Tom Harrington : Thanks, Dan. I appreciate that.
Daniel Moore : Absolutely. I was going to say don’t let the door hit you, but I didn’t want to say that. If it’s in the presentation and I missed it, please let me know. But is there any tax leakage to the $575 million? And I’m assuming there’s no regulatory hurdles that you’re particularly concerned with given the short window in which you expect to close?
Tom Harrington : Yeah, you know, we obviously have to get through some regulatory hurdles, but Culligan believes they’ll get through those. And you can see it’s a pretty quick close, so we think, there are no guarantees. But our view is, Culligan’s view is we’ll get through any of those in normal course over the next several weeks, next whatever it is, two months, Dan.
David Hass : Yeah, and Dan, on the tax side, we’re estimating some minimal leakage. We don’t believe that will actually end up becoming true, but just for conservatism and kind of how we’re looking to deploy capital, we’re reserving a little bit, sort of sub $10 million on that. But we’ll circle back, obviously, upon close with the final outcome.
Daniel Moore : Perfect. And then as it relates to, you know, the multiple you received from Culligan, Tom, when you think about the assets that you’re selling relative to the assets that remain, many discernible differences. In other words, obviously, Culligan will probably generate some pretty reasonable synergies on their side, and that’s embedded in the multiple. But anything else that would explain the sort of discrepancy between the sale price versus where Primo’s trading? Thanks again.
Tom Harrington : Yeah, the Culligan deal stands on its own for what it is, and the value that they were willing to pay for us for, in many cases overlapping assets. So that’s that, and I don’t want to get, you know, we’re in processes and starting processes, and don’t really want to get into a public discussion about what multiple we might, might not get for those remaining assets, because it’ll all be different. So I think it would be wise to not disclose any of that. It’ll hurt our ability to maximize value, frankly, over the long haul on those assets.
David Hass : Yeah, and I think, as communicated, the ability with just this transaction to eliminate the revolver with just this transaction to increase the share of purchase by $25 million. Obviously, we’ll have additional communications as those transact about next set or next user proceeds, but we’re pretty pleased that with just this transaction, we can be that impactful to sort of our leverage in our cash flow.
Daniel Moore : Perfect. And the last one, while I get one more crack at you, Tom, route density, obviously, a big focus, and it kind of reach peak level, not peak but record levels this quarter. Excluding further price increases, how much room is there in your mind to continue to improve route density from current, these kind of current levels we saw in Q3? Thank you, again.
Tom Harrington : Yeah, thanks, Dan. If you look at the numbers we put out there, it runs on the order 3% to 4% on a quarter over quarter. So I don’t think we finished. It does absolutely have to do with customer density. So as we’ve been, one of the things we benefit from our Costco relationship is we bring in customers over those same routes. So if you reduce miles, and you have more customers in a smaller geographic footprint, we’ll deliver more on a daily basis off that footprint. And then it’s also an important component of our M&A tuck-in strategy. As you buy businesses in overlapping geographies, we will continue to benefit from the leverage that they provide us in terms of route density. I think maybe he dropped.
Operator: Okay, thank you. Moving on, your next question comes from John Zamparo, CIBC. John, please go ahead.
John Zamparo : Thank you. Good morning, Tom. I know your ears are already burning, but I’ll echo my congratulations on your career and transition as well. It’s been a pleasure.
Tom Harrington : Thanks, John. Appreciate it.
John Zamparo: My first question is on the M&A market, and I wonder what you’ve seen here. Are there more opportunities now relative to years past, given private equity might be pulling back in the environment of hire for longer? Is that one of the reasons that you might want to accelerate tuck-in deals?
Tom Harrington : Well, I think there’s, you may recall last year when we gave our guide of tuck-ins of 20 to 30, we were purposeful about lack of clarity about the revenue performance of some of those tuck-ins. And that we articulated, we wanted to be cautious because many times we pay a multiple of revenue and we wanted to make sure that any price increases, they took stock. And secondly, that, we talked about the impact of high fuel prices on small operators. So we think that was a prudent decision. And that, as we stand here today, we’ve had as robust a pipeline as we’ve had, and maybe as long as I can remember doing this, right? So it is a actionable 24, 25 pipeline of activities that we have to be thoughtful about timing of when we do them so we can execute properly.
That’s the company’s job, but it’s a robust platform. So I think it’s the market conditions that are ignoring to our benefit. And we continue to kind of be the leader in this space in terms of our ability to execute and more to direct.
David Hass : Yeah. And I think, John, the one thing I’d pile on there is because of Primo’s scale domestically and our branch network, we really don’t bump up against private equity where a single transaction would benefit them none in creating or starting a platform, if you will. So we would have the ability to compete at any level, really, because of the ability to synergize those down quickly within our network itself. And so I feel pretty fortunate that that’s our pipeline and its ability to sort of tuck in very smoothly.
John Zamparo: Right, understood. Okay, that’s helpful. And then my follow-up is on pricing. And specifically, you’ve demonstrated some real pricing power over the past couple of years. I wonder how you’re thinking about pricing for ’24. Do you have anything planned at the moment? Does it depend on your outlook for costs? Have you seen pushback on pricing subsequent to Q3?
Tom Harrington : Yeah. Yeah, fair question, John. I think in my prepared remarks, we talk about our retention rate on that Water Direct business at 86%, which was a slight uptick from prior quarter. That’s a pretty good indication of our ability and the customer’s reaction for pricing. So we haven’t, you know, it’s pretty elastic. We would currently in ’24 look at normal course pricing. Right, so we don’t currently see the need for accelerated pricing based on where inflation appears to be settling in. But we’ve always reserved the right. If that number moves, then we’ll get ahead of it. And then we certainly watch fuel pricing on a daily basis. And if that ticks the other way, we’ll take an action. And I think the last two and a half years or so would indicate that the customer base is stable.
