Michael Hoffman: Okay. That’s terrific. And then everybody’s going to wring their hands about PFAS for a while until this all plays itself out, but putting it in perspective, leachate costs are 1% to 2% of revenues, and then it’s not 5% to 10%.
Ron Mittelstaedt: No, it’s actually even lower, Michael, one is a fair average. It actually is just below.
Michael Hoffman: Okay. And the treatment technologies that you mentioned, I mean, we’re 15 billion to 20 billion gallons a year of leachate, as an industry, it’s $0.05 to $0.20 a gallon is the range, but the treatment technologies are inside that range. So it’s not like you’re quadrupling or whatever if you had to add those technologies to pre-treat and take the PFAS out before managing.
Ron Mittelstaedt: No. I mean, Michael, I mean, basically, as, there’s great variability in the size of landfills and the amount of leachate based on how old they are and how much waste mass is in place and, of course, what the weather conditions are in that geography. But, you’re talking about, $1 million to $4 million for the capital costs to do treatment of most landfills in the U.S. and that will then lower the leachate cost to what it’s today.
Michael Hoffman: Got it. Okay. And then my understanding, the Senate had a meeting about a month ago that proactively, the Environmental Public Works Committee proactively sought to discuss what that intervention language should look like with a real objective of trying to get something passed in 2024. Are you hearing anything different than that?
Ron Mittelstaedt: I have heard the same thing through Industry Association Council and lobbyists, but I do not have any better information than that, Michael.
Operator: Our next question comes from Kevin Chiang frm CIBC. Please go ahead with your question.
Kevin Chiang: Thanks for taking my question and congrats on a good quarter here and start to the year. Maybe if I could just start with the marginal performance. If I look at your full year guide, which I know you haven’t updated at this point in time, full year 120 basis points. If I think back to how we thought that would play through the year, maybe a little bit of performance in H1, maybe a little bit below the 120 in H2, but broadly speaking, pretty even throughout. Just given the outperformance in H1, should we think about performance carrying through H2? I know you are not officially updating your guide, but anything you push back on that kind of simple math, just given in the H1 performance so far?
Mary Anne Whitney: Sure. So just to reiterate or underscore what you have talked about in terms of what expectations we laid out for the year. You are right. We said that it was pretty evenly distributed with our expectation for that 120 basis points margin expansion. We also said, as I mentioned earlier, that the contribution from recycled commodities and RINs would be greatest, greater in the first half and abate over the course of the year. So I just be mindful of the fact that as we have noted, some of the benefit in Q1 was from commodities. And so the expectation would have to be that if you are marking the market here, then you would continue to have that benefit. The other thing to keep in mind is some of our outside performance on the top line was M&A.
And so as we continue to do M&A, which is typically a little dilutive if it’s the typical collection company, you would want to factor that into your expectations, which is why as we think about it, updating in July or considering taking a look at that in July, as we always do, feels appropriate given all those dynamics.
Kevin Chiang: Okay. That is helpful. And maybe just my second question, and maybe it’s a bigger picture question on some of the in-house development you are doing. And you talked about a target of one third. I am not sure if you have enough granularity on this, but I would be interested in knowing, I suspect you are pulling a lot of people or people move back and forth between, let’s say working for the broader transportation sector, so truck drivers and maintenance workers in that field versus those that might enter the waste sector. We are in the midst of a very long freight recession here, so I suspect that is a tailwind for people that are looking to join your firm. I guess as you think about that freight recession eventually exiting, just how much volatility do you think that adds to your in-house development?
Do you think it ends up being pretty steady through a freight cycle just because you offer a different work-life balance? Or do you think it becomes more challenging if the freight economy starts to really move up here and compensation for long-haul trucking becomes a little bit more favorable than it’s today?
Ron Mittelstaedt: Yes. Well, so let’s take a step back, Kevin. I will answer it in a little bit different way, but I think it will get to what you are asking. So traditionally for us, and I would say most of the industry, remember our largest two employee bases are of course CDL drivers and diesel technician or mechanics. When we have had as a company and an industry an opening for that, we have sought to pursue somebody who is a CDL driver or somebody who is a certified diesel technician, which means that we either have to find them unemployed or we have to steal them from another employer, usually by a better compensation and or structure for them. That in a tight economy is a vicious cycle. What we are doing by opening these academies that we are doing is we are actually pursuing a different type of employee.
This is an employee who we are up-skilling quite dramatically from where they are. So we are not bringing in somebody who has a CDL into our CDL driving academies. We are not bringing someone in to our diesel technician partnership school for somebody that has a maintenance background. So this is a longer approach. It’s a dynamic, positive change to the impact of that type of employee. It’s often an employee who has been with us for a period of time. So we know their character that we are making an investment in. We are also doing it from people on the outside. So an example would be instead of hiring somebody with a CDL and taking them from another waste company or a trucking company, we are hiring someone who has been with Home Depot for two years as a forklift operator that has a great track record and safety culture.
But it’s another $10 an hour opportunity if we can get them their CDL, and it totally changes their life and I would say the commitment to us. So that is why it will not be 100% to my response to Michael Hoffman, but I think it will ultimately be a third. So I am less concerned as we go into a tight economy, if and when we do, which of course we will, with us having this approach to help buffer that. It’s another reason we are actually doing it.
