Jim Fish: And one — maybe one last point here that I did mention also, but I’ll mention it again. That differentiates us from our competition, and that is that CNG fleet. I mean 74% of our fleet is CNG and the way RINs works is you have to burn the fuel before you can monetize the RIN and having a fleet that is three quarters natural gas gives us a potential stream there, earnings stream that our competition who might be at 15% to 30% CNG, they simply don’t have that or at least don’t have it to the same potential that we do.
Toni Kaplan: Super. And I wanted to ask about volume. You mentioned the softening in commercial and industrial in the fourth quarter. Maybe just a little bit more color there, the magnitude, how quickly how it — like was it early in the quarter or throughout the whole quarter, et cetera? And if you’re expecting any softer volumes in the remainder of the business implied in the guide? Thanks.
Jim Fish: There were a few moving parts in the volume that was down slightly for Q4. Some of it was by design, residential specifically. Some of it was a couple of lost contracts in the commercial line of business and that was typically going to be in our national accounts group. And then, some of it is maybe softness showing up in the roll-off line of business. I guess, if there’s any good news there, and it is that when we just looked at our January numbers this morning, they were actually better than Q4 on the volume front, particularly C&D, although some of that C&D might be coming from the hurricane cleanup in Florida. But MSW was a positive sign for January. So even with that, we felt that a negative 0.5% to a positive 0.5%.
So a flat volume with last year, as John mentioned, was appropriate. And I guess, as we look at the tea leaves for the economy — there are a few factors that are concerning out there; the housing slowdown, for sure. I mean, that’s been widely discussed and that housing slowdown. While our C&D volume has been very good and continues to be good. We think that C&D will come back a bit. It almost has to with the housing slowdown. Special waste continues to be a strong point for us and the pipeline is good there. But I think as you think about, whether it’s the housing slowdown or whether you think about the consumers saving at 7% in 2020 and now down to almost zero, because inflation has eaten up that savings. That’s going to affect the consumer.
But the good news for us is that our strategy is really not built around the volume aspect. It’s built around cost controls, it’s built around building out this sustainability strategy, and it’s built around pricing. And so, we’re pleased with being able to come in at the top end of the range on EBITDA at 7% for 2023.
Toni Kaplan: Fantastic. Thank you.
Operator: Thank you. One moment for questions. Our next question comes from Tyler Brown with Raymond James. You may proceed.
Tyler Brown: Hey, good morning, guys.
Jim Fish: Good morning.
Devina Rankin: Good morning.
Tyler Brown: Hey, Jim. Thank you for the supplemental deck. But I do kind of want to get to the heart of it. So is the idea here that the contribution in 2026 between RNG and recycling, maybe it’s now expected to be $740 million, I think, if my math is right, and that was upsized, is that right?
Devina Rankin: That’s correct.
Jim Fish: Yes.
Tyler Brown: Okay. But you’re also in the midst of a labor automation effort. And I just want to make sure that I’m not double counting, because some of that is probably in recycling. But how much additional EBITDA are you expecting by 2026 from that effort as well?
Jim Fish: So there is a bit of the — when we automate in the recycling piece in the deck, there is a bit of that in the $260 million, I think, was the number, but…
Devina Rankin: Yes, there’s $70 million in the deck on
Jim Fish: But there are other areas where we’re automating away positions and that are not captured in that deck at all, that really have nothing to do with RNG or recycling.
Tyler Brown : Yes. That’s my point. Can you quantify that piece?
Devina Rankin: Tyler, I would tell you that it’s too early for us to predict the impact of that to 2026 and beyond. What we’re really emphasizing in our 2023 outlook is that we’re starting to see some of the benefits. Yes, recycling is a piece of that. But beyond the recycling line of business, we’re seeing back office to 600 headcount attrition that I mentioned in customer experience, specifically is a strong example of that. And the leverage we’ve gotten in SG&A margin is in large part due to some of that success. So the 40 to 80 basis points of margin expansion really is all solid waste. And so that strong performance in 2023 is an indicator of future value that we think will come as we start to see, in particular optimization efforts in the collection line of business take hold.
Some of that is delayed because of truck deliveries as well as some of our efforts to take that across additional lines of business. We started in the industrial line of business intentionally, and we’re seeing strong success in some of those pilots. And we’re happy with where we are, but too early for us to predict how much efficiency gain we can get across all lines of business in 2020 and beyond. But I think taking the 40 to 80 basis points accomplished or predicted for 2023 is a strong indicator of the strength of those initiatives.
Jim Fish : Tyler, let me expand so quick on what she just said about the 600 position, because that will become close to 1,000 positions just in customer experience. And we’ve talked a lot over the last couple of years about automation. But we haven’t really given you kind of the numbers and where it’s benefiting the bottom line. This is a good example. I mean, what we really did there was used a turnover number that was close to 50%. And customer experience, took advantage of that attrition. And at the same time, we automated the customer experience, which every other industry, by the way, has done over the last 20 years, and we hadn’t. It was — ours was still kind of a person-to-person experience. We haven’t eliminated the person-to-person experience, but we’ve just made it available, made a self-service option available to our customers.
And as a result, our call volume is down close to 25%. That’s a huge drop in call volume. And hence, our ability to take advantage of attrition to the tune of 600 positions in 2022 and another close to 400 positions in 2023.
Tyler Brown : Okay. Yes, that’s extremely helpful. A lot on to come there. Okay. Devina, kind of coming back to 2023 margins, though, and I don’t want to be super — I do want to be specific. Can you just talk about first half and second half margins? So are margins going to be a little bit more flattie in the first half and then up quite a bit in the second half? I just want to make sure that we all kind of get the shape of the year right and could margins actually be down in Q1 year-over-year?
