Noah Kaye: Very nice. Just a quick housekeeping one. You’ve already detailed the expectations for yield through 2024. But just your comments around weather, tough volume comps for 1Q and you just mentioned the weather flipped to be a little bit of a drag here to start we all felt that cold. So how do we think about kind of the volume trends Q-to-date and how that trends through the year?
Brian DelGhiaccio: Look, I mean, the good news, right, is that while January, we did experience quite a bit of weather, we have seen most of that volume return, not a total recovery, but we saw what we would expected in February so far to-date. We’re guiding to flat to 50 basis point positive Q1, may be kind of the low point of that because of the weather. But I would think of it relatively ratable that type of cadence throughout the year.
Noah Kaye: Okay. And in an environment where your yield is decelerating year-over-year at a pretty, pretty shallow step down, you can get the market expansion that we’re looking for without a lot of volume contribution. So, you let the value of the upside to where margins came from? So, the basic take way.
Jon Vander Ark: Correct.
Noah Kaye: All right. Thanks very much. I will hand over.
Operator: The next question is from Stephanie Moore with Jefferies. Please go ahead.
Stephanie Moore: Hi, good afternoon. Thank you.
Jon Vander Ark: Hi, Stephanie.
Stephanie Moore: Hey, there. I wanted to touch a bit on maybe the underlying macro environment, probably a decent follow-up to the prior question. You called out some weakness in the quarter on landfill C&D volumes. I don’t think any of us would be really surprised to hear that. But maybe any other areas you might be seeing weakness or other levels of strength of the opposite? And then what is the kind of the underlying macro assumption embedded in the 2024 guidance? Thanks.
Jon Vander Ark: Yes, I think the picture is mixed. So again, we’re planning on having a strong year. If you think about the direct things, we talked about weather, certainly housing, interest rates being high, mortgage rates being high, housing activity is certainly a byproduct or depressed housing activity as a byproduct to that. So, we would have hoped for a quicker recovery there, both for our business and because we need more homes in the United States, but we think that will be more delayed towards the later end of the year. So we’re not planning a robust recovery on that front. And then if you think about the other macros, the manufacturing, I think, is a mixed picture. We see pockets where while we’re winning business, there’s some service declines in certain subsectors of manufacturing, but other places in terms of remediation projects and other things have been very, very strong.
PFAS is a nice contributor to the business in 2023, and we’ve got a good pipeline in 2024. And then the macro have two wars going on, right, one in Israel, one in the doorstep of Europe. Credit card debt is high with consumers. So we have a cautious kind of macro perspective on that but the underlying demand signals for our business are largely positive.
Stephanie Moore: Great. No, that’s helpful. And then you touched on this a little bit, but if you could kind of walk through kind of what you’ve seen from the cost inflation standpoint, clearly getting better, but some of those clear headwinds that we saw through most of 2023, kind of how those are trending now to start 2024? Thanks.
Jon Vander Ark: Yes, certainly stepping down operating labor, clearly stepping down year-over-year. Transportation is stepping down. Maintenance has been a little bit stickier and most of that is the fact that we’re growing and we’re driving a fleet that’s aging just because the supply chain is still a little congested and we’re not getting all the trucks that we wanted. And it’s really been a three-year phenomenon in that front. So, we’re going to catch up some in this year, but we’re not going to fully catch up on that. And all that is when you’re driving a 12, 13-year-old truck, right, with a kind of a peak cycle in terms of its maintenance versus a new truck that has relatively high warranty recovery, and so therefore, very low maintenance cost, that’s going to show up in the underlying maintenance bucket. So that spend will be, we think, elevated throughout the year. We hope we do a little better, but we’ll speak.
Stephanie Moore: Okay. Thank you so much.
Operator: The next question is from Jerry Revich with Goldman Sachs. Please go ahead.
Jerry Revich: Yes. Hi. Good afternoon, everyone. I would just love to continue the conversation on the cost side. I mean, really impressive in the quarter, your cost per unit were up just 1% year-over-year. So, I’m wondering where are you starting to see deflation. It sounds like the tailwind from better equipment availability still in front of us. So I’m wondering what’s gotten better for you folks already in the fourth quarter numbers? And then Brian, I’m wondering if you just put a finer point on the comments that you made about yield slowing over the course of the year on comps. Do you expect to exit the year with price cost spread still favorable fourth quarter versus fourth quarter? Thanks.
Brian DelGhiaccio: Yes. Yes, Jerry, so Jon mentioned one of them already is our labor has continued to improve, right, really throughout the year. In part, that’s just due to a reduction in turnover, right, that we’ve seen. And so again, when you just take a look at the impact that turnover has, there’s a hiring cost of bringing someone else, well, which is a productivity impact. A newer driver just tends not to be as productive as those that have some tenure. And so we’re starting to see as the turnover rates have come down. We’re seeing that kind of come through that labor line item, which has had a positive impact. So I would say that’s where we’ve seen some of the biggest improvements. Together, we mentioned throughout the year, some of the impact that transportation cost it had, these were things where we had multiyear agreements.
They came up for renewal in the second half of 2022. And we said that we took some pretty big price increases and that they were going to comp out in the second half of 2023. And we’ve certainly seen that. So I would say those are some of the tailwinds we’ve seen it from a cost perspective. The maintenance has stayed relatively sticky in kind of that 7% to 8% type cost increase range year-over-year. To your question just on the price/cost spread, I would say the say we expect the biggest or the most positive impact between that in the first quarter. We expect that to modulate throughout the year, but still price exceeding cost by the time we exit 2024.
Jerry Revich: Okay. Super. And then nice progress on a $100 million efficiency program, how much progress did you make in 2023 specifically and the remaining $35 million of productivity improvement — when do you expect — how much of an improvement do you expect in 2024 relative to that remaining $35 million?
Brian DelGhiaccio: Approximately about $10 million or the main $35 million.
Jerry Revich: Thank you.
Operator: The next question is from Tobey Sommer with Truist. Please go ahead.
Jack Wilson: Yes. Good evening. This is Jack Wilson on for Tobey. Can we double click on sort of the state of the fleet and specifically fleet electrification in the long-term and sort of where you see that going?
Jon Vander Ark: Sure. We mentioned in the prepared remarks that — we right now, we’ll have a $50 million to that this year. We’ll be at several hundred next year and climbing our path, that’s going to start in residential, and then it will move into small container overtime. And we’ve got a really thoughtful strategy in terms of how we roll that out. I mentioned the infrastructure side of that as well it’s not just a truck, right? It’s a system. So you need to understand the infrastructure. You need to understand the incentives. You need to understand the customer or willingness to pay for the vehicle. And if we feel the trucks that we’ve had delivered out of our partnership with OshKosh, those trucks are working very, very well. So we’re excited to see the next 50 come into the fleet.
Jack Wilson: Okay. Thank you for that color there. And then just as a follow-up, can we sort of dig into the moving parts of volume? Are there any sort of specific geographies or market segments that are especially volatile or changing?
Jon Vander Ark: No, I mentioned the housing piece, large-container temp. That’s been certainly soft, as we’re not putting up as many new houses as we need and even for Movement, People are kind of keeping their existing mortgage rates and are reluctant to move. And oftentimes, we see move we see remodeling activity or other ancillary opportunities and large container temp, and that’s been muted. We don’t think that will last forever here, but we’re planning on a relatively benign year this year, looking to 2025 to see that accelerate.
Jack Wilson: Thank you very much.
Operator: The next question is from Tony Bancroft with Gabelli Funds. Please go ahead.
Tony Bancroft: Thanks for the question. Nice job on the quarter. Just some more color maybe you mentioned PFAS remediation. Could you just maybe talk about what is going on currently at your landfills or whatever you’re doing regarding PFAS and what could that maybe just a general idea what could that business look like opportunity-wise going forward?.
Jon Vander Ark: Yes. We think we’ve got a very compelling offering for customers in an end-to-end solution. So we can hand all the way from the assessment to the frontline remediation doing our field service work and then a range of disposal options on the back end, whether that’s into hazardous landfill, whether that’s in deep well, some of that waste can be profiled and then put into a solid waste landfill as well, and you’re seeing some of that flow through our special ways. So that’s measured in the tens of millions. If you look at last year — this year, it will be the high end of tens of millions or potentially tipping into a nine-digit number in terms of revenue. So this is a real growth opportunity for us. And this is all mostly people self-selecting in advance of the EPA regulations coming down as well as some of the Department of Defense work that’s been accelerated on that front.
So we feel like our national footprint positions us well to — in our strategic accounts organization positions us very well to serve customers on this issue.
Tony Bancroft: That’s great. And then maybe switching to trucks. You talked about what’s going on with EVs and the amount of deliveries coming, which sounds great. Any issues with maybe on traditional trucks and EVs on supply chain, getting those deliveries? And then just to piggyback on that one. It surprises you see any surprises in EV performance. You hear read a lot of things about how it’s performing. Obviously, you’re pretty well situated just based on the routing system. But just some real-time color on how those — I guess there’s only a few right now, but that’s going to be growing, and I’m sure you’ve done a lot of testing.
Jon Vander Ark: Yes. The supply chain is — again, we’re probably getting about 80% of the trucks we want over the last couple of years. And that includes the rollover from the previous year, right? So we’re not continuing to fall way behind, but we haven’t fully caught up yet either. But keep in mind, we’ve grown a lot. We’re coming off our third straight year of double-digit revenue growth on that. So as we grow and do these acquisitions, that creates more demand and need for new trucks. So we see that slightly improving. I think we’ll get — we’ll sort and that we’ll shrink that gap as we exit 2024. I don’t expect that we’ll close that gap until 2025 on that front And then the EV specifically, the McNeilus truck is the first purpose-built refuse truck ever and it’s electrified.
And that truck is driving a full route. Most of the other EVs that we’ve piloted that you spend the first 60 days with a lot of software issues that you’re working through, we’ve been really, really surprised by the performance level and the uptime of this vehicle. Working through some bugs. We’re still in a test and learn environment but really promising in terms of what this is going to be able to do to operate at scale with EV.
Tony Bancroft: Thank you so much. Great job.
Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Jon Vander Ark for any closing remarks.
Jon Vander Ark: Thank you, Debbie. I would like to recognize and thank our more than 40,000 employees for their great work and commitment to serving our customers. Their efforts enabled our strong 2023 results and the continued growth of our company. Have a good evening and be safe.
Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.
