Luke Pelosi: Yes. Hi, Jerry, it’s Luke. So as Patrick alluded to in the prepared remarks, we’re seeing a delay in some of these projects coming online, and I think it’s pretty sort of widespread in the industry. There’s some permitting and other sort of just technical complexities that are shifting all these things anywhere from sort of three months to six months to the right. And so, on that point, we want to get better clarity on our timing of what were previously anticipated to be 2024 projects in terms of coming online because our experience is even if the construction is complete, some of these other sort of interconnects and theses can add incremental time before you start actually monetizing the value off of that.
So as of where we sit today, we’re moving our expectations to the right in terms of timing and that $65 million that you said before is probably close to half of that. Now I think that’s a conservative number, and that’s really tied to volume of RNG coming online to the extent that projects materialize closer to the original timetable, there’s some upside to that number. So the current guide of at least $10 million is contemplating RNG in that sort of $30 million-ish sort of range to the extent that delays dissipate, there could be upside to that number. But that’s how we’re thinking about RNG from where we sit today.
Patrick Dovigi: Yes. Just on where we sit, Jerry…
Jerry Revich: That’s assuming $2?
Patrick Dovigi: Yes. That’s assuming $2. Yes. And just from where we sit today, I think well, experience now says, listen we brought on the Arbor Hills facility. It really came on – construction was finished in June. It was commissioned over the summer, got it really online sort of in September and just sort of working out kinks in the sort of quality of gas. So I think we’re moving things to the right, just a little bit somewhere between four months or six months after the plant is actually commissioned to get that up and actually running and selling the highest quality gas. Because what we’ve – our experience has been certainly and the first one is, yes, the facility works perfectly, but then it was going back and looking at the well field to make sure that oxygen and nitrogen levels that were going into the – that was – were a little bit elevated and sort of the RNG was cleaned up.
And I think that took an actual sort of month or two. So we’re just being conservative now is now that we have real data and real experience in bringing these online at landfills, where historically they haven’t been.
Jerry Revich: Definitely makes sense. And then can I ask on the producer responsibility opportunity set you folks have obviously done really well with the programs to-date. What’s the blue sky scenario based on legislation that’s being contemplated in your markets, how significant of an opportunity could that be for looking out over the next couple of years? And what kind of visibility do we have?
Patrick Dovigi: Yes. I think it – where we sort of sit today, we said we communicated 40 to 50 [ph] before. I think in reality, it could be 2x that maybe more depending on what happens in a couple of the other provinces, which is sort of coming to fruition now. It seems as though the model we’ve developed, along with the producers seems to be being accepted by other provinces as the sort of gold standard. So again, this is a file that sort of I’ve intimately been involved with a – sort of a number of years. So it’s sort of near dear to my heart. But I think from where we sit today, the other provinces in Canada are going to adopt the gold standard of what we’ve developed here in Ontario. Quebec is certainly moving that way.
The Maritime is certainly moving that way. Alberta is certainly moving that way. Still some – still some discussion around Manitoba and Saskatchewan. But I can tell you the opportunity is going to continue to grow from here. And just given our asset positioning in Canada and the markets we are and the facilities we have and the collection contracts we already have, our expertise know-how and sort of being able to work with the producers hand-in-hand to sort of come up with and develop this and get this done actually in the most efficient way possible is yielding very good results. And I think it’s a win-win for – I think it’s a win-win for the industry because it was – this was a program that could have potentially created a lot of uncertainty for not only waste collectors but producers, but residents, et cetera, municipalities, governments, et cetera, and I think the plan has come together exceptionally well.
And again, like I said, it will be a win-win for everyone.
Jerry Revich: Well done. Thank you.
Operator: Thank you for your question. Our next question comes from the line of Rupert Merer with National Bank. Rupert, your line is now open.
Rupert Merer: Thank you. Good morning. Thanks for taking the question. Luke, with the Environmental Services business, you highlighted expanded service capabilities and improved asset utilization as having driven growth in that business since you acquired Terrapure. How much more low-hanging fruit do you see there? And how can that drive the pace of growth in margins going forward?
Luke Pelosi: Rupert, I think as we’ve said, we see a clear line of sight to that business approaching a sort of 30% margin over the sort of medium term. And that’s going to be a function of those levers you just described, really making that combined platform HUM [ph], if you will, in terms of asset optimization, but also just the benefits of pivoting to a sort of price-centric growth model. As we’ve gone through, we’ve talked about shedding of work in our Solid Waste business that doesn’t meet appropriate return thresholds. And this is a similar dynamic that we need to be paid the appropriate amount for the work that we do. And we’re going to continue to lead with that approach. And you can see the margin expansion we’re realizing today; I think it shouldn’t be overlooked the impact of achieving that results inclusive of the contaminated soil.
I mean, you’re here in the sort of Ontario, Canadian market, the slowing down of that, that’s very high-margin special waste, if you will. And I think achieving those results even inclusive of that headwind is a real testament to what’s happening there. So we continue to expect to see this – what was a low 20s and now mid 20s, moving to high 20s, leading to a sort of 30% margin business over the medium term, as we previously communicated.
Rupert Merer: What do you think you could achieve on top line, you had a little bit lower top line growth this quarter. Is that a sustainable rate that we see this quarter? Or could we expect you could outperform that?
Luke Pelosi: Yes. So that was the intent of the page to show that historical perspective because we’ve been trying to talk folks down of expectation management when we’re printing 25%-plus organic growth quarter-after-quarter. That really was a multitude of factors combining to yield that sort of outcome. And so, as we go forward from today, what we said at the beginning of the year, and we continue to believe, I think a mid to high single-digit organic top line cadence primarily driven by price is what we are going to be striving for in this business. There’s a little bit of sensitivity around things like soil and/or the modest impact from Motiva or other sort of oil pricing. I can move that around the edges. But I think from a long-term modeling perspective, the way we’re thinking about that is a mid to high single digit, primarily price-driven top line growth.
