US Ecology, Inc.
Q1 2019 Earnings Call Transcript

Published: 3 May 2019

[Operator:]

Good day, and welcome to the First Quarter 2019 U.S. Ecology, Inc. Earnings Call. Today's conference is being recorded. After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] I would now like to turn the conference over to Mr. Eric Gerratt, Executive President [ph] and Chief Financial Officer. Please go ahead.

[Eric Gerratt:]

Good morning and thank you for joining us today. Joining me on the call this morning are Chairman and Chief Executive Officer, Jeff Feeler; Executive Vice President and Chief Operating Officer, Simon Bell; and Executive Vice President of Sales and Marketing, Steve Welling. Before we begin, please note that certain statements contained in this conference call that do not describe historical facts are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Since forward-looking statements include risks and uncertainties, actual results may differ materially from those expressed or implied by such statements. Factors that could cause results to differ materially from those expressed include, but are not limited to, those discussed in the Company's filings with the Securities and Exchange Commission. Management cannot control or predict many factors that determine future results. Listeners should not place undue reliance on forward-looking statements, which reflect management's views only on the date such statements are made. We undertake no obligation to revise or update any forward-looking statements or to make any other forward-looking statements, whether as a result of new information, future events or otherwise. For those joining by webcast, you can follow along with today's presentation. For those listening by phone, you can access today's presentation on our website at www.usecology.com. Throughout yesterday's earnings release and our call and presentation today, we refer to adjusted EBITDA, pro forma adjusted EBITDA and adjusted earnings per share. These metrics are not determined in accordance with generally accepted accounting principles and therefore are susceptible to varying calculations. A definition, calculation and reconciliation to the financial statements of adjusted earnings per share, adjusted EBITDA and pro forma adjusted EBITDA can be found in Exhibit A of our earnings release. We believe these non-GAAP metrics are useful in evaluating our reported results and our 2019 guidance. With that, I'd like to turn the call over to Jeff.

[Jeff Feeler:]

Thank you, Eric, and good morning everyone. I will start this morning's call with a few summary comments on our first quarter results released yesterday, before turning it back to Eric for some additional details on the financial results. I'll then close out the call with an update on our outlook for the remainder of 2019 before opening up for the call for questions and comments. Yesterday, we reported first quarter results that delivered $131 million in revenue, up 9% over the first quarter last year. This growth was driven by a 7% growth in our Environmental Services segment and a 15% growth in our Field and Industrial Services segment. The increase in our Environmental Services segment resulted from strong base business revenue growth of 8% partially offset by a 1% decline in our event business. The event business decline was a result of project timing, weather conditions affecting schedules and our Idaho facilities limited operations in the first quarter. We continue to see positive developments in our event business and expect strong growth for the full year. Our Field and Industrial Services business continue to exhibit momentum from a combination of organic growth and recently acquired operations. Organic growth in the quarter was 3%, primarily as a result of growth in our industrial services, transportation logistics and emergency response service lines. Despite the strong revenue growth, our adjusted EBITDA for the first quarter declined 4% to $23.6 million. Our Idaho facility was still not operating at its full capacity in the quarter. And we have yet to recognize any business interruption proceeds. Excluding the Idaho facility, adjusted EBITDA would have been up in the first quarter in line with revenue growth. Overall, I'm pleased with the execution of our team. While our first quarter is typically the softest of the year, this year's seasonality was exacerbated by the limited operations of our Idaho facility. Results are anticipated to build throughout the remaining three quarters and we also anticipate receiving business interruption proceeds starting in the second quarter of 2019. Our Idaho facility remains on track to resume large portion of its capabilities by the start of the third quarter of the year. Our underlying business remains really healthy with base business outpacing expectations. And while our event business had a slower start than anticipated to the year, it's still expected to deliver double-digit growth on a very strong pipeline. With that, I'll turn it back to Eric.

[Eric Gerratt:]

Thanks, Jeff. As shown on Slide 7, revenue for the first quarter of 2019 was $131 million, up 9% from $120.1 million in the first quarter of 2018. Revenue for the Environmental Services segment for the first quarter was $92.3 million compared to $86.5 million in the first quarter last year. This increase was driven by a 7% increase in treatment and disposal revenue and a 6% increase in transportation service revenue. As Jeff mentioned, base business for the Environmental Services segment was up 8% compared to the first quarter last year, and represented 84% of treatment and disposable revenue. Event business for the Environmental Services segment decreased 1% from the first quarter last year and represented 16% of treatment and disposal revenue. Excluding our Idaho facility, base business increased approximately 13% and event business was up approximately 8% in the first quarter of 2019 compared to the first quarter of 2018. The Field and Industrial Services segment delivered revenue of $38.7 million in the first quarter, up 15% from $33.6 million in the first quarter of 2018. This increase reflects our recently acquired Field and Industrial Services group, based out of Dallas and Midland, Texas. Slide 9 breaks down our Environmental Services treatment and disposal revenue for both base and event business by industry vertical. Base business increased primarily in the metals manufacturing and broker TSDF industry verticals. The decrease in event business was primarily driven by decreases in the other industry vertical due to the completion of large projects that were shipping in the first quarter of 2018. This decrease was partially offset by increases in the chemical manufacturing and government verticals. Turning the Slide 10, gross profit was $35.2 million in the first quarter 2019, down 1% from $35.7 million in the same quarter last year. Our Environmental Services segment contributed gross profit of $31.6 million in the quarter, compared to $32.5 million in the first quarter last year. Treatment and disposal margins were 39% for both the first quarter of 2019 and 2018. Excluding the Idaho facility, treatment and disposal margins were 40% in the first quarter of 2019, compared to 39% in the first quarter last year. Gross profit for the Field and Industrial Services segment was $3.7 million, up from $3.2 million in the first quarter 2018. Gross margin was 10% for both the first quarter of 2019 and 2018. Excluding investments in our new Houston and Tacoma businesses and our Dallas and Midland acquisition, FIS gross margin was 11% in the first quarter 2019 compared to 10% in the first quarter of 2018 Selling, general, administrative spending or SG&A was $20.3 million in the first quarter 2019 compared to $22.2 million in the first quarter last year. The decrease was due to property insurance recoveries of approximately $4.7 million proceeds in the first quarter of 2019 related to the accident in our Idaho facility. Excluding this property insurance recovery, our SG&A was up by $2.7 million on higher labor costs as well as higher intangible asset amortization. Operating income was $14.9 million, which included the $4.7 million in property insurance recoveries in the first quarter compared to $13.4 million in the first quarter last year. Net interest expense for the quarter was $3.8 million compared to $2.8 million in the same quarter last year. The increase was as a result of higher outstanding debt levels in the first quarter of 2019, due primarily to the acquisition of US Ecology Winnie in November 2018, as well as higher interest rates on the variable portion of our outstanding debt. The Company's effective income tax rate for the first quarter was 27.4%, down slightly from 27.6% in the first quarter of 2018. We reported net income of $8 million and diluted earnings per share of $0.36 in the first quarter 2018, compared to $9.2 million and diluted earnings per share of $0.42 in the first quarter last year. Adjusted earnings per share was $0.22 in the first quarter 2019 compared to $0.35 in the first quarter of 2018. Pro forma adjusted EBITDA, which excludes business development expense for the first quarter was $23.7 million, down 3% from $24.5 million in the first quarter last year. Our free cash flow was $16.3 million, including the property insurance recoveries received in the first quarter, our balance sheet remains strong with net borrowings of $320 million at March 31, 2019 and a leverage ratio of approximately 2.4 times, based on the low end of our 2019 EBITDA range. With that I'll turn the call back to Jeff.

[Jeff Feeler:]

Thank you, Eric. As we look to the remainder of 2019, we continue to see momentum in our underlying business. As you can see on Slide 12, we are reaffirming our previously issued guidance initiated this past February. Driving our continued optimism is the underlying health of our business and the industrial sector in which we operate. Total revenue is anticipated to range between $583 million to $627 million. Base business revenue growth outpaced our expectations. In the first quarter, pushing our guidance for the full year growth to the upper end of our 3% to 5% range. Our event business softness in the first quarter was primarily attributable to timing of shipments and limited operations at our Idaho facility. Timing should positively benefit the remaining quarters of the year and combined with a very strong pipeline supports our expectations of double-digit growth in 2019. Our Idaho facility is on track to resume a large portion of its operating capabilities by the third quarter, slightly ahead of schedule. Further, we expect to commence the recognition of business interruption insurance recoveries in the second quarter and each subsequent quarter until our Idaho business is back to normal operations. Our Field and Industrial Services business continues its growth momentum as we bid on new opportunities while implementing contract wins from 2018. Our adjusted EBITDA guidance remains at $135 million to $145 million and our adjusted EPS is expected to range from $2.09 to $2.41 per share. Shifting to capital expenditures, we still expect our capital expenditures to range from $55 million to $60 million for 2019. This estimated range includes $15 million of growth capital deployment and approximately $25 million of landfill spend in 2019, which is higher than our normal spending due to the timing of landfill construction. For those of you that are building the publishing models, we have highlighted some key modeling assumptions that may be useful. We expect that our full year depreciation and amortization, including amortization of intangibles to approximate $47 million. We expect that our interest expense will be approximately $16 million for the full year, higher than 2018, resulting from the acquisition, we completed in late 2019 and with higher interest on a variable portion of our outstanding debt. Our full year tax rate is expected to approximate 27%. Overall, as previously reported, our free cash flow is expected to range from $45 million to $50 million, despite the disappointment of growth capital, and the additional spending in our landfill in 2019. With that operator, I'd like to open up the call for questions or comments.

[Operator:]

Thank you. We will now begin the question-and-answer session. [Operator Instructions] At this time we'll take our first question from Tyler Brown with Raymond James. Please go ahead.

[Tyler Brown:]

Hi. Good morning, guys.

[Jeff Feeler:]

Hi Tyler.

[Tyler Brown:]

Hi, Eric. So just a little clarification, but to be clear, the $5 million have insurance recovery that's not included in your adjusted EBITDA, correct?

[Eric Gerratt:]

That is correct. And that $5 million relates specifically to property. So the damage to property and equipment, it does not. We have yet to have any insurance recoveries related to the lost profit portion of the policy or the business interruption.

[Tyler Brown:]

Right. So at this point, you have not picked up any business interruption. But is there some of that that's embedded in the EBITDA guide? And if so, can you kind of quantify?

[Eric Gerratt:]

Yes. We do have some embedded in there based on kind of what we think today. I would tell you, that there's probably, it's probably about $2 million to $2.5 million that we're affecting to date. Now, again, it's going to depend on how soon we're back up and operational and how fast we ramp back up for the pieces that aren't operational yet to get us back to normal. So there's still some gray in there on how long that's going to take. And then as a result of that business interruption insurance will - is there to recover the lost profit.

[Jeff Feeler:]

And Tyler, I'll just emphasize that that is included in our guide, yes.

[Tyler Brown:]

Yes. Okay. Just want to be clear on that. Okay. I appreciate the organic growth number for FIS. But what was it for ES? I'm assuming some of the Dallas and Ecoserv acquisitions for ES, maybe that's not right or was, excuse me, were they a part of that 8% increase in base?

[Jeff Feeler:]

No. So the Dallas and Midland business is included in FIS, the Ecoserv or the U.S. Ecology Winnie location is included in ES. So for ES, organic growth, in terms of revenue was about 4%.

[Tyler Brown:]

Okay.

[Jeff Feeler:]

So excluding the Ecoserv acquisition. And when we do base and event comparisons, that excludes any acquisitions until recycle those for a year.

[Tyler Brown:]

Okay. So more of the same store sales. Okay, that's helpful. And I really appreciate Slide 8 in the deck. I appreciate you breaking out all the components of FIS. Just kind of in the deck. But emergency response was up a lot in the quarter. Was there a one-time project or was that the Dallas acquisition? And is this kind of a good to go forward number on that piece?

[Jeff Feeler:]

Yes, that growth was mostly the Dallas, Midland acquisition. And I think that's a pretty good number going forward, but we think there's growth opportunities there.

[Tyler Brown:]

Okay. And then when you look at that stack and some of those sub components. What are the pieces in there that are a little bit more sticky or recurring in nature versus which ones are more event in nature?

[Eric Gerratt:]

Most of the small quantity generation, Tyler, is going to be more sticky. Our total waste management group is going to be also more sticky. Now in all essence, it's going to have some variability with project based business that's embedded in that, but those are going to be the big ones. From a more, I'll call it project in nature type, it's going to be your remediation, your emergency response to a certain degree, but there's a lot of smaller spill ups that we really are focused on and those happen very routinely and frequently in the markets that we serve. And then on transportation, logistic, it's a hybrid. So it's going to be some that's project based, but that's going to also include us just providing those services.

[Tyler Brown:]

Okay. And then when I look at transportation in that piece, is it also kind of a pass-through or zero margin business like is in ES?

[Jeff Feeler:]

No, no. Tyler, typically a nappy [ph] - and that side of the business in FIS, we're doing that at a decent margin.

[Tyler Brown:]

Okay, okay. That's helpful. And maybe this one's for Simon. And do you guys kind of called out weather, but not really. But there's no doubt that weather had a big impact on the railroads this quarter. I'm just curious if you could talk about your cycle times? Did that have a big impact on the event business or just any additional color there would be helpful?

[Simon Bell:]

Yeah, this is Simon. No, I would say there wasn't a large impact. We had some delays, but nothing that I would call out. I think it was more just some specific projects that were delayed because of weather delays on the generator side. In other words, they didn't necessarily get the project started because of weather. It wasn't because of limitations that we had be it rail or anything else.

[Tyler Brown:]

Okay. That's helpful. And then my last one. So Eric, I think you have a big IT initiative underway, if I'm not mistaken. Just curious if we get an update there. Is there any burden to the P&L or is it a CapEx item, or is that IT initiative really not material?

[Eric Gerratt:]

It's, I would say it's definitely material for sure to us. But yeah, so we did go live with our new financial system, last April. So we're a year into that. We're still doing some refinements and things there that's gone pretty well, that has mostly gone through CapEx, there's still some additional work and upgrades that we're going to do this year on that, that will also go through CapEx. The bigger piece of what we're doing is more on the operational system. And that's been going on for a couple of years and will go on frankly, for a couple more. And a lot of its internal work, internal development that will be capitalized as we go. It will start rolling in in phases, late this year, early next year in module, so think of it receiving and billing, waste tracking different modules like that. So, the bulk of that work is going to flow through CapEx. As we place things into service, like we did with our financial system in the second quarter last year, you'll have additional depreciation and amortization that will start hitting. So that's really going to be the P&L impact.

[Tyler Brown:]

Okay. Okay.

[Jeff Feeler:]

And Tyler, I'll just add a little bit more holistically. Those are projects that we're dealing with on IT front. But as with most businesses, we see our fundamental business shifting more and more to being IT dependent. So we don't even look at where we're making headcount increases to support the facilities and the operations. We're investing a lot into talent, and people and equipment and software services and things like that, that's going to help drive efficiencies going forward and keep our people more productive. And so that's part of the SG&A increases we've seen over the last few years. I suspect we're going to continue to see some of that because we're, every one of us are becoming more and more dependent on technology.

[Tyler Brown:]

I would agree. Okay. Well, I appreciate it. Thanks for the time guys.

[Eric Gerratt:]

Thanks Tyler.

[Jeff Feeler:]

You bet.

[Operator:]

Thank you. We'll now take our next question from Brian Butler with Stifel.

[Brian Butler:]

Good morning. Thank you very much for taking my questions.

[Eric Gerratt:]

Good morning, Brian.

[Jeff Feeler:]

Good morning.

[Brian Butler:]

Just first on the base growth of that 8%. Can you give a little color on how that broke down between price and volume and kind of what you're seeing trend wise for those into the second quarter and maybe for '19?

[Jeff Feeler:]

Yeah. Brian, I'll take that. This is Jeff. So, from a pricing standpoint, we did pass along, a pricing increases in the first quarter of this year. And it does really impact predominantly on the ES side, the base business that we have, and that was around 3%. But the reality is, is not all customers would get the same pricing so it's not necessarily across the board on that. The other thing on the on the volumes, we are seeing volumes trending up for overall volumes going into our treatment facilities. But the other thing is mix, we're seeing more and more containers being brought to our - into our network, which tend to have a higher price point than large bulk jobs and that's really what you're seeing on that front that's helping drive that growth.

[Eric Gerratt:]

Yes. Brian, it's Eric. Yeah, Jeff's right. I would see it more as pricing and mix. Volumes are up a bit, but not a whole lot if you compared Q1 to Q1.

[Brian Butler:]

Okay, good. And then looking at the gross profit and the margins came in, was that really all a function of Grand View or just can you help us kind of bridge the difference between the margins in first quarter '19 verses first quarter '18?

[Eric Gerratt:]

Yeah. As I kind of mentioned in the prepared remarks, Grand View was a big impact if you're talking gross margin, if you strip Grand View out of ES gross margins, we're actually up about 120 basis points over Q1 last year

[Brian Butler:]

For total gross margins?

[Eric Gerratt:]

For ES gross margins.

[Brian Butler:]

Okay. ES gross margin. Okay. And then looking at kind of the acquisition you did in 2018, can you just give some color and thoughts on how they've performed to date? And below - behind or ahead of kind of expectations and what kind of opportunities you still see there on the acquisition side?

[Jeff Feeler:]

Yeah, Brian, this is Jeff. So the acquisitions we did last year, we continue to be very pleased with the results that we're seeing there. We're continuing to integrate those businesses in the broader Texas marketplace. And honestly, we can't be more happy to have that part of the overall networks that we have down there. There's some seasonality challenges with some of the services business just like what we have everywhere. There's more activity as summertime rolls around and production levels increase. And so, it was seasonally lower for some of the service based business in the first quarter than maybe what we had anticipated. So a little bit of headwinds there, but honestly, the pipeline remains positive for both of those in the Texas marketplaces, we see the balance of 2019 playing out.

[Brian Butler:]

Okay. That's helpful. And on the event business, when you think of that pipeline, going to the remainder of 2019. What's the pace of that? Is there any visibility on whether that's going to be lumpy in one of the quarters or is it just hoping looking for a kind of a steady build throughout the remainder of the year?

[Jeff Feeler:]

Brian, again this is Jeff. Yes, it will be lumpy. And the reality is I'd love to draw a straight line and say it's going to be this nice smooth growth rate, but you will see a similar pattern in a way it's building right now is what we thought 2018. Q2 should be much improved over Q1. Q3 most likely will be one of the highest points. And, depending on shipment schedules towards the end of Q3, it will depend on Q4 as. And so it's really shaping up to a similar pattern that we saw last year.

[Brian Butler:]

Okay, great. And then just last one. What's the split on your debt for variable and fixed?

[Eric Gerratt:]

Yeah. Brian, it's - today we're about - I think we're about - with the Winnie acquisition, which we put that full purchase price on the line, we are about 50% to 60% variable, which shifted - prior to Winnie it was the other way. But that acquisition came onto the line in the variable portion.

[Brian Butler:]

Okay. Any expectation on what your target is on that split or is that going to be - just kind of going forward, that's where you want to be?

[Eric Gerratt:]

I think we'll see the variable portion will come down faster than the fixed as we pay it down. Just the way the facility works, but I wouldn't expect it to be dramatically different.

[Brian Butler:]

Okay, great. Thank you very much for taking the questions.

[Jeff Feeler:]

Thanks Brian.

[Operator:]

[Operator Instructions] We'll take our next question from Michael Hoffman with Stifel.

[Jeff Feeler:]

Brian was in there for Stifel. So I don't know if Michael's jumping on.

[Operator:]

Thank you. We'll take our next question from Jeff Silber.

[Jeffery Silber:]

Hey. I am not from Stifel.

[Jeff Feeler:]

Hey Jeff, how you doing?

[Jeffery Silber:]

Good. Sorry. You had mentioned in the prepared remarks on the event side that there was some issue in the first quarter because of project timing. Could you quantify what that was compared to where you thought it would be?

[Jeff Feeler:]

We've really haven't gone through that qualification effort, Jeff. It would have been it would have been pretty significant. And there is that. And that really the timing piece of it is tied up into a couple larger projects that we, actually have a habit of saying they're going to ship in January and then don't end up shipping until April or May. And so we probably should learn our lessons from that. But the reality is, is that really shifted forward. And I think the key message that you should take away from that is it's not businesses lost, and we're highly confident in those projects that we will get that in the balance of three quarters on the hand.

[Jeffery Silber:]

Okay, great. And then I guess my follow up on that is, could we see - you were trying to give us some gauge for the cadence for the rest of the year? I know it's hard to judge but do you think we might see some shifting around between the quarters or you think just kind of the normal cadence or at least compared to last year is what we should be expecting?

[Jeff Feeler:]

It's going to be building up that I would use this I would use the cadence of last year. That's the way it's really looking like it's shaping out.

[Jeffery Silber:]

Okay, fair enough. I know it's tough to kind of monitor on a quarterly basis. You call that in CapEx some of the additional spending for landfill. [Inaudible] model out the 2020. I know you haven't provided any guidance, but what kind of normalized or what number should we be using for 2020 for CapEx?

[Jeff Feeler:]

Yeah. So what I would use is we'll probably spend another $15 million in growth capital. And we'll probably have somewhere between $10 million and $15 million in landfill with about $20 million in maintenance.

[Jeffery Silber:]

Great. That is very helpful. I think that's it for me. Thanks so much.

[Jeff Feeler:]

Thanks, Jeff.

[Operator:]

[Operator instructions] We'll take our next question from Michael Hoffman with Stifel.

[Michael Hoffman:]

Hey, thanks for taking the question. I did have a follow-up, but I did dial in late, so apologize to lose that if answered already.

[Jeff Feeler:]

Okay, Michael.

[Michael Hoffman:]

So within your guidance, you did show that puts and takes for the property insurance plan and I appreciate the clarity on that [ph]. [Technical difficulty] would be additive to the number.

[Jeff Feeler:]

You know, Michael, your connection is really choppy. We're not getting, I heard some put and takes, but I didn't get the - get what question is. Can you try to repeat?

[Michael Hoffman:]

I really kind of love self-service in America. In the guidance does it reflect an assumption for business [ph] interruption insurance?

[Jeff Feeler:]

Yeah. So if I heard the question right, is does our guidance include an assumption for business interruption insurance. And yes, that has been included in there. Not - it's for business interruption operating, recoveries not property. So that's why we're stripping out the property in there. And so when we entered the year, it was around $3 million to $5 million probably is what we thought we could recover. And Eric had mentioned on the earlier question is probably year to date, we're probably in that $2.5 million to $3 million range that will probably start recovering. And then our operations is coming back. So those will dwindle through the balance of the year.

[Eric Gerratt:]

And just as a clarification, Michael, the way it will work for us is, we will likely also have additional property insurance recoveries that will flow through. We're going to capture those separately, and we'll adjust those out of EBITDA and adjusted EPS as we go like we did in the first quarter. The business interruptions, the loss profit portion that we haven't recognized any yet, as that rolls in, that will flow through and obviously we won't be adjusting that out because it will be recapturing, loss profit.

[Michael Hoffman:]

Okay. And then within the context of the confidence about the business, what particular end markets are you seeing behaving in a manner that gives you this increasing confidence?

[Jeff Feeler:]

Yeah. Michael, honestly, it's a cross end markets. We're seeing in almost all of our service lines, positive developments. And when you look at the waste side of the business, we're seeing it in the chemical, we're seeing it in the refining, we're seeing it in the metals, markets, in the small quantity market, it's there's health pretty much everywhere, there's very few areas of weakness that we think are going to be prolonged.

[Michael Hoffman:]

And that would be same for the event side instead, since a diversity across the portfolio of projects.

[Jeff Feeler:]

Yeah. So on the event side, and maybe that's a good question, get a little bit color on the pipeline is, we're seeing a really strong pipeline. And there are probably about four projects that are larger this year, two of which we won two years ago. That will be just commencing shipments here this year, and a couple others that have been shipping for under multiyear agreements. And we've seen the rewards of those in the previous years. The real excitement we have in the pipeline isn't the large opportunities. It's, as it's built out, it's a whole bunch of smaller 1000 ton to 5000 ton type projects that are really building out that pipeline that we really hadn't seen to this level the last few years. And so I think it's indicative of what we're seeing what the underlying industrial economy is that there's just a healthier, there's more investment being made, there's more opportunities being granted in that pipeline so.

[Michael Hoffman:]

And last one for me to follow-up through on the capital spending conversation when we traveled together earlier in April, you talked about a high in '19 for Michigan landfill a slight dip from that in '20, and then a lift again in '21 and then back to a much more normalized mix between gross and maintenance. Is that still the right way to think about and that would be sustained for a while?

[Jeff Feeler:]

Yes. So 2019 is going to be a high watermark year. We'll see it dip in 2020. And then it should pop back up in 2021 as we're building out another phase of our Michigan landfill as well as other landfills that we have. But once you get out to pass 2021, which is a long way the way, you should see the landfill spend decline. And it probably will decline at a more sustainable rate for several years.

[Michael Hoffman:]

Okay. Alright. That helps. Thanks.

[Jeff Feeler:]

Okay. Thank you.

[Operator:]

Thank you. This concludes our question-and-answer session. I would now like to turn the conference back over to Mr. Jeff Feeler, Chief Executive Officer for any additional or closing remarks.

[Jeff Feeler:]

Alright. Well I want to thank everybody for attending today's conference call. And we look forward to updating you on 2Q results or the conference in the second quarter towards the end of July or early August.

[Operator:]

Thank you. This conference has now concluded. Thank you for attending today's presentation.