Brett Argirakis: Yeah, sure. Let me give you a little bit of an update on the PFAS regulations. To date, there has been no finalization of the regulations, but the EPA does plan to continue regulating the PFAS this year and beyond, of course. In March of last year, they did propose national drinking water standards, but that was a proposal. We expect rulemaking to be March of this year. That’s not in stone, but that’s the target that it seems the EPA is putting out. Let me give you an update on FLUORO-SORB. I think that’s where you’re going because that continues to generate an increasing level of inquiries and requests for piloting across four verticals. And those verticals really are drinking water, water treatment, landfill, leach aid.
And then, of course, the institute remediation groundwater. The drinking water space, of course, has a high level of interest. Right now, that space is slow to accept new technology. But again, we have a lot of activity going on. And we currently are actively participating in two full scale implementations where FLUORO-SORB is the media and we expect four more full scale implementations to commence sometime this year, hopefully in the first half. We also have a couple of pilot programs for drinking water and soil stabilization that we initiated in Europe, UK, Germany and Belgium. In addition, we’re also actively working with some of the largest landfill companies in the world on leach aid treatment and using FLUORO-SORB. And we continue to pursue the in-situ remediation segment to control PFAS.
So, in fact, we recently have been specified into two Department of Defense sites in the United States and these opportunities are expected to generate favorable sales in 2024. So overall, our FLUORO-SORB activity remains high and we fully expect to continue to expand this business through ’24. So right now, it’s a mixed bag. Drinking water is the slowest, but it is also generating probably the most interest.
David Silver: Okay, thank you. I’ll get back in queue.
Douglas Dietrich: Thanks, David.
Operator: Our next question is coming from Kyle May with Sidoti & Company. Your line is open.
Kyle May: Hi, good morning, everybody.
Douglas Dietrich: Hi, Kyle, how are you?
Kyle May: Just a quick one — I am doing well. Appreciate the time this morning. Just a quick one for me. Now that your leverage ratio is below two times, does that change the way that you approach or think about the buyback program?
Douglas Dietrich: No, it doesn’t change it right now. We’ve — right now, we fully intend to complete that program. I think we’ll probably look to continue to make sure our balance sheet through debt is in good shape and I think also building up some cash reserves. The allocation — our typical allocation is 50% of our free cash flow we like to return to shareholders, the other 50% keeping on the balance sheet once we’re at this kind of leverage ratio. This year, with the balance of our share repurchase program and the doubling of our dividend, that’s probably going to be about $75 million to $80 million back to shareholders in 2024. As Erik said, that’s probably about 50% of our $160 million. We could flex that up. If — we like to hold some money for opportunistic M&A.
If that comes around, that market may improve and opportunities if we see them in 2024. If not, we always have the opportunity to flex that back and increase that share repurchase. But right now, we’re on course to finishing the one we have and we can change that later in the year if conditions warrant.
Kyle May: Got it. That’s great, I appreciate it. And then also I was curious with the new product pipeline that you touched on. And correct me if I’m wrong, I believe you said that were maybe 500 products and development with over $1 billion of potential revenue. I assume that’s a long-term target, but just curious if maybe you could give us any color about how much of that product pipeline could potentially come through in 2024? And then how much of those products could contribute to a revenue growth this year?
Douglas Dietrich: Yeah, so the number I gave you, the 18% is the percentage of our sales that’s generated from new products over the past five years. It’s kind of like a freshness indicator, right. And — so that gives you an idea of how much revenue has been generated. We think that’s probably going to be between kind of 18% and 20%. I think 20% is a real benchmark out there. So between 18% and 20% will be the kind of pace of how we’re commercializing products to replace the ones that — we still generating sales from these products. But we count the freshness if they — every five years, something falls off and something else comes back in. So we’re probably commercializing. There’s some really large projects, there’s some smaller ones, I don’t know, 35, 40 new products every year, probably higher than that.
But that gives you an idea of how many things that are coming out. Probably about 50% of those are we kind of call replacement. So they’re upgrades or higher margin versions of something we’ve been selling before. And some of them are — and the other half of them is targeted at growth. I would say of the growth ones and — of all of them, I guess, growth and replacement, 80% of them or 75% of them have a sustainability element to them. We’re talking about increasing the recyclability, the lower energy consumption for either the way they’re produced by us or whether they’re — how they’re used and consumed by our customers. And so that gives you a feel for them. We expect probably similar level of sales and rate of commercialization this year to last.
And I said billion dollars is in that portfolio. That’s the potential I mentioned. Not everything is going to make it through, but there’s some big ones in there. And we’ve commercialized some big ones, targeted at big opportunities, big opportunities that are in the environmental space, big opportunities in recycling, big opportunities in the consumer space. And also, as Brett mentioned earlier, some of these new technologies that are going into high temperature technologies. So hopefully, long winded way of giving you some color of what’s in there.
Kyle May: No, that’s great. I really appreciate it. That’s all from me this morning. Thank you.
Douglas Dietrich: Thanks, Kyle.
Operator: Our next question is coming from Daniel Moore with CJS Securities. Your line is open.
Daniel Moore: Sorry about that. Had to get off mute. Part of my quick follow up was just covered, but maybe just housekeeping, Erik, that the share count as of December 31st. And Doug, you mentioned potential prospects for M&A. Maybe just talk a little bit about what the pipeline looks like. And if anything about what type of size deals you might be looking at. Thanks.
Erik Aldag: Yeah, Dan, I’m going to give you a number, but it’s in the press release, so make sure you check me on this. I think it’s around 32.5, the share count at the end of the year, but I’ll get you the right number there.
Daniel Moore: Perfect. Thank you.
Douglas Dietrich: Yeah, I was going to answer the M&A while they scrambled for the share count. But — so, there’s the share count. We’ll make sure that’s correct for you and we’ll be in the cave. As far as M&A, look, it’s been a quite couple of years, as you’ve probably noticed. We’ve used that time to really focus on the acquisitions that we’ve completed over the past four years. We’ve done four acquisitions in four years. And I think what you’re seeing is the benefits of us truly — you know, there’s one thing we call about integrating them, right. So getting them into the company and getting them into our financials and then they are truly integrating them. What we mean by that is really bringing these up to speed in terms of our culture, OE, productivities, variable costs, looking for opportunities to expand capacity, reduce downtime, upgrading the facilities in terms of safety and modernization.
