap into, which puts us in a good position.

It's worth mentioning that five years ago, virtually all of our OCC was going to China. Now that's essentially none. Whether it was foresight or just luck, we’re glad to have diversified our markets.

We'll chalk it up for good foresight. Thank you.

Thank you. And our next question coming from the line of James Schumm with TD Cowen. Your line is now open.

Hey thanks and good morning everyone. Devina, while it's clear on the SG&A opportunity getting down to 15% after three years, is there anything structurally different about Stericycle such that you wouldn't be able to achieve an SG&A level closer to your corporate level of 9% or 10% over several years?

Yes, the 9.5% for WM total company is the ultimate goal. Stericycle's back office operates on its ERP system and will not integrate with WM’s for the foreseeable future. We believe the path to an optimized cost structure can exist, which we’re working hard to achieve.

Great. Thank you. And on the longer-term outlook for the Stericycle business, are those long-term targets for revenue growth of 3% to 5% and EBITDA growth of 13% to 17% something we should look at?

We don’t see anything wrong with those targets, but the foremost opportunity lies in reducing operating costs and SG&A, which we are already seeing. The cross-selling opportunities are vast and will be verified once we overcome ERP implementation challenges.

We plan to outline specifics about our long-range outlook for top-line and EBITDA growth over the next 3 to 5 years during our Investor Day in June.

Okay, great. Understood. Thank you very much.

Thank you. And I’m showing no further questions on the Q&A queue at this time. I will now turn the call back over to Mr. Jim Fish, President and CEO, for any closing remarks.

Thank you all for your questions this morning. The themes we wanted to convey today focused on our consistent performance and being on track for our guidance for the year. We're encouraged by the volume increase in March and April, and we're on track for our sustainability investments and WM Healthcare Solutions. We look forward to seeing you in June, hopefully at our New York City Investor Day.

This concludes today's conference call. Thank you for your participation, and you may now disconnect.