Patrick Dovigi: I think that’s right. But you’ve got to remember, like, the volumetric shedding that’s been done of some of what we call bad revenue. Sometimes bad revenue is coming from bad customers, right? And so the — around the edges, that helps and then just the broader improvement. It’s been hard to optimize the ship as you were growing at the rate at which we were and as we now have stability, we’re able to pull the levers that our peers have already done to optimize in those areas. And so we still think there is opportunity, for instance, within our DSO. And we will continue to drive after that, which will see a recovery of that investment and will help offset what the normal course growth would be associated with organic growth. But you’re thinking about it exactly right.
Michael Hoffman: Okay. And then to that end, you have had a lot of self-help opportunities just because where you are in the life cycle, whether it’s automation and residential or CNG on the trucks or digital on the cab. Can we talk about what inning you are in that and how that kind of reflects back to your comments you made about your working capital?
Patrick Dovigi: Yeah. I think, where we’re sort of sitting today, we do have a lot of self-help opportunities. I mean, have we — for 2024, again, rolling out 3,500 tablets into our commercial trucks, being able to capture all sort of incremental charges from block bins to overweight bins is a big thing that we’re focused on. I think that’s the biggest piece of the sort of low hanging fruit and we’re in process of doing that. Again, continued fleet conversion to CNG, I would say, is going to be the next biggest wave over the next couple of years, particularly on the backs of a bunch of the EPR contracts that we’re sort of looking to execute on and the lion’s share of those trucks will be converted over to CNG. I think we were sort of low-teens previously.
Now, if you look at the fleet, sort of high-teens on CNG. And as we said, we have a goal stated goal of getting that to sort of 45% to 50% of the overall fleet. And then again, as we said on a previous call, we are — there is — we still have about $150 million of revenue that’s in sort of low margin residential contracts for the most part. And as we said, we’re looking to exit some of that revenue or sell it to a local competitor or local market that will do better for it. I think all of those together help sort of with the capital allocation program, will help with the margin profile and just continue with putting us on the right trajectory to continue moving forward.
Michael Hoffman: Okay. Last one for me is and I applaud that you’re giving a level of detail in the 90-day view, but I back up and go, that means you are having a much greater confidence and ability to see where the model’s going. What can you attribute over the last year or two that has given you, one, the confidence to do it as you turn this consolidation story into an ongoing operating company? What would you point to specifically that gives you that confidence to be able to do that 90-day view?
Patrick Dovigi: Well, I think, if you look at the business and how it’s come together, right, like there hasn’t been a — there wasn’t a year for the first sort of 14 years or 15 years of our founding that we weren’t growing at north of a sort of 30% to 40% CAGR. Obviously, with the higher rates for longer narrative, leverage particularly in the public markets became sort of a myopic focus of ours. And again, with — the committed goal of us and the stated goal of moving leverage into the sort of mid-3s, again, that’s allowed us to take our foot off the M&A gas pedal. And I think if you look historically at what the business has done, I mean, there is — we’ve been pretty sort of muted on the M&A front for the last sort of year and a half.
And I think you get the true picture of what the operating power is of this business, because there hasn’t been a huge amount of M&A. So the story has been pretty easy to follow. Our operators are sort of just managing their existing book of businesses without M&A. So the confidence we have in the forecasting, et cetera, is what you’re seeing today and I think you’re going to continue to see for the future. And even as we sort of get that leverage to the level where, you know, the lion’s share of investors wants it, particularly in an interest rate environment like we’re in today, I think, the business is just now of a size and scale that M&A is really just a modest contribution and just — a real part of sort of the growth algorithm, but it’s not going to be the part of the growth algorithm that’s front and center.
Michael Hoffman: Okay. Thank you very much. Thank you again for the kind words. I’ll see you Sunday.
Patrick Dovigi: Thanks, Michael.
Operator: Thank you, Michael. With our next question comes from Patrick Tyler Brown from Raymond James. Patrick, your line is now open.
Patrick Tyler Brown: Yes. A very formal introduction. Good morning, guys.
Patrick Dovigi: Good morning, Patrick Tyler.
Patrick Tyler Brown: Can you hear me?
Patrick Dovigi: Yeah.
Patrick Tyler Brown: So I think you guys have a debt tower that’s coming up next year. I know your credit quality is improving, but just based on where you are today, do you think that refinancing that 25 tower is going to prove a cash interest headwind next year?