Jon Vander Ark: Listen, we had a really outsized — we’re coming off $5.5 billion of M&A spend over the last three years. There’s always some episodic nature of that. We closed two really big transactions last year in the fourth quarter. And I think last year, it was a $1.8 billion spend, $1.4 billion of it was in recycling waste. So, there’s a natural ebb and flow of just when those deals close. And we don’t time any of those things around a quarter or a year, right? We do that when the seller is ready to sell on that front. The pipeline remains strong in Recycling and Waste and Environmental Solutions. The only place, I’d say, we’re slightly self-constrained is on the Environmental Solutions services side of the business only because we’re doing so much IT integration work that we’re letting that team get focused there.
And again, the pipeline is certainly building, and we could close more opportunities right now. We’re pausing until 2025 on that when we have a really solid foundation to integrate companies into because that’s what we think we maximize the synergies of those acquisitions.
Unidentified Analyst: Thank you. And I believe you said recycled commodities are trending at $160 per ton. Is that what you’re baking in for 2Q? And if not, I guess, what are you baking in there? And I guess one housekeeping is, what is internal inflation running right now?
Brian DelGhiaccio: Yes. I mean right now, we’re just pegging to what we see, which is running right around that $160 per ton. But back to my earlier comment, we want to see that stay for a longer period of time before we sit there and say that, that’s where it’s going to be for the remainder of the year.
Unidentified Analyst: Thank you.
Operator: Thank you. The next question is from Mike Feniger with Bank of America. Please go ahead.
Mike Feniger: Hey everyone. Thanks for taking my question. Just a quick one, I apologize if you already addressed it, but I think EBITDA was a little bit down in environmental solutions or environmental services, margin was down a little bit. You might have addressed it earlier, but apologies if there was something you would want to call out of why that happened and how we kind of think about how that plays through the full year. Thanks everyone.
Jon Vander Ark: Sure. Yes. No, most of that is the acquisition we did in the fourth quarter, ACT. And as you know, when we do acquisitions, we always invest heavily in Q1 or in the first year rather, the pro forma to integrate on that front, so that’s what’s the drag on that. But again, our margin outlook for ES is certainly positive for the year.
Brian DelGhiaccio: Yes. We would expect that to abate that margin headwind on the acquisition, and we ultimately expect to see margin expansion in that business on a full year basis.
Mike Feniger: Okay. And would it be proud be above what you would expect for the Solid Waste business?
Brian DelGhiaccio: Well, look, solid waste ran at 120 basis points in our first quarter. We talked about that cadence on Environmental Solutions moving in that 75 to 100 basis points per year, right? And we see that on a sustained basis in the medium term until we hit that medium-term target of circa 25%. So I think you can think of it in that ZIP code.
Mike Feniger: And lastly, guys, just to wrap-up, Brian, obviously, there’s a lot of focus on CPI, either inflation stayed sticky, rolling over, moderating. Can you just remind us when we think of CPI, there’s, obviously the headlines CPI? There’s what you guys have kind of converted overtime. Can you just remind us where we are in that process? That would be helpful. Thanks everyone.
Brian DelGhiaccio: Yes. So if you just take a look, again, if you look at our entire revenue stream, about 45% of our revenue has some sort of contractual pricing restriction, 55% in the open market. So of that 45% that has that contractual pricing mechanism, 23% is directly linked to CPI, headline CPI, 27% are alternative indices like water, sewer trash, garbage trash. And then, the remaining 50% or either a fixed rate increase some sort of rate review, things of that nature. So we’ve continued to move, right, the book away from headline CPI to alternative indices, where now we have more on alternative indices than we do on headline.
Operator: Thank you. The next question is a follow-up from Michael Hoffman with Stifel. Please go ahead.
Michael Hoffman: Hey. I just wanted to play a little cleanup. So one, roll off this temporary container business, Is it not correct that you would park equipment pretty quickly reposition drivers raised price. So this may show up as a volume calculation is not that big of an impact to profitability because you can pivot so quickly?
Jon Vander Ark: Yes, certainly, Michael. I mean, we’re dynamic in that in the market. And if you look at the quarter, volume was down 10.8%, but price was up 7.1%. And I just think that speaks to the strength of the execution, frankly, that strength of the industry, right? In an environment where volume is declining, if you go back a decade or two, you might see behavior change and pricing will be flat or even pricing or negative. And I think people understand the value of the products and services they’re delivering and the ability to flex and scale in that business is quicker than almost any and certainly, our team has done a great job of that.
Michael Hoffman: And then the other would be — well, the incineration comment I concur with is will remain tight for a while. US Ecology was predominantly an inorganic chemistry play on the disposal side and the incineration world is predominantly organic. So it’s less impactful to you anyway. It’s not that you don’t have organics, but you’re much more of an inorganic play.
