And pretty much through all of that is where that sliding scale came. And as we do talk about 60% of the volatility being covered, there is – that’s a general number, but you are correct as we continue to win new customers as we continue all new contracts, go out with some type of acceptance or adoption of this surcharge, but we also have legacy customers out there that continue to negotiate. So I think it’s not just a combination of where do you want to be, it’s a combination of where do you want to be and how competitive do you want to be in markets all across the U.S. And it depends on who the competitors are against whom we play. So I think if you take a look at the national account perspective, a national account has potentially a little bit of a lower adoption in terms of that versus some of the independents or some of the larger customers.
So that’s, I think, pretty much where that came from as opposed to just being here’s where we think we could mitigate 100% of the volatility.
Dave Manthey: Okay. And then second, on the ERP, I understand that you were not standing still before you flipped the switch on the system. But what are the key changes, the early wins that you can get out of the ERP system. So if we look to year one, based on your experience with SID, what should we expect in RWCS? And related, is there any reason why we shouldn’t see margins just steadily pick higher from here? I mean, it seems like with all this behind you, you can start folding up some of those legacy systems and you’ve already done the RIF. Maybe there’s more behind that. Is there any reason we shouldn’t see sort of up into the right as it relates to margins from here?
Cindy Miller: Dave, great question. And I think what we focus on are – unfortunately during this journey that we’ve had at Staircycle, it’s been quite a turbulent five-year time period, at least for me, in terms of things that have been maybe, let’s say, a bit outside of our control, whether it’s been pandemics and hyperinflation and war in Ukraine and Russia and supply chain issues and now another breakout. So I think you are correct. When I look at the things that we can control, here’s some things that the ERP system affords us an opportunity to do right away. We get better with scheduling, we get better with routing, we get better with overtime, we get better with staffing, we get better with plant utilization, we get better with engagement with customers, we get better and we get more nimble when a customer wants to put on a service or add a container or schedule an additional pickup.
We get better at those things because we get faster. And anytime we get faster on those things, it affords us an opportunity to get to revenue quicker to match the effort and the energy that we’re putting on the operation side from a cost perspective. So our expectation And what we do see and what we have seen [technical difficulty]
Operator: One moment.
Cindy Miller: We will see that. So, Dave, you’re thinking about it correctly. And again, the caveat is for things that we can control, I’m very proud and very confident in the development of this culture and who we are and how we handle things to get better every day. So I’m excited about that. Janet, a couple of things.
Janet Zelenka: Yes. And Dave, just to reiterate, we said that 2023 was the base year of our long-term outlook, which includes a significant margin expansion with a just even growth rate of 13% to 17% which you expect to start seeing next year. And due to all the things and levers that Cindy has mentioned as well as the commercial levers who Cory is sitting right next to me mentioned, On the call that they give us confidence in that number and then the legacy systems and international start to come up and out in 2025. We see some opportunity for adjusting IT cost as we go through this. So we still need to be – – I will point out there’ll be some timing next year, a little bit in the first quarter. There will be the continued headwinds from the paper, but we have a great variable cost model, as I mentioned, and we can drive through that. But from a top line perspective, you still may see some year-over-year choppiness on RISI rate in the first quarter.
Cindy Miller: Yes. And I think Dana brings – Dave, I know you’re very in tune to the RISI rate just kind of on average. Q1, 2Q next year would be comparisons to Q1, Q2, obviously, this year when the average for both of those, Q1 was probably about $225 million. Q2 was close, let’s say, $186 million, somewhere around in there, $187 million. So still some stiff comps, I would say, for Q1, Q2. But then by the time you get to Q3, obviously, it comes down, it’s about $146 million. And I think that’s where you finally get a decent year-over-year comparison from a commodity perspective, at least with respect to RISI and the top line.
Dave Manthey: Yes. Okay. Thank you very much.
Cindy Miller: Thanks, Dave. Appreciate it.
Operator: Thank you. This will end the Q&A session. I would now like to turn the conference back to Cindy Miller for closing remarks.
Cindy Miller: Thank you. And as always, we’d like to thank the investors. We’d like to thank our employees, our customers for the opportunity that we serve for their continued interest in Stericycle. So thank you all very much.
Operator: This concludes today’s conference call. Thank you all for participating. You may now disconnect, and have a pleasant day.
