Tobey Sommer: Thank you. In Environmental Services, I’m curious about the outlook for growth over the balance of the year. You talked about 10% on an adjusted basis. Is that a good trend line? And are there any other adjustments that you could remind us or do you need to call anything out?
Luke Pelosi: No. So the adjustments really, if you’re calling the Q1 presentation, I mean, the — it was a perfect storm of opportunity in Q1 of last year and everything just came together and the business exceeded topline, even our internal by about $40 million. So we normalized for that. If you think about the guide for this year, ES growth is supposed to be sort of mid-single digits organically. The Q1 and Q2 normalized growth is inclusive of M&A. But so really, if you think about ex-M&A for the year, we’re anticipating this mid-single digit topline growth. This is really a price led growth strategy. That’s probably offsetting some shedding of lower quality volume. I think that will pick up in Q2 and Q3 and for the year as a whole, we’re feeling good at that mid-single-digit number.
But what’s exciting us the most is the effectiveness of our topline growth strategy as measured by the sort of margin expansion, right? And if we look at the Q1 result, despite some of the headwinds to see the margin coming in, 70 basis points better than plan, that I think is a testament to the effectiveness of this chasing quality over quantity on the topline and that’s going to be something we sort of continue to do. I mean, our business, unlike some of our peers, one of the benefits of our ES business is you’re sort of 80% plus of it’s this recurring maintenance sort of tight nature. And there is a small component that is more event sort of driven, but it’s the quality of that sort of underlying recurring business that allows us to sort of drive that margin expansion.
So I think for the year, that mid-single-digit holds and we’re encouraged by the margin expansion that we’ve seen in Q1.
Tobey Sommer: Great. Thanks. Last one for me, you mentioned negative weather impact at the beginning of the quarter. Clearly it was very cold in lots of places and then a little bit unseasonably warm towards the end. If you net that out, what sort of impact did weather have on the quarter?
Luke Pelosi: I mean, it’s hard to say to just measure the, just the bad guys, I think on your sort of volume and solid waste, it was probably pretty close to offset by virtue of the pull-forward of the warmer weather. I think about it in Ontario and Quebec and Michigan solid waste benefit. I mean, it was really the ES business that felt it on both sides because the warm weather and a lot of our Michigan and other areas where they introduced half load season earlier, the nature of that business is large, full-size tankers just won’t run in that sort of road conditions. So I think, you probably saw 10 basis points plus of margin impact and I think I said that in prepared remarks from the weather on sort of ES. Solid, I think, it’s probably a wash we had anticipated with the January to be negative 4.5% and we ended up at that negative 3% number, which I think you largely sort of offset by the benefit of the warmer weather and the end of the quarter.
Tobey Sommer: Thank you very much.
Operator: Thank you. With our next question comes from Chris Murray from ATB Capital Markets. Chris, your lines are open.
Chris Murray: Yeah. Thanks guys. Good morning. Luke, it was interesting looking at the chart and the one of the things you did pull out and didn’t talk about a little bit was, some of the surcharge pricing and getting that into the system. And then you’ve also sort of talked about some of the system things you’ve been doing, maybe putting, I think you said you were going to put some tablets in the trucks to be let the capture maybe some better some better pricing opportunities. Can you just talk a little bit about what’s left to do structurally and kind of catching up your pricing to what you think your peers have been doing over the years?
Patrick Dovigi: Yeah. It’s Patrick speaking. I think, again, structurally, if you look at the ind — if you look at the margin sort of independently of the two sort of LLBs, I mean, if you look at let’s, if you look at Environmental Services, that business sort of on a like-for-like basis is sort of running at 3 basis points to 4 basis points higher than the rest of the sector on after sort of SG&A allocation. So, I think we still have a lot to do. I think we’re still fuel surcharges, environmental surcharges. There’s a bunch of other charges that we think we can implement in that business to push that business on a like-for-like basis to that sort of high 20s. Our solid waste business today, again, whole sort of SG&A allocation sort of running in the high 20s today.
If you look at the implementation of the repricing of sort of the EPR contracts, hauling municipal — hauling contracts that continue to come over, plus the implementation of the fuel surcharges, environmental surcharges, the level set that we’ve been through over the last couple of years, that’s what’s allowed that sort of outsized margin expansion. Coupled together now with, again, the implementation of the tablets in our trucks, again, to allow us to capture charges that we’re able to charge contractually that we may be sort of missing today. And I said, the role out of those 3,500 tablets is going to be very meaningful, and again, the sort of catchable nuts. So I think when you sort of put that all together, plus EPR, plus RNG in the solid waste book of business, which we have very little of today, that is going to push us, I would say, closer to industry leading margins in solid waste.
