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Waste Management's Fish on Adapting to Recycling Crisis (Audio) · Bloomberg Intelligence

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  Speaker 1: Broadcasting live to New York, Bloomberg eleventh Rio to Washington,
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  Speaker 1: will take stock of Waste Management. They raised their twenties
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  Speaker 1: sixteen earnings guidance. They reported better than estimated earnings. They
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  Speaker 1: got a revenue boost from positive market conditions. Will speak
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  Speaker 1: with Jim Fish, he is the president of Waste Management.
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  Speaker 1: This is Bloomberg, Catherine, thank you. Now, let's get a
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  Speaker 1: quick update of the benchmark. Stone Industrial leverages down one
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  Speaker 1: hundred sixteen points at eighteen thousand, two hundred eighty eight,
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  Speaker 1: smp F I funded down seventeen point four. Then Nassakistan
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  Speaker 1: fifty three points at fifty one thirty. And that's a
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  Speaker 1: Bloomberg business flash. You're listening to taking stock with Pim
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  Speaker 1: Fox and Kathleen Hayes on Bloomberg Radio. Waste Management. It
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  Speaker 1: raised its twenties sixteen earnings guidance. It reported better than
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  Speaker 1: estimated earnings the trash collect just saying that market conditions.
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  Speaker 1: In fact, it is the number one garbage disposal company
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  Speaker 1: in North America. It said that market conditions were positive
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  Speaker 1: for the company and for the industry. Here to tell
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  Speaker 1: us more is Jim Fish he is the president of
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  Speaker 1: Waste Management newly and pointed the president of Waste Management
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  Speaker 1: joining us from Houston, Texas, Jim Fish, thanks very much
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  Speaker 1: for being with us, Thanks for having me. Just give
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  Speaker 1: people a little bit of an overview of waste management.
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  Speaker 1: I know that you've got over twenty million customers, almost
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  Speaker 1: two hundred and fifty landfills, but maybe just give people
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  Speaker 1: an idea of the size and scale of your operation. Yeah,
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  Speaker 1: so we have we're an integrated waste holler with what's
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  Speaker 1: recycling as a huge component of what we do. We
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  Speaker 1: collect trash from as you said, over over twenty two
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  Speaker 1: million customers. We've got about two hundred and fifty landfills,
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  Speaker 1: we have about a hundred and fifty recycled facilities, we
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  Speaker 1: have over four hundred garbage collection facilities. So we're we're
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  Speaker 1: a fully integer at player within North America. You know,
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  Speaker 1: you just reported your earnings a week or so ago,
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  Speaker 1: and even though some are saying look out tough times
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  Speaker 1: recycling business, Waste Management continues to see its stock rise.
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  Speaker 1: Your stock that is reaching a six month high recently,
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  Speaker 1: uh well, up from fifty two on your stock press
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  Speaker 1: at the start of year forty seven. This time last year.
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  Speaker 1: What's the dynamic here? Well, yeah, almost a six month
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  Speaker 1: time but also also close to an all time high. Um.
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  Speaker 1: I think when you look at recycling, uh, you know
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  Speaker 1: that that's it's almost kind of a good news and
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  Speaker 1: the bad news here. You know, we're closer to the
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  Speaker 1: trough and recycling we're making a lot of progress on
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  Speaker 1: on you know, improving that business, but we're much closer
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  Speaker 1: to the trough than we are to the peak, and
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  Speaker 1: yet still producing strong cash flows and and and a
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  Speaker 1: fifty two weeks or an all time high stock price.
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  Speaker 1: So I think what you're seeing is that the rest
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  Speaker 1: of the business, aside from recycling is is doing quite well,
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  Speaker 1: and that's where the strength is coming from. Are we
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  Speaker 1: seeing applications of technology to waste and recycling? I keep
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  Speaker 1: thinking of robotics. I mean, is there a time when
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  Speaker 1: we're going to see intelligent robotics systems process waste and
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  Speaker 1: sort recyclable materials. Well, for sure, we We've actually have
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  Speaker 1: a pretty automated recycled facility today with things like optical
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  Speaker 1: readers that recognize the type of plastic that's coming up
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  Speaker 1: a conveyor belt and and it shoots a stream of
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  Speaker 1: air at that at that tide bottle and and uh
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  Speaker 1: and shoots it into a bin. So so there's a
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  Speaker 1: lot of technology and these recycled facilities today, and I
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  Speaker 1: think that will only increase. So tell us a little
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  Speaker 1: bit more about what has differentiated you from other companies
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  Speaker 1: in this space. Well, I think first and foremost, Uh,
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  Speaker 1: you know, we've taken a strong stance on pricing. And
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  Speaker 1: you know the way we've referred to pricing in our
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  Speaker 1: industry is there's there's not much the way of price elasticity.
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  Speaker 1: Nobody says, Okay, now they've lowered the price low enough
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  Speaker 1: that I'm gonna create more trash. It's not like big
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  Speaker 1: screen TVs where you where you lower the price of
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  Speaker 1: big screens and you might create enough demand to to
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  Speaker 1: put you economically ahead. So really, the only right answer
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  Speaker 1: with respect to our business is to increase price, and
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  Speaker 1: we've taken a leadership role there. Does that mean that
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  Speaker 1: you will forego certain, let's say recycling contracts because they're
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  Speaker 1: not going to really help your margins? Well, no, I
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  Speaker 1: think what we you know, we're looking at recycling as
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  Speaker 1: as you know, in need of of improvements. Uh, doesn't
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  Speaker 1: mean we won't renegotiate some of these contracts, and we're
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  Speaker 1: doing that. We're probably away through renegotiation. I think what
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  Speaker 1: we're doing with with municipalities, and we've done quite a
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  Speaker 1: bit of it already, is saying, look, uh, the old model,
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  Speaker 1: where you had commodity prices at hundred dollars, in our
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  Speaker 1: processing costs at seventy, we were willing to pay you
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  Speaker 1: your your share of the commodities on the back end
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  Speaker 1: up front. When commodity prices are at seventy in our
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  Speaker 1: processing costs is seventy, it doesn't there's nothing to share.
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  Speaker 1: So we've we've you know, gone back and renegotiate the
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  Speaker 1: contracts and said, look, uh, you know, irrespective of where
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  Speaker 1: commodity prices are, we want to get paid our processing
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  Speaker 1: cost and some acceptable margin up front and then will
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  Speaker 1: split what's left with with the customer. Better be careful
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  Speaker 1: you get too efficient, you won't have any business list.
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  Speaker 1: But you know, if people be so efficient recycly, they
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  Speaker 1: won't do it. But I'm as I'm thinking about growth
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  Speaker 1: and where you go next, I'm wondering a bit more
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  Speaker 1: about your gas to energy facilities in the United States,
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  Speaker 1: because that's you know, the whole energy industry has been
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  Speaker 1: under pressure where how how does that work for you
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  Speaker 1: and how much is it adding to the profits? So
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  Speaker 1: we we have gased energy at UM well over a
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  Speaker 1: hundred and fifty of our landfills. UH. The only landfills
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  Speaker 1: that don't have it are are very small landfills in
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  Speaker 1: terms of volume. So at at all of our medium
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  Speaker 1: and large landfills we have gas energy and those produce
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  Speaker 1: h somewhere depending on the size of the landfill. We
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  Speaker 1: have some lantils that that produce as much as tim
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  Speaker 1: mega whites and mega wats of energy out of them.
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  Speaker 1: We have some that are as small as three. But
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  Speaker 1: but there's a fair amount of energy production going on.
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  Speaker 1: And we do things like like UM power part of
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  Speaker 1: the University New Hampshire and UH there's a fab facility
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  Speaker 1: in South Carolina for automobiles that we power a portion
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  Speaker 1: of that uh fabrication facility. So we really are producing
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  Speaker 1: energy out of out of what we uh the trash
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  Speaker 1: it's going to these landfills. Many thanks to Jim Fish,
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  Speaker 1: president of Waste Management based in Houston, Texas, navigating the
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  Speaker 1: twists and turns of the recycling garbage industry. You could
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  Speaker 1: say effectively, and guiding his company to nearly record earnings
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  Speaker 1: last week. I'm Kathleen Hayes along with Pim Fox on
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