Ron Mittelstaedt: Yes. So, I would say, if anything, what I think you should read into that is it suggests more margin opportunity and really reflects sort of an increased amount of M&A over the certainly already the start of this year and the second half of last year. So, I would tell you that that’s probably about 50 basis points more of the increase, which is basically all of that based on the guidance. And what we would expect you to see is roughly a 50bps to 75 basis point incremental continuous improvement throughout this year, 100 basis points just on weather, as we said, Q1 to Q2, and then continuing Q2 to Q3, Q3 to Q4, stepping up another 50 to 75 basis points per quarter. Again, that can change a little bit due to incremental shedding, but that’s really the delta.
Sabahat Khan: Okay, great. And then maybe just continuing the margin discussion from the last question, I think, and we’re looking at another, I think, 100 plus bps of margin improvement in Q2. Seems like the Q1 margin improvement was split between kind of core business and recycling, RINs, etc. Maybe just walk us through kind of the confidence around that 120 bps in Q2. What is that coming from? Maybe the split there. And how much of a tailwind from sort of commodities and RINs are you baking into that improvement into the next quarter?
Mary Anne Whitney: Sure. So the way to think about it’s that the greatest margin contribution from recycled commodities and RINs would be in the first quarter. It would decrease over the course of the year, all of the things being equal just because the comparisons get tougher, right? Because you had commodities ramp last year. And so if by way of example, you started with 100 in Q1, you could see that stepping down to 60 bps or 50 basis points in Q2. So that really tells you that the tailwinds are coming from the underlying business and that is growing. And as we said, coming into the year, we had talked about that outsized opportunity between that price-cost spread that I described we’re already seeing in Q1, and we’d expect that to continue.
And also the operating leverage we’re getting from those improving dynamics around retention and turnover, where we’ve said that we’d see it in a number of different areas. And as we’ve indicated, we’re starting to see that, whether it’s the relationship between overtime and straight time, even as we have more heads in place, but seeing overall improvement and the reduction or the slower growth in third-party costs, providing some more margin expansion on things like outside repairs. So those are the types of dynamics that would contribute to a growing operating leverage as we move through the year. And that’s what gives us the conviction for Q2 is that we’re already seeing it in the numbers in our operating statistics. And we know that the dynamic is that the savings follow after you see those quarter after quarter improvement.
Ron Mittelstaedt: And one other thing I would note, you didn’t ask it, but just to get it even more granular, as, we closed the secure E&P transaction in the first quarter. And we noted that it’s margin accretive for the full year. I would note that, different than our solid waste business, Q2 is actually the lowest seasonal quarter for revenue, EBITDA, and margin in that business due to the thaw breakup period that goes on in Canada from April through mid-June. So unlike our solid waste business where Q1 is the seasonally weakest quarter, in that business, Q2 is comfortably the seasonally weakest quarter. So the point being, that is not what is driving margins in Q2. It’s our underlying solid waste business.
Sabahat Khan: Got it. That’s super helpful. And maybe just a quick follow-up, Ron, around your answer in the earlier question about the new PFAS regulation potentially adding to the M&A opportunity set. Presumably this is going to take a while to play out, but maybe from a philosophical perspective, how big of an addition could that be to the M&A set in terms of how many more folks could come to market? And over what period of time do you think that plays out in terms of the benefit to the larger acquirers?
Ron Mittelstaedt: Yes, well, number one, I would tell you it’s too early to, understanding and all that. I think it depends on ultimately what the regulation is and, how private folks decide, excuse me, to comply with it, obviously it has the most effect on disposal-related assets directly. And, of course, there are far less of those today than there were in previous cycles of, incremental federal regulation change. But without question, it has traditionally been a macro driver. It does take time for that to happen. So it’s not something that’s going to be a ’24 or maybe even an early ’25 thing. But over time, it does — it tends to drive M&A.
Operator: Our next question comes from Michael E. Hoffman from Stifel. Please go ahead with your question.
Michael Hoffman: Hi, good morning, and thanks for taking the questions. Ron, how would you think about where open positions are versus year-over-year? And then sort of second to that is, at the point you get fully loaded with your in-house training, how do you feel about how — what the proportion of your fill rate will be driven by the things you actually own and control in the training?
Ron Mittelstaedt: Okay. So, Michael, we have historically, meaning for, let’s just call it 15, 20 years through various cycles, we’ve always targeted running the company at about a 3.5% to 4% open head count at all times, given through some natural attrition and then, of course, involuntary turnover that we’re being proactive on. At our worst time as we came through into ’22, into ’23, we actually peaked at approaching 7.5% open head count positions. We have reduced that throughout ’23 to present to where we are now down right to about 4%, maybe even 3.9 on a run rate basis. So, we’re really at where we have historically run. We have a few regions that are down in the 2.5% level, and, we’re very comfortable with that. So, we’ve reduced open head counts year-over-year to date by 46%.
That is the number. We’ve reduced voluntary turnover by — we’re at peaked. We are now down to about 15.7% as of April 1, with a target of getting to between 10 and 12 by year-end and entering ’25. So, we’re well more than halfway to our target from where we were 12 months ago. Now, to the second part of your question, I would say that our objective as we come through what we believe will be mid-25, so call it a year from this summer, our objective is to get to sort of a third or more of those that we hire coming through our in-house, what I’ll call our in-house development and academies. That would be the target. Now, could be more beyond that, but that’s our target, one in three of getting to that.
