Tara Hemmer: Today, we have 40% fixed based on the roughly 4 million MMBtu, and so that is what is fixed today. We’re working on fixing more of that longer-term.
Michael Hoffman : But — so you don’t have a goal for that $500 million? I guess that’s what I’m trying to ask. What how much of it.
Tara Hemmer: Yes. We have a goal. We’ll give you more information on that in April, Michael. We have a pathway to have a portfolio mix longer-term.
Michael Hoffman : And will you give a sales when you do it for
Tara Hemmer: We’re going to unpack that in April.
Michael Hoffman : And will you talk about sales in April as well, so we can model this, right?
Tara Hemmer: You’re talking about revenue, yes, revenue on the RNG business.
Michael Hoffman : Yes, yes. I mean in the supplemental document, we have the EBITDA and the free cash, but they don’t have revenue. So we’re all guessing what that means to our model.
Tara Hemmer: You can — I think you could figure it out based on the $26 per MMBtu number we gave you.
Jim Fish : Suffice to say, it’s the margins on this business, Michael, and whether you’re looking at margins on the EBITDA side are 70%-ish maybe 75%. I mean, we’ll get — as she’ll still give more detail on in April. And then as Devina went through, the cash conversion is tremendous, too. So it’s why this business — why we’re so excited about it. And nobody has asked a question about M&A, but I did mention that I’d rather do a three times EBITDA investment than a 10 times EBITDA investment where there’s some uncertainty about integration. So we’ll talk about revenue and what it means. But these are hugely high margins on the EBITDA line with these RNG plants.
Michael Hoffman : Last question for me. In 2019, you told us that the solid waste business would compound at 5% to 7% EBITDA free cash. When I add in the $740 million by 2026, will that new baseline still compounded by the aggregate number, 5% to 7%, or does that 10% increase dilute that compounding, the aggregate compounding?
Devina Rankin: It’s a great question, Michael. And what we’re doing is working to segment these parts of the business very clearly so that we can articulate the level of growth that each of them is expected to have. The solid waste business has outperformed that 5% to 7% target that we established, and we couldn’t be more proud of those results. In terms of what’s happening in the RNG and recycling businesses, we’re talking about a new step level change in our free cash flow generation for the business. Our ability to grow that, I think done a great job of articulating the fact that this opportunity and what’s outlined in the supplemental deck is just a starting point for us. Our portfolio provides tremendous upside opportunity from here. Our ability to say whether that’s 5% to 7% or some other number, that will come as we further articulate our plans for building out the total addressable market that we have across our landfill network.
Michael Hoffman: Okay. Thanks for taking my questions.
Operator: Thank you. Our next question comes from Michael Feniger with Bank of America. You may proceed.
Michael Feniger: Thanks, everyone. I know we’re over. So I’ll just keep it short. Tara, apologies if you touched on this, but why has RINs rolled over in the beginning of this year? And any policy actions that we should be monitoring that helps get that RIN recovery to that 230 for the full year?
Tara Hemmer: Yeah. I think the important thing to remember here is that earlier in — really in December of 2022, EPA came out with their that rule, which on the positive side, set a three-year framework for renewable volume obligations, which for us for the long-term is positive because at the end of the day, it really sets the standard for the program and the RIN pathway for us. I think there’s been a little bit of speculation in the marketplace around whether or not those were the right numbers that EPA issued. We’re confident that come June when EPA issues their final rule, there’ll be more clarity. So I think that’s a little bit of what you’re seeing. But long-term, strong fundamentals on the price side related to RINs.
Michael Feniger: Thank you. And just, Devina, the last four to five years, I think your EBITDA margins have been in the tight range of 28% to 28.4%. You are now guiding for 40 to 80 bps, so moving up there. Just can you quantify how much of a headwind is there on the margin for RNG and OCC in 2023 based on the guide?
Devina Rankin: It’s 10 to 20 basis points.
