Quinn Fredrickson: So Mike, I just wanted to start out with €“ you made some comments in the past about the ES business, kind of starting with industrial production as a base for growth. Can you give us a sense for just what kind of IP environment you might be assuming for the 2023 guidance?
Mike Battles: Yes, Quinn. So I think that we’ve had a couple of great years of ES organic growth. In 2022, it was 20% organic growth. In 2021, it was 8% organic growth. Industrial production is scheduled to be low to mid-single digits. I think that we can do better than that, but we can’t be €“ we can’t assume that we’re just going to continue to kind of go at the level that we’ve been at given the large growth that we’ve had in 2021 and 2022. So I’d say that’s mid-single as I think about ES revenue growth in 2023.
Quinn Fredrickson: Okay. Thank you. That’s helpful. And then secondly, Eric, just building on your comments on SKSS spread. Can you just give us a little more color on your ability to manage the spread and your confidence in managing the spread in 2023? And just looking for what’s maybe structurally changed for the better, whether your ability to manage collection costs, IMO 2020 market consolidation or any other factors?
Eric Gerstenberg: Sure. So going back in time a little bit, we separated out our bulk products and services business. And that was predominantly around the collection of used motor oil, the used loop and selling back our direct blended products into the market. That’s the organization that we talked about earlier when we announced the change with Brian Weber. By separating out that organization, we also put in a significant amount of discipline around managing how we collect used motor oil, the prices in the market that we charge or pay for that oil and then through the re-refinery process, how we sell that direct blended oil. So there’s a significant amount of discipline with that organizational structure change that we’ve put in place.
It’s obviously reflective in our numbers from 2021 and 2022, and we continue to have that in place today, and we’ll be €“ we’re very confident that our spread management processes today are better than ever, very robust. We know who we’re competing against. We know the customers that we’re managing, and we’re very confident of our continuous to be able to manage that spread.
Quinn Fredrickson: Okay, thank you very much, guys.
Eric Gerstenberg: Thanks Quinn.
Operator: Our next question comes from the line of Jerry Revich with Goldman Sachs. Please proceed with your question.
Adam Bubes: Hi. This is Adam Bubes on for Jerry today. Thanks for taking my question. You recently announced the results of the third-party study demonstrating safe destruction of PFAS at your incinerators. Are you able to update us on how you’re thinking about the PFAS opportunity in terms of tons or volumes? And if incineration is designated a safe disposal method, do you need to build additional capacity beyond the Kimball, Nebraska plant to capture that incremental volume?
Eric Gerstenberg: Yes. So we €“ as mentioned, we continue to believe that high temperature thermal destruction is the best disposal technology for managing particularly contaminated soils. We do not feel that we have to build any additional capacity across our network. Our plants are very robust and Kimball will obviously provide an additional complementary tonnage to managing PFAS contaminated soils. I think it’s too early to tell right now what €“ and put a number on the tonnage that we would expect out of this. Regulations are still being changed and we continue to be heavily involved in that process. We continue to communicate to all regulatory agencies on what our test has unveiled and we’re working with customers on different opportunities that they have to remediate their sites depending on how the regulatory environment plays out.
Adam Bubes: Great. And then can you help us think about your assumptions for base oil prices that’s contemplated in the guide?
Mike Battles: Yes, Adam. So we assume that base oil pricing moderates over the course of the year. We assume that €“ you know how base oil pricing work, Q1 is kind of low. Q2 is up, Q3 is up, Q4 is down, and we assume that base oil prices on average for the year will be down a bit year-over-year in the guidance.
Adam Bubes: Great, thanks so much.
Operator: Our next question comes from the line of Jim Ricchiuti with Needham. Please proceed with your question.
Jim Ricchiuti: Hi, good morning. And again, congratulations to all on the career developments, Alan, particularly to you, a question I have just with respect to Thompson Industrial, I wonder if you could talk a little bit about that any additional color you could provide, including overlap with HPC?
Mike Battles: Yes, Jim, this is Mike, and I’ll start. Eric or Alan, feel free to jump in. We’re really excited about Thompson Industrial. It brings industrial cleaning to a part of the country where we don’t have a very large industrial presence, like Alan mentioned. The Southeast is not an area where we have a huge IS business. So bringing that type of €“ so there isn’t a lot of overlap today with HydroChem. A small amount, but not a lot. And so we’re excited about our ability to sell environmental services businesses into that €“ into those new customers and provide perhaps some cross-sell around that. As Alan said, it was about $100 million purchase price and that will close probably at the end of this month.
Jim Ricchiuti: Got it. Thank you.
Eric Gerstenberg: It also provides us €“ just one other thing, Jim, this is Eric. It also provides an entrance to other markets that we haven’t traditionally been in and particularly that Southeast market pulp and paper as well as the utility sector.
