Ron Mittelstaedt - Chairman and CEO Steve Bouck - President Darrell Chambliss - Chief Operating Officer Worthing Jackman - Chief Financial Officer.

Al Kaschalk - Wedbush Securities Joe Box - Keybanc Capital Michael Hoffman - Stifel Financial Corporation Adam Baumgarten - Macquarie Charles Redding - BB&T Barbara Noverini - Morningstar Alex Ovshey - Goldman Sachs Corey Greendale - First Analysis Scott Levine - Imperial Capital.

Ladies and gentlemen, thank you for standing by. Welcome to the Waste Connections Third Quarter Earnings Conference Call. During the presentation, all participants will be in a listen-only mode. Afterwards, we’ll conduct a question-and-answer session. (Operator Instructions). As a reminder, this conference is being recorded Wednesday, October 22, 2014.

I would now like to turn this conference over to Ron Mittelstaedt, Chairman and CEO. Please proceed, sir..

Okay. Thank you, operator and good morning. I’d like to welcome everyone to this conference call to discuss our third quarter 2014 results as well as provide a detailed outlook for the fourth quarter.

I’m joined this morning by Steve Bouck, our President; Darrell Chambliss, our COO; Worthing Jackman, our CFO, and several other members of our senior management team. 2014 continues to play out better than expected and the third quarter was no exception.

Improving commercial collection trends, a 7% increase in MSW landfill volumes and more than 20% increase in E&P waste activity enabled us to exceed the upper end of our revenue, EBITDA and margin outlook for the period. Year-to-date, revenue has increased 7.6%, mostly through organic growth.

EBITDA margins have expanded almost 60 basis points and we’ve converted more than half of our EBITDA into free cash flow despite a 75% increase in cash taxes. We’re now on track to see the upper end of the higher full year outlook we provided just in July.

We’re also pleased to announce recent new market entry acquisitions of solid waste collection operations in Alabama and North Dakota and the acquisition of an E&P waste treatment and disposal company with two landfills in the Bakken and a pipeline of four additional permitting opportunities in North Dakota, Montana and Wyoming.

These transactions along with other acquisitions we expect to close over the next several months provide additional building blocks for growth and margin expansion in 2015. Before we get into much more detail, let me turn the call over to Worthing for our forward-looking disclaimer as well as other housekeeping items. .

Thank you Ron, good morning.

We must inform everyone listening that certain matters discussed in this conference call are forward-looking statements, intended to qualify for the Safe Harbors from liability established by the Private Securities Litigation Reform Act of 1995, including statements related to expected operating trends, recycled commodity values, E&P waste activity, expectations regarding period-to-period comparisons, potential acquisition activity, contribution from closed acquisitions, the timing of permitting and construction activities including new projects, our return of capital to stockholders and our fourth quarter outlook for financial results.

Such forward-looking statements are subject to various risks and uncertainties, which could cause actual results to differ materially from those currently anticipated. These risks and uncertainties are set forth in the company’s periodic filings with the Securities & Exchange Commission.

Stockholders, potential investors and other participants are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements.

The forward-looking statements made herein are made only as of the date of this conference call and the company undertakes no obligations to publicly update such forward-looking statements to reflect subsequent events or circumstances.

On the call we will also discuss non-GAAP measures such as adjusted EBITDA, adjusted net income and adjusted net income per diluted share and adjusted free cash flow. Please refer to our earnings release for a reconciliation of such non-GAAP measures to the comparable GAAP measure.

Management uses certain non-GAAP measures to evaluate and monitor the ongoing financial performance of our operations and other companies may calculate these non-GAAP measures differently. I’ll now turn the call back over to Ron..

positive 2.8% from core price and positive 2.1% volume. Core price growth in the quarter increased 20 basis points sequentially from Q2 to 2.8% and likely will increase another 10 basis points in Q4 to about 2.9%.

As noted on our July earnings call, we implemented additional midyear price increases in certain markets to offset operating cost pressures resulting from the continuing recovery of collection volumes. We continue to see improving commercial collection trends including increased customer accounts, service day increases and container upsizing.

That should provide a more meaningful P&L benefit beginning in 2015. Solid waste volume growth in the third quarter was more than double the upper-end of our expectations for the period due to higher commercial and roll off collection activity and an increase in MSW landfill volumes in spite of tough prior year comps.

Volume growth continues to run about 1 percentage point above our expectations for the year. Solid waste landfill revenue in the third quarter increased about 5% year-over-year with revenue per ton up 3.2% and volumes on a tonnage basis up 1.6%.

MSW tons increased 7% with all three regions up year-over-year in spite of the fact that Q3 was the toughest prior year comparison with MSW tons up 16% in Q3 of ‘13. Increased MSW tonnage was partially offset by reductions in special waste and C&D tonnages, which declined 6% and 2% respectively in Q3.

As noted last quarter, the decline within special waste once again was associated with our anniversarying of a large contaminated soil job, such jobs secretly come in at lower rates, because the materials accepted for daily cover at our landfills working phase, thus allowing us to avoid cost that we would otherwise incur to excavate such soils on our own.

The slight increase in C&D was primarily related to a tougher comp last year, resulting from strong clean-up activity in Oklahoma. September was our best month in the quarter for landfill volume improvement and a strong jumping off point into Q4. Total tonnage increased 7% over September 2013 with all three waste streams at our landfills increasing.

Roll off activity continues to grow despite increasingly more difficult prior year comparisons. Roll off pulls per day in Q3 were up about 6% on a same store basis and revenue per roll off pull increased 2%. Pulls per day rose in each of our three solid waste regions with our west region up 2%, our central up 5% and our eastern region up 12%.

Recycling revenue was $14.5 million in the third quarter, down about $2.2 million or 13% year-over-year, due primarily to our decision to close and outsource two operations and to a lesser extent lower recycle fiber values.

Prices for OCC or old corrugated containers averaged about $115 per ton during the third quarter, down about 20% from a year ago period and down sequentially 5% from Q2. Increased prices for plastic, aluminum and glass in the period helped us to have the portion of the dollar impact from lower fiber values.

E&P waste activity which remained strong, exceeded expectations as we reported almost 82 million of such revenue in the third quarter, up almost 24% year-over-year.

About half of the growth was attributed to same store improvements in the Bakken and the Mexico Permian with the other half from two new facilities opened since a year ago period, most notably our new landfill in the West Texas Permian.

While we are extremely pleased with our year-to-date performance within E&P waste, we’re more focused on the outlook for this segment and potential changes in drilling activity given recent weakness in crude prices.

For Q4, we expect E&P waste revenue to grow between 10% and 15% with 70% of the increase attributed to the new West Texas Permian landfill and our Bakken mud plant opened late last year and earlier this year.

We’re also bringing on line a new E&P waste treatment and injection disposal facility in the north central part of the Eagle Ford that we have been developing over the past year.

As we look at 2015, early discussions with customers suggest that drilling activity could be about flat year-over-year with the price of crude ranges between $80 and $85 a barrel.

For sensitivity analysis, we believe drilling activity could increase about 5% if crude rises back above $90 per barrel or a decrease of 10% to 15% as crude falls below $75 per barrel.

Although highly correlated to drilling activity, our results would also be influenced by other mitigating factors including increased customer outsourcing, the ramping of recently opened or acquired facilities and a potential shift of volumes from one landfill to another if rigs move between basins due to varying drilling economics.

Turning now to our M&A activity. As noted earlier, we recently completed new market entry acquisitions of solid waste collection operations in Tuscaloosa, Alabama; and Williston, North Dakota. In both cases, each represents the largest privately held company within its respected market and each market has good growth characteristics.

Tuscaloosa is a growing market with additional tuck-in opportunities while Williston is rapidly expanding and growth in that market was limited by the amount of resources the prior owner had available to connect. We expect these operations on a combined basis to contribute about 20 million of revenue in the upcoming year.

We also just completed the acquisition of an E&P waste treatment and disposal company with two landfills in the Bakken and the pipeline of four additional permitting opportunities in North Dakota, Montana, and Wyoming.

One of the acquired landfills is Chimney Butte in the south section of the Bakken with almost $10 million in revenue; the other landfill is Smoky Butte which is closer to the Canadian border and scheduled to open within the next few weeks.

This acquisition further strengthens our long-term asset position within the Bakken and expands our portfolio of new permitting opportunities for future growth. As noted in our press release, we’ve been reviewing a record amount of potential growth opportunities and expect to complete additional acquisitions over the next few months.

With more potential sellers assessing the market, maintaining discipline and deploying capital is as important now as ever. The current cost of debt makes almost any acquisition accretive on a P&L basis but market selection, asset positioning, quality of assets, valuation, and tax basis drive free cash flow generation and sustainable value creation.

And finally as also announced yesterday, our Board of Directors authorized a 13% increase in our quarterly cash dividend. Despite this increase, our dividend remains less than 20% of our expected free cash flow, leaving us with tremendous flexibility to fund our growth strategy and further increase the return of capital to stockholders.

Our Board also extended the term of our existing stock repurchase program by three years through 2017. As noted in previous quarters, we consider growth investments to be our highest and best use of capital and have not yet restarted the buyback, given the level of M&A dialogue and other potential growth initiatives.

And now, I’d like to pass the call to Worthing to review more in depth the financial highlights of the third quarter and to provide a detailed outlook for Q4. I will then wrap up before heading into your Q&A..

Thank you, Ron. In the third quarter, revenue was $546.6 million, an 8.5% increase over the prior year period. Organic growth contributed 7.2% to year-over-year growth and acquisitions completed as of prior year period net of divestitures the remainder.

We exceeded the upper-end of our revenue outlook for the period by $11.6 million with solid waste and E&P waste activity contributing about equally to the beat. In Q3, our adjusted EBITDA, as reconciled in our earnings release, increased 8.6% to $192.3 million.

As a percentage of revenue, this was 35.2% or 20 basis points above our outlook and about flat to the year ago period. Adjusted Q3 EBITDA margins within our E&P waste business increased to about 75 basis points year-over-year on higher activity levels.

And within solid waste they declined about 25 basis points primarily due to the previously noted impact from recycling. Adjusting for the items reconciled in our earnings release, the following are certain line items that moved a notable amount in the third quarter from the year ago period as a percentage of revenue.

Labor and supervisory expense decreased 60 basis points; fuel expense decreased 55 basis points; SG&A decreased 10 basis points; brokerage cost increased 45 basis points; rebate taxes and pass-throughs increased 40 basis points; subcontracted expenses increased 25 basis points; and medical insurance expense increased 15 basis points.

Fuel expense in Q3 was about 5.3% of revenue and we averaged approximately $3.52 per gallon for diesel, which was down about $0.15 per gallon from the year ago period and down $0.05 sequentially from Q2.

Depreciation and amortization expenses for the third quarter were 12% of revenue, down 30 basis points year-over-year primarily due to reduction in depreciation expense as a percentage of revenue requesting improved leverage in that line item associated with higher organic growth.

Interest expense in the quarter decreased $2.1 million over the prior year period to $15.8 million due to lower average outstanding balances and borrowing cost on our bank facilities. Our effective tax rate for the quarter was 39.6% or about 40 basis points higher than expected primarily due to higher state tax accruals.

GAAP and adjusted net income per diluted share in the third quarter were $0.48 and $0.56 respectively. Adjusted net income include among other items add back for the loss on disposal of assets and impairments and the amortization of acquisition-related intangibles.

Adjusted free cash flow through the first nine months of the year was $278.5 million or 17.9% of revenue, up over $15 million year-over-year despite an almost $40 million increase in cash taxes.

Debt outstanding at quarter-end was about $1.89 billion and our leverage ratio is defined under our credit facility was approximately 2.6 times debt-to-adjusted EBITDA. In late September, standard enforce increased our credit rating two notches to BBB+. I will now review our outlook for the fourth quarter of 2014.

Before I do, we’d like to remind everyone once again that actual results may vary significantly based on risks and uncertainties outlined in our Safe Harbor Statement and our various SEC filings. We encourage investors to review these factors carefully.

Our outlook assumes no change in the current economic environment and it excludes the impact of any additional acquisitions that may close during the remainder of the period and items such as expensing of acquisition-related transaction costs.

Turning first to revenue; revenue in the fourth quarter is estimated to be between $512.5 million and $517.5 million, up about 6% over Q4 2013. Solid waste pricing volume growth on a combined basis is expected to be between 3.5% and 4%.

Revenue from E&P waste activity is expected to increase between 10% and 15%; recycling, intermodal and others should be about negative 0.5%. Adjusted EBITDA for Q4 is estimated to be between $174 million and $175 million or almost 34% of revenue.

Depreciation and amortization expense for the fourth quarter is estimated to be about 12.5% of revenue or down 40 basis points from the prior year period as a percentage of revenue. Amortization of intangibles in the quarter is estimated at about $6.7 million or $0.03 per diluted share.

Operating income for the fourth quarter is estimated to be about 21.5% of revenue. Interest expense in Q4 is estimated to be about $16 million. Our effective tax rate in Q4 is estimated to be about 39.4%. And finally, non-controlling interest is expected to reduce net income by about $150,000 in the fourth quarter.

And now let me turn the call back over to Ron for some final remarks before Q&A. .

Okay. Thank you, Worthing. Again we are extremely pleased with our performance throughout the year and our prospect for 2015. Continuing core pricing growth, improving collection trends and increasing landfill volumes should provide strong momentum for solid waste into next year supplemented by recently completed and potential upcoming acquisitions.

In addition, we further strengthened our asset positioning within key oil-rich basins and expanded our potential new facility permitting pipeline to take advantage of longer-term growth prospect and expected increase outsourcing for E&P waste treatment and disposal.

Despite we’ve seen weakness in the price of crude oil, it appears will stabilize within a range supportive of sustaining current activity levels. And regardless of price movements, we remain focused on maximizing free cash flow generation under multiple planning scenarios. We appreciate your time today.

I will now turn this call over to the operator to open up the lines for your questions.

Operator?.

Thank you. (Operator Instructions). Our first question comes from the line of Al Kaschalk from Wedbush Securities. Your line is now open. Please proceed with your question..

Good morning guys..

Hey Al, good morning..

I wanted to start in on the strong performance on the MSW tonnage. But I was hoping you could maybe square up the difference there on the growth rates because I think total tonnage you said was up 1.6%, but MSW landfill tonnage was 7%.

So, could you give us a little maybe insight as to maybe what’s happening within those markets? Are you getting more third party volumes to your landfill special jobs or projects? Just little more color on that would be helpful..

On the MSW side that’s a broad-based increase across most of our landfills, that kind of volumes not related to one-time jobs or projects where you see the impact of year-over-year changes from one-time jobs is what we talked about in special waste with the decline in soil jobs year-over-year as well as the decline in C&D activity based on the tornado activity we got last year..

And Al with us being -- with us comfortable being the largest MSW contributor to our own landfills off our own trucks, obviously that gets eliminated in the calculation.

And so, we are seeing and as Worthing said, throughout our entire system, and we’re starting to see service increases escalate and start approaching, not only recovering cost but starting to contribute..

Okay.

But the difference between I guess the growth rate, you’ve seen strong pricing, I think you guided here for fourth quarter volumes to be up, I guess implied about 1%, 1.5%; is that the math?.

That’s correct..

The implied guidance on volume is 0.5% to 1% in Q4, because pricing is around 3%..

Okay, alright. Thanks for clarifying that. And then secondly... .

And that’s again that’s consistent with what we’ve seen the entire year with volume running about half a point to full percentage point above expectations..

Okay.

So, I guess the message is that special waste and C&D had comp issues; the trend there is as we see improvement in economy or timing that that should become a tailwind for you or a positive comp?.

No longer a headwind that’s correct. And again, as we noted, September was the month in ‘14 where we saw increases across all three waste streams..

Alright, okay.

And then finally, I appreciate the color on E&P; are you -- I guess the level of oil price per barrel, is that -- does that have different economic impacts on a given basin for you, specifically I know that broader comments have been $75, but would the Bakken be less or would the Permian be more? I mean what -- how do you calibrate, what should we look for in terms of specific regions whether maybe some pressure points?.

Yes, I mean I think certainly each of the basins have different breakeven points and each of the drillers based on their investment activity and how long they’ve been there, have different cost points within each of those basins. So the answer is a little bit different for the specific customers.

But as a general -- and I’m going to characterize that general rule of thumb, we would expect the Bakken to have probably the most sensitivity to crude pricing first and probably the New Mexico Permian to probably have the least sensitivity and everyone else in between..

Okay. Thanks and great conversion in the quarter..

Thank you..

Our next question comes from the line of Joe Box from Keybanc Capital. Your line is open. Please proceed with your question..

Hey, good morning guys..

Hi Joe..

Good morning, Joe..

Ron, thanks for the driller CapEx. I guess just hypothetically speaking; let’s just say that driller CapEx comes in flat in ‘15.

With the acquisition that you just did, your new Permian location ramping and third-party migration in the Bakken, how should we ultimately think about the growth rate in this business in a flattish type environment?.

Well, if CapEx is flat and implying a flat rig count and a flat drilling linear foot drill, it actually would imply based on the recent improvement in productivity. Now you’ve been seeing drilling productivity improved year-over-year approaching double-digits now for several years.

So I would tell you that conservatively that a flat CapEx would yield somewhere between a 5% and a 7% improvement in linear footages drilled. And if we are keeping or maintaining our market share, flat CapEx should equate to a 5% to a 7% type organic growth.

If we are improving our market share with additional facilities then we would be ahead of that. So we’re still confident that in a flat CapEx environment that still yields fairly strong organic growth in terms of linear footage growth due to productivity pick-up..

Understood. Thanks. And maybe switching gears to the solid waste side, I think you mentioned earlier that landfill tonnage was the best in September. And I’m not sure if that was just MSW or if that was across the Board. But can you maybe give us a sense of the cadence of the landfill growth that you had each month in the quarter.

Just give us a sense of how it played out?.

Yes. Well, first off in September, to your first question, it was actually all three lines of business into our landfill special waste, MSW and C&D were all not only positive, but the most positive we had in the quarter. And I think Worthing may have the breakdown here..

Yes. Just if you look at the trends, August was the worst given the events that we had to the comp in the prior year period, while September again overall tonnage of the landfills was a positive 7%. So September was the best month, August, the worst and July somewhere between..

Okay.

Can you maybe just give us that same clarity for the commercial collection business, which this is kind of a second quarter in a row where you’ve talked that business up?.

Yes. Well, what I can tell you, what I can tell you Joe is that actually as I look through it in terms of our increases in service, our third quarter was the largest quarter we have actually had in over six years. It outpaced the second quarter in terms of service increases by about 10%.

And the gap in terms of service decreases grew further in Q3 to the widest that we’ve had in 5.5 years. So, meaning we have less service decreases, the greatest amount of service increases and that gap is starting to grow..

Great. It’s actually pretty good. Just one more quick one for you, I guess it’s to that prior point. You guys did a nice job recovering the extra commercial collection cost in last quarter, looks like most of that headwind is largely behind you.

I am curious, does that mean you guys are going to take a pause on some of the extra pricing that you’re doing or are you still pushing on that front given we’re seeing a little bit of margin pressure, but it’s coming more from the recycling side?.

Yes. I mean it’s coming from the recycling side, Joe, there is only so much we can do about obviously on that commodity, I mean the number one thing we’re doing is limiting our exposure to that, with that goes the decision to close the few facilities last year. But it’s also coming which I think is indicative of improving market on the labor side.

When you start talking about the labor markets in and around the shale play and I don’t mean in our E&P business I mean adjoining states such as Colorado, such as Oklahoma, Louisiana, Texas, Kansas, Nebraska, South Dakota was a very, very -- and we have very large price increase in those states with the largest hours in most all of those states I just mentioned other than Texas.

We have -- those are markets with a lot of labor pressure because front line employees have the option to not go too far and work in the shale play. So, I mean those comp pressures are not going to abate anytime immediately. We don’t believe unless there is quite a change in the shale play.

And so we will continue with our pricing effort and trying to recover this. Obviously we can abate some on the price as service increases and new businesses escalate. But I would -- we guided for Q4 to price to pop up a little bit more. And I would expect right now that price will be a little better in ‘15 than it was in ‘14 aggregately..

Great. I appreciate that. Thanks and nice quarter..

Thank you..

Our next question comes from the line of Michael Hoffman from Stifel Financial Corporation. Your line is now open. Please proceed with your question..

Thank you very much and again congrats on the quarter.

If we could start with solid waste in the front-end loader trends, can you talk about the weight per yard versus dollar per yard sort of where we are in your mind about that cycle as we stand post-recession and working through that broad-based operating leverage? I got what you said on the service intervals, I’m just curious about how you think about weight per yard and dollar per yard at this juncture?.

Well, we’re still a bit behind that curve to be honest, Michael in both our residential and our commercial system. I mean if you look, I think we outlined that of disposal cost, I mean we didn’t outline, but our disposal cost internally is still a bit out pacing the revenue increase. So we’re still a little bit behind that.

I look at that as a positive. We’re getting the margins that we are and the performance that we are and we still have room to improve in that area. But we’re getting a lot, lot closer as I mentioned that with service increase is being the highest and service decrease is being the lowest in a number of years that recovery gap is improving fast.

I cannot tell you specifically exactly in each of the systems and where we are on a revenue per yard, we look at that on a market-by-market basis. We’re still seeing that new business in most of our competitive commercial markets is coming on, on a reasonable discount to our existing revenue per yard on the commercial side.

We’re still seeing that in our subscription residential market that new customers are coming on at a reasonable discount to existing customers. So, but those gaps are closing. That’s what I can tell you about those two right now..

Okay.

And then would you anticipate for seasonal issues that some of this favorable trends ebbs a little bit in 4Q, 1Q and then you get a reacceleration or do you have a feel that barring stupid weather, this pattern could hold?.

Right now, I mean if I look at the last and I have it in front of me, if I look at the last three years seasonally, it’s certainly service increases do tend to slow in Q1 as do decreases.

So if the spread stays the same, I don’t think there would be much of an effect, I don’t think there would be much of a negative slow or contraction due to the seasonal part of that. So right now, we’re fairly confident that the spread would hold as long as the economy stays where it’s at or better..

Okay.

So the pop could come anytime then under that scenario?.

Yes. I mean we’re hoping that that’s by the second quarter of next year that we’re starting to see the benefit of that..

Okay.

And then on the landfill side, the third party volume coming at you, can you tell whether that’s residential or front-end loader or if you can, which one is stronger or not than the other?.

Yes, it’s more commercial..

Okay. So that’s….

Which is both front-end and rear load but it’s more commercial..

Okay.

And then Worthing, what’s the CapEx plan for fourth quarter?.

Well for the full year, we may approach $210 million which would put CapEx in the fourth quarter potentially around $60 million plus or minus..

Okay.

And then on the energy waste side, you’ve had a favorable tax benefit for the acquisition accounting, where are we in that sort of crossover as the business has gotten bigger and more profitable?.

Well, we’d say it’s favorable tax accounting but step up basis..

Yes. So you’ve sort of given yourself the benefit of good tax basis because of your acquisition accounting. What’s….

What acquisition accounting is, negotiating the transaction but the pace at which we write-off intangibles on our tax books is over 15-year period. So arguably we’re two years into that 15-year period..

So how much bigger with the business (inaudible) offset the benefit from a tax standpoint of this intangibles write-off?.

Yes. It’s not about scale at all. I mean we’re getting again our deduction our tax flows for those intangibles over that 15 year period. And to the extent we have pre-tax income to soak that up, which we’d obviously do then you’re seeing the benefit over 15 year period..

Michael, you are drilling in on a point not fully understood by the others in the marketplace..

I know I’m just trying to make a point..

Well, we’d like you make the point..

2 to 3 (inaudible) also differences in buying would help that..

Yes, right. Okay. Well, I was looking for the help on making a point too, but I’ll switch gears..

I was available..

I know you were.

How would you compare 4Q E&W activity versus the pattern you had in 3Q at this point through month-to-date?.

October has been a strong month. I mean obviously as we always look at any quarterly forecast, we get cautious to further out as we go and as you go further out in the Q4 you run into something called Christmas holiday season, potential bad weather et cetera.

So, the activity right now has not slowed down, but obviously the comps get tougher year-over-year and we’ve guided to 10% to 15% increase in the fourth quarter..

Okay.

And are you presuming that the Bakken and all of those non-resident employees disappear for two weeks for Christmas and New Year like they did last year?.

Last year -- the last year was again you saw, you didn’t see people disappear in the last two weeks of the year, last year. Again you saw nice improvements on a year-over-year basis ‘13 to ‘12. And it remains to be seen issue, but right now we’re not fearing about people abandoning shift with regards to the Bakken..

I think what happened in the fourth quarter last year more so than we’re expecting this year, Michael is people accelerated CapEx into Q2 and Q3 drillers-wise and we heard a number of our larger clients who sort of said the CapEx budget for ‘13 was done or close to done in the fourth quarter. We’re not hearing that right now this year..

Well, and they got such a delay off the first quarter and part of 2Q that I’m not sure that quite off yet?.

That’s also correct..

Right. Okay.

And then lastly on that capital spending thought about going forward, one of the major trend changes is much longer laterals to try and improve the yields out of these signs and you don’t actually -- you’re not actually seeing capital spending rise to do that because you’re getting that much more productive on their finding cost?.

Yes..

So, I’d want to make sure I understood correctly. I mean if you have flat capital spending year-over-year, we still have pretty healthy growth as it relates to your business maybe better than middle single-digits.

I mean it’s…?.

Yes, it could be. I just said that that over the last five years you’ve seen sort of a minimum 10% improvement in productivity a year; it’s actually been greater than that if you look at it.

But there is almost an exponential equation; the longer the lateral, how much horsepower and how much more downward pressure is put which yields more of what we do..

Right.

And then the other part that you didn’t mention is the outsourcing trend is still in its infancy, so outsourcing shouldn’t slow just as capital spending flat?.

No, it shouldn’t. No, that’s correct. It depends on the basin, in some basins outsourcing is 100% like in the Mexico or Louisiana as an example. And others such as Oklahoma it’s more in its infancy..

Okay, great. All right. Thank you very much for taking my questions..

No problem..

Our next question comes from the line of Adam Baumgarten from Macquarie. Your line is now open. Please proceed with your question..

Hey guys. Thanks for taking my question. I just want to drill on the 4Q volume guidance; I mean it seems like comps get a little bit easier, you have the soil issues behind you, your guidance seems a little bit low especially given October trends.

Can you kind of walk me through the 0.5% to 1% volume guidance?.

Well, I think we got to go back to what we discussed in February. In February, we laid out a full year expectation, as well as an expected flow by quarter. We’re back in February, we said -- we thought Q1 would be our strongest volume performance in the year, 2% plus and settling down to about flat year-over-year in Q4.

And that full year average will be about 1% when you run the math. And what we’re seeing obviously so far year-to-date through nine months, our volume growth is running about 2% or 14 percentage point of our full year expectations.

And rather than talk about flat in Q4, we are talking about half a point to 1% positive, which again is that much more of a set improvement versus our expectations back in Q1..

Okay, thanks. And then I guess just on the incremental acquisitions you guys touched on hope they’re coming in the next few months.

Can you talk about which areas they are in, sort of maybe magnitude?.

Well, we have transactions that we are under filing letter of intent on in both the solid waste side of the business, as well as the E&P side of the business. We have transactions that we are negotiating letters of intent on in both sides of the business.

And you know I mean -- we don’t sit here and provide any acquisition guidance, we stop doing that long ago. But what I would tell you is that historically we’ve sort of said that an average year for us is 60 million of acquired revenue or so. You obviously have what we’ve already announced year-to-date.

If we close, what we think we will in a couple of months, we will exceed that average year of 60 million. So, I mean you can sort of triangulate to the types of revenue it could be..

Great. Thanks a lot guys..

(Operator Instructions). Our next question comes from the line of Charles Redding from BB&T. Your line is now open. Please proceed with your question..

Hi gentlemen. Good morning, thanks..

Good morning..

Just a quick follow up on the E&P side.

Maybe you can talk a little bit more about the acquired permits and just how we should think about the timing there?.

Well, without divulging too much market intelligence because it’s a relatively small market area and a limited number of players, there what we acquired were two landfills in the Bakken, one that’s an existing site, one that is opening literally as we speak near the Canadian border at the top of the Bakken and then a third permit in more of what I’ll call the central Bakken that we will look to open over the next year or more.

We also acquired three permits in two in Montana and one in Wyoming, excuse me, reverse, one in Montana, two in Wyoming. And I would expect us to open one or more of those probably at the end of ‘15 or the beginning of ‘16.

Obviously rig activity and plant CapEx activity by drillers in that area and the timing of that necessitates when we will open that we want to be out in front of that but rig activity there is very minimal at this point. So there is not a necessity.

So, we feel that this really gives us up to another four sites that over the next two plus years we could look to open as rigs move and as drilling expands sort of west wards. .

I would not expect any of these new permitting sites to contribute in ‘15..

Other than the two that we have already….

Already acquired, the four permits that we bought, there is that if we do get one built over the course of ‘15, we’re looking at a ‘16 contribution, not a ‘15 contribution..

Okay. That’s helpful. I guess and then in terms of -- get on the E&P side just thinking about the nature of the contracts.

Can you just give us some general color in terms of contract duration or I mean is there any expected lag between kind of the tare back in industry spending and when you actually will see lighter revenue or expected flat revenue?.

Yes. Well, I mean it’s not really the contract, it’s where there are in the drill cycle.

Obviously if they deploy a rig and then make a decision to drill a well and then they make a decision to slowdown, they’re going to finish the drilling of that well because all of the capital is sitting there basically done and really the drilling portion of it is a lower portion of it.

So I mean I would not call it an immediate impact but if people made a decision to slow or reduce drilling activity, then you would see that I would say within a quarter or little more..

Okay. That’s great Ron. Thank you..

Yes..

Our next question comes from the line of Barbara Noverini from Morningstar. Your line is now open. Please proceed with your question..

Hi. Good morning everybody..

Good morning..

Yes, I know you touched on this a little bit earlier, but can you please characterize the opportunities for E&P landfill acquisitions similar to what you just closed in the Bakken? Are there many facilities out there like this maybe where you’re seeing that owners lack sufficient resources to expand, or is gaining disposal capacity in these shale plays more matter extending your existing facilities or maybe getting new permits claim for where it is?.

Okay. It’s a little of all of the above. First off there are not a number of opportunities like the one where we just acquired what can ultimately be up to six E&P landfill. In fact, I do not believe another entity exist that owns that many in any of the plays or even combining all the plays.

So that was a very significant opportunity for us to sort of stretch our lead in this business. But there certainly are acquisition opportunities in each basin that are very specific to the basin and we are looking at those.

We are also looking at different technology options in each of the basin to treat various stratus of the waste that we may not be treating today. That is an acquisition opportunity potentially as well. And then we are looking at various Greenfield permitting our site by engineering and development team.

So, it’s a little bit of all three of them, but I think it would be misleading to tell you that you’re going to see us make an additional announcement so we get up to six landfill permits in a singular deal because that just doesn’t exist..

Got it, that’s helpful. And then I know you’d already mentioned that you have a very strong presence in a lot of the states where this activity is happening.

But would it be fair to say that it’s maybe a part of your near-term strategy now to build-up MSW operations in the regions where you have that strong E&P activity such as you did in Williston this quarter?.

We certainly are going to look at the MSW opportunity; I mean these oil-rich basins tend to be fairly rolled.

They -- when large drilling companies come down and basically build a city such as they did in Williston, Williston six years ago had 8,000 people, today it has approaching 100,000, you don’t see that type of growth virtually anymore else in the country.

But in those basins where that opportunity exists, we’re certainly going to take a hard look at the solid waste and recycling options there..

Okay. Thanks very much..

Our next question comes from the line of Alex Ovshey from Goldman Sachs. Your line is now open. Please proceed with your question..

Thank you. Good morning, guys..

Good morning..

Good morning..

Couple of questions for you; first, I’m not sure if you’ve talked about this on buyback, but would you be able to provide a relevant range of what we should expect for share buyback in the fourth quarter?.

Well, I think we covered it on the call when we said that we don’t anticipate any buyback activity given the amount of growth investment opportunities that we have right now, both on the M&A side, as well as the permitting side. And so you’ve not seen us be active right now.

And for modeling purposes, I would not encourage you to modeling any to the extent we do some that would be just additive to the numbers, but I would not assume any at this point..

Okay, got you. That’s helpful. And then just looking at the margin profile for [360], it seems like the margin sequentially came in, in the third quarter versus the second quarter.

Is that sort of a normal seasonal pattern for the business or whether it’s something there that maybe one off?.

No, we’re starting to see some start-up expenses associated with the new facility in the North Central and Eagle Ford that we talked about. We are also seeing some increased costs as we continue to ramp the facility in the West Texas Permian.

You could stay ahead of the kind of ramping that we’re seeing out there and so you’re seeing us put some additional labor and some additional treatment capabilities in that basin to handle the growth..

Got it. Okay. And just one last one for me, so as I think about the incremental margins for the solid waste business I’m just kind of maybe thinking about at a really high level on taking the weighted number that you guys gave us quarterly, for example this quarter was up 2%.

Can you remind us again how we should think about what the incremental margin on that type of volume number would be?.

Yes. It really depends on where you’ve seen the contribution from. As we noted in 2013 when the growth was primarily related to disposal increases, you saw the kind of incrementally higher margins based on that kind of flow through and that would have been in the kind of a 40% to 50% range based on it again being primarily landfill related.

As you move into this phase of recovery where you’ve got -- begin to see hard collection activity, again the first thing you’re seeing is a lot higher cost coming to system both in disposal costs, as well as labor and truck maintenance.

And so in that phase, we’re probably running late last year and the first half of this year in that 20% to 30% incremental contribution range.

But as we kind of worked through the service increases and other collection increases, we’ve been talking about as you move into ‘15 you ought to be able to get back into that 35% or so incremental contribution..

Excellent and very helpful, Worthing. Thank you..

(Operator Instructions). Our next question comes from the line of Corey Greendale from First Analysis. Your line is now open. Please proceed with your question. .

Hi, good morning guys..

Good morning..

Good morning..

Congratulations on really nice quarter. I just had -- this question has been asked and someone answered but I am still getting questions about it in line, someone asked it again.

Given all the positive trends you’re seeing, I understand what your guidance was for the full year, but it’s not entirely clear why the volume growth would be less pronounced in Q4 than it was in Q3.

Could you just talk about kind of the underlying fundamentals or whether there was some particularly tough comp issue in Q4 that we can see at a high level?.

I will give you again rewind. In Q2 and Q3 in each case, we guided to about 0.5% to 1% positive volume growth; each case we exceeded that by about 50 to 100 basis points. Let’s not get over our skis and be all-in on an outlook, but let good things lead to pleasant surprises..

I understand.

And thinking, and I know it’s early for 2015 but the trends you’re seeing, absent some regression in the economy, is it reasonable to think volume growth in ‘15 should be at least as good as it has been in 2014?.

I mean if it stay in that 1% to 2% range..

Okay.

And then just briefly on the E&P front, I know that one of the longer-term tailwind potentially is regulatory changes that would force more outsourcing, I know that’s not a rapid thing but you just give us the state of the world on that and whether you’re thinking it would be a benefit in 2015?.

I think Corey that first off, no; there is nothing specifically broad-based at the federal level that we are seeing currently. There are small things by state that are helpful.

North Dakota has adopted a couple of things over the last 180 days that incrementally make it beneficial for companies to outsource versus use reserve pit and they have also added certain capital requirement for methane, flaring and methane commitment rather than just open flaring that really add to a driller’s commitment to sort of the whole environmental plan in the Bakken if you will.

And so we are seeing, in the Bakken as an example, we are seeing a relatively rapid conversion to outsourcing and we believe that is in part being fueled by some of the regulatory tweaks that the State of North Dakota has done. So, we are seeing those things head in the right direction, just nothing broad-based..

Okay. I will turn over. Thank you..

Our next question comes from the line of Scott Levine from Imperial Capital. Your line is now open. Please proceed with your question..

Hey, good morning guys. .

Hey Scott.

Good morning Scott..

So, yes, I think in response to Michael’s question, you indicated you hadn’t seen any slowdown recently in E&P waste side of the business and gave some good sensitivity.

Was the cadence of activity throughout the quarter fairly consistent that has accelerated slowdown at all? And maybe a little bit of color if we’re looking at prices at this level, and your E&P business is driven more by new investments rather than underlying growth.

Is that any indication for the margins on that business you might see in 2015 if that’s the case?.

Well, first off to your first question, we really did not see any deceleration in any of the basins not only in the quarter, but through where we are in October so far. So we have not seen a change in the pace of that.

And we are not really projecting that currently based on the feedback we are getting from our customers through this quarter based on the current price accrued setting in the $82 range..

I’ve been trying to be cautious about seasonality as we end quarter and things like that a bit normal..

That’s normal, but I just meant relative to the current price accrued..

Got it..

And I think the second part of the question Scott was related to ‘15?.

Yes, it really because ‘15 is more driven by new investment rather than underlying growth, is there any margin implications as far as you could see?.

Yes. I would expect margins would be about the systems what you saw this year..

Okay, great. And then a follow-up on M&A, I don’t know if you gave with regard to the valuations. Any commentary with regard to just the market in general, we saw large deal announced recently in Mid-West.

And just in general, are you seeing sellers’ expectations improve and maybe just a little bit more color regarding acquisition?.

Well, I think there is a lot of -- there are a lot of sellers of various sizes testing the market right now, Scott. Many of those deals have not gotten done, many of them.

They’ve sort of been announced, there was a prospective buyer and then either through due diligence, buyers found out that what seller’s thought was there, wasn’t or discussions around tax situations predominantly have brought about disconnect.

What we are seeing predominantly where there is a disconnect multiples on the solid waste are a bit higher than they have historically been. But the biggest disconnect is that mostly private equity really does not value a step-up in the transaction of what we call a tax step-up in the transaction.

And depending on the size of the transaction that’s going to be 1 to 2.5 times of EBITDA. So we’re seeing transactions where we might be using the seven day times EBITDA with the step-up and they are at 9 to 11 times without a step-up. Now the reality is it affects private equity in the same way it affects us.

It should -- they hope to find a buyer who also doesn’t require it down the line. And as many of them are finding out, those buyers don’t really exist. And so you’re seeing -- up, double down in the number of the investments they currently have and haven’t been able to get out of them in space.

So that’s the biggest disconnect that we are seeing is really on the tax side and whose going to pay the seller’s tax bill..

That’s great color. Thank you..

We have a follow-up question from the line of Alex Ovshey from Goldman Sachs. Your line is now open. Please proceed with your question..

Thank you.

Just a real quick one for you guys, is there an update from your end on bonus depreciation?.

a; if he is going to do it; b, if it’s going to be retroactive; or c, it’s just going to be in ‘15. But what I would say is if it is retroactive to January 1st, it’s worth about a $15 million that’s a $1.5 million reduction in our December cash tax payment, so stay tuned.

We’ll see what he does and we’d not take that into any of our expectations this year, but we’ll kind of monitor what’s going on in DC..

Good Color. Thank you..

And there are no further questions on the phone lines at this time..

Okay. Well, if there are no further questions, on behalf of our entire management team, we appreciate your listening to and interest in the call today. Worthing and Maryann Whitney are available today to answer any direct questions that we did not cover that we are allowed to answer under Regulation FD and Regulation G.

We thank you again for your interest in our call. And we look forward to speaking with you at upcoming investor conferences or on our next earnings call..

Ladies and gentlemen that does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your lines..