Waste Management, Inc. (WM) Earnings Call Transcript & Summary

Okay. Good afternoon, everyone. I'm Jerry Revich from Goldman Sachs, and I'm delighted to host with me from Waste Management, John Morris, Chief Operating Officer; Mike Watson, Chief Customer Officer; Ed Egl, Senior Director of Investor Relations. John, Mike, Ed, thank you very much for joining us today.

Thanks for having us. Good to see you.

Thanks, Jerry.

So we're going to run this conversation in fireside chat format. If anyone on the webcast has any questions, you can just submit that through the webcast, and they'll arrive in my inbox. So with no further ado, I would love to start the conversation gentlemen in terms of looking back at your Analyst Day, the company is performing really well compared to the targets that you folks laid out just 3 years ago. I'm wondering if we look at the underlying pieces of the strategy today versus 3 years ago, what aspects of the strategy have played out better than expected in driving the performance that we've seen? And what are the opportunities that continue to drive the strong organizational performance from here based on implementing the next layers of the strategy?

Maybe I'll take a crack at that to start, Jerry. I mean I smile because I think about that Investor Day when we were up in New York a while back, and it feels like, in some ways, like a decade ago. So many things have transpired since then, and we've survived COVID, right? We're at the tail end of it, knock on wood. I mean it's still lingering out there a bit. We did the ADS deal. Those are 2 really interesting hurdles and opportunities at the same time. But I think about -- I think your commentary is fair. I mean we've -- the company has performed exceptionally well through COVID. None of us signed up for that, but we -- I think what we all resolved ourselves to is, there's opportunities for us to become a stronger company through that. And I think what you're seeing is, we stuck to what we needed to do, we needed to do through COVID. We executed the ADS deal in the middle of that. And when I go back, Mike and I look at what we talked about during Investor Day, not a lot has changed. I think we've executed well. I would tell you, the one area where I think we are advancing the ball faster now than what we probably anticipated even 2019 is really around what we're doing with our tech investments in automation, and that's a lot of what you heard from Jim and Devina on the calls and you've heard from the broader team on some of these kind of conversations. So I don't know if you want to comment on that, Mike?

Yes, I think it's a good point, John. The sustainability investments we've made along our continuum on the strategy. I think our investment in technology, automation has really differentiated WM. I think it's differentiated us across the customer interactions, the operational efficiencies even back office. So I think those are the ones we see some great strides, but even some more opportunity in the future to further digitalize our customer experience, really reduce the labor intensity of our operation, which is continually going to challenge all of us, and also look at ways to invest in technology more efficient, both on the street operationally, but also in the back office. So I think that continuum of differentiating, making the right investments around sustainability as well as the optimization, automation of our businesses is where we see continued growth for WM.

And looking at the bottom line, over the past 3 years and even 5 years, you folks have delivered double-digit compounded earnings growth over that time frame pretty regularly. As you think about the opportunity set from here, how is the growth algorithm different? Or maybe it's similar to what we've seen over the past 5 years in terms of mix of margin expansion, yield improvement, M&A and buybacks.

So not necessarily in order, Jerry, but I think when we look at the growth profile, and we talked about on the last call, comps have been a bit interesting, right, because of buying ADS because of COVID -- return from COVID, the comps. But if you step back for the last handful of years and kind of normalize for that, we've certainly seen good volume growth. We're still seeing good business formation. We talked about that on the last call. M&A, clearly, we were -- we took, I wouldn't say, a pause, but we were much more focused in the 9 areas or regions that consumed ADS to make sure we did that well. We're very happy with the way that went. You've heard from where we started to where we, I wouldn't say end, that we're still bringing out some additional synergies, but that deal has gone exceptionally well. My point in bringing that up is, core M&A tuck-ins are still very much part of our strategy. We'll continue to pursue those. We want to do it, obviously, with the right kind of discipline. You've also heard us talk, Mike mentioned, what we're doing additionally around the RNG opportunity and recycling. If you think back 5 or 7 years, when we're talking about recycling, it's had to de risk the business, not being relying on commodities. And we talk a lot less about that now. We talked about the speed for service model, and that's been a good story for us. We think recycling will be economically sustainable going forward in the environment we're operating in, and frankly, the model that we've pursued. And I think with respect to RNG, we're going to continue to charge down that path. We've been asked questions, very fair questions, about how we're not going to take the commodity risk on the RNG from a syndication of risk, and how do we not put ourselves in a position where we're taking all the commodity risk, and we've got a portfolio approach there that we've talked about. I think the last piece I might make -- I'm sorry, go ahead, Jerry.

No, no. Please, please.

And I was going to say, I think the last piece that goes back to what Mike said, for a lot of reasons, we've talked about disruption in supply chain, labor pressure, inflationary pressure, et cetera. I think the moves that we're making to pull forward a lot of the technology advancements that Mike was mentioning, the arbitrage benefit from that, frankly, gets better every day as we look at continued labor disruption and the shortage and the premium for labor supply.

Yes. And the headaches of putting together a staffing sheet at any location. In terms of the technology opportunities from here, so we spent a lot of time in the past couple of earnings calls talking about the recycling technologies, what else stands out as if implemented across the business could really improve productivity and efficiency that hasn't been implemented yet?

Mike is leading a large part of that effort around automation. Maybe he's better off taking this one.

Yes. As I mentioned earlier in the kickoff, I think if I look around the customer journey and how that translate into our operations and back office, I think the further digitalization of our customer interactions, we've made some great progress so far. You've heard a lot about those, but we're seeing those really take hold, and that will have an impact on how our customers engage with us, which will be twofold, really. A better customer experience, but also reduce the labor intensity of handling our calls. We take a significant amount of calls at WM, and it's our goal to make a better experience which our customers want, and our agents can spend more time on more complex issues. That's probably one of the more simpler ones. We've made some investments in routing technology where we think this is going to be a big game changer for WM and a differentiator, utilizing how we manage our container inventory, our people, our truck assets and improve the routing efficiencies through technology that will help us really be more efficient and use less human capital to service our customers and also, I think, most importantly, leverage us for continued growth operationally as well as in back office. So those are the ones that I think I'm really the most excited about is how our customers engage with us, but also how we can be more efficient, more safe and more reliable through automation and technology. I think one thing we talked about at Investor Day was our technology on our trucks. I think this is also something that differentiates WM. We call it SmartTruck, but really, this is a rolling information center for us that allows us to engage with our customers, understand what's happening when we service them and provides us really with information to make better decisions to serve them and to ultimately engage with them as well.

Very interesting. And at the Analyst Day, you laid out a productivity improvement number. I want to say, it was $75 million or $100 million. Please correct me if I'm wrong. How far along are we on achieving on that specific quantified piece? It sounds like, Mike, what you're laying out is above and beyond what you folks spoke about at the Analyst Day, correct?

Yes. I mean John can handle the actual efficiency conversation, but the way I'm looking at this, this is continuing to build on our operating efficiencies. I think we've handle those very well, including the integration of ADS, which John will get into. But to me, this is a way for us to make better decisions on the street to service our customers and get them a more reliable, more productive service over the long haul and really be able to service more customers per labor hour. And really, that's the name of the game of the investments here is to be less labor intensive to service our customers, but also scale for growth as well. I don't know, John, if you had something to add to that?

Yes, I think -- I don't know if it's in addition to, Jerry, as much as it is. I think when we talk to you folks in 2019, we didn't have the benefit of what we know now, right? And I think a lot of the inflationary and specifically, the labor headwinds have certainly not moderated. If anything, they've increased. So the things that Mike was mentioning are, we're probably going faster now because of that. The rationalization of these investments is getting better and better as we continue to face these inflationary pressures. So what you hear us talking about is doing a lot of the things we chatted about in 2019, we're probably upping the pace and have been for some time, trying to offset, obviously, what's going on in the inflation front. I know we're going to talk, I'm sure, at some point about pricing, but this is part of us on the margin front, it's not just pricing. It's got to be -- part of it has to be efficiency. And it's not driving fast. It's really about making the model more efficient. That's what Mike was commenting on.

Yes. And John, I'll take that in consideration to talk about pricing then. In terms of pricing, your business, as you folks have been very clear about, you don't want to come back to customers and raise prices multiple times. Based on the price increase we saw on new customers in the first quarter and with the CPI rollovers coming over the course of the year, it sounds to me that there's a chance if things go well, pricing could actually accelerate as we go through the year. And I know it's really early relative to your guidance, but just based on the cadence of the price increases that you folks put through and what's going on with inflation, is that a reasonable thought process? And obviously, we'll reexamine guidance later, but am I missing anything in terms of contract cadence or otherwise that I should keep in mind?

So I would tell you, Jerry, yes, we're not -- I mean we talked about guidance at a different time, but we really -- to Mike's credit and revenue team, they really -- we started to see this really late Q1, early Q2 last year, right? And to the credit of Mike and his team on the revenue side, started taking the steps then anticipating what was going to happen with overall inflation and more specifically, labor. And I think when you look across virtually every element of pricing and revenue quality, it started to ramp up between Q2, Q3, Q4 and then obviously into Q1. So it's not as though we waited. I would tell you though, I spoke about it on the call specifically is, somebody -- I forget who asked the question, but could you have gone faster, could you have done more? I guess the answer could always be yes, but that is offset with really a focus we have, which is around customer lifetime value, right? When you look at our -- specifically our commercial and industrial customer base, we're happy to report our churn numbers are still at historic lows. Our rollbacks on our pricing are as good as I think they've ever been, and I think part of it is the tools and the discipline that Mike and his team have put in place to help us. We're fighting, obviously, to offset inflation, but we're also taking a long term. I've used the phrase, this is a long game, and we don't want to let one quarter to the next really cause us to deviate from what the price is here, which is keeping these customers for the long term.

Yes, I think you summarized it well, John. I think one of the things we're proud in addition to some of the results we've had in Q1 is on the disposal side. Disposal side is one where we spent a lot of time on more sophistication on tools and technology. And our disposal -- MSW disposal yield was 5.1%. So we really closed that gap to the rest of our lines of business. Obviously, the inflationary pressures are different in the disposal line, per se, but it is our -- we have a premier asset network, and we need to make sure that we get the appropriate returns on that, but also cover those inflationary costs. But I think the sophistication we've added around that particular line of business is something that we're very proud of with that type of performance on the price side.

And the one thing I'd like to add, Jerry, real quick, is, just remember, last year, we had some strong pricing starting in Q2, 6.2% core price. So the comparisons are going to get a little bit more difficult as we go through the year, but that doesn't mean we're changing our pricing efforts. We're still pricing customers appropriately to recover the cost inflation we're seeing, but because of the math dynamic there and revenue growth that we've seen over the last few quarters, you could see it look like it's coming down as a percentage of revenue, but that doesn't change the fact that we're continuing to increase prices.

The other thing I would add, Jerry, to that, we talked a little bit about the indexes in the past. I think our goal is to make sure that our business is tied to the appropriate indexes as we move forward. There's been some variations in some of the indexes in our industry. But I think the most important thing is, we're focused on trying to maintain that pricing discipline, as we mentioned, making sure we cover the inflationary costs across lines of business. They're a little bit different, but I think we have really demonstrated strong performance across the entire both disposal and collection lines of business to drive that growth. We will see some trailing as a lot of these index are trailing 12 months. And if I look back 6 months, a year, CPI was 1.5% a year ago and now it's 6.6%. That's CPI-U. So that stretch is pretty distinct for that particular index that it's a little bit different on some of the others. But I think those are some of the things we're working through is trying to manage through those contracts and try to get the pricing improved, not only with the index, but also going back to customers where it makes sense to say, hey, our costs have increased, and these are case-by-case spaces to make sure we improve the profitability. And I think you're seeing that both on our new business pricing as well as our existing business, which is really about the overall quality of revenue that we want to have at WM.

And Mike, I just want to zero in on the comment just to make sure I'm on the same page with you. When we're going back to customers saying, hey, our costs are rising faster, is that a comment to long-term customers where you have inflationary agreements that, as you said, we're hitting a threshold where we're supposed to be getting paid 2% more when we need to get paid 6% more. Is that what's happening?

Yes, that's exactly what's happening. Obviously, we want to stay connected with the inflationary cost of our business, and we might have an index, for example, that is -- let's just theoretical, say, it's a 5% increase in our costs or 9%. We're going back to customers, and those are individual negotiations that we're working through in their case-by-case basis. And in some instances, we have some open market price increases where we have the leverage to move those to cover those inflationary costs, some we don't. And our goal ultimately is to try to understand and connect our cost pressures with the revenue that we pass through to our customers. Does that answer your question there?

It does, yes. Certainly, reasonable from a customer standpoint, too. And in terms of looking at the landfill part of the business, correct me if I'm wrong, but a significant part of that is levered to these types of indices that we're talking about which, to me, suggests landfill yield should be accelerating as we head into 2023, just by virtue of the CPI mechanism. Do I have that right? About 70% of your landfill business is term-structured.

No, I wouldn't say, it's not that high. I don't have that number off the top of my head, Jerry, but it's, I know, it's not that high. Much more of that landfill business we have -- listen, we have plenty of contracts that are tied to municipalities or franchise. I don't think it's that high. We can circle back with that. But regardless, what I would tell you is, we've -- there's certainly been a recognition about a couple of things. One, the value of the landfills and where they're placed, number one. Number two, more and more with the way the composition of landfills are metro areas, remote areas. The value of transfer stations and transportation is that much more today than it was yesterday, and we think that will continue. So it's really about the value of not just the landfill asset, but accessing that facility, whether it's by truck or whether it's by rail or whether it's by water, which we do all 3 of, and making sure we're capturing the value of the network, not just the landfill. You've seen us focus and you've heard me in particular talk since they got -- took the job as COO. Transfer station pricing is part of this, too, right? We don't want to take the risk of transportation of fuel and all those other things. So I think you have seen a ramp in terms of how we price and what the yield effect has been on both the transfer station and the landfill. And as Mike -- and I went back and looked, if you look at it accelerated quarter-to-quarter in 2021, and you continue to see that in Q1 of this year, and we're going to continue to make sure we capture value partly. As Mike mentioned, inflation is staring us in the face on the landfill side, whether it's construction, whether it's materials. The one thing I would say is, when you look at it and maybe you compare it to the other lines of business, which happens from time to time, one of the biggest inflationary pressures we're seeing is labor, and that's much more intense on the collection side than it is on the landfill side. So it's not exactly an apples-to-apples comparison, but we're pleased with the acceleration we've seen in both the transfer and landfill pricing strategies.

Got it. That is clear. And one of the interesting investment opportunities that you folks have in your business is on the landfill and gas side. I'm wondering when your folks are setting up the structure, do you see an option value to potentially set up an entity that you could divest in 3 years or 5 years that has the economics of the volatility essentially? Is that part of an opportunity that we should be thinking about as we build up these landfills? Could we be potentially divest the resulting clean energy entity?

Yes, I don't know if that's necessarily in our sights right now, Jerry. What I would tell you is, and I remind everybody, there is a lot of talk about RNG right now, a lot of talk about RINs, about the risk portfolio or risk profile, and how do you take -- syndicate some of that risk. We have run and have been running landfill gas to energy plants for decades, right? The difference is, we were doing it and converting it to electricity. And what has changed is obviously the value of the MMBTU of gas, right, especially if it's coming out of a landfill in the form of RNG. Right now, we power -- and to keep me honest here, about 40% of our fleet -- our CNG fleet is powered by gas coming out of our landfills. So we still got a significant portion -- 30%, I'm sorry. So we still got a pretty big opportunity to continue to take that gas out of our landfills, repurpose it and put it into our trucks. And by the way, right now today, our CNG percentage on route is about 70%. That number will continue to grow. So we see that as a really good story. And by the way, whether we're investing in RNG or landfill gas energy, we have an obligation, obviously, to manage that gas. RNG is the technology that makes the most sense for us right now. So we see that kind of circular story there, the closed loop tying to our fleet strategy as being a good one. On the risk side of the commodity, I think what we've said is, listen, there's -- we've signed a couple of contracts. We referenced a small percentage of the portfolio, but we've got customers lining up transportation and non-transportation related. We're willing to pay a premium to say that they got renewable natural gas going into their facility or facilities. So we don't see right now any -- on the horizon, any shortage of need in terms of the market for renewable natural gas. And we think as a result of that, in a portfolio approach, we can syndicate a lot of that risk.

Well, -- and also what's interesting is if you assume pandemic era RIN prices, you folks are still achieving a 7-year payback on those investments, too, which hopefully we won't see pandemic again, but...

Yes, I'm on your side on that one. You're right. We have been conservative on how we've modeled what the value of the RINs would be going forward and the gas for that matter.

And in your conversations with folks like Amazon and others that are interested in reducing their carbon footprint, how are they thinking about the carbon reduction that they're achieving by using RNG? Do your conversations get that granular? And we've heard essentially $2 with reprices is where -- what those types of buyers are willing to pay now? Is that consistent with what you're hearing in your conversations?

Yes. As I mentioned, I wouldn't -- I don't know about conversations. I'm not going to comment on any specific company. What I said earlier was, we feel there's certainly a pull in the demand in the market for the gas that we're producing, what we're producing today and what we're going to produce. I think what we've said we got the fifth plant coming on, I think, this month or it might have just been turned on. We got another one at the end of the year. We'll see the benefit of those full year, obviously, next year. The run rate on the rest of those plants, Jerry, is about 18 months to 24 months from when we stick a shovel on the ground to when we get the benefit of it. So there is a little bit of lag between cash out the door in terms of investment and when we're going to start to see the benefit. But the commodity side of that has been really, really strong. I mean there's been -- there's certainly non-WM transportation fleets that could be monetized. We have room to monetize our fleet. We've got demand outside of transportation, as I mentioned, a couple of the contracts that we've done. And then you've also got the European draw, and those markets are obviously more mature than ours. So when you look at all of it, we feel pretty good that we've got some optionality there on the commodity side.

The one thing I would add to that from a customer standpoint outside of the renewable gas or customers, whether large or small, are looking for more solutions from WM that we can provide around how they can be more sustainable, whether it's their operations, the circularity of their supply chain, how they can improve their recycling, just generally how we could help and partner with them to be a better sustainability partner. And that's some investments we're making and expanding those breadth of services, but a lot of that has to come with information and the investment we're making and reporting and data around sustainability that's helping WM differentiate itself really in our strategic business or our national account space as well, which we've seen great growth, which we've mentioned in quite a few earnings calls, that's really positioned WM as a sustainability leader in that space.

And John, I want to go back to the comment that you made earlier that your own CNG powers about 1/3 of the fleet. Based on the locations of these plants that we're talking about, does that get you enough of scale relative to the rest of your fleet? Or is there any geographic intricacy that might make a portion of the CNG fleet not addressable by your own gas production.

Yes. I think I would think of the gas as fungible, Jerry. I mean our first plant, we were putting gas in -- it was Indiana or Illinois, I forget which state. And we are actually monetizing it in California because it made the most sense to monetize that portion of the fleet. There are opportunities, obviously, for us to convert the actual gas and put it in our own truck. But to your point, if you look at the map of where all our locations are and where these RNG properties are going to be on or will be, they don't always sit exactly over our fleet. So there's going to be -- there is -- some of that gas is fungible and that where it goes in and where it comes out. But in terms of molecules, we want to offset what we're burning through our trucks with the gas that's coming out of our own landfills.

Well, that's a lot easier and I appreciate it. I didn't realize it was that fungible. That's very interesting. And so roughly, based on the usage per truck, I think compared to the gas that you folks are bringing online, getting to all of your own CNG, I think, would roughly absorb 1/4 of the gas that you're bringing to market. Does that sound like the right ballpark? There are a lot of assumptions in there.

I don't know if it's a quarter, Jerry. What I would do know is that when we're based on the runway now that we'll reach a point where we will have enough gas to supply our entire fleet, that is CNG. And we're never going to get to 100% CNG simply because there's not gas availability everywhere, but it's going to be probably high 80s to 90%. And we will get to a point where we can produce enough RNG to go into our fleet, and then we will have surplus gas. I don't know what the percentage is off the top of my head. I can circle back and check on that and have that get back to you, but that's why the other comments I made about what the demand is for gas inside and outside of WM in transportation, outside of transportation and also internationally is why we feel good about the ability to market those molecules even when we're done with our fleet, so to speak.

And John, to your point, we were having conversation with Cummins earlier today, where they spoke about their 15 liter will be available in commercial production for natural gas in 2024. And I'm wondering for you folks for refuse application, does that -- is that an attractive product? Does that improve your essentially route management at all having the higher power 15-liter engine? Or does that not move the needle for refuse applications?

You broke up. Who made that comment? I didn't hear that for the first part of your...

Sure. Yes. Cummins, the engine manufacturer that -- so they're rolling out a 15-liter engine in commercial production in 2024 for natural gas.

Yes, I mean, listen, the more optionality we have with, in this case, Cummins and the power units that they're building, gives us more optionality to our fleet. And one of the things we focus on is, we want to have adequate and not overdone or underdone power for each of our vehicles, right? And that varies across the country. Things like weight loss, terrain ,are they driving up at down hills? Are they driving across Texas where it's flat? I mean all those things go into it. So to hear that Cummins is going to come out with yet another selection for us just gives us some more optionality in what we put in our units.

Okay. Super. Can we talk about recycling, John, the M&A pipeline for recycling specifically? How active is that versus other bolt-on opportunities? Is that a particular focus for you given what you folks are able to deliver when you acquire and upgrade plants and the volumes that you obviously carry?

Well, I think you've heard us talk about how much money we're going to put in over the horizon over the next 5 or 6 years. About not quite 3 quarters of that is really going to be focused on automating the plants we have for obvious reasons. It goes back to the earlier comments about inflation, labor pressure and strain on labor pools. It makes all the sense in the world for us to prioritize upgrading or automating our plants when we talk about the MRF of the future. I don't call it the MRF of the future anymore. It's more the MRF of the present. We started in Chicago. We got a number of those done. We've got a pathway to go out and update those plans, and we prioritize them. But to your point, when you think about everything that's going on with sustainability, with circularity, with the demand for recycled product, all those things, we consider that to be a tailwind. And as a result, we are also looking at new markets where we feel like maybe in the past, it was marginal whether we would want to enter in and get in the recycling business. And with what some of the tailwinds we've had, I just mentioned, there are some new markets that we're looking at as well.

Very interesting. And can we talk about plastics specifically? You folks have spoken about 40% of the value of recycling output is plastic. That's up from 30%. Anything more that you folks can do to increase the plastics recycling rate or pricing point or to high grade that part of the value stream?

Yes, I think I'm going off memory here, but I think plastics are up 2x or 2.5x what they were just a handful of years ago. It's pretty simple. I think we're seeing obviously strong and probably as important, consistent demand for that product. And if you think about recycling over the last 2 or 3 decades, it's been a little bit of an EKG, right? Supply and demand has been strong and weak at different times, and as a result, you've seen the sporadic performance in the business, and this is not specific to plastic, but recycling overall. Us moving to kind of the fee-for-service model has stabilized it, and it's kind of, hey, we're going to get paid for our investment plus a return, and then we'll obviously share the commodity with the customer. I think with plastic, in particular, trying to focus on that for a lot of different reasons, but I think what it's really resulted in when you talk to some of the big consumer product groups, manufacturers, there is certainly a higher and more consistent demand for recovered plastics. So how do you do that? One, education. I think it's more challenging on the residential front, which -- where about 60% of our recycling material comes from that we process, but education is a piece of it. Automating, we talk about automating residential, containerizing material, all those things. It is a combination of all those things plus education plus some of the demands that customers are putting on themselves to achieve whenever their circularity or sustainability goals are. So we feel like all those things are tailwinds to what's happening on the plastic side.

Very good. And we just got a question via e-mail. So the question is, can you talk about impact diesel shortages could have on your business? So it sounds like the question is, are there any parts of your footprint where you're having diesel physical supply constraints?

No, we're not. And obviously, being so much less reliant on diesel on our collection fleet certainly helps. There are some pockets where in the past we've seen it -- seen some -- and it's really been -- I think of some of the events in the Gulf Coast over the year where supply might have been disrupted because there's was a hurricane or what not. But right now, we're not seeing any, and honestly, we've learned a few lessons from that and don't see any real risk from disruption on diesel supply.

Great. And capital allocation, John, you spoke to this earlier in terms of opportunity set in M&A, how are you thinking about the stock buyback parameters compared to bolt-on M&A? Or should we be thinking about some of each on a consistent basis going forward?

Yes. I think our message here, Jerry, has been clear and consistent, right? Dividend payout ratio around 50% is a priority number one. And then it's obviously the huge bolt-on, tuck-in, however you want to phrase it. I also think the one element that's a little bit different is, we talk about recycling and the additional investments we're making on RNG. We said, we were comparing those almost like an M&A dollar, right? The returns on those projects are so strong that we put those in the priority -- same priority as what we're doing on the traditional M&A front. In some cases, the returns are even better than what we get on the traditional tuck-ins. On the bolt-on stuff, to use your phrase again, we were certainly more focused on ADS in the areas that we were doing that. I would tell you, we still see a healthy pipeline. I just looked at ours the other day. We're going to continue to be disciplined there on the buyback. I think, and to keep me honest, I think $1.5 billion is what we're approved for this year. I think we did about $250 million of that in Q1. And in terms of priority, that's how it goes, right? Dividend, M&A, some of the sustainability investments, and then lastly, obviously, buying back shares. So I think that message has been pretty consistent.

Super. Great. Well, that's all the time we have. John, Mike, Ed, thank you so much for joining us, and thank you, everyone.

Thank you, Jerry.

Cheers. Good to see everybody. Thank you.