WM
#We do get a little bit of help from working capital in Q4.
I'd agree with that.
That's right, <UNK>.
There's two things really that are potential headwinds for us.
And then we overcome those with the growth of the business.
Those two things, as you mentioned, one is cash taxes, the other is CapEx.
Right now looks like CapEx for 2017 could be higher.
We had a couple projects that we originally had in 2016.
That's why our range has come down a little bit.
We were originally $1.4 billion to $1.5 billion.
We're now $1.4 billion $1.45 billion.
We brought the top end of the range down by $50 million.
That's just simply because a couple of the projects that we had originally thought would show up in 2016 look like they will show up in 2017.
So none of it do we feel like we can't overcome.
But those are the two things that work against us a little bit in 2017.
<UNK> and I kind of manage the capital committee pretty ---+ along those lines.
And we look at bonus depreciation, we look at how do we kind of smooth CapEx a little bit.
And so as we think about CapEx, though, really maybe to answer your question this way.
We've said all along that we thought CapEx should fall in the 9% to 10% of revenue range.
In 2014 it was below that.
It was in the 8%s.
2015 it was just above 9%, kind of like 9.1%.
And 2016 it's going to be closer to 10%.
But we still think in 2017 and on a go-forward basis that range of 9% to 10% is a healthy range.
It's a good range for us.
Keep in mind that if you look at things like fleet purchases, in 2012, 2013, I think 2012 we bought around 900 to 950 vehicles.
We're going to buy 1,300 vehicles this year.
So when we think about OpEx, and we talked about it a little earlier, eventually that has to start affecting our maintenance cost as we increase the number of trucks that we buy by almost 40%.
Hopefully that answers your questions.
<UNK>, I'd just add one other thing to that.
<UNK>though we have the last few years moved a few dollars of capital into the current year, the one thing that <UNK> and I are very focused on, and that's making sure we support the business and the growth.
We're not doing that other than to support growth, where could we add value by moving trucks forward or backward or any other capital project.
It's got to align with where the opportunity is and how we want to grow our business.
(Multiple speakers).
We've talked about is talking to individual area managers and vice presidents, and saying look, here's what your capital requests have done over the last three years and here's what your earnings have done.
So when we think about return on invested capital, maybe you're doing well, maybe you're not.
But we're having those individual conversations.
I completely agree with that.
We've seen, to your point, in the restaurant sector we've seen weight come down slightly.
But we haven't seen service levels change.
And so we continue to see service increases outpace service decreases.
For us, that's really on the commercial side, that's the leading indicator that we look at.
And we still see that very strong.
CPI transition.
Yes.
As we look at it, I think the number that we've always said it's about 25% to 35% of our customers are on some type of modified index, whether it's a particularized index for us or a government index like the wastewater and sewage.
That's one where, like a lot of things we do, you have to have sort of an industry backing.
Look, too many times we see ---+ I'll go back to the recycling business.
Too many times we saw a lot of people bid rational contracts like we do.
And then one party comes in and says, we'll do it under the old type of contract.
And before you know it, they're winning business and losing money.
I would tell you, we haven't seen as much sort of industry acceptance of a different CPI-based residential or franchise type model.
We have not seen widespread enough acceptance to move the needle.
When bidders go in and say, we're going to bid on a modified CPI.
And then the fourth bidder comes in and says, we'll take whatever you have on the table, it's hard to see things change.
And so we've had better success in our large franchise areas, like California.
But I think that's going to be a long, slow slug that we just have to ---+ there's only one thing we can do at Waste Management, and that's stiffen our backbone and say, we're not going to bid these contracts when it's not good for our business.
We've proven that on the recycling side.
We need to continue to have that type of firm backbone on the residential and franchise side.
<UNK>, you've seen that.
That's why our residential volume has stayed negative, is that we have lost some volume.
But we look at it, as Dave said, on the long-term basis with return on invested capital as a real focus.
And we're just not going to take business long term that doesn't give us the ability to manage our cost structure but also get some margin improvement.
The last report I saw, which was last week I think, showed rig counts across the US in the shale plays up 11, which is very small on a percentage basis.
And the majority of those were in the Permian Basin where we don't have a presence.
But we are starting to see a little bit of indication that maybe some of those shale plays where we do have a presence are thinking about drilling next year, which is a change from the past two years, for sure.
But nothing yet.
<UNK>, in the real business we're still down versus prior year.
We're getting closer to anniversarying that reduction.
But it's still not anywhere close to the previous level.
And without significant movement forward, but we see signs of it.
Thank you.
<UNK>l right.
Well, thank you all for joining us.
As we move into the holiday season, we wish you all the best as we move toward the end of the year.
And hopefully everyone on the phone gets a little chance to spend some time with the families and live what the holidays are about.
So we'll see when we release next quarter.
Thank you.
