And so when we think about how our margins are comparing in the space, we’re really proud of the progress we’re making. And I think that 31.1% demonstrates the strength of the process improvements that we’ve been putting in place and the price execution we’ve had.
Kevin Chiang: That’s great color, and actually very, very helpful. Thanks again and congrats on a good quarter there.
Devina Rankin: Thank you.
Operator: One moment for our next question. Our next question comes from the line of Jim Schumm from TD Cowen. Your line is open.
Jim Schumm: Hi. Thank you and good morning. You talked a lot about price, but you also mentioned that churn is at historical lows. I mean, why not try and push price a little bit more here? What’s the – I mean I know you can lose some business, but given that churn is low, why not push price more?
John Morris: It’s a good question. I think – listen, we – I mentioned it earlier, we’re very focused on customer lifetime value. And when you look at the defection rate, coming down. Those are some of our most valuable customers. And I think you’re seeing that show up across our customer metrics and in the margin expansion. And as we’ve talked about a few times, I mean, getting price for price is one thing, but getting it over our cost of inflation and been able to grow the business. And Devina mentioned our national account business being a great example, where we’ve differentiated shown value and continue to grow the top line there. So.
Devina Rankin: On the disposal side of the business, I think it’s important to really emphasize some recent success the third quarter was the best ever disposal core price that we’ve had in our business. And we’re pricing new business up 9% on a year-over-year basis in the disposal part of our business. I think it indicates the strength that we’re having there. And pricing has typically in this business been on the collection side. And what you’re seeing is we’re taking that discipline and customer lifetime value approach and extending it all the way through our value chain.
John Morris: The last point I’d make on that is a line of business, which is that we’ve been very focused on in terms of pushing price to get the right margin as residential and core price of 6.9% yield to 6.3%. I think as an example of where we are absolutely pushing price.
Jim Fish: But I don’t John – its transfer stations. I mean for many, many years, Jim, we never even took a price increase. I mean transfer station pricing was 0.5%. And if you look at our transfer stations pricing, which really is kind of a proxy for landfill, I mean they’re – for all intent purposes, they’re kind of close in landfills, if you want to think about it in that way. And our transfer stations pricing and the yield number for transfer was 7.1%. And that is a – honestly, it’s kind of close to historical highs. I mean we did have an 8.9% in that line of business in Q1. But other than that, it’s close to the highest number on my entire period. It goes all the back to 2017. So not saying we can’t continue to push price. We absolutely believe we can. We do have to be conscious of that customer lifetime value that John mentioned.
Jim Schumm: Got it. Thank you very much. Last one for me. So you made about $370 million of share repurchases, but weren’t very active on the M&A front. Can you just talk about how you’re thinking about M&A versus share repurchases right now?
Jim Fish: Well, yes, let me kind of say this about the M&A market here. First of all, at a time when interest rates are kind of a multi-decade highs and there’s a bit of uncertainty about the economic outlook here. I’d rather pay 3 times this $740 million that we’ve talked a lot about today than get into a process based on kind of rosy forward forecasts and race to the top. And that’s kind of what it feels like in some respects in the M&A market today. So it doesn’t mean we’re not going to be in the M&A market. We will be. And when we’re in that market, we’re going to very much focus on strong strategic growth opportunities and tuck-in acquisitions. But I just I don’t want to get into a competition, particularly based on these kind of future forecasts that may or may not become realistic or achievable.
As it compares to the overall capital allocation plan and share repurchase, we’ve laid out that we had $1.5 billion in authorization. And we’ve talked about $1.3 billion being the actual number. We look at all kind of aspects of that capital allocation plan. We will continue to evaluate dividends, share repurchase, M&A. Devina has talked about the balance sheet, and she’s always done such a great job of keeping that balance sheet in a good place. But most of – if you think about it as M&A dollars, a lot of that has not been technical M&A. It’s been these investments that Tara talked a lot about. And those are basically an acquisition that we’re paying three times for instead of 12 or 14 times for.
Jim Schumm: Right. Right. Okay. All right. Great. Thank you for the answers. Appreciate it.
Jim Fish: You bet.
Operator: Thank you and one moment for next question. Our next question comes from the line of Stephanie Yee from JPMorgan. Your line is open.
Stephanie Yee: Hi. Good morning. I was just looking at the average yield guide for 2023. I think the expectation was for it to be over 5.5 percentage points. And based on the trend year-to-date, it seems like there should be a big step-up in the fourth quarter. Is that typical seasonality? Or is there anything abnormal with year-over-year comps in this year, implying a big ramp in average yield in the fourth quarter?
Devina Rankin: So the way that we’re looking at it right now, we actually expect our fourth quarter yield to be pretty well in line with what we produced in Q3 and that would pull the full year to ride at that 5.5% that we had targeted. I would tell you from a conversion of core price to yield perspective, the trend that we saw in Q3, isn’t really representative of a long-term trend or revision in the strength that we had seen of converting more of our core price dollars into yield dollars. It’s instead mix related and also because of some of the impacts of noise from hurricane Ian that were particularly significant in Q3 and Q4 of 2022 and that’s impacting our year-over-year conversions. So, I think the key message here is confidence in our ability to deliver yield for the year of around 5.5%.
Stephanie Yee: Okay. Thank you. That is very helpful. And then if I can just go back to the comment about the futures market for RIN pricing and how you’re not necessarily pricing at the spot market $3.40 RIN price. Can you just help educate me a little on? Is there an actively traded futures market for RINs? And is maybe waste management leading that development of the futures market?
