Morning. My name is Ashley, and I will be your conference operator today. At this time, I would like to welcome everyone to the management call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.
Thank you. Mr. Ed Eggle, Director of Investor Relations, you may begin your conference.
Thank you, Ashley. Good morning, everyone, and thank you for joining us. With me this morning are Bob Ream, Chairman of Waste Management's Board of Directors and Jim Fish, President and Chief Executive Officer. Bob and Jim are each going to make some brief comments this morning, and then we will open the lines for questions and answers. Before we get started, I will refer you to the press release that we issued yesterday evening.
The press release is available on our website at www.wm.com. During the call, you may hear certain forward looking statements based on current expectations, opinions or beliefs. Such statements are subject to risks and uncertainties and are based only on information available at the time that the statements are made. Some of these risks and uncertainties are detailed in our filings with the Securities and Exchange Commission, including our most recent Form 10 ks. This call is being recorded and will be available 24 hours a day beginning approximately 10 a.
M. Eastern Time today until 5 p. M. Eastern Time on December 11. To hear a replay of the call over the Internet, access Waste Management's website at www.wm.com.
To hear a telephonic replay of the call, dial 855-859-2056 and enter reservation code 193 01943. Time sensitive information provided during today's call, which is occurring on November 11, 2016, may no longer be accurate at the time of a replay. Any redistribution, retransmission or rebroadcast of this call in any form without the expressed written consent of Waste Management is prohibited. Now I'll turn the call over to Waste Management's Chairman, Bob Rehm.
Thank you, Ed. Good morning to all of you and thank you for joining us for this important announcement on such short notice. As you read, effective November 10, 2016, the Board of Directors elected Jim Fish as our President and Chief Executive Officer and also elected him to the Board of Directors. Jim replaces David Steiner, who served as CEO since 2004. Today's announcement is the culmination of a very thorough succession planning process that has been underway for the past 18 months.
Jim is absolutely the right person to see David. He has very strong knowledge of and experience in all aspects of the business, is respected by employees, customers and shareholders, and has the right skills and leadership qualities to take to helm. We look forward to working closely with Jim and the rest of the senior leadership team as they continue to execute upon a strategic plan that has been and will continue to drive long term success and shareholder value. I will now turn the call over to Jim for his comments.
Thank you, Bob. I'm honored to be in this position and excited to continue the strategic priorities that Dave Steiner, the rest of our senior leadership team and I have been executing on over the last several years. As we've discussed throughout 2016 on our earnings calls and at investor conferences and meetings, the company's results have exceeded expectations. And as we discussed on our Q3 earnings call, we expect that momentum to continue, providing us with an ideal Waste Management team is committed to continuing its diligent focus on safely serving our customers, executing our pricing programs, identifying operating efficiencies and being stewards of the company's capital resources. These priorities have served as the foundation of our success and they will continue to drive our long term strategy and our ability to create shareholder value.
Before opening up the lines for questions, I'd like to say 2 things. 1st and foremost, on behalf of the entire Waste Management leadership team and the company's 40,000 plus employees, I'd like to say thank you to Dave Steiner for his vision, leadership and drive. David leaves a legacy of disciplined pricing, but David's impact on our company and this industry does not stop there. His accomplishments and contributions are numerous, and we are all grateful for the wisdom he has shared as our CEO over the past 12 years. We will continue to benefit from his contributions for years to come.
And finally, let me say that at Waste Management, our greatest asset continues to be our people. The talented and dedicated team that makes up all of Waste Management is a huge part of our success, and I look forward to working with each of our team members to support and execute our strategy. And with that, operator, we can open up the line for questions.
And your first question comes from Hamzah Mazari.
Good morning. Jim, congratulations. Look forward to working with you in your new role and wish David the best. Just wanted to see, does this signal any change in strategy investors should be thinking about regarding Waste Management going forward? We knew the succession plan would take place at some point, but it seems maybe a little earlier than most expected.
Yes. Good morning, Hamzah.
It doesn't signal any change whatsoever in the long term strategy, and I want to be clear about that. We feel good about how the strategy has played out over the last several years, and we will continue down that path.
Okay. And then just a follow-up question. In terms of CFO, are you looking at internal and external candidates both? And what's the timeline for that? It seems like most outside CFOs coming into the waste sector have had a very short shelf life for whatever reason.
So just trying to get a sense of timeline regarding the CFO role. Thank you.
Right. Well, the answer is yes. We're looking at both internal and external. We've been going through the search now for, gosh, I think about 3 or 4 months. I would expect we will try and wrap that search up here in the next 2 months, I would hope.
But we are looking at both internal and external and expect to come to conclusion with the search here in the next few months.
Great. Congrats again. Thank you. Thank you.
Your next question comes from Corey Greendale.
Hey, good morning and congratulations, Jim.
Thanks,
Corey. So two questions. First, backward looking, I don't know if David is on the call, but could you address, it's not a surprise. We know that succession has been the CEO for longer than most Fortune 500 or excuse me, S and P 500 CEOs are, but why now specifically?
This is Bahram. Why now? Because we had established an 18 month timeframe for succession back in June of 2015. And this timeframe we thought continued to be appropriate after an assessment and evaluation during that 18 months. And so we felt it was appropriate to move ahead at this time.
Okay. And then Jim, one forward looking question. I understand fully there's no change in strategy. I was hoping you could specifically address the question of kind of what you view as Waste Management strategy and role relative to investing in kind of R and D projects, alternatives to traditional landfill, those sorts of things?
Rodney McMullen:] Right. Well, Cory, as you know, over the last probably 5 years, we've made a pretty significant investment in alternative technologies, and we continue to be interested in those. And we will look at all those technologies that look to have some merit. I mean, as we've probably discussed a number of times, the biggest hurdles there happen to be not only the economic hurdle, but also the commercialization hurdle. It's some of the technologies have a difficult time processing as much material as we bring in each day.
So but we'll definitely continue to look at those and invest them as we deem appropriate.
Okay. And just one last one, I assume you're not going to say anything that hasn't been announced. But other than having to backfill the CFO role, are there any other changes you expect in the near term in the management structure or team?
Corey, I've worked with this team for 4 years since coming here as CFO and 12 from the field organization. It's been a team that I'm very comfortable with. I think in addition to David and his leadership, this team is part of why we've been as successful as we have. So aside from we recently announced that Mark Schwartz is retiring at the end of the year as Senior Vice President of Human Resources. But aside from that, I don't expect to see any changes in the near term.
Great. I thought you might want to bring in a couple more booth graduates, but totally get it.
Well, that's always a good idea.
Great. So again, congratulations. Thanks very much.
Your next question comes from Noah Kaye.
Hey, Jim, and congratulations again on the election. So, you've spoken, I think, very eloquently in the past about some of the challenges in the recycling industry and kind of the need to rework contracts. It's come up obviously on earnings calls in recent years. I was just wondering, maybe if you could kind of give us your latest thoughts on where waste management stands with respect to reworking recycling and what you see as any potential impacts from some of the recent political developments? Thanks.
Yes. So regarding recycling, Noah, we've as we said on our last earnings call, we've worked through most of the de risking of the business, if you will. But recycling is very important to us. It's important to our customers. And therefore, we will certainly continue in that business.
And I think most of the kind of contract negotiation, which is what I'm talking about when I say derisking, most of that has taken place already. I believe we said about 80% of it was complete when we spoke to you at the end of the Q3. But recycling is an important business for us. We'll continue in that business. And then, boy, regarding the election, I guess I was as surprised as anyone.
We didn't as we said, and
I think we had a couple
of questions last time we met with investors on the road about the election. And our view was that really either candidate, whether it was Hillary Clinton or Donald Trump, we were somewhat agnostic there because both candidates have been friends to the industry over the years. And so while we were all surprised at the result on Tuesday night, I think either candidate would have been fine for our industry. It is we are pleased that it sounds like President-elect Trump is talking about infrastructure spending, and that would certainly be a benefit to us. So from that standpoint, we would be very supportive.
All right. And since thanks. And since you went there, I'll just ask about one last element, which is corporate taxes. And obviously, tax plan is pretty significant, close slashing corporate tax rate to 15%. We've got a Republican majority in both houses now.
As you see it, do you believe kind of corporate tax reform is back on the table? And obviously, we understand that would be a benefit for you, but what are your thoughts on that?
Well, I don't know. It seems like it's always on the table, but obviously with the highest corporate tax structure in the world and those of us who are primarily United States or North American companies bear the brunt of that, we would be supportive of any change in for the better, for the in corporate taxes. But Boyd, asking me to predict whether it's going to happen is kind of ask me to predict the weather next week. So I would be supportive of it, but I'm not sure that it happens. I guess with a kind of a Republican Congress and a Republican President, it's probably the best shot you'll have at it.
Thanks so much and congratulations again.
Thanks,
And your next question comes from Michael Hoffman.
Hello. This is Brian for Michael this morning. Hi, Brian. Just two quick ones. Was there a separation agreement with David?
Nothing has been finalized at this point.
Okay. And when that's finalized, that will be filed, I'm guessing?
I believe so.
Okay. And will David be staying on the Board?
I think that is still up in the air, because he has an employment agreement that has certain provisions in it.
When does that employment agreement end?
It's still in place. It's still in place.
It's still in place.
The employment agreement? So it just it doesn't have an end date?
Right. It auto renews annually.
Auto renews annually at what month?
I believe maybe May, but his employment agreement is filed as an exhibit to our 10 ks, which is on EDGAR.
And when do you think you'll have a decision on the Board? Is that being worked on right now or is that unknown?
I can't predict when we'll have that finalized, but hopefully we'll have that finalized relatively quickly.
Great. Thank you.
And there are no further questions at this time.
Okay. Well, thank you for joining this morning. We look forward to working with all of you going forward and for the continued success of voice management in 2017. Thank you.
Thank you.
Thank you for participating in today's management call. This call will be available for replay beginning 11 o'clock Eastern Time today through 11:59 p. M. Eastern Time on December 11, 2016. The conference ID number for the replay is 1,930,1943.
Again, the conference ID number for the replay is 193 01,943. The number to dial for the replay is 1-eight fifty five-eight fifty nine 2056 or 1-four zero four 537-3406. Thank you. You may now disconnect.