Jon Vander Ark: That is correct.
Michael Hoffman: Okay. That’s what I want to clarify. All right. Thanks.
Operator: The next question comes from David Manthey with Baird. Please go ahead.
David Manthey: Hi. Good afternoon. Thank you. So acquisitions were 1.7% in the third quarter. You said 50 basis points for 2024. It looks like maybe couple of hundred million rolled off third quarter to fourth quarter last year. So we’re looking at, what, maybe 150 basis points in the fourth quarter this year?
Brian DelGhiaccio: Yeah. Remember, when we talked about most of the rollover that we had for full year 2023 was the portion of US Ecology that we completed May of 2022 right? Coming in, which was a majority of the rollover for the full year. As we think about the actual impact within the fourth quarter, we’re looking about 180 basis points.
David Manthey: Okay. All right. Thank you for that. And second, on the RNG development. I think around now is when these facilities were scheduled to come online and maybe you could just remind me the financial targets and how those 39 RNG facilities with the BP joint venture are expected to ramp from here?
Brian DelGhiaccio: Yes. So let me just talk about the entire portfolio rather than just the subset, right? So again, five have already come online here that are going to start contributing here nominally in the fourth quarter, but really start to contribute in 2024. You can kind of think about the cadence in the $20 million to $25 million per year of incremental EBITDA beginning in 2024 and ultimately hitting run rate $28 million at which point we expect $100 million cumulative of additional EBITDA in the portfolio compared to our current baseline. .
David Manthey: Got it. Okay. Thank you.
Operator: The next question comes from Jerry Revich with Goldman Sachs. Please go ahead.
Jerry Revich: Yes. Hi. Good afternoon. I’m wondering if we could just talk about the margin opportunity over the course of 2024, Brian, as you pointed out, margin momentum on a seasonally adjusted basis is accelerating this year. So you’re already on track to expand margins by, call it, a full 30, 40 basis points just on a run rate 3Q versus the full year average. And so as we think about the moving pieces in 2024, I guess it’s not hard to get to double your normal margin expansion targets, especially given the moves in — potential moves in OCC. And I’m wondering, anything that we need to keep in mind as we look at those moving pieces and the cadence of margins that you pointed out in an answer to an earlier question?
Brian DelGhiaccio: Yeah. So Jerry, the one thing I would point out is just remember from the point in time in which we acquired US Ecology and we took several pricing actions, right? And as we sit there and move forward, we’re going to get more in the cadence of more of an annual price increase on that portion of the business. So while we still expect margin expansion in the Environmental Solutions business and at a rate north or higher than what we expect in recycling and waste. We would expect that margin expansion to decelerate from what you saw in 2023. So you can look in — just in the quarter alone, margin was up almost 400 basis points year-over-year. We would not expect that level of contribution going forward.
Jerry Revich: Got it. But the base business, the momentum, it sounds like is accelerating, excluding ES.
Brian DelGhiaccio: Yeah, correct. I mean if you take a look just right now, we’re kind of in the 30 basis points. We talked long term in that 30 to 50, and you start to get some of the contribution from some of the other sustainability investments that we’re making. So it’s a little bit of push and pull and net-net, we would expect margin expansion in 2024 over 2023.
Jerry Revich: Okay. Super. And can we talk about capital deployment with the buyback announcement. Can you just update us on how much more runway do you think you have to deploy more capital towards polymers, opportunities to redevelop gas electric plants into gas plants and stock buyback from there? Can you just calibrate us on how to think about the opportunities in each of those areas?
Brian DelGhiaccio: Sure. Just to give you an idea, if we’ve talked about, right, several investments, you’ve got the RNG portfolio, you’ve got polymer center and you have Blue Polymers, some of which is going to come through capital, some of which is going to be the investment in the JVs just to kind of think it from a cumulative perspective here, maybe I’ll walk through each from polymer centers, we see a total investment of around $300 million, okay, for the four centers. right? And that’s going to happen, right? It’s happened, and we think that’s over a four-year time frame of about $70 million a year. Blue Polymers, you can think of that being about $160 million investment. And again, those are going to be JVs. So that will come through as an investment in those joint ventures.
And then the investment in the RNG portfolio is all around $375 million, okay? So those are the cumulative investments, but we’ve been making those investments. So those are somewhat in our run rate. Now — and we talked about that after the US Ecology acquisition, where leverage elevates to 3.4 times, we were going to focus on deleveraging, getting back to that three times before we resume the share repurchase, got back to 2.9 times. We have since resumed, right, that share repurchase program. And as you just saw in the announcement, right, the Board just authorized another $3 billion program that extends over the next three years beginning in 2024 through the end of 2026.
Jerry Revich : Super. Thanks.
Brian DelGhiaccio: You bet.
Operator: The next question comes from Stephanie Moore with Jefferies. Please go ahead.
Stephanie Moore: Hi. Good afternoon. Thank you.
Jon Vander Ark: Good afternoon.
Stephanie Moore: Hey, guys. I appreciate the color so far in kind of 2024 outlook and just now on kind of the margin opportunity, too. But, maybe could you talk a little bit about your views on inflation in 2024? Not necessarily hard numbers, but kind of buckets of areas where you think some inflationary pressures maybe could linger from 2023, or — on the other side of that, should abate versus 2023. Just trying to think of those puts and takes would be helpful. Thank you.
