Jon Vander Ark: No, pipeline is very strong. We’ve got a mix of small- and medium-sized deals across Recycling and Solid Waste and ES, right, and that’s kind of at different stages in the process and feel good about that. The premiums or the multiples are still kind of hanging in the same Zip Code because we’re looking at premium assets. We’re not just buying revenue. We’re very particular buyers, and we want to get something that’s quality. And one of the first questions one has asked is why would we do this ourselves? And if it’s something like a residential subscription business or a temporary roll-off business, we should go get that with our sales team, not pay a premium for that. So, we’re looking for infrastructure. We’re looking for route-based businesses with customer contracts that we know that we will integrate in the business and drive value over time.
Walter Spracklin: Okay. And just the last one here. Just on your guidance, I know you had, had a double-digit in there. You kind of walked it back last quarter. You’ve kind of brought it back again confidently here this quarter. Just what’s changed your view here that gives you the confidence behind this guide, that you perhaps kind of didn’t have when you had the third quarter report?
Jon Vander Ark: Well, maybe a slightly different view of the history, right? We never gave an official guidance. We said we had line of sight at one point to double-digit, right? That was in a different commodity price environment. And so given the commodity market being depressed for six to nine months, that certainly gave us a different outlook, right, just based on the math of the commodity prices. And I think we’ve talked about here a high single-digit number going forward. Now, if we end up doing more M&A early in the year and that has the year impact and we get to double-digits, we certainly could, but I think we’ve been pretty consistent with how we’ve approached it.
Brian DelGhiaccio: And the other thing I would just add to that as well is that on the October call, we said that we’ve got a perspective that we’re going to achieve high single-digit growth. And if you look at the midpoint of everything we put out there, it’s high single-digit growth. So, to Jon’s point, I would sit there and say it is exactly in line with where we thought we would be in October.
Walter Spracklin: Fair enough. That’s all my questions. Thank you very much.
Operator: The next question comes from Toni Kaplan of Morgan Stanley. Please go ahead.
Toni Kaplan: Perfect. I wanted to ask first on capital expenditures. I know 4Q is usually sometimes seasonally high, and this quarter seemed maybe particularly high. I was wondering if that was related to the asset management system in the polymer centers, or if there was something else in there. And how we should be thinking about CapEx for 2023?
Jon Vander Ark: Yes, certainly investing to grow the business, right? We’re always disciplined but never afraid to spend that money. One of the bigger drivers of that was the second polymer center that we’re putting in the Midwest. We just — we’ve seen so much demand for the offtake of our first one that gives us a lot of confidence that the market is really getting value and need that product. And the returns in our business case, we think, are going to be north of what we originally pro forma-ed. So, that gave us the confidence to accelerate that investment moving forward.
Brian DelGhiaccio: Yes, and the other thing is, we talked that there were some supply chain disruptions throughout the year, impacted things like trucks and some of the heavy equipment. And we actually were able to take or seed, take title of those assets in the fourth quarter. So, as you think about building the 2023 plan, most likely, we’ll be more back-end loaded like you’ve seen in the last couple of years, but maybe not to the extent that you saw in 2022.
Toni Kaplan: Super helpful. And I wanted to ask on volumes. I know you gave the 50 to 100 basis points for 2023 of volume. I wanted to just ask sort of what you’re seeing with regard to commercial and industrial. I know some of your competitors talked about like a little bit of a softness in 4Q, but maybe a little bit better in January. I wanted to hear your experience on that.
Jon Vander Ark: Yes, there’s different moving pieces for sure. Obviously, there’s been a little bit of a slowdown in the construction market as you’ve seen housing starts kind of pull back in the second half of last year, and we’ve certainly baked in some softening of that into the 2023 environment. But listen, the industrial market is very, very strong right now, right? You saw the consumer number this morning. I mean the consumer is engaged. So, we still see lots of economic activity. Travel and leisure, right, is kind of bursting at the seams. So, we remain mindful, right, that there’s certainly recession talks on the environment, but we’re a pretty broad-based barometer of the economy, and we’re seeing a lot of strength right now.
Brian DelGhiaccio: Yes. And even though we’re seeing a little bit of softness on some of the construction activity, we’re still seeing above-average price. If you take a look in the temporary large container business, we’re nearly 9%priced during the fourth quarter.
Toni Kaplan: Sure. Thanks for the color.
Operator: The next question comes from Kevin Chiang of CIBC. Please go ahead.
Kevin Chiang: Thank you operator and good afternoon everybody. I was just wondering, when you talk about the pricing initiatives within ES, just wondering what percentage of your revenue do you think you need to reprice to get to the levels you wanted? And how long do you think it takes to kind of get through all of that?
Jon Vander Ark: Well, we’ll look at every dollar of revenue on every customer and really try to understand — again, we look at pricing with two lens. One is, from a customer and an insight standpoint, right, what does the market bear? What does our offer have from a value standpoint versus our competitors? And then we also want to look on the internal side and say, what is our cost? We’re including a capital charge and make sure that we’re getting a fair return on that. And so we’re going to go systematically through every customer and every dollar of revenue. And I think the encouraging thing is we put out some double-digit price increases, and we’re seeing it stick, right? Customers are really valuing the integrated offering.
And keep in mind, whatever they spend with us is a very small percentage of their cost structure. And so safety and speed and sustainability and our digital tools and all those things that we’re investing in, right, those are big differentiators that allow that price to stick.
Kevin Chiang: All right. That makes a ton of sense. And then I apologize if you’ve given this number before, but when you look out longer term and you’re through some of the cost synergies and some of the revenue upside opportunities, do you have a targeted ES adjusted EBITDA margin that you’re thinking about? You did 17.5%in — or roughly 17.5% in 2022. Does this get to the mid-20s when you’re kind of through many of these initiatives?
