Q3 2021 Clean Harbors Inc Earnings Call
[music].
Greetings welcome to the clean harbors third quarter of 2021 conference call.
At this time all participants are in a listen only mode.
A brief question and answer session will follow the formal presentation.
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It is now my pleasure to introduce your host Michael Mcdonalds General Counsel for clean harbors. Thank you Mister Mcdonald's you may begin.
Thank you Robin good morning, everyone with me on today's call, our Chairman President and Chief Executive Officer in Elena's begin EVP and Chief Financial Officer of Mike battles, President and Chief Operating Officer, Eric Grossberg, and SVP of Investor Relations, Jim Buckley slides for todays call. It posted on our website and we invite you to fall off that.
That is we are discussing today that are not historical facts are considered forward looking statements within the meaning of private Securities Litigation Reform Act of 1995 participants are cautioned not to place undue reliance on these statements, which reflect management's opinions only as of today November 3rd 2021.
Information on potential factors and risks that could affect our actual results of operations is included in our SEC filings. The company undertake no obligation revise or publicly released the results of any revisions to the statements made in today's call other than through filings made concerning this reporting period.
The discussion will include references to non-GAAP measures clean I was believes that such information provides an additional measurement and consistent historical comparison of his performance reconciliations of these measures for the most directly comparable get measures are available in today's news release on our website and in the appendix of today's presentation.
I'd like to turn the call over to our C E O L and Mckim, Alan Thanks, Micheal. Good morning, everyone on slide three you can see the strong contributions we received from both environmental services and safety clean sustainability solutions business.
William posting the highest quarterly revenue in our history.
Within environmental services, we benefited from a consistent flow of high value waste streams, and our disposal and recycling network.
We also benefited from a recovery and a number of service businesses in the quarter, particularly our industrial services business.
Yes, K S. A segment outperformed our expectations market conditions caused the really finding spread to remain wide all quarter.
And the team executed well and they disruptive environment.
Product demand was robust throughout two three due to the industry supply shortfalls and growing interest in sustainability offerings.
Without question, our industry has had to deal with economic headwinds, including higher supply chain labor and transportation costs.
We met those head on.
You can place a multitude of necessary price increases to offset the rising expenses.
Adjusted EBITDA grew 10% from a year ago, resulting in a healthy 19.5% margin adjusted.
Adjusted free cash flow was in line with our expectations and we're on track to hit our new increased annual target.
Turning to a segment starting on slide for environmental service revenue grew 15%.
Favorable mix in pricing in our disposal network combined with increased activities and a number of our service businesses, including industrial in field services really drove the year over year increase.
Industrial services grew 24% as customers continue to move forward with large turnarounds to reduce the backlog of maintenance projects that have been deferred due to the pandemic.
Ah based business in field services, excluding decontamination work was up approximately 25%.
Reflecting a more typical level of scheduled work and other smaller response jobs.
As expected adjusted EBITDA and the business segment was down from the third quarter of 2020, when we recorded a much higher level of government assistance and had significantly more high margin Covid decontamination work.
[noise] backing out those items from both periods adjusted EBITDA in the segment would have increased year over year.
Government assistance programs in this segment totaled $1.1 million in this year's third quarter compared to 11 million two excuse me 11.2 million a year ago.
Q3 of this year also saw a significant inflationary pressures in third party cost and we partially offset those with high revenue pricing and costs mitigation strategies.
Incineration utilization was 82% up from the prior year, we expect to see a lower number of turnaround days in queue for and should generate stronger utilization to close out the year.
Our measure of that expected utilization and current demand for a disposal services is are deferred revenue.
At 86.6 million as of September 30th deferred revenue is at its highest level in our history or kills remain busy as we finish out a very strong year.
In Q3, a favorable mix of waste supported by our pricing initiatives pushed our average incineration price up 18% from a year ago.
Some of that increase resulted from a temporary high value waste stream project at our Canadian plant.
But if we focus exclusively on R. U S. Incinerators are average price was up 11% in the quarter.
Environmental remediation projects remain limited in Q3.
With the resurgence of the Delta variant, causing an uptick in cases in some regions Ah number of customers pushback cleanup projects and regulators he's completion deadlines.
The landfill volumes declined 5% as a result.
Strong base business drove a 17% increase in average pricing per ton.
Revenue from COVID-19, decontamination work totaled $8 million in the quarter somewhat higher than we had anticipated due to the uptake uptick in cases.
But still down significantly from $20 million in Q3, a year ago.
Demand for our core safety clean offerings was positive in Q3 <unk>.
<unk> services were two 232000 in the quarter.
Moving to slide five S.
<unk> assess revenue was up 60% nearly 206 million as product demand remained robust throughout the quarter based.
They soil and blended pricing were substantially higher and volumes were stronger than the third quarter of last year, when the pandemic negatively affected production.
Adjusted EBITDA increased more than 41 million year over year, while margins top 34%. These.
These results were driven by the further widening of are really finding spread and the return to a more typical production levels.
Improvement in the Sks's margin also resulted from the costs and productivity initiatives that we implemented as part of our organizational change that we made over the past year.
We still have collections were strong exceeding 60 million gallons for the first time since the pandemic began.
Given the margin opportunities and base soil and the additive shortages that exists in the market the percentages of blended products and direct volumes came in as expected.
Turning to slide six in early October we completed the acquisition of Hydro <unk> Ah.
A transaction, we expect will contribute significant value to clean harbors in the coming years.
We believe that the addition of H P. C will afford us economies of scale in our network and with our combined resources.
As a result, we expect to achieve at least $40 million of synergies. After our first full year of operating H P. C.
And not included in that number or any cross selling opportunities, which we are confident will be broad based from this combination.
The initial integration is proceeding smoothly.
We've already starting to capitalize on Hbc's leadership in industrial cleaning specialty maintenance and utility services, including its unique automation technologies we've.
We've had a number of executive team gatherings is part of our stronger together branding campaign.
And for me those meetings really have reinforced reinforced the natural cultural fit between our organizations a cornerstone of making a large deal like this work and I'm excited about the opportunities ahead.
Turning to slide seven we're continuing to invest capex to grow our business, particularly on the disposal side.
We completed a large investment in our Utah incinerated this year following a.
A number of permit modifications and this investment enables us to increase our containerize ways throughput, while managing waste within the totaled thermal capacity of the unit.
As first noted on our queue to call. We are moving more we're moving forward aggressively with our plan to add a new incinerator and Kimble Nebraska.
And on the M&A front, while the HTC transaction closed quickly are planned acquisition of the vertex re refining assets is taking a bit more time to complete.
We are cooperating fully with the federal Trade Commission, which is made an additional requests for information as part of the hot scrap with Dino review, we're working through that request and now envision that acquisition closing in the first half of 2022.
We will continue to look for opportunities, whether those are internal or external which will generate the best returns on capital.
With our debt level and leverage up significantly a result of H P. C will more closely evaluate reducing our that going forward.
We also intend to continue would share repurchases, although at a slower pace than we have in the recent years given our other near term capital priorities.
So in closing I am extremely proud of what our team has accomplished not just in Q3 week, but this entire year.
We're executing we've executed sharply capitalized unfavorable macro trends and with benefited from a rebound in the industrial cycle, which is really helped our services business.
However, one area that I've been disappointed in recently as our safety and.
And after a strong start in Q3 in July there were far too many safety incidences in August and September.
Fortunately all of these were minor, but whenever people get hurt our performances diminished and we're really working with our operational leaders to reinforce our safety practices and ensure that everyone understands the benefits of our safety starts with me culture here.
We entered the final quarter of the year in great shape to closeout, an excellent 2021.
However, we do see the challenge is created by Labour availability and inflation as well as supply chain and transportation limitations.
While we're not completely immune to those obstacles our company is better position than most to address those cost too aggressive pricing as well as cost mitigation plans and productivity gains.
So I expect us to perform well here in Q4 and entered 2022 with a really strong tailwind in terms of market demand.
So with that let me turn it over to Mike battles.
Thank you and good morning, everyone.
Turning to our income statement on slide nine revenue increased 22% in the quarter driven by top line growth of more than 75 million in each segment.
It's important to note that almost all of that growth is you'll get it.
Adjusted EBITDA was 10% higher than a year ago coming in at $185 $1 million.
EBITDA margin for the quarter was strong at 19.5%.
On a percentage basis, SG&A was up 30 basis points from a year ago to 14%.
Largely due to higher incentive compensation as well as 7% and innovation costs.
Full year using the midpoint of our guidance range that now includes HTC for a portion of Q4 weeks.
We expect SG&A to be up in absolute dollars in the prior year, but.
A flat to slightly down on a percentage basis.
Depreciation and amortization in Q3 declined slightly to $71.5 million.
In line with our expectations.
2021, we know anticipate depreciation and amortization in the range of $295 million to $305 million.
Which includes the impact of Hipc.
And give them operations increased by 25%.
Reflecting at 22% revenue growth as well as benefits from our pricing strategies.
Turn to slide 10, cash and short term marketable securities at quarter, Ed was $711.5 million up more than $140 million from your Ed and approximately $45 million from June 30th.
That a quarter Ed was 155 billion with leverage on a net basis of one four times.
That ratio, obviously changed recently with the addition of $1 billion, a seven year term debt at LIBOR plus two to support the HTC acquisition.
Are weighted average cost that today, including a recently issued get is three 3% and we continue to have no debt maturities until 2024.
Turning to cash flows on slide 11 cash from operations in Q3 with solid at $102 $8 million.
Capex net of disposals was $41.7 million up substantially from a year ago when the pandemic restricted are spending.
Ah Capex spend this quarter included $2.1 million related to the new incinerator, we will be constructing and gamble.
We delivered Q3, adjusted free cash flow of $61.1 million.
For full year 2021, we still expect net capex in the range of $190 million to $210 million, even with the addition of HTC.
And the initial spent on the new Kimble incinerator that will likely total $6 million to $7 million.
During the third quarter.
Back approximately 33000 shares at a total cost of $3 million.
We still have just over 160 million of our 600 million authorization remaining.
Trying to slide 12 based on a Q3 results the closing of the HBC transaction in current market conditions. We are raising of 2021 guidance. We now expect adjusted EBITDA in the range of 655 $675 million with the midpoint of 665 million.
This assumes approximately $15 million contribution from HBC in the quarter, reflecting up to 5 million integration toss, including Sevens.
Based on our year to date performance, Here's how are full year 2021, adjusted EBITDA guidance translates to our segments.
And environmental services, we expect adjusted EBITDA to be slightly down on an absolute basis from full year 2020.
Higher margin decontamination work is lower than a year ago, and we are receiving approximately $26 million less and monies from government assistance programs in this segment.
Despite these headwinds this decrease will largely offset will likely be offset by other factors, including necessary an extensive price increases.
Higher profitability in our incineration business.
Gains in our safety clean branches field service and industrial services, including the addition of HBC in Q4, and a comprehensive cost reduction measures.
Perhaps ksf's, we know dissipate adjusted EBITDA at the mid point of our guidance to grow more than 160% over 2020.
Driving this result is a combination of our wide, we refining spread and the year over year increase in our production levels and collection volumes versus 2020.
That level of adjusted EBITDA would also put us approximately 75% above what that segment delivered in 2019.
As a point of reference this segment received government money government assistance or three $7 million in 2020 weeks.
We expect less than half that amount this year.
And our corporate segment, we expect negative adjusted EBITDA to be up mid to high teens from 2020, largely due to higher incentive compensation and the addition of HTC.
We also had about $3 million in government assistance in 2020, and corporate and less than half a million dollars. This year.
For full year 2021.
Inhibitor guidance now assumed receiving a total of approximately $12 million in total government assistance, primarily from Canada.
Based on our current EBITDA guidance and working capital assumptions. We now expect 2021 adjusted free cash flow in the range of 310 that $330 million for a mid point of $320 million.
In closing, we delivered another excellent quarter and both segments of our business, particularly on the top line as demand returned to prepandemic levels and many of our businesses.
We're excited about the prospects of htpc.
An environmental services, we expect to benefit from a record backlog at.
As Alan outlined we're facing some costs and labor challenges, but we're confident in our ability to address those.
Within Sks S higher base oil pricing and effective spread management has continued into the queue for.
We expect expect to narrow at some point as supply normalizes, but we are maximizing the benefit for as long as we can.
The team has done a great job driving profitability in that segment.
With that Rob Please open up the call for questions.
Thank you.
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Thank you.
Our first question comes from the line of no. Okay without the Heimer. Please proceed with your questions.
Good morning, all and thanks for taking the questions can.
<unk> Hi, how are you can you start by talking about the acceleration of pricing initiatives, which you mentioned during the prepared remarks, what what level of price and yes. Do you believe this needs to drive margin expansion in this segment as we head into 2022, what's your confidence and ability to get that price and how much.
Can you actually drive in I can ask.
Including hydro cab or does it need to come primarily from the disposal type.
No I think the show and I think I think pricing really needs to come from across the board.
Certainly transportation impacts all pieces of our businesses, you know and that's where we have seen the greatest amount of challenge.
Moving are a waste materials, but also servicing customers and gathering ways.
So we definitely know that we've.
We've had limitations on getting new equipment getting trailers.
Getting sub contractors.
To to support us when we when we've now maxed out of them internal capability. So I would say transportation really has tentacles throughout all aspects of our business, but as we think about.
Price increases moving forward, we recognize that many other costs materials and supplies labor costs are going up fuel other energy natural gas and so forth. So.
Our team, which has been in place for years here really is working for.
Forward across all lines of business with pricing initiatives that have been normally going on this year, but are going to be actually accelerated going into 2022.
Okay. Thanks.
And just sort of your confidence around ability to get enough price to drive Margaret expansion N E. S for next year.
I think.
Suddenly we have some cost headwinds.
In regard to our labor cost and other.
Cost is you know so we're we're not only hoping to offset those increasing costs, but also to get someone margin expansion from that yeah, no and I think that the different this year versus prior years as well is that stick rates have been actually much better than than we expected and and that is going to continue I think the message if people got it and.
Understand that their costs are going up across the board and so when we've gone to customers with bike increases they've been.
Except it.
Yep.
And just says.
I'll follow up around Heydrich time.
You provide a little bit color on integration so far can you.
Give us a little bit more on where your first focusing kind of some of the key early initiatives their priorities and then you know if it's possible can I get a knee towards the cadence how those $40 million in cost synergies flow through.
Over the balance of the first of all year.
Sure well certainly are are day, one plan was to get her to come up and running on our platform on which we successfully did and.
The management team is in place now and we've got some terrific people that came over from hydro come combined with our team were really feeling excited about moving forward.
There are obviously some synergies that will be working on and the next three months here to close out the year and then moving forward into next year, a big focus will be on sort of looking at contracts.
Because we do have a number of customer overlaps within our businesses and so we're gonna have to be working.
Real closely with our customers as we.
Signed contracts together, so we can move forward into 2022 with.
Everything under one corporate organization here. So that's gonna be our primary focus is to get those contracts rationalized.
Okay perfect. Thanks, so much.
Yep.
Our next question is from the line of Jerry Ravage with Goldman Sachs. Please proceed with your question.
[noise], Yes, hi, good morning, Iran. Good morning in January.
Can we talk about the incinerator price and catered soon based on contracts that you haven't place heading into the fourth quarter what level of incinerator price increases are are are you expecting based on what's already.
Planned.
For the quarter and then you know.
Coming back to the three announcement now that some of your customers had more time to process. What <unk> is doing I'm wondering if you've had inquiries for potential similar arrangements in terms of increasing school with existing customers that.
I'd be perfectly integrated in incinerators. Thanks.
Hi, Jay This is Mike I'll start and then I'll turn it over to Eric hosted with Us today.
So when you think about pricing for Q3.
As we said it down said in his prepared remarks, Q3 pricing insulin ratio is up 11% and in the past we've been asked what is that next versus price and revise it.
Two thirds mix one price I think in Q3, it's more two thirds price one third mix. So we have been getting kind of a lot of price and as contracts come up for renewal even off cycle discussions we've been able to drive pricing incineration.
At at a pretty high clip kind of all year as you know versus last year, but before we continue to drive kind of good price expansion in that business and so I expect that as contract come up for renewal as we add as.
As Alan said, not just an incineration, but in all parts of our business. We have been able to drive will be able to drive priced to drive the profitability in the business and we're talking about three and I will turn it over to Eric and give you some more color on that yes.
Yes, Jerry this is Eric so our our startup with three M continues to go well, we've been handling a significant amount of volume from them throughout the course of this year and continue to implement our strategy with servicing all of their locations as we look at our other captives in the industry we have relationships.
With every one of those units that have a captive incinerator and we continue to work closely with them. They have been our customers for a long time.
There is certainly areas that we can continue to help them on reducing their costs by leveraging our network. So it does continue to look like those opportunities there ahead of us.
Okay, Great and then.
The we refining spreads you mentioned the record.
A record quarter for you folks can you talk about how do you view normalized refining margins post I M. O 2020, now that the world.
Well hopefully be normalizing <unk> post Covid, where do you expect refining margins to shake out compared to prior cycle levels.
Yeah, I think I think we we certainly see the impacts of emo.
When we look at outlets for recycle fuel oil versus.
Our internalization of taking used motor oil and refining it into base oil and so we could clearly see it in that market we're going into.
Into the fourth quarter here, and then to the winter months with record inventory 40 over 40 million gallons inventories. So we're well positioned to have what we need in our in our facilities to process and we're now looking at alternatives for some of our oil because there's just a ton of oil around and I think that's evident.
<unk> of 2020 in my opinion anyway, and so I think that moving forward into 2022 is although we think that.
Base oil pricing may start coming down.
I think the team that we put in place at the beginning of this you had run this segment of our business is really doing an excellent job of maintaining that spread.
And I think customers.
I'm really interested in.
Or green.
No oil.
The whole idea about sustainability program I think we could sell a lot more direct mood boiled to our customers.
If not for the additives shortages that we had the hydrogen problems that the industry has had in getting a hydrogen. So I think next year will be able to offset probably some decline in visual pricing with a further high margin sale of our our blended direct materials because the demand is here, we just need to get them the product.
Oh I appreciate the discussion thanks, yeah.
My next question comes from the line of Tyler Brown with Raymond James. Please proceed with your questions.
Hey, good morning, guys.
Hey, Hey, Hey, Mike on the guidance it looks like you're raised EBITDA mid point by call at 30 million I think you called out the $15 million in hydro Kim but my hunch is is there some moving pieces and that other 15 million I don't know if you're totally look at it this way, but could you bridge. The other 15 million I know you've got good guys like wider.
Spreads and then maybe some things working against you, but could you maybe bucket some of that.
Sure that is so it really is the addition of nitrogen and just just to clarify when you talk about hydro Ken.
As in up to $5 million 17 integration costs and on and on a monthly basis. The business is not is not linear right. We talked about a variety of million of EBITDA that business, but 15 looks pretty late for Q4, we didn't buy that business until after the first week of October.
October is a great month for the industrial business law turnarounds happening in November and December tend to be slower and so it's important to note that 15. Please don't take 15 at the run rate as you go into 2022 from a from a mass exercise I know you guys love spreadsheets the.
When you when you think about when you think about other things. It really is that I've called consistently spreads starting to narrow and and as we say here talking to you I don't see that happening so as such that's allowed us to raise our guidance again in queue for it there are a lot of moving pieces.
Whether it would be seven Scots integration costs are the things, we're doing but I'd say it at a high level of that just driving.
Okay. That's helpful. And then I went on the pricing flexibility I mean, I get it and disposal, maybe even charged for oil and S. K, maybe even emergency response, but in these industrial cleaning contracts how much pricing flexibility do you have is that those contracts, maybe escalate annually or.
Where can you go back and maybe much pricing there more often.
Then in times like this yeah, I think that there's been a certainly a shift over the last year and a half with our relationships with a lot of large industrial accounts, we gave back a lot of price concessions and even though we had firm contracts with firm pricing we gave back.
Millions of dollars during 2020 with pricing concessions, we're going back to those customers and others and realizing that yes, we have contracts in place maybe some of them are not coming up for renewal for a year or two but we are raising prices to those customers as well, we're going back and getting those concessions and then some.
Certainly for sure and with the shortage in labor with the inability to get equipment and transportation costs.
There isn't a customer that we do business with that hasn't been touched by what we read about in the paper all the supply chain issues and so.
Our feeling is quite frankly.
If we can't get the kind of margins for the risks that we're taking we're not going to continue to do business, we're going to move forward and share those resources with other customers.
Where we can make the margin that we can recover the cost increases that we're seeing.
Okay. That's that's helpful and then just lastly.
I know it is early but just any flavor on capex for next year I assume you're going to have a big jump in Kimball spend.
Yeah, Yeah that is so you have a couple of things that you're going to have.
The Hydro Camass addition, and that's not generate a fair amount of of that but they also need capital and we have about 55 million, which we talked about before for the incinerated keyed up for 2022.
So is mid twos are good place holder is it maybe maybe towards three but we have to go through our budget process and that includes the capital budget. So I'd hate to kind of give 2022 guidance on this call.
Okay, Alright, I appreciate it thank you.
Our next question is from the line of Michael Hoffman with Stifel. Please proceed with your questions.
Hey, Thank you very much.
Alan I'd like if I could start with safety.
<unk> that you share that with us.
So what do you think happened.
Just the the everybody was having to work so hard because there's such labor issues and then you had to kind of bring attention back to that.
And then I want to follow up with a Labour question I think we've seen it over the last 18 months and.
A lot of us think that there's just a huge distraction, particularly going through the pandemic.
People.
We just think that they're not focused.
And you know, it's a lot of slips trips and falls.
Stepping into a you know a pothole and twisted an ankle.
We're not seeing tremendous.
Hugely.
No injuries, but but we're just seeing a lot of these small.
Crazy things you know that otherwise, we just would have never seen I think before the last 18 months or so and so we I guess, we Chuck it up so maybe a distraction at this point, but.
<unk> certainly with a combination of H P C P.
Probably be close to one or even under moving forward because we have a lot more billable hours now coming over but.
Think we've just gone through this sort of disruption and I think that's what's causing some of these issues.
And then the labor issue.
My view is that the total addressable pool has shrunk permanently and that this doesn't you can't fix this with just paying people more.
So how do you address.
The expanding addressable pool for clean harbors, where where do you go looking to make that pool bigger. So that you have people you can try and higher.
Yeah, I think we have to really look at all.
All places, whether it's a trade schools or or the Maritime Academy resorts.
Going into the Drivers' schools or.
The military.
We have.
800 military personnel now former military personnel not working for us. So that's been a great place for us to recruit from and we've got some real strong relationships with the army there that we want to expand but we have to do better.
We are several thousand people short.
Our revenues are constrained by our staffing and we also know that from a safety standpoint.
First year employee tends to have a higher incident right. Then certainly other employees who've been here longer more experienced better trained so really doubling down on training on boarding and and really trying to fill those open key positions that we have out in the field.
And then Mike can you help us we are modelers and spreadsheet people. So.
The rollover Emma.
<unk> sales and EBITDA, you want us to use for hydrogen yeah. So if you say 15 million and there is no. Let's say 3 million of of 17 integration. So that's and then we've already said publicly 115, plus 2000 25 million of of of.
Integration synergy costs, so and you can do the math on that you can get a rollover number from there.
Okay. So I'm, taking 115 less 15, and then help me with the three one of them is that three is incremental to the 15th so it's a negative it's really 12.
So it's so it's let's say, it's 15 for the corner. So say it say, it's 15 for the quarter.
115, revise it publicly plus 2000 25 million of of synergy costs 50, like 135 minus a 15 to probably at one 115 run rate Scotland.
Alright, Ma'am and then go mental EBITDA of 2022.
Got it and then yeah.
Do the math right, you're somewhere between up to maybe $100 million above 2019 and used oil S. K S. S.
Some piece of that is Alan alluded to has to have benefited from I M. O. So when the number correct.
What I'm what I'm interested in is you know.
There's 115 from H P C. There's potentially on an annualized basis 15 to 20 from vertex.
So I think we can have a conversation says.
Even if this corrected 100 per cent on January 1st.
You're not down your flat maybe up.
All else being without any other growth anywhere else, that's the right way to start the thought process about 22.
So so we have to go through a budget process includes the board review as well as.
Capex budget, so it's hard to hard to kind of speak to that kind of was so much level of precision, but I would say that when.
When you think about the spread.
As we talked about before Michael it's kind of three things. It is kind of the impact of ammo 2020.
I'd say strong spread management by the team to put in place in earlier this year and is white and I don't know, it's really hard for me to predict kind of win that.
When that gets back to when that contracts and if that contracts certainly not going to happen on January 1st.
As you know it took a long time to get to hear it will also take a long time to get back to whatever normal is I don't know what normally so so it's really hard for I mean, I think personally I believe for us and people in our industry. This will be one of the hardest budgets and hardest guidance will have to do in our time here because that's gonna be really hard to predict.
If and when that does come back to whatever whatever that was kind of prepandemic. If it does so it's hard for me.
Good news is I don't have to give that today I have time to think about kind of where we are we will have a conversation in February about that looking forward to it.
Okay.
Thank you very much.
Thanks, Michael.
Thank you. That's reminder, sent to ask a question today. Please press star one from your telephone keypad.
Our next question is from the line of timber shooting with need them. A company. Please proceed with your question.
Thank you good morning.
You talked about in the business some of the project volumes stalling had been at least in your slide you talked about as a result of the the pandemic just as we're starting to see.
Some of the Delta concerns yeah, seemingly hopefully abating more recently.
Or should we see that turn around I assume you're starting to already.
We have a pretty good pipeline, but maybe you might want to comment on that yeah, Jim clearly as we've gone through this year, our pipeline has been increasing quarter to quarter. The difficulty came about when.
When many of these projects were restricted from getting permits to be able to move forward and do the cleanups that were required and so the permit process has continued to be somewhat delayed, but our pipeline house wrong.
Our visibility of projects today is much better than a year ago, and we do foresee as we go into the fourth quarter and get into 2022 that will have much much more robust project business into our sites.
Got it and just with respect to H P. C. I could certainly appreciate yeah.
A.
Short term.
Goals that you need in terms of integrating the business, but you've also talked about cross selling opportunities and I'm wondering.
How soon in 2022 might we begin to see the benefits of that.
Yeah.
At least I'll start I think.
We've looked really from a sales standpoint, we've we've sort.
Sort of combined our sales organizations together now and I think looking at the white space that exist across particularly the top 40 or 50 accounts of H P C and vice versa clean harbors as well and so I think the team has really done a good job in these early.
Weeks to to start planning the strategies against that white space that exists in some of these contracts that that we each have the kind of sheer our capabilities across those accounts.
Eric if you want to add any yes, I would say in the early days that our teams on both sides now combined as one a very excited about the cross sell opportunities you think about refineries and chemical plants alone.
Pre acquisition, obviously hydro Ken was really only do an industrial cleaning and things like leak detection and repair.
And there is an opportunity combined forces to do additional material processing chain clean house, together transportation and disposal of those tank clean out. So our teams are sales working together there are already knee deep into starting to expand cross sell without our customer base at Jim as we've given out.
These numbers either in their earnings and announce it made in connection with the acquisition in to their earnings calls.
Include any crossville.
Got it and just with respect to pricing.
H P. C. I assume same same kind of dynamics that you're seeing in the business or have they been.
What have they been doing on the pricing side as we've seen some of this inflationary pressure really build or is this something that you're addressing now at H P. C that part of business I would say, we're just addressing it now we were restricted during the entire of integration process of looking at any pricing data.
Right up until the closed so.
With the closed take a place on the eighth it's sort of been from that point on now that we've really been aggressively trying to look at all of that but I would say.
Three months prior to.
Signing our agreement you know.
<unk> did a pretty good job of managing pricing certainly with their customer base, but.
And had to take a pause during the integration. So I think we can be more aggressive now and try to get everything at least underway.
In the near term here.
Got it thanks very much.
Thank you.
Our next question is from the line of chest Silbert with BMO capital markets. Please proceed with your questions.
Thanks, So much wanted to switch the topic to what's going on in Washington, I know things are still not yet finalised, but you've had a few more months to look at some of the plans that they've been talking about from an infrastructure perspective et cetera, any indication what impact that could have on your business over the next few years.
You know I think one of the key things is.
Lowering the age on drivers 18 and that.
There are a lot of.
A lot of routes that we do in a lot of movements that we do that that would help us a lot to be able to.
Put on a new generation of drivers sooner and I think that will help.
And that issue across the board.
But I think I don't know where it do you know where we are with <unk> at this point I know that's a big topic that people have asked yes, DFAST continues to be a big focus.
[laughter], obviously in October the EPA issues.
Issued <unk> policy statement. They are full first focus over the next year or two is around drinking water and groundwater. We continue to follow very closely where they're going with the legislation they look to create and what levels and limits they deploy.
Deploying but.
It continues to be an opportunity for us, but it's going to be a long long time in the making and really old a long tail over 10 to 20 years of how we look at that.
Okay. That's that's helpful and just keeping the discussion about the regulatory environment I don't know if you can give us a little bit more color on the issues with the vertex energy closing and what are the milestones we should be looking for over the next few months before that the old closest thanks.
Sure Jeff So as I mentioned, we did get a second request put in the Federal Trade Commission, we are working to respond to that and that includes.
Providing all the data we need to give a thoughtful response that that the government.
Until then we are just working that business continues as a separate standalone public company and so the week and so we're both worth it we both have a list of things we have to go do and we're going we're going to we're working on it every day.
Fair enough. Thanks, so much thanks, Jeff.
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Thank you.
This concludes our question and answer session I'll turn the floor over to Mister make him for closing comments.
Okay, Rob Thanks, Thanks for joining us today, we are participating in the Beard Industrials Conference next week and certainly a number of other conferences before year end. So we look forward to speaking with many of you at those events have a safe day.
This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
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